BANKING AND COMMERCIAL LAW.

Bankers' Cheques, The New Law of,

LEGAL MISCELLANY.

NOTES OF THE MONTH.

THE BANKERS' MAGAZINE;

AND

Journal of the Money Market.

JANUARY, 1858.

THE COMMERCIAL CRISIS, 1857.

WHATEVER may be the opinion of ultra-theorists in finance, and however much those who look forward to periods of severe monetary pressure as the millionaire's harvest, the practical every-day public have all along been thoroughly convinced of the propriety of the step which has been the occasion of calling Parliament together in the month of December. Except by that very small minority who see in a great financial crisis only the opportunity of rearing up an enormous fabric of wealth upon the chaos of commercial ruin, the feeling was universal that the Government were fully justified in the act which has rendered a bill necessary to indemnify them for having authorised an infraction of the Bank Act of 1844, and to exonerate the directors of the Bank of England from the consequences of acting upon that authority. Probably upon no question so suggestive of conflicting views, as directly or indirectly every measure having reference to the stability of the existing currency laws must needs be, was there ever greater unanimity exhibited by Parliament than in its approval of the course which ministers by their letter of the 12th November adopted. The advocates of rival theories, the champions of metallic currency and the paper currency, the free traders in money and the protectionists, Chancellors of the Exchequer that have been and that hope to be-bankers, merchants, manufacturers, and lawyers-all who carry anything like authority in vote or speech, with only one important exception, concurred by granting the indemnity in stamping with the parliamentary approbation the policy which Lord Palmerston and Sir Cornewall Lewis have in an exigency of no ordinary character pursued,

VOL. XVIII,

1

Upon two points, and two only, was there the slightest shade of difference observable in the course of the several debates which introduced and carried the Indemnity Act to its final stage the first, whether the authority to the Bank to exceed the parliamentary limit of its issues was not too long delayed; and the second, whether the relaxation should be allowed to operate only so long as the minimum rate of discount remains at ten per cent.? These are questions which every man will determine for himself according as he has been personally affected by the event. He who has experienced no losses, who has known nothing of the suspension of regular remittances from the United States or the north of Europe, during the period when solvency in those countries was the exception and bankruptcy the rule, he who has had no occasion to apply for the ordinary discount accommodation-which, in a commercial community, is as much an essential as the currency itself— and receive a refusal, not from the insufficiency of his credit or the value of his securities, but solely from the extreme competition in the demand, as compared with the limit of the supply, will in all probability hold to the opinion that the concession was properly timed. While those who with assets-presently but not instantly available-sufficient to pay 20s., 30s., or more shillings in the pound upon all their liabilities, have seen their names paraded in the bankrupt list, and the fair fame acquired by many years of honest and prudent trading shattered by a calamity which has spread over nearly half the civilized globe, upon which there is scarcely a commercial people in the world that has escaped wholly unscathed, will as certainly contend that had the screw been loosened a week or two earlier, their credit might have been saved, and the hundreds-perhaps thousands-who are in one way or other dependent upon them rescued from the misery and want by which the total or partial cessation of employment is invariably accompanied. One thing however is certain, that any further delay in the application of the ameliorating principle would have resulted in consequences far more serious than any which we have now to lament. Equally true is it that the remedy applied was instantaneous in its operation; and of its success, the facts mentioned by the Chancellor of the Exchequer in his speech of the 11th ultimo, viz., that the Bank reserve which on the day the Government letter issued was reduced as low as £581,000, stood on the 11th of the following month at £4,680,000 or £2,680,000 over the £2,000,000 excess of issues, and that the bullion had risen within the same four weeks from £6,524,000 to £8,200,000 are conclusive.

- Whether the inquiry by which ministers have avoided the responsibility of proposing any permanent alteration of the late Sir R. Peel's Act, with the view of meeting these periodical financial crises which have, at almost regular intervals of ten years, marked the progress of the present century, will eventuate in any practical advantage, is a matter upon which even those whose sentiments upon the leading principles involved in the currency question accord may reasonably differ. The duty which the committee have had delegated to them is wide and comprehensive: to inquire into and report upon the general principle of the Act of 1844; to investigate the subject of provincial issues in England, Scotland, and in Ireland; and to inquire how far the general operation of the acts of 1844 and 1845 may be illustrated by an investigation into the causes of the present commercial distress. Here is a task, not for a session, but for a whole Parliament.

As regards the first section of the inquiry, the voluminous evidence collected by the committee of last session would, under ordinary circumstances, afford ample data upon which to found a satisfactory report. The unfortunate occurrences of the last two months may, however, in the minds of some persons, warrant a further sifting of adverse authorities, ere the only decision to which common sense and experience alike point is pronounced-viz., that under all circumstances, the principle of the convertibility of paper money must be maintained inviolate. The subject of provincial issues, though in itself a matter of detail, opens up a much wider field for discussion, and is likely to elicit a large amount of testimony, in which, as is generally found in such cases, the public benefit will be associated with what each individual witness conceives to be most in accordance with his own particular interest. What Mr. Gladstone calls the natural development of Sir R. Peel's Act undoubtedly contemplated the gradual abolition of country issues, and, in process of time, the centralisation of the whole issuing powers of the United Kingdom in the Bank of England. For many and obvious reasons, a change which would establish a uniform paper currency for England, Scotland, and Ireland, and place the responsibility of note issues in the hands of one establishment, would conduce to the public convenience and advantage. There is but little question that such a change would have been carried into effect in 1844-45, but that Sir R. Peel discovered that local customs and local prejudices in favour of the provincial bank note were too powerful to be readily overcome. The same reason, it is to be presumed, now induces the Chancellor of the Exchequer to avoid any indication that in this respect