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letter would have relaxed these necessary exertions. But to that pressure a panic succeeded, which could not be provided against or foreseen by legislation, which could not be reasoned with, and which could only be met by a discretionary assumption of power by the Government suitable to the emergency. Whether any modification in the Act of 1844 was desirable, was a question for future consideration. His own opinion was in favour of the maintenance of the great principles of that measure. If the identical restrictions were not imposed upon the Bank as were then in force, still there must be some restrictions; for, after the experience of 1825, 1836, and 1839, he for one would not be content to leave the regulation of the monetary concerns of this country to the uncontrolled discretion of the Bank. In 1844 the general conviction was that it ought not to be so left, and he for one knew no better mode of imposing restriction than that which was devised by the Act of 1844.” Fully agreeing with Sir Robert Peel on the necessity for a restriction, we think that the restriction devised by the Act of 1844 is not the true one, and that it leaves open the door to the Bank for the most fatal mismanagement. We shall endeavour to shew, in a future chapter, that one may be devised which must be effectual.

33. The Committee appointed by each House began to sit in February, 1848. The Governor, Mr. Morris, and the DeputyGovernor, Mr. Prescott, were examined at great length before each Committee, and expressed their unqualified approbation of the Act of 1844, and the manner it had worked. The object of the Act was to place the circulation of this country exactly in the same position as it would have been if the currency had been entirely metallic.

"Your opinion is, then, that with regard both to the contraction of the currency and the expansion of the currency, they would both have taken place precisely in the same mode, and to the same degree, had the currency been purely metallic?"

Mr. Morris-"Yes, I have not the slightest doubt upon the subject."

They said that its object was to secure the convertibility of the note, which it had effectually done. That the Bank acted erroneously in the spring of 1847 in not raising their rate of

discount sooner, which much contributed to the monetary pressure in April. They said that the Government letter of the 25th October was not sought for by them, nor issued in any way at their instance, that they had no fear whatever for the Bank, and that it was not required to maintain the solvency of the Bank; but, nevertheless, it had the best effects in allaying the commercial panic. That the panic would inevitably have occurred even without the Act of 1844, but that Act brought it on sooner, and probably made it less severe. That the great merit of the Act was, that when the pressure did come, the Bank was in possession of £8,000,000 of treasure; that if the Bank had been left free it would probably have followed the course of dangerous liberality which it had done on so many previous occasions. That, though the Government letter did relieve the panic, it would probably have passed away without it. They earnestly deprecated any alteration of the Act, except that they thought the permission to issue notes upon silver bullion too limited.

34. Mr. S. Gurney agreed in blaming the management of the Bank during the first three months of 1847, and said, that if the Bank had commenced restrictive measures much earlier, the pressure of April would have been mitigated. He said, that in October the rapid diminution of the reserve caused a very general distrust among the public as to how they were to obtain circulating medium. The wealthy and more powerful took care very largely to over-provide themselves, infinitely beyond the necessities of the case. The consequence was, that the notes in the hands of the public amounted to nearly £21,000,000, of which he had no doubt that four or five millions were locked up and inoperative in consequence of the alarm and fear of not being able to get Bank notes at all. In illustration of this, he said that his own house was largely called upon for money on Saturday, the 22rd, not from distrust of the house, but from doubt that Bank notes were to be had at all. They applied to the Bank for discount to a large amount, which was agreed to, but they were told the rate must be 10 per cent.; upon remonstrating with the Governor, and saying that it would have the worst effect if it became known that their house was paying 10 per cent. for money, the rate was finally agreed upon at 9 per

cent. At this rate they took £200,000. On Monday, the 25th, however, the demand was again very heavy, and they applied for £200,000 more. It was a case of difficulty with the Bank under its reduced reserve and the limitation of the Act, and a final decision was postponed till two o'clock. At one o'clock, however, the letter from the Government was announced, authorising the relaxation. Its effect was immediate. Those who had sent notice for their money in the morning sent word that they did not want it, and that they had only ordered payment by way of precaution. After the notice, they only required £100,000 instead of £200,000, the alarm passed off, and by the end of the week they had to ask the Bank, as a favour, to be allowed to repay the money they had taken. Mr. Gurney stated, that the experience of the last two years had altered his opinion respecting the Act, and that he thought it necessary there should be a relaxing power somewhere.

35. Lord Overstone was of opinion that the Act of 1844 had no effect whatever in aggravating the pressure in April; that the course pursued by the Bank from January to April was extremely erroneous and detrimental to the public interest, and was only stopped by the positive provisions of the Act; and, if that system of procedure had not been so stopped, it must have ended in the most disastrous consequences.

36. Mr. George Carr Glynn had been of opinion before the Act passed that the division of the Bank into the issue and banking departments was a desirable experiment, but, after the experience of the preceding year, considered that it had decidedly failed.

37. The Committee of the Commons, presented their report on the 8th June, 1848. It entered into no philosophical examination of the correctness, or the contrary, of the opinions of the witnesses; it aspired to and attained to no higher function than acting as a kind of preface to the mass of evidence, but concluded by stating the opinion of the Committee that it was not expedient to make any alteration in the Act of 1844. The Report of the Committee of the Lords was presented in July, and was a much more elaborate production. It not only examined the evidence at considerable length, but pronounced an opinion of

its own, and recommended that the Act should be so far amended as to introduce a discretionary relaxing power, which was only to be exercised during the existence of a favourable foreign exchange.

37. On the 22nd of August Mr. Herries moved that the House would, early next Session, take the Report into consideration, which motion was negatived. In the next Session he made another attempt to induce Parliament to alter the Act, but without avail.

38. After the severe medicine the body commercial had been subjected to by the great crisis of 1847, which there can be little doubt was of great service, by removing houses that had been insolvent for years, the commerce of the country was established on a sounder basis, and had gone on, generally speaking, with great prosperity up to the autumn of 1857. The chances of war led to a great demand for shipping, and, of course, much speculative dealing in that property. This occurred especially at Liverpool in the autumn of 1854, and led to some very extensive failures. The revelations which ensued from these failures disclosed that the same inveterate and abominable practices of accommodation paper were again rampant. Fictitious bills to an enormous amount were fabricated among persons who were in the same species of business, and were negotiated all over the kingdom. Other parties resorted to practices even more disgraceful still, if possible. These great failures, which are too well known to require naming here, gave credit a very serious shock; in addition to which, a considerable number of persons who were engaged in extravagant over-trading in Australia suffered severe losses. There is nothing to call for special remark, except that a great drain of bullion began from the Bank of England at the end of June, and continued rapidly and steadily till the middle of October. On the 23rd June it stood at £18,169,000, including the coin and bullion in both departments; and by the 13th of October it was reduced to £11,752,300. The causes of this great outflow are not sufficiently ascertained, for us to reason upon them with accuracy. Some attributed it to the purchases of corn which the high price of wheat here caused to be made for importation-some to operations of the Bank of France,

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Time will probably furnish us with more satisfactory and accurate information. What the causes were is of comparatively slight moment. We are happy to say that the Bank of England acted, in this case, with a promptitude and decision most favourably contrasted with its former errors. The rate of discount was rapidly raised, to enhance the value of money. On no former occasion had the rise been so frequent and extensive in so short a time; but the effect produced was most salutary.

39. The following table, taken at intervals, shews the bullion in the Bank, and the rate of discount

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