ble. Looking to the general state of things throughout the country, and to what I know to have been the state of things in London, and the position of trade generally; to the alarm that was spreading rapidly through the country, and to the fact that the power of the Bank had been reduced to such a point, that if there had been any apprehension of the failure of the country banks it could not further support them, and that very little might have occasioned, (I might perhaps go further and say) would have occasioned the failure of banks in large towns and in the country; believing that, if one or two country banks of any magnitude had failed, alarm would have been spread throughout the kingdom, or if one or two London banks had failed, consternation would have been general; seeing, also, the considerable amount of reserve in the hands of the country bankers and joint stock banks, and the necessity that there would have been of having that reserve as early as possible converted into gold, if the Bank was obliged to stop; seeing that a reserve of £20,000 for each of 300 country banks would have taken six or seven millions; or of £15,000 each, would have taken five millions; and that if the run for gold had once begun, it would probably have gone on until the Treasury was drained; seeing all this, my firm opinion is, that the Bill of 1844 has not secured convertibility; and I state the grounds on which that opinion is formed.

Are you prepared to state any measures which you would consider advisable to be adopted for the purpose of placing the monetary system upon a better footing?-There are two broad principles on which I should be disposed to think it would be advantageous to act; one is, to make the metallic basis of the currency larger, and the other is, to secure more unity of purpose in the administration of the affairs of the Bank of England; not to have a body so fluctuating, and a change of policy depending upon one or two accidental votes. If the Governor and Deputy-governor were out of business, and were paid for their services, and their whole time and attention given to so important a subject as the administration of the currency, I think very great public good would be attained: I say it with every feeling of respect to the Bank; but I think there would be a greater uniformity of action, and that they would have more time to look systematically at the first indications of circumstances that might by-and-bye produce adverse exchanges, and the various difficulties into which the country would be thrown by them. I have never seen such perfect discouragement thrown upon commercial matters, as I have seen in the last year; I have been thirty years in business, and I have never witnessed the feeling of helplessness and hopelessness so strong as in the last year; there were heavier losses in 1825, but I never saw a greater feeling of discouragement, persons not knowing what they could depend upon in looking to distant operations. Anything that would enable us to encounter the difficulties that we have to encounter in our mercantile operations, from the sudden calls upon us from a bad harvest, I think would be of great national consequence, and it seems to me, that a wider metallic basis is almost essential to the attainment of that object.

What practical proposal would you make upon the subject of a wider metallic basis?—I am not prepared to state the form in which it

should be done. In the first place, I should like to see the capital of the Bank of England repaid, and that the Bank of England should have command over its resources. I think that is an essential thing to begin with, and I think if it had that command over its resources, provision might be made for adverse times and serious contingencies. Whenever we have an export of any extraordinary amount of the precious metals, we not only lose that amount which is unavoidable, but we have every thing throughout the country deranged. There is hardly any price that we could pay, which, in my opinion, is too high a price to prevent that. The loss generally from panic, and the closing of the channels of commerce, directly and indirectly, I feel perfectly satisfied, is many times greater than the interest of a large amount of bullion kept in some way or other under the control of the Bank, in the issue department, or the banking department as it might be; and I think one most important thing to look at in connexion with any alteration which might take place, is to take from the Bank-(I do not like to call it the temptation)-but to take from the Bank the feeling that their duty to their proprietors requires them to get rid of a large amount of bullion. They should be exempt from the necessity of having to account to the proprietors for holding too large an amount of bullion; those who have the administration of the currency should not have a personal interest in diminishing the amount of bullion to the minimum, instead of having reference solely to its connexion with the circulation.

Would you propose that a smaller number of notes should be issued upon securities?—I should feel it presumptuous to go much into detail upon a subject of this kind, because in doing so, it is necessary to carry out the whole plan. If the Bank of England had its capital repaid, of course I do not mean in such difficult times as these, but that the principle should be established to be acted upon in better times, if it had its capital repaid, the question then is, whether it should be repaid into the banking department, or the issue department; but they, whoever they might be, who had to administer the affairs of the Bank, and who had so to apply it, that it might be rendered more available than it is now as capital, would have to consider how much of it they should keep in bullion, and how much they should employ in other ways. Suppose the Bank kept a certain amount of foreign bills always under discount, that would give us a claim upon foreign countries, in the event of an adverse exchange, to a certain amount. Suppose they had five or six millions, or a certain amount of foreign stock, to which I know there are objections, or invested in foreign bills or in bullion, in whatever proportion might be deemed expedient, then you would have something by which you could discharge your debts to foreign countries, when you had an unusual amount of debt to them. When we are pressed for corn we cannot wait for it; foreigners can wait for our manufactures till adverse times are over; they can go on for six or eight months, wearing out their clothes, but we cannot wait for our corn. It seems to be taken for granted that we can always create a want abroad for our manufactures. I think that mistake lies at the root of great practical mischief; and I think, in this large commercial country, looking to the way in which our commerce has increased

of late years, and looking to the enormous extent of it now, our metallic basis does seem too small. It has been said, and said truly, by a very eminent person, that we erect a larger superstructure upon a smaller foundation of bullion than any other country. Then the question arises whether you should diminish your credit, or whether you should enlarge your basis of bullion, if there is this disproportion. We know that credit may be abused; but credit has been the foundation of the commerce of this country; and if we think it inexpedient to maintain our present extent of credit on our present basis, then give it a broader basis; but at all events, we are extremely anxious, commercially, that the subject should be considered, with a view to see if there are not ways by which these violent revulsions may be mitigated. We have two of them in one year, and the anxiety and pressure of these panics, coming on one after another, is becoming to many persons intolerable. There is hardly any expense that would not appear to be a small expense, compared with the object attained, if it could be

attained.

Mr. Cayley. Your objection to the present system is, that, losing a few millions to pay for corn, and to ratify the exchanges, deranges the whole commercial state of the country, which extends to some hundreds of millions.-Yes.

You think that the main difficulty of the present system of currency is, that in consequence of the export of bullion, to restore the exchange, the whole of the internal transactions of the country suffer very materially?—I do.

And you consider that that state of things requires a remedy?—I do. Supposing there was a broader basis for the circulation which you recommend, of what would you constitute that broader basis?—I have already stated that part of it would be in bullion. In the first place, it would be made broader by the repayment of the capital of the Bank of England, of which some part might be retained in bullion, and some part in securities, which might be easily converted, and, if possible, some part in foreign securities, which might give us the means of paying foreign debts, without deranging the monetary affairs as it does at present.

Charles Turner, Esq., Examined.

Chairman. You are a merchant at Liverpool?—I am.
What line of trade are you in?—The East India trade.

How long have you been in mercantile pursuits at Liverpool?-Since 1829; 19 years.

Have you been the whole of that time in the East India trade?— First I was in the American trade, and afterwards I was in both the East India and American trades till 1840, and since 1840, solely in the East India trade.

You attend here in consequence of a communication which was made to you, and with a view of laying before the Committee information respecting the state of trade at Liverpool?-I do.

Causes of the Distress in 1847.

Will you have the goodness to state what you consider were the causes that produced the commercial difficulties at Liverpool, so far as they came under your observation?-The fundamental cause I believe to be the famine, which occasioned the necessity for a large import of food to supply the consumption of the country, the consumption being increased at that period by the very large railway expenditure, which gave more money to a great number of people who are notoriously prodigal in their expenditure. I believe also that the imports of food were increased by the Government loan, and by different subscriptions of private individuals, which were expended in the purchase of food, which from the circumstance of the famine could only be supplied from abroad. These combined circumstances caused the imports of the country to be very largely in excess over anything that the commercial exports could pay for; and the balance, I believe, was partly paid for by the exports of foreign stocks, and other matters of that kind, and by so reducing the indebtedness of foreign countries to ourselves; but still there remained a very large balance to be paid for, which could only be done in specie. The demand for that specie caused a considerable drain upon the banks, and an increased application to the discount brokers and other parties for the discount of bills; they, finding this demand come upon them, began to scrutinize the bills offered to them for discount, in a way which they had certainly not done, to my knowledge, since 1837 or 1839, and the facilities of houses then began to be very seriously curtailed, and the weak houses began to fail. Those houses which had entered into engagements without taking into account the proportion of available means that they had to meet them, and which relied upon their credit in order to meet their engagements, rather than their available means, of course went down. This increased the alarm that had been previously felt; and the bankers and others finding that they could not rely with the same degree of confidence that they had previously done upon turning their bills and other money securities into bank notes, for the purpose of meeting their engagements, still further curtailed their facilities, and in many cases refused them altogether; they locked up their bank notes, and in many instances, to meet their own engagements; they were afraid of parting with them. Merchants were obliged to look forward to meet their engagements in a way that they had never hitherto done, inasmuch as they could not depend upon being able to raise bank notes, and they were afraid, when once they got the bank notes, to part with them. The alarm and confusion of course were increased daily; and unless Lord John Russell and the Chancellor of the Exchequer had issued the letter to the Bank, which they ultimately issued, I believe that universal bankruptcy would have been the issue. I believe that letter was a very wise one. I think particularly that the rate of discount which they charged, eight per cent., was a very prudent measure, inasmuch as it prevented its being taken advantage off to get money for purposes which it was not intended to facilitate.

Conduct of the Bank.

Do you consider the constitution of the Bank, as at present formed, satisfactory?-Not altogether; in my opinion, there must be a large commercial interest in the Bank direction, a very large number of merchants but I cannot help thinking (without the slightest imputation upon the Bank directors,) looking at the disasters which have taken place, and the way in which the Bank direction has been mixed up in the disasters, that there must have been many members of the Bank direction to whom it was of importance that the Bank rate of interest should be kept down, when, for the sake of the public, it ought to have been increased. I think it would be desirable that there should be some government officer, either a paid governor or a paid deputy-governor, who should have some controlling power as to the rate of discount upon commercial bills; that it should not be left entirely to gentlemen engrossed in commercial pursuits, and who may have a strong interest in keeping down the rate of discount, when, as regards the public, it may be desirable that it should be raised. That is the only suggestion which I can offer respecting the Bank.

Examples of Over-trading.

Chairman.-You said that there had been over-trading; will you explain more particularly what you meant?-As regards the overtrading, there has no doubt been a vast deal of over-trading; a matter which has tended still further to embarrass matters. Of course we are all aware of the events which have taken place as regards the Mauritius trade, and other trades of that kind. The brokers have been in the habit, we all know now pretty well, not only of advancing upon goods after their arrival to meet the bills drawn against those goods, which is perfectly legitimate, and upon the bills of lading, which to a certain extent might also be done; but beyond that, they have done what is perfectly illegitimate; they have advanced upon the produce before it was shipped, and in some cases before it was manufactured. Now, to speak of my own individual instance; I had bought bills in Calcutta to the extent of six or seven thousand pounds in one particular instance; the proceeds of the bills went down to the Mauritius, to help in the growth of sugar; those bills came to England, and above half of them were protested; for when the shipments of sugar came forward, instead of being held to pay those bills, it had been mortgaged to third parties to pay previous engagements before it was shipped, in fact almost before it was boiled. Now, nothing can be more unsound and worse than that state of things that has gone on to a considerable extent.

Mr. D'Israeli.-Did not the glut last in the Indian markets to 1842 and 1843, so that prices were not remunerative in 1842?—I do not recollect as to that; the general course of the trade has been a tolerable good one up to last year; but to show the way in which the matter has been carried on of late years, I will just mention one fact; there is one house which failed in London the other day, and in examining their affairs, a transaction of this sort was proved to have taken place;