CHARTER OF THE BANK OF ENGLAND. (Hansard, 22 May 1832)

§ Lord Althorp
said, that the Motion on this subject, of which he had given notice, was one of the greatest importance, as it affected the prosperity of the country in the greatest degree, and nothing would have induced him to have brought it forward at so late an hour, but that, as it was for a Committee of Inquiry, be did not think it was right to delay it. He was anxious it should not have been delayed, but other circumstances had prevented him from bringing it forward as early as he could have wished. There was another ground on which he conceived it would appear that it was not improper for him now to bring it forward, which was, that he did 1357 not intend to enter into any discussion, or state his own views on the subject; indeed, it would be almost using contradictory terms for him to say, he would move for a Committee of Secresy, and yet, at the same time, explain the views to the House which would guide him in Committee. It would be inconvenient, nay, improper, even if he had had an opportunity of addressing the House at an earlier period of the night, for him to have gone into a statement of his views on the banking system. He would state the reasons on which he grounded his proposal for a Committee. This was the first instance when the Bank Charter was proposed to be referred to a Committee of this House. But a feeling had existed for a number of years past, that the period of the renewal of the Bank Charter was the proper time for an inquiry into the general system of banking. Great anxiety had been expressed that this opportunity should be taken; and the principles on which the Bank had conducted its business should be subjected to the review of the Legislature. And he did not think he should have acted consistently with his duty, if he had entered into any negotiations with the Bank, relative to the renewal of the Charter, without first appealing to the House, and bringing the whole case fairly before a Committee. It was desirable that this Committee should be one of secresy; for although he knew secresy was not very particularly observed on these occasions, yet the advantage was, that the question could not be brought into discussion in the House, or what took place in the Committee be there adverted to. This was a great advantage; for when so many interests were concerned, that discussion should arise before the matter was completely concluded in the Committee would be attended with great injury. He hoped that the House would not object to appoint a Committee of Secresy. The first questions it would have to discuss would be, whether the Charter was to be renewed, and exclusive privileges of any description given to the Bank of England And if these questions were decided in the affirmative, the Committee would then have to recommend on what conditions and under what restrictions, these privileges should be conceded. He thought it would be desirable, also, that the genera condition of the banks of issue in the country should be taken into considera- 1358 tion. The issuing of money was the prerogative of the State, and, therefore, the Legislature had a right to say, on what conditions individuals should be allowed to issue money. There was another point of view under which the Bank of England must be looked at, viz.—as the banker of the State. The bargains made with it in this capacity, and as the manager of the Public Debt, should be inquired into. The Bank of England was both a bank of issue and the banker of the State, and it was incumbent that those two characters should be kept distinct in the inquiries of the Committee. He should go into the Committee having his own opinions, but he hoped he had candour enough to give them up if they were wrong. The currency was connected with the question of the Bank Charter; but to enter into that in the Committee, would involve the Committee in contradictions, and he thought it ought not to be touched. He thought, certainly, that the Committee ought not to go into any consideration of the standard of value. He had his own opinion, too, concerning the issue of 1l. notes, but though he did not wish that subject to be debated, it was impossible to exclude it from the Committee. He had great difficulty in selecting the Committee, but he believed he had placed on it a representative of every interest and every opinion. He had made the Committee numerous; it would consist of thirty persons, besides himself, which was as great a number as could be placed on a Committee of Secresy. At the same time, he felt that he had omitted several Gentlemen who would well deserve to be placed on it. The noble Lord concluded by moving for the appointment of "a Committee of Secresy to inquire into, and report upon the expediency of renewing the Charter to the Bank of England, and also on the existing system of banking by Banks of Issue in England and Wales."

Mr. Baring
said, that if there should be that variety of opinion amongst the several members of the Committee, which the noble Lord seemed to think, there might be a difficulty in their coming to one general conclusion as td their report, and it was of the utmost importance that they should come to a sound opinion, as the system of banking in this country for the next twenty or twenty-five years might depend upon their decision. There were two points on which he did not clearly un- 1359 derstand the noble Lord, and was, therefore, anxious for some further information respecting them. The question of the 1l. note circulation was totally different from that of the renewal of the Bank Charter, and he did not see why they should be mixed up. Did he understand the noble Lord that they were both to form subjects of consideration in the Committee? The other point on which he did not clearly comprehend the noble Lord was, as to the terms on which the Bank was to transact the public business, or be made the banker of the State, and as to the compensation which the public might expect to obtain for giving to that body exclusively the management of the Public Debt, and the privilege of issuing notes in the metropolis. He should rather think, that whatever bargain was to be made with the Bank in this respect, should be on the responsibility of Government, and not left to the arrangement of a Committee. The Government, of course, would make the best bargain it could for the public, and the Bank would be able to take care of its own interests. Would it not be well that some instructions should be given to the Committee on these points?

§ Lord Althorp
said, that as to the subject of the 1l. notes, he had formed his own opinion; but at the same time he felt it impossible to exclude it from the consideration of the Committee, if they should think fit to enter upon it. As to the other point, he thought the Committee was not the fit medium through which a bargain should be made with the Bank. They might give their opinion as to the terms of the present bargain, but the Government should be left to make any future arrangement that it might deem necessary on that subject. These, however, were matters which could not be excluded from the consideration of the Committee, if the Members pleased to enter upon them, unless the House tied up their hands more strictly than ought to be the case with such a Committee.

Mr. Hume
said, from what had fallen from the hon. Gentleman (Mr. Baring), as to the decision of this Committee having an influence upon the system of banking in this country for the next twenty years, that hon. Member seemed to think that the Committee were only to consider the renewal of the Charter; which the hon. Member took for granted would be re- 1360 newed, but as it appeared to him (Mr. Hume), the Committee might consider and report upon the expediency of renewing the Bank Charter at all.

§ Mr. Pearse
had heard the noble Lord's statement as to the different opinions on the subject of banking, which the several members of the Committee were supposed to represent. He hoped that the noble Lord would select a sufficient number of practical men to go through the details of the Committee, and that they should not find on it a set of philosophers; for he always found that where such men applied themselves to practical measures, they were very obstinate, and it was difficult to move them from their preconceived opinions. An unsatisfactory decision by the Committee, on this important subject, would only lead to future remonstrances, and to great annoyance and inconvenience.

§ Sir Henry Parnell
understood that the Committee were to take into consideration not merely the renewal of the Charter, but the whole subject of banking. As to the suggestion of the hon. Gentleman below him (Mr. Pearse), that there should be practical men on the Committee, he would beg to ask that hon. Member, how the practical men had managed the Bank of England after the suspension of cash payments in 1797? The hon. Member was then a Director, and must remember that the effect of that measure was a depreciation of Bank paper to the amount of thirty per cent. That depreciation was, however, denied by the practical men of that day, and on that denial was founded a memorable vote of that House.

§ Sir Richard Vyvyan
thought it not a little extraordinary, that now, at what he might call the close of this self-doomed and self-admitted corrupt Parliament, the noble Lord should have appointed such a Committee as this. How did they know how long this Parliament might last, or whether they should ever be returned again? He remembered that, eighteen months ago, an hon. friend of his asked the noble Lord, whether he intended to bring forward any measure relative to the currency of the country, and the noble Lord stated he had no such intention. Now, however, when a measure had passed that House, which hon. Gentlemen on the Ministerial side said, that the whole country demanded, and which was to be carried through the other House by any and every means—at such a time, when 1361 they were not certain of having this Parliament another Session, they were about to enter into the whole question of the currency. He did not say (that they were to go into the question of the standard of value, but they were to go into the question of the issue of 1l. notes. He must protest against that course. He thought they ought to wait until the Bill which, as he had said, was to be carried through the other House by any means, should have passed.

§ Mr. Courtenay
could not concur with his hon. friend, that they ought to defer this subject to a new Parliament, for that, he thought, instead of being for the better would be for the worse.

§ Lord Althorp
said, the hon. Baronet did not seem to understand the question before the House, or to have an accurate recollection of the subject to which he had referred. The question which had been asked of him, soon after he came into office, was, whether he had any intention of altering the standard of value; to which he stated, that he had not; but in the last Parliament he did state, that it was his intention to bring forward this question of the renewal of the Bank Charter at an early period. The hon. Baronet, therefore, was not justified in charging him with any inconsistency on that subject. It should also be recollected, that the Charter would expire next year, and that there was no time to be lost in considering the question of its renewal, if it were to be renewed. As to the labours of the Committee being extended to another Session, he must say that he did not think that it would take long time. It was a matter more of opinion than of evidence; and as the Committee would consist of practical men their opinions would be drawn out without any great examination of oral evidence though, of course, some evidence would be brought before them. He repeated that the answer which he gave the hon. member for Aldborough, on the occasion to which the hon. Baronet alluded, relate, to the standard of value.

§ Sir Richard Vyvyan
had understood the noble Lord in the way he had mentioned but he was still surprised that the question should be brought forward at such a time as the present. Suppose it was not now decided, would it not be agitated again in a new Parliament? Would it not be better, therefore, to introduce some temporary measure at present, and leave the 1362 whole question open for consideration in the next Parliament.

Mr. Wolryche Whitmore
was understood to ask the noble Lord, whether it would not be better to exclude the consideration of the 1l. note issue from the Committee?

§ Lord Althorp
had already stated, that he did not think it possible to exclude that subject. His own opinion was, that it would be better not to bring it under discussion; but if the Committee should choose to enter upon it, he did not see how he could shape his Motion so as to prevent them.

Mr. Baring
Would it not be better, then, to exclude it altogether from the Committee, or have a distinct Committee appointed for its consideration, for it was quite a different question from that of a renewal of the Bank Charter? Did he understand the noble Lord, that it was not imperative on the Committee to enter upon the subject, but that they were competent to do so if they thought proper?

§ Lord Althorp
That was his opinion; and if his opinion alone were to decide, he would rather that it should not be gone into by the Committee.

§ Sir M. W. Ridley
thought it would be better to restrict the Committee from entering upon that subject; the more particularly as the 1l. notes did not form part of the present circulation of the country, and the entering upon it at the present time would be again to agitate the subject, and to raise expectations which might not be realized.

Mr. Hume
hoped the noble Lord would not restrict the Committee in that respect. The circulation of Scotland and Ireland consisted, in great part, of 1l. notes, but it was different in England, and he did not see why the Committee should be prevented from carrying their inquiries into that subject.

§ Sir M. W. Ridley
said, his answer to the remark of the hon. member for Middle sex was simply this—that the inquiries of the Committee were confined to England and Wales.

§ Mr. Attwood
thought they must enter into the question of 1l. notes, and to the issues of country banks; and when they had considered these subjects, it would be for the Committee to decide on the matters that might arise out of those inquiries.

§ Mr. Gisborne
also thought the subject of the 1l. notes could not be excluded from the consideration of the Committee. The 1363 whole subject ought to be left open to the Committee.

§ Mr. Robinson
concurred with the noble Lord in thinking that it would be impossible to exclude those subjects from the consideration of the Committee.

§ Sir Richard Vyvyan
asked why the noble Lord had omitted the name of the hon. Alderman (Thompson), who was the only Bank Director who had a seat in that House?

§ Lord Althorp
said, he had omitted him for that very reason—of his being a Director; for as he thought that the question related to a renewal of the Charter, it would not be proper to place on it any Director.

Mr. Baring
said, that one individual in a Committee of thirty-one could not influence its decision, but it would evidently facilitate the inquiries of the Committee to have a Bank Director upon it.

§ Lord Althorp
said, that it was only motives of delicacy that prevented him from naming the hon. Alderman, whom, if he were not a Director, he would gladly have selected. However, as it appeared to be the opinion of several of the Gentlemen that it would be a convenience to the Committee to have the hon. Alderman one of its members, he should not object to it.