tilleries; I will, however, state, that on an early day I shall propose a continuance of the suspension of the corn law for three months. THE MONEY MARKET-LOAN (DISCOUNT House in Committee on the Loan Acts. The CHANCELLOR OF THE EXCHEQUER: Sir, I am not aware that I need add much to what I stated to the House on Friday night, as to the intentions of the Government with respect to the course they intend to adopt in the present state of the money market. I stated on Friday that I should propose in the Committee tonight a resolution enabling Government to allow interest by way of discount upon all sums of money paid up by the contractors for the loan in anticipation of the instalments due on a future day. That, Sir, is the resolution I am about to put into your hands. I have already said that it is not necessary that I should state much in addition to what I addressed to the House on Friday night, because I then put the House in possession of the views of the Government on the subject, with the exception of the precise amount of the discount which it was our intention to propose. But it may be as well that I should make some additional statement to what I then advanced, and I will do so very shortly. We do not suppose, as has been represented, that this measure will be sufficient to put an end to all panic and pressure on the money market, which would be anticipating from it consequences utterly disproportioned to what it is calculated to produce, and disproportioned to what any Government could possibly effect in such a state of things as the present. Every one who considers the present high price of corn, and the pressure which it occasions among the manufacturing classes of the community, as well as the high price of cotton and other articles-chiefly those of general consumption-must be conscious of the pressure and suffering which are felt among various classes. To relieve that to the full extent, is, I am persuaded, beyond the power of any Government. While, therefore, I do not anticipate that any complete relief can be given by the measure I now propose, I may be permitted to make a statement of what I do anticipate from the measures which the Government are about to adopt. I am aware that by the proposals we make, an additional burden will be placed upon the public; but I think it would be bad economy if this burden were not submitted to, and this course not adopted. I think the House will be of opinion, that it may be well worth while to pay an additional sum at present, for the advantage of keeping up the price of Government securities of any and every description. The House is aware of the high rate of interest on money at the present moment; of the high price which all are obliged to pay who want it; and that the rate of interest upon Exchequer-bills is much below that of those other securities which come into competition with them. Exchequer-bills have, in consequence, if saleable at all, been selling at a discount, and great loss has been sustained by those who held them. I think it right, therefore, and good economy, to raise the rate of interest on them, so as to bring them to a level with other competing securities. I also believe it will be advantageous, and will tend to relieve the pressure on the money market, if we allow, as I propose, a discount on prepayment of the loan. I believe that the two measures we propose, of raising the rate of interest on Exchequer-bills, and of allowing discount on advances upon the loan, are indispensably necessary for the sake of the credit of the Government, and to keep up the price of its securities; and, moreover, that they will facilitate the operations of the money market, partly by letting loose a quantity of money which has been held in consequence of the alarm, and still more by removing that want of confidence which has pervaded all classes of the mercantile community. The representations which have reached us have been, that the merchants and manufacturers have not been able to carry on their operations because they could not get their bills discounted, and that the country bankers could not discount their bills because they in turn could not get their bills re-discounted in London, as they had been accustomed to do. I have also been informed, from authorities on which I can rely, that the large sum of money which has been advanced on railroad shares, has affected, to a considerable extent, the amount of available capital which would otherwise have been employed in discounting bills. I find also that a system which formerly prevailed, to a small extent, has recently been extensively adopted; and that monied men in London, instead of investing their money in securities, have been in the habit of placing it at call with the bill brokers. greater in the two first-mentioned quarters. I, therefore, thought that it was an exceedingly wise measure, in reducing the 34 per cent Annuities, to make the dividends payable in April and October, instead of in January and July: but the inevitable consequence was, that so far as the April and October quarters are concerned, the probability of a demand for assistance from the Bank was increased and not diminished. Now, with respect to the practice the periods of payment of the dividends, generally, if I may be permitted, I will read an extract from what I said in 1844, for the purpose of justifying myself against the supposition of having anticipated that the Bank would not be required to give the usual advances on Exchequer-bills, and which it is perfectly safe and proper for them to do. On the 20th of May, 1844, I said— The amount, therefore, placed with the the necessity for extraordinary aid was bill brokers induced them to look far and wide for bills to discount, and this tended very much to increase the amount of bills discounted and re-discounted in the country. When the alarm came, then the bill brokers were obliged to return the money which had been thus deposited with them; and this increased, to a great degree, the pressure on the money market. From the unsaleability of Exchequer-bills, the parties who held them, having been unable to realize money upon them, were under of requiring advances from the Bank at the strongest necessity of calling on the bill brokers to return the money which had been deposited with them. The consequence of raising the rate of interest will be, that a premium on Exchequer-bills will enable these parties to dispense with the necessity of calling upon the bill brokers, and thus contracting the means of discount. I believe, therefore, that an advance in the interest on Exchequer-bills will have a considerable effect in alleviating "With these powers, I apprehend that the Bank the pressure on the money market; and I of England will continue to perform all the funcconfidently hope, from what I hear, that tions which she has hitherto discharged with so the effect of the measure will be to put a much advantage and convenience to the public; as, for instance, making the quarterly advances good deal of money again into circulation. at the payment of the dividends. There will be I am not prepared to say that it would no less need of this than before. I am glad to have been possible for the Bank of England take this opportunity of expressing my approval to have done this, except for the last power ducing the 33 per cents, of transferring the paywhich I propose to give by the resolution ment of the dividends on the new stock to the spring of the Committee, enabling the contractors and autumn quarters. This will have the effect for the loan to pay up their contributions of equalizing the payment of the dividends in the upon receiving interest by way of discount four quarters, and is a very judicious measure. upon their instalments." In the same way, the Bank will, I conceive, as The object of heretofore, make advances on deficiency bills, and the Government was to put themselves for rendering assistance to the trade of the country in funds, without its being necessary for in periods of difficulty. There is no reason why them to make demands on the Bank for this should not be done out of the capital of the assistance. The statements that are abroad Bank; and, with proper caution and prudence, I of the demand made by the Government which has been to be deprecated is, when the believe no difficulty need arise. The only mistake on the Bank during the last quarter, have Bank made the fatal mistake of substituting for been exceedingly exaggerated. I had fore- advances of capital, increased issues of notes." warned the Bank early in the quarter of No other person but myself adverted to what the probable amount would be; and, the subject during those discussions. The therefore, I made neither an extraordinary probable demand in future quarters of nor an unexpected demand on the Bank. this assistance was thus foreseen, and no But I was told that something like an expectations were held out that it would assurance or pledge was given when the not be made; though, by equalizing the Bank charter was passed, that no such payment of the dividends, the probaassistance would be required. I never entertained such an expectation; but I did expect that in consequence of another measure that for the equalization of the payment of the dividends in the four quarters of the year-there would be less occasion for assistance from the Bank in two of those quarters, because, as there was a larger amount of dividends due in January and July than in April and October, of the course which the Government took in re bility was, that no excessive amount would be required. The time of requiring these advances may always be foreseen, and the Bank has ample time to make provision for them beforehand. I am ready to admit that it is very desirable to avoid making similar demands as much as possible, and that we should pay the dividends without requiring the aid of the Bank. With that view, I think it desirable to hold out inducements to the contractors | but for the one circumstance of the rise in of the last loan, in order that by the instal- the price of corn. So far as the mere ments being paid up, the balances in the monetary pressure goes in London, I hope Exchequer may be such as to enable us to it is to a certain extent passing away; and dispense with the assistance of the Bank. I trust that, with renewed confidence in I believe that it will be good policy and the City, confidence may be restored in the good economy to ease the money market provinces, and that the check to trade in any way we can. I shall always be glad which has been anticipated may not take to afford any reasonable facilities to the place. It is, however, impossible to deny gentlemen who contracted the last loan. that the price of corn does constitute a In consequence of circumstances which most material cause of anxiety. It is right neither they nor the Government could the House should know that the importa foresee, it has not been a very good bar- tion of corn goes on to an extent, I should gain for them. I believe it is no advantage have thought, perfectly sufficient to check to a Government in any of its departments any rise of price. A certain quantity of to drive a hard bargain, for if it attempt corn has been exported from this country: that it is sure to pay for it in the end; and about 132,000 quarters were exported in I believe it is equally opposed to the in- the course of the last month; but in the terest of both parties. Neither do I agree same period we imported 432,000 quarters. that this need necessarily entail any con- In the week ending the 28th of April, siderable loss upon the public. It is quite the quantity of wheat and wheat flour, certain, that if trade comes to a stand-still, Indian corn and Indian corn meal, entered the revenue must inevitably suffer. Within for home consumption was 200,034 quarthe fortnight during which the panic pre- ters; and the entries of all descriptions vailed, the receipts in the Customs and of grain, amounted to 333,273 quarters; other branches of the revenue fell off; being equal to the food of 17,000,000 but matters have since resumed their persons for a week. These importations usual course, and I am glad to hear to-day are so considerable, that it might have been that they are in a much better condi- thought they would have checked the rise tion-that the power which many per- of prices. [Lord G. BENTINCK: Are these sons have felt they had of obtaining loans the actual importations?] No; but the on Exchequer-bills, has to a great extent ob- entries for home consumption. [An Hon. viated the necessity of making those loans; MEMBER: What were the imports?] I and that the demand upon the Bank for cannot give you the imports of the difloans, even at the rate of 5 per cent, has ferent kinds of grain, but I can state that been to a very much less amount than was the imports of breadstuffs were about anticipated at the time the announcement 196,000 quarters, and the diminution of was made. I stated, on Friday, the the quantity in the warehouses during the amount which had been advanced by the week had been about 3,000 quarters. I Bank on that day; on Saturday and to- do not know that I need state anything day no very great amount has been asked further on this subject. I will only add, for, and in all respects the money market that, since Friday night, I have deteris easier. The price of stocks has to a mined to make a slight alteration in the small extent declined; but that has been terms of the payment of discount. I have partly owing to the rise of price of Exche- this morning seen the contractors for the quer-bills, compared with which they are loan, and they represented to me that if rather lower then they otherwise would they were forced to pay up their instalhave been. The report I have to-day re- ments within the time I named on Friday, ceived from the Governor of the Bank of it might have the effect of considerably deEngland is, that, upon the whole, things pressing the price of stock, and would, of have been easier to-day; that there has course deprive them of one of their great been a very moderate demand for loans on inducements to pay up the instalments; Exchequer-bills; that there has been a fur- and they suggested that a further time ther influx of gold from Holland, to the should be afforded. I propose, therefore, amount of 29,000l.; and that late news to give them an inducement to pay up a from America brings such advices with re- portion of the loan before the 18th of June, gard to the exchanges as to render the and also a further inducement-but not further export of gold from this country at so high a rate of interest-to pay up exceedingly improbable. 1 should be much the remainder of the loan before the Octomore confident as to our future prospects ber dividends become due. The right hon. Baronet concluded by moving the following | previously been. He (Mr. Hume) consid Resolution : “That every contributor towards the Loan of eight millions made in this present year, who shall pay into the Bank of England any sum of money on account of any future instalment of his contribution, on or before the eighteenth day of June next, shall be allowed an interest by way of discount, after the rate of five pounds per centum per annum; and every contributor who shall in like manner pay up any sum of money after the eighteenth day of June, on or before the tenth day of September next, shall be allowed an interest by way of discount, after the rate of four pounds per centum per annum, on the sum so advanced on account of any such instalment, to be computed from the day on which such payment shall be made, to the day on which such instalment would be due, in pursuance of the contract entered into for raising the said Loan." On ered that it was most wise and prudent to separate those two departments; but the great change which took place at the time he referred to was the fixing of the amount which the bank of issue should be at liberty to issue. Another great change then made was that which placed the Bank of England, with all its resources, exactly in the same situation in many respects with all other banks in any part of the country. The managers of the Bank of England had the full discretion of discounting or not, as they chose; and, whatever opinion might have been formed of the proceedings of the Bank within the last two or three months, he (Mr. Hume) could only say that its managers were bound, in conducting MR. HUME considered that the right their business, to pay regard to the cushon. Gentleman who had just addressed tomers they had to deal with, and to the the House had given no satisfactory rea- deposits placed in their hands; and they son for the course he was pursuing. The alone could be the judges of the extent to right hon. Gentleman seemed to think that which they should go in discounting. the course taken by capitalists, in placing this ground, he (Mr. Hume) was not distheir money in the hands of individuals, posed to criticise the conduct of the Bank from whom they might have it at their of England with regard to these transaccall, was one of the circumstances which tions, because, unless they were conversant had produced the present pressure. Why, with the affairs of the Bank, and with the he had always supposed that one of the nature of its securities, it was utterly imgreat advantages of banking would be to possible for any individuals to form a place disposable capital where it would be correct opinion on the subject. He beready at command, and thus prevent the lieved that the right hon. Baronet opposite embarrassment that might result from (Sir R. Peel) never contemplated the defixed investments. The hon. Baronet had pendence of the Government upon the also attributed the pressure to the system Bank for advances; and when that right of discount and re-discount; but he (Mr. hon. Gentleman was in office he believed Hume) wished to know what that had to there was money enough in the Treasury, do with the currency of the country? He at any time for the payment of the divicertainly expected that the Chancellor of dends. He had always contended that the Exchequer would have taken a review the Bank of England ought not to be alof the changes made in 1844 and subse-lowed to pay in notes, while other bankers quently; that he would have considered whether the anticipations then held out had been realized; and that, if they had not been realized, he would-as he possessed better means of obtaining information on the subject than any Member of that House-have given some explanation of the extraordinary pressure which had taken place. The right hon. Gentleman, however, had not taken this course, but had read a quotation from one of his own speeches, which certainly did not agree with his recollection; for he remembered that the right hon. Baronet opposite (Sir R. Peel) stated that the arrangements he had made for separating the bank of issue from the bank of deposit would place the currency of the country in quite a different situation from that in which it had were compelled to pay in bullion; and he had also objected to any connexion between the Government and the Bank of England. He considered that one of the first and most important duties of a Chancellor of the Exchequer was to see that the Government was able to pay the regular demands made upon it, without being obliged to apply to any man, or any body of men, for assistance. If this course had been pursued, he believed that the alarm and pressure which were now experienced would never have existed. He thought, therefore, that the Government ought not to be allowed to depend upon the Bank for advances to assist in the payment of the dividends. He thought that freedom ought to be allowed to any body of men to issue notes as they pleased, so long as they paid them in gold; for his observations must be always understood as having reference to a bullion standard. If the right hon. Baronet the Member for Tamworth could not give a better explanation than had been given by the Chancellor of the Exchequer, of the present pressure, then that House had better consider whether a wrong course had not been entered upon, and whether it would not be advisable to retrace their steps. The question ought not to be allowed to remain in the present vague and unexplained state. MR. MASTERMAN did not rise to ob from the Chancellor of the Exchequer that he would apply to Parliament for powers to enable he may require for the payment of the July divithe Bank of England to make such advances as dends out of the issue department of the Bank, instead of the banking department; such advances, of course, to be repaid out of the growing revenue, and the same regulation to apply to all future advances for the payment of dividends." The CHAIRMAN intimated that it was not competent for the hon. Gentleman to move the proposed addition, because it did not apply to the matter referred to the Committee, which related to a proposed allowance, by way of discount, on the prompt payment of instalments of the loan. MR. MASTERMAN thought, nevertheless, that the two subjects were closely connected together. MR. BROWN said that, considering the constituency which he had the honour to represent, he could not let this opportunity pass over without laying before the House the total prostration of credit that now existed in Lancashire, which had brought the business of that section of the nation to nearly a dead lock. Hon. Gentlemen were probably aware, that when houses in Liverpool, London, or Glasgow, received imports from abroad, they were either drawn on by the houses shipping the produce, or by houses in Manchester or elsewhere, who had orders for British manufactures, in payment for them. At present the alarm and want of confidence were such, that orders for human food to the United States and other countries were, in many cases, countermanded, prudent houses not choosing to risk their credit by being drawn upon until they should see what steps Government might take to restore the healthy action of trade. Houses, also, in the ma ject to the proposition made by the right hon. the Chancellor of the Exchequer; but he could not anticipate that it would afford such a relief from the existing pressure as the right hon. Gentleman seemed to expect, or do anything to alleviate the uncomfortable feeling in the money market. It was well known in that House that he (Mr. Masterman) was one of the few who predicted that the right hon. Baronet the Member for Tamworth would find his Bill not available at all periods. The alarm which had been recently created, had, he was satisfied, arisen from the improper arrangement made by the Chancellor of the Exchequer. But he was of opinion that it was impossible for the Bank of England, under the existing Act, to come forward at those quarterly periods to advance two millions or three millions on deficiency bills, and at the same time do justice to the commercial community. He was satisfied that any assurance held out to the public that such demands would not be made on them in future, would do more to alleviate the existing pressure than anything else besides. He should therefore like to make a small addition to the Motion of the Chancellor of the Exchequer, be-nufacturing towns, found that bills on Loncause he wished an announcement to go forth from that House assuring the country that, if the Government wanted any assistance for the payment of the next quarterly dividends, it should be provided for in a different manner from that in which it had hitherto been provided. He would now read the proposal, which he desired to move by way of addition to the resolution of the Chancellor of the Exchequer, and he really thought that it would do more to relieve all present inconvenience than anything else. His proposed addition was to the following effect: "The Committee, however, are of opinion that nothing would tend so much to relieve the present pressure upon the money market as an assurance don or Liverpool, however good, could not |