The Speech of Pascoe Grenfell, Esq. in the House of Commons, on Tuesday, the 13th of February 1816, on certain transactions subsisting betwixt the Public and the Bank of England. With an Appendix. London, Murray, 8vo, 1816.

Or late years the Parliament of Britain has signalized itself by collecting and dissemenating information on several important points of national economy. We imagine it would be hard for the most determined reformer to shew how, by mere extension of the elective franchise, or any enlarged constitution of the legislative body, an House of Commons could be found more worthy, in this respect, of the public confidence. At a time when party violence has graduated through various heights, until at last it seems to have reached its acme, it is well to resort to any thing which can excite, on fair grounds, a favourable view of the intelligence and integrity of the assembly which makes laws for us. On its reputation for wisdom or folly, the intellectual character, as well as the political spirit of the nation, must in some degree depend. So long as it contains men with the literature and habits of gentlemen, what is agreed on within its walls must have a strong sympathy with what is best in the public: and until the whole of that public, or at least that part of it whose leisure and education fits it for making a ready and decisive opinion on public acts and relations, shall become all at once, and permanently, wiser or better, it is evident that what could be done by a reformed House of Commons must depend more on the spirit, intelligence, and personal independence of the unministerial part of its members, than on any new mechanism of the whole body. The character, not less almost than the existence, of the country, is in the hands of its responsible ministers. The country is not, nor cannot be aware, until from the nature of the thing it is perhaps too late, of how much both are on occasions committed; and it would be unreasonable to expect that the ministers themselves should be always aware of the true

own measures.

complexion or consequences of their mind, from a commendable contempt From occupation of of small difficulties, and from that human nature, it is clear that, in inevitable trust of self which pervades giving their minds to the rapid succession of affairs in a great nation like this, ministers must be far advanced in some measure resulting from a preceding one, before even the first outward results of that of which it is a consequence can be made apparent. This is almost always true with respect to great projects of state. It is just one of those fatalities in human affairs, which, by demanding an union of requisites the most opposite, ope rate as a constant check to any progress which tends beyond a certain point. It requires at once the longest reach of generalization, and the most untired capacity for particulars. There is nothing for all this but a phalanx in our legislative assembly, composed either of men who have known, or may wish to share, the duties of office themselves, and are not only disposed, but able, to criticise acutely the proceedings of its holders for the time being, -or of those who, without any turn for office, or experience of its duties, have yet sagacity and penetration to see when the public interests are attended to, and when they may be neglected, and with this, firmness to pursue their investigations, and good sense and management enough to make them understood and appreciated. It is creditable to any country to possess such men; and we are of opinion, that it is from their influence that our House of Commons has derived to its proceedings a character of directness and sincerity which appears so greatly wanting in newly-formed legislatures elsewhere. While that House has men who devote their days and nights, their ease and their credit, their fortune and pleasures, to the public inte rest, it can never become contemptible from the indiscretion of injudicious assailants or weak defenders. Among those men, the speaker now before us merits, in our humble opinion, 'a conspicuous place.

A few circumstances in the history

of the Bank of England, previous to Mr Grenfell's investigations, seem needful for elucidating their scope and object. So long as the Bank continued responsible for its issues, by being Hable to pay in specie, like any private bank, it seems to have been sufficiently careful and circumspect in its bargains with the public; and its advances to Government and to the merchants seem to have been influenced by each other. The discounts were subject then, as now, to great fluctuation. Mr Bosanquet stated to the Lords' Committee, that he had seen them decrease in amount from a whole to a third. So cautious were the directors in their transactions with Government, as, in 1783, to refuse making the usual advances on the loan.* In 1782, the highest amount of their notes in circulation was £9,100,000; in 1783, £7,300,000; and in the year following, £6,700,000. From 1787 to 1798, the amounts were eight, nine, ten, and eleven millions; in 1794, little less than eleven millions; in 1795, £13,500,000; in 1796, a little more than eleven millions. From 1777 to 1794, the advances made by the Bank on land, malt, and other Government securities, had fluctuated from seven to eight and nine millions, never exceeding £9,900,000. In 1795, they stood at eleven millions. At the end of that year, it was understood that Mr Pitt contemplated a loan of £3,000,000 to the Emperor of Austria. At this momentous period, however, the country began to feel vitally the effects of its hitherto unparalleled exertions. Taxation had cut deeply into a national capital, which had not been reinforced by any temporary expedients, or excited by artificial stimuli. The pressure of commercial distress, which is always more or less attendant on a state of war, had then been considerable. Demands for accommodation at the Bank had been great. That corporation, trading on ascertained resources, had become impressed with the necessity of limiting its issues of notes, and of caution in giving discounts. The doubtful success of our continental alliances against France, and the spirit of change which seemed brooding over the mighty waters that

bounded the political horizon at home, had banished mercantile confidence. Hoards of gold were everywhere made by the timid and avaricious; and men's fears, operating on their interests, made those with small possessions desirous of withdrawing their floating paper securities for something more tangible, in the event of foreign invasion or domestic tumult. In this situation of things, so early as 3d December 1795, the Court of Directors thus expressed their opinion to Mr Pitt: "Should such a loan take place, they are but too well grounded in declaring (from the actual effects of the Emperor's last loan, and the continued drains of specie and bullion they still experience), that they have the most cogent reasons to apprehend very momentous and alarming consequences." This opinion was enforced and repeated in two delibe rately formal opinions, delivered to the Chancellor of the Exchequer by the Court, on 14th January and 11th February 1796. Previous to these dates, the demand for gold from abroad was very great. The market price of that article was four guineas an ounce,' while our coin cost only £3: 17: 101; the consequence of which was, that foreign shipmasters had orders to take back their returns in specie or bullion, and large quantities of English guineas were melted at Hamburgh and other ports abroad." At the early part of that year, so large a loan as six millions for Germany, and eighteen for Britain, was expected, and threw the Bank Directors into the greatest consternation. They had frequent communications with Mr Pitt on such small advances as he could persuade them to give. At an interview, 23d October 1795, the Governor of the Bank told him, that another loan of magnitude "would go nigh to ruin the country!" But the most impressive remonstrance made to the Premier from the Directors, was one dated 28th July 1796, on which day a series of resolutions were passed in Court, on an advance of £800,000, of which this is the conclusion: "They likewise consent to this measure, in a firm reli

facts, as they bear on the question of the For the principles connected with these suspension of cash payments at the Bank, and its effects on currency and prices, see sect. 1. of Mr M'Culloch's Essay on the Reduction of the Interest of the National Debt

ance that the repeated promises so frequently made to them, that the advances on the Treasury bills should be completely done away, may be actually fulfilled at the next meeting of Parliament, and the necessary arrangements taken to prevent the same from ever happening again; as they conceive it to be an unconstitutional mode of raising money, what they are not warranted by their charter to consent to, and an advance always extremely inconvenient to themselves." Towards the close of 1796, and the beginning of 1797, the fears of the Bank increased, and Mr Pitt's demands became more urgent. On 25th February, the banknotes in circulation were £8,640,250; and next day an order in council was issued, suspending payments in specie at the Bank, which was soon after followed by an act of the Legislature, "restraining the Bank of England from paying its obligations in cash." On 1st May 1797, the first issue of one and two pound notes was made; and at that date the amount of notes in circulation was £13,055,800—a sudden bound of four or five millions from that point which the Directors found safe while they were called on for specie. On 27th December 1796, Mr Pitt stated the probable expenditure of the ensuing year at £27,647,000, and the new taxes to defray the interest of a loan of £18,000,000, to make up that expenditure, at £2,132,000. In 1796, we find the highest price of bank stock to have been, on 23d January, 1771, and the lowest, on 24th November, 144. The highest amount of bank notes in circulation was £11,700,000. In January 1797, it was only £10,500,000; and Mr Grenfell states the value of the capital stock," on an average of the whole year, only 125 per cent." The total of the funded debt, in 1796, was £327,071,371.

The suspension of cash payments we consider to have been at that pe riod the most important event that had occurred, from the declaration of independence by the British American colonies, if we except the revolution in France itself. All parties are now agreed on the importance of this suspension, though two very distinct opinions have been maintained about its propriety. We humbly imagine, that it was fraught with political and moral consequences of the most serious im

port to this country, and, indirectly, to the civilized world. These, however, are yet only so far advanced in their progress; and it would ill become passing speculators like us to attempt to describe its future direction. The immediate fact with regard to the purpose intended by this measure is, that it was completely successful. Indeed, the untouched resources of this country were, from many causes, at that time in a state of unparalleled vigour. The more they were probed, it was found, to use an expression of Mr Burke's, that "we were full, even to plethory." Taxes to an amount hitherto unknown in the history of the world were collected with certainty, and with such ease, that their first pressure only was felt. All the powers of Europe who joined in the coalition against France were subsidized by us, some years nearly to the amount of their own revenues. The great majority of the landed proprietors, almost all the merchants and manufacturers, and certainly much of the rest of the population, fully concurred in these measures. If ever minister could say, that in all he proposed the nation went with him, that minister was Mr Pitt. His schemes of war and expedients of finance were received with a fervour of approbation which seemed to think no advance too great for the objects in view, and only to regret that means alone, however costly, could not accomplish them. All of our national spirit that was sentiment, or emotion, or propensity, tended to utter hatred of France, and cordial trust of the high-minded man who had gained the ascendant in our councils. It is with the consequences of these measures to the Bank of England that we have now to do; and they were as follow.

The Bank of England was, by public contract, the agent for managing our debt, and, by parliamentary ap pointment, the place of deposit for all balances of public money from depart ments of revenue or accountantship. In the first of these characters, its emoluments had increased with the increasing burdens of the country, until for that service alone nearly £300,000 per annum was received; and in the second, the Bank has now had, for eleven years, the custody of balances of money permanently, averaging, on the whole, £11,500,000. On this large sum the Government

received no interest. It attracted the attention of the committee on public expenditure, in 1807. That commit tee, in its report, commented with equal good sense and ability on the advantages which the Bank must de rive from such a large deposit of money.* The bank notes in circulation had then increased to £16,621,390; and the deposits, which in 1797 had been only £5,130,140 inclusive of private accounts, were, on the Government account alone, betwixt eleven and twelve millions. Bank stock, which had sold in 1800 from 156 to 172 per cent., then sold at 230

strong circumstances," as the committee observes, "in confirmation of the large increase of profits." It appears, from the evidence of Mr Samuel Thornton before the committee, that in 1800, when he, as Governor, transacted with Mr Pitt a renewal of the Bank's charter for twenty-one years, it had not escaped his eagle eye, to urge, on the part of the public, a right to participate in the profits of the Bank, arising, among other things, from money lodged there to pay the grow ing dividends, and the quarterly issues for redemption of the national debt, which "Mr Pitt estimated, might, during the progress of the charter, accumulate to £4,000,000 a-quarter."+ The final bargain made for the public was, for the renewal, and on account of the advantages from public money enjoyed by the Bank,-a loan of three millions, without interest, for six years, "producing," as Mr Thornton says, a profit of £900,000; but, at the then price of annuities, it was worth only £750,000, reckoning_£5 per cent. interest of money." The same gentleman states the average balance from money lodged for payment of growing dividends, as "two millions and an half,” and “ on the public accounts at that time, of trifling amount." Mr Grenfell, however, has found out," from statements now made by the Bank," and avers it in his speech, that the money for growing dividends exceeded £3,600,000, and that the trifling deposits were £1,947,000. If Mr Pitt had possessed, in 1800, the knowledge which

See Report, &c. ordered by the House of Commons to be printed, 10th August 1807, pp. 75, 76, 77, 78, and 79.

+ Vide Report, as above, p. 103.

Mr Grenfell now possesses, we should have had a bargain more advantageous to the public. The plain truth, with respect to what was really done, is, that the Bank lent, with an air of sacrifice and self-denial, as the equiva lent in a bargain most advantageous to them, three millions of money to that public, of whose treasure they were then in permanent possession of sums amounting to more than six millions! In 1806 this loan became payable. The administration at that time did not find it convenient to make the payment, but succeeded in "prolonging the period of this loan for the then existing war," at 3 per cent. i. e. paying " £90,000 per annum for the use of it."* "Why, sir," says Mr Grenfell, addressing the Speaker with most excusable animation, “at the very moment, in 1806, when the Bank re quired, and the public most improvidently agreed to pay, £90,000 for the use of three millions of money, the Bank held, and were in possession of, a treasure belonging to the public amounting to a sum little short of twelve millions, wholly unproductive to the public, but productive of advantage to the Bank." In the year 1814, it is most proper to add here, this loan was repaid, and the interest on it, amounting, for eight years and eight months, to £780,000!

As soon as the report of the committee on public expenditure made its appearance, Mr Perceval, who was by that time Chancellor of the Exchequer, came forward to claim for the public a participation in the profits derivable from the deposits, and a reduction in the charge for managing the national debt. The Bank agreed to give another loan of three millions without interest; to allow the withdrawing of half a million of the unclaimed dividends then lying in their hands; and "a reduction equal to about one fourth in the then existing charges for the management of the debt." The saving by this arrangement was £242,000 per annum. In 1814 this loan became due. The present Chancellor of the Exchequer prevailed easily on the Bank to allow the prolongation of it to 5th April in this year, on the ground that the public balances had remained "undiminished."

We may now venture to state the • Mr Grenfell's Speech, p. 21.