Commercial Distress — HC Deb 30 November 1847 vol 95 cc374–477

Claims Supported by This Source

1. Chancellor of the Exchequer Wood: Explaining the reason for recommending in the letter of 25 October that the Bank of England deviate from the Act of 1844. The Act was not in fact broken, and no Act of Indemnity is needed. After the letter, hoarded gold and notes returned, notes that had been cut in half and sent to the country were returned to the bank, and the amount of notes actually taken after the unlimited power of issue was granted was small (cc. 374–377, section on hoarding).
2. Chancellor of the Exchequer: The main cause of the pressure was the absorption of capital for the purchase of corn and for railway construction, acting upon an unsound state of commercial credit. The cost of imported corn was £5,139,000 from June 1846 to January 1847, £14,184,000 from January to July 1847, and £14,240,000 from July to October, totaling £33,563,476 in 15 months (cc. 388–389).
3. Chancellor of the Exchequer: Railway expenditure was about £4.5 million per year in 1841–43, £6,105,000 in 1844, £14,135,000 in 1845, £9,815,000 in the first half of 1846 and £26,670,000 in the second half, and £25,770,000 in the first half of 1847. At the same rate, it would have reached £38 million in the second half of 1847. Excluding about one-fifth for preliminary expenses and land, between £80 million and £90 million was absorbed in 15 months for railway construction and corn purchases (cc. 389–390).
4. Chancellor of the Exchequer: Even during the pressure, the Bank of England did not refuse a single bill for discount that was within its rules, but only raised the rate of interest. Until October, there was no deficiency in notes, discounts, or accommodation (c. 388).
5. Chancellor of the Exchequer: Did not adopt the 10% proposal for the minimum discount rate, setting it at 8%. The lowest proposal from the requesting side was 7%, but that was insufficient. At the time, the interest rate in Hamburg was 7%, and in New York, it was over 7% (cc.401–402).
6. Opposing argument (Cayley): The Chancellor of the Exchequer cites a shortage of capital and railway calls as the two causes, but it was pointed out that Lord Russell did not place much importance on the calls (cc.470–471).

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