two before. I reply, that the accounts which we received on Thursday, Friday, and Saturday, were of a totally different description from those which had been previously brought us. It was on Saturday and not before, that this conviction was forced upon us, and it was not till then that we felt it necessary to sanction a violation of the law"

The persons applying generally said that it was necessary to place a limit on the amount to be authorised, which they proposed should be £2,000,000 or £3,000,000, but the Government thought that the limit should be placed on the rate of interest, and, accordingly, this was the method adopted

31. Sir Robert Peel felt particularly called upon to come forward and defend the Act of 1844. After defending himself from some minor charges, he protested against singling out individual members of Parliament, and making them responsible for the acts of the whole Legislature. He said that some persons alleged that the Act of 1844 had been passed without due inquiry, but he recounted the committees that had sat for five years, and had asked, on the whole, upwards of 14,000 questions-questions and answers without end, but with no practical result from those apparently interminable investigations. The last committee had closed its labours without any practical results. At last, the Ministers determined to bring forward a measure on their own responsibility, which had been carried by extraordinary majorities; but, nevertheless, if it could be shewn that the Act of 1844 could be amended that it ought to be done

"There has been some misrepresentation respecting the objects of this Act. I do not deny that one of the objects contemplated by the Act was the prevention of the convulsions that had heretofore occurred in consequence of the neglect of the Bank of England to take early precautions against the withdrawal of its treasure. I did hope that, although there was no imperative obligation on the Bank of England to take those precautions, that the experience of 1825, 1836 and 1839, would have induced that establishment to conform to principles which the directors of the Bank acknowledged to be just, and which they had more than once professed to adopt for their own regulation. Sir, I am bound to say, that in that hope, that in that object of the Bill, I have

been disappointed. I am bound to admit, seeing the extent of commercial depression which has prevailed, and the number of houses which have been swept away, some of which however, I think, were insolvent long before the Bill came into operation, and others of which became insolvent in consequence of the failure of those who were connected with them, and were imprudent in their speculations, I am bound to admit that that purpose of the Bill of 1844, which sought to impress, if not a legal at least a moral obligation on the Bank, to prevent the necessity for measures of extreme stringency by timely precautions, had not been fulfilled. Sir, I must contend, that it was in the power of the Bank, if not to prevent all the evils that have arisen, at least, greatly to diminish their force. If the Bank had possessed the resolution to meet the coming danger by a contraction of its issues, by raising the rate of discount, by refusing much of the accommodation which they granted between the years 1844 and 1846-if they had been firm and determined in the adoption of those precautions, the necessity for extrinsic interference might have been prevented; it might not then have been necessary for the Government to authorise a violation of the Act of 1844. . . The bill of 1844 had a triple object. Its first object was that in which I admit it has failed, namely, to prevent, by early and gradual, severe and sudden contraction, and the panic and confusion inseparable from it. But the bill had at least two other objects of at least equal importance—the one to maintain and guarantee the convertibility of the paper currency into gold; the other to prevent the difficulties which arise at all times from undue speculation being aggravated by the abuse of paper credit in the form of promissory notes. In these two objects my belief is that the bill has completely succeeded. My belief is that you have had a guarantee for the maintenance of the principle of convertibility such as you never had before; my belief also is, that, whatever difficulties you are now suffering from a combination of various causes, those difficulties would have been greatly aggravated if you had not wisely taken the precaution of checking the unlimited issues of the notes of the Bank of England, of joint stock banks, and private banks"

32. Sir Robert Peel then entered into a most able de

scription of the true evils the country was suffering under, which arose from the enormous destruction of capital by the dearth of food, and the unusual absorption of capital in one channel of commerce, the construction of railroads, which were not yet remunerative. He shewed the absurdity of expecting to have cheap money while capital was scarce. The whole of his remarks are so admirable that we regret that their length prevents us from giving them entire. He cordially approved of the course the Government had taken in not issuing the letter sooner than they did, and in doing it when they did. The true remedy for the state of things under which the country was suffering was individual exertion, the limitation of engagements, the cessation of all demands which could be postponed; an earlier issue of the 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 of 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 Deputy

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Governor, 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 23rd, 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 ten 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 ten per cent. for money, the rate was finally agreed upon at nine 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