our example; nay, have not only not followed our example, but have actually applied to the importation of British goods higher rates of duties than formerly. I quite admit it. I give you all the benefit of that argument. I rely upon that fact, as conclusive proof of the policy of the course we are pursuing. It is a fact, that other countries have not followed our example, and have levied higher duties in some cases upon our goods.

But what has been

You have defied the

the result upon the amount of your exports? regulations of these countries. Your export trade is greatly increased. Now, why is that so? Partly because of your acting without wishing to avail yourselves of their assistance; partly because of the smuggler, not engaged by you, in so many Continental countries, whom the strict regulations and the triple duties, which are to prevent the ingress of foreign goods, have raised up; and partly, perhaps, because these very precautions against the ingress of your commodities are a burden, and the taxation increasing the cost of production, disqualify the foreigner from competing with you. But your exports, whatever be the tariff of other countries, or however apparent the ingratitude with which they have treated you, your export trade has been constantly increasing. By the remission of your duties upon the raw material, by inciting your skill and industry, by competition with foreign goods, you have defied your competitors in foreign markets, and you have been enabled to exclude them. Notwithstanding their hostile tariffs the declared value of British exports has increased above 10,000,000l. during the period which has elapsed since the relaxation of duties on your part. I say, therefore, to you that these hostile tariffs, so far from being an objection to continuing your policy, are an argument in its favour. But, depend upon it, your example will ultimately prevail. When your example could be quoted in favour of restriction, it was quoted largely. When your example can be quoted in favour of relaxation as conducive to your interest, it may perhaps excite at first in foreign governments, in foreign boards of trade, but little interest or feeling; but the sense of the people of the great body of consumers will prevail; and in spite of the desire of Government and boards of trade to raise revenue by restrictive duties, reason and common sense will induce relaxation of high duties. That is my firm belief."

Another evidence of the liberal views held by Sir Robert Peel's Cabinet at this important period was the abolition of the prohibition to export machinery. There is scarcely anything for which Britain is more distinguished than for her power to mould and subdue the hardest metal, and to convert the shapeless and roughest mass of inert matter into the most useful mechanical instrument. No country in the world possesses factories for machinery as extensive as Manchester, Leeds, and their immediate neighbourhood. And when we consider that it is by this superiority

in mechanical contrivances that England was able for so long a time to maintain her manufacturing industry, and to render foreig nations in a manner tributaries to her power and skill, we may almost sympathise with those who entertained grave apprehension from allowing these very machines, these wonders of art, to be sent to rival nations. They thought it altogether inexpedient to hasten or actively promote the successful manufacturing rivalry of foreign competitors by supplying the Continent with English machinery of the best description. And they reasoned respecting the exportation of machinery in the same manner as they did as regards prohibiting our artisans to emigrate, or allowing the exportation of coals or of cotton yarn. If we happen to possess any special aptitude or privilege, why should we throw it away? Why build the fortune of others with our own hands? But experience has proved that it is in vain to attempt to keep for ourselves any advantage we may chance to possess. Our superiority to other nations must be maintained by the constant exercise of that same skill and energy which set us from the first at the head of other countries. We cannot rely upon fictitious expe dients for keeping other nations behind us. At the very time when we prohibited the exportation of our machinery, other nations, especially Belgium, France, Germany, and Switzerland, were making considerable progress in them. Our position had become untenable. The prohibition to export machinery applied by law to several articles specified by a schedule attached to the Cus toms Regulation Act of 1825; but a discretionary power was vested in the Board of Trade, to permit the export when the machinery was of great bulk and contained a quantity of raw material, and to restrain it when the machinery was of modern improvement, and depended mainly upon the ingenuity and excellence of the mechanism, and also when the raw material used was but trifling. It is easy to see how difficult it must have been for the Board of Trade to use this discretion aright. In practice, whilst the most ingenious pieces of mechanism found their way through the customs, tools, which are as important as machinery, were not allowed to be exported. But machines of all kinds were smuggled continually. Passengers not only took drawings and plans, but secreted machinery in their luggage. Sometimes a piece of machinery was sent to the quay and the remainder to the docks. Sometimes machinery was secreted in bales of goods which custom-house officers could not readily unpack. In many ways the law was evaded. The prohibition of exportation positively injured the manufacturers of machinery. A machine maker in England discovering some new mechanical combination, or inventing a new machine, might secure a protection for the invention on the Continent in the same manner as in this country; but when the patent applied to a machine, the export of

which was prohibited, he was obliged either to establish a manufacture on the Continent, which was inconvenient and almost impracticable if he was not present to superintend, or to throw himself into the hands of foreigners, and thus derive only a portion of the profits, all of which he would have got had his invention remained in his own hands. If the latter method was adopted it became necessary to supply such foreigners with the knowledge requisite for the construction of the machine, to furnish drawings and specifications, possibly to send a model machine, which, being made in this country, could be sent to the Continent only in a surreptitious manner. Thus, instead of calling into activity the works connected with our own coal and tin mines and the labour and industry of a large body of our industrious artisans, the manufacturer was compelled to call all these advantages into operation in foreign countries. We have already seen that the committee on the combination laws, appointed in 1825, was to have enquired into the operation of the law respecting the exportation of tools and machinery, but had no time to complete their enquiry on the subject. In 1843 the enquiry was resumed, and, after having examined a large number of witnesses, the committee reported that, considering that machinery was the only product of British industry upon the exportation of which restraints were placed, they recommended that the law prohibiting the exportation of such should be repealed, and that the trade of machinery should be placed upon the same footing as other departments of British industry. The Government acted upon this report. A bill on the subject was introduced, and the exportation of machinery was set free.12

12 6 & 7 Vict. c. 84.

CHAPTER II.

THE BANK CHARTER ACTS.

Conflicting Opinions on Monetary Legislation.-Committee of 1819.-Committee of 1826.-Committee of 1832.-Committee of 1836.-Committee of 1840.-Committee of 1841.-Theory of Lord Overstone, Colonel Torrens, and Sir Robert Peel.-Theory of Mr. Tooke and Mr. Fullarton.-Sir Robert Peel's Motion.-Currency Laws for Scotland and Ireland.-Law of Joint Stock Companies.-Practice of the Board of Trade on granting Charters.-Committee on Joint Stock Companies.

THE Bank Charter Act of 1844 has been subjected to considerable criticism. Dealing as it did with the monetary organisation of a great commercial nation, legislating in accordance with a special theory of currency and banking, interfering with established customs and in some cases even with private rights, the Bank Act has by one class of financiers and economists been held up as the master-piece of Sir Robert Peel's administration, and by another as only a piece of blundering and meddling legislation, useless in times of ease and prosperity, and most inconvenient in times of anxiety and panic. In the main conclusions of the Bullion Committee there was a universal concurrence. The act of 1819 was accepted by most parties as a just and necessary measure, since the restriction of cash payments could be considered only as an exceptional measure which extreme circumstances alone could justify. Yet on the occasion of the crises in 1826, 1836, and 1839, conflicting views were expressed respecting the relative influence of causes immediately connected with the currency and causes special to the times of a political or economic character. Sir Robert Peel, however, who since 1829 had become a decided convert to the bullionist theory, was at no loss to account for the same, and saw in all these circumstances a clear and decided reason for checking by law any excess of issue which endangered the maintenance of a metallic currency. Taking advantage, therefore, of the expiration of the time for which the privileges of the Bank of England had been granted, Sir Robert Peel, on May 6, 1844, propounded his new scheme for controlling and regulating the issue of notes. Much had been done already in the way of clearing the ground for further legislation on the currency, and it may be well before entering on the proposed measure, even at the cost of some repetition, to refer to the different

inquiries instituted on the subject, at least since the famous Bullion Committee.

The first documents in date and importance are the two reports of committees of the Houses of Lords and Commons in 1819, on the expediency of the resumption of cash payments by the Bank of England. Before those committees appeared Samuel Thornton, Thomas Tooke, David Ricardo, Alexander Baring, and many other financial authorities; and the reports, besides dealing with the immediate subject before the committees, dwelt also on the point how far, during the restriction, an undue circulation of notes was the cause of the unfavourable state of the foreign exchanges. Some of the witnesses attributed the unfavourable state of the exchanges to an excess in the circulating medium of the country; others to the effect of the Mint regulations respecting the silver coinage; and others to the operation of foreign loans, to the investment of capital in foreign funds and speculations, and to the large purchases of corn abroad. The Lords committee reported that many of those who maintained that it is at all times in the power of the Bank to exercise a complete control over the rise and fall of the exchanges, and over the price of gold, nevertheless thought that the great loans contracted by foreign states since the peace, the investments made by persons in this country in foreign securities, the pressure which took place in the money market at Paris and other commercial towns on the Continent and in America, and the great importation of corn during the year 1818, all concurred in lowering the exchanges. That on the other hand, many of those who attributed the high price of gold and the unfavourable state of the exchanges chiefly to such operations, and who denied or doubted the fact that the issue of the notes of the Bank of England had been excessive, nevertheless thought that an excessive increase or diminution of their issue was capable of affecting the exchanges.

In 1826 a committee of the House of Commons was appointed to inquire into the state of the circulation of promissory notes under the value of five pounds in Scotland and Ireland. As regards Scotland, it appeared that notes of not less than twenty shillings had been at all times permitted by law, and upon the continuance of such issue the committee's report was decidedly unfavourable. The presumption on general principles appears to your committee to be in favour of an extension to other parts of the United Kingdom of the rule which it has been determined to apply to England. Provision would thus be made for equally apportioning among all parts of the empire that charge which is inseparable in the first instance from the substitution of a metallic in the room of a paper currency. The wider the field over which a metallic circulation is spread the greater will be the security against its disturbance from the operation of internal or external causes, and the lighter

T