Mr. J. L. Ricardo, Mr. James Wilson, Mr. F. T. Baring, Lord John Russell, Mr. Spooner, Mr. Goulburn, Mr. Cardwell, Mr. Hume, Mr. Thornley, Sir William Clay, and Mr. Tennent, and after a searching inquiry, it reported that there was a concurrence of opinion amongst the witnesses that the primary cause of the distress was the deficient harvest, especially of the potato crop in 1846, and the necessity for providing the means of payment in 1847 for the unprecedented importation of various descriptions of food which took place in that year. Among other causes, the deficient supply of cotton, the diversion of capital from its ordinary employment in commercial transactions to the construction of railroads, the undue extension of credit, especially in our transactions with the East, and exaggerated expectations of extended trade, were stated as having contributed to the same result. The Committee commented on the conduct of the Bank of England, and concluded by stating that they had under their consideration, whether it was advisable that powers should be conferred by law upon the Government to enable them to meet the advent of circumstances which might call for extraordinary interference, but that they came to the conclusion that, looking to the impossibility of foreseeing what the precise character of the circumstances might be, it was more expedient to leave to those with whom the responsibility of the Government might rest at the time, to adopt such measures as might appear to them best suited to the emergency. The Committee, therefore, after a careful review of all the evidence, were of opinion that it was not expedient to make any alteration in the Bank Act of 1844. But this resolution was arrived at by a very slender majority. Mr. Hume moved, That, in the opinion of this Committee, the laws for regulating the issue of bank notes payable on demand have aggravated the commercial distress in England in the year 1847,' and the motion was lost by eleven members voting in the affirmative and thirteen in the negative. Nearly every paragraph of the report originally prepared by the Chancellor of the Exchequer met with strong opposition, and was the subject of a division.

The Committee of the House of Lords in their report entered at much greater length into the operation of the Bank Charter Act. After examining into the causes and extent of the distress of 1847, and the effects of the Treasury letter of October 25, the report went on to show that the principle of the Bank Act requiring that the efficiency of the circulation should be identical with its money amount is erroneous, because it depends on many other circumstances, such as the rapidity of circulation, the number of exchanges performed in a given time, as well as upon its numerical amount; and that, moreover, such a rule is inapplicable to periods of favourable and of adverse foreign exchange. The Committee dwelt on the increased fluctuations in the rate of discount since

the passing of the Act of 1844; criticised the limitation of the amount of silver by the Act of 1844, an alteration of which would not involve any alteration in the standard; and then entered into the remedial measures recommended by the witnesses giving their opinion in favour of the introduction of a discretionary relaxing power, to be vested in the Bank of England alone, rather than in the Government, or the Government and the Bank conjointly. Generally, the opinion of the Committee was decidedly adverse to the operation of the Bank Acts. To those who may have expected that the 7 & 8 Vict. c. 32 would effectually prevent a recurrence of cycles of commercial excitement and depression, the contrast between the years 1845 and 1847 must produce a grievous disappointment. To those who anticipated that the Act would put a check on improvident speculation the disappointment cannot be less, if reliance is to be placed (as the Committee are confident it may) on the statement of the governor of the Bank, and of other witnesses, that speculations were never carried to such an enormous extent as in 1846 and the beginning of 1847. If the Act were relied on as a security against violent fluctuations in the value of money, the fallaciousness of such anticipation is conclusively proved by the fact, that whilst the difference between the highest and lowest rate of discount was in the calamitous years 1837 and 1839 but 21 to 2 per cent., the difference in 1847 rose to 62. If it was contemplated that the number and the extent of commercial failures would have been lessened, the deplorable narrative of the Governor of the Bank, recording the failure of thirty-three houses comparatively in large business, in London alone, to the amount of 8,129,000l., is a conclusive reply. If the enormous extent to which railroad speculation has been carried be considered as an evil to which no sound system of banking could have applied a corrective, such a corrective has not been found in an Act, since the passing of which, during a period of three years, an increased railway capital of upwards of 221,000,000l. has been authorised to be raised by Parliament, and when the enormous sum of 76,390,000l. is stated, on high financial authority, to have been actually expended on railways in two years and a half. If the power of obtaining banking accommodation on moderate terms were considered to be promoted by the act of 1844, it cannot be said that this important object has been attained, since it appears in evidence that in 1847, in addition to an interest of 9 or 10 per cent., a commission was also frequently paid, raising the charge to 10, 20, or 30 per cent., according to the time which bills had to run. The committee are fully aware that alternations of periods of commercial excitement and of discredit, of speculation and of collapse, are likely to arise under all systems of currency: it would be visionary to imagine that they could be averted altogether, even if the circulation were exclusively metallic. But it is on this account that great

care should be taken to avoid increasing an evil, perhaps inevitable, by any arbitrary and artificial enactments.'

Before the presentation of these reports a discussion took place on the subject in the House of Commons, when Mr. Herries moved: "That, looking to the state of distress which has for some time prevailed among the commercial classes, and to the general feeling of distrust and alarm by which the embarrassments of trade have been aggravated, it is the opinion of this House that her Majesty's ministers were justified during the recess of Parliament in recommending to the Bank of England, for the purpose of restoring confidence, a course of proceeding at variance with the restrictions imposed by the Act of the 7 & 8 Vict. c. 32, and that this House will resolve itself into a committee upon the said Act.' Mr. Herries further declared his opinion that, should the House assent to that proposition, he would propose, That it is expedient that the limitations imposed by the Act 7 & 8 Vict. c. 32 upon the Bank of England, and the Act 8 & 9, c. 36 & 37, in relation to the issue of notes payable on demand, be suspended, subject to such conditions as may be provided by any Act to be passed for that purpose.' The first motion was, however, lost by 122 to 163, and thus the discussion ended. In August 1848, again Mr. Herries brought the subject before the House, and moved, 'That this House will, early in the next session of Parliament, take into its serious consideration the reports from the committee of this House and from the committee of the House of Lords, communicated to this House, appointed to inquire into the causes of the recent commercial distress, and how far it has been affected by the laws for regulating the issue of bank notes payable on demand.' But the motion was negatived without a division.

CHAPTER VII.

COMMERCIAL AND ECONOMIC PROGRESS, 1840-1850.

The French Revolution and its Influence. Progress of Population.-Increase of Exports.-Improved Condition of the People.-Property assessed to Income Tax.-The Clearing House.-State of Finances.-Treaties of Commerce.

THE period now before us will ever be memorable in the commercial annals of England for the bold and independent commercial policy then fairly adopted. Sir Robert Peel, urged by the Anti-Corn Law League, and stimulated by the severe distress in Ireland, acted on the sound maxims of free trade, and under his leadership the corn laws were abolished and the tariff was remodelled. The banking laws also, which at all times have given rise to so much conflict of opinion, were now systematized; and the railway system was established, which had an immense influence on the economic condition of the country.

The commerce of the country did not run an even course of progress during the ten years. Several adverse influences acted against it. The principal of these were two very bad harvests, a bad cotton crop in the United States of America, too much speculation in railway shares, iron, and cotton, and more especially the political condition of Europe during the last five years.

A bad harvest had considerable influence in unsettling the politics of France in 1847. In that year the price of wheat, which usually ranged at 40s. to 50s. per quarter, rose to 678. 4d., and instead of exporting, France had to import large quantities of grain, for which she had to make heavy payments. The commerce of France did not prosper during the reign of Louis-Philippe. The imports for home consumption were checked by a prohibitory tariff; the exports were not increasing, and the people were not able to bear the losses and sacrifices which a bad harvest always entails. Were matters closely scrutinised, it would be found that it was more from economic than from political causes that France entered into that revolution which seemed to shake from the very centre not only her own but every throne in Europe.

The revolution of 1848 had a considerable influence not only on trade and industry,' but on banking and finance. On the Bank

The imports and exports of France were greatly affected by the revolution. In 1847 the value of imports was 53,713,000l., and of exports, 50,828,0007.: total, 104,541,000l. In 1848 the imports were 34,475,000l., the exports, 46,120,0007.:

of France the revolution produced a great change. In 1815 the capital of the Bank had been reduced to 62,900,000 fr., its two branches at Rouen and Lyons were closed, and its operations were limited to the metropolis. After the revolution of 1830, the want of banking accommodation being great, departmental banks were opened at Lyons, Marseilles, Lille, Orleans, Havre, and Toulouse, and the amount of their discounts rose from 352,000,000 fr. in 1838 to 851,000,000 fr. in 1847. The Bank of France, however, became jealous of their progress, and on the occasion of the renewal of its charter, sought and obtained a stipulation prohibiting the formation of any new departmental bank. But when, in 1848, the provisional government made enormous demands on the resources of the Bank, and a suspension of cash payments became necessary, a further step was taken towards the unification of banking, and by an arbitrary measure all the departmental banks were suddenly converted into branches of the Bank of France. The year 1848 was a trying one for France. Commerce and industry can never make progress whilst revolution and uncertainty weaken the institutions of the state.

The population of the United Kingdom suffered considerably from the mortality in and emigration of the people from Ireland. The results of the Census of 1851 were as follows:

The population of the principal towns increased as follows:

total, 80,595,000l., a decline of 23 per cent. The declared value of British manufactures exported to France in 1847 was 2,554,000l., and in 1848, 1,025,000. The French 3 per cent. fell from 74 f. 10 to 51 f. 90, the 5 per cent. from 116 f. 75 to 72 f.; the shares of the Bank of France from 3,180 f, to 1,650 f.