HC Deb 26 June 1828 vol 19 cc1526-30
Mr. Hume

said, that as he considered the question of the currency to be one of vital importance to the country, he must again impress upon ministers the necessity of altering their policy. In the speech of his majesty, in February, 1826, they were recommended to take such measures as would prevent the fluctuations which had lately taken place; but instead of attending to this recommendation, ministers came down with a measure, which lessened the currency, and tended to increase those fluctuations. The object of his motion was, to ask leave to introduce a bill which would compel bankers to make quarterly returns of the amount of their notes in circulation. If that plan were adopted, not only would it prevent excessive speculation, but it would enable parliament to deal with the currency, upon any emergency, with greater safety than at present, when it was impossible to ascertain, with exactness, the amount of paper in circulation. The bankers with whom he had communicated on the subject had declared, that they had no objection to give publicity to their proceedings in the way he proposed. The hon. member then proceeded to repeat the opinions he had formerly expressed, as to the manner in which the system of banking should be conducted in this country. He thought that no bankers should be allowed to issue notes, until they had given full security for every farthing of the amount to be issued. That, combined with the plan of quarterly returns, would, he conceived, afford perfect security to the public. He disliked the air of secrecy which was observed with respect to all the proceedings of the Bank of England. The Bank of France was guided by a more liberal policy; for, in February last, it laid before the public a full statement of all its affairs. If the Bank of England had been in the habit of issuing similar statements, the lamentable events which distinguished the close of 1825 would not have occurred. He did not, however, mean to blame the Bank for what they did on that occasion; for he believed they thought they were acting in a way which would be beneficial to the country. He then referred to the United States of America, where, as he said, during the recent panic none of the banks formed on the principle of the Scotch banks (that of giving security) had failed, whilst most of those established upon the system prevailing in this country had become insolvent. That was a practical instance which ought not to be lost sight of. The hon. member then read several extracts from papers which had been laid before the local assemblies in the United States, but in so hurried and confused a manner that it was impossible to collect their pur- port. He did not scruple to call this a complete departure from consistency on the part of the ministry; indeed a total dereliction of all principle. He would not require at the hands of private bankers the same minute accounts as from chartered banks; but he thought these depositories of public money would never be safe until government required of them, in the first instance, securities, and next convertibility of their paper into gold, with a regular quarterly return of the amount of their issues. He concluded by moving for leave to bring in a bill "to compel the Bank of England, and all country bankers, to make quarterly returns of the amount of their promissory notes outstanding."

Mr. Hudson Gurney

opposed the motion. At that late period of the session, and on the eve of the operation now about to take place, of calling in the one-pound notes, no conjuncture could be conceived, in which this species of legislation could be more ill-timed. Indeed, the hon. member's own views seemed to be singularly confused. He had mixed up joint-stock banks, and chartered banks, and private banks, and banking in England, and banking in Scotland, and banking in France, and banking in Massachusetts, in a manner which could not practically bear upon the present state of monied transaction in this country, whether the existing system be a good or an erroneous one.—He, however, should, at the present moment, deprecate any legislative measure. It had been put forth, in 1825, that the insolvency of many of the country bankers arose from their having gone into the bubbles and speculations of the day. It was, however, found that the contrary was the fact; and, whatever failures had then taken place, had, for the most part, arisen from their having made imprudent advances to their immediate neighbourhoods. Now, as the legislature had determined, that the circulation of one-pound notes should cease in April next, the real danger to be guarded against was, lest the bankers, anticipating a greater demand on them than might probably take place, in consequence of that measure hanging over them, should be too hastily withdrawing their credits, and might thus bring on, during the winter months, a greater pressure than the country could conveniently bear. A run on the bankers was a great grievance to them; but the real pressure was from that which necessarily followed it; namely, the run of the bankers on the country; and though in his (Mr. Gurney's) opinion, the looseness of credits given by bankers, had, at one time, gone to a very dangerous and injurious length; yet it must be obvious, that the bankers, having to supply their respective districts with the specie necessary to their circulation, would not be very ready to grant such credits now, and might be safely left to take their own measures, without being obnoxious to the suspicion of wishing unreasonably to extend their issues.—Here, Mr. Gurney said, he could not but remark on the most unfortunate examples which the hon. member had brought forward to sustain his motion. In America there was hardly any metallic currency. The notes of the banks in the different states circulated at different values; as calculated against the United States bank note, which went every where, and with them appeared to constitute the standard in use; whilst the very system of the Scotch circulation was issuing on joint securities, to be met by after returns of the sales of property, and not, as in England, real cash lodgments previously made. Under all these circumstances, he hoped the House would not concur in the motion of the hon. member, and that if the hon. member were to bring any motion forward in another session, he might see fit to have his plan a little more digested than it appeared to be at present.

Sir C. Cole

supported the motion. He thought that the labouring classes had a right to ask, at the hands of the legislature, some security for the solvency of country banks, in which they must of necessity repose so much confidence.

The Chancellor of the Exchequer

concurred fully in what had fallen from the hon. member for Newton, and felt, that after his observations upon the motion, it was unnecessary to enter into the wide field of discussion which the hon. mover had thought it necessary to take. The question really was, ought parliament to compel all bankers to render a public account of their issues? To accomplish this object, it seemed, the hon. mover had no hesitation in prying into and revealing the secrets of their business; secrets on which not only their welfare but their ruin might depend. Admitting that in the estimate he (the chancellor of the Exchequer) had made of the issues of country bank paper, there had been some inaccuracy, was that a reason why private individuals should be compelled to go into a statement of this nature, and disclose what must so often prove injurious to their interests? He, for one, could not concur in the motion. That hereafter a mode might be struck out, of controlling those issues by some species of return of the issues, he thought not impossible; but he felt that, at present, circumstances connected with the currency, called on parliament not to be precipitate in legislating on the subject.

After a short conversation, Mr. Hume consented to withdraw his motion.