HC Deb 21 March 1805 vol 4 cc67-72
Lord A. Hamilton ,

pursuant to notice, rose to submit his motion on this subject to the house. In bringing forward the resolution which he should have the honour to propose, he was not actuated by any sentiment of hostility to the right hon. gent. opposite (Mr. Foster.) When he had first called the attention of the house to this subject, he had stated, that the excessive issue of paper had arisen from the restriction of issues of specie from the Bank, and had produced the consequent depreciation. The object of his motion was, a disapprobation of the measures that had been taken by the commissioners of the treasury in order to remedy the high rate of exchange. Their measure were of a partial and temporary nature, answering no one purpose proposed, and leaving the exchange in precisely the same state. The noble lord here read from the papers on the table the different rates of exchange at which the Irish treasury had offered at different times their drafts upon this country, from 11½ per cent. to 8 1–3d at par; and contended, that by giving their drafts at par, whilst the actual exchange was 13 or at least 12 per cent. they negociated the transmission of the loan at the loss to the public of 40,000l. on every million, and he should ask whether this was fair, legal, and regular? An expectation was entertained in Dublin that the measures of the treasury would reduce the exchange to par; and, consequently, the whole of the sums advertised had not been purchased whilst the rate was above par; but, when the accommodation had been offered at par, though the sum wanted did not exceed 150,000l. the sum of 500,000l. was subscribed; and such was the eagerness and avidity to procure a share of it, that a kind of riot had taken place amongst the bidders at the castle, which required the military to suppress. The house, he trusted, would put an end to this practice in future, as it had produced no advantage, but great loss to public. The restriction of cash payments had caused an excessive issue of paper, which enabled the Bank Directors to give a bonus of 5 per cent. last year, making the total dividend on their stock 12 per cent. He should ask the right hon. chancellor of the exchequer under what possible circumstances he could renew the payments in specie? As the restriction had now existed during a period of peace and of war, as the effect of it was an excessive issue of paper, and a consequent depreciation of it, and as by the measures pursued by the Irish treasury, a loss of 40,000l. had fallen on the public in every million, and as amidst this desolation of the finances of Ireland, the only stock that thrived was Bank Stock, he should therefore move his resolution, "That it appeared to the house that a considerable part of the sums raised in G. Britain for Ireland, for the service of the year 1804, had been transmitted to Ireland by Bank of England Post Bills; and that said bills had been sold in Dublin by the commissioners of the treasury, by public advertisement, at rates inferior to those at which they had been before sold."—The other resolutions expressed disapprobation of the conduct of the Irish treasury in so doing.—On the question being put on the first resolution,

Mr. Foster

observed, that whatever complexion the noble lord might put on his resolutions, they amounted to a direct charge on the commissioners of the treasury in Ireland. He had confounded the question of exchange with the conduct of the treasury. The right hon. gent. begged to state the nature of the transaction. A large loan had been negociated in England for the service of Ireland, and he had applied in Nov. to the Directors of the Bank in Ireland, to bring over the money, which they had refused, lest it should injure their character for impartiality, as some of them were concerned in the business of exchange. The commissioners were obliged to order it over in Bank of England Post Bills, which they sold in Dublin. They first advertised a sum of 200,000l. at 11½ per cent. but only 170,000l. were subscribed. The next sum they advertised was of the same amount at 10 per cent. and only 170,000l. was obtained. They then found themselves under a necessity of disposing of the bill at par, which was 8 1–3d, in order to procure the sums required for the public service. But during the whole of this period, the actual state of exchage fluctuated between 8½ and 10 or 11, to which it had in one or two instances, risen for a short time. The noble lord could not therefore make out that any loss had been sustained by the public by this transaction. The question of exchange was not regularly before the house, but he would be indulged with an observation upon. it. The state of exchange depended on the general balance of pecuniary transaction between two countries, and in this respect it was favourable to Ireland so large a sure of money having been transmitted. The restriction of the issues of specie was the primary cause of all the unfavourable state of the currency and exchange, unknown before, but whose interest it was to keep it high. Another cause was the over issue of paper. In the months of May, June, and July, the Bank of Ireland diminished its issue from three to two millions and a half, and the exchange fell. In August they increased it again to 3 millions, and the exchange rose. The same consequence had happened in 1753, from the breaking of the Bank, and in the reign of King William, from the base coin. Where guineas were paid, the exchange was at 5 per cent. being 3 below par. The right hon. gent. contended no ground had been made out for the motion, and therefore to get rid of it, moved the order of the day.

Lord Henry Petty

agreed in the whole doctrine laid down by the right hon. gent. as to the causes of the unfavourable state of the exchange for Ireland. He agreed also that the question was a direct charge upon the treasury of Ireland. But he disclaimed on his own part and that of his noble friend, any intention to make a charge upon the right hon. gent, whose conduct, if brought before the house, would intitle him to its gratitude. There had been considerable misconduct in the Irish treasury, in their management of the bringing over the loan. They had departed from the usual mode, and thereby occasioned considerable loss to the public. The right hon. gent. disclaimed any idea of lowering the exchange, though the expectation had prevailed to that effect, as appeared from the full sum required having been subscribed when the exchange was lowered to par. The noble lord here read an extract from the report of the committee on the Irish currency and exchange, to spew that it was improper in the lords of the treasury to interfere with the exchange, as it would encourage jobbing, which had literally taken place in this case, persons having bought the bills and re-sold them at a profit. He should therefore vote for the proposition of his noble friend.

The Chancellor of the Exchequer

maintained that the conduct of the Irish treasury had been correct, as it was the duty of the commissioners to provide the money for the public occasions. It was a perversion of terms to infer that the depreciation of paper had any real effect on the exchange. He allowed that the excessive issue of paper produced a depreciation. The fact was, that in each country there was a different circulating medium, and the depreciation of either could have only a nominal effect on the course of exchange. The remittance of so large a sum as four millions and a half, would have had the effect of lowering the exchange, even if the operation of the Irish treasury had not taken place. The ground of the noble lord's charge of a loss to the public, appeared to rest on a supposition, that the rate of actual exchange would have continued the whole time at 13 per cent.; but was it to be supposed the Irish treasury could have procured purchasers at 13 per cent. when they had failed at 11½? for these reasons he thought that no ground had been laid for the noble lord's motion.

Mr. Fox

was glad to hear the right, hon. gent. allowing that an excessive issue caused a depreciation, and that the house was never again to hear the fantastical opinion that paper was not depreciated, but the value of gold raised, as well as that these evils proceeded exclusively from the restriction on the Bank, As long as the Bank paid in specie, there had been no excess, because in that case the issue carried its own remedy with it, being payable in specie. The question here was, that the new method had produced an effect which the the old method never had. 'Whether the loss to the public was to the extent of the difference between 11½ and 13 per cent. it was impossible to tell now, but he thought sufficient ground had been laid for the proposition of his noble friend.

Mr. Lee

said, that having been a member of the committee upon Irish affairs, and having attended carefully to the evidence they produced, he had some good reasons to suspect the committee to have been mistaken, in having ascribed the depreciation of Irish notes to the over issuing of paper by the Bank. The issues of the Bank of Ireland were ascertained and well known; but it was the less surprising, that the paper of that company should be depreciated at home home, when even the paper of the Bank of England experienced in that country a depreciation of 3½. per cent.

Mr. Alexander

also considered the depreciation to be owing to circumstances altogether unconnected with the Bank of Ireland; for the private Bankers, even about Dublin, actually circulated notes beyond the issue of the national Bank; which, being by one of its bye-laws obliged to discount mercantile bills at one per cent. below the legal interest, gave to other Banks a great advantage over it.

Mr. J. Latouche

expressed himself favourable to the motion, on the ground that the lords of the treasury in Ireland, by the mode they adopted in this instance, did not obtain terms for the public, which they might have done, even under the circumstance of the times. Much was certainly lost by the generally credited report, that the exchange of the two countries was to be reduced to par, and the report not having been contradicted by the Government, which was perfectly well acquainted with its existence, and its procedure deterred the merchants from coming forward on the occasion.

Mr. Foster ,

in explanation, observed, that the committee of last year, so frequently alluded to, had disapproved of the old mode of draining hills at par upon England. The method which they seemed to point out, of having recourse to the assistance of the Bank of Ireland, had been resorted to; but they having declined all interference, the lords of the treasure, unwilling to return to the mode condemned by the committee, found themselves, by necessity, compelled to recur to a new method of their own.

Mr. Grey

observed that, though the right hon. gent. said he had but one alternative left, either to return to the old mode condemned by the committee, or discover some new one himself, he would take the liberty of reminding him, that it was not drawing bills at par upon England which was condemned by the committee, but the attempts of the lords of the Irish treasury to lower the balance of exchange. Near 200,000l of the loan of last year was remitted in the ordinary way, and had no bad effect. By the measure the treasury took, it placed itself in the situation of [...] man who should have property to sell, and should advertise that he must sell it on a particular day; the obvious Consequence of which would be the depreciation of his property, from a knowledge beforehand of his necessity.

Sir W. Pulteney

remarked, that when large sums were remitted, the exchange must be affected. The subject of the over issue had not been sufficiently investigated. As to the depreciated state of the paper of Ireland, it was a fact of which several gentlemen might not be aware, that the notes of the Bank of England were at a discount of 3 per cent. in Ireland.

Mr. H. Thornton

thought the noble lord had not sufficient grounds for his present motion; it was not the manner of passing, bills, but the quantity in the market, which, was the occasion of the increase or depreciation of the rate of exchange. He was afraid that the reduction of the issue of the paper of the Bank of Ireland could not be expected at present. He was surprised that they had not taken the hint given in the report of the committee.—After this, lord A. Hamilton said a few words in reply, and his motion was negatived without a division.