§ Mr. Humemoved for a return, "of the number of Country Banks issuing notes that have become bankrupts since January 1816, up to the present time; stating the place where the banks were established, the number of partners in each bank, the amount of debts proved against each, and the amount per cent of dividends paid or declared upon each, as far as the same can be complied with." The House would then have before it, a statement of the extent to which the public banking had suffered by the country system.
Mr. Maberlythought the account objectionable, as an intrusion upon the affairs of individuals. If the principle wag once established, that any member might move for an inquiry into the private concerns of parties, it was difficult to see where the operation of that principle might stop. How could that House entertain cognizance of the debts which had been proved. He hoped the Chancellor of the Exchequer would not accede to such an improper motion.
Mr. Grenfellwished Scotland to be included, because he was persuaded that a return to the motion, as regarded Scotland, would be nil.
§ Mr. John Smithsaid, that when an intrusion upon the private affairs of individuals was spoken of, it ought to be recollected of the country bankers, that they had in fact been dealing in that which was the money of the country. Theirs was quite a different case from that of merchants or ordinary traders; and he was therefore disposed to support the motion. He had not until that morning read the correspondence between the Treasury and the Bank; but, in reading it he had been much struck with a paragraph which stated, that the country banks, all of them, without exception, had for some time fostered, supported, and encouraged, a rash spirit of speculation. Now, in the name and on behalf of very many country bankers who claim to be considered men of honour, prudence, and integrity, he called on the chancellor of the Exchequer, to state the grounds upon which he had made that sweeping accusation. At the same time, it would, perhaps, be convenient to the right hon. gentleman to prove to parliament the sound policy of directing public odium against the country banks at this particular crisis.
The Chancellor of the Exchequersaw no objection whatever to the motion. He thought it quite reasonable that the House should be in possession of any facts relative to the number of country banks which had failed. Such a return could do no mischief to parties who might have failed and were in business again. With regard to the terms in which the country bankers were spoken of in the correspondence between the government and the bank, he could have no objection to give every explanation to those who might fancy themselves injured thereby. Most certainly, it never had been the in- 147 tention of ministers to convey the slightest imputation against individuals. Their argument went merely to the general system of country banking. And it was difficult to think that any member could have listened to the account given a few nights since by the hon. member for Taunton, of the course which a country banker was compelled to pursue in order to carry on his business profitably, without seeing that the system was calculated to produce the effects adverted to in the correspondence. In truth, an allusion to the system of country banking generally, and not to individuals, was all that ministers had contemplated; and that was the only interpretation which they imagined could be put upon the words in question; but even if the charge had been made against individuals, he could not look at it in the same light with the hon. member for Mid-hurst. Every man who possessed, and traded with, considerable capital, was, more or less, an encourager of speculation; and to say so, was neither an impeachment of his honour or his integrity.
Mr. Calcraftwas happy to hear the explanation given by the right hon. gentleman; but, without that explanation, he certainly should not have understood the expressions, "rash speculations, aided, fostered, and abetted, by the country banks," as exactly placing the country bankers upon that advantageous ground which it seemed they really occupied in the right hon. gentleman's opinion. For himself, however, he denied the fact that it was by the issues of the country banks that the rash spirit of speculation, as it was called, which had existed in the country, and the enterprises to which that spirit had led, had been supported. Seventeen millions of paper could not have been issued by any country banks for purposes of speculation, and that speculation principally carried on in London. For, as fast as a country note made its appearance in London, it was instantly converted into a bank of England note, or into gold, or the banker was discredited. Those speculations, which, joined to the conduct of government, had done so much to disorder the country, never could have been carried on by country bank notes. To the motion he saw no objection. As far, however, as disclosure went, it would do the country bankers no harm, but good. It was well for ministers to talk of country paper! The right hon. gentleman had more 148 accommodation paper in the market than all the country banks put together. No circumstance had more contributed to do mischief than the immense amount afloat of exchequer bills. Government, deal as it would with the system of the country banks, would do little good until the issue of exchequer-bills was limited. He could not place much confidence in any set of men who could speak on the 13th of January of the distresses of the country as being over.
§ Sir J. Wrottesleysaid, that during the last year, the country bankers had been almost the only class of persons who had not speculated. They had been rather the victims of the speculations of others, than speculators themselves.
§ Mr. Hudson Gurneythought, that though it would be perfectly easy to obtain a return of the number of failures of country bankers, it would be extremely difficult to learn the amount of the dividend they had respectively paid. The object of the hon. gentleman appeared to be, to show the advantages of the Scotch system of banking, as compared with that obtaining in England; both with regard to its general security, and as not being obnoxious to the objections of encouraging undue adventure. But, if such were the hon. gentleman's view, Mr. Gurney said, he must entirely differ with him. There was nothing he should more deprecate than the introduction of the Scotch system into this country, as he was convinced, that its direct tendency would be to the increase of the number of bankruptcies, though not, perhaps, leading to the breakage of so many banks. The Scotch system was one which went, much more than that of England, towards facilitating speculations of every kind; but, it was the customer there who broke, and the banker who swept his securities.
Much had been said, and said very idly, of the degree in which the paper of the country bankers had aided in the delusions and frauds which had been practised an the public; but, in fact, the country banker is, of all mankind, the most interested in preventing speculation. The speculator is his natural enemy. If he gains, the profit is not the banker's; and, if he becomes insolvent, the banker is sure to lose. At the same time, there is an evil in the existing system, for which it seems difficult to find an adequate remedy. The banker allows an interest to the customer; consequently, he must 149 employ the money deposited with him; and, when the mass of the transactions of the country are such as they have been of late, it is impossible for him, with the utmost precaution, to avoid entirely the discount of bills, of which the basis may be partly commercial transactions, and partly mere speculation; whilst his circulation will necessarily be proportionably increased by the increased prices of all things, measured in a perpetually increasing medium; and, when any revulsion takes place, it is obvious that the banker must as necessarily pull in his advances, for his own security, with the greatest rapidity with which he can effect it, in order to meet his engagements; and thus greatly increase embarrassment, whenever embarrassment shall be general.
The hon. member then entered into the detail of the successive depreciations of the currency, since 1797. He said, it was agreed on all hands, in the debates of that House in 1812, that the depreciation had reached 35 per cent. Now, he considered that this 35 per cent, or something like it, had hung upon them ever since. At one time, through the abundance of paper circulation, it had spent itself on the currency: at another, when that paper was called in, it had fallen on prices. Then we had commercial embarrassment, and agricultural distress, till the necessities of all men had brought the right hon. gentleman's bill of 1819, by a sort of tacit agreement, into abeyance and commodities paid for in paper, found the prices at which they could be produced under the existing burthens of the community.
For his own part, he sincerely wished the circulation of the country out of the hands of private individuals. But, it was utterly impossible to do away with the paper currency of the country banks, without supplying some other medium, which should sustain prices in a manner to meet this depreciation, which had gone to 35 per cent in 1812; and this could, in his opinion, only be done by one of two measures—the one, the abandoning the law for making gold, at its present standard, the only legal tender; the other, issuing such amount of paper, either by government directly, or by the Bank, as should sustain the general sale value of commodities at something like their understood level.—Mr. Gurney said, that he felt some apology was due to the House, for having taken that occasion of express- 150 ing his sentiments on the subject; but as, in the more regular debate on the right hon. gentleman's motion to-morrow, many gentlemen of much more weight would probably be desirous of giving their opinions at length, he might then be precluded from an opportunity of stating what was his decided conviction; namely, that unless some measures of the nature adverted to were entertained, they would bring on an almost universal bankruptcy, and a degree of pressure, to which the embarrassments of 1816, 1821, and 1822, could hardly bear a comparison, and under which, how the multiplied engagements of the country, public and private, could possibly be met, was more than he could comprehend.
Mr. Robertsonsaid, that the system upon which the Scotch banks were conducted, was that of creating an artificial capital, which was lent out in aid of the manufactures and trade of the country. That this system had been productive of great advantages, was proved by this, that it had raised Scotland from being the poorest country in Europe, to the state in which it at present was. The banking system in England was upon a different footing, it had the effect of keeping up a system of trading and manufacture which ministers were using every effort in their power to oppose. When they found that the system now pursued by ministers actually sent twenty four millions a year out of the country without any return, it would be clearly seen that nothing but our banking system could have prevented the present distresses of the country from having come upon her long before. And if ministers persevered in their intended plan of withdrawing the one and two pound country bank notes from circulation, they would aggravate those distresses ten fold. It was to him astonishing that the House should continue to look with silence upon this conduct on the part of his majesty's government; first causing of a great evil, then suddenly changing their measures, and thereby aggravating the distress which their first error had caused. He begged of the House to recollect this argument with respect to our commercial system, that our foreign commerce, including shipping and all, did not amount to more than forty millions a-year, while our manufactures, agriculture, and internal trade and commerce, amounted to one hundred and thirty millions per annum. Such being the case, it became 151 the duty of the landed and manufacturing interests, to check the progress of the evil. But when had there been any discussion upon the subject since the meeting of parliament? There had, indeed, been some motions for the production of papers and returns, but no hon. member had come forward to propose a remedy for the evil. On the contrary, every one seemed anxious to shut his eyes from the view of those miseries, the existence of which no one could deny.
§ Mr. Tierneywished to ask a question of the chancellor of the Exchequer, in order to solve a doubt suggested by the correspondence between the Bank and government, concerning branch banks. In the answer of the Treasury committee of the Bank to the communication from ministers, they said, "Finding also, that the proposal by the Bank of establishing branch banks is deemed by his majesty's ministers inadequate to the wants of the country, &c." What he wished to ask was, when the Bank made that proposal to establish branch banks, what was the nature of that proposition, and why it was not before the House?
The Chancellor of the Exchequersaid, that no proposition had, in fact, been made in the written communications of the Bank to establish branches of its own institution. Something of that kind might have passed in the course of the discussions, but certainly no direct proposition to establish branch banks of their own had been advanced in writing by the Bank.
§ Mr. Tierneysaid, that the Bank had said expressly, that the proposal which had been made by them was not one which ministers could adopt, because they considered it inadequate. Certainly, if such a proposition had been made by the Bank, it ought to be known to the House.
The Chancellor of the Exchequerrepeated his denial of any proposition having been made in writing by the Bank to establish branch banks; though, if they had made such a proposition, ministers would have deemed it inadequate to the prevention of a crisis like that through which the country had just passed.
§ Mr. Tierney.—Then, in point of fact, the Bank did never make any such proposal ["No," across the table]. Then it ought not to have appeared in a written communication of their own that they did.
§ Mr. Pearsesaid, that the subject might hate been touched upon verbally and iu- 152 cidentally, but no specific proposition had been made. The expressions in the answer of the Bank went too far. But, for years past, that plan had been repeatedly a subject of conversation.
§ Mr. Humethought, that the trading in money ought not to be allowed to individuals, it being a branch of the prerogative of the sovereign. As to bringing before the public, individuals who had been unfortunate, there could be no objection on that ground, as those individuals had already appeared in the Gazette. His object was merely to lay before the House certain facts. That the public had suffered much from the recent failures, by the issuers of paper, was beyond doubt; and those losses ought not to rest upon the poorer classes of the community. He was anxious that the House should see the amount of loss which had been sustained from actual failures.
The Chancellor of the Exchequersaid, he was anxious to explain an observation of his which had been misunderstood by the hon. member for Wareham. That hon. member seemed to be of opinion, that he had thrown the whole blame of the excess of issues on the country banks. He wondered how the hon. member could have so misunderstood him. What he did say, was, that it was not possible to charge the whole evil, or even its origin, on the country banks, or upon any persons issuing paper. The speculations which had brought on the present crisis were of a character necessarily incident to all commercial countries, where there existed a great share of capital and enterprise. In all such cases, individuals would be found ready to take advantage of every circumstance favourable to their own interests. He had further said, that the speculations of 1819, whatever their immediate effect, had been followed by increased confidence and speculation.
Mr. Calcrqftsaid, he was most ready to admit the right hon. gentleman's explanation. He felt it at the same time necessary to say, that the papers on the table went far to strengthen the impression he at first entertained of what had fallen from the right hon. gentleman.
§ The motion was then agreed to.