§ On the motion, that the bill be read a third time,
§ Mr. Ellice
wished to draw the attention of the chancellor of the exchequer to one provision, which appeared to have escaped his observation; but which a number of persons who were very much interested in the effects of this bill considered of great importance. By the law as it now stood, the Bank was not compelled to give small notes in exchange for large ones. Now, as some inconvenience might arise to the public, in consequence of the alteration proposed by this bill, and as country banks might be placed in a certain degree of difficulty, if they could not procure small notes to meet any casual run upon them, under peculiar circumstances, he thought a clause might be added, as a rider to the bill, compelling the Bank to give, in exchange for their larger notes, either legal gold coin of the realm, or bank of England one-pound notes.
The Chancellor of the Exchequer
did not see the necessity of adding such a clause to the bill. There would, he was sure be no objection, at the Bank, to exchange those large notes for current gold coin of the realm, or for one-pound notes. An hon. director had distinctly stated, that the Bank was prepared in any possible event, either to give small notes or the current coin of the realm, in exchange for notes of a large amount.
§ Mr. Ellice
observed, that if he understood the right hon. gentleman, he stated that the Bank were now bound by law to exchange large for small notes or the current coin of the realm. If this were so, then certainly the clause he proposed was unnecessary. He did not wish to press the clause against the consent of the right hon. gentleman; but if he withdrew it, it was on a distinct understanding that the Bank were now compelled by law, to give either 1l. notes, or current coin of the realm, in exchange for large notes.
The Chancellor of the Exchequer
said, that rather than be responsible for any mistake, with respect to the existing law, he would agree to the clause.
believed that the Bank neither was nor would be bound by law to pay its large notes in smaller notes or in cash, until 1823. Having this impression, he hoped his hon. friend would press his proposition.
§ Mr. Scarlett
said, before the late bill passed, the Bank were precluded from paying in cash at all. A new discretion would be given to them by the present bill; but there was no law that he knew of, which rendered it imperative on them to pay their large notes in small ones.
§ Mr. Littleton
was confident that if the clause proposed were not enacted, great mischief would be the consequence. He could assure the House that the subject was one on which the country bankers felt much anxiety. It would inspire them with great confidence, if the clause were added to the bill.
was convinced that to withdraw the small notes from circulation would serve to aggravate the distress of the country. The Bank should be obliged to supply the country with one pound notes for the accommodation of the public. If, indeed, small notes were withdrawn while gold was issued at its sterling value, he could not conceive it possible to prevent the export of gold. Small bank-notes should be circulated in conjunction with gold; and so long as that was the case, he had no doubt that the former would be generally preferred, as notes were so much more convenient to carry than gold, and formed a great protection against robbery, thieves very naturally feeling it dangerous to deal in articles so likely to lead to detection. In order to guard against the export of our gold coin, it would, in his opinion, be expedient that it should rather be a token than a representative of value. This was the only country in Europe which did not charge seignorage; and that was a disadvantage to us which might be as fairly met by issuing gold, and silver also, as tokens above their real value, as that the banknote should be the standard of value. Such a plan appeared to him the only one that could be devised to prevent our gold coin from being exported. For instance, he would have the sovereign pass for a guinea, and the crown, as well as other denominations of coin, for something more than their real value.
said, he should prefer a very great degree of public inconvenience to the numerous and dreadful evils which 205 attended the circulation of one-pound notes. He hailed with satisfaction the announcement of that new system which the Bank was about to adopt, as one of the greatest benefits that could be conferred on the country. The existing practice appeared to him in no other light than as a bounty on the commission of crime; and he must regard the whole subject as second to none whatever in importance. Every gentleman who would take the trouble to go through the list of prosecutions for the forgery of banknotes, would see the alarming increase in the number of offences, generated by a departure from the sound principles of our ancient currency. Not only had great evils been produced, but he apprehended that a foundation had been laid for their continuance. He had drawn up a comparative statement of offences tried and punished during 14 years previous to 1797, when the suspension of cash payments took place, and the same term of years which had immediately followed. The inference from this statement was, that the act of 1797 had given birth to a new crime to which a punishment was annexed inferior in severity to that of murder only; and, notwithstanding this, that the number of offences had been tripled throughout the country generally, and in London had increased seven-fold. The hon. gentleman here stated various accounts, specifying the number of convictions and executions at different periods. The loss sustained felt chiefly on the smaller shopkeepers; and it appeared that from the year 1812 to 1818 there were presented to the Bank 154,465 forged notes, of which 128,800 were 1l. notes and 18,562 were 2l. notes. All this information went to establish one point, which was, that the severity of punishment had not served to correct or prevent the crime. From the year 1805 to 1818, the number of persons convicted of forgery was 501 of whom 207 had been executed, being a far greater proportion than had suffered capital punishment for any other offence except murder. Nevertheless, as he had before stated, the crime was tripled in the country, and had increased sevenfold in London. These facts were sufficient to deter any government from again embarking in so dangerous a career—a career which had proved beneficial to no parties except the Bank itself, whose proprietors, and he mentioned it not in the way of re- 206 proach, had been enabled by it to divide 25,000,000l. amongst themselves.
expressed his opinion, that the wants of the community could not be adequately supplied by a cash circulation. If any-alarm should arise, and a run upon the banks take place in consequence, the gold would be immediately exported. He could not agree, however, with the suggestion, that it would be more advantageous to circulate the gold in the shape of tokens rather than as coin. With regard to the increased number of forgeries, it was to be attributed, partly to the increase of population, and partly to the general substitution of paper for coin. He believed that a reference to the late assizes would show, that offences of every other kind had also multiplied.
§ Mr. Pearse
observed, that there seemed to be but one opinion with regard to the propriety of passing this bill. He really did not see any reason for the alarm that was represented to have taken possession of the country banks. The Bank of England had alway been solicitous to consult the interest and convenience of the public, and to afford all the accommodation in their power. In confirmation of this, he might allude to the respectable authority of the late Mr. Horner in 1810. Here the hon. director read an extract from the bullion report. The Bank had, in the judgment of the committee, exercised a very great degree of forbearance and discretion, in not converting to their own profit the means placed at their disposal, and had fully justified the confidence reposed in them by the public. He was not aware that any thing had subsequently occurred which ought to change this opinion of their conduct.
said, that the hon. gentleman was never more mistaken than when he represented him as differing in opinion from his late lamented friend Mr. Horner. On the contrary, there was no one step which he had not taken in perfect concurrence with that learned gentleman. The hon. member adverted to a speech of Mr. Horner, in which he characterised the transactions between the government and the Bank, as a scene of rapacity on the part of the directors, and of extravagance and profligacy on the part of the chancellor of the exchequer.
§ Mr. Monck
begged to call to the recollection of the House, what had been the extent of the great forbearance of the Bank of winch so much had been said. 207 In 1797, their issues of paper amounted to 8,000,000l.; and in 1817 they were 30,000,000l. This increase formed a pretty accurate gage and admeasurement of their forbearance! With respect to what had fallen from an hon. gentleman, he begged to observe, that he had never pretended to state the precise amount of the reduction in the issues of the country banks. He had only stated, that a very great reduction had taken place. He denied that the fall in the price of bullion within the last two years was any measure of the depreciation of other commodities. So far was this from being the case, that, while bullion was not depreciated more than four or five per cent, all other commodities had fallen as much as 25 per cent. With repect to the Ricardo system, which substituted payments in bullion for the ancient currency, it was, in his opinion, neither more nor less than a cheat and a fraud upon the public creditor. It was a violation of the public faith, in so far as it was a departure from established usage. It was one thing, when the value of the precious metals was kept down by intrinsic causes—over which we had no control, and another when it was affected by artificial tricks and contrivances, by innovations on the laws which regulated the currency, and by forcible legislative enactments. The Ricardo system might protect the Bank against the effects of any sudden run, it might facilitate the collection of the revenue; but the great objection to it was, that it was a violation of the public faith, and that it operated as a bar to a return to cash payments, and tended to perpetuate the paper system, with all the evils, moral and political, which were inseparable from an artificial currency,
said, that hon. gentlemen had argued as if the Bank restriction act was a measure asked for by the Bank, whereas it was forced upon them by the government, and by the political occurrences of the day. It should be recollected that the Bank was the representative of a large body of persons, whose interests they were bound to protect. He saw nothing reprehensible in the conduct of the Bank; on the contrary, his opinion had always been, that their conduct reflected the highest, credit upon them as trustees of the body for whom they acted.
said, that when the hon. member spoke of the increased issues of 208 the Bank, he ought to have considered what was the cause of that increase. He ought to have remembered, that the peculiar occurrences of the times had drained the country of its specie, and that it became absolutely necessary, that another currency should be substituted in its place. He thought the charges which the hon. member had made against the Bank, were neither founded on fact nor reason. As an individual, he considered every acknowledgement due to the directors for the high honour and integrity which had marked the whole of their proceedings.
Mr. Alderman Heygate
expressed his doubt as to the efficacy of the bill. He wished to ask the chancellor of the exchequer, whether the Bank had a sufficient quantity of specie to replace, not only the whole of their own small notes, but those also of the country banks, which must be drawn out of circulation. He made this inquiry because it was not unlikely that the country bankers would withdraw their one pound notes as soon as this measure came into operation. The issue of those notes, by country bankers, was the least profitable, but most troublesome part of their business; and they had some time since an intention of withdrawing their small notes, which was not carried into effect, purely out of a consideration for the inconvenience it would produce to the country. If the Bank had been forced into their situation by the government, it was not fair to blame them for the effects which that situation had produced.
§ Mr. Ricardo
said, he should not have blamed the Bank if they had only increased their issues to an amount sufficient to replace the gold coin that had been removed from the country; but they had extended their issues far beyond what was necessary for that purpose, and to this increase of circulation he ascribed all the depreciation which had followed.
The bill was read a third time. After which, Mr. Ellice brought up a clause for compelling the Bank to give in exchange for their large notes either 1l. notes, or legal coin of the realm. The bill was then passed.