tion or indiscretion of the Bank Directors | Parliament were rejected, of course the for the present state of things. The right parties who had paid the deposit on their hon. Baronet had quoted the opinion of scrip sustained great and ruinous losses. Mr. Jones Loyd on the matter; but he Those were the parties who had the greatest forgot to report to the House the ex- reason to complain of railway speculation, pressions he himself used during the dis- and who had suffered most from it. But cussion on the measure of 1844. The those in this House who now blamed railright hon. Baronet then said, that the ways had no right so to do; for at first Act of 1844 would take away all dis- there had been the greatest disinclination cretionary power from the Bank. What on the part of Parliament to encourage right had he, then, to blame the Bank that kind of speculation. Some years ago, Directors, to whom, as he said, the Act many hon. Members would recollect, a left no discretionary power? Then there competing line was projected between Birwere the speculations in railways. These mingham and Manchester. Sir Robert the right hon. Baronet had considered had Peel espoused the cause of the new line, materially assisted in bringing on the pre- while Lord Stanley opposed it. It was a sent crisis. Now he (Mr. Cayley) did not hard battle, and eventually Lord Stanley know any parties that had contributed won. Lord Stanley had justice on his more to the railway speculations than the side. That noble Lord was anxious to Government of Sir Robert Peel, in neu- sustain the London and Birmingham Comtralising that excellent report of the Board pany in their new and then rather doubtof Trade, which had been produced under ful speculation. It was only fair to allow the able auspices of Lord Dalhousie, and some time, in order to see whether the first which entered into an investigation of each railway really would pay, before the conparticular scheme, and into a subdivision venience of the public was consulted by of the various districts of the country the the construction of a more direct line. most immediately in want of railway ac- This was during protection times; before commodation. When that report was the non-interference principle became so brought up, was it acted upon? No; it generally adopted; and in this instance, at was thrown aside, and everything with re- all events, he left the House to judge ference to the multitude of schemes then which had been the most prudent course. afloat left to the lottery of Committees. The railways, deficiency of capital, the Even after the potato failure in 1845, the potato failure, and the insolvency of merright hon. Baronet the Member for Tam- chants, were the scapegoats upon which worth turned the first sod of the Trent the ruin of so many great houses was laid. Valley Railway; and in the performance He (Mr. Cayley) was used to the saddle of that interesting operation the right hon. being always put upon the wrong horse in Baronet took occasion to enlarge upon the this question, and therefore attached very immense benefit which must accrue from little credit to the reasons assigned. It direct lines of communication. For that was to him a matter of anomaly, and must reason he said he had supported the Trent be to others, that houses which had stood so Valley project; and if another line were long, and weathered so many storms, should brought forward, still more direct, between simultaneously all of them be compelled London and Manchester, it also should to suspend their operations, while every have his best support. What could con-house had sustained immense loss. That tribute in a more direct way to fan the flame of speculation than conduct such as this? The columns of every newspaper were filled with new schemes. The main speculation at that time was to procure a letter of allotment, and endeavour to sell it at a premium, before the next settling day. The moment there came a check upon this species of gambling-when parties who had paid money for these letters of allotment or for scrip found they were so much waste paper-a severe pressure and great distress existed amongst the middle classes. In the early part of 1846, when one-half of the Bills brought before

did not look like individual imprudence, so much as some general overwhelming cause. But the merchants of the present day at all events had learnt their lessons in the modern school-they had been gradually approaching perfection according to the doctrines of that school-and if they had failed, the school was to blame quite as much as they were. With regard to the statement of the right hon. Gentleman (the Chancellor of the Exchequer), able though he admitted it to be, he must say that, taking it as a whole, it did not give satisfaction to him (Mr. Cayley), nor did he think that it would give

but a thorough investigation with a view to thoroughly ascertain the causes of the alternations of prosperity and distress which he (Mr. Cayley) attributed to nothing else than changes in the value of money. He had one ground of confidence: the Chancellor of the Exchequer in the present instance had assumed a much less confident air than his predecessors on similar occasions. On many previous occasions he had heard irrefragable principles laid down always destined to be disproved, and many final settlements of this question never destined to be final. Irony, and sarcasm, and ridicule, used to assail all those who ventured to dispute the infallible dogma; but now he was glad to perceive that experience had produced some effect, at all events, in the manner of discussing the question. With regard to the statement of the right hon. Baronet, that the commercial embarrassments could not have been anticipated, he would only say that those embarrassments, in their main features, had been clearly foretold in the memorial presented by the bankers of London in 1844, as the consequence of the passing of the Bank Charter Act. Mr. Jones Loyd, it is true, said in his pamphlet, that it was quite necessary that the country should experience cycles of convulsion, in order to preserve the standard of value. That doctrine he (Mr. Cayley) disputed. Mr. Jones Loyd was well known to be the author of the Bill; but Mr. Loyd was not a Member of Parliament.

472 satisfaction to the House. The Chancellor | fair and searching inquiry. We had had of the Exchequer considered that the two enough of packed Committees, and wanted moving causes of the present monetary de- no more concocted or preconceived plans, rangement were to be found in the deficiency of capital, and railway calls. But the Chancellor of the Exchequer was speaking for the Government when he made this statement; and how did it tally with the opinions already expressed by the only Members of the Government who had spoken on the question. His noble Friend (Lord John Russell) was a very material part of the Government; and he had said that he attached very little importance to railway calls as a cause of the commercial embarrassments. And what did the President of the Board of Trade say the other evening when the noble Member for Lynn mentioned something about "bankruptcy and shame?" The right hon. Gentleman said that he did not believe that the country was anything like in a state of bankruptcy. There was capital sufficient and energy sufficient left to speedily repair the late disasters. He (Mr. Cayley) should have liked to have heard the views of some other Members of the Government. With regard to the appointment of a Committee, under ordinary circumstances, such a course might have been satisfactory. But a Committee might mean many things. It might be formed for the purpose of giving the go-bye to an adverse resolution. The appointment of the Committee practically condemned the Act of 1844; and the House ought to insist upon the suspension of the obnoxious parts of that Act pending the sitting of the Committee. The pressure on the money market was not removed; the foreign importations were large; the balance of trade was really still against us. He feared they would have no immediate relief; that they would have to wait long and patiently for a reaction. The building was not indeed absolutely on fire, but the embers were still smouldering; and if the House did not suspend the Act of 1844 during the sittings of the Committee-likely to continue for ten or twelve months-the embers might again burst out into a flame, and they then would be something like philosophers looking calmly upon the work of de struction, while they stopped to scientifically inquire into the natural properties of the water which should be at hand to quench the flames. He should preserve the right of proposing or supporting a suspension of the Act during the sitting of the Committee. The Committee being appointed, he hoped that they would have a

He was the author of the Bill out of the House, but not the author of the Bill in the House. Mr. Loyd, out of the House, said that the very essence of the Bill was the convertibility of the Bank issues. Sir Robert Peel, in the House, said it was no such thing. On the 13th of June, 1844, Sir Robert Peel said that the Bank could always govern its own notes, but only "by a tremendous sacrifice of the mercantile and other interests." He said "that was what he wished to prevent," and "that he would compel the Bank of England to conform to certain principles advantageous to the public." How far had these promises been realised? Instead of having the panic of 1837, and the panic of 1839, we had had the panic 1847 twice repeated within the space of a few months; and mercantile men told them that the last was more severe and more pressing than any previous panic. So

much for the authorities on which Parlia- | to have had it come forth at 5 or 6 per ment had been accustomed to rely on this cent, or at any price. His right hon. subject, and which for the future he hoped Friend told the House that the sums exit would be equally disposed to distrust. pended in railroads had caused the distress. The Chancellor of the Exchequer had In reference to this view he would venture given as a reason for fixing the minimum to ask him one question: if the 7,000,0007. rate of interest at 8 per cent, that its of bullion had not been exported, would the object was to draw foreign capital to this panic have arisen? No! Then what country. If the Government, however, had the railways to do with it? But in reonly wished to attract foreign capital, they lation to the expenditure on railways being should have left the pressure alone, for the cause, did the Chancellor of the Exthat was rapidly bringing down the prices chequer intend by the expression of such of goods lower than the manufacturer could an opinion to delude himself, or to delude produce them at. The first letter from the public? He attributed the pressure to the Government to the Bank of England the unusual amount of money sunk as fixed he quite agreed with, except that the re- capital. Now what was the fact? If a malaxation ought to have come earlier, and nufacturer had 50,000l., and embarked that no minimum rate of discount ought 25,000l. in building a mill, he might be to have been suggested by the Government. said to have fixed half his capital. The But in withdrawing their first letter, they capital was fixed, so far as the manufactushould have placed the public on the same rer was concerned, but it was not fixed as footing as that in which it stood previous to other persons. It still remained as to the issuing of that letter. The rate of floating capital to them. The difference discount before the publication of the first between fixed and floating capital which letter, was from 7 to 7 per cent. The seemed to haunt the brain of the Chanimmediate effect of the letter was to raise cellor of the Exchequer, was merely an imathe rate of interest from 1 to 2 per cent, ginary one; and for this reason it was that generally throughout the country, that is, it had not taken by storm the masculine to 9 per cent. And now when the bullion in understanding of his noble Friend at the the Bank coffers amounted to 10,000,0007. head of the Government. When a man sterling, the Directors still charged equally built a house, or made a railway, or a 7 per cent, although they were charging canal, the floating capital which he em7 per cent practically with only 8,000,000l. barked in those undertakings was not bullion in their coffers before the Govern- buried and sunk and lost in them, and so ment letter was issued. It was only fair disappeared altogether from view; but this that, as the Government suggested to the floating capital was transferred from the Bank the high minimum of 8 per cent in party so embarking it to the party who October, they should also have suggested constructed the house, the railway, or the a lower minimum than 5 per cent in No- canal; who in turn left with the first party, vember. The Government was probably in exchange for his floating capital, a cernot at all aware of the mischief which had tain amount of labour, or labour's worth. been done by their suggestion of the 8 per So that instead of capital being really cent. Everybody expected that the Bank fixed, meaning by that term sunk, in a under pressure might charge a high per railway, canal, or house, it was, more procentage on advances, but nobody ever be- perly speaking, labour that was fixed, fore heard of Government fixing the mini-realised, or embodied in it. This was the mum rate. This step afforded moneylenders the ready pretext for charging exorbitant rates, and tended greatly to increase and to continue the depression and difficulty. The rate of discount charged, had been as high, in some instances, as 25 per cent, and this he attributed to the countenance afforded by the Government to usury. But one thing was clearly proved by their suggestion of the 8 per cent minimum rate of discount, viz., that the Government could not have believed in a real deficiency of capital; because if they had they would have been too happy

real truth on this subject; so long as the floating capital remained in the country. By an export of bullion, however, to correct the balance of trade, by investing it in foreign securities, or by Government expenditure out of the country, no doubt so much floating capital was really sunk to this country, until more favourable circumstances induced its return. Supposing 3,000,000l. were to be expended in railways per month, about one-fourth of the amount would be paid for iron and land. That immediately returned to the money centre. The other portion was

paid for labour, and passed through the gressing the limit of the Act of 1844, had baker, the butcher, and the general dealer, applied the screw so rigidly as that for a into a banker's hands. It might be two short time all accommodation was refused. months going the round, but it then re- This was the origin of the panic; and this turned to float again through the country. pressure the Bank was compelled by the If there had been really an absence of Act of 1844 to produce, when it had somecapital, as alleged by the right hon. Gen- where about 10,000,000l. of gold in its tleman the Chancellor of the Exchequer, coffers-while at this very juncture it reowing to an extensive outlay on railways, fused to advance its notes even upon silver, and this had been the cause of commercial although applied to in two separate inembarrassment, it would have shown itself stances to do so. The short history of our in this way. The labour employed in ma- difficulties was this. Gold left the country nufactures would have been in a measure for corn so rapidly in the spring, that after supplanted by the labour employed on rail- supplying the Chancellor of the Exchequer ways. The inevitable result of the with- for his deficiency bills in April, the Bank drawing so much labour from the produc- of England found its reserve of notes so tion of manufactures, would have been a low that it was compelled to borrow money. scarcity of manufactured goods, ending in The moment, however, it was discovered a rise in the price of such goods. Was on the Stock Exchange that the Bank that the case? On the contrary, the uni- was doing this, all confidence in the versal complaint was, that manufactures Bank to support mercantile credit was could not be sold except at a price ruinously gone, and a general discrediting of comlow. So that the absence of capital in re-mercial paper, and a panic ensued. This lation to manufactures, and the excessive panic gradually subsided before the apoutlay on railways, both proved insufficient pearance of fine weather in May, which causes for our commercial embarrassments. promised a plentiful harvest and a partial To illustrate the truth of the position that cessation of the drain of bullion. But the a deficiency of capital raised the price of same cause produced such a fall of prices an article, he (Mr. Cayley) would cite two in corn during the summer, that the corn instances which had occurred during the merchants, who had speculated in the exlast few years in the United States. The pectation of corn sustaining its price, betwo or three years previous to 1837 were gan to fail. This disaster, so slight was years of great speculation in that country. the confidence which had as yet been reAgriculture was neglected-almost desert- gained by the mercantile body, produced a ed-and the result was a rise in the price repetition of the panic, which resulted in of corn from four dollars the barrel to eight such a suspension of all confidence, that and ten dollars the barrel; which continued bills of exchange, which usually form about about thirty months. The other instance eight-tenths of the circulating medium, was that of cotton. Subsequently to 1839, became unmarketable, bank notes were from the great monetary pressure in Eng- hoarded by all who could lay hold of them land, the price of cotton had fallen in 1843 as a shield against unforeseen contingento about half what it was in 1838, so that it cies; while the limited amount of bank became more profitable to cultivate maize, notes remaining in circulation, had also sugar, and coffee rather than cotton. From to do the work of bills of exchange, which this cause our cotton manufactures have had ceased to be current. No wonder then lately been suffering from a scarcity of the that the scarcity of notes was real and inraw material of these fabrics, and a rise in tolerable. The floating capital of the counits price. The Chancellor of the Exche- try, as represented by bills of exchange, quer, therefore, had not given a satisfac- was palsied as if by a passage of the electory or a real solution of the difficulties with tric fluid; the Bank reserves were again so which the country had been surrounded. low, that the limit of the Act of 1844The cause of them had been much more the Gorgon's head-again showed itself, truly and clearly traced in a memorial of and turned everything to stone: and what the merchants, bankers, and traders of the was yesterday living, active, buoyant, floatcity of London in June, in which it was ing capital, was to-day turned to a lifeless, stated, as was the fact, that whatever shapeless mass of unmeaning lumber. The might be the effect of railways, no serious pressure on the mercantile body might be pressure existed in the country before illustrated in some degree by a round game April, when the Bank, owing to its re- at cards, where each person had, say, two sources being so low, and its fear of trans-dozen counters at the beginning of the

1