HC Deb 08 March 1822 vol 6 cc992-7
Mr. Maberly

said, that the papers for which he was about to move, were necessary to show the high rate, of interest paid to the Bank of Ireland, when contrasted with that paid to the Bank of England. While the Bank of England received only 300l., or 340l.; for every million of debt which it managed, he understood the Bank of Ireland received 2,000l. upon the same sum. He then moved for an account of the total amount of debt due to the Bank of Ireland, funded and unfunded, of the periods when contracted, and of the rate of interest paid for the same.

Mr. Grenfell

said, he had always understood, that the Bank of Ireland, so far from receiving 2,000l. for every million of debt which it managed, absolutely received nothing.

Sir J. Newport

reminded the House, that when the charter of the Bank of Ireland was renewed in 1808, one of the conditions was, that it should lend to the public 1,000,000l. at the rate of 5 per cent. interest, and that it should thenceforward manage the public debt gratuitously.

Mr. Pearse

said, that no comparison could fairly be made between the conduct of the Bank of England and that of Ireland. The practice of contrasting the charges made by the one with those made by the other, was extremely invidious. While the Bank of England had a specific engagement for managing the national debt, and whilst it lent its money to the government at 3 per cent., the Bank of Ireland was enabled to lend its money to the same quarter at 5 per cent. If that difference of interest were taken into consideration, the balance would be found to be much in favour of the Bank of England. it mattered very little, whether it was in the shape of management, or of a higher rate of interest that the respective Banks received their emoluments. If the Bank of England were to receive the same interest, on the motley which it had advanced to government, as the Bank of Ireland did, its emoluments would be more than 2,000l. for every million of debt it managed. Besides, the Bank of England had given large premiums to the public on various occasions when its charter had been renewed, whereas the Bank of Ireland had given nothing, but had entered into terms with government: indeed, in the last 30 years it had paid upwards of 4,000,000l. in the shape of premiums. He had said thus much, because he felt strongly the insinuations thrown out against the Bank of England Though a director, he had no great personal interest in the profits of the Bank; for, to confess the truth, he had not much more Bank stock than was necessary to give him a qualification. Indeed, upon seeing the effects of the war, he had made it a point of honour not to increase his stock beyond the amount which he possessed upon first entering into the direction. The hon. member for Portarlington had, upon a former occasion, asserted, that the directors had scarcely ability enough to perform the duties with which they were intrusted; but he (Mr. P.) preferred the opinion of the proprietors of Bank-stock, who elected them annually, to all the theories of modern philosophers on the subject. Neither theory nor speculation would do for the management of the affairs of the Bank of England; and he would say then, what he had often said before, that those who had been intrusted with the management of them, had never been influenced by any thing, but the most honest and honourable intentions. During the long war in which the country had been engaged, the Bank, though it had made frequent advances to government to enable them to pursue it with energy, had never lost either its credit or its character; and those gentlemen who had been recently across the water, could bear witness, that the credit and character of the Bank was at the present moment in the highest estimation among the nations of the continent.

Mr. Ricardo

said, that whenever the conduct of the Bank was brought before the notice of the House, he should think it his duty to speak of it as he thought and felt. With regard to the directors, he was willing, at all times, to give them full credit for honesty of intention; but he could not help thinking, that they had at different times involved the country in. considerable difficulties. He persisted in saying, that the Bank restriction act which was passed in 1797, might have been unattended with detriment to the country, had the directors known how to manage their own concerns. But, not knowing how to manage them upon true principles, they had issued a quantity of paper so large as to depreciate its own value; and to recover from that depreciation, the country had found it necessary to undergo a painful process, which had been the cause of a great part of the present distress. Even since the year 1819, the Bank had committed a great error in its eagerness to provide gold. That error they confessed themselves, when they offered to lend government 4,000,000l. Such an offer he took to be a specific confession of error, inasmuch as it was a declaration that they had amassed more gold than was necessary, and by so doing had aggravated the evils under which the country suffered. As to the plan of the Bank lending 4,000,000l. to the government, he viewed it with some degree of fear, because the directors had convinced him by their conduct that they did not know what they were about. If they thought they could issue either 4,000,000l. of gold coin, or even of paper, without withdrawing the gold coin from circulation, they were mightily mistaken. He was quite sure that the currency could not absorb it, and therefore it must go abroad.

Mr. Gurney

said, it was perfectly well known to all who heard him, that while the Bank of England conducted their own affairs they went on very prosperously; and that it was only when they were interfered with by theorists and speculators that they experienced any thing like distress.

Mr. Monck

agreed, as to the mischief which the Bank had occasioned to the public, but could not concur in thinking that they did not know how to manage their own affairs. Did the House recollect the advantage which the Bank had taken of the Restriction act? That act, when it was passed, was by no means intended to be permanent. Its duration was limited to three months. But it was found so convenient to gentlemen in business, to the merchants and manufacturers, and to the Bank of England, that great reluctance was expressed to repeal it. It was continued, therefore, during the war; and although its duration was limited to six months after the return of peace, so unwilling were the Bank to return to cash payments, that nothing short of the positive declaration of that House could have induced them to do it. At the time of the restriction, the whole amount of the Bank paper in circulation was eight millions. But during the war, they raised that amount to thirty-three millions. By this conduct, the paper was depreciated 25 per cent as respected gold, and 50 per cent. as respected other commodities. Now, what did the directors do during the suspension of cash payments? They lent their money right and left to government in that depreciated currency; and now, in consequence of the resumption of cash payments, the Bank received in good hard money, what they had lent in worthless and depreciated paper. The result, therefore, proved, that they knew perfectly well how to manage their own affairs. In 1797, Bank stock was 120 per cent; it had now risen to 280. But that was not all. In the course of that time, they had given to the proprietors three or four bonusses of 5 and 10 per cent. Three or four years ago an act was also passed, allowing the Bank to add 25 per cent. to their capital. Was there ever an instance of any merchant, or body of merchants, making so immense a profit in so short a space of time? And let it be remembered, that it was made at the expellee of the country.

Mr. T. Wilson

reminded the hon. gentleman, that what he called a superfluity of paper-money had raised the price of corn and of rents. It was difficult to say, if the restriction on cash payments in 1797, had not taken place, how affairs would have gone on. Certain it was, that the war could not have been maintained with the energy which brought it to so successful a close; and some of the gentlemen opposite would assuredly not have enjoyed the high rents which they had been receiving. The Bank had invariably conducted themselves throughout the contest in conformity to the wishes of government [hear, hear!]; and with a view to the best interests of the country.

Mr. Manning

declared, that when the Bank restriction of cash payments had been enacted, it had been enacted for only a limited period. Parliament had, however, thought fit to continue it, notwithstanding a resolution of the court of directors, expressing their wish and power to resume payments in specie. He should abstain from any invidious comparison between the Banks of England and of Ireland; but this he would say, that though nothing was charged for the management of the Irish debt, yet the difference between the interest at 5 and at 3 per cent was an advantage of 32,000l. a year to the Bank of Ireland. If the Bank of England were allowed the same rate of interest that the Bank of Ireland was, it would willingly transact the national debt without any charge, since it would gain 40,000l. a year by the exchange.

Mr. Grenfell

assured the hon. rector (Mr. Pearse) that he had not meant any thing personal in any observation he had made, the directors had repeatedly told him that they had no personal interests to serve, and be fully believed them when they told him so. But, nevertheless, whether they were influenced by personal motives, or by the oaths which they took to the Bank proprietors, to promote their interests to the utmost, the effect had been the adoption of measures fatal to the interests of the country, and productive of enormous profits to the Bank. From the time of the erection of the Bank into a public corporation, down to the year 1797, which was about a century, the whole amount of the profits had never exceeded 7 per cent, and such a thing as a bonus had never been heard of. Now he stated, as a Bank proprietor, that from the year 1797 he had always received 7 per cent upon his capital. That, however, was the least part of his profit. He declared—and he challenged any Bank director to contradict the declaration—that, from the year 1797 down to the present time and during all the continuance of the war, by the advantages arising from the restriction act, from the public balances, and the high charge for the management of the public debt, the property of the Bank had increased and improved to the enormous sum of 30,000,000l. sterling. That statement he challenged the whole court of directors to deny. The hon. director opposite had taken great credit for the services which the Bank had rendered the government during the war. That the Bank had always been ready to advance money to the government, he did not doubt; but it was owing to the restriction act that they were enabled to do so. Besides they had never advanced a single sixpence without being very handsomely paid for it. He had now been a member of parliament twenty years; and during that time he had voted against every motion for the continuance of the Bank restriction act. But, from 1797, down to 1819, never had one Bank director voted along with him. On the contrary, they had, one and all, up to the very last hour, fought hard to prevent the resumption of cash payments. It was, therefore, a mockery to say that the Bank of England had always shown an anxiety to resume its payments in specie.

The motion was then agreed to.