UC-NRLF 
 
 ^B 37 77b 
 
 BREACH OF PRIVILEGE 
 
 SHOWING 
 
 THE CAUSE AND CURE 
 
 OF THE 
 
 NATIONAL DISTRESS 
 
 IN 1847-1848. 
 
 SECOXD EDITION, CONSIDERABLY ENLARGED. 
 
 PRICE FOUK SHILLINGS. 
 
LIBRARY 
 
 OF THE 
 
 UNIVERSITY OF CALIFORNIA. 
 
 Received AUG 161892 ,189 
 ^Accessions No. 4^ f^^^/^o. Class No. 
 
 '/■■ 
 
 
,%$■' 
 
 .'J. 
 
1 
 
BREACH OF PRIVILEGE 
 
 SHOIYTNG THE 
 
 CAUSE AND CUEE 
 
 NATIONAL DISTRESS, 
 
 ^rconli IStittion. 
 
BREACH OF PRIVILEGE: 
 
 BEING 
 
 THE EVIDENCE 
 
 OP 
 
 MR. JOHN BULL, 
 
 TAKEN BEFORE 
 
 THE SECRET COMMITTEE 
 
 ON 
 
 THE NATIONAL DISTRESS 
 
 IN 1847 AND 1848. 
 
 4 T. c\ ^SVY 
 
 PUBLISHED WITHOUT AUTHORITY. 
 
 -V- 
 
 SECOND EDZTZOir, 
 
 WITH SECOND AND THIRD EXAMINATIONS, 
 
 AND AN APPENDIX. 
 
 LONDON: 
 JOHN OLLIVIER, PALL MALL; 
 
 AND 
 
 PELHAM RICHARDSON, CORNHILL. 
 1849. 
 
< 
 
 ^(f-Zy^i^ 3 
 
PREFACE TO THE SECOjS^D EDITIOj^. 
 
 Sir Robert Peel, in his Speech upon Mr. Herries' Mo- 
 tion, on the 28th of August, distinctly admitted that the 
 suspension or repeal of his measures would relieve the 
 country from the connnercial distress under which it had 
 been so long suffering ; and, consequently, that they are 
 the cause at least of the continuance of that distress. Also, 
 that he never will consent even to a temporary relief, until 
 the distress and ruin are at least as great as in October, 
 1847. 
 
 The " Currency Question," therefore, is no longer a 
 difficulty, no longer involved in mystery ; but is reduced 
 to this simple form : " Will this commercial community 
 any longer submit to a system confessedly intended to de- 
 prive them of the control of their own affairs, and to 
 cripple the commercial enterprise of the country ? " 
 
 Under this new feature of the case, a Second Edition of 
 this Publication may appear unnecessary. But it is not 
 sufficient to know that Sir Robert Peel's system is wrong ; 
 the public should know what is right, in order to guard 
 them against any delusive attempts to patch it up. No- 
 thing will do but an entire eradication of the cancer, and 
 the public mind is fast coming to that conclusion. 
 
 This Second Edition contains my Second and Third Ex- 
 aminations, and the following documents in the Appendix : 
 
 (A.) Letter from the late Sir R. Peel in 1826. 
 (B.) Resolutions proposed by Mr. Caley, l on the English 
 (C.) - - - - Mr. Spooner, J case. 
 (D.) - - - - Mr. Spooner, "I on the Scotch and 
 (E.) - - - - Mr. Hume, J Irish cases. 
 (F.) Mr. Salt's Letter to Sir R. Peel, August 28. 1848. 
 
 J. B. 
 
 December, 1848. 
 
 A 3 
 
PEEFACE TO THE FIKST EDITION. 
 
 The old English chronicler, Mr. Joseph Miller, relates 
 an anecdote of a man who, whenever he wished to make 
 anything very public, told it to his wife as a secret. My 
 constitutional respect for the two Houses of Parliament 
 calls upon me to believe that a similar motive actuated 
 them in referring the public and universally important 
 subject of the present Commercial Distress to Secret Com- 
 mittees, although I am aware that there are some 
 people who do not scruple to say that the object was to 
 ** Burke the question." The phrase is rather modern to 
 my ears, but I believe it means that the money capitalists, 
 by whom the ministers are supposed to be guided, ex- 
 pected thereby to delude the operatives — rather a dan- 
 gerous game in these times ! The same hope seems to 
 animate them still, although the operative classes of almost 
 the whole of Europe have risen up in insurrection, as we 
 were warned they would do, if restrictions by which In- 
 dustry has been sacrificed to Capital were not removed. 
 
 But notwithstanding the above-mentioned feeling for 
 the Houses, I confess that I have not the same respect for 
 what is called " Privilege of Parliament." The uncon- 
 stitutional attempts of the late and present Prime ministers 
 to set privilege above the laws have not tended to raise it 
 in public estimation. 
 
 It is perhaps this which has emboldened me to defy the 
 Serjeant-at-Arms, and to publish my evidence without 
 consent of the Committee ; feeling confident that the more 
 publicity and the less secrecy — the more candour and 
 the less mystery — there is connected with this important 
 subject, the better. 
 
 J. B. 
 
 April, 1848. 
 
EVIDENCE, 
 
 Mr. Bull called in and examined, 
 
 Q, Have you been long acquainted with the mercantile 
 business of this country ? 
 
 u4. A great many years. 
 
 Q, You carry on your business in Little Britain ? 
 
 A, In Great Britain. 
 
 Q. What do you conceive to be the cause of the Com- Cause of 
 mercial Distress, and of the Panics which occurred in April ^°g'['™s^s'['^'^^ 
 ^nd October of last year (1847)? 
 
 A, As commerce is, in other words, the interchange of Restricted 
 commodities ; and as this interchange cannot be carried on *^"'^'^^"^y- 
 to any great extent without a medium of interchange, or 
 what is called currency ; it follows that, whenever there is 
 not a sufficiency of this medium, or a sufficient freedom of 
 its action, commerce must be deranged. Just as the con- 
 struction of a railway must be impeded, if there be not 
 sufficient wheelbarrows to move the earth. Now this 
 medium, or currency, is greatly crippled by the existing 
 monetary and banking laws (1816, 1819, 1844, 1845) ; 
 and to this is to be attributed the commercial distress of the 
 last and present years. 
 
 Q. What are we to understand by the word Currency ? Currency 
 
 1-k A/TO •'the repre- 
 
 Do you mean Money r sentative of 
 
 A. I use the word Currency, to avoid the ambiguity ^^lue. 
 to which the indiscriminate use of the word Money has 
 given rise. Currency is the representative of value, and 
 
 A 4 
 
8 
 
 Money con- 
 founded 
 with capi- 
 tal. 
 
 Money. 
 
 Commer- 
 cial cur- 
 rency. 
 
 The late 
 Mr. Roths- 
 childs 
 opinion. 
 
 Faihire of 
 the crops 
 not the 
 
 not value itself. All money is currency, but all currency 
 is not money. The word Money is frequently, but erro- 
 neously, used to denote wealth or capital ; a confusion which 
 frequently leads to error. Capital is wealth, or that which 
 is of value ; currency is the representative of wealth. 
 Currency is of two kinds : — 
 
 1. Money, properly so called, which is issued by the 
 sovereign power of the state, and is a legal tender in all 
 payments, whether it be made of metal, or paper, or any 
 other substance. 
 
 2. Commercial currency, which is not a legal tender ; 
 but, being conventional between the parties using it, no one 
 being compellable to take it, will always expand or con- 
 tract according to the requirements of commerce, if it be 
 not fettered and controlled by unwise legislation, as our 
 currency is at present. 
 
 Q. You then consider that the late commercial distress 
 is attributable mainly to the limitations placed upon the 
 currency by the laws passed since the year 1815 ? 
 
 A, Yes ; and in this I follow the late Mr. Rothschild, 
 (than whom, perhaps, nobody had more practical knowledge 
 of the subject,) who said, ** Give this country money in 
 abundance, and it will have the trade of the whole world; 
 but if you make money very scarce, it (the trade) will go 
 to other countries." Now, the tendency and object of all 
 our monetary legislation since 1815, has been to make 
 money more scarce. That is the fundamental cause of the 
 commercial distresses that have occurred. 
 
 Q. It does not appear, however, that the commercial 
 position of other countries is better than our own ? 
 
 A, True. But when Mr. Rothschild talked of trade 
 going to other countries, he of course meant to those 
 countries where the counteracting influence did not exist. 
 It was not necessary for his argument to point out that 
 the state of the whole commercial world is influenced by 
 this country. Their present difficulties have followed 
 ours. 
 
 Q. You seem to attribute the commercial distress en- 
 tirely to our monetary laws. Do you not think that the 
 
failure of the Crops of corn and potatoes had something ^^"^e of 
 to do with the matter ? 
 
 A, Very httle. It no doubt caused a diminution of 
 accumulated capital; but, under a sound monetary system, 
 it would in no way have deranged commerce, or lessened 
 the employment of labour. 
 
 Q. Explain yourself. 
 
 A. When the short crops occurred, the great want of 
 the country was the want of employment, through which 
 the industrious classes of the community might obtain 
 wages and food. The natural consequence would have 
 been, that labour would have been called into active oper- 
 ation to supply the deficiency. Thus the first loss would 
 have fallen, where it ought to fall, upon the accumulated 
 capital of the country, which would have called forth 
 productive industry to replace the deficiency. Under the 
 present system, however, when the necessary importations 
 of food took place, instead of its being met by an export- 
 ation of our manufactures, which would have employed 
 our population, it was met by an exportation of the foreign 
 article gold, because, according to the law of 1819, that 
 conmiodity must be kept in store by the Bank of England, 
 and supplied at the low, untaxed price of 3/. I7*. lOW. 
 per ounce. Gold being thus the cheapest article, was 
 exported instead of manufactures. Now by the same law 
 it is absurdly enacted, that when gold, which forms part 
 of our circulation, is exported, the other currency of the 
 country, instead of being enlarged to supply its place, 
 shall be diminished to an equal amount. Thus, at the 
 very time when extra exertion and an additional appli- 
 cation of labour are wanted to supply the deficiency of the 
 harvest, the currency (the only agency through which 
 labour can be efficiently called into action) is diminished, 
 labour is unemployed, and business rendered unprofitable. 
 
 Q. Do you not think that the great absorption of capital Railway en- 
 by Raihvays contributed to this result ? the^clusr^ 
 
 A, I am not aware of any '' great absorption of capital " 
 by railways. A certain portion of land, instead of being 
 ploughed or made into turnpike roads, was formed into a 
 
10 
 
 shape which was expected to be more profitable. Beyond 
 this, all that has been laid out upon railways has been, not 
 anything- which previously existed, but a quantity of 
 labour which would not otherwise have been employed, or, 
 in other words, the food of the labourers thus employed. 
 But these labourers must have been provided for in some 
 way. This was done in England by the poor-rate ; in 
 Scotland by half starving the people, and half ruining the 
 landlords ; and in Ireland by the more decided course of 
 letting them starve by thousands. These results Her Ma- 
 jesty's Ministers voluntarily preferred, rather than allow 
 willing capitalists to employ willing labour ; because in so 
 doing they must have been guilty of the antiquated par- 
 liamentary crime of inconsistency, and have broken down 
 the money monopoly, which has been so profitable to a 
 few favoured capitalists, by whom it is supposed that they 
 are guided in these matters, and so detrimental to the rest 
 of the country. 
 
 Q, Do you then not believe that the railways aggra- 
 vated the commercial distress ? 
 
 ^. Certainly not. It was the limitation of the currency 
 checking the construction of railways which caused that 
 part of the distress which is ascribed to the railways them- 
 selves. 
 
 Q, Do you not think the large amount of expenditure 
 to which shareholders were pledged would have exhausted 
 any extent of currency that might be issued ? 
 
 u4. No. Whatever currency may issue forth from the 
 Mint, the Exchequer, or from bankers or other persons 
 who exchange capital for its exchangeable representative, 
 must either be hoarded (during which time it ceases to be 
 current), or must be engaged in the employment of labour. 
 On railways it would circulate in the most active manner. 
 The same shilling would frequently be used every week 
 in payment of wages upon the same line, or fifty-two 
 times in the year ! The aggregate amount of expendi- 
 ture, therefore, can afford no correct notion of the quantity 
 of currency required or employed. 
 
 Q. But, supposing that sufficient currency could be 
 
obtained, do you think there is sufficient surplus capital in 
 the country to bear so great a drain ? 
 
 A, I cannot see the slightest symptom of any drain; 
 but on the contrary, a wide field for the employment of 
 productive labour. The whole of that large amount was 
 to be laid out upon future labour. Perhaps not one bar 
 of iron, or one brick to be employed in those works, was 
 then smelted or burnt. The only capital then in exist- 
 ence, with which they had to do, was the land ; and the 
 only use it was intended to make of that land was, to apply 
 it to a supposed more profitable use than theretofore. All, 
 therefore, that the railways had to do with the capital of 
 the country (whether surplus or otherwise) was to under- 
 take to feed and clothe a certain number of the working 
 portion of the community, which the said capital was by 
 law bound to do, whether in industry or idleness. This 
 responsibility the shareholders took upon themselves, and 
 would have carried through, if they had not been denied 
 the right of converting their capital into a current or ex- 
 changeable shape. This last peaceful appeal of industry 
 against the oppression of capital was rejected by our le- 
 gislature, and an insurrection of the industrial classes has 
 broken out over the whole of Europe. 
 
 Q, Do you mean to connect the Revolutions now going Convulsions 
 on throughout Europe with the distress which has pro- ^" Europe, 
 duced the inquiry before this Committee ? 
 
 A, Certainly. The present state of things has been « Emanci- 
 for years predicted by the " Society for the Emancipation j^^°"t°^.. 
 of Industry," and by others who have observed the errors Society, 
 of our present monetary system. The object of the French Chartism. 
 Republicans, the English Chartists, the Irish Repealers, as 
 well as the great body of insurgents throughout Germany, 
 is the same, although assuming various shapes. On the 
 other hand, Belgium, which it was supposed would first 
 ** fraternise " with France, having previously adopted the 
 same laws and speaking almost the same language, is nearly 
 the only country in Europe untainted with sedition, and, 
 notwithstanding her geographical position, stands a fairer 
 chance of peace than any other. This arises from her 
 
tinues. 
 
 1^2 
 
 having made it her policy to do justice to the industrial 
 classes. The happy consequence is, that not only all 
 classes, but all parties there, are now united in the de- 
 termination to repel foreign aggression and foreign in- 
 fluence. 
 Distress Q. But, whatever may have been the danger, do you 
 
 still cou- j^Qt consider that the worst is now over, and that we are 
 
 4*1 I'll lirkci ' 
 
 in a progressive state of improvement ? 
 
 A. No. It is a mistake to suppose, because the pa- 
 tient has survived two paroxysms that therefore he is well. 
 The country has been ever since, and is now, in a chronic 
 state of panic. Capital is accumulated in the form of 
 tumours or masses, and there is no power in the weakened 
 constitution, under the present system of depletion, to 
 absorb it in the general circulation. 
 
 Q. But although commerce is not yet quite in a healthy 
 state, are you not of opinion that it is coming round, and 
 that after a short period things will right themselves ? 
 
 A, That is, that nature would cure the patient if his 
 doctors would let him alone ? I fully admit that. Indeed 
 it is what I have been contending for all along. But you 
 forget that in the present instance Dr. Sangrado is daily 
 applying his lancet, and lowering the circulation of the 
 life blood ; so that although this system may keep off fever, 
 yet it will inevitably bring on a weakness that will ruin 
 the constitution. It will also be powerless to delay a 
 relapse much longer, while it is constantly rendering its 
 patient less able to bear it. 
 
 Q. It is the opinion of those who ought, from their 
 position, to be best informed upon monetary matters, that 
 the danger is over, and that it only requires an abstinence 
 from enterprise for a time, to restore trade to a wholesome 
 state, and re-create the capital that has been lost. Do 
 you see any reason to doubt this opinion ? 
 
 A. It appears to me that, if those who " ought from their 
 position" to know better, are of opinion that capital is to be 
 created by doing nothing, and refusing to allow the operative 
 classes to work, the sooner they are removed from their 
 " position " the better. It is, perhaps, their position that 
 
13 
 
 prevents their seeing what is obvious to the commonest 
 labourer, viz. that if a bad harvest or any other cause 
 have reduced the quantity of food or any other necessary, 
 the proper remedy is to labour with increased energy to 
 replace it. The most illiterate plough-boy knows that 
 when a crop has once failed it will not grow again until 
 resown. Trade cannot return to a wholesome state while 
 doctored with the noxious poison of a fettered currency. 
 
 Q, Do you mean to say that you anticipate the return Return of 
 of a commercial crisis ? ^^^^^^' 
 
 A, Certainly I do ! Do not you ? In the present state 
 of the continent, the probability of gold being in request 
 abroad is obvious. The practice of hoarding, for instance, 
 is the natural consequence of the insecurity of govern- 
 ments. Many other causes also may occur to create a sud- 
 den demand. Under such or similar circumstances, gold 
 will inevitably be drawn from the Bank of England, and 
 if we persist in the folly of basing all our commercial 
 transactions upon it, nothing can prevent another com- 
 mercial crisis and panic ; and it will be more calamitous 
 than any of its predecessors. In order to purchase this 
 gold of us, produce and commodities will be poured in 
 upon us from abroad, to which the system called free 
 trade will give every facility ; so that our manufacturers 
 will not only lose the foreign but the home trade ; and 
 employment, both with them and the agricultural labourer, 
 will become more scarce. Tradesmen will then feel the 
 pressure more severely than ever. The numbers of the 
 Chartists and discontented will increase. 
 
 Twice within one year have we had to bring back gold Costly sa- 
 at this costly rate, to preserve the solvency of the Bank effecTthr 
 of England, or, as some call it, to maintain the converti- leturn of 
 bility of the bank note, and at the additional expense of ^"^'^' 
 reducing the saleable value of property thirty per cent. 
 This operation we shall have to repeat during the present 
 year ; and if the wet weather should again produce a 
 short harvest, the result will be awful. 
 
 It is a piece of refined mockery and cruelty in the Act 
 of 1819j that, proceeding upon the assumption that gold 
 
14 
 
 is the only wealth, the only happiness, the only security, 
 the only thing to be desired, it forbids our retaining it 
 when we see that it is departing daily, and know that that 
 departure will compel us to limit our transactions, to dis- 
 charge our workmen, and to sell our commodities at a 
 loss ! On the contrary, that law is at this time holding 
 out a tempting bribe for its exportation by fixing its maxi- 
 mum price ! When it is gone, however, at this losing 
 rate, we are imperiously called upon to buy it back again 
 at an^ sacrifice, under pain of not being allowed to carry 
 on our business ! I believe no greater financial folly has 
 been committed since the days of Midas, from whom it is 
 a palpable plagiarism. 
 Assignats, Q, When you refer to the revolutionary movements 
 
 going on throughout Europe, and at the same time re- 
 commend the abandonment of our ancient gold standard, 
 and the adoption of a paper currency, you seem to forget 
 the result and effects of the French assignats. Do you 
 think that the people of this country would tolerate such 
 a system ? 
 
 ^. 1. You seem to forget that gold never was our 
 standard until the year 1816. Therefore all arguments 
 founded upon its antiquity fall to the ground. 
 
 2. Although the people of this country have tolerated 
 
 for the last thirty years a system more fraudulent, because 
 
 more subtle, than the French assignats, yet I do not 
 
 believe that they would bear with one so barefaced as the 
 
 Issued latter ; and I recommend nothing of the kind. The 
 
 without assisTiat of the former French revolution, although origi- 
 
 adequate o i-iv-r«i-r-v • •! 
 
 foundation nally bascd upon the National Domams, was soon earned to 
 an extent far beyond any pretended foundation or means of 
 giving value for them, and forced upon unwilling parties 
 in exchange for property forcibly seized. When first is- 
 sued on this basis, they amounted to only 45,000,000 ; 
 but were ultimately extended to 450,000,000, or ten 
 times the original amount, without any increase of basis. 
 Parties took them rather than nothing, in the hope that 
 they might some day be paid. The chance was small, 
 and ultimately failed. The paper money required in this 
 
 and without 
 limit. 
 
15 
 
 country is within our annual revenue, and therefore of a 
 totally different character from the assignats, and perfectly 
 responsible. If our national debt be sound, such a paper 
 must be as unimpeachable as gold. 
 
 Q, It appears then that you disapprove of the general 
 tenor of our monetary laws ; but you will, at least, admit 
 that they have produced some beneficial effects ? 
 
 A. 1 am not aware of it. They appear to me to be 
 founded entirely upon erroneous principles. 
 
 Q, For instance, do you not consider the convertibility Converti- 
 of the bank note to be of paramount importance ? ^' '*^* 
 
 A, There is an ambiguity in the use of the word 
 *' convertibility,'^ which misleads. If it be understood 
 to mean the quality of being at all times exchangeable for 
 any commodity desired, at its market price, I consider it 
 not only important, but essential to the nature of a cur- 
 rency. If, on the other hand, it is to be understood, as it 
 is by modern theorists, as meaning, that it should be con- 
 vertible, on demand, into gold or any other commodity at 
 a Jixed price, and thereupon lose its proper function as 
 currency, then I consider it as one of the most mischievous 
 qualities that can be given to a circulating medium. If 
 the quantity of the currency can be thus forcibly varied by 
 extraneous circumstances, such as the demand for a parti- 
 cular article of merchandise, it cannot be wondered at that 
 commerce is frightfully deranged, and panic frequent. 
 This is one way in which the Act of 1819 makes money 
 not only very scarce, but, what is even worse, very uncer- 
 tain. But if the question refer, as I believe it does, to 
 the responsibility of the note, viz. the fact, and the 
 general conviction, that it really represents value, then I 
 do consider it of the greatest importance. 
 
 Q, Then, whatever may be your opinion of the Acts of 
 1819 and 1844 in other respects, you will of course give 
 them some credit for having preserved this important cha- 
 racter to the Bank of England note ? 
 
 A, They have had no such effect. On the contrary, 
 they have several times brought the Bank (a perfectly 
 solvent corporation) to the brink of stopping payment ; 
 
i6 
 
 and, if continued in force, will do so again and again. 
 The remedy of the Bank is to " put on the screw," thereby 
 deranging the whole commerce of the country, forcing 
 down prices, and compelling our manufacturers and mer- 
 chants to sell at a loss, until they have ruined a sufficient 
 number to buy back, at any cost, the gold which they 
 have been compelled by law to part with at a low rate. 
 This wronging of every body else is called " righting 
 the money market." During all the panics and periods 
 of commercial distress through which we have passed 
 since 1815, including that under which we are now suf- 
 fering so severely, the validity of the Bank of England 
 note has never once been doubted, although its reserve has 
 several times been reduced to a critical level. 
 
 Q, How do you account for this ? 
 
 A, The panics have arisen from the fear of a scarcity 
 of circulating medium, not of gold. The public have 
 never for a moment doubted the validity of the Bank of 
 England note — feeling that, by imposing upon the Bank 
 the promise to pay in gold at a fixed price on demand, all 
 the notes issued by them, which is palpably impossible, and 
 by claiming a right to participate in profits, the Govern- 
 ment have practically become partners, and have taken 
 the responsibility upon themselves. It is no longer a 
 question of the solvency of a private corporation. 
 Panics. Q. You do not then think that either the Act of 1819 
 
 or that of 1844 has had any beneficial effect in preventing 
 Panics f 
 
 A, On the contrary, those acts have been the causes of 
 those panics. Panics do not arise from an actual deficiency 
 of currency, but from a fear that it may be deficient. When- 
 ever there is a fixed limit there is danger of panic. Every 
 thing therefore which so limits, or tends to limit, the extent 
 of the currency, however wide that limit may be, or to en- 
 cumber its requisite expansion, is bad, tendhig to panic and 
 the derangement of commerce. It would perhaps be diffi- 
 cult to adduce a stronger proof of this than what occurred in 
 October last. Commerce was as it were in its last agonies. 
 The Bank of England, fettered by the Act of 1844, could 
 
17 
 
 not have continued their payments a week longer, except- 
 ing by the sacrifice of niilHons of property and the ruin 
 of a great many more commercial houses both here and 
 abroad. In this state of things the famous Ministerial Govern- 
 Letter was issued, removing the actual limitation ; and t™r"october 
 although it did so at the usurious minimum rate of interest i847. 
 of 8 per cent, (which to the ordinary run of traders was 
 perhaps 15 per cent.), yet the panic was instantly abated, 
 and so far from more currency being called for by the 
 public, the issues of the Bank became actually less. 
 
 Q, Have not these Acts been useful in correcting the Foreign 
 foreign exchanges ? ^ "^ * 
 
 A. The operation of " correcting the foreign exchanges" 
 is similar to that of " righting the money market," and 
 these Acts have certainly been very efficient in its perpe- 
 tration. When w^e have imported more value than we 
 have exported, the exchanges are said to be against us, 
 and something will be required to settle the balance. The 
 price of gold being fixed at the rate at which it stood pre- 
 viously to the existence of the greater part of our national 
 debt and taxation, it naturally takes precedence of all other 
 commodities, and is exported. The only way to stop this 
 export, or to bring gold back, (its price not being allowed 
 to vary here,) is to export our goods at a losing price, 
 which the Bank, having the power conferred upon it 
 by the Acts of 1819 and 1844, compels the manufacturers 
 and merchants to do. This is called " correcting the ex- 
 changes ! " The Bank does not stop payment, but the 
 merchants and manufacturers do. 
 
 Q. Do you not think that the Ministerial Letter was Eight per 
 rendered necessary by the circumstances, and that fixing J^"*4J[",^ 
 the minimum rate of interest so high as eight per cent, classes. 
 was well calculated to attain the object in view. 
 
 A, That depends upon what the object was. If it 
 was to embarrass trade, and discourage enterprise or 
 speculation ; to make labour (the capital of the poor man) 
 cheap, and the means of employing labour (money) dear ; 
 to transfer the hard-earned profits of industry to capital ; 
 to promote class legislation; to make the rich still richer 
 
 B 
 
18 
 
 High in- 
 terest de- 
 notes insuf- 
 ficiency of 
 money. 
 
 and the poor still poorer; to discourage the employment of 
 willing labour and tax those who are willing to employ it; 
 to promote discontent among the labouring classes and 
 encourage Chartism; to reduce the revenue and prove the 
 necessity for an income tax ; then I think the means well 
 
 adapted to the end But if, on the other hand, the 
 
 object was to foster that trade upon which some think that 
 the existence of this country as an independent nation 
 rests, to give a fair reward to industry, to unite the 
 interests and feelings of all classes, to give a permanent 
 value to capital and " a fair day's wage for a fair day's 
 work," then I consider it to be a great blunder. 
 
 Q. But surely, after contending so strongly that 
 money should be free, you do not mean to refuse a fair 
 interest for its use. If money be worth eight, ten, or 
 twelve per cent., why should it not obtain it ? 
 
 ^. I do not contend that money should not receive in- 
 terest according to its real value ; but I contend that it 
 is not fair to render money scarce, and then mulct the 
 industrious public by compelling them to pay a premium, 
 not for the money, but for the scarcity. As the capital 
 of nations accumulates, the rate of interest falls. In this 
 country, if money were not made an object of monopoly 
 and restriction, the real rate of interest would not exceed 
 5 per cent., and probably be nearer to 4 per cent. When- 
 ever therefore it exceeds that, it may be taken as a sure 
 indication that something is wrong. At present there is 
 a glut, a panic, and a scarcity, at the same time. Those 
 who have money are afraid to part with it, even at a high 
 rate of interest, because they see that trade is paralysed, 
 and has little chance of making a profit; while those who 
 would fain employ it in some industrial pursuit cannot ob- 
 tain it excepting at an usurious rate of interest, which 
 shuts out ail chance of an adequate return. Capital would 
 be far more valuable at a steady rate of 4 per cent, than 
 it is now with all its present high price and uncertainties. 
 
 Q, In what way does the present law cripple the 
 amount of circulation ? 
 
 A, First, by limiting its amount to the quantity of 
 
19 
 
 gold deposited in particular places, gold being a scarce 
 foreign commodity, at no time bearing any relative pro- 
 portion to our transactions, and liable to be suddenly ex- 
 ported, tbus contracting our circulation at a time when it 
 generally wants expansion. Secondly, h^ fixing the price 
 of gold, contrary to the most ordinary rules of commerce. 
 Thirdly, by fixing that price at the continental or untaxed 
 level, and therefore below that for which we can afford to 
 sell our taxed manufactures at a profit, whereby a premium 
 is held out to export gold in preference to manufactures. 
 Fourthly, by limiting the power of issuing notes even 
 upon the deposit of gold to a few and decreasing number 
 of individuals, whereby an injurious monopoly is created. 
 
 Q, Are you aware that the last limitation is with a Onebankot 
 view of ultimately confining all note circulation to one ^^^"^ injurL- 
 hank of issue. What is your opinion of that plan ? 
 
 A, That it is very mischievous. In proof of this I 
 will request attention to what has lately occurred ; viz. 
 that all the recent extensive and ruinous bankruptcies 
 have occurred either in London or Lancashire, or those parts 
 of the country where Bank of England notes alone are in 
 circulation ; w^hereas in those parts of the country where 
 other notes have also been in use, scarcely one such 
 bankruptcy has taken place ! This is a striking and 
 important fact. Money, of course, should have only one 
 source of issue — the State ; but commercial currency, commer- 
 being a voluntary arrangement in business, should be ^^^^ *'"''- 
 unfettered. It is freedom from meddling, and not the be free, 
 absence of customs duties, which constitutes real freedom 
 of trade. 
 
 Q. Is it not desirable that the issue of notes should be Regulation 
 so concentrated as to afford to the Bank of England or of currency 
 
 p 1 1 7 • absurd. 
 
 some other competent body the power oi duly regulating 
 the currency f 
 
 A, No ; the currency, if let alone, will regulate itself 
 much better than any body of men can. It is a mis- 
 chievous conceit in a legislature to imagine that they can 
 manage the affairs of individuals better than they can 
 themselves. 
 
 B 2 
 
20 
 
 Q, What is your opinion of the division of the Bank 
 of England into two departments, and of the weekly pub- 
 lication of the state of its affairs ? 
 
 A, As far as the publication goes, I consider it too 
 fiequent, and the divided form of the return tends to 
 confuse more than to inform the public. It is useful 
 only to the money jobber, while it tends to foster the 
 very erroneous notion that the commerce of the country 
 ought to be regulated by the state of the money market 
 and the foreign exchanges. Moreover, whenever the re- 
 serve of the Bank becomes low, it unnecessarily creates a 
 partial alarm ?inA panicy to the great disturbance of trade. 
 Q, You have answered only as to publication ; what 
 have you to say upon the division of the business ? 
 
 u4. I consider the division which prevents one part of 
 the establishment assisting the other, as an additional dif- 
 ficulty thrown in the way of circulation, and therefore in- 
 jurious to trade, without having one redeeming quality of 
 usefulness. It has also been made either in ignorance or 
 in defiance of the existence of the two descriptions of cur- 
 rency which I explained in the early part of my evidence, 
 viz., money and commercial currency. The proper di- 
 vision would have been between the 14,000,000/. issued 
 upon the security of the Government (which should be in- 
 vested with the character of money and not be demandable 
 in gold at a fixed price) and the notes issued by the Bank 
 on its own account. Over the former they should have 
 no control, and with it they should have nothing to do, 
 excepting as the paid agents of the Exchequer or the 
 Mint, employed to transact their business. 
 Act of 1819. Q' You seem very decided in your condemnation of 
 the monetary system established in 1819? and its com- 
 plement in 1 844 ; but seem to forget the important ob- 
 ject which it accomplished of redeeming us from a fatal 
 and ruinous system of paper money, and re-establishing 
 the ancient gold standard of value. 
 
 A. With respect to the system, I am at a loss to com- 
 prehend how that system can be fatal and ruinous which 
 enabled us to raise within eighteen years the enormous sum 
 
21 
 
 which now constitutes five hundred millions of public debt, 
 and in one particular year one hundred and thirty millions, 
 — whereb}^ our credit was so raised that we were enabled to 
 increase our National Debt to 800,000,000/., — which, 
 notwithstanding- that the greater part of this was not ap- 
 plied to productive purposes, but was absorbed in the waste- 
 ful expenditure of war, enabled us, when the struggle 
 was at an end, to commence paying it off at the rate 
 of fifteen millions a year, — and which during all this 
 time was adding to national and individual wealth at 
 a g-reater rate than had ever been known. I should 
 rather be disposed to apply the terms fatal and i^uinous to 
 that system which has since the year 1819 been adopted 
 in its place, under which all chances of paying off debt have 
 vanished ; the public expenditure exceeds the revenue, 
 notwithstanding the reimposition of the war tax on pro- 
 perty and income ; periodical panics and inundations of 
 bankruptcy have taken the place of the commercial pros- 
 perity which formerly characterised England ; manu- 
 facturing labourers are overworked and underpaid ; their 
 children demoralised because their labour can be obtained 
 at a cheaper money rate than that of the father ; the poor- 
 rate is increasing- ; and the welfare of industry is sacrificed 
 to capital. 
 
 With respect to the standard of value, food is the real sti-ndard of 
 " standard of value." Gold, from its scarcity, its dura- ^* "^* 
 bility, and its convenience of transport, has been adopted 
 by all nations as the measure by which the values of all 
 commodities may be ascertained. Two articles of the 
 most dissimilar nature may be exchanged with the greatest 
 ease by parties of different countries and languages by 
 translating both into their value in gold. Thus gold has 
 become, by nature and circumstance, the standard measure 
 of value. It is a great mistake to suppose that it has 
 been, or can be, so constituted by Act of Parliament. A 
 standard is one point from which to start, while price is 
 a relation between two things. What is therefore known 
 as the '* standard of value" supposed to be established 
 by the Act of 1819 (being the relation between gold and 
 
 B 3 
 
currency) is in fact a standard oi price, — than which nothing 
 can be more inconsistent with every sound rule of pohtical 
 economy and commerce. Yet this is done in the law of 
 1819, which enacts that the price of an ounce of gold 
 shall be 3/. 17*. lO^d. in our currency, whereby the price 
 of all commodities is necessarily influenced. This attempt 
 to fix the price of gold has also had the usual effect of 
 rendering it more variable, and therefore less suitable for 
 a standard than nature has made it. 
 
 The Act of 1819, therefore, it will be seen, instead of 
 establishing the " standard of value," has violated it, and 
 prevents its beneficial action. 
 Remedy. Q. What plan then would you recommend for placing 
 
 the currency upon a proper footing ? 
 
 A. To free the currency from the shackles with which 
 it is now bound, and allow it to act freely and find its own 
 level like the commodities with which it has to deal. A 
 government money (that which is issued in anticipation of 
 taxes) should be issued to meet the object which calls it 
 forth. If the taxes are to be paid in money, money should 
 be provided for the purpose. The people should not be 
 called upon to make bricks without straw. With the 
 commercial currency the government have nothing to do, 
 and ought not to meddle. All that is required of the le- 
 gislature is, that they should guard the ignorant and the 
 poorer classes from being deceived, by calling upon those 
 who issue notes to give reasonable assurance that they 
 are what they profess to be, viz. the representatives of 
 value. This has been satisfactorily done in Scotland for 
 many years, by the establishment of an excellent system 
 of Joint Stock Banking. In England, the publication of 
 the names of the partners has had a good effect. In the 
 State of New York, bankers are compelled to give direct 
 security, either in government stock or in mortgages, and 
 are consequently relieved from personal responsibility as 
 to these notes : and this plan has worked well theie for 
 the last ten years. 
 
 Q. Could you state your plan in a simple form ? 
 
 A. Yes. It is reducible to two simple points, appli- 
 cable to the two classes of currency. The details would 
 
23 
 
 of course require arrangemeut, but would involve uo 
 difficulty. 
 
 T. All g-overnment, or taxation Money, instead of the 
 inconvenient form of Exchequer Bills, should be 
 issued in Exchequer Notes of convenient amounts, 
 from 1/. upwards, not bearing interest, being legal 
 tenders for taxes and all payments. 
 II. The Commercial Currency should be issuable in 
 notes of 1/. and upwards, by all bankers affording 
 satisfactory assurance of their responsibility ; these 
 notes to be payable on demand, either in legal tender 
 money, or in gold at its market price. 
 Thus a large annual amount would be saved, which is Beneficial 
 now wantonly thrown away in the interest of Exchequer ^^^^*' 
 Bills ; and the circulation would encourage productive in- 
 dustry, give support to the working classes, enlarge the 
 home market for our manufactures, diminish the poor- 
 rate, and rapidly increase the revenue. There would be 
 no new principle involved. The same security would ex- 
 ist for these public ** promises to pay," as has existed for 
 a century, viz. the good faith of the government, and the 
 liability of the whole property of the country. 
 
 Q. Would not the Exchequer money you thus propose Govem- 
 be a novelty in our system ? Exchequer 
 
 A, By no means : it would, in point of fact, be a recur- money the 
 rence to the ancient principle of money successfully acted "ractke 
 upon in this country for centuries. Exchequer bills have 
 been current from the days of Henry III. In their present 
 form, not being receivable in payment of taxes until their ma- 
 turity, they are frequently at a discount discreditable to the 
 government issuing them. Exchequer tallies of wood form 
 the original on which the paper Exchequer bill is founded. 
 
 Q, Would it not necessarily lead to an over issue. No danger 
 and consequent depreciation of the currency, rise in prices, i*ssur^' 
 and excess of speculation ? 
 
 A. As to *' over-issue," there is no danger of any thing 
 of the kind. No banker parts with a note unless he receive 
 a value in return. No person gives that value for the 
 note unless he have a use for it. No note will remain out 
 
 B 4 
 
24 
 
 money 
 
 longer than that use exists. Currency does not create 
 transactions : transactions call forth currency. But sup- 
 posing- the possibility of over-issue, it could only be under 
 a monopoly, such as the One Bank of Issue system ; and 
 the most effectual cure (far beyond any enactment) would 
 be the existence of several banks of issue, when it would 
 be the business of each to send home the notes of all the 
 others as early as possible, so that none could remain out 
 forty-eight hours longer than they were wanted. 
 
 The paper of private parties could in no way depreciate 
 the general currency, which would all take its tone from 
 the state money. 
 
 The supply of currency, or symbols of value, could 
 not improperly affect prices. If prices should rise, 
 upon the removal of restraint, it will be a clear proof that 
 they had been artificially and injuriously kept down by the 
 existing restrictive system. 
 
 Commerce is " speculation." Is it then the declared 
 and professed object of the Acts of 1819 and 1814 to 
 cripple the commerce of the country ? It can scarcely be 
 supposed that such an intention will be avowed. But it 
 must be obvious that any restraint intended to clip the 
 wings of speculation must injure the security of the body. 
 No government or legislature ought to attempt to control 
 the interchange of commodities between man and man. 
 Experience, too, has shown that it is an insufficiency or 
 limitation, not a superabundance, of currency that leads to 
 rash speculation. The more lestricted our currency has 
 been, the more frequent and extensive have been our 
 panics and bankruptcies. That this must always be the 
 case, is obvious. Give people a sufficiency of a legitimate 
 currency to enable them to get a fair profit upon their in- 
 dustry, and they will be less inclined to gamble. Trans- 
 actions carried on through the medium of a legitimate and 
 responsible currency Quay be disadvantageous to one of the 
 parties, but they cannot be unsound. It is the unjust and 
 impolitic limitation of this medium which drives people 
 to the use of a spurious currency or an unsound system 
 of credit, by which many are led to undertake more than 
 they can perform. 
 
25 
 
 If the peculiar sort of speculation which it is desired 
 to discourage be that which may be defined by the term 
 (jamhUng, then is the legislation of 1819 at least useless, 
 for gambling does not require the intervention of currency 
 at all. The late extensive dealings in railway shares were 
 carried on almost entirely without it. 
 
 It should be borne in mind that labour cannot be set to Currency 
 work without currency, and that currency cannot be called e,'^'^^"ovmcnt 
 into action but by the employment of labour. So that of labour 
 any limitation upon the currency is a direct and serious in- ^"^^ capital. 
 jury to productive industry. It could easily be shown at 
 the same time that it is not so beneficial to the capitalist 
 as some persons think. The injustice done to industry 
 reacts upon capital. 
 
 Q, Would not the course you recommend cause (jfold to Gold at its 
 be wit/idraivn from the Bank, and to be exported ? prtce^profit- 
 
 A. On the contrary, if gold were left to its market able to the 
 price, like any other commodity, it would not generally be ^^*'°"- 
 so much in request as our manufactures, which are more 
 practically useful. Gold would not be exported with- 
 out a profit, and then its departure would be beneficial to 
 this country, like the export of other merchandise. When 
 required again it would be repurchased, but at no higher 
 price than we thought it then worth, so that a gain would 
 arise from both transactions, while the property would in the 
 meantime have been fructifying in various ways. It is the 
 present system which, by fixing a low price upon gold, ir- 
 respective of its value in the market, holds out a strong 
 inducement for its exportation. 
 
 Q, But it is invariably found that it returns in the Fixed price 
 course of time to the coffers of the Bank. Since October Turfous/"' 
 last it has been gradually returning ? 
 
 ^. That is true. It returns to its state of uselessness, 
 in which it is a burden to the country. But mark the 
 difference : whereas, in the case of a free trade in gold 
 as referred to in my last answer, every transaction is at- 
 tended with profit ; in the existing state of things, under 
 the Acts of 1819 and 1844, every step, both of action and 
 inaction, is attended with loss. First, we are bound by 
 law to part with it whenever the fixed price is so much 
 
26 
 
 lower than the market as to make it worth anybody's while 
 to demand it. Next, when it is wanted back to fulfil the 
 requirement of the law to resume its sleep, for no earthly 
 purpose but to fulfil the enactments of a baneful statute, 
 the Bank have the jpower, which they exercise with a most 
 unmerciful tyranny, of forcing- down prices below that of 
 gold, i, e, to a losing- level. Then, and not till then, does 
 the g-old return. It has now been returning- for some 
 months. But at what cost ? The loss of capital that has 
 been sustained since April last, arising from this cause, is 
 enormous ; thousands of persons have been ruined ; and 
 a wide spread of panic, bankruptcy, insolvency, and com- 
 position, has taken place. 
 Destroyed Q, But you will surely admit that, although there have 
 
 ^^^' been several conspicuous instances of the bankrupt firms 
 
 being solvent, yet some large and imposing concerns were 
 carrying on business without capital, and were found to be 
 in a state of unsoundness and insolvency, which could not 
 last, and ought not to have existed ? 
 
 A. True : but it should also be recollected that it was 
 
 under the influence of the restricted currency of 1819 and 
 
 1844, that those concerns were either fostered without 
 
 capital, or having once had capital, were ruined. 
 
 Gold basis Q, Is it to be understood, then, that you would recom- 
 
 sent cur-^" ^^^ud the abandonment of the gold basis of our currency, 
 
 rency a de- and the Substitution of an unlimited issue of paper ? 
 
 A, As that question involves several grave misappre- 
 hensions, it does not admit of a simple answer. It 
 assumes, erroneously, 1. That we ought to have a gold 
 basis for our currency. 2. That we have such a basis. 3. 
 That it is proposed to substitute a basis which we have 
 not for one that we have. 4. That the combination of 
 rags, lamp-black, and ink, of which a paper currency is 
 composed, forms its basis. 5. That the removal of the 
 restraints with which it is now fettered would cause the 
 quantity of our currency to expand to an unlimited extent. 
 
 6. That if the quantity did increase, it would be injurious. 
 
 7. That without restraint it would be in the power of 
 bankers to issue whatever amount of currency they pleased. 
 
 lusicn. 
 
27 
 I will endeavour to answer each of these points as a Currency a 
 
 distinct question. representa- 
 
 1. Currency is the representative oi value, lo attempt value. 
 to make it represent only one particular commodity is to 
 cripple its usefulness, and consequently to shut out a 
 portion of the willing labour of the country from employ- 
 ment. For, as has been observed, labour cannot be set 
 
 to work in a country in an advanced state of civilisation, 
 excepting by currency ; while currency cannot by pos- 
 sibility be used without employing labour. The very 
 qualities (durability and compactness) which make gold 
 the most convenient article for barter, and an excellent 
 substance of which to form a portion of a currency, (par- 
 ticularly in countries where little confidence or credit 
 exists,) render it very unfit for a basis, because they 
 afford facilities to its being withdrawn. It w^ould be 
 better to use the gold itself for circulation, for then the 
 expense of collecting it would place a wholesome check in 
 the w^ay of its exportation. Land, which is immovable, 
 w^ould be a far better basis than gold, which is so remov- 
 able. Another presumptive reason why it is not neces- 
 sary to have a gold basis is, that we have not got it, and 
 have never had it ; for, 
 
 2. When Sir Robert Peel introduced the bill of 1819, ^''^^^"^ 
 by which the present system of currency was established, hovrcons'ti- 
 he stated it to be mainly upon the ground of the necessity *"tcd. 
 
 of this gold basis ; yet, in introducing that of 1844, he 
 admitted, not only the want of necessity, but the absolute 
 impossibility of carrying it out. He consequently founded 
 the currency upon 14,000,000/. of debt in London, and 
 8,000,000/. of promises to pay in the country ; leaving 
 only the remainder to be based upon gold. Our national 
 debt, funded and unfunded, of nearly 800,000,000/., is 
 not based on gold. It is based upon the whole property 
 of the country, to a portion of which the holder of stock 
 or exchequer bills is guaranteed through taxation. 
 
 3. The whole taxable property of the country then On taxable 
 being really the basis of our currency, and not gold, it is {'he^ountrv. 
 not proposed to substitute any other. 
 
28 
 
 Competition 
 the check to 
 over-issue of 
 commercial 
 currency. 
 
 4. In order to bring ridicule upon a paper currency, 
 those who cannot urg-e a sound argument against it, talk 
 of it as if it represented no nriore value than the pieces 
 of paper of which it is coniposed. Whether sagacity 
 or candour be the more prominent feature in the character 
 of these parties, it would not be inappropriate to ask them 
 the old school-boy question — "Which is the heavier, a 
 pound of lead, or a pound of feathers ?" 
 
 5. It is another popular error to suppose that, if the 
 restraint upon the currency were removed, it would increase 
 to an unlimited extent, and that a limit ought therefore 
 to be placed upon it. This theory rests upon the extra- 
 ordinary supposition that currency creates transactions ; 
 whereas the fact is, that transactions create currency. 
 It is the capitalist that sets the navvie in motion, and the 
 navvie the wheelbarrow ; not the wheelbarrow that drags 
 the navvie. 
 
 G. If anything be artificially kept down, when the re- 
 straining power is removed it will rise, but only to its 
 natural level. Those gentlemen who propagate the theory 
 that currency is different from everything else, and would, if 
 unrestrained, rise to a fearful height, and inundate every 
 thing, might learn a useful lesson from their easy chairs, 
 the cushions of which, when they rise from their own 
 dreams, will rise from their compressed position. As the 
 art of the upholsterer has placed a limit to the swelling of 
 the cushions, so has nature placed a limit to currency. 
 As no currency can exist without employing labour, so 
 when all the labour of the country is employed, the cur- 
 rency will have arrived at its maximum. All increase, 
 until it arrive at this point, must obviously be beneficial and 
 not injurious. 
 
 7. I have explained the impossibility of any banker 
 keeping notes in circulation that are not required by trans- 
 actions, i.e., for the employment of labour. But if there 
 be any doubt upon this subject, an infallible cure is to 
 encourage the existence of several banks of issue, in dif- 
 ferent parts of the country, and they will be efficient checks 
 upon each other. Such a system too will prove highly 
 
rency. 
 
 29 
 
 beneficial, in other respects, as local banks can meet the 
 wants of commerce far more effectually than a central 
 establishment in London, which, as we have seen, can only 
 apply a Procrustean rule, which, in the fever of a panic 
 will strangle or behead a large portion of its patients. 
 
 Q. If the present check were removed, would there Prices reia. 
 not be danger of a large issue of paper, and a consequent **^^*<^'^"^- 
 advance of prices to an inconvenient extent ? 
 
 A, Far from it. Under the present restrictive system, 
 the fear of a scarcity induces many to hoard, and to with- 
 hold their means from active employment. If the re- 
 strictions were removed, and currency could be obtained 
 whenever value was offered for it, this holding back 
 would cease, and the outstanding amount would be all in 
 active and efficient operation, so that the present extent of 
 transactions would be carried on with less currency instead 
 of requiring more. If an extension were required, it 
 would be for the purpose of additional transactions, which, 
 so far from being dangerous, would set additional labour to 
 work, and add to the wealth of the country and the social 
 and peaceful condition of the people. 
 
 To whatever extent it may be carried, so long as the 
 paper represents value, which I consider to be the essence 
 of a currency, it can have no effect whatever upon prices, 
 which are quoted in the government money. The word 
 " issue " seems to mislead the public mind, as if bank 
 notes were sent out like young heroes in nursery tales, to 
 see what they can buy and outbid each other ; or as if 
 bankers dealt them out at the corners of the streets like 
 Dr. Eady's bills. On the contrary, the bank directors and 
 other discounting bankers who have given their opinion 
 in favour, not only of the act of 1819, but of its aggrava- 
 tion or complement in 1844, will be able to give evi- 
 dence that no banker parts with a note until he receives 
 its value in some shape or other. 
 
 The credit of an individual or body may be doubted, 
 and then their paper will not be equal in value with that of 
 one in perfect credit, so that it will require more of it 
 to buy a particular commodity. But even this difference 
 
^0 
 
 Competi- 
 tion the 
 check to 
 prices. 
 
 Supposed 
 
 tlitleronce 
 
 between 
 
 paper and 
 
 gold under 
 
 government 
 
 money. 
 
 Beneficial 
 effect of pro- 
 posed cur 
 rency on fo- 
 reinrn trade. 
 
 does not occur with promises to pay on demand. If 
 doubted at all they are rejected altogether, and immediately 
 cease to be current. 
 
 If, after the removal of the restriction, prices should 
 rise, it will be a clear proof that they have been unnaturally 
 and injuriously kept down. My opinion is that they have 
 been so kept down, and that they will rise upon the eman- 
 cipation of the currency ; but that it will not be to any 
 dangerous or inconvenient extent, will be obvious when 
 we reflect that the same removal of restriction, which it is 
 supposed would open the door to exorbitant prices, would 
 give still greater facilities to competition, to which we may 
 safely look for protection when there is no monopoly of 
 money. 
 
 Q. On your plan of currency, what do you expect would 
 be the difference between the estimated value of the go- 
 vernment paper and gold ? 
 
 A. With the advantages this country enjoys in capital, 
 skill, industry, enterprise, locomotion, and machinery, I do 
 not believe the difference that could practically obtain would 
 exceed the present difference between our existing coinage 
 of silver compared with that of our gold ; that is, the 
 new paper money and the silver coinage would probably 
 circulate at par. This would not be more than one half 
 the difference which existed between paper and gold 
 during the war that terminated in 1815, when gold was 
 free — for it should be borne in mind that, in 181 1, our silver 
 coinage, by Act of Parliament, was 25 per cent, under its 
 present scale ; nor would it amount to so much difference 
 as existed under the legal standard of 1797> when the 
 500 millions of debt created during the war commenced 
 to be contracted. 
 
 Q. Would not the relaxations you propose in the future 
 currency, and a free price of gold, embarrass our Foreign 
 Traded 
 
 A, Quite otherwise ; it would materially facilitate it, and 
 render it reasonably productive to those who labour, and to 
 those who employ capital in manufactures and commerce, 
 which has not been the case of late years. 
 
31 
 
 We deal with the foreigner according to natural value, — 
 that is, value irrespective of our peculiar taxation ; and this 
 natural value is equivalent to gold at the recognised price 
 of the world, namely, at about 31. l^s, lO^d. per ounce : 
 it is at this rate we are obliged to sell our goods abroad. 
 No enactment of our own can bind other countries, or 
 can alter this operation of the open market of the world, 
 excepting to our own prejudice. This disadvantage we 
 have entailed upon ourselves by the mischievous legislation 
 of 1819 and 1844. The exporting merchant would be 
 really protected, and foreign sales would not only be faci- 
 litated, but become profitable to the manufacturer and 
 merchant, if those acts were repealed, and we again had a 
 circulating medium for home purposes that would give him 
 the means of repossessing himself of taxation prices on the 
 conversion of his gold payment into our home currency. 
 Manufacturers would no longer be compelled, by the action 
 of the Bank of England screw, to sacrifice their property 
 in order to force the useless importation of gold into this 
 country. At home we ought always to deal with each other 
 at prices which include taxation with natural value. We 
 cannot deal with each other on a lower scale, and still 
 afford just remuneration to the home producer, who has 
 paid taxation combined with natural value, in the wages 
 of labour. For the benefit, therefore, both of home and 
 foreign trade, we require in this country a circulating me- 
 dium capable of expressing prices so combining natural 
 value and taxation, which gold, from its nature, cannot do. 
 
 Q. What do you expect would be the consequence to Benefits to 
 manufactures and commerce of a relaxation of the restric- f^om sr*-^^ 
 tive clauses of the Acts of 1819 and 1844, and a revert- gested 
 ing to an authorised amount of annual taxation money ? ^^^"ge- 
 
 A, I am confident that in a very short time the staple 
 manufactures of the country would assume a condition of 
 prosperity — artisans and labourers, now idle and dissatisfied, 
 would find employment — wages would rise, as they did 
 during the war, beyond the rise in the prices of commo- 
 dities, while the means of paying them would be propor- 
 tionate — -and what would be of far more importance thnn 
 
 A 
 
 
 
32 
 
 the nominal rate of wages, employment would be more 
 constant and regular. Retail dealers would become pros- 
 perous. The working classes would then be able, as they 
 are already most willing, to second the efforts of the 
 philanthropic (now comparatively abortive) in promoting 
 their religious, moral, educational, and sanatory improve- 
 ment. Useful and practical railways would be carried 
 forward and completed. Harbours of refuge and national 
 defences might be proceeded with. All the classes bene- 
 fited would spend more freely — and the effect of restored 
 confidence, and consequently more readily paid rents, would 
 be to stimulate the purchases of the higher classes to an 
 extent they have not reached for years — while, as a 
 direct result, taxation on its present scale would be consi- 
 derably more productive. Contentment, instead of the 
 scowd of dissatisfaction, w^ould mark the countenances of 
 our artisans, and all calls for such organic changes as 
 those sought by Chartists, by Leaguers, and by Re- 
 pealers, would be neutralised and cease ; and this because, 
 being employed and satisfied, the motive for seeking change 
 would be destroyed. The legislature would be seen to 
 have done justice of itself to all. Class interests would no 
 longer be the bone of contention. Under this system, by 
 the improvement of the revenue derived from customs and 
 excise, there would be no occasion for an income tax ; 
 even without this obnoxious impost there would be a rea- 
 sonable prospect, from surplus revenue, of reducing the 
 INational Debt by some millions annually ; and the public 
 creditors would have no fear of being mulcted by a further 
 reduction of interest. Thus would they enjoy far more 
 security for present income, and be assured against an 
 ultimate repudiation of the National Debt. 
 
 The witness withdrew. 
 
33 
 
 tion. 
 
 Mr. ^ULL further examiiied, 
 
 Q, In your former evidence you have recommended an One-pound 
 issue of 1/. notes. Are you aware that several practical gerya^d^" 
 men object to this on account of the great liability/ to for- deprecia- 
 ^^crT/ f And have you considered this point ? 
 
 A, I have ; and attach no weight to it. I believe that 
 a reference to official returns will show that in times of 
 metallic currency there have been more prosecutions for 
 coining than there have been for forgery under a paper 
 currency : and this although the latter class of prosecution 
 is stimulated by private interest. I also think that there 
 is less loss arising from forged notes than from light sove- 
 reigns, which government allows to be worn down to a 
 considerable extent, and then suddenly compels the unfor- 
 tunate holder, who is no way in fault, to make up the 
 loss. This, practically, falls with double severity upon 
 the poorer classes, who are frequently compelled to pay 
 the tradesmen with whom they deal twice the amount of 
 the real deficiency. But even if there were a greater loss 
 upon the 11, note than upon gold, its advantages would 
 greatly counterbalance it, in as much as it would enable 
 capital to employ the whole industry of the country, 
 which gold, from its limited amount, is utterly unable 
 to do. 
 
 Q. There is another objection to IL notes of a very 
 serious nature, viz. that they take the place of sovereigns, 
 and thus disturb the gold basis of our currency. 
 
 A. I have given my opinion upon what is called the 
 *' Gold Basis." If bank notes be so much more useful 
 that they are preferred to gold coin, and " take its place," 
 why should an arbitrary statute be interposed to prevent 
 their use ? Surely this must be a mischievous interference 
 with trade ; and if applied to any, why not to all bank 
 notes ? It is a glaring instance of Class Legislation to 
 allow to the richer classes the acknowledged convenience of 
 
 c • 
 
34 
 
 notes, and to deny it to the payers and receivers of wages. 
 I have not heard any body attempt to explain why a bank 
 which may safely be trusted for 5/. cannot be trusted for 1/. 
 
 Paper also possesses an important advantage over gold 
 in the case of robbery. The gold once out of the posses- 
 sion of the real owner, is entirely lost to him. Paper, on 
 the contrary, is traceable and recoverable, into whatever 
 hands it may have fallen. Thus it is not only more 
 secure to the owner, but adds materially to the power of 
 suppressing this class of crime. 
 
 But I recommend the use of 1/. notes upon the very 
 ground which you seem to think objectionable, viz. that 
 they take the place now occupied by sovereigns. This 
 they do, and perform the office of a currency much more 
 efficiently and faithfully, never deserting their post in the 
 most trying times, as sovereigns do on the first appearance 
 of danger or profit. The commercial distresses in 1822 
 and 1826 were immediately removed by issues of 1/. notes 
 
 Q, But if you do not acknowledge the absolute neces- 
 sity, you must admit that it was very advisable at the end 
 of the war, to bring back the value of the note to an 
 equality with the gold pound ? 
 
 A, I certainly do not acknowledge any necessity in the 
 case. We throve many years with the inequality, and 
 might have done so still, but for the dabbling of 1819. 
 No more loss arises from a piece of paper being worth 
 20*. and a piece of gold being worth 255., than from one 
 piece of paper being worth 20*. and another worth 40*. 
 At the same time I fully admit it to be very desirable that 
 the two values should be brought as soon as possible to an 
 equality ; not, however, because it would signify one straw 
 whether the pound sterling consisted of three, four, or 
 five dwts. of gold, but because it would indicate that our 
 taxation was reduced to a reasonable level. In short, 
 it is very desirable that our debt and taxation should be 
 considerably reduced, for that is the only way in which 
 the currency of a highly-taxed country can really be 
 equalised with gold. To propose to balance the account 
 in any other way is fraudulent. 
 
35 
 
 The course pursued by the Act of 1819 was not to pay Taxation 
 tlie debt, but to alter the figures ; that is, it said that the j^^erenJe^^ 
 pound sterling, after being- loaded with a taxation of thirty between 
 or forty per cent., should be set down as having- cost no ^nd goM. 
 more than the untaxed pound of former days. The differ- 
 ence still exists, but has been put out of sight by this 
 juggle, and has for the last thirty years been paid by the 
 productive classes, who have thus ever since been pre- 
 vented from bringing it to account against the consumer. 
 Many individuals have been hanged for smaller frauds. 
 Legislatures have too many necks. 
 
 We must not deceive ourselves with the fallacy that Effects of 
 Parliament can by enactment alter value ; it can only alter 
 price. This was the deception practised in 1819 with 
 respect to gold. Before the operation of the system thus 
 established, the taxed paper currency and untaxed gold 
 bore their relative prices in the market, as every thing un- 
 fettered does. An Act of Parliament, therefore, altering 
 the price of any of them, could only interfere to disturb 
 this commercial freedom, and must have acted mischiev- 
 ously. Those concerned in passing the Act, if they had 
 any knowledge of monetary or commercial affairs, or of 
 political economy, ought to have seen that this was the 
 wrong way of going to work. They ought to have 
 known that the proper way was to find out, and remove, 
 the cause of the difference which existed. 
 
 Now, in this instance, what was the cause ? obviously 
 the taxation necessary to pay the interest of our debt. 
 There are two ways of meeting this difficulty — the 
 sponge, or payment. The present Monetary System is fast 
 tending towards the former. I recommend the latter. After 
 much suffering from the contracted scope of our currency, cause oi 
 we had been compelled, in 1797* to throw off the fetters change of 
 of a gold currency, under which the powers of taxation i 
 were exhausted, and the country was within twenty-four 
 hours of bankruptcy, and to extend our paper currency very 
 considerably. With this paper money, being free from the 
 imperfections of gold as a currency, the enormous expenses 
 of the war were defrayed, and the greater portion of our 
 
 0.2 
 
 currency in 
 
 797. 
 
36 
 
 Imagined 
 depreciation 
 a just action 
 of the cur- 
 rency. 
 
 Reduction 
 of national 
 debt possi- 
 ble under 
 system sug- 
 gested. 
 
 Difference 
 between 
 paper cur- 
 rency and 
 gold. 
 
 national debt was contracted ; because, in addition to natural 
 value, tbat currency was capable of expressing taxation to 
 the fullest extent to whicli wealth existed capable of bear- 
 ing it. Moreover, that wealth, so far from being exhausted 
 thereby, was immensely increased by its circulation. 
 
 The fact of this paper being current in this country 
 only, and not marketable over the world, made it subject 
 to, and gave it the power of expressing, our taxation. On 
 the contrary, gold, finding a market everywhere at its na- 
 tural value, could not be subjected to our local taxation. 
 Hence arose the difference between our currency and gold. 
 Interested parties who wished to establish a monopoly in 
 money for their own benefit, called this a depreciation of 
 the paper, implying that it was of less value than it pro- 
 fessed to be, and that the credit of the country had suf- 
 fered from its issue, in which there was not the slightest 
 truth. It was a wholesome difference, and so far from 
 doing any harm whatever, was the only means of doing 
 justice to the producers, who in no other way could obtain 
 from the consumer repayment of the taxes they had paid. 
 Under these circumstances it ought to exist, until its cause 
 (the national debt, and consequent heavy taxation) are suf- 
 ficiently reduced. The arbitrary fixation of the price of 
 gold, so far from forwarding this object, has seriously re- 
 tarded it. Before 1819 we had an annual surplus for 
 paying off debt at the rate of 15,000,000/. per annum. 
 Since that time scarcely any portion has been cleared off, little 
 more than a million a year on the average ; the taxation 
 has become more and more burdensome ; and for the last 
 three years our expenditure has exceeded our income. 
 
 I beg to hand in an excellent letter from the late Sir 
 Robert Peel in 1826, well-suited to the present time. 
 (See Appendix A.) 
 
 Q. In your former evidence, you stated that one of the 
 consequences of the course you recommend would be, that 
 the paper pound in our currency would no longer corre- 
 spond with the gold pound. Would not great inconve- 
 nience arise from this difference ? 
 
 A, On the contrary, it would be attended with great 
 
37 
 
 advantages both to our home and our foreign trade. The 
 paper pound would encourage productive industry, by en- 
 suring a remunerating price for labour. The increased 
 labour thus stimulated would ensure an abundant supply of 
 products to the consumer, and secure him at all times 
 against excessive prices. It would ensure the revenue by 
 the increased production and consumption of exciseable 
 commodities. It would increase and render more profit- 
 able our foreign trade, by enabling us to deal with the 
 foreigner upon the principles of pure barter, or value for 
 value, uninfluenced by the taxation which enters into the 
 cost of production in this country, and of which, by means 
 of the gold pound, the foreigner now obtains so large a 
 share. The benefit that would arise from returning to the 
 system pursued in our prosperity, and allowing gold to be 
 dealt with like other commodities, instead of being pri- 
 vileged above all, would recur at every dealing or exchange, 
 and would thus multiply in perpetuity. Gold would then 
 fall into its proper place as a useful servant of commerce, 
 not its master; its ultimate end would no longer be to 
 make all other wealth pay tribute to it at the rate of 
 tweyity-eight hundred per cent, 
 
 Q. Are you not aware that Parliament has declared What is 
 that " a Pound is a certain definite quantity of gold, with ^°"" 
 a mark upon it to determine its weight and fineness ; and 
 that the engagement to pay a pound means nothing, and 
 can mean nothing else, than the promise to pay to the 
 holder, when he demands it, that definite quantity of 
 gold ? " Also, that the present laws are founded upon 
 that conviction ? 
 
 A. I recollect that the House of Commons did coun- 
 tenance such an opinion, absurd as I shall show it to be. 
 I concluded, at first, that it must have referred to the Pound 
 Troy ; because to apply it to the Pound Sterling is neither 
 according to history, nor tradition, nor to the ancient mo- 
 netary system of the country ; nor is it in any respect true, 
 but evident nonsense, and calculated to mislead. Never, 
 until the year 1816, was gold the measure of the pound 
 sterling at all. And with regard to their relations to each 
 
 c 3 
 
88 
 
 other, there have been twenty- two alterations in the me- 
 tallic value of the pound since the commencement of the 
 reig-n of William I. 
 
 The natural value of gold varies but little. Hence it 
 has been universally adopted as the best measure of value. 
 Under our present monetary system its price is artificial, 
 and it varies considerably. It defeats the very object for 
 which it was established. Former Sovereigns and parlia- 
 ments altered the quantity of the precious metals in a 
 pound according to their altered values, and were com- 
 pelled to make those alterations whenever that value came 
 to vary much from the standard previously fixed. It 
 remained for the wisdom of our legislators of 1819 to fix 
 an arbitrary price in defiance of value ; and not only to 
 defy the law of supply and demand, but, in direct oppo- 
 sition to it, to fix a low price, to discourage a supply, and 
 to compel a demand ! 
 
 With respect to the assertion, that " every body who 
 has contracted to pay a pound has engaged to pay 5 dwts. 
 3 grs. of gold," it has no foundation luhatever, either in 
 law, or custom, or theory, or practice. Nobody ever did, 
 or does, intend any such thing, unless where expressly 
 stipulated in a contract ; and I doubt if such a contract 
 exist. Supposing such a practice to be established, it 
 would at once annihilate nine-tenths of the trading transac- 
 tions of the country ; we should fall back from civilisation, 
 and sink into poverty. If the present laws be founded 
 upon any such absurdity, the sooner they are repealed the 
 better. What debtors do promise to pay, is a certain 
 amount in the legal currency of the country. 
 Act of 1819 To raise the price of the currency, therefore, as was 
 in'opera"' ^loue by the Act of 1819, is a glaring fraud upon the 
 tion. debtor class of the community ; a class which does not 
 
 consist, as some dupes of the Bullionists imagine, of the 
 insolvents, but comprises the industrious producers who 
 make beneficial use of the accumulated capital which would 
 otherwise be useless. 
 
 It should be borne in mind that the intention of cur- 
 rency is to represent value, without regard to the shape in 
 which that value may exist. It is nothing short of stu- 
 
39 
 
 pidity or dishonesty to say that it is intended to represent 
 gold alone. While saying this, I am aware that there are 
 some who say that gold is ordained by Providence to be 
 the currency of the world, and seem to think it profane to 
 talk of any other ; although, in practice, they acknow- 
 ledge the usefulness and safety of bank notes. These poor 
 people, however, I consider harmless, compared to those 
 who coolly blame Providence for their own blunders. 
 
 Q, Would you, then, advocate an unlimited issue of Regulation 
 paper, and no regulation of the currency ? "gncv, ^""^ 
 
 ^. Why should it be limited? I have before shown 
 that, if left to itself, on the basis of property, it cannot ex- 
 pand injuriously. Distress has invariably attended every 
 limitation, and prosperity as invariably every removal of 
 it. The occasional low rate of interest arising out of the 
 present fettered system, will tempt people to unwise spe- 
 culations more frequently than the steadier rates of an un- 
 fettered supply. 
 
 But supposing any control or regulation of the currency 
 were desirable, it would be difficult to find a more inju- 
 rious way of applying it than fixing the amount. 1 . That 
 which suits one period will not suit another ; 2. The 
 same amount of currency at one time will do much more 
 business than it will at another, according- to the activity 
 of its circulation ; 3. That activity is very much crippled 
 by a limitation of the total amount ; 4. If nearly the full 
 extent of the prescribed quantity be out, it naturally pro- 
 duces panic, and a fear that there may not be enough ; and 
 the consequence is, that the more it is wanted the more it 
 is hoarded and kept out of circulation ; .5. This producse a 
 fluctuation not only incompatible with, but antagonistic to, 
 the requirements of trade ; 6. This uncertainty is even 
 worse than the actual limitation; for when a man has 
 entered upon a most beneficial speculation, it frequently 
 happens that he is stopped in the middle of it, and ruined. 
 
 In fact, the phrase ** unlimited issue" is one of those currency 
 bugbears invented by the Bullionists to frighten the ig- representa- 
 norant, and deter them from inquiry. The truth is that, pJrVor °" 
 bearing in mind the real nature of currency, (viz. that it is capital. 
 
 c 4 
 
40 
 
 the exchangeable representative of property,) it will be 
 obvious that it cannot be over-issued. Its issue is natu- 
 rally stopped when there is no more capital to be repre- 
 sented, or no more labour to be employed. It is not the 
 over-issue of currency, but the issue of a rotten paper 
 under cover of its name, which is the real subject of dread, 
 although these philosophers are not aware of it. Now, 
 nothing is more productive of this false and unsound cir- 
 culation, than the denial of a legitimate currency. Capital 
 and labour are constantly struggling for employment, and 
 if denied the natural means of doing so by bad and arbi- 
 trary laws, they will, even at great risk, seek some other. 
 Hence arises the great quantity of unsound private paper 
 now attempting to do the duty of the sound currency 
 denied us by the acts of 1819 and 1844. 
 Money and Q' You sccm to attribute the evil entirely to the con- 
 capitai. dition of the currency. Are you aware that it has been 
 stated that it was not Money but Capital that was wanted ? 
 jl, I am aware of such an assertion having been made, 
 but am at a loss to comprehend it, or to see how it applies 
 as an answer to parties urging commercial distress. Those 
 who use it as an argument in support of the present re- 
 strictive monetary system stultify themselves ; for, if it 
 be true, it is under this system that our capital, formerly 
 so abundant, has dwindled to so low an ebb. Besides, 
 whichever were deficient, the obvious remedy would be, 
 as far as possible to supply the deficiency, — not to dis- 
 courage industry, and thereby withhold the only means of 
 reproducing. 
 Commercial Q. Do you think that the legislature would be justified 
 distress. jj^ departing from principle to relieve commercial distress, 
 however extended ? and is it not better to adhere to 
 sound principles, and to allow individuals to suffer for their 
 imprudence, however great that necessary suffering may 
 be, until trade has recovered from the shock ? 
 
 A, First, it is necessary to ascertain that the principle is 
 sound. When the distress is so severe, and so general, as 
 it has been for the last twelvemonth, it would be natural 
 to suppose that even the most bigoted would begin to 
 
41 
 
 suspect that there must be something wrong m the system 
 under which it arose. I have aheady shown that the 
 principles adhered to in this instance are unsound ; that 
 the wide-spread ruin and distress have not been produced 
 by the imprudence of the parties, but by legislative 
 tinkers ; and that trade and industry cannot return to a 
 healthy state under their present restraint. An obstinate 
 refusal to listen to common sense must not be confounded 
 with an adherence to principle. 
 
 Q, You profess to object to class legislation ; but in The agri- 
 the whole course of your evidence, although you have p"i'"|"^f^jnt 
 urged much on behalf of the merchant and manufacturer, scathed. 
 you have not once mentioned the agriculturist. If your 
 system apply only to particular classes, how will it relieve 
 the distress, which is general ? 
 
 A, It is true that I have not mentioned the agricultu- 
 rist ; but it does not follow that I have not been thinking 
 more of his interest than he has of his own. He is at 
 present apparently well off, in consequence of high prices 
 induced by a short crop, and does not see the danger that 
 awaits him. The present monetary system is undoubtedly 
 class legislation, being supported only by discounting 
 bankers, and other interested parties. That which I re- 
 commend has every chance of being otherwise, because it is 
 entirely inartificial, advantageous to all, and founded upon 
 the natural course of events, and upon the practice of this 
 country in times when it was prosperous. It is true that 
 under the most impartial plan of operations, some will 
 benefit more than others, although they may be so short- 
 sighted as not to see their own interest. In the present 
 case, for instance, there is a conspicuous class of persons, 
 and among them a particular individual, who would de- 
 rive incalculable advantage from adopting the course which 
 I recommend. Their blindness, indeed, in resisting so 
 just and advantageous a course, and in hugging the chains 
 which are daily heaping disgrace and difliculties upon 
 them, is almost inexplicable. 
 
 The parties to whom I allude are Her Majesty's minis- Finance 
 ters, and especially the Clmricellor of the Exchequer. How c"catc ufeir 
 
42 
 
 owndifficul- one in such a position, with such difficulties around Jiiui, 
 with so palpable an opportunity before him of doing justice 
 to all classes — of allaying discontent — of paralysing 
 chartism, leaguism, direct-taxism, and repealisai * — of 
 increasing the revenue, and rendering all questions of in- 
 come tax unnecessary — can obstinately oppose himself 
 to this obvious interest of himself and friends, is almost 
 incomprehensible. There seems little doubt but that any 
 ministry, stepping forward at the present time to relieve 
 industry from the trammels of ** regulation " and usury, 
 would acquire such a hold upon the gratitude of the 
 country, that their peaceable possession of office for the 
 next twenty years, under the most ordinary attempt at 
 good conduct, would be all but certain. It is a lamentable 
 evidence of the dearth of talent among our rising men, 
 that nobody has yet occupied this righteous and obvious 
 ground of success ! 
 
 Q. Are you acquainted with the fact, that several 
 Bank Directors and other Bankers hold opinions upon this 
 subject opposite to yours ? 
 
 ^. I am. But those who enjoy a monopoly are not 
 the most likely to advise its dissolution. Moreover, bank- 
 ers are not the best judges of commercial affairs. From 
 the nature of their occupation, their minds are too much 
 confined to a narrow view of the subject. They think 
 there is nothing like leather. On the other hand, I have 
 testimony of far greater weight in favour of the opinions 
 Example of I havc explained, viz. — the whole of Europe. On the 
 nrtVonl"^^'^ late outbreak, the first step of almost all the Govern- 
 ments (Old, New", and Provisional) was to enlarge the cur- 
 rency, and to establish discount banks. Those which did so 
 have stood their ground for the time. This is a convinc- 
 ing proof, not only of the prevalence but of the correct- 
 ness of the opinion, that industry has been injuriously 
 fettered. 
 
 Our blind infatuation in refusing to attend to so awful 
 a warning, (backed as it is by private ruin, misery, discon- 
 
 Opinions 
 of some 
 bankers- 
 
 * Ay, and of averting rebellion in Ireland without an army. 
 
tice. 
 
 43 
 
 tent, and turbulence at home, and by the fearful fact of 
 the increasing calls for radical changes, however ab- 
 surd their form,) almost forces the reflecting mind to the 
 conclusion, that this country has entered upon that pre- 
 paratory state which, it is said, Providence has appointed as 
 a prelude to destruction. 
 
 Q. [By a Member.] I admit, indeed I believe it is now Unfounded 
 generally acknowledged, that a great injustice was com- ^|^|",J"^^"* 
 mitted in 1819 by the alteration of prices consequent doinrrjus- 
 upon the fixing the price of gold. But that evil has 
 passed away ; all contracts and transactions have now ad- 
 justed themselves to the new state of things ; the injured 
 parties are dead and gone ; and it would be a greater in- 
 justice to revert the standard as it existed in 1797' It 
 is therefore considered not only more prudent, but more 
 equitable, to allow the currency to remain in the state 
 into which it has settled down rather than again to dis- 
 turb it by repealing the Acts of 1819 and 1844. 
 
 A, The fancy of the honourable member has evidently i"jurwus 
 been caught by one of the clap-traps of the Bullionists, and Act of 1819 
 he has consequently not given himself the trouble of five Jj'^t every 
 minutes' reflection upon it ; otherwise he could scarcely ^^' 
 have failed to see that he is not at all aware of the effects 
 of the measure of 1819. That Act, when it fixed the 
 price of gold at its natural value, i, e, at a price so low 
 that it did not bear or represent any part of our indirect 
 taxation to which every other commodity whatever is sub- 
 ject, not only committed an extensive robbery of all those 
 then indebted, for the benefit of the bullion dealer, but 
 established a system by which all those who might there- 
 after become indebted should be defrauded in the same 
 way. In short, however serious the retrospective effects 
 of this measure may have been, its principal and profess- 
 edly its only object was its effiect for \he future. 
 
 Unless, therefore, those who say that the wrong which 
 was committed in 1819 has passed away, can show that 
 the Act then passed was merely an arbitrary regulation 
 of existing contracts, and not a system for the future re- 
 gulation of the currency, as it professed to be, they prove 
 
44. 
 
 that the conclusion they draw, that the "evil has passed 
 away," is fallacious. It was a system of injustice, which 
 has not passed away, but is still in operation, and becoming 
 more and more oppressive. 
 
 If the Act of 1819 did not make some provision for 
 the future regulation of the currency, then was it one of 
 the greatest frauds that was ever perpetrated upon the 
 public, introduced under false pretences, and working a 
 great wrong without any prospect of benefit arising from 
 it. 2. If it did make those provisions, and they have 
 actually failed, so that the whole of its effects have passed 
 away with the past explosion, then was it one of the most 
 clumsy and inefficient measures ever proposed to Parlia- 
 ment. 3. It is notorious, however, that neither of these 
 two positions is the correct one ; but that the Act of 1819 
 was confessedly a measure for the future regulation of 
 Aggravated the currcncy ; and that the Act of 1844 was passed to 
 by Act of stimulate and perfect it. That it has continued to work 
 its effect, whether for good or for evil, is clearly proved, 
 both by those who condemn it as being the cause of great 
 evils, and by those who consider its maintenance of far 
 greater consequence than the welfare of the English 
 operatives, the lives of the Irish peasantry, or the peace 
 and security of the country. 
 
 In fact, the injury and injustice committed in 1819 were 
 but a trifle compared to the amount of that which the 
 measure has been in the constant unmitigated habit of in- 
 flicting ever since. The thousands of persons and millions 
 of property which have been sacrificed to this great Bena- 
 muckee of the Bullionists, attest that the evil has not 
 passed away. On the contrary, it is visibly increasing, 
 and will increase with the increase of the population, and 
 the competition of other countries. 
 
 The restoration sought by the free currency-men is not 
 a restoration of the losses inflicted upon thousands of their 
 fellow subjects ; but the restoration of their natural right 
 to do as tbey please with their own property, and to 
 manage their affairs in their own way. It is not a re- 
 storation of the stolen property, but a protection against 
 
45 
 
 future robbery ; not a compensation for damages, but the 
 abatement of a nuisance. 
 
 If, therefore, the only pretence left for refusing an Buiiionists 
 equitable consideration of the question is that contained in th'^^seives. 
 the present question, the defenders of the Acts of 1819 
 and 1844 prove themselves to be in the wrong, and that 
 their position is untenable. 
 
 Q. TBy a Ri^ht Hon. Member.] It is, however, con- Comparison 
 
 .1 1111 1 1 'i. of the two 
 
 sidered by those who support the present system, that it systems. 
 is much better to have a limited amount of currency based 
 upon gold, than an unlimited extent of fictitious credit. 
 How do you answer what appears so reasonable ? 
 
 A, It is not necessary to enter upon any argument on 
 that abstract position. It will be enough at present to 
 state that it has no reference whatever to the question 
 before the Committee. It must be either gross ignorance 
 and inattention to what has occurred upon the subject, or 
 wilful misrepresentation, which attributes to the Anti-Bul- 
 lionists a desire to establish a basekss currency. 
 
 Of the present currency under the Act of 1844, which 
 the Buiiionists impudently assert to be based upon gold, 
 22,000,000/. are notoriously based upon nothing but 
 credit ! It is one of the leading objects of the A nti-Bul' 
 lionists that all the currency should be founded upon pro- 
 perty, and none upon mere credit. The currency they 
 recommend, therefore, is more secure than that of the 
 Buiiionists, and more capable of maintaining its " conver- 
 tibility." This is one difference between the two opi- 
 nions. 
 
 Moreover the Anti-Bullionists desire that the currency 
 should be founded upon the broad basis o^ property, which 
 would extend its use to all capitalists, without favour to a 
 particular class. The Buiiionists, on the contrary, wish 
 its foundation to be confined not only to one commodity, 
 but that the monopoly of its use should be bestowed upon 
 a few privileged individuals, with full power to pillage the 
 rest of the community at the rate of 10, 15, or 20 per 
 cent, per annum. This is another difference between the 
 two opinions. 
 
46 
 
 Tlie Anti-Bullionists consider this restriction, this mo- 
 nopoly, and this extortion, not only an injustice committed 
 against the great hody of the people, but a serious shock 
 upon commerce, and a glaring instance of hypocrisy in 
 men who profess to be advocates of freedom of trade ; 
 and they point to the fact of the Bullionists having de- 
 stroyed ^50,000,000/. of property during the last year, 
 to bring back 9,000,000/. of their darling bullion, and 
 to the serious check this has given to trade, as a striking 
 condemnation of their system. The Bnllionists, on the 
 other hand, (or, at least, so says their champion,) rejoice 
 in this devastation, and applaud themselves when they 
 chucklingly tell us that the pressure is the most whole- 
 some thing in the world for us, and they are glad to see 
 it ! They uphold their system because of the injury it 
 does to trade ! This is a third difference between the two 
 opinions. 
 
 One great error of the Bullionists' argument lies in the 
 absurd fallacy that there is no shape in which wealth can 
 exist but gold, which is in fact little more than a repre- 
 sentative of wealth after all, for no one eats it, drinks it, 
 or clothes himself in it. To correct the evil effects of that 
 error, little else is wanting than to allow gold to be dealt 
 with like any other commodity. 
 Convert!- Q, But has it not been shown that the Bank of Eng- 
 
 ^^^^^y"^ land, even in the most extreme case that has occurred, 
 could have paid in gold all their notes that had the most 
 remote chance of being presented ? Is not this an assu- 
 rance of the convertibility of the note to the greatest prac- 
 tical extent ? How then can you make out that by the 
 Anti-Bullion plan it would be more secure ? 
 Depositors ^' I would submit that although it has been asserted 
 in jeopardy, that the Bank of England could have paid all their notes 
 in gold, it IS, very far from proved. Assuming, however, 
 for argument sake, that they could have done so, it is 
 clearly shown by those who make the above assertion, that 
 this payment of their own note liabilities must have been at 
 the expense of their depositors, who, had they come the 
 day after, would have found no gold left for them ; — had 
 
47 
 
 they come the day before, would have rendered the bank 
 note utterly inconvertible. 
 
 Thus, it will be obvious that this pretended " conver- 
 tibility " of the note is based upon a premeditated fraud 
 and robbery of the depositors ; just as the credit of the 
 Bank of England, under the Bullionist system, is sup- 
 ported by taxing- the community at large, (who are, by the 
 common law of the land, as much entitled to exchange 
 their commodities as the holders of bullion,) to the extent 
 of 8, 10, 15, or SO per cent, per annum, and by the de- 
 struction of the property of others to twenty-eight times the 
 amount of that which is required for their own preser- 
 vation. 
 
 The witness withdrew. 
 
48 
 
 Third Examination of Mr. Bull. 
 
 Common^ First Report, 
 
 First Re- Q» Have jou read the First Report of the Committee 
 
 port on Na- qj^ National Distress, and the evidence taken before it ? 
 
 tional Uis- y/ T 1 
 
 tress. ^. 1 have. 
 
 Q, Have you seen any thing in the evidence to induce 
 you to change the opinions expressed in your former 
 evidence upon the subject ? 
 
 ^, Nothing whatever. But I see much there to con- 
 firm and strengthen them. There are, it is true, opinions 
 given by some three or four w^itnesses in favour of the 
 present restrictive system of currency, as contained in the 
 Acts of 1819 and 1844, the legislation of 1844 being, 
 in point of fact, the realisation of 1819; but they are 
 entirely unsupported by facts, and are neutralised by ad- 
 verse admissions these witnesses were constrained to 
 make. These opinions proceed only from the mono- 
 polists, in whose favour the restrictions were created, 
 viz. — three Bank of England Directors, and one large 
 discounting provincial and London banker (reputed to be 
 the author of the bill of 1844) ; while thirteen witnesses 
 utterly condemn those acts, and adduce indisputable facts 
 in confirmation of their opinion. 
 
 Notwithstanding this, I find that the first Report states 
 that the preponderance of the evidence is in favour of the 
 present restrictive system. No reliance, therefore, can be 
 placed upon the statements of this Report itself. Indeed 
 a consideration of the proceedings will show that its adop- 
 tion had little reference to the evidence, but it was per- 
 verted to a party purpose, and was supported only by those 
 who had either taken part in the original passing of th( 
 Act of 1844, or had pledged themselves to its support 
 some of whom had not heard any of the evidence. Al 
 those who had not been perpetrators or accessories of this 
 great commercial crime voted against its continuance. 
 
49 
 
 Q, Does not the general concurrence of opinion among Failure of 
 the witnesses, " that the primary cause of the distress was ^^^''^use of 
 the deficient harvest, especially the potato crop in the year distress. 
 1 846, and the consequent necessity of providing the means 
 of payment in the year 1847, for the unprecedented im- 
 portation of various descriptions of food which took place 
 in that year," in any way shake your confidence in your 
 own views ? 
 
 j1. I can see no such ** general concurrence." There 
 were seventeen witnesses examined, and of them thir- 
 teen testified against the existing legislation. But even 
 if there had been that general concurrence, or there 
 had even been an entire concurrence of opinion, it would 
 only have shown the incompetency of the witnesses to 
 judge on the subject ; it could not have altered the im- 
 mutable laws of nature. The natural tendency of a de- 
 ficient harvest in one year is not to depress or cripple com- 
 merce, but to stimulate and extend it, as the only means 
 of supplying the deficiency. This, in fact, is the advantage 
 which civilisation has over barbarism to escape famine ; and 
 this would have been the result of the late scarcity, had 
 there not been laws in existence calculated and intended 
 to check commerce — or speculation, as it is called by the 
 anti-commercial statesmen of the present day, with a view 
 to throwing a slur upon it — by limiting the means of 
 carrying it on. This is illustrated in the resolutions Resolutions 
 moved as an amendment by Mr. Cayley in opposition ^^\^^^ 
 to those of the Chancellor of the Exchequer, and is Spooner. 
 corroborated by the resolutions of Mr. Spooner. In 
 the first place we limit the currency (which ought, 
 when required to be able to represent the value of any 
 kind of wealth,) to the amount of gold which may be ac- 
 cumulated in a few favoured spots ; and next, having 
 given this gold the sole monopoly of supplying currency 
 to the country, we have not only repealed all the laws 
 which formerly forbade its exportation, but actually enforce 
 its sale below its market price. Can it then be wondered 
 at, with this bribe held out, that when something must be 
 exported to purchase corn from abroad, this low-priced ar- 
 
 D • 
 
50 
 
 Scarcity in 
 1800. 
 
 Present 
 system ob- 
 structs com. 
 merce. 
 
 Price of 
 cotton; rail- 
 ways and 
 Eastern 
 trade not 
 causes. 
 
 Cotton. 
 
 tide, gold, is selected by the exporters in preference to 
 our manufactures, until the manufacturers are starved into 
 parting with their goods at a loss ? or can it surprise us, 
 that if the currency is to be diminished to the extent of 
 this withdrawal of gold, commercial distress ensues ? 
 
 Scarcities have frequently occurred before the existence 
 of the present money laws, and have never been attended 
 by commercial distress. That in 1800, when corn on the 
 average of the year rose to 118*. per quarter, was much 
 more severe than that of 1846, but produced neither 
 panic nor commercial distress. 
 
 That the present currency and banking laws do check 
 commerce — for all commerce is speculation — is admitted 
 on all hands ; and it is marvellous how such anti- commer- 
 cial statutes should ever have been passed in this trading 
 country, or should be tolerated two years ! The sup- 
 porters of those measures confess this to be their express 
 object in maintaining them ; colouring their views, how- 
 ever, under the flimsy pretext that it is only undue specu- 
 lation they wish to check. What right has any govern- 
 ment to interfere with the nature of the speculations of 
 individuals, or wherein does the wisdom of such policy 
 consist ? who is to define what is undue ? how shall they 
 impart to their crippled currency, or to the favoured de- 
 positories of it, the discernment, the inducement, and the 
 power to prevent the effects of their screw acting much 
 more frequently and more severely upon the due than upon 
 the undue, — the former being the more numerous, and al- 
 ways involving something to lose ? 
 
 Q, Do you think, as some do, that the deficient supply 
 of Cotton, the diversion of capital from its ordinary em- 
 ployment in commercial transactions to the construction of 
 Railroads, the undue extension of credit, especially in our 
 transactions with the East, and exaggerated expectations 
 of enlarged trade, have contributed to the distress ? 
 
 A, First, Cotton has been scarce and plentiful, high and 
 low in price, and has borne as much fluctuation as most 
 articles; bringing advantages and disadvantages, from time 
 to time, to those who deal in it, without producing any 
 
general derangement of trade ; its depression, moreover, 
 below a remunerating price to importers, is owing entirely 
 to the action of the currency, which the Governor of the 
 Bank of England shews necessarily lowers all things in the 
 market, in order to command the gold. The reduction of 
 the manufactured article must lower the price of the raw 
 material. If, however, it be thought that the scarcity of 
 cotton (the dealings in which are confined to a particular 
 trade) has on this occasion contributed to that effect, it 
 should be borne in mind that its price during the year 
 1847 varied only 50 per cent., while that of money during 
 the same period varied 200 per cent. The pernicious 
 effects, therefore, of a scarcity of money, " which enters 
 into all transactions," must have been much more exten- 
 sive than those arising from a scarcity of cotton, which 
 occupies httle more than half a million of hands. I was 
 consequently surprised on looking over the Report to see 
 no mention made of any witnesses having grappled with 
 this important fact. 
 
 Secondly, The diversion of capital, as it is called, from Railways, 
 its ordinary employment in commercial transactions to the 
 construction of Railroads, if it have any meaning, or had 
 any bearing upon the question, must have had the very 
 opposite effect ; it must have tended to relieve the com- 
 mercial and agricultural interests from a portion of that 
 capital which was too abundant to enable it to obtain an 
 adequate return, and to have lightened that accumulation 
 which has been stigmatised with the mistaken name of 
 " overproduction." It is not capital that has been wanted 
 during the present distress, notwithstanding the enormous 
 quantity that has been sacrificed to a vicious theory ; but the 
 permission and means of using capital, which would have 
 been afforded by a free currency. The diversion of capital, 
 from one useful employment to another, may produce in- 
 convenience and loss to some, but cannot create a general 
 panic or distress. No distress arose until the new em- 
 ployment was stopped, when immediately thousands w^ere 
 delivered up to ruin and starvation. 
 
 Thirdly, The undue extension of credit has been forced Undue 
 
 D 2 • * 
 
52 
 
 Alleged 
 over-trad- 
 ing. 
 
 No steps 
 have been 
 taken by 
 parliament 
 for relief. 
 
 Abandon- 
 ment of re- 
 striction on 
 money the 
 only relief. 
 
 upon the commercial and trading portion of the community 
 by the laws withholding from them a legitimate currency ; 
 and that crying evil would be in a great measure cured by 
 their repeal. 
 
 Fourthly, Exaggerated expectations of enlarged trade 
 (which, in the present instance, were excited and encouraged 
 by the Ministry and several prominent statesmen of the day) 
 would of course be likely to injure those who acted upon 
 them, and their connections. But this would in no way 
 produce general commercial distress, or affect those un- 
 connected with such transactions, as the present state of 
 things has done with tens of thousands of persons, and to 
 the amount of many millions of property. 
 
 §. Do you then doubt the agency of these causes in 
 producing the effect in question ? 
 
 ud. The considerations I have suggested will show that 
 none of these causes can account for the " recent," and 
 present (for it still continues) " commercial distress." 
 
 Q. Do you give this answer after having referred to 
 the evidence taken before the committee ? 
 
 A, Yes. A reference to the evidence shows it to be 
 at absolute variance with the Report. 
 
 Q. Are you aware that with regard to some of the cir- 
 cumstances referred to in the Report as the causes of the 
 commercial distress, provision has been already made by 
 parliament, and that others are beyond the control of legis- 
 lative enactment ? 
 
 A, I am not aware that Parliament has done anything 
 whatever to remove the causes of the commercial distress. 
 If they think they have, they deceive themselves : if they 
 say so, they deceive others. 
 
 But the change recommended by thirteen out of the 
 seventeen witnesses called before the committee, is also 
 desired by the productive classes of the community, and is 
 advocated by almost the entire press of the country, except- 
 ing the well-known organ of the usurers. This is not 
 beyond the control of the legislature, requiring simply the 
 repeal of the restrictive clauses of the acts of 1819 and 1844, 
 This would give fai more freedom to trade than the entire 
 repeal of the Excise and Custom duties, even if that mea- 
 
53 
 
 sure were responded to by foreign nations, which of course 
 it never will be. 
 
 Q. An opinion has been expressed that earlier steps 
 in the autumn of 1846 and spring of 1847, on the part 
 of the Bank of England, might have obviated the neces- 
 sity for the more stringent measures which circumstances 
 compelled the Directors to adopt in April, and might thus 
 have prevented the alarm which was caused by those 
 measures and the long-continued panic. What is your 
 opinion upon this point ? 
 
 A, The circumstances which compelled the Directors panic, 
 to apply the screw in April 1847 were not of a natural Apnii847. 
 or commercial nature, but were purely legislative blunder- 
 ings. They were simply these, that the acts of 1819 
 and 1844, after compelling the Directors to part with 
 their gold below its market price, (^. e. for less than the 
 price at which the manufacturers can sell their goods 
 with a profit,) forced them to reduce the circulating cur- 
 rency of the country to the extent to which they had thus 
 bribed the foreigner to take their gold, thus preventing 
 the manufacturer from holding his goods until he could 
 obtain a better price, and forcing him to sell at a loss. 
 
 Q, What is your opinion of the effect of the act of Effect of 
 1844 upon the obligation of the Bank to look beyond the ^^\^l^^l^ 
 pecuniary interest of its proprietors, and to consider the duct of the 
 public interest ? ^^"^• 
 
 A, There is no enactment upon the subject : some of 
 the vague expressions used by the Right Hon. Baronet 
 who introduced the bill, have been quoted as exonerating 
 the Bank from all considerations excepting that of obtain- 
 ing as much profit out of the public as possible. 
 
 But I am clearly of opinion that the Bank of England, 
 
 having sold their consciences to the ministers of the 
 
 day, and assisted in deluding the public by promising to 
 pay all their notes in gold at the present Mint price, which 
 they knew to be impossible, and having in return received 
 a profitable monopoly at the expence of the commerce of 
 the country, with the mischievous power of " exercising 
 great influence over the general mercantile and monetary 
 
 D 3 • 
 
54 
 
 transactions of the country," are in equity called upon to 
 comply with its wishes, a duty which I believe the Bank 
 has never disclaimed. 
 
 I am far, however, from thinking that this arrangement 
 is the most beneficial for the public interest ; but as it 
 would take up too much time to enter at large upon this 
 part of the subject, and as it does not necessarily relate to 
 the inquiry before the committee, I merely throw it out 
 at present as a hint. 
 
 I have no doubt of the permanent interests of the Bank, 
 if it were unshackled and unhampered by injurious mo- 
 nopolies, being identified with those of the public at large. 
 But, judging from reason, and from the experience of 
 notorious facts, I do not think that, under present circum- 
 stances, those interests are so identified. 
 Interference Nor, cvcu supposiug that identity to exist, do I think 
 of pariia- that it would of ncccssity " insure an enlightened adminis- 
 trade inju- tratiou of the affairs of the Bank." Experience would 
 rious. lead to a very different conclusion. I am aware that it is 
 
 a kind of axiom with political economists that men will 
 always do that which is best for their own interest ; but 
 every day's experience tends to disprove this. The econo- 
 mists themselves indeed are foremost to do so. The 
 favourite defence — the Fauxhourg St, A.ntoine — the 
 Pire-la- Chaise^ of these political wiseacres in support of 
 a restrictive currency, is that if the public were allowed 
 to manage their own affairs, they would infallibly violate 
 this axiom and ruin themselves. They therefore argue 
 that the ignorant merchants, manufacturers, farmers, and 
 tradesmen, of this country require a nurse to keep them 
 out of the fire, and they have the modesty to offer them- 
 selves for the place. They assume that a trading corporation 
 in London can manage the affairs of a Liverpool merchant 
 better than he can himself ; that a parliament can predict 
 better in 1844 what will be wanted in 1848 or 1858 
 than those who may experience those wants when the time 
 arrives. 
 Blunder of But ouc of the most remarkable instances which history 
 ceUo^^oT" ^^^^' ^*' ^^^^^ \i^Ye, to record of a man acting adversely to 
 
55 
 
 his own interest, is now manifest before the Committee, the Ex- 
 Looking round to the vast and extensive benefits that chequer. 
 would be conferred by removing the fetters now placed 
 upon our currency, and restoring it to its natural and 
 honest state of freedom, ramified as those benefits would be 
 into every corner of the British empire, there is no man 
 who would be more benefited by the abolition of the present 
 dishonest system of currency than the Chancellor of the 
 Exchequer. Yet, judging from the published proceedings 
 of the committee, and debates in Parliament, he seems to 
 be the man who is most strenuous in supporting this enor- 
 mous job. All this, too, when no one accuses him of 
 deriving, either publicly or privately, the slightest advan- 
 tage from it ; but, on the contrary, it is notorious that his 
 family have been for a long period suffering a loss of many 
 thousands a year in the unnecessarily depressed price of 
 an important mineral production which they possess, by 
 the operation of the present restrictive monetary system. 
 Did we not see the immense sacrifices both of fortune and 
 of character frequently made for the sake of party, one 
 would almost feel it charitable to conclude that the indi- 
 vidual in question was more fit for Hanwell than for the 
 House of Commons. 
 
 Under the present system of fettered currency Usury Bad effects 
 thrives, trade and manufactures become unproductive, la- tamp^eH^g 
 bourers are unemployed, the Poor-rate increases, discon- with the 
 tent spreads. Chartism and other morbid cancers of dis- gince^"*8i5. 
 satisfaction spread, the revenue declines, the ministry is 
 driven to attempt measures which it does not approve, or 
 which it cannot carry; and after thus exposing the un- 
 soundness of the system upon which they are acting, they 
 are finally forced to submit to what is perhaps the greatest 
 disgrace that can fall upon a Finance Minister in this 
 country, viz. proroguing Parliament with an expenditure 
 greater than the revenue ! 
 
 On the other hand, by removing the restrictions now Good effects 
 placed upon the currency, and restoring to all her Ma- "^afrer" 
 jesty's subjects their natural right to manage their own currency. 
 affairs, (abandoning the silly conceit that Parliament can 
 
 D 4 
 
56 . 
 
 do it better,) the scene would be completely changed. 
 Trade and manufactures would become profitable, com- 
 merce would become a steady speculation instead of a ha- 
 zardous risk, as it now is from the uncertainty of the 
 currency. Labourers would consequently be better em- 
 ployed, and, being supported by wages, would leave the 
 Poor-rate as a provision for the blind, the halt, and the 
 aged ; discontent would subside, and political agitators 
 disappear. With more business and more employment 
 the revenue would improve, and with reasonable care soon 
 exceed the expenditure. The fear of new taxes would 
 vanish, and the Chancellor of the Exchequer would be one 
 of the most popular men in the kingdom. 
 
 When therefore I see a man deliberately choosing the 
 false position wliich he has chosen, I cannot subscribe to 
 the doctrine that men will always do that which is most 
 for their own interest. 
 Appoint- Q, You are aware, perhaps, that the Court of Direc- 
 
 Bank^Go- ^^^^ ^^ ^^ Bank of England have made a change as to 
 vernor. the sclcctiou of the Governor and Deputy-Governor, cal- 
 culated to improve the constitution of the governing body 
 of the Bank ? 
 
 ^. I am glad to hear that it is thought that the pro- 
 posed measure will be beneficial, but have not any favourable 
 opinion of it myself. Whether beneficial or not, however, 
 I am sorry to see the circumstance paraded in the Report, 
 as it seems to imply that it is proposed still to leave the trade 
 and commerce ojp the country at the mercy of a body of in- 
 terested money dealers. I have full confidence in the up- 
 right intentions of the Bank Directors, and their general 
 discretion ; but, independently of their duty to their Share- 
 holders to prefer their interest to that of the Public, they 
 are frequently impelled to a course injurious to the com- 
 munity. Their wisdom, too, is often questionable. 
 
 It is not just to throw upon them that blame which be- 
 longs to the erroneous system to which their predecessors 
 in an evil day gave their assent. A longer continuance 
 of the Governor in office (provided he be the right man), 
 would lead to more steadiness in the conduct of the Bank. 
 
57 
 
 But to suppose that a radically defective law is to be made 
 to act beneficially — that commerce is to be supported — 
 that credit is to be sustained — that the current transactions 
 of all parts of the country, even the most distant, are to be 
 " regulated," by the tinkerings of the Bank parlour, is, in 
 point of wisdom, upon a par with that of the deluded men 
 who, (being out of work because their natural employers 
 cannot obtain money to pay wages without giving the mo- 
 nopolists a ruinous price for it,) instead of asking for a re- 
 moval of those restrictions which thus keep them in a starv- 
 ing condition, ask for universal sujSfrage ! 
 
 Q. Was not the severe loss incurred by commercial Commercial 
 houses in the course of last autumn from an unprece- 
 dented combination of the circumstances above referred 
 to, seriously aggravated by the want of confidence which 
 prevailed in consequence of the numerous failures which 
 induced bankers and others to retain a reserve both of 
 gold and of bank notes, to a very great extent ? And did 
 not this take place with a very large amount of notes in 
 the hands of the public, probably exceeding, by no less 
 than 4,000,000/., " the actual requirements of the public 
 at the time ? " 
 
 A, I confess myself considerably mystified by this Restricted 
 question, and know not where to find the commencement causrof 
 of the tangle. difficulty. 
 
 The losses incurred by commercial houses were indeed 
 very severe, as well as extensive. They were not, how- 
 ever, confined to those houses, but pervaded the whole 
 mass of the industrious and productive classes, excepting 
 in those districts where a competition of issuing banks ex- 
 isted. Ruin and misery were widely spread, and political 
 agitation revived. 
 
 The combination of circumstances, by which they were 
 produced, was quite unnecessary. Had they not been so 
 combined by the confinement of restrictive money laws, 
 and had the currency on the other hand had free scope 
 to act, the losses would not have been one-fiftieth part of 
 what they have been. The restricted currency was both 
 the cause and an aggravating effect. 
 
58 
 
 The want of confidence by which they were further ag- 
 gravated was also produced by the same cause. Who 
 could feel confidence, when he saw that the power of rehef 
 was forbidden ? What prudent man would refrain from 
 husbanding his resources under such circumstances ? It 
 is the natural consequence of limitation. It is in the nature 
 of that anti-commercial millstone to grind its victims 
 beyond the simple pressure of its original weight. 
 
 If the act of 1844 have so stultified itself as to induce 
 the locking up of 4,000,000/. of its limited currency, it 
 is a clear proof that it is working mischievously. It 
 is crippling the exertions of industry much within the 
 narrow limits intended three years before, although the 
 population and its requirements have greatly increased in 
 the interval. 
 
 Can the Committee, or any reflecting person, seriously 
 wonder that commerce is distressed, when thus subjected 
 to tinkering by anticipation ? It requires all the intelli- 
 gence and judgment of an experienced merchant to decide, 
 from day to day, what shall be the course of his proceed- 
 ings. Yet some members of the legislature seem to 
 imagine that they can foretel, for years to come, what a 
 community, consisting of millions of persons, may at all 
 times find it necessary to do. A committee of prophets 
 would shrink from such a task. 
 Govern- Q. But did not the issue of the letter of the 25th of 
 
 October, by the First Lord of the Treasury and the Chan- 
 cellor of the Exchequer, immediately remove the feeling 
 of alarm ? 
 
 A, It did ; and perhaps nothing can show more clearly 
 the evil effects of a limitation of the currency in the 
 abstract. We have just seen that the panic was not the 
 consequence of the entire absence of currency, absurdly 
 restricted as it was, for there was " a very large amount 
 of notes in the hands of the public, exceeding, by no less 
 than 4,000,000/., the actual requirements of the public at 
 the time ; " but it arose from a fear of a deficiency, in con- 
 sequence of the extreme limit to which it could be issued 
 being known. Nor was the panic removed by any addition 
 
 ment letter. 
 
59 
 
 to the currency, but simply by the nominal removal of that 
 untouched limit. The conclusion is palpable. Had there 
 been no theoretical fixed limit of the kind, there would 
 have been no panic, 
 
 Q. Are you aware that the possibility of circumstances 
 arising-, in which some such extraordinary measures might 
 be called for in consequence of a monetary crisis, was not 
 unforeseen by the Government at the time when the Act 
 of 1 844 was passed ? 
 
 A. I understand that Mr. Cotton, who was Governor 
 of the Bank at the time, and therefore an accomplice in 
 the transaction, has said so. At first sight it appears 
 strange, that being the case, that they did not make some 
 provision to meet such a contingency ; but, on consider- 
 ation, the reason seems apparent. The confession of the 
 necessity for giving way, as soon as the plan came to be 
 put to the test, would have exposed its unsoundness. It 
 would have been a confession that the expansive was the 
 right, and the contracted the wrong, system of currency. 
 
 Q, You are probably aware that the evidence given Evidence 
 upon the effects of the Act of 1844 is contradictory : that in com- 
 its beneficial effects, as regards the issues of the country JlJadSo^ry"" 
 banks, have been admitted by many witnesses ; and al- 
 though some have suggested an alteration of its pro- 
 visions, very few have contested the general principles on 
 which it is founded. 
 
 A. I confess that a perusal of the evidence did not lead 
 me to that conclusion. As I have stated before, there 
 appear to be, out of the seventeen witnesses examined, 
 thirteen who condemn the Act of 1844, and only four, 
 all interested parties, who attempt to support it. And 
 even these four are compelled to admit the necessity of its 
 relaxation when the Act comes into operation. 
 
 Q. Have you considered a question upon which con- Power of 
 siderable doubt has arisen, viz. w^hether or not it would 
 be expedient to vest in the hands of Government or the 
 Bank Directors a discretionary power to relax the strin- 
 gency of the act of 1844, in extraordinary cases of 
 emergency ? 
 
 
60 
 
 A, I have, and consider it perfectly easy of solution. 
 The very suggestion of the question affords strong pre- 
 sumptive evidence that the measure is a fair-weather 
 cockle-shell, w^hich must be overset at the first squall. 
 The acknovi^ledgment that it requires relaxation at the 
 very moment it comes into actual operation, is an utter 
 condemnation of the Act. 
 
 Q, Supposing it to be considered necessary that a power 
 of relaxation should exist somewhere, do you think that it 
 would be better entrusted to her Majesty's Ministers, or 
 to the Directors of the Bank of England ? 
 
 A. Supposing such a case, the Directors of the Bank 
 would evidently know more about the matter, and would 
 probably be consulted by Ministers before they acted. 
 But the very fact of admitting that a relaxation is neces- 
 sary completely condemns the system. From the earliest 
 period of our history until the year 1819 no such thing 
 Relaxations as a limitation of the currency was ever heard of. From 
 since 1819. ^|^^|. ^j^^g ^^ ^]^g present, a period of twenty-nine years, 
 during which the present monetary system has been the 
 law of the land, there have been several distinct relaxa- 
 tions forced on by the distress existing under the restric- 
 tions, viz. 1822, 182.5, 1836, and the last in 1847, 
 extracted from the fears of an ungracious ministry, 
 but not until they had looked calmly upon the destruction 
 of millions of property, and the sacrifice of thousands of 
 lives. In every instance which has been tried, the com- 
 mercial distress has been immediately relieved by a very 
 small step in the right direction : viz. the issue of Ex- 
 chequer bills or an amount of \L notes. 
 
 A very grave constitutional question arises, namely, 
 whether Government should be entrusted with a power, 
 secretly exercised, by which the value of every man's 
 property may be improved or depreciated at will ? 
 Whether that law can be said to be worth a moment's 
 sanction that is dependent on such a will as we have seen 
 the existing Government exercise ? It is an ascertained 
 fact, that the attempt to attract gold from abroad in 1 847, 
 after its efflux under the late scarcity, produced a dimi- 
 
61 
 
 nation in the value of property belonging to the confiding 
 subjects of our Queen to an extent not less than two hun- 
 dred and fifty millions sterling ; not to say any thing of 
 the misery it produced among the labouring population. 
 
 I dispute the right of the legislature of any nation to Present cur- 
 impose a hig-h scale of taxation on the necessaries of life ^f^^y ^"J"" 
 
 nous to 
 
 which enter into the daily consumption of the industrious, producing 
 and then so to constitute and restrict the circulating me- classes. 
 dium, that it shall be inadequate to the repayment of that tax- 
 ation, as was effected under the act of 1819. To do this is 
 to prevent the producers of the country, whether the labour- 
 ing classes or the capitalists, from obtaining remunerating 
 prices. Under the unjust operation of such legislation we 
 have seen successive Governments abandon one security 
 after another, as they must successively abandon all fiscal 
 charges, until the national creditor will tremble for his 
 annual interest, ay, and his principal too. The nations of 
 old acted on a far different principle ; they levied taxes, 
 but they created the symbolic money in which these taxes 
 could be paid, upon the principle propounded by the great 
 Aristotle, that money is conventional : a principle also in- 
 stanced in the case of the Roman tribute money, referred 
 to by our Saviour. I am satisfied that, unless our Go- 
 vernment consents to the adoption of a national paper 
 money, expressing our expenditure and receivable in taxa- 
 tion, in which the precious metals and all other commodities 
 can be freely exchanged, we shall go on from bad to worse, 
 until a disruption of the social system takes place, as over- 
 whelming of our institutions as that which has occurred 
 in France. 
 
 Q. Are you aware of the fact that the Committee, Decision of 
 after a careful review of all the evidence, are of opinion ^<*™rni"ee 
 that it is not expedient to make any alteration in the Bank evidence. ^ 
 Act of 1844 ? 
 
 A, I learnt, with some surprise, of their having come 
 to that conclusion ; but how they reconcile it to the evi- 
 dence before them passes my comprehension. 
 
6^ 
 
 Eviderice before Commons' Committee, 
 
 Q. If you have read that evidence, will you, as shortly 
 Mr. s. J. as possible, state your views upon it ? 
 Lloyd ad- ^ There was not a single instance of a witness on the 
 
 sityofre-" English branch of the case justifying the unalterable re- 
 striction, striction of the Act of 1844, not even its reputed author, 
 Mr. Samuel Jones Loyd. This gentleman, in reply to 
 questions 5149 to 5154 inclusive, entirely admits the ne- 
 cessity of the relaxation of the Act effected by the Govern- 
 ment letter of October, 1847 > 3,nd with reference to the 
 difficulties experienced in paying the Government divi- 
 dends in 1847, and in transferring the actually paid-up 
 Railway deposits to the Accountant General in 1846, 
 which first indicated the breaking down of the Act of 1844, 
 Mr. Loyd observes, in his answer to question 5146 : — 
 
 " The payments with regard to the dividends, or the payments 
 which may arise for other purposes, such as prompts upon duties, 
 and payments upon raikoads in the early part of 1846, and instal- 
 ments of loans, and so forth, are all payments which ought to be 
 met, and can be easily met, by judicious banking arrangements ; 
 and the Bank of England, I am sure, is perfectly competent to 
 make arrangements which shall enable them to meet those pay- 
 ments with perfect safety, and without any serious inconvenience ; 
 that object is easily obtained by 'judicious banking arrangements,' 
 and it would be highly objectionable to meet that by any tampering 
 with the currency." 
 
 The cool assurance of the author of the Bill of 1844, 
 deprecating a tampering with the currency, will not escape 
 the attention of the Committee. Mr. Jones Loyd would 
 probably prefer some mere " accommodation " transaction 
 similar to that by which the metallic supply was drawn 
 from France in the year 1839, or some " pig upon bacon " 
 manoeuvre, such as the extensive issue of bills at two or 
 three months, drawn by a banking firm in Lancashire upon 
 their own establishment in London, in order to fill up the 
 void created by the adsorption of Bank of England notes. 
 Mr. Cotton Mr. Cottou, the Governor of the Bank of England, 
 reilxatk>n?^ at the time the Act of 1844 was under preparation, and 
 
G3 
 
 who was consulted on the occasion, originally, as will be 
 seen by answer 4057 and 4247, recommended a power of 
 relaxation being vested in Government, and consequently 
 approved of the issue of the letter in October. 
 
 Although it is apparent from the evidence of the Go- Governor 
 vernor and Deputy Governor of the Bank of Eng^land ^'^ Deputy 
 
 , , . ^ •' - _ . c? . Cjovernor of 
 
 that relaxation may be necessary on future occasions, it Bank in 
 will afford little consolation to those who have their pro- ^^jour of 
 perty embarked in manufactures, trade, and commerce, to 
 know how much destruction may take place before a re- 
 medy is vouchsafed. The following are questions and 
 replies of the Governor and Deputy Governor of the 
 Bank : — 
 
 " 3172. Q. The Committee understand you to think that though 
 interference was justifiable on the 25th of October, 1847, any 
 previous interference would have been improper ? 
 
 " A. Yes ; but I am not prepared to say that the interference 
 on the 25th was unnecessary. 
 
 "3173. Q. So that, according to your opinion, before the Go- 
 vernment would be justified in interfering, we must have the 
 same extent of panic and alarm, and of failures ? 
 
 " A. I think the Government would not be justified in inter- 
 fering under a less state of alarm and excitement than prevailed 
 on that occasion." 
 
 The tenor of all the succeeding answers of the Go- Commercial 
 vernor and Deputy Governor of the Bank of England on f^Tted as 
 the same day show upon what an insecure monetary system the means of 
 the whole superstructure of commercial currency is based, fhTsoileifc 
 while the following replies to questions 3278 to 3283 of the Bank, 
 demonstrate the cruel havoc of property which necessarily 
 ensues from that ill-conceived and iniquitous system — the 
 safety of which is thus declared to depend upon a sweeping 
 reduction of prices — thus scattering to the winds, in fact, 
 the fair rewards of enterprise and industry. 
 
 " 3278. Q. When the Bank reserve is very low under the export 
 of gold, is it impossible to afford an inducement for a speedy return 
 of gold without creating great pressure ? 
 
 " A. The means of getting back the gold is, by making money 
 dear, and causing a fall generally in the price of commodities, 
 which will bring back gold. 
 
64 
 
 "3279. Q. Then the means of attracting gold back to this 
 country, after it has gone out, is to lower prices ? 
 
 " A. Prices will fall in consequence of the increased value of 
 money. 
 
 " 3280. Q. Under a great fall of prices, the Bank is compara- 
 tively safer ? 
 
 " A. A great fall of prices has a tendency to bring capital into 
 the country, and as bullion flows into the country it acts upon the 
 reserve of the Bank, and of all private bankers. 
 
 "3281. Q. But in order to attract gold back into the country, 
 the more forced sales there are, and the lower the prices, the safer 
 the position of the Bank is ? 
 
 " A. The lower the prices of commodities, the greater will be 
 the tendency to the increase of the importation of the precious 
 metals, and of the reserve of the Bank, and of bankers gene- 
 rally. 
 
 " 3282. Q. Under that state of things, that is a pressure arising 
 from a fall of prices, in order to secure the return of gold, does 
 not any accommodation afforded to the public rather tend to obstruct 
 the fall of prices ? 
 
 "A. Yes. 
 
 " 3283. Q. The less accommodation, under that state of things, 
 that is afforded to the public, the safer to the system ? 
 
 " A. The accommodation must of necessity, under that state of 
 things, be reduced." 
 
 This is part of the testimony tendered before the Com- 
 mittee by the four supporters of the Act of 1 844, in respect 
 to England ; this is the testimony of the author and friend 
 of the Act of 1844 ; these are the admissions of the in- 
 terested parties upon whom it may be supposed the Chan- 
 cellor of the Exchequer relied in overbearing the other 
 thirteen witnesses ; these are the terms upon which the 
 nation is to go on sacrificing for the attempt to enjoy im- 
 practicable " convertibility." Four of the witnesses, 
 Messrs. Turner, Bevan, Bates, and Gardiner showed the 
 necessity of a relaxation of the terms of the Act, while the 
 testimony of other nine expressed in unmistakable language 
 their denunciation of the enactment of 1844 as a whole ; 
 and yet, after this accumulation of testimony condemnatory 
 of the entire legislation, the Committee, by means to which 
 I shall just now refer, came to the stultifying resolution 
 contained in clause 18 : — 
 
65 
 
 " Your Committee, after a careful review of all the evidence Inconsistent 
 upon this part of the subject, are of opinion that it is not expedient '^^^f^"*'^'^ 
 to make any alteration in the provisions of that Act." 
 
 of the com- 
 mittee. 
 
 Had a jury at the Old Bailey delivered such a verdict 
 upon such evidence, the judge would have referred them 
 to their oaths. 
 
 It will remain for the future historian to record with 
 the reprobation it deserves the absolute inconsistency of 
 the Report with the evidence it professes to embody, on a 
 question so vitally important to all classes of society. I 
 cannot, however, refrain reflection upon an extraordinary 
 proof of ignorance of the first principles of monetary and 
 economic science apparent in witnesses so prominent as 
 the Governor and Deputy Governor of the Bank of 
 England. In answer to the question 3280 before ad- Capital and 
 duced, they so express themselves as to lead to the ^unj^^'^u 
 absurd conclusion that the precious metals alone constitute the Go- 
 capital. They say, *' A great fall of prices has a tendency ^jjg"^^ ^"^ 
 to bring * capital ' into the country." Now, one is im- Governor of 
 pelled to ask, does not the exported commodity constitute E,^gfand' °^ 
 the " capital " of the exporter as much as the imported 
 metal constitutes the capital of the importer ? Do they 
 suppose that the precious nietals constitute the only wealth 
 of a nation ? Are they ignorant of the fact that the 
 word used by the Romans to express money was " pe- 
 cunia," from ** pecus," cattle, which was the ancient money 
 before the use of metals. But referring to the other 
 replies of these high monetary functionaries, it appears 
 monstrous that such sacrifices of the weal of this great 
 empire, and such cold-blooded calculations upon the 
 wages of labour, should in continuance be permitted ; — 
 that a monetary system, worthy only of the darkest ages, 
 should be longer tolerated in this the nineteenth century. 
 
 The question will frequently be asked out of doors, Opinion of 
 IIovv could such a specimen of legislative blundering t^e House 
 escape the deserved censure of a Committee of intelligent 
 gentlemen, members of the House of Commons — a 
 legislative enactment which is thus described in a passage 
 of the Report of the Committee of the House of Lords, — 
 
66 
 
 a Report which cannot be too extensively read, notwith- 
 standing it is confined only to the more recent symptom 
 of the disease, namely, the Act of 1844, and does not 
 penetrate to the root of the mischief, that of 1819 ? 
 
 " It is true that to those who may have expected that the 7 & 8 
 Vict. c. 32. would effectually prevent a recurrence of cycles of 
 commercial excitement and depression, the contrast between the 
 years 1845 and 1847 must produce a grievous disappointment. 
 To those who anticipated that the Act would put a check on im- 
 provident speculation, the disappointment cannot be less, if reliance 
 is to be placed (as the Committee are confident it may) on the 
 statement of the Governor of the Bank, and of other witnesses, 
 that, ' Speculations were never carried to such an enormous ex- 
 tent as in 1846 and the beginning of 1847.' If the Act were relied 
 on as a security against violent fluctuations in the value of money, 
 the fallaciousness of such anticipation is conclusively proved by 
 the fact, that whilst the difference between the highest and lowest 
 rate of discount was in the calamitous years 1837 and 1839 but 
 two and a quarter to two and three quarters per cent., the dif- 
 ference in 1847 rose to six and three quarters. If it was contem- 
 plated that the number and the extent of commercial failures 
 would have been lessened, the deplorable narrative of the Governor 
 of the Bank, recording the failure of thirty-three houses com- 
 paratively in large business, in London alone^ to the amount of 
 8,129,000/., is a conclusive reply. If the enormous extent to which 
 railroad speculation has been carried be considered as an evil to 
 which a sound system of banking could have applied a corrective, 
 such a corrective has not been found in an Act, since the passing 
 of which, during a period of three years, an increased railway 
 capital of upwards of 221,000,000/. has been authorised to be raised 
 by Parliament; and when the enormous sum of 76,390,000/. is 
 stated, on high financial authority, to have been actually expended 
 on railways in two years and a half. If the power of obtaining 
 banking accommodation on moderate terms were considered to be 
 promoted by the Act of 1844, it cannot be said that this important 
 object has been attained, since it appears in evidence, that in 1847, 
 in addition to an interest of nine or ten per cent, a commission 
 was also frequently paid, raising the charge to ten, twenty, or 
 thirty per cent., according to the time which bills had to run. The 
 Committee are fully aware that alternations of periods of com- 
 mercial excitement and of discredit, of speculation and of collapse, 
 are likely to arise under all systems of currency; it would be 
 visionary to imagine that they could be averted altogether, even if 
 the circulation were exclusively metallic. But it is on this account 
 that greater care 'should be taken to avoid increasing an evil, 
 perhaps inevitable, by any arbitrary and artificial enactments." 
 
67 
 
 The answer to the above question is, that the Com- Decision of 
 mittee in its origin was so constituted as to secure the *^® ^°™- 
 
 1 rrii T 1 • 1 ™o"^ Com- 
 
 issue arrived at. Ihe two parliamentary claimants to the mittee, how- 
 concoction of the Act, namely. Sir Robert Peel and the Produced. 
 Chancellor of the Exchequer, voted for it. Their measures 
 were on their trial before the nation ; and they strove 
 hard to gain a majority in their favour. Yet they would 
 have been defeated had not the noble Lord at the head 
 of her Majesty's Government come at the eleventh hour 
 to the rescue of their fond enactment ; while, most 
 unfortunately, two of the members of the Committee, 
 Mr. Herries and Mr. Thomas Baring, who had shown 
 a decided conviction against the bill, from the evidence 
 which had come before them, were accidentally absent. 
 
 There were nineteen meetings of the Committee on 
 National Distress, in considering the case as it related to 
 England and Wales. Of those who recorded their votes 
 in favour of the legislation of 1844, in support of the 
 Report embodying the resolutions of the Chancellor of the 
 Exchequer, one had not attended at all, — two attended 
 four times, — one fi.ve times only. Of those who opposed 
 the present system, and who were present and voted when 
 the resolutions were discussed, none attended the Com- 
 mittee less than twelve times. Two of them, it has been 
 before explained, were accidentally absent from the meet- 
 ing at which the English inquiry was concluded. 
 
 Seeing that the Report of the Chancellor of Exchequer 
 was carried by members of the Committee who had either 
 not attended, or had attended so loosely as not to justify 
 their votes, and that Sir Robert Peel, whose monetary 
 system, especially, was on its trial, had also voted : the 
 independent members absented themselves from the in- 
 quiry in disgust ; and it will be some time, one would 
 think, before twenty-six gentlemen of the House of Com- 
 mons will complacently be assembled in a room up-stairs, 
 with a knowledge that all evidence is to be swamped by a 
 packed majority who had not listened to the witnesses. 
 
 It has been said. If the members who absented them- 
 selves did not hear the evidence, they may have subse- 
 
 E 2 
 
68 
 
 quently read it ; but, if this were sufficient, why confine a 
 jury in a common law case to the box in Court ? Why 
 not depend upon their collecting the evidence from report ? 
 Why should particular individuals be elected on the Com- 
 mittee who are not likely to attend, and why exclude 
 others who would give proper, candid, and fair attention ? 
 Such proceeding deprives the Report of the Committee 
 of all weight. 
 
 The gentlemen who were in a minority on the first Re- 
 port, not having regularly attended the hearing of evidence, 
 refrained fi om voting on the second, — a severe practical 
 reproof to the other absentees. 
 Summaries In Order to form a correct view of the evidence, it 
 oftheevi- jg neccssarv in the first instance to divest the mind en- 
 
 dence. . *^ 
 
 tirely of the Report agreed to by the Commons' Committee, 
 which is completely at variance with the evidence. This 
 done, the Committee have before them a very able series 
 of resolutions proposed by Mr. Caley, and another by 
 Mr. Spooner, giving not only a clear summary of the 
 evidence, but drawing sound and practical conclusions 
 from it. (Appendix B., C.) 
 
 There are also able summaries of the Scotch and Irish 
 evidence contained in series of resolutions proposed by 
 Mr. Spooner and Mr. Hume (Appendix D., E.) ; but 
 these were rejected, like all the other common sense that 
 was laid before them, by a majority of the Committee. 
 Mr. Hume's valuable document refers shortly to the 
 inestimable advantages derived by Scotland from that 
 admirable system of banking under which it flourished for 
 a century, and made such rapid strides to wealth. It 
 points out the folly and stupidity of interfering with such a 
 system ; and shows clearly, that with so successful a 
 practical example before us, w^e need not grope in the 
 cesspools of theorists for the means of extricating our- 
 selves from our difficulties. 
 
 Q, Have you any other specific reference to make to 
 the evidence ? 
 
 u4. The truth is, I find the whole to be so much at 
 variance with the Report that I might refer to it gene- 
 
69 
 
 rally in support, to a certain extent, of the opinion I have 
 expressed. The following questions and answers, how- 
 ever, will show forcibly the injurious effects of the present 
 monetary system. 
 
 Mr. Gurney, the eminent bill-broker, Mr. Horsley ^^- ^ur- 
 Palmer, Mr. Bevan, Mr. Bates, Mr. Pease, and Mr. Birk- "^^' 
 beck united in showing the imminence of the crisis under 
 which the commercial interests of the nation were labour- 
 ing when the Government letter was issued. Mr. Gur- 
 ney, in reply to the following questions, thus expresses 
 himself : — 
 
 1603. Supposing the letter of the Government had not been Necessity 
 issued, but that the Act, in its full force, had been carried out ° '"^ ^^^ 
 into unmitigated operation, what, in your opinion, would have yernment 
 been the eifect? — I think the wisest in the city cannot calculate; letter. 
 
 at the same time, my firm persuasion is, that it would have ended 
 in a stoppage of the Bank ; somehow or other, I think it would 
 have produced that calamity, and tliat sort of extreme alarm over 
 the country, that it woukl, before very long, have gone to a run 
 for gold, and nothing would have stopped it ; that is my im- 
 pression. 
 
 1604. Do you think it would have affected the convertibility of 
 the note in that way? — T think it would ultimately, but the wisest 
 cannot exactly say ; my own opinion is, that it would have run to 
 a great national calamity. 
 
 1655. Do you consider that the calamities of the past year have 
 been attended with very serious losses, irrespective of the parties 
 who have actually failed. The question has reference to merchants 
 and commercial men in the city of London ? — I have no hesitation 
 in saying, that the loss to the commercial community and the 
 monied interest in 1847, is unprecedented in amount. 
 
 1656. Can you form any estimate of the loss sustained by the 
 solvent mercantile houses in the city of London? — 1 could not 
 venture upon such an opinion. 
 
 1657. But it must be very great in your estimation? — Very Extent of 
 great indeed ; I can only say, beyond all my previous experience, striction.^' 
 
 Mr. Horsley Palmer thus replies regarding the crisis ^^{^^ 
 
 of 1847 • — Crisis of 
 
 1847. 
 
 2114. Mr. Spooner.'] What would be the effect upon the ma- 
 nufacturers and the labourers in the country during such an 
 operation ? — It destroys the labour of the country ; at the present 
 moment, in the neighbourhood of London, and in the manufactur- 
 ing districts, you can hardly move in any direction without hearing 
 
 E 3 • 
 
70 
 
 universal complaints of the want of employment of the labourers 
 of the country. 
 
 2115. That you ascribe to the measure which it was necessary 
 for the Bank to adopt, in order to preserve the convertibility of the 
 note? — I think that the present depressed state of labour is en- 
 tirely owing to that circumstance. 
 
 2116. Mr. Cayley.'] The capital we get back upon the rectifica- 
 tion of the exchanges affords no compensation for the capital which 
 the country loses during the operation ? — None ; you have the 
 strongest instance of that in the months of April and October of 
 last year ; in the month of April, in consequence of the stringent 
 measures of the Bank, a million and a half of bullion was forced 
 into the country from credit or capital ; it was drawn back within 
 a month or six weeks, in October, from the violence of the con- 
 traction of our importations of November, and I may say almost of 
 December ; and what is now coming from India is the effect of that 
 discredit, and of capital being forced into the country ; the East 
 India Company are now bringing a million of silver from India, 
 which, I believe, is intimately connected with the depressed state 
 of trade between India and England. 
 
 2117. And the pressure produces forced sales? — It stops credit, 
 and the British merchant sells his goods for the purpose of carry- 
 ing on his forced operations, and to bring back his capital at an 
 earlier period than it would come in the ordinary course of trade. 
 
 Mr. Bevan. 
 Govern- 
 ment letter. 
 
 Mr. Bevan gives his opinion thus : — 
 
 would have been the consequence 
 on the 23d of October had been 
 man can tell what the consequence would 
 
 2369. What, in your opinion 
 if the letter which was written 
 longer delayed ? — No 
 have been. 
 
 2370. Will you just state in what way you think it would have 
 operated ? — I cannot say where it would have stopped ; the panic 
 might have gone on and on, till at last there might have been just 
 that which was so much feared, namely, a run for gold. It might 
 have gone on to that ; I do not say that it would. 
 
 Mr. Bates. Mr. Bates, the merchant, thus descrihes the state of 
 things : — 
 
 2518. You remember, of course, the 25th of October, when the 
 Government letter was sent to the Bank ; what effect had that 
 letter upon public confidence ? — It set every thing right at once ; 
 there was plenty of money immediately afterwards. 
 
 2519. Confidence was immediately restored? — Yes, it was. 
 
 Mr. Pease. Mr. Pease, an extensive merchant and connected with 
 
71 
 
 the manufacturing- and mining interest of the county of imminence 
 Durham, thus repHes :— of the crisis. 
 
 4619. What was the effect produced by the Government letter 
 of the 25th of October ? — I was in London two days preceding 
 the issue of that letter, and I then found it impossible to transact 
 business of any kind, except with Bank of England notes ; I had 
 in my pocket a very large amount of Navy bills, and bills on the 
 first houses in London, having only three or four days to run, and 
 for those I could not obtain Bank of England notes, except as a 
 personal favour of my private friends : I tendered them to the first 
 houses in Lombard Street, and I was answered that they would 
 take them with the greatest possible pleasure, but they really had 
 not notes at command. 
 
 4669. Under all these operations of the screw by the Bank of 
 England under adverse exchanges, upon whom does the distress 
 or pressure fall the heaviest ? — Undoubtedly upon the man who 
 is forced out of work, or whose employment is seriously diminished; 
 but as regards the impoverishment of capital, looking at it as a 
 matter of pounds, shillings, and pence, I should be afraid that the 
 accounts of almost every man engaged in commerce or manufac- 
 tures would show a frightful cutting down in the last year. 
 
 4670. Do you think that even solvent houses have suffered ? — 
 I have no doubt of it ; I do not speak of it universally, but gene- 
 rally, from the circumstances under which they have carried on 
 business, the high rate of discount, and the failures and losses, and 
 the great depreciation of stock ; they have very bad accounts. 
 
 4671. But the classes who can least escape from the infliction 
 are the working classes ? — Certainly. 
 
 4672. And the working classes suffer most ? — Yes. 
 
 Mr. Birkbeck, the avowed representative of the Country Mr. Birk- 
 Bankers, demoUshes the pretence of convertibility. ^^^' ^^ ^^ 
 
 5892. Supposing the letter had not been issued, and this drain bility.'^ ^" 
 had come upon the Bank of England, what would have been the 
 consequence if the Bank could not have met all its payments by 
 means of its reserve? — It is frightful to contemplate what the 
 consequence would have been. 
 
 5893. What would probably have been the effect upon the 
 amount of bullion in the issue department? — It would have been 
 drawn out. 
 
 5894. By the holders of the 14,000,000/. of notes that were 
 issued upon securities? — Yes. 
 
 5895. "Was not the convertibility of the note at that time in very 
 imminent danger? — I think so. 
 
 5896. If the Act of 1844 had for its object to preserve the con- 
 
 E 4 
 
72 
 
 vertibility of the note, do you think it answered its purpose? — I 
 think not. 
 
 The oft-exploded, but still authoritatively adduced, fal- 
 lacy of the recent national distress having had its origin 
 in Railway operations, has been completely demolished by 
 the evidence in the Commons' Committee ; the following 
 reply of Mr. Gurney will almost suffice. 
 
 Mr. Gur- 1606. Do you attribute much to the effect of the railways? — 
 
 "ey- I cannot in my own experience trace it to railways ; my own ex- 
 
 spcculafion P^^'^^"^®' which is in the floating money of the country, has not 
 not pro- ^®^ ^® *^ perceive much derangement in the circulating medium 
 ductive of on account of railways ; I have been asked several times, whether 
 the distress. I thought it affected the money market while they were in pro- 
 gress ; even during iheir progress, I was under the necessity of 
 giving an answer that I could not tell, but still my reason would 
 say tliat so far as the commercial capital of the country (I do not 
 mean the mere floating money) has been withdrawn from com- 
 mercial purposes and trading purposes into railways, it must have 
 had a certain injurious effect upon trade; on the other hand, I 
 should say that it was rather a time of excitement, in fact in trade, 
 and there was no facility wanted ; facility, if I may so say, was 
 rather too ready, and therefore, though my reason and my judg- 
 ment tells me that it must have had such an effect as that alluded 
 to, my experience has not shown it to me. 
 
 Mr. Birk- This quotation might well suffice ; but the opinion of 
 rTutr" ■^^' I^Jrkbeck on this subject is so important, as repre- 
 senting the Country Bankers, that it is impossible to sup- 
 press it. 
 
 5919. And there has been, in conjunction with that, a very 
 large investment in railways? — That, I think, would not have 
 been felt to a serious degree but for the other causes ; it would 
 have caused individual suffering; but it would not have caused 
 national suffering. 
 
 5920. Does it not raise the rate of interest in the market ? — No, 
 it does not ; the money is there still. 
 
 5921. Then you do not think that the calls upon the country 
 for railway purposes to the amount of 3,000,000/. or 4,000,000/. 
 a month have had any effect in raising the rate of interest in the 
 market, or producing a scarcity of money? — I cannot conceive 
 that it could do so ; provided there was a good state of trade, I do 
 not think the nation would have felt it in the least ; individuals 
 might have felt it, but not the nation ; the money is there still. 
 
73 
 
 5922. Mr. Hudson.'] It goes to landed proprietors, shopkeepers, 
 and others? — Yes. 
 
 5923. Mr. Cayley.'] There is the same amount of railway calls 
 going on now, but yet money is at the cheap rate you have de- 
 scribed? — Yes; there is very nearly the same amount of railway 
 calls. 
 
 5924. Mr. Spooner.'] At the time you allude to money was 
 very cheap in the market? — It was. 
 
 5925. There was a great difficulty in employing it ? — Yes. 
 
 5926. If it had not been employed in railroads, do you think it 
 would have gone for investment elsewhere ? — I think a good deal 
 would have gone abroad. 
 
 5927. Being kept at home, have not the labourers of this country 
 benefited from the general expenditure ? — Yes. 
 
 5928. And the revenue has also benefited from that expen- 
 diture? — Yes. 
 
 5929. Did it at all lessen the amount of currency in the country ? 
 — I cannot conceive how it could lessen it. 
 
 5930. As you said before, it might have created some individual 
 distress ? — No doubt it has done so. 
 
 5931. But nationally it has not produced any effect? — No; all 
 that I can charge upon the railways is, that it has occasioned the 
 difference between keeping a number of labourers upon good 
 wages and throwing them upon the poor rates. 
 
 But this gentleman, whose repHes do honour to his Advantage 
 class, describes so effectively the nature of those exten- from "pi" 
 sions of Bill circulation to which some Bankers have "po"-^^ 
 resorted to fill up the void created by an insufficiency of bills. 
 Bank notes, that it should not be withheld, more especially 
 as it explains the nature of those which are technically 
 termed " pig-upon-bacon" bills. 
 
 5801. Did the Bankers in Lancashire, and in your district of Resort to 
 Yorkshire, come to any understanding as to the use of Bankers' l^il's of ^^- 
 drafts in 1847? — Six or seven years previous to last May, the ^^^"5^ *"• 
 great bulk of the payments in Lancashire were made in the Bank of insuffi"' 
 of England notes. Then there came an important change ; we cient cur- 
 got Bankers' drafts upon London for sums varying from 100/. to rency. 
 5,000/. which we had never seen before. 
 
 5802. Can you at all account for that change ? — I understood 
 that it was in consequence of an arrangement between the bankers 
 of Lancashire and their customers that they should not draw cash 
 checks upon them, but should take bills instead. 
 
 5803. What necessity gave rise to that custom ? — I think it 
 was the effect of the Act of 1844 in restricting the Bank of Eng- 
 land circulation. 
 
7* 
 
 5804. What was the length of the bills? — Some were two and 
 some were three months' bills. 
 
 5805. Were they drawn by Banks in Lancashire, or were they 
 drawn by Banks in different parts of the country, and circulated 
 in Lancashire ? — They were drawn by Banks in Manchester on 
 their Bankers in London. 
 
 5806. And you have every reason to suppose that they were 
 drawn in consequence of the poverty of the circulation? — Yes, I 
 have no doubt of it. 
 
 5807. Were those bills drawn generally by the Manchester 
 Banks ? — Yes. 
 
 5808. By one Bank in particular ? — No, by all the Banks. 
 
 5809. Mr. Glyn.'] But had you not seen that practice prevail 
 before the passing of the Act of 1844 in the same district ? — Not 
 to the same extent as in 1847. 
 
 5810. Was there not the same practice at other times when 
 money became scarce there ? — No ; I had seen bills for six years 
 previous to that, but I do not remember seeing any bills of two or 
 three months. 
 
 5811. In 1838 did not the same practice exist? — No; during 
 that time we did not see bankers' drafts for two or three months. 
 
 5812. Was not the practice of the Banks in Manchester very 
 extensive at that period of drawing upon their agents in London ? 
 — I think not ; the mode of conducting business is this, the manu- 
 facturers in Lancashire sell to the Manchester houses at four 
 months ; they sell this month, and the goods are paid for the next, 
 and the buyers have the option of paying in Bank of England 
 notes, and deducting interest at five per cent., or of paying in a 
 three months' bill. 
 
 5813. Mr. Cayley.'] Has it not been the practice for many years 
 for some of the Manchester bankers to draw upon their own firms 
 in London ? — It has. 
 
 5814. Have not such bankers greater facility in drawing bills 
 at two or three months' date at times of pressure, than their com- 
 petitors who draw upon independent firms? — No doubt they have. 
 
 5815. Those who draw upon independent firms must lodge se- 
 curities to cover the acceptance of their drafts? — Certainly. 
 
 5816. Then the bankers who have been in the habit of drawing 
 upon their own firms in London must have a great advantage over 
 the other banks? — No doubt they have. 
 
 With respect to the modes of escape from the panics 
 under which the country so frequently labours, and to a 
 chang^e in the law, opinions are various. 
 Panic and Mr. Gumey thus treats of panics and their remedy : 
 
 its remedy. 
 
 Mr. Gur- 1618. Do you consider that, when there is alarm, or what is 
 
 technically called a panic, the cure for such panic is by an issue of 
 
 ney 
 
75 
 
 notes rather than by a contraction of notes ? — When there is a 
 panic the only cure is a liberal issue of notes ; and for this reason, 
 that if the community feel that there is a difficulty in such issue it 
 aggravates the panic ; and though I have had it said to me more 
 than once, "It is only panic — it is only panic," I am perfectly 
 certain that there is nothing so powerful in its operation upon the 
 circulating medium, or so wholly uncontrollable, except by an un- 
 limited issue almost, as panic. 
 
 Mr. Bates records his opinion thus : — ^^' ^^^e^- 
 
 2467. To what causes do you attribute the difficulties of the 
 country in 1847? — I think it was a combination of causes; the 
 alterations in the tariff, allowing the importation of so many arti- 
 cles free of duty, acted upon by an immense internal expenditure, 
 stimulated importations, to which may be added the failure of the 
 potato crop in Ireland ; these were all aggravated by the stringent 
 clauses of the Bank charter. 
 
 Mr. Pease shows his opinion of the embarrassing nature Mr. Pease, 
 of the present monetary system, and leaves the remedy to 
 be inferred, in reply to the following question : — 
 
 4663. At this moment, supposing there were to be a general 
 contraction of paper, and there were to be a drain of 8,000,000/. 
 or 10,000,000/. of our bullion, or more, in what state would the 
 productive classes and trading classes of this country be ? — I am 
 satisfied what course I should take ; desiring to keep up the appre- 
 ciation of paper as much as I possibly could, under circumstances 
 very discouraging, I should issue one or two millions of 11. notes, 
 and thereby get the sovereigns in ; / should by that means take the 
 sting out of the Act, though for my own part I prefer 505. notes, 
 and I should be very glad to see 505. notes. The present gold 
 circulation of the country is a very harassing and inconvenient 
 circulation indeed ; the circulation of bullion is carried to an ex- 
 tent that is extremely harassing to men of business ; we want a 
 cheaper medium of circulation ; the wages that I am called upon 
 to pay will not be less than 10,000/., or 12,000/., or 15,000/. a 
 month ; a great portion of that I have to raise in specie ; I am 
 forced to seek that gold round about, of the bankers in the dis- 
 trict ; I frequently pay an agio for obtaining it, and if I send the 
 gold to London, my friends do not like to take it ; they say that 
 whatever they weigh it at, the Bank of England always weigh it at 
 less, and they can never get the value of it at the Bank, and they 
 will not even return the gold to them ; and, therefore, the circu- 
 lation of gold to the present extent is a most inconvenient and 
 vexatious one to men in business who have large amounts to pay ; 
 I believe that the substitution of a lower denomination of paper 
 
76 
 
 money by the Bank of England would keep much more gold in 
 this country, without depreciating paper at all, and I think the 
 Bank would have a larger reserve to meet any difficulties. 
 
 Mr. Tooke. 
 
 Mr. John 
 Taylor. 
 
 Causes of 
 distress. 
 
 Potato crop 
 not an ade- 
 quate 
 cause. 
 
 Not rail- 
 ways ; they 
 mitigated 
 distress. 
 
 Mr. Tooke, who does not suggest a substitute, 
 expresses himself as to the first step to a remedy : — 
 
 thus 
 
 5465. Do you think that if the Act of 1844 had not been in 
 operation, the Bank of England would have been able to give more 
 extensive credit, and have prevented the alarm which produced 
 the great fall of prices ? — Yes, that is my opinion. 
 
 5466. It was the contraction of credit from the limit under 
 which the Bank was put by the Act of 1844, which created that 
 loss of credit, and which produced all that want of confidence ? — 
 That is my opinion. 
 
 5422. Then do you think, upon the whole, that the best remedy 
 for protecting the public against crises like that which it has ex- 
 perienced in the past year, would be the entire repeal of the Act 
 of 1844 ? — Most undoubtedly. 
 
 The only opinions I shall now adduce are those of a 
 gentleman who, having given deep attention to the 
 bearing of the national currency, almost from the time 
 the Act of 1819 was passed, and who has written ex- 
 tensively on the subject. I allude to Mr. John Taylor, 
 who traces the national distress from its origin, and 
 accounts for it differently from several of the witnesses. 
 
 Mr. Taylor is asked, 
 
 5498. Will you have the goodness to state to the Committee 
 what you consider to be the causes of the distress of 1847? — I 
 think that the ordinary causes to which that distress is attributed 
 are not the causes of commercial distress ; they are the causes of 
 great distress to some part of the community. The i'ailure of the 
 potato crop undoubtedly was a great calamity, but I do not think 
 that that calamity was necessarily the cause of the commercial 
 distress ; I think the commercial distress was rather caused by a 
 peculiarity in our currency, which forbade our exercising the ability 
 we ought to have to counteract that calamity. 
 
 5499. Do I understand you rightly that you consider the 
 failure of the potato crop would have produced distress, but that 
 under a wholesome system of currency it would not have produced 
 the distress which the country has recently gone through? — 
 Exactly. 
 
 5500. With regard to the speculations in railways, do you 
 consider that that was a cause of the distress? — I do not think it 
 
77 
 
 was at all a necessary cause of the distress ; on the contrary, I 
 think that to a considerable extent the money spent in railways 
 mitigated the distress ; I think the money spent in railways, 
 instead of injuring the country, contributed to the prosperity, in a 
 certain degree, of the country; I believe again it was owing to a 
 peculiarity in our currency which, in my opinion, is not fitted to 
 our circumstances, that railways were not of more advantage to 
 the commerce of the country than they were permitted to be. 
 
 5501. Do not you conceive that the transfer of a large quantity 
 of capital from floating capital to fixed capital produced great tem- 
 porary injury to the country? — It might have done so under the 
 peculiar circumstances in which this country is placed with re- 
 ference to its currency, but I do not think it would have been at 
 all a cause of the distress if we had had the state of currency 
 in this country which I conceive we ought to have. 
 
 5502. Am I right in supposing that you trace all tlie difficulties Distress at- 
 that the country has gone through to the system of currency which tributable 
 is by law established ? — I trace all the difficulties of the country to errors 
 which have caused what is deemed commercial distress to an error j" currency 
 in our currency. I allow that evils must arise from year to year, ^^^^ 
 
 and they are constantly occurring, as we find sometimes from one 
 quarter and sometimes from another ; but they are capable of 
 being materially mitigated, and Providence has ordained that they 
 shall be so mitigated, and that there shall never be an evil so un- 
 mixed but that there shall be some countervailing circumstances, and 
 such countervailing circumstances, I think, would have materially 
 mitigated the evils alluded to in the question, if it had been per- 
 mitted by a condition of the currency suitable to the exigencies of 
 the nation. 
 
 5571. With regard to the pressures that take place, which are Kind of 
 supposed to come naturally, we have heard lately that alternations currency 
 of prosperity and adversity are natural consequences ; is that your required 
 opinion? — My opinion is, that, according to the description given fj^'^Jjl^'^ 
 of us, we are the most foolish people in the world ; we are always taxed^coun- 
 supposed to be so anxious to rush into every engagement, that we try. 
 bring ourselves perpetually into jeopardy, and then those panics 
 arise, which are all attributed to the excessive cupidity of the 
 English people, to their great desire to get money by any means. 
 1 do not think that this is the true character of the English people ; 
 I think they are misunderstood ; I think that if we had such a 
 paper-money as I contend we ought to have, to represent the tax- 
 ation of the country, a properly constituted legal tender money, we 
 might arrive at such a pitch of comparative prosperity, that 
 people would not willingly throw away their existing advantages 
 in insane attempts to get something more, which would generally 
 disappoint them in the event. We should be more like what we 
 once were, a people not over-working themselves, and not requiring 
 an}- of those who were employed by them to be over-worked. 1 
 recollect the time when the lower classes of this country were in 
 
78 
 
 The pre- 
 sent and 
 past sys- 
 tems of 
 currency. 
 
 Important 
 but unap- 
 preciated 
 eflepts of 
 the change 
 effected in 
 1797. 
 
 far easier circumstances than they appear to be at present ; there 
 was not that intensity of labour in those early times which there is 
 now, and there would not be such intensity exercised now if we 
 had that system which we require, and without which we ought 
 not to be subjected to a system of indirect taxation which calls for 
 a rise of prices. 
 
 5573. Do you think that the same amount of care, prudence and 
 ability in the last 30 years would not have borne a man harmless 
 through commercial adventures which carried him through them 
 during the last century ? — I believe in comparison with the time 
 to which I would more willingly refer, that which preceded the 
 last century, mercantile adventure has been far more hazardous since 
 the termination of the late war : a better period, undoubtedly, 
 than the present was that during the late war, when we had a 
 ^system of currency which comes very nearly to the time that I 
 look back to, when I speak of the times preceding 1700. 
 
 5574. Would you say that those alternations of prosperity and 
 adversity were the necessary consequences of the present system, 
 rather than natural alternations of prosperity and adversity? — I 
 should say that they are the necessary consequences of the present 
 system. 
 
 5589. You alluded to the period during the war ; did not those 
 commercial pressures occur during the war as well as since ? — 
 They occurred but seldom, and not with the intensity of suffering 
 with which they have been attended since. During the war prices 
 were high ; men freely embarked in great adventures and met 
 with considerable profits ; it was only now and then that they ex- 
 perienced great reverses. The Berlin and Milan decrees were es- 
 teemed a serious blow to trade and commerce, and at first injured 
 a great many people, but they also afforded an opportunity for 
 great speculation, which was beneficial to many other people ; for, 
 after all, the country could not be deprived of wliat it wanted from 
 abroad, nor could foreigners be debarred from getting goods from 
 England in return. 
 
 5592. Do you consider that the system existing during the re- 
 striction of. cash payments was a perfect system? — As it stood 
 during the war I do not think it was a perfect system ; I think 
 that there was placed in our power a very wonderful piece of 
 machinery, the use of which we did not fully understand ; it served 
 our purpose admirably well, but we continued to use it to the end 
 without seeing what great advantage that paper-money was ca- 
 pable of conferring upon us. We had gone on for a great many 
 years, centuries I may say, with an imperfect system of metallic 
 money, assisted by paper-money of various kinds ; but it was never 
 a perfect system of currency. Even before 1700 it was liable to 
 abuse ; it was never equal to the system we might have in action 
 now ; and when we were driven to the use of a legal tender paper 
 in 1797, we did not see what a powerful instrument of good this 
 paper-money might be made ; we looked upon it as an evil rather 
 than an advantage ; and therefore, at the end of the war, we were 
 
79 
 
 anxious to get rid of its use. If we had known its power, we 
 might as well have got rid of iron, zinc, or any other commodity 
 which we can now convert to a thousand useful purposes of which 
 our ancestors had no conception ; we might as well have given up 
 the advantage of the use of the steam-engine as the use of paper- 
 money. 
 
 With reference to scarcity of food not being* necessarily 
 a cause of monetary embarrassment under a sufficiently 
 expansive currency, Mr. Taylor explains himself. 
 
 5597. You imagine that pressures will, under all circumstances, Under a 
 happen to particular classes of produce? — They will; but I do right 
 
 not think that there was anything like our recent commercial money sys- 
 distress ; with regard to the quantity of corn imported in different *?™' ^^^^" 
 years, there was in the years 1800 and 1801 a remarkably great mitiffateV 
 importation of corn. 
 
 5598. Was there a great degree of commercial distress accom- 
 panying that importation ? — There was great general distress ; 
 the corn of this country was of bad quality as well as deficient in 
 quantity. 
 
 5599. The increased price of bread, from whatever source, must 
 alwajrS lead to the distress of classes ; but was there a general 
 commercial distress and panic in 1800 and 1801 ? — There was not 
 a general commercial distress ; benevolent companies were formed 
 for the sale of flour, meal and bread, at reasonable rates, which 
 had the sanction of Parliament, in order to mitigate the general 
 calamity ; and there was a great deal of sickness in consequence of 
 the bad quality of the corn of this country. 
 
 5531. You do not mean to deny that there is a serious calamity 
 in the losses that we sustained by the failure of the potato crop 
 and the failure of the harvest ; but you mean to say that the 
 natural loss is greatly aggravated by our artificial currency? — It is 
 greatly aggravated by being brought, as it were, to a point to bear 
 with all its pressure upon the quantity of gold in the country. If 
 it were spread over a larger surface, and were allowed to act upon 
 all the productions of this country, it would be comparatively 
 unfelt ; and I do not think that there would be any great distress 
 with any class of the community, because the working classes would 
 be able, by means of increased wages, to get that corn when it was 
 brought from the Continent at a higher price than it had before 
 been sold at here. 
 
 On the point of ** convertibility," we have the following 
 from Mr. Taylor. 
 
 5559. Supposing the country insists upon some kind of converti- Converti. 
 bility into the precious metals, what kind of convertibility would bility. 
 
80 
 
 you recommend ? — Convertibility at the market prices of those 
 precious metals. 
 
 5560. Do you remember any occasion on which the Bank of 
 England proposed to pay its paper at the market price of gold ? — 
 Yes. 
 
 5561. What occasion was that? — The Bank of England pro- 
 posed in 1819 to take up its notes in gold at the market price till 
 the time came when the country could bear a return to the strict 
 Mint price ; but that notion was scouted ; and I think a very erro- 
 neous view was taken of it by Mr. Ricardo. He said, " there was 
 nothing to prevent the Bank from declaring at one time that gold 
 was 41. per ounce, and at another thai it was 10/. per ounce ;" I 
 think I have seen that opinion repeated recently. It appears to me 
 that he must have entirely mistaken the principle upon wliich the 
 Bank would act; it could never be the interest of the Bank to 
 depreciate its own capital ; if it lent out its capital at the rate of 
 4L an ounce, it must be very foolish management indeed to allow 
 the parties to w4iom it had lent, to bring back paper-money, in 
 which gold had gradually risen to the price of 10/. an ounce, to pay 
 off loans that they had received at the rate of 4/. an ounce ; for, after 
 all, it is the quantity of gold lent which they ought to look to ; 
 the nominal amount of the paper is not to be regarded in com- 
 parison ; it would be a great gain to the Bank of England, and to 
 every Bank, to receive its notes back again enhanced in value, but 
 it is a decided loss to receive its notes in return degraded in value. 
 
 Remedy. The remedy suggested by Mr. Taylor is given in the 
 
 following : — 
 
 5536. Do you wish our circulation to consist of paper not con- 
 vertible? — I could wish our circulation to consist of a certain 
 quantity of legal tender paper-money, issued by the authority of 
 the Legislature, the quantity to be determined by the Legislature 
 from year to year, with reference to tlie amount of taxation. 
 
 5537. Would there not be danger under that system of coming 
 to the state of the assignats in France ? — None whatever, if we 
 took the most ordinary care to prevent it, or unless we were so 
 mad as to rush upon our ruin contrary to the dictates of our own 
 good sense ; for it could never be to the interest of any Govern- 
 ment to depreciate the value of its paper. Mr. Huskisson com- 
 plained, in his pamphlet on Depreciation, that during the war 
 there was a depreciation of the currency, and that the Government 
 paid so much the more for all contracts ; but if prices were not 
 raised higher than the taxes required them to be increased, I do 
 not think that he had any right to make that a ground of com- 
 plaint, because I do not see why the Government should buy its 
 commodities from the people at a less price than that which the 
 people pay for their commodities to each other. 
 
 5538. You are not in favour of depreciated paper ? — I am 
 
81 
 
 not in favour of a depreciated paper ; but I do not call that a 
 depreciated paper of which the value is a pound in English trans- 
 actions, though it may be of less value than the gold pound in 
 foreign transactions. 
 
 5542. What would be your standard of value? — The standard 
 of value, if I may use the term properly as contradistinguished 
 from the measure of value, is in this country, and in every country, 
 a certain quantity of that article which constitutes the principal 
 support of man's life, which is in this country wheat ; this is an 
 old definition to be found in Sir William Petty's writings. 
 
 5543. And admitted by most writers ? — By some of the best 
 authorities. 
 
 5544. What would be the measure of value? — The measure of 
 value is most conveniently found in coins of gold or silver, either 
 or both of which, with copper corresponding with them, for 
 smaller payments, answer the purpose of a measure of value per- 
 fectly well. 
 
 5545. Your representative of value would be paper ? — Yes ; 
 suppose the country were taxed to the extent of 50,000,000/. a 
 year, and it was resolved that there should be an issue of paper- 
 money to that amount, the Government owing 50,000,000/. ; in 
 the course of the first year it pays away that sum by the issue of 
 so much paper-money. All the time that it is paying away this 
 50,000,000/. of paper-money, it is receiving other money from the 
 proceeds of the taxes, the same that it now receives, but this 
 money it has borrowed ; part of it is owing to the Bank ; a good 
 deal of it is raised upon Exchequer bills ; the Government has, in 
 fact, no money of its own ; that money, therefore, which is coming 
 in during the year in which the other money is going out, being 
 due to other people, ought to be paid back to those from whom it 
 has been borrowed ; the Government then would no longer be 
 under the obligation of paying interest for the money in which it 
 received its taxes, for it would be as regards that paper-money 
 which it had issued to the amount of the annual taxation at no 
 expense, save that which attended its creation. When that money 
 was brought back again, the whole transaction would be as perfect 
 as it could be, even if gold had been the instrument made use of 
 in the process. 
 
 5602. How will your plan of legal tender paper-money operate 
 so as to allow the notes to be brought into circulation ? — The Go- 
 vernment, if it were to issue to the amount of the annual taxation, 
 through the medium of its own payments, would effect that easily 
 enough ; whatever might be the place of issue, the Treasury would 
 draw checks or issue warrants for the payment of certain sums at 
 that establishment, which sums, consisting principally of payments 
 of dividends to the public creditors, and monies claimable for 
 stores and services by every class, would be paid in the legal 
 tender money ; so in the course of one year the whole of the 
 
 F 
 
82 
 
 money would have gone out, and when any portion of it had been 
 out one year, that portion would come in again for taxes exactly as 
 another year's payments began to be entered upon. 
 
 5616. In testing the value of paper in commodities or gold, 
 would you not say that there was a depreciation? — In testing its 
 value in commodities, I should say that there was what is called 
 depreciation ; but I think that this is a very improper term to use, 
 because it conveys a wrong impression. If you add a third element 
 to the value of commodities, whereas previously you included only 
 two elements in the cost, the raw material and the labour, if you 
 add to those two elements taxation as a third, with the understand- 
 ing that the parties who pay the taxation are to charge it again on 
 the commodities which they produce, you have no right to expect 
 that such commodities will not increase in price ; and if they do 
 increase^ it is not right to say that the paper-money which repre- 
 sents such is depreciated, as tested by commodities. 
 
 5617. They require more money with which they may be mea- 
 sured? — Commodities require a higher price to represent them 
 when taxes are added to the raw material and labour than they 
 would require if the raw material and labour were alone to be 
 considered. 
 
 5648. Is there no fear that without some such check as the 
 foreign exchanges are now found to give, our producers would 
 charge too high a price for their goods to English consumers ? — 
 That is a very important question ; it is, I think, the main question 
 on this great subject. If we had no check to rely upon against an 
 excessive rise of prices, in the event of our having recourse to a 
 legal tender paper, I should be inclined to agree with Mr. Jones 
 Lloyd, that whatever might be the inconvenience, we must submit 
 to place ourselves under the control of an absolute gold system ; 
 but I contend that there is no need whatever to be apprehensive of 
 any such result ; for why is it that men get the prices they do 
 now ? Every producer asks the highest prices he can obtain in 
 the market for his commodities; why does he not get what he 
 asks? It is because another man is willing to produce and sell the 
 same commodities for less money ; and the competition among 
 men, who are all eager to sell, with the caution exercised among 
 buyers, who are equally unwilling to give too much, is the cause 
 why, under our present system of currency, a proper price is at 
 last obtained for every article. 
 
 5649. Would you have no check interposed ? — The only check 
 that could be required would be the same check that we have now, 
 the check arising from the internal competition of people of the 
 same country producing the same commodity, and willing to sell it 
 for the lowest price against each other, with the check which the 
 foreigner would bring to bear upon us by imported goods. The 
 check of competition would be sufficient even if it were only the 
 competition between people of our own country, but it is still more 
 
83 
 
 severe if we allow foreigners to enter into competition with our 
 own producers. 
 
 I might proceed further, and show by Mr. Taylor's 
 evidence the excessive and fraudulent change effected in 
 the "ancient" standard of value of this country, but that 
 this point has been so well stated in the resolutions moved 
 in the Committee by Mr. Spooner. I will content myself, 
 therefore, with referring to that gentleman's comparison 
 between the operation of the existing system, involving 
 a fixed price of gold, and that which Mr. Pitt intro- 
 duced in 1797 J ^^id by which he enabled this country to 
 pass through the most expensive war the world has ever 
 known. 
 
 5520. Will you state your view as to the effect of that system of 
 the carrying out of the currency upon the industrious and working 
 classes ? — In consequence of its being rendered necessary that the 
 paper currency of this country should always be convertible into 
 gold upon demand, whenever we have, from whatever cause, a 
 general rise of prices, immediately that gold has a tendency to go 
 away, it is not allowed to rise in price with the paper money ; 
 but corn, lead, tin, iron, and all other commodities may rise, and 
 the foreigner therefore naturally takes that which he knows is the 
 cheapest commodity he can take, and when he has taken it we are 
 obliged to go cap in hand to him, and beg him to take our goods 
 at almost any sacrifice, in order that he may let us have that gold 
 again, without which the Bank cannot continue to give its cus- 
 tomary accommodation to the public. 
 
 5521. Would you recommend that the gold, into which the 
 Bank-note is convertible, should be allowed to find its own value 
 in the market? — I would certainly recommend that it should be 
 allowed to find its own value ; but I do not think that that would 
 be a difference that would at all disturb any of the relations of 
 price that are now prevailing in this country, or any power of the 
 tenant to pay his landlord, or inflict any injury as regards the 
 position of the debtor to the creditor, or of the creditor to the 
 debtor. I think the effect of it would be the effect which was felt 
 for a long time during the war ; that there would be great freedom 
 in the use of money, and great easiness in transactions, without any 
 unjust rise of prices, or any rise that would be considered injurious 
 to any part of the community. 
 
 5522. If gold was allowed to find its own value in the market, 
 under an adverse exchange, do you think the foreign demand for 
 it would raise its price? — If there was an adverse exchange, the 
 
 F 2 
 
84 
 
 Lords' Re- 
 port. 
 
 foreigner could not bring bis English bill to tliis country, and 
 get for it what he now can, 100/. ; he would get something less 
 for it. 
 
 5523. In that case, is it your opinion that the price of gold 
 might rise till it became more profitable for foreigners to take our 
 goods than to take gold? — That is my opinion. 
 
 5524. Under those circumstances, little or no fall in the price of 
 our goods need take place to induce foreigners to take our goods ? 
 — The foreigner would not object to take our goods at higher 
 prices, if he sold his goods at higher prices, 
 
 5525. Under the present system, enabling the foreigner to 
 take gold at a fixed price in foreign payment, can the Bank pro- 
 tect itself against a drain in any other way than by curtailing 
 discounts, throwing down prices and disemploying labour? — It 
 cannot. 
 
 5526. Under the present system, the foreigner is enabled to take 
 his payment, not by a rise of price of gold, but by a ruinous fall 
 in the price of our goods ? — That is so. 
 
 With respect to the Evidence taken before the Lords' 
 Committee, all the witnesses, excepting the same interested 
 few, condemn the Act of 1844. The Report differs 
 widely in character from that of the Commons, being an 
 able and candid, though rather long, summary of the 
 evidence. Yet, strange to say, it has a character of its 
 own, tending much to impair its usefulness, which is this, 
 that, having pointed out the vast preponderance of evidence 
 condemnatory of the Act of 1844, it actually recommends 
 that it should be retained on the Statute Book, and that 
 some power should be given to somebody to relax it when 
 they may think fit ! In other words, that whenever cir- 
 cumstances admitted of its coming into operation, it should 
 be either a nonentity or a nuisance, according to the whim 
 or interest of the parties thus empowered to relax it ! 
 
 Not a reply 
 to Mr. 
 Spooner. 
 
 Sir R, PeeVs Speech. 
 
 Q, Have you read the speech of Sir Robert Peel, on 
 the 22d of August, 1848, in defence of the present 
 monetary system, in answer to Mr. Spooner, and with 
 reference to Mr. Salt ? 
 
 A. I have read the speech, but find neither any an- 
 
85 
 
 swer to Mr. Spooner, nor to any other of his opponents, 
 upon the question. His flippant attack upon Mr. Salt 
 has heen well answered by Mr. Salt himself, in his letter 
 of the 28th of August, 1848 (Appendix F.), in which, 
 by a simple statement of facts in high contrast with the 
 assumptions of the Right Hon. Baronet, he points out the 
 mischievous effects that have resulted under his system. 
 
 His assumption, that Mr. Spooner's coincidence in opi- Mr. 
 nion with the late Mr. Horner upon one point was the fjf^rt"n<!e\o^ 
 same as his agreement with all his opinions, enabled him Mr. Horner 
 to raise a laugh among an auditory confessedly and wil- ^^^^^^^^' 
 fully ignorant of the subject. 
 
 But, after all, it is a speech of considerable importance, Objects of 
 as a confession of the objects of the Bullionists and their J^^^ a"oted' 
 leader, and of the nature and extent of their feelings to- 
 wards the industrious classes. 
 
 The Bullionist system, then, as explained by Sir Robert 
 Peel, in August, 1848, is as follows : — 
 
 1. The *' Convertibility" of the Bank of England note Converti- 
 (which he explains to mean the compulsory substitution of ^''^*J P^^' 
 gold in its place at a fixed price whenever demanded) is however 
 "paramount;" that is, that every other consideration ^^^^^y- 
 should give way to it. — This is not a hasty expression. 
 
 Mr. Spooner, taking a very moderate view of the case, 
 called his attention to the fact that, within the last year 
 250,000,000/. of property had been sacrificed, the trading 
 and labouring interests generally ruined, and distress and 
 misery spread throughout the empire, in order to bring 
 back the 9jOOO,000/. of gold necessary to keep up the 
 pretence of this " convertibility." Still Sir Robert not 
 only laughs at this destruction, and considers it a trifle 
 compared to his hobby, but he actually exults and rejoices 
 in it, coolly telling the ruined capitalists and starving 
 millions that this is the great object of his system, and 
 that, as far as he is concerned, they never shall have any 
 relief until they are, at least, in as bad a condition as in 
 October 1847. 
 
 2. Notwithstanding the notorious historical facts, that Relaxation 
 distress has invariably attended the operation of the Bui- [h!)jfah'ad- 
 
86 
 
 mitted to 
 eifect relief. 
 
 Fallacy 
 about the 
 limit of a 
 currency. 
 
 Arguments 
 of Anti 
 bullionists 
 misrepre- 
 sented. 
 
 Alleged 
 over-trad- 
 ing. 
 
 lioiiist system, and prosperity as invariably attended its 
 relaxation, Sir Robert Peel is hostile to such relaxations, 
 and still declares his determination that no relaxation 
 (which he admits to be a relief) shall be allowed, with his 
 consent, until the country is in as bad a condition as it 
 was in October 1847 ; «• e, until 250,000,000/. of pro- 
 perty is sacrificed in one year, thousands of capitalists 
 ruined or impoverished, millions of the labouring classes 
 reduced to half work, and distress and misery spread 
 throughout the empire. This is a direct confession, by 
 the only party who has ever denied it, not only that the 
 commercial distress was created, and is kept alive, by the 
 pressure of the Acts of 1819 and 1844, but that it was 
 intended by their framers that they should have that 
 effect. 
 
 3. Sir Robert confesses himself of opinion that, with- 
 out a limit placed upon the quantity of notes to be issued, 
 they would increase indefinitely, and that prices would rise 
 in proportion to their abundance ; like a child who fancies, 
 because he is growing taller, that he will continue to do 
 so as long as he lives, and judges of the ages of his 
 acquaintance by their height. — This is a degree of ig- 
 norance amounting to stupidity, in one who has paid any 
 attention to the subject. 
 
 As well might he fancy that water poured into one end 
 of a trough Avould form a fountain at the other, and that 
 the more water he poured in, the higher the fountain 
 would rise. All the Anti-bullionists want, is to remove 
 the partition which prevents one end of the vessel from 
 filling to the same level as the other. 
 
 4. Feeling the impossibility of answering the argu- 
 ments of the Anti-bullionists, he adopts the usual rhe- 
 torical device of attributing to them certain opinions and 
 objects fitted to ready-made answers he has got up, like 
 Tom Thumb, who, according to Lord Grizzle, " made the 
 giants first, and then he slew them." 
 
 5. He attributes to them, as a crime, that they wish to 
 encourage trading, and the employment of the people ; 
 and he opposes them on this very account, avowing that 
 
87 
 
 his system is to discourage trade, and to deprive the 
 capitalist of the only means by which he can employ labour. 
 
 6. He accuses them of expecting that prices will rise Fallacy that 
 indefinitely, in proportion to what is called the issue of j^"jf^J,j°|J^^^ 
 Bank notes ; and confesses that he himself believes that niteiy under 
 Avould be the result. — They are not such simpletons, ^"^''^'"s^^^ 
 
 ^ ' ^ r !•• ' c ^ currency. 
 
 Accordmg to this theory (an exclusive invention of the 
 Bullionists), waste paper would at length become the cur- 
 rency of the country. Why should it happen now, and 
 here, upon the destruction of the present monopoly, when 
 it has never occurred in any country or at any time 
 before ? and when it is at variance with all experience ? 
 Sir Robert Peel thinks, or wishes to make others think, 
 
 7. That " acres or property" are not a safe foundation I'loperty 
 for a circulating medium ! not even silver ! Nothing but be afiUmis 
 gold, which he admits to be inadequate in quantity. of currency. 
 
 8. That an ** issue" of paper upon such property {ad 
 libitum, as he calls it,) would increase prices in proportion 
 to its quantity, 
 
 9. That bankers issue their notes, promising to pay Bankers' 
 value, without taking any value in return, and that the JJithouT* 
 issue is entirely at their pleasure, independently of the value re- 
 requirements of trade. ^"^^"^ ' 
 
 10. That two of the principal objects of the Anti-bul- Derides re- 
 lionists' system, viz. that " prices should be remunerating," ^"V"^''^'^'"S 
 and that " every industrious man should have full employ- 
 ment," are not merely unimportant, but are actually fit 
 subjects of derision. 
 
 11. That the character of the present House of Com- sir Robert's 
 mons is so bad, that the country has no confidence in the'iious^f 
 them ; and would not think their promise, to consider this of Com- 
 important question, of any value. "^^"^' 
 
 12. " That the restrictive clauses of that Act (184^4) Panic, com- 
 prevented us from adding, in April this year, to commercial ^oUdcai.^"^ 
 pressure the dangers of political panic. {Hear I hear ly* 
 
 He and his hearers must be the only men capable of 
 
 reading a newspaper who do not know, that in the month of 
 April last such was the political panic, that scarcely any 
 thing else was talked about for weeks ; shops were shut 
 
 F 4> 
 
88 
 
 up, and a greater military force was collected in the Me- 
 tropolis than had ever been known before ; and it was 
 only by this precaution that a revolutionary outbreak was 
 prevented ! 
 
 13. He <* perfectly concurs in the first Report of the 
 House of Commons," which, as the Chancellor of the 
 Exchequer admits, expresses the object of the packed 
 majority of the Committee, in opposition to the evidence 
 taken before them. 
 
 14. That limiting the issue of notes to the represent- 
 ation of gold alone, of all the wealth with which the 
 country abounds, is no great severity of restriction, 
 
 15. That the currency permitted by the Acts of 1844 
 ency of cur- ^^^ 1545 r^^ ^^\^,}^ ^iQ ^oasts that 33,000,000/. is issued 
 
 rency with ^ .„ ., _ 
 
 his avowed " without the dcposit 01 a smgle ounce of gold ), is 
 founded upon a gold basis. 
 
 16. That all the gold that is held in reserve, to secure the 
 " convertibility" of 48,000,000/. of notes, is 15,000,000/.! 
 
 17. That the restrictions of the Acts of 1819 and 1844 
 
 cannot prove injurious I recommend him to read again 
 
 the plain statement of historical facts in Mr. Salt's Letter 
 of August 28th, showing that distress has invariably at- 
 tended their application : he says he has read the Lords' 
 Report. But Sir Robert does not consider ruin, starv- 
 ation, and distress among the producing classes (provided 
 the money interest escape) as injurious, but beneficial. 
 
 18. That, in particular circumstances, we might "safely 
 sanction relaxation." 
 
 19. That " the attempt to provide against panic by 
 legislation would only involve Parliament in difficulty and 
 counteract its views." — Well illustrated by the fact that 
 one of the vaunted objects and promised results of the 
 legislation of 1 844 was the prevention of panics ! 
 
 Sir Robert 20. That the examination of the Governor and Deputy- 
 Srectors of Grovcmor of the Bank of England before the Committee, 
 the Bank at *< shows that they might be entrusted with a wide dis- 
 vanance. crction ; " and that those functionaries possess a " full 
 acquaintance with the subject ! " — These functionaries reject 
 all discretion ; declare their desire to adhere literally to 
 
 Cliancellor 
 of the Ex- 
 chequer's 
 llt'port. 
 
 Proportion 
 between 
 wealth and 
 currency re 
 pudiated. 
 Jnconsist- 
 
 prhiciples. 
 
 Actual pro 
 portion of 
 gold to 
 paper. 
 
 Restriction 
 injurious. 
 
 Mr. Salt. 
 
 Relaxation. 
 
 Panic. 
 
89 
 
 the Acts of Parliament, as they stand ; and do not know 
 the difference between money and capital ! 
 
 21. That "trade is carried on with capital, not with Money con- 
 paper money, other than as paper money represents ^"U5ltatitai. 
 capital." — Why, then, confine the use of paper to that 
 
 only which represents gold, a comparatively insignificant 
 item in the capital of the country ? 
 
 22. That the object of the Anti-bullionists in wishing sir Robert 
 to free the currency of the country from the narrow J^'.'jJ'^t^^,^^ 
 trammels of gold, is to establish a paper currency founded chooses to 
 upon credit, and that they are wrong in doing so ; at the c«"^^™"- 
 same time that he thinks, or professes to think, that he 
 himself is right in basing the fundamental 38,000,000^. 
 
 of his currency entirely upon credit and upon debt. — This 
 is a misrepresentation of the objects of the Anti-bullionists, 
 who desire to have a wider and safer basis for the cur- 
 rency than the present. Sir Robert, with an ingenuity 
 worthy of his namesake, Robert Houden, passes his argu- 
 ment from his own nostrum to credit, without letting you 
 see how it gets there ; leaving his admiring auditors to 
 suppose that there is no wisdom but in his brain, and that 
 there is no rest for the sole of the foot between Bullionism 
 and " unlimited credit ! " 
 
 23. That pressure, to the extent at least to which it Monetary 
 was felt in 1847, is desirable for the purpose of securing STo'^be 
 the ** convertibility" aimed at by the Acts of 1819 and desirable. 
 1844, ^. e. the solvency of the Bank. Now that this is 
 openly avowed, let the country judge which they like best. 
 
 24. That, unless this convertibility of paper into gold Far-fetched 
 («. e, the Bullionist system) were preserved, " all classes i'^'^^*^^'""- 
 will suffer ; " not only all those concerned in commerce and 
 manufactures, but those chiefly who depend for their daily 
 subsistence on the wages of labour. 
 
 25. That those who live upon weekly wages are the Tampering 
 most iniured by a tamperinsf with the currency. — We ^^*'^ ^''^ . 
 
 J J t & J- »Tc currency in 
 
 nave recently seen the lamentable eliects upon the com- i si 9 and 
 mercial classes of tampering with the currency in 1819 ^^^^" 
 and 1844. It follows that its injury to the industrious 
 classes must have been still more serious, and that this 
 was in contemplation when the Acts were passed. . 
 
90 
 
 Assumption. 2(J. That if the Bullionlst theory were abolished, the 
 
 currency would be depreciated ! 
 Pressure gy^ That uiider his system, in times of panic, pressure, 
 
 Sir 11. Feel's and Compelled pressure, is the only remedy against in- 
 system. crcascd disastcrs. 
 
 Avovvaisof Here we have the minimum amount of suffering re- 
 quired by Sir Robert Peel before he will descend from 
 his hobby for a few minutes. We have a confession of 
 the greatest ignorance upon several points of great import- 
 ance. We have the misrepresentation of the objects of his 
 opponents. We have contradictory arguments used to 
 prove the same conclusion. We have unsupported asser- 
 tions made. We have confession of the objects and effects 
 of the Acts of 1819 and 1844. And all these put together 
 to support a peculiar theory. But we have not one single 
 fact referred to in support of that system, under which it 
 is confessed on all hands that commercial distress and 
 panic have become regular intermittents, countless millions 
 of property have been sacrificed, and thousands upon 
 thousands of the productive classes have been ruined. 
 Present The great advantage, therefore, of this speech is, that 
 
 *^*uostion^^^ it narrows the question into a simplicity of form in which 
 according to evcu Gentlemen of the House of Commons may think 
 Sir Roberts ^j^^j^ capacities equal to its comprehension. The question 
 has become no longer one of theory, but of plain fact : it 
 is no longer, what has caused the frequent recurrence of 
 commercial distress ? or what is the operation of the Acts 
 of 1819 and 1844 in this respect ? These are confessed ; 
 but whether the country is disposed any longer to pay 
 that price for Sir Robert's whistle ? Not, what is a pound ? 
 but whether the old proverb be true, that " you may buy 
 gold too dear." Whether a system which has enormously 
 enriched Sir Robert Peel, Mr. Jones Lloyd, and a few 
 others, at the frightful expense to the rest of the empire 
 which we have lately witnessed, shall continue to be en- 
 dured ? Whether those who receive salaries and annuities, 
 from her Majesty downwards, will be much longer able to 
 maintain them against an unemployed and starving popu- 
 lation ? 
 
 " last. 
 
cur- 
 
 91 
 
 Q. But is it not the case that a currency convertible 
 into gold as at present is better for the labouring classes ; 
 and is it not true that a currency that would allow 
 prices to rise would militate against the interests of that 
 class ? 
 
 A, The ''convertibility" of the Bank-note is of no What 
 use to the labouring classes. Silver is a legal tender to fo^^Jf^^ J^* 
 forty shillings. The average of wages is under twenty bouring 
 shillings. Wages, therefore, are principally paid in silver ; ^ ^^^'^^' 
 and although, in our present coinage, the silver is 15 per 
 cent, lower in value than the gold, yet no inconvenience 
 has resulted. 
 
 You seem to forget that all commodities are but con- 
 densed labour. A rise in the price of commodities, there- 
 fore, implies increased remuneration for labour ; ^. e, either 
 higher wages or more constant employment, which amount 
 to the same thing. Any increased price of commodities 
 is met by the increased means of procuring them. 
 
 Q. [By a Member.] But would not an advance on Misstate- 
 credit create much unsound business, and lead, when the "^'^"^ "^^ 
 
 ' ' views or 
 
 day of reckoning came, to a reaction that would be very the Anti- 
 mischievous in its effects ? buiiionists. 
 
 yi. That question evidently arises from reading a cer- 
 tain conceited newspaper, which has long been endeavour- 
 ing to mislead the public upon this important subject. If 
 the parties on whose credit it was issued were able to 
 fulfil their engagements, no mischief would arise. But it 
 should be remembered that it is not the Anti-bullionists 
 who desire any " advance on credit," but the Buiiionists 
 themselves, who have founded their currency upon 
 14,000,000/. of credit of the worst kind, viz. Debt/ 
 Besides this, their system, by withholding from the com- 
 munity the use of a sound and legitimate currency, the 
 restoration of which is advocated by the Anti-bullionists, 
 force them to the use of a great deal of credit-paper in 
 its most objectionable and unsound shape, viz. the bills of 
 exchange of private individuals. It is the fostering nurse 
 of " Pig-upon-baconism." The Buiiionists declare their 
 readiness to sacrifice the wealth, peace, and security of the 
 
9^ 
 
 country to the maintenance of their monopoly in their 
 insufficient, insecure, and variable currency. 
 
 What the Anti-bullionists desire, on the contrary, is to 
 establish a sound and secure currency, which shall be at 
 all times equal to the requirements of capital and industry, 
 founded upon the broad and immovable basis of property, 
 not upon credit, or debt, or even upon the narrow, uncer- 
 tain, and fluctuating basis of gold. 
 
 To suppose that, if the limitation were removed, the 
 currency would increase to an inconvenient extent, is not 
 only contrary to all experience, but to common sense. 
 Limitation of the currency is quite a modern invention in 
 the world. There never was a positive limitation of its 
 amount until the act of 1844 ; and the state of the 
 country ever since it came into operation is surely enough 
 to convince the blindest follower of the Bullionists that he 
 has been deceived. 
 
 The effect of freedom would be, not so much to in- 
 crease the quantity of the currency, as to extend the 
 activity of its circulation ; not so much to raise prices as 
 to increase production, by giving employment to those 
 who are now unemployed ; and to furnish that reward for 
 labour and industry, without the encouragement of which 
 they must languish, and production, commerce, and 
 wealth must decline instead of advancing. 
 
 Upon the late removal of restraint by the Government 
 letter of October, 1847, the amount of currency was di- 
 minished — not increased. If at any time after a complete 
 removal it should increase, it can only be because some 
 employment has called it forth. If prices do rise, it will be 
 only to that extent which is necessary to secure a regular 
 supply of labour and production, a result as beneficial to 
 the consumer as to the producer. Competition will ef- 
 fectually prevent their risiftg any higher. The excessive 
 profits (so ruinous to all other classes) now made by the 
 bullion holders and money dealers can never be obtained 
 by the agriculturist, manufacturer, or merchant, until you 
 confer upon them a monopoly as close as that which is 
 now conferred upon the usurer. 
 
93 
 
 Q, How do you reconcile your suggested currency 
 alteration with the rights of the national creditor ? 
 
 A. It is perfectly in accordance with them, and requires What cur- 
 no reconciling-. Practically, it would be beneficial to him. l^^^^J ^/^^ 
 
 All 1 1 ^ 1 1 11 *^i • 1 • 1 , for the fund- 
 
 Although he undoubtedly obtamed an immense bonus by owner. 
 the Act of 1819j he has not been entirely free from draw- 
 backs, such as reduction of interest, fluctuations in the 
 value of his property, and property tax. From the last, 
 at all events, and its prospective increase, he would be 
 freed by the change ; not to mention the sponge, which 
 will be the inevitable consequence of an adherence to the 
 Bullionist system in case the country should be involved 
 in an expensive war. These and the millions the country 
 would save by allowing gold to find its price in the market 
 like every thing else, would amply repay the public credi- 
 tor for any loss he is likely to suffer, and defend him from 
 any alarming rise in prices. 
 
 A great mistake prevails as to the rights of the public 
 creditor. If he ever received a promise that he should 
 be paid 100/. worth of gold for the 55L of paper which 
 he lent, it was not " on demand," but when the object 
 for which it was borrowed was accomplished, viz. when 
 the expences of the war were paid. Had Mr. Pitt's 
 system been persevered in, it would before this time 
 have been accomplished. Thanks to Sir Robert Peel, 
 who put the cart before the horse, we have still nearly 
 800,000,000/. of national debt. 
 
 Q, Have you any further remarks to make ? 
 
 ^, I hope that it has been sufficiently proved that the Summary. 
 restriction of our existing monetary system, effected by the 
 Acts of 1819 and 1844, has been the cause of the late 
 and present commercial distress ; and that such distress 
 did not arise directly either from the failure of the potato 
 crop, the prices of cotton, railway enterprise, or over- 
 trading. 
 
 I trust, too, it will be manifest that a circulating 
 medium ought to be the representative of value, and not 
 value itself ; that it should be sufficient at the same time 
 that it is sound ; that all restriction of currency falls inju- 
 
94 
 
 riously and unjustly on the producing classes, depressing" 
 the value and extent of labour ; that it has been productive 
 of every panic that has occurred since 1819 ; that it is an 
 evil in present and daily operation ; that it will continue 
 to be productive of commercial distress, keeping hundreds 
 of thousands of industrious men out of employ ; that it 
 is fallacious to say that it secures convertibility of the 
 note, but that, in fact, it is in proof that convertibility at 
 the fixed price of gold, in the language of Sir James 
 Graham, speaking of the Act of 1819? is "a delusion and 
 a fraud." 
 
 I hope it will be manifest that the fallacies advanced in 
 support of the existing system, one after the other, have 
 been exposed and exploded, while its advocates, having no 
 available argument left, are driven to evade the real ques- 
 tion, and to talk about some assumed views of their oppo- 
 nents. I hope, too, it will appear that the monetary 
 system now in action has produced much of that popular 
 disquietude that has led to large and unexpected organic 
 changes, that, if obstinately persisted in, it threatens 
 to produce a still louder call in the same direction, and 
 will infallibly and of necessity accelerate the most deter- 
 mined and searching scrutiny into all forms of national 
 outgoings. The royal expenditure has already been 
 marked out as the next object of attack by a powerful 
 body in the second commercial city of the kingdom, where 
 the whole trading interests are in a state of most fearful 
 prostration. 
 
 Elements of Q, It must be admitted that there is much reason in 
 renTy"ai-'''"^ the argumcuts you have used in favour of your views ; 
 ready exis^ but do you think it likely that any minister will be found 
 bold enough to undertake the responsibility of recom- 
 mending a return to a Paper Currency ? 
 
 A, It is not a return that is wanted. You seem to 
 forget that we have now got a symbolic or conventional 
 representative of value, made of paper, issued by the 
 Government in the shape of Exchequer Bills, and have 
 had it in wood or paper for centuries. By the existing 
 
95 
 
 laws, however, the monopoly of using it is granted to a 
 few favoured money-dealers, and the consequence is that 
 the public has been paying- 10, 15, 20, and even 30 per cent, 
 for its use. Nay, productive industry cannot now alv/ays 
 obtain it at any price, and capital is lying idle in great 
 masses, while the labouring classes are driven for want of 
 employment to plotting, sedition, and rebellion. 
 
 All that is wanted is to give this paper a circulation, by 
 issuing it in payment of dividends and other outgoings of 
 Government, at once to the public, without the interven- 
 tion of any usurers to appropriate it to their own gain. It 
 is a circulation founded upon the responsibility of the nation 
 at large, ^. e, upon the whole property of the country, and 
 its use belongs of right to all who possess that property. 
 
 It requires no courage to correct this enormous in- 
 justice : — only a moderate allowance of brains and ho- 
 nesty. 
 
 Q,' [by ^ Member.]] Your explanations have shown Errors of 
 me several errors which I had previously entertained. I rJ^''^"'/"'^" 
 now see the childishness of expecting that foreigners w^ill mitted. 
 take our manufactures at remunerating prices, while we 
 offer them gold at a lower price. I am sensible of the 
 folly of pretending that all our commercial transactions are 
 limited to the quantity of gold lying idle in the Bank, 
 when we know that if that were the case we should not 
 have one tenth of the commerce we now have. I am now 
 convinced of the fraud that has been practised upon the 
 country, by telling them that the present system is a 
 return to the ancient monetary system of the country. I 
 am convinced also of the absurdity of the theory that gold 
 (itself only valuable for the purposes of exchange) is the 
 only kind of wealth which ought to be represented by 
 currency ; while the vast accumulations of our industry 
 f re forced to buy the same privilege of the bullion holders 
 at the rate of 10, 15, and 20 per cent. I am no longer 
 blind to the fact that the money cheapness which the public 
 are at present taught to look to as the greatest national 
 blessing, is produced, not by the abundance of necessaries 
 and comforts, but by the fraudulent means of making 
 
96 
 
 Converti - 
 bility con- 
 founded 
 with ex- 
 change- 
 abilty. 
 
 Bulli 
 
 Anti- 
 buUionism. 
 
 money scarce, by which no good can arise to any body but 
 the usurers. 
 
 I should therefore be ready to admit the entire correct- 
 ness of your views, if you could satisfy the Committee that 
 the convertibility of the note would not be endangered by 
 it. How do you provide for this object, which is con- 
 sidered of paramount importance ? 
 
 A, To have a right view of this subject, it is necessary 
 to distinguish between the two words convertihle and ex- 
 changeable. When one article is converted into another, 
 the former ceases to exist ; when it is exchanged for an- 
 other, both continue to exist. It is the artful use of these 
 two inconsistent words, as if they were synonymous, which 
 has led the unwary to fall into the slang of using the 
 word convertibility, when they mean exchangeability, or 
 perhaps really responsibility, i, e, the certainty of the note 
 being exchangeable for the value it professes to represent. 
 
 The present (or Bullionist^ money system labours for 
 convertibility in order to " make money scarce," and offers 
 a high bribe for the conversion of the notes of which 
 the currency consists into gold, by fixing a low price upon 
 the latter ; and when this is done, they cease to exist as 
 currency. This exclusive conversion into gold of course 
 lessens their exchangeability with all other commodities ; 
 while it in no way strengthens their responsibility. 
 
 On the contrary, the free currency (or Anti-bullionist^ 
 system neither encourages nor admits the destruction of 
 any portion of the currency by its conversion into some- 
 thing else : — it gives the greatest freedom to its exchange^ 
 not only for gold, but for all other commodities — it 
 secures its responsibility by basing it upon property of 
 the most secure and immoveable kind, and not entirely 
 upon gold which is the most moveable, and most fre- 
 quently moved of all property It suits the currency to 
 
 the wants of commerce, not commerce, which is always 
 varying, to a fixed and whimsical amount of currency. 
 
 The witness withdrew. 
 
97 
 
 APPENDIX 
 
 APPENDIX A. 
 
 LETTER FROM THE LATE SIR ROBERT PEEL DURING THE 
 PANIC OF 1826. 
 
 To the Members of both Houses of Parliament. 
 
 My Lords and Gentlemen, 
 Will you permit an old man to address you on the subject of 
 our currency ? I sat in Parliament thirty years, during which time 
 I frequently heard this important question discussed by Mr. Pitt, 
 Mr. Fox, and other distinguished characters. On the passing of 
 the Bank Restriction Act I was entrusted by the merchants and 
 citizens of London to present their petition against the measure. 
 Though my opinions were embodied in their case, my best en- 
 deavours to serve them were not successful. Having been long 
 and extensively engaged in commercial dealings, I often witnessed 
 a national embarrassment arising from a defective and impure cur- 
 rency, which resembled the present stagnation of trade ; and I la- 
 ment to observe that suffering and experience have failed in this 
 instance of producing their usual good effects. In the enlarged scale 
 of business carried on by this country, embracing a great variety 
 of pursuits, a reliance on a metallic circulation ever did, and ever 
 will, fail us. Gold, though in itself massy, often disappears in 
 consequence of war or speculation — nay, the breath of rumour 
 itself is sufficient to disperse it. Our domestic concerns are in- 
 terrupted, and confidence lost for want of an ample and approved 
 medium of traffic. 
 
 I am no friend to an unrestrained issue of paper money, and saw 
 with concern, in the absence of a due quantity of specie, notes ad- 
 mitted into circulation, issued by persons of respectability pos- 
 sessing property, but evidently unable to meet a sudden and large 
 demand upon them. More than two years ago I mentioned to a 
 friend high in his Majesty's councils my fears of the mischiefs 
 likely to ensue if this practice were not discontinued, accompanied 
 with a suggestion to confine future issues of paper money, or 
 
 G 
 
98 
 
 tokens, to the Bank of England and other competent bodies of men, 
 who would give security in land, the public funds, canals, build- 
 ings, or other tangible property, amounting at least to half the 
 value of their bills or notes in circulation. My proposition was 
 not favoured with any notice, yet had it been adopted, I am of 
 opinion that most of the panic and distress now so severely felt in 
 the nation would have been avoided. If such an improvement in 
 the banking system could be made available, gold would become 
 less requisite, and the country would be supplied with a stationary 
 medium of exchange originating with ourselves. 
 
 Whilst directing the energies of the state in war, Mr. Pitt 
 evinced equal ability in discovering, improving, and applying our 
 internal resources. The war drained the country of its specie, and 
 our enemies entertained sanguine hopes that our ruin would sooner 
 be effected by want of pecuniary means, than the want of courage, 
 discipline, and conduct in our armies. Mr. Pitt was more than a 
 match for our contingencies. With the aid of the Bank of England 
 and other opulent houses, the energies of Great Britain were main- 
 tained in full activity, and the importance and utility of paper 
 money more clearly established. Ingenious machines were intro- 
 duced into our manufactures, and the encouragement and protection 
 afforded them greatly increased the demand for our goods both at 
 home and abroad. Our superiority at sea gained our merchants 
 easy access to foreign markets, and the wealth derived from trade 
 and commerce (though to some persons it may appear paradoxical) 
 more than covered the whole expenses of the war ; when the minis- 
 ter had recourse to loans, they were speedily raised by British 
 capitalists, and the increase of the public debt was due from our- 
 selves to ourselves, and resolved itself into a family account without 
 impairing the national property. Mr. Pitt, having succeeded in 
 securing peace and independence to the empire, whilst devoting 
 his sole attention to the affairs of the public, suffered his own to 
 be very much embarrassed. Many of his friends wished to ex- 
 tricate him from his difficulties, and requested me to learn from 
 Mr. Rose in what way we could best relieve him. His reply was, 
 " Mr. Pitt is the most unaccountable of men, and would prefer 
 living in a garret to being indebted to the bounty of his friends." 
 Though disappointed, the opinion I had long entertained of this 
 able minister's high character was not diminished. 
 
 The present panic and distress in the country have been de- 
 clared by high authority to proceed from " overtrading" and " wild 
 speculation." Infant nations and establishments are liable to mis- 
 carry from want of experience and solidity. Trading and specu- 
 lation being natives of this island, and parents of our wealth and 
 independence, are surely exempt from such an imputation. The 
 same authority has declared that " gold and paper money are 
 incompatible with each other, and cannot exist together." The 
 population and trade of the empire having much increased, a pro- 
 portionate increase in the medium of circulation is called for, and, 
 
99 
 
 when gold is found insufficient, recourse must be had to paper, 
 which, if improved, on the principle already suggested, the two 
 substances would be found in the same market without disunion. 
 
 Anxious to see our situation ameliorated, I trust the currency 
 may be mended without changing or impairing the national cha- 
 racter ; which measure, if resorted to, would resemble the policy 
 of diverting from its course a powerful river that has long given 
 felicity and happiness to a large district, merely because from ex- 
 cessive rains it had sometimes exceeded its natural limits, and 
 produced partial inj ury. 
 
 I am, my Lords and Gentlemen, 
 
 Your faithful and obedient Servant, 
 
 Robert Peel. 
 
 Drayton Manor, March 8. 1 826. 
 
 APPENDIX B. 
 
 RESOLUTIONS PROPOSED BY MR. CAYLEY RELATING TO 
 ENGLAND. 
 
 1. That it has been shown to the satisfaction of the Committee 
 that the Bank Charter Act of 1844, if not the proximate cause of 
 the late and still existing commercial distress, so increased its in- 
 tensity as (more especially in the last autumn) to convert the pres- 
 sure into a panic ; to the paralysing consequences of which the 
 mercantile public, solvent and insolvent, were alike exposed, until 
 relieved by the Treasury letter of October 25.; which operated 
 instantaneously in mitigating its disastrous eifects. 
 
 2. That scarcity of food, and its high price (although doubtless 
 productive of much individual privation, especially under severe 
 banking restrictions, which lead at once to the disemployment of 
 labour,) do not necessarily produce a monetary crisis, as is proved 
 by the case of 1800, — the year of greatest scarcity in the present 
 century, when all classes were reduced to a very diminished con- 
 sumption of bread-corn, but when no monetary pressure occurred ; 
 notwithstanding that the average price of wheat in that year was 
 1135. a quarter, 43^. higher than the average price of 1847, which 
 did not exceed 70s. a quarter. In the first instance, owing to the 
 absence of a simultaneous monetary pressure, the employment of 
 labour suffered little or no interruption ; while, in the latter in- 
 stance, the pressure arising out of our present monetary system 
 checked production and the employment of labour at the very 
 moment when great losses, from natural causes, were most requisite 
 to be supplied, and thus directly aggravated and prolonged the 
 distress. 
 
 6 2 • 
 
100 
 
 3. That if railways had caused the comraercial distress, it could 
 only have been by their absorbing part of the capital usually 
 devoted to manufacturing and commercial production, which must 
 probably have led to a diminished supply of goods, and to a rise in 
 their price, which symptom failed to exhibit itself, notwithstanding 
 a scanty supply of raw materials. Neither did the rate of interest 
 increase until the Bank of England commenced its course of re- 
 striction early in 1847, to meet the drain of bullion for the payment 
 of foreign corn. Whilst, in contradiction to the hypothesis that 
 railway investments caused the scarcity of money in 1 847, there is 
 this remarkable fact, thai the rate of interest in the discount mar- 
 ket is at this moment only about three per cent., in spite of railway 
 calls being as large as ever. 
 
 4. That the working classes are the heaviest sufferers from 
 monetary derangements, in consequence of the destruction of that 
 credit and confidence on which commercial transactions are based, 
 and by which the employment of labour is sustained. 
 
 5. That a complete restoration of confidence and employment 
 cannot be anticipated so long as the manufacturing, trading, and 
 mercantile interests have reason to apprehend a repetition of the 
 pressures and panics of 1847, which, v^hile the Act of 1844 remains 
 in operation, a system of free imports must tend to accelerate and 
 multiply. 
 
 6. That the frequent alternations of prosperity and adversity 
 which this country has experienced since the war, are mainly 
 traceable to sudden and violent oscillations in the value of money 
 — the necessary offspring of the monetary system we established 
 on the return of peace, which rests the profits of trade and the 
 wages of labour on the accidental variations in the supply of gold ; 
 the extreme severity of which system towards our trade and 
 industry the Act of 1844, for the first time, made it impossible for 
 the Bank of England to mitigate or evade. 
 
 7. That, therefore, if it be desirable to restore a more lasting 
 prosperity to trade, with its concomitant blessings of better em- 
 ployment and greater comfort and contentment to the people, no 
 time should be lost in repealing laws which directly contribute to 
 monetary derangements, and in enacting others which may offer 
 some assurance that the natural risks of capital embarked in com- 
 merce shall not be artificially increased by constant fluctuations in 
 the value of money ; and that prudent adventure and honest in- 
 dustry shall not be disappointed of their fair reward. 
 
101 
 
 APPENDIX C. 
 
 RESOLUTIONS PROPOSED BY MR. SPOONER RELATING TO 
 ENGLAND. 
 
 1. That the standard of value established by the Act of 1816, 
 and called into action in the year 1819, was not the ancient 
 standard of value existing previous to the year 1797. 
 
 2. That the ancient standard of value was gold and silver coin 
 jointly, protected by the heaviest penalties against reconversion 
 into bullion, and against exportation. Silver in tale was a legal 
 tender to an unlimited amount, with the exception of nine years, 
 namely, from 1774 to 1783 ; when in tale, it was limited to 25/., 
 but in weight continued unlimited ; at the same time all the coin 
 in circulation was greatly debased, but still was legal tender in all 
 payments. 
 
 3. That the standard brought into operation in 1819 is a single 
 standard of gold, at 3/. 17*. lO^d. per ounce, convertible into bul- 
 lion, and free to be exported at the will of the holder, silver being 
 a legal tender for 405. only. 
 
 4. That in 1811, in consequence of the Report of the Bullion 
 Committee of 1810, a proposition, having for its object to obtain 
 from Parliament the recognition of the depreciation, which had 
 then reached an alarming point, and a pledge to return to the an- 
 cient standard of value, was negatived ; the fact of depreciation 
 being denied, the futility of pledging Parliament to return to a 
 point whence Parliament declared there had been no departure, 
 followed as a matter of course. 
 
 5. That had not this proposition of the Bullion Committee been 
 negatived by the House of Commons in 1811, it is not to be sup- 
 posed that the country would have submitted to the heavy taxation 
 of the time ; that settlements would have been made, or debts con- 
 tracted without reference to future changes in the value of money. 
 It is now admitted that money was depreciated 30 per cent. When 
 the Report of the Bullion Committee was under consideration, it 
 was strenuously asserted that no depreciation had taken place, and 
 that there was no departure from the ancient standard ; it being 
 thus contended that there was no departure from the ancient 
 standard, and this being affirmed by a vote of the House of Com- 
 mons, the return to the standard could not then have been con- 
 templated. The debtor interest, consequently, could not have 
 contemplated that its burdens would be so much augmented, nor 
 could the creditor interest have anticipated receiving payment in 
 
 G 3 
 
102 
 
 a currency which should possess so great an increased exchange- 
 able value. 
 
 6. That every attempt to carry out the gold standard has been 
 found impracticable, as is proved by the distress occasioned by the 
 preparation for so doing in 1816, as well as by the passing of the 
 Bill in the year 1819, which enforced that attempt — which dis- 
 tress was only mitigated by the permission which was given in 
 1822 to continue the circulation of one and two pound notes until 
 1833 ; by a Government loan in aid of the agricultural classes ; and 
 also by permitting an operation with respect to pensions, commonly 
 called the " Dead Weight." 
 
 7. That the relief produced by these measures brought on the 
 hollow prosperity of 1823, 1824, and 1825, and forced prices above 
 the level at which gold could be retained in this country ; gold 
 was consequently exported, and the Bank was compelled again to 
 limit the issue of its notes. The distress which had been wit- 
 nessed in 1822 returned with accumulated force, and a reduc- 
 tion of prices to a ruinous extent took place, forcing an equally 
 ruinous exportation of goods, which again brought back the gold. 
 
 8. That the Exchanges being thus turned in favour of this 
 country, the Bank of England again increased its issues ; but credit 
 had received so great a shock, and the commercial and manufac- 
 turing interests were so deeply injured, that general prosperity 
 was not restored till the year 1836, to be again followed by a panic 
 at the end of that year, which continued till midsummer 1837 ; and 
 another panic in 1839, all to be traced to the same causes, and 
 which again produced such great distress, that in 1842 Sir Robert 
 Peel, the Prime Minister, declared that indirect taxation had 
 reached its limit. 
 
 9. That the Bill of 1844 was enacted for the purpose of compel- 
 ling the Bank of England to regulate its issues strictly in accord- 
 ance with the state of the Exchanges, and by this means to retain so 
 large an amount of gold in its coffers as to ensure the convertibility 
 of the notes of that establishment. 
 
 10. That the failure of the potato crop in 1846 caused a great 
 increase in the importation of foreign grain, as well as of other 
 produce, and these imports were further increased by the adoption 
 of free-trade principles. In consequence of these extra imports 
 gold was exported, and the reserve of notes in the banking depart- 
 ment of the Bank of England was reduced from about nine millions 
 in December 1846 to two millions and a half in April 1847. This 
 sudden reduction compelled the Bank of England forcibly to con- 
 tract its issues, in order to regain its position. On October 23., 
 the time of the greatest pressure, the Bank held more than eight 
 millions of bullion in its vaults, and while the whole of the com- 
 mercial and manufacturing interests and the labouring population 
 were brought into the greatest distress, amounting to an almost 
 total cessation of business, the bullion in the vaults of the Bank 
 was, by the Act of 1844, in this emergency, rendered perfectly 
 
103 
 
 useless ; the Bank, however, was instantly relieved from its diffi- 
 culties by the Government letter of the 25th of October, and the 
 pressure instantly mitigated, but the industrial powers of the nation 
 have been so deranged, that up to this time vast numbers of the 
 population remain out of employment. 
 
 11. That so long as the Bill of 1819 remains in force, these 
 alternations of prosperity and adversity will continue. That a 
 remedy at once easy and safe would be found in the creation of a 
 National Paper Money, to be issued in the gradual repayment of 
 the debt due from the Government to the Bank of England ; in the 
 payment of the dividends and Government annual expenses ; — the 
 issue of the National Paper to be limited to the amount required 
 for these purposes ; such paper money should be of convenient 
 amounts for general circulation and for the payment of taxes, and 
 should be a legal tender in all payments. This national money 
 cannot but maintain an equable value, so long as its issue is limited 
 in the manner above described, and so long as the Government is 
 compelled to receive it in payment of taxes. 
 
 12. That there should also be for the purpose of foreign trade a 
 Mint Bank, to be supported at the public expense, where bullion 
 should be received, and for which notes, payable in bullion, 
 should be issued ; silver should be made a legal tender to the 
 extent of five pounds in the present coinage, and by weight to 
 any amount. 
 
 13. That the professed object of the promoters of the Acts now 
 in force for the regulation of the currency, has been to secure 
 a medium of exchange, which, in its influence on the value of 
 commodities, should be steady and uniform. That sudden and ex- 
 treme fluctuations in money values have always been deplored as 
 great evils to all classes of society, and especially to the labouring 
 population. That the evidence which has been given before this 
 Committee, establishes the fact that not only are the Acts now in 
 force powerless to prevent extreme fluctuations, but that they are 
 the fruitful source of those evils, rendering all trading and mer- 
 cantile undertakings unsafe, and bringing, in a vast number of 
 cases, total ruin upon tliose who contract monetary obligations in 
 reliance upon the continued value, either of money or commo- 
 dities. ' — 
 
 14. That, in the opinion of this Committee, the immediate atten- 
 tion of the legislature should be directed to the adoption of such 
 measures as will secure a monetary system adapted to the vastly 
 increased transactions and augmented population of the United 
 Kingdom. That the existing system has inflicted, and is at this 
 time inflicting, great social evils upon society at large, and that it 
 iias endangered, and is still endangering, the maintenance of good 
 order, by destroying the demand for labour, occasioning universal 
 commercial stagnation and general panic. That in the event of 
 the occurrence of war in any part of Europe, which, from the pre- 
 sent state of the Continent, is much to be apprehended, such a 
 
 G 4 
 
104 
 
 demand for bullion would undoubtedly arise as would lead to the 
 derangement of all monetary affairs in England ; and should this 
 country, in consequence of the treaties to which it has been a 
 party, be directly involved in a war, the evils of the present mone- 
 tary system would become intolerable, and all those regulations 
 which Parliament has so strenuously endeavoured to maintain 
 would be at once swept away ; and in the midst of a dissatisfied 
 people, with the increased difficulty of maintaining peace and 
 order, the proper and judicious settlement of an important question 
 would be rendered, if not impossible, far more difficult than it is at 
 present. 
 
 15. That, in the opinion of this Committee, the full and impartial 
 consideration of the monetary policy of England, and its effects 
 upon the trading and mercantile interests, not only in this country 
 but also in all the dependencies of the British crown, lias been im- 
 properly neglected by the Legislature. That a fair and candid dis- 
 cussion of this vital question has been obstructed by the leading 
 members of successive administrations having unjustly attributed 
 to the' advocates of monetary reform designs against the interest of 
 the public creditor and the good faith of the country. That such 
 charges are manifestly and palpably without foundation ; and that, 
 on the contrary, it is an undoubted fact, that danger to the public 
 creditor can only arise from an obstinate perseverance in a mone- 
 tary system, so restrictive in its character, as to render it impossible 
 to obtain such an amount of revenue as is required for the payment 
 of the interest of the national debt, and for the support of the 
 state. That every effort to carry out the existing system to its 
 full extent has been followed by a serious diminution in the 
 national revenue, by urgent demands for the reduction of taxation, 
 and by violent dissensions amongst the different orders of society, 
 between whom the maintenance of perfect sympathy and mutual 
 confidence is essential for the preservation of public faith, and of 
 the institutions of the country. 
 
 APPENDIX D. 
 
 RESOLUTIONS PROPOSED BY MR. SPOONER RELATING TO 
 SCOTLAND AND IRELAND. 
 
 1. That the four witnesses from Scotland, who have been ex- 
 amined by the Committee, ascribe the monetary derangement of 
 1847 primarily to the failure of the crops of potatoes and corn ; 
 and are of opinion, that although railway speculation had been 
 productive of individual inconvenience, it had not amounted to a 
 
105 
 
 national evil. These witnesses, while they differ as to the degree 
 of monetary disturbance accruing from the Act of 1844, concur in 
 opinion that the restrictive clauses of that Act greatly aggravated 
 the monetary pressure. 
 
 2. That there appeared to be but one opinion among the wit- 
 nesses as to the preference entertained in Scotland for the local 
 note circulation over that of gold ; and it appears that the gold 
 coinage was only in demand by persons visiting England. 
 
 3. That the two Managers of Scotch Joint Stock Banks agree 
 in opinion that the provision of the Act of 1845, which renders it 
 imperative upon the Scotch Bankers to retain a certain amount of 
 gold in their coffers, is expensive, useless, and embarrassing, and 
 they repudiate the attempt to force the use of gold into the general 
 circulation. They consider that the Bank of England is the best 
 depository of gold for national purposes. The witnesses who are 
 engaged in banking approve of the clause in the Act of 1844 which 
 restricts the Banking Companies of Issue to their present number, 
 while the Secretaries of the Chambers of Commerce, respectively 
 of Edinburgh and Glasgow, under instructions from their Councils, 
 consider that such restriction is calculated to operate injuriously 
 in future. 
 
 4. That the four witnesses from Scotland agree in showing that 
 the effect of the legislation of 1845 has been seriously to increase 
 the charge of banking operations to the public, and that the ex- 
 pense of keeping so much gold in the coffers of the banks is the 
 main cause of such increased charge. They show also, that when- 
 ever the circulation requires expansion, a further demand for gold 
 is made upon the treasures of the Bank of England, the gold which 
 is required by the Act of 1845 to be kept in Scotland being per- 
 fectly useless, as the payment of the notes, in fact, takes place in 
 London, and not in Scotland. 
 
 5. It appears that while the rate of discount adopted by the 
 Banking Companies of Edinburgh and Glasgow has closely fol- 
 lowed the scale adopted by the Bank of England, there had not 
 been a considerable withholding of the usual accommodation to 
 the trading interests that were deemed to be in a sound state, and 
 though discount transactions were somewhat discouraged by a rise 
 in the rate of interest charged, yet it was not until the Autumn of 
 1847, that the panic arose to its height in Scotland, and that panic 
 was immediately allayed by the appearance of the Government 
 letter. 
 
 6. That the witnesses from Glasgow exhibit a distressing ac- 
 count of the present depression experienced by the manufacturers 
 of that city, and its dependant trading district, at the present 
 moment, and show that large numbers of the working classes have 
 been thrown out of employment in consequence of financial dif- 
 ficulty. These witnesses concur in opinion, that the confidence 
 necessary to returning prosperity cannot be established while the 
 restrictions of the Act of 1844 remain. 
 
106 
 
 7. That three gentlemen engaged in the banking business of 
 Ireland were also examined by your Committee. While these 
 gentlemen approve of the restrictive provision of the Act of 1844, 
 with reference to the prohibition of new Banks of Issue, and do 
 not object to what they have experienced of the practical operation 
 of the legislation of 1845 ♦, two of these witnesses object to the 
 separation of the banking and issue departments of the Bank of 
 England, but all concur in opinion, that a power of relaxation of 
 the Act of 1844 is essential to the safety of the Bank of England, 
 to banking generally, and to the maintenance of commercial credit. 
 It is apparent, however, from the testimony of these gentlemen, 
 that the trade and commercial operations of Ireland had experienced 
 much relief from the large supplies of money and food from Eng- 
 land. The witnesses from Ireland, in common with those from 
 Scotland, show that the monetary pressure in that country was not 
 much felt until the Autumn of 1847, and they ascribe the passing 
 away of panic entirely to the Government interference in October 
 of that year. 
 
 8. While the desirableness of maintaining convertibility was 
 admitted by all the witnesses, it was clearly given as their opinion 
 that the circulating medium of a country should be in proportion 
 to the general transactions of the country ; and that any system 
 which upon alarm of famine creating a great drain of gold requires 
 a corresponding diminution of the paper currency, is not a sound 
 system. 
 
 9. That, in the opinion of this Committee, the evidence of all 
 the persons examined is to effect that the Act of 1844 greatly ag- 
 gravated the commercial panic of 1847 ; and that the Act of 1845 
 caused great inconvenience and expense, was uncalled for, and 
 is totally useless. 
 
 APPENDIX E. 
 
 DRAFT REPORT PROPOSED BY MR. HUME RELATING TO 
 SCOTLAND AND IRELAND. 
 
 The causes and the extent of the recent commercial distress have 
 been so different in Scotland and in Ireland, that your Committee 
 propose to keep their statements and opinions thereon separate. 
 
 Your Committee examined four witnesses from Scotland ; viz. 
 two from Edinburgh, and two from Glasgow. 
 
 Mr. James Andrew Anderson, manager of the Union Bank in 
 Glasgow, has been thirty years resident there. 
 
 Mr. John G. Kinnear, a merchant of long standing, and the 
 secretary to the Chamber of Commerce. 
 
107 
 
 Mr. David Bell, manager of the City of Glasgow Bank in 
 Edinburgh, and engaged as a banker fifteen years. 
 
 Mr. John Fletcher Macfarlan, secretary to the Royal Chamber 
 of Commerce in Edinburgh, and deputed to state their opinions to 
 your Committee. 
 
 Before stating "how far the commercial distress in Scotland 
 had been affected by the laws for regulating the issues of Bank- 
 notes payable on demand," your Committee will call attention to 
 the condition of banking in that country before 1844-5. 
 
 The system of banking there had been established for upwards 
 of a century, and was interwoven with every transaction in that 
 country. 
 
 Its safety and its utility had been tested, and the most unbounded 
 confidence in its security was entertained by all ranks of the 
 people. It had prevented the hoarding of small sums by the 
 people, who, by means of these banks, had the advantage of having 
 their savings taken care of, and of receiving interest on these sums 
 as deposits, however small in amount, and for however short a 
 time. The money that would otherwise have been locked up and 
 useless in private hands, became the means, through the banks, of 
 affording loans of capital, and discounts of bills, to all those who 
 were desirous to improve the agriculture and promote the manu- 
 facture of the country. 
 
 Whilst the prudence and caution of the bankers on the one 
 hand prevented undue speculation, the immense amount of de- 
 posits placed under their management enabled the Banks to de- 
 velope the natural resources of that kingdom, and to become in 
 that manner directly instrumental in advancing the prosperity of 
 Scotland, and enriching its inhabitants. 
 
 Your Committee desire to call the special attention of the 
 House to the fact, that, whilst the paid-up capital of all the Banks 
 in Scotland did not exceed 10,000,000/. sterling, the amount of 
 deposits in these Banks has been stated to amount to the sum of 
 nearly 30,000,000/. sterling ; and, adverting to the known prudence 
 with which that large fund of 40,000,000/. sterling have been for 
 so many years applied in affording assistance to the agricultural, 
 manufacturing, shipping, and commercial interests, it is not to be 
 wondered that Scotland has prospered so largely in all its relations 
 during the last century. 
 
 This system has afforded the means of fostering the industry of 
 Scotland in every channel, and of making the small savings of the 
 humbler classes at once the means of enriching the richer classes, 
 and also of affording additional means to the depositors them- 
 selves. 
 
 The people of Scotland were satisfied, and had no idea of danger 
 to the credit or to the solvency of the Banks, knowing that the 
 whole of the 3,000,000/. issue of notes (as stated in another part) 
 were based on 10,000,000/. of paid-up capital, and also on the 
 individual responsibility of the partners of Joint Stock Banks. 
 
108 
 
 The Scottish nation was satisfied with their banking system, and 
 it is much to be regretted that any legislative interference took 
 place in 1845. 
 
 It is believed that there were few if any petitions sent to Parlia- 
 ment for any interference with, or restrictions upon, the banking of 
 Scotland, whilst almost every town and county sent up petitions to 
 Parliament against meddling in any way with their banking, and 
 especially against the Bill of 1845. 
 
 It is difficult to understand why, when the circulation and 
 monetary affairs of Scotland were in so good a condition, and its 
 inhabitants perfectly satisfied with them, so much trouble should 
 have been taken by the Government to interfere with their system 
 of banking, and thereby to cause general discontent throughout the 
 land. 
 
 It has been stated that " there is a difference in the system of 
 banking in Scotland from that of London — a connexion exists 
 between each Bank and its customers — every merchant does all 
 his business in one Joint Stock Bank, and that Bank is expected 
 to give him all the facilities he may properly and reasonably re- 
 quire to carry on his business, and in times of difficulty to carry 
 him through ; " and, therefore, the proceedings in Scotland ought 
 not to be judged of by the banking in London. 
 
 There are parts of the banking system of Scotland that deserve 
 particular attention. The allowance of interest for every II. or 21, 
 paid into a Bank even for one day is a strong inducement for every 
 man to put in every note he does not immediately want, and the 
 advantage of every depositor becomes thus the best check against 
 an over-issue of notes ; there is, besides, a general feeling that the 
 money is safer in the Banks. 
 
 The confidence of the public in the security of the Banks in 
 Scotland is greatly increased by the exchange of notes twice a 
 week between all the Banks in Edinburgh and Glasgow, because 
 if there were any doubts of the solvency of any of the Banks, the 
 other Banks would immediately require payment in Exchequer 
 bills, or gold, on the spot ; there is thus the best means of knowing 
 the solvency of the Banks, and the public confidence is thereby 
 established. 
 
 If the operation of Exchanges is examined, it will be found that 
 it, in fact, converts the whole of the Bank-notes twice in the week 
 into Exchequer bills, or into gold ; and if at any of these Exchanges 
 there be an excess of notes that any one Bank has to pay, that 
 excess is immediately paid by order on London : the same practice 
 existed before 1844 as at present. 
 
 It is stated, that the power and resources of Banks in Scot- 
 land arise from three sources : 1st, from capital paid up ; 2d, from 
 deposits ; and, 3d, to a small amount, from their notes in circula- 
 tion. 
 
 That the profits of banking arise chiefly from the deposits, bor- 
 
109 
 
 rowing at three, and lending at five per cent., and there is but 
 little profit from their note issues. 
 
 That the issue of notes, however, creates responsibility and con- 
 fidence in the public, and the amount of deposits increase in pro- 
 portion to that confidence ; and it is by the lending of them the 
 profits are made. 
 
 And no Bank in Scotland can carry on business with success 
 without the issue of notes, not so much from the profits arising 
 from their circulation, as for the confidence it gives to the public, 
 and brings deposits to the Bank. 
 
 There is an advantage by issuing notes, but a loss by issuing 
 gold ; the Act of 1844 increases the latter, and limits the former. 
 
 It has been alleged, by those who urged an interference with 
 Banks of Issue, that there would be danger to the credit and 
 monetary transactions of the country if Banks were allowed to 
 issue any amount in notes they pleased ; and it has been alleged 
 that undue speculations have been also encouraged by that means, 
 and therefore the Acts of 1844 and 1845 were passed. 
 
 The intention of the Legislature, by the Restrictive Acts of 
 1844 and 1845, would appear to have been two- fold ; first, to pre- 
 vent an over-issue of Bank-notes ; and, secondly, to guard the 
 Public against loss by their notes being dishonoured. 
 
 By the evidence, all the witnesses agree that no Bank has it in 
 its power to issue and to keep out any number of Bank-notes 
 beyond the wants of the trade, and that no discretion or talents of 
 the Bankers can regulate the circulation, which in reality regulates 
 itself; that one-pound notes will not remain out; and if an excess 
 of notes is issued in any week, the Bank must pay for it in the 
 next ; and in this way a complete check against over-issue exists 
 without any Act of Parliament. 
 
 Mr. Macfarlan, to support his opinion that the requirements of 
 trade did in all cases regulate the amount of currency, whether of 
 notes or coin, stated an instance where the fact of increased busi- 
 ness causing increased circulation, was exemplified in the case of 
 Railroads, as stated in a letter from Mr. Law, of Edinburgh, read 
 to your Committee. In the years 1844, 1845 and 1846, while 
 very extensive Railway works were going on in Scotland, the copper 
 coin became so scarce in towns that a premium of 6d. per pound 
 sterling was thankfully paid for collecting it from the retail shops, 
 and bankers were obliged to get copper from the Mint at an ex- 
 pense of 8d. in the pound. The commercial panic of 1847 having 
 suspended, to a great extent, the Railroad works, the copper coin 
 has returned in plenty to Edinburgh and other towns. The writer 
 adds, " It is evident, from these facts, that a much larger amount 
 of coin is necessary to carry on conveniently a larger amount of 
 business than a small. If the quantity is a fixed quantity, it will 
 be too plentiful when there is little business going on in the coun- 
 try, and too scarce and expensive when there is much business : 
 and if laws were made for the express purpose of making the coin 
 
110 
 
 still more scarce, when most wanted for the convenience of trade, 
 such laws could be productive of nothing but unprovoked and un- 
 mitigated mischief." 
 
 After stating the above facts, the writer asks, " Cannot a true 
 analogy be traced between the bills, notes, gold and silver that are 
 required for a small, and, also, for an extensive commerce ? and, 
 if the natural law which regulates copper coin, has a similar in- 
 fluence on notes, bills, gold and silver, no man need wonder at the 
 recent wants we have suffered while the laws of the country are 
 adverse to this natural influence." 
 
 " These evils are the natural and unavoidable results of a mis- 
 taken case on the part of the Legislature. Commerce, whether in 
 goods or money, is by far most competent to regulate itself, and 
 it can only be safe, profitable and prosperous when entirely left to 
 itself" 
 
 Mr. Bell says, " that bankers have little control over the circu- 
 lation, that they cannot make it larger or smaller in the least ; it 
 is the requirements of the country that regulates it." And Mr. 
 Macfarlan, in proof that Banks cannot circulate more than the 
 Public require, states that " before 1844, the Banks in Scotland 
 were perfectly free, and allowed to circulate as much paper as they 
 pleased, but they never could get out more than 3,000,0C0/. except 
 in busy times, and the witnesses all agree, that every additional 
 Bank tends to limit the circulation, and even to make it less ;" and 
 that may be easily comprehended, when it is stated, that every 
 Joint Stock Bank consists of numerous partners (one of these 
 Banks has 1400 partners) who each make it their business to get 
 as many notes of other Banks as they can to put into their own. 
 There is thus a constant effort making by every partner, to get as 
 many as possible of the competing Bankers' notes out of circulation, 
 and the result is necessarily a decrease rather than an increase of 
 the whole i and it is evident that that kind of restriction operates 
 directly, constantly, and always acts as a better check against over- 
 issue than Legislative enactments. 
 
 INIr. Anderson thinks that it was not the currency of the Joint 
 Stock Banks that required to be limited ; but that it was the loans 
 that required limitation. 
 
 The Act of 1844 allowed of no discretion by the managers of 
 Banks as to the amount of issues, and thus has increased the diffi- 
 culties of banking ; and, although the operation of that Act is 
 chiefly in England, yet, in co-operation with the Act of 1845, he 
 thinks that the distress of the Autumn of 1847 was much aggravated 
 in Scotland by the operation of these two Acts. 
 
 The witnesses have all stated to your Committee, that the Act 
 of 1844, which prohibited the formation of more Banks, created a 
 monopoly in favour of the existing Banks, and enabled them to 
 raise the rates of discount and to increase charges on the commer- 
 cial interests, although it is not clearly made out that the high rate 
 
Ill 
 
 of interest paid by Railways and some other causes, may not have, 
 at the same time, contributed to these results. 
 
 There is some difference of opinion on the subject of new Banks. 
 
 One Banker stated that, if the Act of 1844 had not passed, there 
 would have been five or six new Banks of issue established, and 
 that very injurious consequences would have resulted therefrom ; 
 but another witness differs from him, and thinks that that might 
 have been safely done, and that the Public would profit by the 
 establishment of more new Banks. 
 
 The Bankers who do not object to these Acts, admit that theirs 
 is a somewhat interested opinion ; but the merchants, generally, 
 complain of the operation of those Acts as being generally injurious 
 to the Public by the increase of charges on money dealings. 
 
 It is distinctly stated that if more new Banks were established, 
 the aggregate circulation of notes would not be increased, but 
 would be divided between the new and the old Banks ; the Public 
 would gain by the competition for business, botli as to the rates of 
 discount and allowance for deposits, and the established Bankers 
 would be the losers ; hence the desire of those Bankers to prevent 
 the establishment of new Banks of issue, and to approve of what 
 the Act of 1844 does for them. 
 
 Mr. Bell being asked whether it was right that Bankers should 
 have the discretion of giving such accommodation as they should 
 judge proper, answered, " I think there is a little confusion upon 
 the subject of banking. In Scotland we separate our circulation 
 from our capital. Circulation arises from the requirements of our 
 customers, and our investments depend upon our capital and our 
 resources." He adds, " I draw a distinction between notes in cir- 
 culation for the convenience of exchange, and advances for the 
 accommodation of the country." 
 
 It will be found that a few hundred thousand pounds of currency 
 constitute all the difference between a period of great adversity 
 and a period of great prosperity, so that a banker, whenever he 
 increases his accommodation, whether to hona fide traders or to 
 speculators, must advance from the deposits in his hands, or from 
 the reserves of capital — he must in reality act by his capital and 
 not by his issues of notes. 
 
 It had been alleged at Berwick, that the failures had arisen from 
 a deficiency of currency, but Mr. Bell considered that allegation 
 altogether unfounded, and attributed the distress rather to the 
 tying up of capital in England and Scotland that restricted the 
 accommodation which could otherwise have been given to the pub- 
 lic, and the returns will show that there was more capital tied up 
 at that time than in former years. 
 
 He further adds that if you will leave capital free, the currency 
 will regulate itself ; and he wants no Act of Parliament for that 
 purpose. An Act of Parliament which affects all men alike and 
 lays down a general princi[)le, cannot provide for the peculiarities, 
 and for the particular circumstances, which take place in trade in 
 
112 
 
 different communities, equally with the discretion of the manager 
 of banks. 
 
 Whilst, in the opinion of some of the witnesses, restrictions on 
 the accommodations of bankers may be at times wise and useful, 
 it is admitted that restrictions under other circumstances may be- 
 come the reverse, and might injure the whole commercial com- 
 munity, and therefore the discretion of the bankers ought, in every 
 case of application for discounts and loans, to discriminate, and to 
 act accordingly, whilst an Act of Parliament must operate equally 
 in all cases. 
 
 Caution and discretion are essential to good and useful banking ; 
 bankers do not want restrictions, by Acts of Parliament like that 
 of 1845, which cannot, by laying down a general principle, by 
 possibility provide for the various individual cases that do arise. 
 
 Your Committee agree with the witnesses, who state * ' that the 
 system which encourages public works and commercial enterprises, 
 and at the same time limits the monetary means of exchange, is 
 contradictory and injurious. The two things are contradictory to 
 each other ; that if you contract the amount of money, you must 
 contract what you are to do with it ; you cannot do with a small 
 amount what you do with a large ; and, consequently, tliose re- 
 strictive Acts must be injurious to the trade of the country as long 
 as they continue." 
 
 Your Committee consider that it is clearly made out in evidence 
 that there cannot be either a permanent over-issue of Bank-notes, 
 or any loss to the public from Bank-notes under the system of 
 banking in Scotland ; and, therefore, that the legislative inter- 
 ference in 1844 and 1845 was altogether uncalled for. 
 
 In respect to the obligation under the new Act to keep a larger 
 quantity of gold, Mr. Bell states, " that the bankers never thought 
 of gold ; they held that they converted their notes into gold twice 
 a week by the system established, under which every surplus 
 amount of notes is met by a draft in London." 
 
 It appears by the Return before the Committee, that the amount 
 of gold kept by the Scotch bankers, during the years 1842, 1843, 
 and 1844, varied from 324,000/. to 41 1,000/., whilst it had in- 
 creased in 1846 to 1,284,000/. ; showing an increase of upwards of 
 800,000/. of gold locked up in their coffers, and that quantity of 
 gold is declared by the witnesses to be a loss of capital to that 
 extent, without adding in the smallest degree to the confidence 
 which the pub lie previously had in their banks. 
 
 It is the opinion of this banker that the gold adds no security to 
 the Bank-notes, and would be more useful in London, which is tlie 
 centre of the world, and where it is wanted, than in Scotland, 
 where it is not of the least use. As the Act of 1845 compelled 
 the banks to keep more gold, it is stated that the merchants and 
 commercial interests have been charged a per-centage on their 
 dealings with the banks, which tliey never before paid, to make up 
 the loss to the bankers, from their keeping that quantity of gold ; 
 
US 
 
 and lie therefore wishes the Acts repealed, and that bankers should 
 be left, as before, to keep what amount of gold each may please. 
 
 All the witnesses from Scotland agree that the provision of the 
 Act of 1845, which renders it imperative upon the Scotch bankers 
 to retain a certain amount of gold in their coffers, is expensive and 
 useless. 
 
 The people of Scotland prefer Bank-notes to gold, and often 
 refuse to take gold, which, not being a current coin, passes in 
 many places as bullion. It is stated that no increase of confidence 
 in the safety of the Banks has been caused by the large addition to 
 the gold in their coffers ; that the possession of that gold does not 
 prevent the banks having recourse to their resources in London in 
 the payment of any excess of issues ; and that the taking up of so 
 much gold has been a total and useless loss of that amount of 
 capital. 
 
 Mr. Anderson thinks that if the amount of reserves were pub- 
 lished in Exchequer Bills, that the people of Scotland would be 
 equally satisfied as by the present publication of the amount of gold ; 
 and 
 
 He states distinctly that he " would repeal the Acts, and leave 
 the bankers in Scotland each to carry on their business in their 
 own way, as parties in other branches of business are allowed to 
 carry on theirs;" and Mr. Bell concurs in that opinion, except 
 where he thinks that all banks of issue should have a paid-up 
 capital, as a basis for their Bank-note issues. 
 
 It is further the opinion of some of the witnesses, that if the 
 restrictive Acts had not been passed, the same quantity of gold 
 that answered every purpose of the commerce of the country in 
 1842 would have answered the same purposes in 1847. 
 
 It is satisfactory to your Committee to state, that although a 
 difference exists on some matters of minor importance, all the 
 witnesses concur in the maintenance of the convertibility of the 
 Bank notes on demand ; but one witness expresses his doubts 
 whether convertibility be secure under the present system. 
 
 Your Committee submit some extracts from the proceedings of 
 the Chamber of Commerce in Edinburgh for the past seven or 
 eight years, explanatory of the importance of the subject, and of 
 the interest taken in banking by that body. 
 
 That Chamber was incorporated by Royal Charter in 1786, and 
 consists of upwards of 200 of its chief merchants. 
 
 Mr. Macfarlan, the Secretary, informed the Committee, that the 
 Chamber consider it their duty to attend to whatever can promote 
 the commerce and manufactures of the country, and that they had, 
 for many years, directed their special attention to the banking in 
 Scotland. 
 
 In the year 1841, there was a report that some alteration was to 
 be made in the Banking Laws of Scotland. It was feared that an 
 attempt would be made to suppress the one-pound notes, and the 
 Chamber, which represented the general opinion of the Scotch 
 
 H 
 
114 
 
 merchants, deprecated the change of a system that worked so well ; 
 and they published their opinion in Resolutions unanimously 
 agreed to by the Directors. 
 
 A copy of these Resolutions, dated 21st of April, 1841, was laid 
 before your Committee, and will best explain the opinion of the 
 people of Scotland on that important subject, and their decided 
 opinion against any interference with their banking system. 
 
 " 1st. That the system of banking presently established in Scot- 
 land is well suited to the circumstances of the country, fosters 
 industry, promotes commercial undertakings, and, at the same 
 time, supports the agricultural and manufacturing interests in 
 a state of healthy and vigorous action. 
 
 "2d. That this system, which has now been established for 
 upwards of a century, and has had its safety as well as its 
 utility tested in the most severe and scrutinising manner, has 
 been found to minister to the wants and necessities of the 
 country in the most satisfactory way, neither on the one hand 
 encouraging improvident speculation, nor on the other re- 
 stricting the development of the national resources ; and has 
 thus been directly instrumental in advancing the prosperity of 
 Scotland, and enriching its inhabitants. 
 
 " 3d. That all these advantages have been secured for this 
 country without injury to the nation at large, or the introduc- 
 tion of any schemes calculated to interfere with, or in any 
 degree counteract the views and wishes of the Legislature in 
 its monetary arrangements ; while the weekly exchanges 
 which take place between the respective banks, effectually 
 prevent an over-issue on the part of any one of their number, 
 such over-issue being immediately returned upon them, and 
 the amount paid down on the spot, in Bank of England notes, 
 Exchequer bills, or gold. 
 
 " 4th. That to interfere with this system, so long and so firmly 
 established, and the advantages of which have been so im- 
 portant and so manifold, would be in the highest degree im- 
 politic, hazarding, as it would, the welfare of Scotland for 
 some speculative improvement, subjecting all its interests — 
 agricultural, commercial, and manufacturing — to an expe- 
 riment in legislation, which, however well intended, could 
 scarcely fail of being followed by consequences the most dis- 
 astrous, throwing into confusion, as it necessarily must do, all 
 the existing arrangements of the country. 
 
 " 5th. That the Directors cannot but view with the most serious 
 alarm any proposal to interfere with, or disturb, in any way 
 whatever, this system, which has met with such universal 
 approbation, and against which no disinterested party can 
 point out any existing evil either to the country or to the 
 Government ; and they would therefore deprecate in the 
 strongest manner any such interference, either on the part of 
 the Parliament or of the Government. 
 
115 
 
 "6th. That Petitions, founded on these Resolutions, be pre- 
 sented to both Houses of Parliament." 
 
 The question of banking afterwards occupied the attention of 
 the merchants of Edinburgh at different times. In 1844, when 
 the Charter of the Bank of England was under discussion, they 
 carefully watched the proceedings in Parliament, and in January 
 1845 the Chamber, in their annual Report, deprecated strongly any 
 interference with the system of banking in Scotland, and conclude 
 in the following words : " It is to be hoped that the decided oppo- 
 sition so universally shown to any such attempt (as an interference 
 with the banking system), will induce the Premier to pause in his 
 design, and to propose no measure which does not command the 
 hearty and cordial concurrence of the people of Scotland." It 
 further appears, that a deputation of the Chamber of Commerce 
 had waited upon Mr. Macaulay in Edinburgh, " to call his atten- 
 tion specially to the subject, and point out the great benefits which 
 its system of banking had confirmed in Scotland, and the necessity 
 of maintaining its efficiency unimpaired." Notwithstanding these 
 and other efforts by the people of Scotland generally against inter- 
 ference, the Bill of 1845 was passed. 
 
 In 1847, " when matters were looking gloomy," the Chamber of 
 Commerce of Edinburgh presented, on the 12th of October, a Me- 
 morial, with Resolutions, to Her Majesty's Ministers, praying for a 
 suspension of the Acts of 1844-5, with the view to their repeal. 
 The annual report of the Chamber on the 17th of January 1848 
 states, that " The changes (in banking) introduced by Sir Robert 
 Peel had been uniformly regarded by the Chamber as injudicious, 
 uncalled-for, and positively injurious to the country, and had, 
 therefore, been as uniformly opposed. All opposition, however, 
 was vain." And whilst your Committee refer to that Memorial, as 
 fully pointing out the opinion of the Chamber of the injury to the 
 trade of the country by these Acts, they consider the 3d, 5th, and 
 6th Resolutions so pertinent, that they are here transcribed : 
 
 "3d. That in the opinion of this Chamber, no satisfactory 
 reason has ever been adduced to show, that the banker or 
 money -merchant should be more severely checked and ham- 
 pered in his transactions, than the merchant whose dealings 
 are only in money's worth ; or that the free and unfettered 
 action of the one, is not as indispensable to the healthy state 
 of an increasing commerce as the other. 
 " 5th. That in so far as the existing monetary laws neutralies 
 the excellence of the banking system of Scotland, this Chamber 
 has always viewed them as directly subversive of the best in- 
 terests of the country. Free competition in banking, a 
 numerous proprietary, unlimited responsibility, and a paper 
 currency convertible into silver or gold on demand, has been 
 by long experience matured into a system better suited to the 
 wants and trade of the country, safer in itself, more economical 
 H 2 
 
116 
 
 and convenient, more implicitly relied on by an entire people, 
 than any system ever devised by any State for the service of 
 its subjects ; a system which no State can give, and which no 
 State ought to be allowed to mutilate or take away. 
 " 6th. That in the opinion of this Chamber, no effectual remedy 
 for the evils existing in the monetary affairs of this country 
 can be pointed out, short of the repeal of the various Acts to 
 which these evils can be clearly traced." 
 
 The opinion of the Chamber of Commerce therefore is, that 
 banking should be left as freely to the discretion of the managers, 
 as all other business in the country ; and the witness adds, " it was 
 so in Scotland until this Act, and the result was beneficial to the 
 whole country.*' 
 
 All the four witnesses concur in opinion, that the primary cause 
 of the distress was the same in Scotland as in England — the 
 potato famine in 1846, and the large importations of corn paid for 
 in gold ; that there was an increased export trade to China and 
 other places in 1845 and 1846, but the returns of produce were 
 sold at considerable loss. In the beginning of 1847, considerable 
 transactions in six and twelve months bills, the failure of the corn- 
 merchants, and a demand of money for railways and other pur- 
 poses, all contributed to cause the commercial difficulties in the 
 autumn of that year. 
 
 The approach of the commercial difficulties was indicated by 
 the rate of interest on deposits and loans. Before the year 1844, 
 the usual allowance by the banks to depositors was two per cent., 
 and the charge by the banks for discounts was four per cent. In 
 1846, the allowance for deposits was three to three and a half per 
 cent., the rate of discount was raised to five per cent, and over ; 
 and above that interest, a commission was charged on all cash 
 transactions that had never been before charged. The interest on 
 deposits after May 1847 increased to four per cent., and the rate of 
 discount rose to from six to six and a half per cent. ; and towards 
 the autumn of 1847, the discount was raised to seven and eight per 
 cent. ; and during all the pressure there was little difficulty in ob- 
 taining money on good security at that rate ; but ever since that 
 time there has been an increased value of money, so that public 
 bodies, which used to borrow at four, are obliged to pay five and a 
 half per cent. 
 
 A strong impression existed in Scotland, that the Bank of Eng- 
 land would not be able to pay its notes in gold, and that a national 
 bankruptcy must follow. Mr. Macfarlan attributes that great 
 panic to the Act of 1844, and states his confident belief that such 
 alarm would not have taken place in England, Scotland, or Ireland, 
 if that Act had not passed. Mr. Anderson states, that the com- 
 mercial pressure was greater in 1847 than at any former period in 
 his recollection ; and he also considered that the increased distress 
 
117 
 
 had been chiefly caused by the operation of the Acts of 1844 and 
 1845. 
 
 It is quite substantiated that the issue of the letter of the Go- 
 vernment to the Bank of England on the 25th October, 1847, im- 
 mediately dispelled that apprehension and alarm, and gave relief 
 to the money market. It was also added, that if the Act had not 
 been suspended, he had great fear of the Bank of England, which 
 would have caused " entire confusion." 
 
 Your Committee consider it of importance to ascertain whether 
 the recent distress was actually commercial, or caused by deficiency 
 of circulation ; and, according to the evidence before them, the 
 distress seems to have been altogether commercial, and not 
 monetary. Complaints were made of the scarcity of money, but 
 the difficulty was to obtain credit and good security ; there was, in 
 fact, an increased circulation during the greatest pressure, and, it 
 is distinctly stated, that discounts could always be obtained on 
 good security, though at higher rates of interest ; the alarm in 
 Scotland was more for the safety of the Bank of England than for 
 the banks in Scotland. It is only necessary to refer to the Returns 
 laid before your Committee to see that the average amount of 
 notes in circulation in Scotland in the month of February in each 
 cf the years 1842, 1843, and 1844, was 2,651,217/.; and in the 
 month of November, 3,783,904/. 
 
 The circulation increased in the month of February 1845 to 
 2,982,867/., and in November to 3,784,118/.; that in February 
 1 846 it was 3,097,930/., and in November, 4,046,526/. ; whilst in 
 1847, the year of the greatest commercial difficulties, the circu- 
 lation in the month of February was 3,533,346/., and in November 
 3,783,904/., showing a large increase in the circulation of bank- 
 notes during the heaviest pressure beyond the circulation of 1843 
 and 1844. The actual excess in the month of November 1846 
 was 784,316/., or about 25 per cent. ; and of 522,694/., or 18 per 
 cent, in 1847, more than the average circulation in the same 
 month in the years 1842, 1843, and 1844. 
 
 At the time, therefore, when the increased transactions of the 
 country called for an increased capital, it appears that, by the ope- 
 ration of the Bill of 1844, the Banks were obliged to lock up part 
 of their capital in gold to a considerable amount, which un- 
 doubtedly lessened their means of discount, and prevented their 
 granting loans or discounts to their customers. 
 
 Your Committee desire also to observe that the average amount 
 of gold coin and bullion held by the banks in Scotland in the 
 month of November of the three years, 1842, 1843, and 1844 was 
 372,653/. ; that in the same month in the year 1846 the amount 
 was 1,284,261/., and in November 1847 the amount was 1,100,258/., 
 showing an excess of gold to the amount of 911,608/. locked up in 
 the banks in 1846, and an excess in 1847 of 727,605/. of gold, 
 beyond the average amount of the three years before the operation 
 of the Acts of 1844 and 1845. 
 
 H 3 
 
118 
 
 Some of the witnesses have stated to your Committee that the 
 Acts of 1844 and 1845 are not founded on sound principles, as 
 they impose a limit to the circulation, whilst there is no limit to 
 transactions in trade, and Mr. Salmond, the Manager of the City 
 of Glasgow Bank in Glasgow, stated that " he saw no hope that 
 the trade and manufactures in Glasgow would be restored until the 
 Acts of 1844 and 1845 should be modified ; he, also, attributed the 
 continuance of the panic which exists in Glasgow, and the unwil- 
 lingness of merchants to come under new engagements, to the fear 
 of being brought under the operation of the Act of 1844." 
 
 It is also stated, as the deliberate opinion of the Chamber of 
 Commerce, as well as of other witnesses, that the restrictive parts 
 of the Acts of 1844 and 1845 should be repealed, and your Com- 
 mittee entirely concur in that opinion. 
 
 Your Committee examined three witnesses from Ireland, Mr. 
 M'Donald, Governor of the Bank of Ireland ; Mr. Murray, Manager 
 of the Provincial Bank ; and Mr. Bristow, of the Ulster Bank in 
 Belfast. 
 
 In Ireland, the system of banking is nearly the same as that of 
 Scotland, giving cash credits and receiving deposits; charging 
 6 per cent, as the maximum on discounts to merchants, and al- 
 lowing 3 and 3 J per cent, on deposits ; but interest is not allowed 
 in daily operations as in Scotland ; ten days' notice is required for 
 all deposits on which any interest is allowed. 
 
 The exchange of notes takes place between the Banks in Ireland 
 as in Scotland, but the periods of exchange vary. In Belfast there 
 is a daily exchange, regulating the whole circulation ; in Ulster 
 the exchanges with the branch Banks are not so frequent, but they 
 are made according to the extent of trade in the several towns, 
 some twice and some thrice in the week : Exchequer bills are em- 
 ployed for that purpose as in Scotland, and by this means the 
 same sufficient check is kept in Ireland against over-issues and 
 against losses by Bank-notes as in Scotland, and therefore no Act 
 of Parliament seems to be requisite to interfere with Banks of issue 
 in either country. 
 
 Mr. James Bristow states, that the Act of 1845 affects the Irish 
 Banks in a manner in which it does not affect the Scotch Banks ; 
 the notes of Scotch Banks are all payable at the head office in 
 Edinburgh or Glasgow ; the notes are circulated by the branch 
 Banks, but are payable in gold only at the head office. By an ex- 
 press law the Irish Banks are obliged to provide for their notes at 
 every branch where they are issued ; the Banks are consequently 
 obliged to keep a supply of coin at each branch Bank equal to the 
 demands that are likely to be made on them ; and yet, by the law 
 of 1845, the Banks are only permitted to issue notes beyond their 
 average amount upon gold and silver at the four offices, which are 
 called head offices, for the purpose of that Act ; all the gold held 
 at the other offices, where they are by law obliged to pay their 
 notes, is not permitted to be counted in regard to the over-issue of 
 
119 
 
 notes ; that appears to be an injustice, and applies equally to all 
 the Banks in Ireland. 
 
 In Ireland there appears to have been little commercial distress, 
 compared with what was experienced in England and Scotland. 
 
 There was no pressure in the money market until the end of 
 1847, and that very light. 
 
 The failure of the potato crop caused some apprehensions, but 
 the trade was good all 1846 ; discounts were from 4^ to 5 per cent, 
 until December of that year. 
 
 In the spring of 1847 the rate of interest was raised to 6 per 
 cent., and to 6 J and 7 per cent, between May and October 1847, 
 when it was raised in self-defence to 8 per cent., in consequence 
 of the letter of the Chancellor of the Exchequer of the 25th Oc- 
 tober to the Bank of England fixing that rate of interest ; the rate 
 of interest would not have been raised in Ireland but for that 
 letter. 
 
 There was no want of circulation, although in December 1844 
 the circulation had been 7,839,530/., and in May 1848 only 
 4,840,672/. ; but during the whole year 1847, the banks had a 
 large amount of unemployed notes, and there was no difiiculty at 
 any time in discounting good bills. 
 
 The failure of the corn merchants in July 1847 had little effect, 
 and advances to railroads scarcely any. 
 
 The issues of notes might, at any time, have been increased 
 more than 700,000/. on the gold in the banks, if there had been 
 any need. 
 
 Mr. M'Donald recollected the panic of 1825, which was much 
 more severe than that of 1847. 
 
 Mr. Murray does not think that the Act of 1844 aggravated the 
 difficulties, or caused an additional amount of 50,000/. of gold to 
 be kept ; and he states that there was no panic in Ireland in 1847 ; 
 the large expenditure of the Government in that country pre- 
 vented it. 
 
 The Acts of 1844 and 1845, in the opinion of both witnesses, 
 had little effect on the commercial affairs or circulation in Ireland. 
 
 Mr. M'Donald thinks that the Act of 1844 may have given more 
 stability to the Banks ; the Act of 1845 prevented the establish- 
 ment of any new Banks, but from the fresh recollection of the 
 failure of the Agricultural Bank, there was little probability of any 
 new Bank being established if the Act had not passed. 
 
 Mr. Bristow states that there was no over-trading in 1846 ; they 
 did not feel any commercial difficulty until April 1847, and then 
 they only felt the effect of the difficulty in London. The Act of 
 1844 was, however, in his opinion, the cause of serious aggrava- 
 tion as soon as the reserve of the Bank of England got small ; that 
 the Act of 1845 has done no injury in Ireland, as the circulation 
 has been sufficient for all the business of the country, which has 
 been of late much depressed. 
 
 There was no panic at any time in Belfast. 
 
 H 4 • 
 
120 
 
 Mr. Bristow says that they were perfectly satisfied with the 
 Banking Laws before 1844, and wanted no change ; he advises 
 the entire repeal of the Act of 1844. " I think," says Mr. Bristow, 
 " putting an absolute limit, which is perfectly inflexible, is a very 
 objectionable thing for the trade of the country; and, as far as my 
 observation goes, the Bill has produced considerable injury." 
 
 Mr. Murray considers that there is a necessity for a power of 
 relaxing the Act of 1844, and that the Chancellor of the Ex- 
 chequer should be empowered by law to do so when necessary ; in 
 his opinion, there would not have been a sovereign left in the 
 Bank of England if the relaxation had not been made in October 
 1847. He further recommends that the Act of 1845 should be 
 amended. 
 
 Mr. Bristow states, that there never is a gold circulation in 
 Ulster, and in Belfast there is a small demand for gold at the time 
 emigrants are leaving the country. 
 
 Your Committee submit these as the opinions of the Irish wit- 
 nesses ; and the House will be able, after seeing the evidence, to 
 judge whether two Acts requiring such amendments, and even a 
 temporary suspension, ought to be continued. 
 
 APPENDIX F. 
 
 LETTER FROM MR. SALT TO SIR ROBERT PEEL. 
 To the Right Hon. Sir R. Peel, Bart., M.P. 
 
 Sir, — I have hesitated to address you on the subject of your 
 speech on Mr. Herries's motion, considering it too great a penalty 
 on a member of Parliament that a speech in the House should 
 subject him to a correspondent out of it ; but I have this day 
 received so many applications, by letter and otherwise, not to let 
 your observations on my evidence pass unnoticed, that I am com- 
 pelled to think the case warrants the intrusion. 
 
 Allow me, Sir, in the first place to thank you for your strictures 
 on Mr. Richard Spooner. If be did allow himself to be brow- 
 beaten on the Secret Committee into a denial of the currency doc- 
 trines I maintained, and whose truth he will not dispute, or if he 
 thought it expedient not then and there manfully to stand by them 
 against all odds, it was a moral weakness deserving your reproof; 
 but I think I may venture to answer for him, that if he did com- 
 mit this error, he will amply redeem it on the very first occasion 
 the question shall be discussed in the House of Commons, and it 
 appears it will be discussed again, though settled for ever in 1819, 
 and again finally settled in 1844. 
 
 Allow me. Sir, to draw your attention to the strange signi- 
 
1^1 
 
 ficance of this perpetual resurrection, which comes like the im- 
 perishable evidence of ill-deeds done. It is in vain that all inquiry- 
 has been pertinaciously refused, all discussion repressed by every 
 unfair influence, all dissent from the Bill of 1819 treated as folly 
 or fraud. Burking, browbeating, mystification, have been vain, 
 the question ever reappears in more formidable shapes, and more 
 irresistibly demands attention ; and now, by a singular fatality, 
 yourself, the author of the Bill and head of the opposition to its 
 re-discussion, make a quotation from my evidence before the Se- 
 cret Committee more calculated than any other to challenge public 
 attention. 
 
 I reproduce your quotation : — 
 
 " Sir Robert Peel asked — Will you state whether I correctly 
 understood you as saying that that national paper should be issued 
 ad libitum till the period when prices were remunerative^ and 
 every industrious able-bodied man found full-employment ? — 
 Certainly. 
 
 " When that object was achieved, you would fix your standard 
 at that point ? — Yes. 
 
 " Till you had achieved that object, till prices were remunera- 
 tive, and all able-bodied industrious men had employment, we 
 should have an unlimited issue of paper ? — Yes ; the only reason 
 I say that is, that under the present system we have so far de- 
 parted from what is right in the basis. We have had such extra- 
 ordinary fluctuations that we cannot now tell where we are. It is 
 necessary to take an observation, but the great principle is that 
 the labourer should have his wages, the manufacturer his profit, 
 and that the creditor should have his due — that the labourer 
 should have his value for his labour as well as the wealthy man, 
 the creditor the value of his money. 
 
 " Do I correctly state your views when I state that you would 
 propose that national paper should be issued without limit, or 
 without any reference to any metallic standard of value, until the 
 period shall have arrived when the prices generally should give to 
 every able-bodied industrious man full employment ? — You cor- 
 rectly understand me." 
 
 It does not. Sir, appear clearly in the report of your speech 
 what was your object in making this quotation from my evidence ; 
 but, from the general tenour of your observations, and from the 
 "laughter" and "much laughter" in the House, I infer that you 
 meant to impress your hearers with the belief that the scheme was 
 wild and visionary. If these were your objects and views, they 
 were in direct opposition to fifty years of facts. ^ i 
 
 During the whole of the war a sufficient issue of inconvertible / / 
 paper money did, as you well know, maintain remunerative prices [ / 
 and full employment for labour. ' 
 
 With this great fact in evidence before you, where was your 
 warrant to treat my evidence so lightly? But let us see what 
 follows : — 
 
122 
 
 Under the paper system the country was powerful, prosperous, 
 contented, and loyal. The prosperity of the country was proved 
 by its power of paying taxation. The preparation for your Bill 
 began in 1816; in 1819 it was finally passed. The whole scene 
 was changed. An unparalleled depression of prices filled the 
 country with ruin and insolvency, and the labourers were at once 
 thrown out of employment. The peasantry firing the ricks ; the 
 Luddites breaking the machinery; the blanketeers and colliers 
 marching to London ; the Cato-street plot ; the Peterloo massacre ; 
 misery, insolvency, disorder, and discontent, everywhere gave 
 fearful evidence of the agony that was convulsing society, and 
 threatening its entire dissolution. 
 
 Was all this suffering, so unparalleled in its extent and severity, 
 the effect of your Act ? Was it indeed this Act that did convert 
 the wealthiest and most industrious nation on earth into a mass of 
 disaffected and desperate insolvents and paupers ? The ruin fol- 
 lowed the Act ; the suspension of the Act was the remedy sought. 
 
 In 1822 Lord Castlereagh brought in five Bills, all tending to 
 the suspension of the operations of the Act of 1819. An unequalled 
 prosperity followed. If the evil was not in the Bill, how came it 
 so closely to follow its enactment ? Why was its suspension the 
 only remedy ever sought ? Wherefore was its suspension followed 
 by such a burst of prosperity ? The issue of paper money did re- 
 store remunerative prices and the full employment of labour, the 
 contentment of the people, and their attachment to the institutions 
 of the country. The renewed operations of the Bill was marked 
 by a renewal of the national calamities and discontent. 
 
 It is further in evidence that in every subsequent period of 
 distress, the only remedy resorted to by each successive government 
 was still a relaxation of the Bill, even down to the Chancellor of 
 the Exchequer's letter of October, 1847, and the relief obtained 
 has always been in proportion to the degree of relaxation. The 
 experimentum crucis has been repeated during thirty years, always 
 with like results. 
 
 When the vast calamities attendant on that gigantic error are 
 considered, the persevering attempts to conceal their source from 
 public indignation are explained. Hence the counting out of the 
 House, the pretended scorn of the Birmingham opinions, the 
 ridicule heaped on them, the charge of fraud brought against them. 
 All these things become clearly explained, and excite no surprise ; 
 but I do wonder at the audacity that would continue to maintain a 
 system so fatal. An error so persevered in becomes a crime. It 
 is a crime, if persevered in, the laws may recognise. 
 
 I proceed now. Sir, to examine, briefly, the special effects of the 
 Bill in the year 1847. 
 
 The potato crop failed, and an importation of food became ne- 
 cessary ; the food was imported at a cost not exceeding half per 
 cent, on the national wealth. It might hare been paid for in goods 
 or in gold, and the limit of the loss would have been the amount 
 
123 
 
 paid, a sum too insignificant, compared to the national resources, 
 to have been perceptible, and the national industry could have re- 
 placed it in a few weeks. 
 
 But the Bill of 1819 had made gold the basis of our whole sys- 
 tem ; and, therefore, when tlie gold was exported to pay for the 
 food, the whole system was broken up ; and the Bill provides that 
 this calamity shall in every case be added to that of a bad harvest ; 
 that the abstraction of an infinitesimal part of our money shall 
 destroy our whole monetary system ; that the purchase of a small 
 quantity of food shall cause an immense quantity of starvation, by 
 destroying the means of distributing the food, and employing la- 
 bour. If this were the only evil of the Bill, its existence ought not 
 to be tolerated an hour. i i 
 
 Instead of placing the national credit and solvency on the broad I I 
 and indestructible basis of the national industry and wealth, you i ' 
 have placed all the great national interest on gold, the narrowest j I 
 and most shifting, and therefore the most unfit, basis it was pos- j | 
 sible to choose. You could not have done worse. 
 
 The gold being in quantity perfectly unequal to effect the ex- 
 changes needful for the existence of society, an immense and dis- 
 proportioned superstructure of paper money and credit became a 
 compulsory result, and a certain cause of perpetually recurring 
 ruin. 
 
 In framing the Bill of 1819 you do not appear to have had a 
 suspicion of this consequence; but in 1844, after an interval of a 
 quarter of a century, this much seems to have dawned obscurely 
 in your mind; but, alas! what was your remedy — enlarging and 
 securing the too narrow and shifting basis ? Not at all ; you crip- 
 pled and limited the superstructure. You left us subject to the 
 whole of your original error, and provided a new one! 
 
 The Bill of 1844 provides that in proportion as the gold money 
 shall disappear, the paper money shall disappear also ! Out of the 
 money thus doubly reduced, the unhappy people are compelled to 
 pay unreduced taxes, and out of the inadequate remnant to dis- 
 charge unreduced debts, and to provide for the unreduced neces- 
 sities of their respective stations. So the leaven of the law works 
 its way through all society. The payments cannot be made out of 
 these reduced means, the loss of the credit follows the loss of the 
 money, the means of exchange, employment, and consumption are 
 destroyed, and the world looks with amazement on the consum- 
 mation of your work — the wealthiest nation in the world, withering 
 up under the blight of a universal insolvency, an abundance of all 
 things beyond compute, and a misery and want beyond relief. 
 
 It is true that through all this the price of gold has been main- 
 tained at 3/. 17*. lO^d. per ounce, in round numbers call it 41. the 
 ounce — that is to say, four sovereigns weigh an ounce, and there- 
 fore gold must always be four sovereigns an ounce. Do you still 
 deny that the price is fixed ? 
 
 But though you fixed the price which is the index of value, you 
 
124 
 
 did not only not fix the value, but by restoring and maintaining 
 the monopoly of gold as the only ultimate means of discharging 
 debt, you raised its value indefinitely. But the price was fixed, 
 and therefore the change in value was not ascertainable by the 
 generality of mankind. 
 
 This, then, is the whole amount of the benefit of the Bills of 
 1819 and 1844 — that the debtor may be called upon to pay double 
 the value of his debt without knowing he is so defrauded. Your 
 assumed physicianship amounts to this — you administer the poison, 
 but gild the pill ; ttie patient dies, but the doctor thrives ; your 
 promise is life, your gift is death. 
 
 You have fixed the price and raised the value of gold, but you 
 have broken down the value of everything else. Look on the 
 wreck, what interest is there in this vast empire that is not in- 
 jured? Pass them in review, from the ruined merchant to the 
 workhouse pauper. Have you, Sir, no visions in your sleep ? 
 
 The Bill did promise gold payments, but did keep that promise 
 in strange fashion — not by sufficient supplies of gold, but by limi- 
 tation of paper money ; the amount of gold was not raised to the 
 needful level of paper, but paper was cut down to the arbitrary or 
 accidental level of gold. This limitation of the quantity of money 
 raised its value, and broke down the value of property everywhere 
 below the cost of its production. This is the source of the ruin 
 which presses on the East Indies, on the West Indies, on every 
 part of the empire. You know that free issues of paper would 
 restore prosperity and employment as it did in 1824 and 1825, 
 secure equal justice to the debtor and creditor, and yet you think 
 the subject of no graver import than to serve as a matter of merri- 
 ment to the ignorant bulk of your hearers. 
 
 You are reported. Sir, in all the papers to have said (but it is 
 not credible you should have done so) that the possession of 
 15,000,000/. of gold will secure the convertibility into gold of 
 48,000,000/. of paper. (You seem to have forgotten Exchequer 
 bills and saving-banks). This wonderful Bill does not then give 
 us an arithmetical security, but leaves us dependent for its sole 
 boon on some secret and wizard potency. But 48,000,000/. is not 
 the limit of our debts ; these are thousands of millions : will 
 15,000,000/. insure their convertibility into gold, will it provide for 
 the sale of all property, and all tlie needful exchanges our ex- 
 istence requires ? 
 
 But we are not even sure of these 15,000,000/. Supposing 
 5,000,000/., or 10,000,000/., or 15,000,000/. of gold to be exported 
 for food, why in that case we are not sure of the Bill. It exists then 
 only to hamper us when not needed, and when needed to force 
 convertibility it is to be suspended, so that all our sufferings are 
 borne to maintain an unsubstantial shadow that does not realise its 
 own slender promise. 
 
 But, again, on your own showing, under what view do you, the 
 supporter of the Bill, foreshadow the suspension of the Bill ? As a 
 
125 
 
 calamity ? No, as a relief ! You are reported to sum up the 
 48,000,000/. of paper money the Bill allows with the explanation. 
 " Is this restriction ?" But you make no calculation of the mass of 
 transactions to be performed. What strange political tailoring to 
 swear to the sufficient size of the garment without any reference 
 whatever to the body it is to cover ! 
 
 You are reported. Sir, also to have said on another occasion that 
 you believed the Gemini letters must be written by more than one 
 individual, as you felt sure no one person could be found capable 
 of writing so much nonsense ; but for the proof, Sir, which your 
 Bills of 1819 and 1844 supply of what may be done by one indi- 
 vidual, I should be compelled to believe that your speeches on the 
 currency must be the work of many reporters. It is difficult to 
 believe one person to be possessed of such a fertility of error. . i 
 
 The sole aim of your Bill has been to convert paper money into I 
 gold. I have shown how signally you have failed in this one ob- * I 
 ject, always excepting your special claim of converting 48,000,000/. 
 of paper money into 15,000,000/. of gold, for which mutation I sus- 
 pect few will thank you. In all other respects the whimsicality of 
 your fate has been to establish a universal inconvertibility. Labour 
 cannot be converted into wages, East India estates. West India 
 estates, railway shares, sugar, rice, cotton goods, &c. ; in short, all 
 things are inconvertible except at the cost of utter ruin. There 
 has been nothing like it since the days of Midas. 
 
 In opposition to this universal inconvertibility our Birmingham 
 doctrine is, that money, which is the medium of exchange, should 
 be maintained in such perfect equilibrium with labour and pro- 
 perty, that it shall always be easy to convert property and labour 
 into money at fair and remunerative rates ; that through the wise 
 regulation of this powerful agent, labour shall be fully employed 
 in creating wealth, and that money, which is the organ of distri- 
 bution, shall keep demand in harmony with production, ministering 
 on the one hand to the wealth and power of the country, and on 
 the other to the happiness of its people. 
 
 I have spoken freely. Sir ; it is my habit, but I assure you that 
 if a single word personally disrespectful has crept into this letter, 
 it is wholly unintentional on my part. I have wished in all re- 
 spects to have, as I have felt, the deference due to your rank and 
 station, but I have wished to speak the truth and to state facts. 
 The facts, Sir, are of your creation, not of mine. I cannot alter or 
 disguise them. You have had confided to your administration, by 
 our illustrious Sovereign, this most powerful State, of almost un- 
 limited extent and fertility — a people unrivalled in their know- 
 ledge, caution, skill, and energy, possessed of unlimited means of 
 creating wealth, and out of all these elements of human happiness 
 your measures have produced a chaos of ruin, misery, and discon- 
 tent. You can scarcely place your finger on the map and mark a 
 spot in this vast empire where all the elements of prosperity do 
 not exist abundantly, you cannot point out one where you have 
 
126 
 
 not produced results of ruin. Every resource is paralysed, every 
 interest deranged; the very empire is threatened with dissolution. 
 The Canadas, the West Indies, and Ireland, are threatening seces- 
 sion, and England has to be garrisoned against its people as against 
 a hostile force ; the very loyalty of English hearts is beginning to 
 turn into disaffection. Review once more these vast resources and 
 these wretched results, and I trust you will not make the most 
 fatal opinion of your life the only one to which you will persist in 
 adhering. 
 
 I am, Sir, very respectfully, 
 
 Your humble and obedient Servant, 
 
 T. Glutton Salt. 
 
 [tjsivbesity; 
 
 THE END. 
 
 London : 
 
 Printed by T. C. Shaw, 
 
 New-street- Square . 
 

 UNIVERSITY OF CALIFORNIA LIBRARY 
 
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