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In the committee, lord Liverpool called the attention of the House to the expediency of inserting a clause, authorizing the Bank of England to establish branch banks throughout the country. There was no doubt that such a power was vested in the Bank by their charter; but a question had arisen as to the extent of discretion with which they could clothe their agents. He did not think the establishment of branch banks would take place to any great extent; yet it was but right and prudent to give the Bank the opportunity of trying the experiment. He therefore proposed a clause allowing the Bank of England to carry on branch banks for the purpose of issuing cash notes, and bills of exchange.
The adoption of this clause rendered another proviso necessary, viz. a clause making the notes issued by the branch banks payable at the place where they were issued; for, to lay individuals under the necessity of bringing or sending their bank paper to London, before receiving gold for it, would be both inconvenient to the public and discreditable to the Bank. Something of this sort had recently occurred in Ireland. The Bank of Ireland had established branch banks in different parts of the country; a number of its notes had been presented at these new establishments to be exchanged for coin, and, for a while, were paid in coin, till the Bank, finding this inconvenient, refused to pay any where but in Dublin. The consequence was, that some of the notes were protested, and legal measures adopted to recover the amount. Being satisfied, however, that, the contract expressed on their notes being a general one, they were bound to pay wherever they
had agents, they had recourse to another expedient: they made an alteration in their notes, by inserting the word "Dublin," thus limiting the payment in specie to that city alone. Moreover, as the country banks were to be compelled to pay their notes in gold at the place where they were issued, it would be invidious not to lay the same obligation on the branch banks. The only difficulty was, that it would be necessary for the Bank so to frame its notes, as to ascertain at what particular place they had been issued: otherwise a person taking a note to a branch bank might be told, that it had not been issued there, and that there he could not have gold for it; but this obstacle, it was suggested, might be surmounted by the Bank adopting a note of a particular description for each of its branches; and perhaps to give the notes this local character, would tend to lessen in some measure the inducements to forgery. Lord Liverpool readily assented to the proposed clause, both because he thought it likely to prove a check on over-issues by the Bank, and because it was necessary to take every precaution to prevent thepos->sibility of discredit being thrown on any of these branch establishments; for the slightest imputation on the security of a branch of the Bank of England would be attended with far more serious consequences than even the failure of a private bank. A greater degree of opposition was manifested to the bill, when it came down to the House of Commons. It was there resisted both by those who were hostile to the whole system on which ministers were proceeding, and by those who were over-chary of the privileges of the Bank. The clause, it was said, which enacted, that no joint-stock banking company should carry on business within a certain distance of London, would be successfully evaded. The Bank of Ireland was fenced by a similar protection in regard tonotes under 50/.; but theprivate banks rendered it nugatory, by appointing, as their agents, bankers resident in Dublin, as if what they did by an agent were not as illegal as if they had done it themselves. The scheme, likewise, it was argued, would give encouragement to those who, from time to time, enriched themselves by preying on the credulity of the public, and who had never been more successful in their nefarious pursuits than they had lately proved under this very form of joint-stock associations. The country would be inundated with unsubstantial paper; the notes of the country bankers would become mere local tokens; the branches of the Bank of England, free from all the disadvantages to which country banks were liable, would monopolize the paper circulation; and it would only be fair, therefore, to postpone the measure, until the privileges of that body had expired with its charter. To this it was answered, that the possibility of improvidence being seduced, or knavery tempted, to do what was foolish or dishonest, by any facilities which this measure might afford, could be no reason for rejecting it, when it would so certainly be productive of general and essential benefit to the country. It was acknowledged on all hands, that the Bank alone was insufficient to manage all the money concerns of the country; and the question then was simply, since other banks we have, and must have, in what lies the magic of the number six, as applied to the
members of these necessary establishments? No doubt, there were still restrictions in the bill which it would be difficult to justify on any sound principle; but to remove these required a farther surrender on the part of the Bank; and government had been unable to obtain more extensive concessions than the present bill contained. Although, however, the bill was not what it otherwise would have been, it would be unwise not to avail ourselves of the facilities yielded to us, so far as they went. Some slight alterations were made in the bill, and were agreed to by the Lords. The bill then passed; and, in virtue of the powers conferred by it, branches of the Bank of England were soon after established in some of the principal trading and manufacturing towns, while the ordinary banks, which had escaped from the hurricane, were rapidly regaining confidence and composure. ■
But, while these two leading measures of government, in which they had received fully as much support from their customary opponents, as from their habitual friends, bade fair to give new security to the pecuniary arrangements of the country for the future, the ministers could not be blind to the widely-spread distress of the present. The total want of demand for manufactures and labour had suffered little diminution; and, in the city, above all, theabsence of money, or rather the absence of that confidence, without which gold lurks as closely concealed as when buried in its native veins, kept the whole current of commercial transactions in stagnation. An expression in the communication from the Treasury to the Bank, regarding the surrenders CDS]
of part of their charter, that " the panic had subsided, and confidence was nearly restored," had been severely animadverted upon in parliament; and ministers were twitted with it, night after night, as displaying great ignorance, not only of what was passing all over the country, but especially of the situation of the metropolis itself. From the opening of parliament, the mercantile classes had expected that government would take some immediate step to give them present relief, and applications to this purport had been made at the Treasury. The scarcity of money was the evil complained of, and an issue of Exchequer bills was the remedy generally pointed out; but government had resolved not to lend itself to a system of artificial relief for a disease which they thought would better cure itself without their interference. They had expressed themselves willing, indeed, to keep the Bank harmless to the extent of two millions, if it should think proper to go into the market, and purchase Exchequer bill's to that amount; but no definitive step had been taken, when Mr. Wilson, one of the members for London, brought the subject before the House of Commons (February 23rd), on the occasion of presenting a petition from the merchants, bankers, and traders of the city, praying the House to take into its consideration the present commercial distresses. He assured the House, that, so far from distress having disappeared, or danger passed away, every day displayed new victims; and the privations and difficulties of even the last week, had brought many to the ground. The representations made to ministers had been fruitless; they had made up their minds to
grant no relief, and had referred the merchants to the Bank, who had it in their power to advance money on the security of goods, a resource which, he said, no merchant could adopt without bringing a stain upon his credit. He vindicated the merchants from the aspersions which had been cast upon them, as having produced the present calamities by their own imprudence, and a fondness for speculation, reckless of consequences. With the ephemeral schemes of the preceding year, the merchants, as a body, had had no more connection than other people, and, in many cases, much less. It was notorious that these bubbles had been the creation of a few scheming attornies, and idle and needy speculators; not of the real merchants of London, who now, from mere inability to convert their securities into money, were trembling on the brink of ruin; and these bubbles had been as keenly pursued in St. James's street, as they ever could be in the alleys of the city. Even the imprudent speculator was often a man worth saving, if not on his own account, at least on account of others with whom he was connected in agricultural, commercial, or monied interest. The merchants, in general, were far from deserving to be harshly told, "some of you have over-traded; some of you have speculated rashly; therefore the whole body must be content to suffer, and suffer on, till every thing finds its own level."; Hp was not pleading the cause of gambling share-holders, but of a class of individuals, who, from the general want of confidence that prevailed, and particularly among the banking part of the community, were suffering under a pressure which could not easily be described, but whose sufferings, if not relieved, would describe themselves in a way which the House would not be able to misunderstand. All that was required was an issue of Exchequer bills—a measure which on former occasions had been often adopted, to relieve temporary, but general embarrassments, and which, on no occasion, had either failed in its object, or been productive of inconvenience to the government. He gave notice that on the 28th he would move that the petition should be referred to a select committee.
A long discussion followed, in which the same views were taken, and the same sentiments expressed, by almost every member who spoke; and Mr. Canning and the chancellor of the Exchequer found themselves deserted even by some of theirfirmestadherents. Thestrongest position taken against them assuredly was, not so much the threatening appearance of the mercantile horizon, which no man could deny, as the fact that the particular preventive measure urged upon their attention was one of tried efficacy, justified by the sanction of great names, and one which the country had been too much accustomed to regard as a never-failing resource in evil limes. Many, who had the evil before their eyes, would have allowed it to take its way, if it had been necessary to search for a remedy; but when they saw at hand what they believed to be a known specific, they readily joined in the wish that it should forthwith be administered, that they might escape, with all speed, from a painful spectacle. But, although ministers did not enter at large into the question, which would more properly be discussed on the motion for apnoinU
ing the committee, they did not shrink from firmly announcing the principles on which they had acted in refusing the various applications which had been made them, and on which they were determined still to oppose them. Convinced that the proposed measure was erroneous in principle, and mischievous in practice, tending to produce, even by its temporary efficacy, a future recurrence of the same evil, and an improvident trust in the constant interference of government, when other and safer cures could be applied, they refused to accede to that, as a popular expedient, which their knowledge informed them was not necessary, and which their deliberate judgment taught them to reject as in itself prejudicial to the interests of the community.
The most provoking, the most unmanly, the most unjustifiable weapons of their adversaries, were the insinuations thrown out that the resistance of government proceeded from cold-blooded insensibility to the misery which prevailed, and the danger which threatened. "For myself," said Mr. Canning, "and my colleagues, I totally disdain to answer such imputations. I impute to no man who now hears me, that he is so insensible; but for others to impute to those upon whom every day and every night care and anxiety are brought by the consideration of these distresses, in addition to the common sympathy in which they share as men, is to impute to them not only a want of feeling, but a want of sense that would unfit them not merely for the situations they fill in the government of the country, but to appear here, in the midst of those among whom they have the honour to sit.*
The unanimity, however, with which all parties seemed to urge the necessity of providing some measure of relief for the mercantile interest, rendered it impossible for government not to lend its aid to any arrangement which did not require its immediate interference. Although determined to resist the issue of new Exchequer bills, even upon securities, lord Liverpool had already stated, in the House of Lords, that, if the Bank would go into the market, and purchase a certain amount of Exchequer bills, government would keep them harmless to the extent of two millions. The effect of these purchases would be, to bring forth an equal quantity of currency, and thus remove the stoppage of mercantile movements which only the want of that currency had occasioned. To this, however, the Bank would not consent, and seemed to be fully as unwilling as ministers to involve themselves by any extraordinary interference. But, between the day on which Mr. Wilson presented the city petition, and that on which he had given notice of a motion to refer it to a select committee, the force of public opinion, joined to the increasing agitation of the mercantile interests, persuaded government, that it was necessary to have recourse to some expedient, and convinced the Bank, that it would be prudent to comply, as far as they could, with the wishes of government. Besides the powerful voice of the city, deputations had arrived in London from Liverpool, Leeds, Glasgow, and other importantmanufacturing and trading districts, all calling upon government to give its aid in removing, or relieving the existing pressure. It was not the want of substantial wealth, or good secu
rities, which occasioned the evil, but the inability to convert that wealth into money. Many a merchant had his cellars and warehouses filled with merchandize, which, in ordinary circumstances, would have justified him in thinking himself a rich man; and yet, from the universal distrust which prevailed, and the complete prostration of almost every branch of traffic, he found himself unable to meet his ordinary engagements. The arrangement made with the Bank was, that the Bank should make advances to privateindividuals upon the deposit of goods, merchandize, and other securities; but the whole sum to be advanced was not to exceed three millions. Commissioners were appointed to carry the arrangement into execution in the principal commercial districts; the gloom began to disperse, and confidence to return. Yet the applications for assistance were far from being so numerous as might have been expected from the loudness and unanimity of the cries for relief; and, at some of the provincial stations, the office' of the commissioners was almost a sinecure. In truth, where the reigning misfortune is want of confidence, such an expedient destroys, in a great measure, as soon as it is taken, the reasons which made it necessary to take it at all. The knowledge that a public fund exists ready to advance money to those who can furnish substantial deposits, infuses a similar confidence into private individuals; and when one body celebrated for prudence and caution has led the way in trusting its neighbours, others are gradually encouraged to follow in the same path, and return to their ordinary sources of gain,