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212.: THE BANK CHARTER BILL [2] EXAMINER, 18 AUG., 1833, P. 514 - John Stuart Mill, The Collected Works of John Stuart Mill, Volume XXIII - Newspaper Writings August 1831 - October 1834 Part II [1831]

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The Collected Works of John Stuart Mill, Volume XXIII - Newspaper Writings August 1831 - October 1834 Part II, ed. Ann P. Robson and John M. Robson, Introduction by Ann P. Robson and John M. Robson (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1986).

Part of: Collected Works of John Stuart Mill, in 33 vols.

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212.

THE BANK CHARTER BILL [2]

EXAMINER, 18 AUG., 1833, P. 514

For the background, see Nos. 208 and 209. This leading article in the “Political Examiner” is headed as title. It is described in Mill’s bibliography as “An article headed ‘The Bank Charter Bill’ in the Examiner of 18th August 1833” (MacMinn, p. 33); in the Somerville College set of the Examiner, it is listed as title and enclosed in square brackets.

this piece of weak and ignorant legislation has passed through the Committee, and may have passed the House of Commons before these lines are printed; not entirely without improvement, but without the only sufficient improvement, viz., annihilation.1 Never was the answer more applicable which some one made to Pope when he exclaimed “God mend me.” “God could more easily make twenty than mend the like of you.”2

The principal change for the better consists in the destruction of not perhaps the worst, but the most undefended and indefensible of all the exclusive privileges which the measure, as it originally stood,3 was intended to prolong. The monopoly of the Bank is to extend no further than to the supply of currency. For deposit and other banking purposes, banks with more than six partners may henceforth be established in any part of the United Kingdom. For this amendment we are indebted to no conviction, to no enlightenment of the understandings of our Whig Ministers, nor yet to the wisdom of the House overruling their folly. We owe it to a singular discovery. Till now it had been believed that by the law as it stood, no banking establishment with more than six partners, except the Bank of England, could exist in London, or a circle of sixty-five miles round it, or could have existed anywhere in the kingdom, previously to the Act of 1826.4 Of a sudden it is discovered that this interpretation of the law is wholly erroneous; that there is not, nor has ever been any legal hindrance to the establishment of banks with any number of partners; that the Legislature, every successive Ministry, all parties interested in upholding the monopoly, and all parties interested in breaking through it, have been entirely mistaken in what so nearly concerned their duties, their occupations, and their interests. A curious picture of the law and of legislation; and a curious example too, if the fact really be as stated, of the fallacy of the expectation that what it is peculiarly and strongly men’s individual pecuniary interest to know, they will know; for of all the innumerable adventurers, or those who would gladly have been adventurers, in banking speculations, or who have actually founded numerous associations for banking purposes in other parts of the kingdom since 1826, if there had been one who had inspected the Act and given a fee to Sir William Horne or Sir John Campbell for telling him its real meaning, he must have learnt the very fact which those functionaries, as the law authorities of the Crown, have just promulgated to a wondering public.5

However, this being announced, put it in the power of Lord Althorp to escape from the awkward position in which he had placed himself before Parliament and the public by his hasty and silly measure, at no greater expense than that of an evasion—the favourite resource of juste-milieu politicians, as of all other waverers whether in public or private life. Had Lord Althorp made confession to the Bank of a change of opinion; had he said, “I was ignorant of the subject—I am now better instructed;” or even, “This measure is unacceptable to Parliament and to the country, and must, therefore, be modified in conformity to public opinion,” he would have done that which, next to proposing at first a well considered and well digested plan, would have been the noblest and wisest part a Minister could have performed. A mere private arrangement between Ministers and an interested party cannot, in common sense, bind a servant of the nation to betray his trust by pressing a measure when he has ceased to think it expedient, or to resign his office when the sworn enemies of the people’s dearest principles and wishes must be his successors. Lord Althorp’s engagement with the Bank was fulfilled when he had proposed the measure. That engagement could not have been forfeited by altering, or even by withdrawing the Bill, on the occurrence of any real change in his opinion either of the measure itself, or of the consequences to the public of persisting in it. The use of the private correspondence was merely to ascertain what price the Bank were willing to pay for what privileges, and if the privileges were refused the Bank were released from paying the price; that was all.6

But this view of the matter was not adapted either to the optics or to the nerves of a Lord Althorp. Observe his mode of dealing with the pretended pledge. He owns it; but as it would be inconvenient to keep it, he keeps it only “to the ear.” His bargain was that the Bank should retain their existing exclusive privileges.7 It is true that when this promise was made, Lord Althorp believed, and the Bank believed, and the world believed that the Bank did possess the privilege now in question; and, as long as this was the case, it is obvious that they enjoyed all the advantages which the real possession of the privilege could have given them. However, as the Attorney and Solicitor-General affirm that the Bank had not what all the world thought they had, it is not an existing privilege; and to refuse it to them hereafter, though as complete a change in their position as if they had really had it, happens not to be an infringement of the actual letter of the engagement. This is enough for Lord Althorp; and to this trick we are indebted for a riddance, which the most potent arguments, urged and re-urged from the beginning to the end of a Session, never would have procured for us.

The only other alteration for the better which this Bill has undergone, is the permission given to country banks of issue, whatever be the number of partners, to have agents in London and to make their notes payable there. By means of this clause a door will, we trust, be opened for the ultimate defeat even of those provisions of the Act which are intended to secure to the Bank the exclusive supply of paper-currency to the metropolis.

All attempts have failed to procure a shortening of the period of time during which this Act, for which the best that can be hoped is that it supplies the means for its own nullification, is to remain binding on the country. The monopoly is granted for twenty years; once during that period, namely, ten years from this time, it is to be subject to revision. But, with the consent of the Bank it may be revised or repealed at any moment; and before ten years have passed over us, times may come at which, as in 1826, the voice of the public out of doors will “act upon the prudence” of the Bank.

September 1833 to October 1834

[1 ]The Bill passed through Committee on 10 Aug. and the House of Commons on 19 Aug. (PD, 3rd ser., Vol. 20, col. 782); it was enacted as 3 & 4 William IV, c. 98 (29 Aug., 1833).

[2 ]For the anecdote, see Richard Owen Cambridge, “To Mr. Fitz-Adam,” The World, No. 50 (13 Dec., 1753), p. 303.

[3 ]In the Ministry’s resolutions presented by Althorp on 31 May; see No. 208.

[4 ]7 George IV, c. 46 (1826)

[5 ]William Horne (1774-1860), who had been appointed Solicitor-General in 1830, was made Attorney-General in 1832, being replaced as Solicitor-General by John Campbell (1779-1861). Their judgment is reported in “The Bank of England,” The Times, 14 Aug., pp. 5-6.

[6 ]See “A Copy of All Correspondence and Minutes of Any Conferences between the Government and the Directors of the Bank of England, on the Subject of the Renewal of the Bank Charter,” PP, 1833, XXIII, 279-96.

[7 ]See Spencer, “Letter to the Governor and Deputy Governor of the Bank of England” (6 Aug., 1833), ibid., p. 293; and his interjection in the debate on the removal of the Bank’s Charter (31 May, 1833), PD, 3rd ser., Vol. 18, col. 188.