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currency. Seven-eighths of the rents of estates were paid in the paper currency of Scotland, and no loss had been sustained in consequence of it. After a debate of two nights, the motion was carried by 154 to 45. The Act (Statute 1828, c. 65) provided that after the 5th of April, 1829, no corporation or person whatever should publish, utter, negotiate, or transfer in any part of England, any promissory note, draft, engagement, or undertaking in writing, payable to bearer on demand, for less than £5, or upon which less than £5 remained unpaid, which should have been made or issued, or purport to have been made or issued, in Scotland or Ireland, or elsewhere out of England, under a penalty of not less than £5, or more than £20. The same exemption as to cheques as in the former Act.

49. In 1832, during the crisis of the Reform Bill, a run upon the Bank took place, which lasted for about a fortnight; but, as it was merely from political feeling in London, and did not extend into the country, no serious result ensued.

50. The Bank charter expired at the end of one year's notice, to be given after the 1st August, 1832, and this time the Bank had done no such services to the Government as to be in a position to demand from it a renewal of its monopoly several years before it expired. Moreover, these exclusive privileges, as Lord Liverpool said in 1825, were out of fashion. Many great monopolies were now on the eve of breaking up, and the public mind was more roused and enlightened on the subject of banking, from the discussions caused about the severe distress of 1825. Before taking any steps towards a renewal of the charter, the Government determined to have an inquiry before a Secret Committee of the House of Commons, which was appointed on the 22nd of May, 1832, and consisted of the following members

Lord Althorp, Sir Robert Peel, Lord John Russell, Mr. Goulburn, Sir James Graham, Mr. Herries, Mr. Poulett Thompson, Mr. Courtenay, Colonel Maberley, Sir Henry Parnell, Mr. Vernon Smith, Mr. John Smith, Mr. Roberts, Sir M. W. Ridley, Mr. Attwood, Sir J. Newport, Mr. A. Baring, Mr. Irving, Mr. Warburton, Mr. G. Philips, Lord Morpeth, Mr. Morrison, Mr. Heywood, Lord Ebrington, Sir J. Wrottesley, Mr. Lawley, Mr.

Cavendish, Alderman Wood, Mr. B. Carter, Mr. Strutt, Mr. Stanley, Alderman Thompson.

51. The Committee was appointed during the height of the political excitement attending the passing of the Reform Bill, and sat for some months, and did not make any report till the end of the Session. The inquiry was extremely incomplete. Many of the most interesting subjects connected with it were scarcely touched upon. But the close of the Session made them report the evidence to the House as far as it had gone. It was expected that a new committee would have been appointed in the new Parliament to continue the inquiry, but the Government in the meantime made up their mind as to the changes they intended to make in the Bank monopoly, and dispensed with any further inquiry.

52. Although the inquiry was left in a very incomplete state as to many branches of the subject, the evidence given embraced many interesting points. The most important of which were, the rules adopted by the Bank for regulating their issues -the expediency or the contrary of publishing their accountsthe expediency or the contrary of establishing Joint Stock Banks, or of having one or more Banks of Issue in the metropolis-the causes of the panic of 1825, and the action of the Bank during that period-the advantages, or the contrary, of making Bank notes legal tender, and the effects of the usury laws on com


53. The great truths regarding the regulation of a paper currency, which had been approved of by the Bullion Committee were now unanimously recognised by the directors, and Mr. Horsley Palmer, the Governor of the Bank, being asked by what principle, in ordinary times, the Bank was guided in the regulation of its issues, said, that in a period of full currency, and, consequently, with a par of exchange, the Bank considered it desirable to invest two-thirds of its liabilities of all sorts in interest-bearing securities, and one-third in bullion. The circulation of the country being then regulated by the action of the foreign exchanges, the Bank was extremely desirous to avoid using any active power of regulating the

circulation, but to leave that entirely in the hands of the public. The action of the public was fully sufficient to rectify the exchanges without any forced action on the part of the Bank in buying or selling securities. He thought it desirable to keep the securities very nearly at the same amount, because then the public could always act for themselves in returning notes for bullion for exportation when the exchanges were unfavourable, and if there was a great influx of gold, the Bank could always re-assume its proportion by transferring part of the bullion into securities. He considered that the discount of private paper was one of the worst means which the Bank could adopt for regulating its notes, as it tended to produce a very prejudicial extension of their notes. He condemned strongly the practice of the Bank during the restriction with respect to the extensive discounts of mercantile paper at 5 per cent. when the market rate was much higher, which necessarily led to an excessive issue.

54. The great majority of the witnesses were in favour of a publication of the accounts of the Bank, as tending to inspire greater public confidence than the mystery in which they were then enveloped, and also acting as a check upon the directors themselves. Almost all the witnesses were against the establishment of joint stock banks in London, as they would tend to injure the private bankers. Considering the ideas of the age, when class interests were supreme, we need not be surprised at this unanimity of feeling; nor that it rather escaped the attention of the witnesses that it was not the interests of the private bankers, however respectable they were, that was the paramount consideration, but what was best for the public good. And still more decidedly were the witnesses opposed, with scarcely an exception, to the establishment of any new joint stock banks of issue in London. There was a very prevalent feeling that Bank of England notes should be made legal tender, as a means of allaying a drain on the country bankers for gold during a panic.

55. It was at this time that we may date the first prominent appearance of the great modern heresy, that bills of exchange and cheques form no part of the circulating medium or currency. As this unhappy doctrine, however, was much more emphatically



pronounced a few years later, we may defer considering it to that period. The committee pronounced no opinion of their own on the various points brought out in the evidence.

56. The harvest of 1832 was unusually abundant, which caused a great depression of the price of all sorts of agricultural produce towards the end of 1832, followed, of course, by "agricultural distress." This was brought before the notice of Parliament in the speech from the throne at the opening of the Session of 1833, and a committee was appointed to inquire into it. This distress afforded the irreconcileable enemies of the Act of 1819 another opportunity of attacking it. Mr. Attwood moved for a committee to inquire how far the present distress was connected with the monetary system. Lord Althorp immediately met the motion by an amendment, that any change in the monetary system which would have the effect of lowering the standard of value was inexpedient, which, after a debate of three nights, was carried by a majority of 304 to 49.

57. On the 31st May, 1833, Lord Althorp moved a series of resolutions for the renewal of the Bank Charter, one of which was, that so long as the Bank was bound to pay its notes in gold, Bank notes should be declared legal tender, except by the Bank itself. Several members wished for further delay to consider the resolutions, as the Session was nearly at an end; but Sir Robert Peel was decidedly of opinion that the House would be abandoning its duty if it consented to postpone the question. He was of opinion that it was desirable to continue the privileges of the Bank, and that there should be but one bank of issue in the metropolis, in order that it might exercise an undivided control over the issue of paper, and give facilities to commerce in times of difficulty and alarm, which it could not give with the same effect if it were subject to the rivalry of another establishment. He resisted, at great length, the proposition for making Bank notes legal tender, as a departure from the principle of the Act of 1819, and the true principles that should govern a paper currency. It was decided, by a majority of 316 to 83, to proceed with the consideration of the resolutions. The plan of making Bank notes legal tender gave rise to much difference of opinion, but was carried by 214 to 156.

58. We have already seen that the public had attempted, at various times, to form rival banking companies to the Bank of England, and in 1709 and 1742, the Bank Acts had been framed to stop up various loop-holes which had been successively discovered. In 1742, the phraseology used had been supposed to be quite effectual for that purpose. At that time, the custom of giving notes payable to bearer on demand to their customers in return for deposits, was considered so essentially the fundamental idea of banking, that to prohibit the giving of these notes was deemed an effectual bar upon carrying on the business of banking. But in process of time-about 1793-the London bankers discontinued issuing notes payable to bearer on demand. The Act of 1742 was considered to be so effectual a bar upon establishing banking companies in general, that for a long time it escaped public observation that the method of doing business by way of cheques enabled banking companies to elude the wording of the Act of 1742. In 1796, when, in consequence of the restrictive measures of the Bank of England, much distress was felt in London from the want of a circulating medium, an association of merchants and bankers was formed, for the purpose of providing a circulating medium which should not infringe the privileges of the Bank; the question was considered by them, in what the Bank's privileges of exclusive "banking" did consist, and they determined, "The privilege of exclusive banking enjoyed by the Governor and Company of the Bank of England, as defined by the Acts of Parliament under which they enjoy it, seems to consist in the power of borrowing, owing, or taking up money on their bills or notes payable on demand." About the year 1822, some writers detected this flaw in the monopoly of the Bank, and maintained that a joint stock bank of deposit was no infringement of the Charter, and that such banks might be formed, and carry on a very successful business without issuing notes at all, but by merely following the practice of the London bankers by adopting cheques. Though this idea was much discussed in pamphlets at that period, no practical result ensued.

59. It is somewhat remarkable that the discovery should have been allowed to lie unfruitful for so long a period. When the Government first entered into negotiation with the Bank in 1833,

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