COMMERCIAL DISCOUNTS OF THE BANK OF ENGLAND. (Hansard, 5 April 1811)

§ Mr. Huskisson
observed, that if the principle assumed in the Report of the Bullion Committee, namely, that the depreciation of our currency must be tried by the relative value of gold and silver, 730 was just, it was manifest that a depreciation had taken place, and this depreciation could only arise from an excess in the issues of the Bank. The directors had, however, denied the possibility of any such excess, because their advances were made only on good bills or sufficient mercantile securities. This was the opinion on which those gentlemen contended, that there could not be any excess in the circulation of their notes, so long as they adhered to this regulation. It was therefore necessary, he conceived, under these circumstances, that the House should be furnished with an account of the actual amount of the Discounts of the Bank, in order fairly to try the justness of their own principle. It was most important that the great principle by which the affairs of such a corporation as the Bank of England were conducted should be thoroughly examined. If the history of all the Banks of discount of which he had heard, shewed that they had all occasionally carried their discounts too far, and that this was the great danger to which such establishments were exposed, even when under the obligation of paying in specie, it was surely justifiable in him to assume the possibility of the Bank of England having fallen into the sane error, under the circumstances of diminished restraint and increased temptation. If this was possible, it became the House to ascertain whether this was or was not the case. He wished to avoid entering into the general question; and confine himself to the laying a ground for the production of the paper he should move for. It was well known that there had lately been what was termed overtrading, to a very great extent, and that among the variety of recent commercial speculations many had failed, and had thereby occasioned much individual calamity. It was generally believed, that many of those speculations originated in the great facilities of discount at the Bank. There had been numerous instances of men rising into sudden affluence and splendour, and falling back into bankruptcy and distress. This was a departure from the true character of commerce, and threatened alarming consequences. If there was any visible or supposed connection between this state of things and the conduct of the Bank, was not that a ground for inquiry? Sir Francis Baring, a great practical authority, had said, he had known clerks who, with salaries of 100l. per annum, were in the habits of obtaining 731 discounts to the amount of five and even ten thousand pounds. He might quote the late lord Liverpool, in support of the evil to be derived from the creation of factitious capital; but he was aware this would be called the language of theorists, of men so very wild and speculative as to dream that the resumption of payments in cash at the Bank would be a measure of expedience. It might be urged, that the failure of the late commercial speculations was nothing more than a slight distemper. But did not such distempers tend to produce exhaustion in the body politic, and was not the drain of national capital to be deplored, withdrawn from useful employment, and lavished in prodigal and unsuccessful enterprise? The paper he should move for had been communicated to the Committee by the Governor of the Bank, under an injunction not to insert it in the Report, and it had since been published in one of the daily vehicles of intelligence. A person had seen it on the table of a director, and had surreptitiously communicated a copy. As it was, however, already before the public, he apprehended there would be the less difficulty in consenting to the object of his motion. It had been urged, that such a production would be prejudicial to the Bank. This he could not understand; neither could he believe that it was any interference with their private concerns. Could that be called a private concern which went to alter the relative value of every description of property in all its ramifications? If he were to propose to enquire into the principles which, governed the Bank in their particular discounts, that would be an improper interference; but when he asked only for a scale of the proportion which the whole amount of discounts at one period bore to the whole amount at another, he did not see what fair objection could be made. Without this paper the House would, in his opinion go after all to the discussion of the great question in the dark. The paper lately presented to the House from the Bank, by no means answered the purpose he had in view. That paper contained nothing, more than an account of the sums advanced at different periods by the Bank to government on the application of the latter. Bat it was impossible for the House to discover by this what the whole amount of the government securities now in the hands of the Bank might be, or what the number of Exchequer Bill which might have been bought by the latter in the 732 market. It was essential to know, not only how far they had gone in accommodating-individuals, but what limits they had pre-scribed to themselves in accommodating government. He must disclaim entertaining what he feared had been imputed to him, any spirit of hostility to the Bank, nor, could he think that any such spirit was evinced by a mere doubt of their infallibility. The real enemies to the Bank were, he was convinced, those who should advise them to resist this motion, or who should attempt to persuade them that power and compulsion could ever supply the place of confidence. The real enemies of the Bank were those who taught them that there was nothing in the present state of paper currency to merit the interposition of that House, or to require the vigilance of the legislature. The hon. gent, then, after recapitulating his arguments, and referring to the amount of individual suffering and extensive distress, created by a growing depreciation of the circulating medium, moved, "That there be laid before this, House, a comparative scale of the Commercial Discounts of the Bank of England, from the 1st of January 1790 to the first of January 1811; distinguishing each year."

§ Mr. Manning
begged to be understood, in the course of what he should say upon this question, as having no instruction whatever from the Court of Bank Directors. It appeared to him, that the document moved for, would be attended with great inconvenience, and ought not to be granted, unless called for by the necessity of the case, which at present it was not. The only document that could be said to be necessary, was the amount of the Bank Notes issued, and that was laid before them every year since the passing of the bill. To give an account of the commercial discounts, would be an interference with the internal management of the Bank, and, therefore, should be resisted. He regretted that his hon. friend had thought proper go so much at large into the general question, which he thought ought to be reserved for the proper occasion, when the House was called upon to discuss it distinctly. He allowed that the principle of cash payments should be resorted to when it was practicable, but this was not the period. His hon. friend had said that the Directors would consider, such a proposition an offence; but he was sure that they would always be willing to return to the old system when it could be done with propriety. The motion was unnecessary, 733 This was the first instance in which any such motion had been made, and therefore he should give it his negative.

§ Mr. Horner
wished in a few words to state his reasons for agreeing in the motion of the hon. gent. at the same time that he declined entering upon the general subject, which he confessed ought to be reserved for the proper occasion, and not debated by piecemeal. He condemned the conduct of the person who had been guilty of such a breach of privilege as the publishing of the document in question; and thought the motion rested upon fair grounds. The hon. gent. had opposed it by stating, that it was not necessary to call for the precise amount of the discounts; but that was not what the motion called far: it did not demand the precise amount, but merely a comparative and proportionate scale. The question then was, whether it was necessary or not? It appeared to him that the evidence which the Directors of the Bank had given proved the necessity of it. They had stated, that it was impossible there should be any excess, the issues being always regulated by the discounts. The only way to shew that their doctrine was true, was to produce an account of the amount of their issues, and a scale of their discounts: and see whether they corresponded. This was rendered still more necessary from what had been stated by the hon. mover, who affirmed, that though the amount of the discounts had been reduced, that of the issues had not. How would the 'Bank of England reconcile this with their doctrine? He should certainly Vote for the motion.

Mr. Marryatt
said, that the Bank of England having become of late a great state engine, Parliament had a right to investigate its affairs, if necessary to the public good. It has been said, that not a note more was in circulation than the good of the public required; but he knew the contrary from experience. He could state instances of several clerks who had failed with notes in their hands, to the amount of hundreds of thousands of pounds. It was, in fact, impossible to know the state of any man's affairs, from the facility of discount in the Bank of England. Excess of paper, like excess of every thing else, tended to its depreciation. The prima facie evidence was against the Bank of England, and it was for their honour to give the statement required. The malady under which this country laboured, with respect to Bank circulation, was one that might be 734 remedied, if taken in time, but, if neglected, it would be likely to end in a convulsion fatal both to public and private men.

§ Mr. H. Thornton
approved of the limitation of discount by the Bank, and defended its conduct in many instances.

§ Mr. A. Baring
thought that a loose paragraph in the papers possessed no authenticity but what was conferred on it by the hon. gentleman himself; and conceived that no ground was made out to justify the motion.

§ Mr. W. Smith
said, that when the Income Tax was first brought in, it was thought that it would be an injury to commercial men, by obliging them to reveal their affairs; but this was not admitted as a sufficient argument to counterbalance the one of public advantage proposed by the measure, neither should the reluctance of the Bank Directors be available in the present case. He had listened attentively to the hon. gent. (Mr. Manning), but did not hear any positive evil mentioned as likely to accrue from the adoption of the motion: all that was said, was that evil would result; but what the evil would be, was left to their own imaginations. For his part, he did not think that any would result; and on that account, together with the reasons already urged by other gentlemen, he thought that the House had a right to call for the paper.

§ Mr. Huskisson
in reply said, that he was still at a loss to know what objection could be made to the motion. He called for the document not to create, but to reconcile differences, by throwing additional light on the subject at issue. His hon. friend had complained that he anticipated the discussion upon the great question; itself: all he did was, to say that there were different opinions, without stating any opinion himself upon any of the prints. As to the indiscretion with which he had been charged, in alluding to the printed document, it afforded an opportunity to the members of the Committee to disclaim the transaction for themselves, and he was sure they would be obliged to him for it. He had nothing more to add, but to express his conviction that the document was necessary, and with that declaration he should leave it to the House to determine whether they would grant it or not.