§ The Chancellor of the Exchequer moved the order of the day for resuming the adjourned debate on the Bank Charter and Promissory Notes Acts. On the question being put, "That Mr. Speaker do now leave the Chair,"
§ Sir John Wrottesleyrose. It was, he said, necessary, before he entered more at large into the reasons why he wished to take the sense of the House upon the Speaker's leaving the chair, to state why he had not taken this course at an earlier moment. Now, there was a rational objection to that course being taken on Friday last; for then, properly enough, several gentlemen were anxious to hear the statement of the chancellor of the Exchequer, but at this moment the case was materially altered. All those who thought, as he did from the outset, that the project of the right hon. gentleman was impolitic, were bound to take the earliest stand against it. All those who, after hearing that statement, thought the right hon. gentleman's plan to be fraught with danger, ought to take their stand 246 against it at the earliest opportunity which was afforded them. All those who thought that it would inevitably tend, not to remedy or to lessen, but greatly to increase all the existing evils, must also think with him in his view of the question. Upon all who entertained the opinions, of which he had given a summary, he now called for support, while he resisted the Speaker's leaving the chair on the present occasion [hear hear]. If he could presume to have another call upon the House, it would be, not to proceed further in this business without hearing and pondering deliberately upon the arguments which would be adduced against the motion; and in offering those which his own mind and experience suggested, he most anxiously begged their indulgence for a patient hearing. The House was, he had always found, willing to listen to those who advocated the interests of any great body of men who were likely to be affected by their legislative proceedings; and he had found them more attentive, when any individual of their body claimed their notice, when he was himself materially interested in the question at issue; and still more so, when circumstances transpired which affected, not only the hearts of respectable men, but their honour and integrity. With all the patience, kindness, and indulgence which the House could extend, he still felt that he had a task of great difficulty to perform. He was most deeply impressed with the importance of the subject, and with his incompetence to reward hon. gentlemen for their attention, by making it entertaining; and if they did not think fit to listen to his arguments, he should be under the necessity of giving up, in despair, the discharge of a duty, which he felt most anxious to perform. Never was there a question which better deserved the most laborious consideration; and never did he feel the sense of his own inability bear so heavily upon him. He was well aware that in the House, and, indeed, in the country, there existed great difference of opinion, whether this question ought or ought not to have been brought before the country. One of his majesty's ministers had claimed credit for placing the subject in the front of the king's Speech, and it had been urged by many, that discussion could not, at all events, have been avoided. He was not of that opinion. He did not say, that the topic ought not to have been collaterally introduced. It might merely have been 247 mentioned, though not from the throne, and an expectation might have been added, that the evil would be best remedied by leaving it alone—by not intermeddling by legislation, but by leaving the case to the energy and good sense of the people of England. The effect would have been, that things, instead of getting rapidly worse, would have gradually mended; and it might have been hoped, that the existing melancholy situation of the country would have been altogether relieved, and the prevailing distressing embarrassments eventually been productive of great public good, though attended with much private calamity. Certainly, it might have been proper to mention this state of things incidentally; and if that mention had been made by some honourable gentleman unconnected with government, the consequences would not, perhaps, have been injurious. The mischief had been done by rendering it an authorised and official statement by the king's ministers. That letter, that cruel letter he might well call it, had issued from the Treasury; and if it had not been brought forward with so much formality, its genuineness might well have been doubted, or at all events it might have been thought that some clerk of the Treasury had delivered out the foul copy instead of the fair one. In such a composition, it was at least to be expected that the ordinary rules of grammar should have been attended to; but it was a production that would have disgraced even a school-boy, for the common concord between the verb and the nominative case was wholly disregarded. However, the production had never been disavowed, and for this reason principally he looked upon it as genuine. The charges it contained were important, and he must add, extremely unfounded and injurious. In the first place, it accused all the country bankers with having fostered, aided, and abetted, the rage for speculation; whereas it had been said on former occasions, and not denied, that they were the only persons who had not joined in these wild speculations. In fact, it was part of their business, by every possible means, to ascertain whether their customers were or were not speculators. The moment they found a man beginning to speculate, it was the duty, and the constant practice, of the country banker to warn him; and if he did not follow the advice given, the next step was either to 248 limit or to close his account. Therefore, the assertion of the letter was as unfounded as it was cruel; and indeed it might be looked upon as one of the harshest things that had ever been said of a respectable body of men. What was the fact upon this subject, as appeared upon undeniable evidence? Speculation began in a district of the kingdom where actually no local notes were circulated. The earliest speculation was in cotton in the towns of Manchester and Liverpool, where no part of the currency consisted of country bank notes. Where next did the wild spirit of speculation shew itself? Upon the Stock Exchange in the city of London. Would any body, then, venture to say, that the mad speculations of the last year were really owing to the excessive issues by country bankers? He sincerely believed that no set of men more sincerely lamented them, or more endeavoured to avoid them, by warning their customers constantly not to have any thing to do with them. "But," said the king's ministers, who brought forward this unfounded accusation, "it was we who warned the country against the consequences of mad speculation." Was it indeed? Where had they done so? He was prepared to show, that they were the parties to blame, for at least a part of those difficulties. It was in the latter end of the year 1824 that these speculations began to show themselves in their more striking colours; and it was then that doubts arose, whether it was not necessary to consider the application of the act, commonly called the Bubble act, to these proceedings. The House knew that upon the explosion of the celebrated South Sea-scheme, the parliament of that day enacted a law, which, if put into full operation, would render it almost impossible for any man to embark in these wild schemes. In consequence of the severe penalties of this Bubble act, many years elapsed without the appearance of any of these delusive schemes. At last, in a time of scarcity, when the public thought the bakers and millers were taking advantage of the dearth, mills of a particular construction were set up by companies to grind grain, and to bake bread on a saving scale. A case arose out of these, he believed it was that of "the King against Webb and another," in which lord Ellenborough was called upon to revive the penalties of the Bubble act; but that high judicial personage declined doing so, and rather 249 put a different construction upon the law than that which was previously understood to attach to it. Things stood in this shape till the year before last, when the lord chancellor maintained somewhat of a different opinion from lord Ellenborough, and dropped doctrines which differed from those which prevailed in Webb's case. Under these circumstances, what was more necessary than for the government to bring in a bill to declare what the law really was? The effect of this declaratory enactment would have been, if not to crush, at least to restrain, these wild speculations, and so to correct the system that tended to their establishment, as to expose the parties who engaged in them to the penalties which lord Ellenborough retrained from directing against them. The government, so far from doing this, in fact did just enough to prevent any body else from pursuing such an object; for the attorney-general gave notice of his intention to bring in a bill; the bill was brought in; it was laid upon the table; and neglected during the whole of the session; while the spirit of speculation was allowed to proceed undeterred, and to make dreadful ravages over the whole of the kingdom. God forbid, then, that ministers should be allowed to shift the blame, which ought to rest only upon them, to the shoulders of innocent country bankers. The next subject to which he wished to call the attention of the House was, the proposed repeal of that part of the Bank charter which, until the year 1833, authorized the issuing of small notes. On what terms had the Bank of England its charter, and on what authority was that privilege secured? The terms were, that they should be enabled to issue small notes, and the authority was the faith of parliament. What was the privilege of the country bankers respecting the same power, and how was it conferred? To issue small notes likewise, and upon the same faith of parliament. When would the Bank charter expire? In the year 1833. When would the small country notes cease to be legally issuable? In 1833 also. The privileges of the Bank of England and the country banks being in this respect alike, and delegated equally upon the faith of parliament, how happened it that the Bank were still to have the power of issuing small notes, and the country banks none? See the injustice, the par- 250 tiality, as well as the cruelty of this treatment of the country bankers! Had parliament, in the year 1822, repealed the privilege, as it was intimated that they meant to do, then the country bankers would have been prepared for that result. But this was not the course pursued. They were, on the contrary, entrapped: they were led into a scrape; and now the whole system thus formally and definitely sanctioned, was to be retraced and reversed without the smallest valid reason for the change. It was ridiculous to talk of giving them three years to alter their practice; for now that the stamping of their notes was refused, those at present in circulation were not calculated to last eighteen months; so that the country bankers must at once prepare to withdraw their small paper circulation, and make instant arrangements for cash payments. He supposed it would be contended, as indeed had already been the case, that the country banks had forfeited their claim for equal justice; that they had abused their power of circulating small notes, by their over-issues, and the excess to which they had carried it. Well, then, let the conduct of the Bank of England be examined, and the same test applied to that corporation. Had the latter never abused its power by over-issues? Could the chancellor of the Exchequer deny, that what with the government, and what with the Bank, the paper circulation of the country became at one time so depreciated, that the relative value of the guinea in gold and in paper, was as 27s. or 28s. to 21s. Why not then, if this were a valid ground for depriving a party of a charter, have broken up the Bank privilege? But, he denied the assertion that the country banks had over-issued; he knew that some persons entertained a different opinion, but he challenged them to the proof. The country notes in circulation in the year 1825 were double in amount those of 1822. Be it so; and he could tell the reason why. Almost all these small notes were employed in carrying on the provision trade; for general mercantile transactions were notoriously conducted through the medium of bills of exchange, the amount of which far exceeded that of all the small country notes in the kingdom. Then, if these notes represented, as they did, the value of these provisions, they must necessarily partake, in their amount, of the changes 251 in the price of the commodities for which they were exchanged. Look, then, to facts, and it would be found, that the price of corn in 1825 greatly exceeded the price of it in 1822. In some places it was double, and the value of cattle more than doubled, in the same period. This augmentation of value in commodities necessarily increased the amount of the notes in which they were to be paid. The country customer who wanted to buy a certain quantity of corn, or a certain number of cattle, on a market day, went to his local banker, and obtained the money which was necessary to make such purchases. The House would, however, see, that, for obvious reasons, money had since last July become scarce, and consequently the transactions of business had become more circumscribed. It became necessary, therefore, for public convenience, to lessen the number of five-pound notes in circulation, and to increase the issue of those of smaller amounts.—Onepoint had been urged with considerable force; and it was certainly calculated to make an impression upon the public mind by appealing to the best feelings of our nature. It had been said, that, on the failure of a country bank, the utmost misery was brought upon the lower orders, who were thus deprived of their petty savings, hoarded up in the one and two pound notes of the firm which had failed. A most piteous case had been thus made out by the chancellor of the Exchequer, and assuredly those who did not feel for the sufferings of the poor, under such circumstances, deserved to be ranked among the basest of mankind. But, he begged to call the attention of the House to the fact, whether parliament had not, upon this subject, done every thing in the way of legislation that was necessary or even possible. First the labourer was not bound to take country notes; or if he had taken them, he had the power of immediately repairing to the counter of the firm, and of obtaining sovereigns in exchange. The value of a sovereign might be reduced to 18s. or even lower, and in that case the poor man could only obtain provisions to that amount, but he always was sure to obtain the full value of a country note. If he did not want to spend it, he could take it to the savings' bank, and invest it in government securities. In fact, with all these cautions, even if a labourer took a country note, it was his own fault if he kept it in his possession 252 more than twenty-four hours. Parliament, in fact, had done all it could to protect him, and it was little less than folly and weakness for the House to attempt to pass statutes to protect him against the consequences of his own heedlessness. But, the great difficulties which must attend the contemplated change in the system of paper-money were these:—The one-pound notes were (except in Lancashire) the great medium of payment for manufacturing labour throughout the kingdom. The country banker took the manufacturer's bill upon his correspondent in London or Bristol, or wherever else he dealt, and gave him his own notesin return, with which the manufacturer paid his workmen, who, as he had before said, obtained their necessary supplies at full value for this paper. Now, he did not mean to say that the business of the country could not be carried on without these small notes; but he was quite satisfied, that if they were withdrawn, a very different quantity of business would be transacted. It should be remembered, that a great deal of the money drawn from the country, particularly in the shape of rents, was transmitted to the landlord in London, and spent during a large portion of the year in the metropolis: this operation must go on; but it was impossible that with it could be conducted the same extent of country business. And, if the latter could not be transacted on the same scale, then what became of the labouring poor who must be thrown out of employment? Was there no sympathy for the large classes who were dependent for support on manufacturing industry? What medium of circulation did they propose to substitute for that which would be withdrawn by the departure of these small notes? None, that he could understand. He had certainly heard a good deal of the improvement which was to arise in the banking system from these changes, and that in a short time joint-stock companies would rise up in the country. He did not believe a word of it. They might probably have branch banks, from the Bank of England, in Lancashire: they might have them also in some of the manufacturing districts of the county of York; but, in any other of the manufacturing counties such establishments were not likely to appear, unless government granted a charter—(and this the Bank of England would take care to prevent)—or unless a parcel of adventurers 253 were found ready to act together in the banking trade, with little or no property at stake. A pretty system this would be for the country—one, which so far from mitigating the existing evil, would greatly aggravate and extend it in every quarter. He had already argued, that the country banks, so far from doing any of the mischief under which the public had so lately suffered, bad greatly tended to reduce it; and by bringing capital into particular manufacturing situations, had considerably tended to local improvements, promoted the general industry of the people; and, referring again to the letter from the Treasury to the Bank—he meant to that part of it, which, as it were, summed up the character of the country banks—he for one was not disposed even to condescend to reply to the imputation. The principles which regulated these institutions, their stability and their solvency, had been declared by those on the spot, who best knew their credit and honour, whose means of judging were declared indisputable; and those declarations were a sufficient answer to the calumnies of those, whose animadversions upon their conduct, could only arise from ignorance on the one hand, or interested prejudice on the other. Hoping to have the assistance of every gentleman who apprehended danger from the proposition now under consideration—a danger which was every twenty-four hours growing greater, and its progress alone capable of being stopped by an abandonment of it—he reiterated his appeal to all those who thought as he did upon the question, for their support in resisting the Speaker's leaving the chair. But, if he were not confident of having this support—if he were conscious that he should stand alone in the division, still he would do his duty to the utmost of his power, in averting the evil which must follow the adoption of the chancellor of the Exchequer's plan, and the extent of which it was impossible for any human being to calculate.
Mr. Alderman Thompsonsaid, he was extremely anxious to take an opportunity of expressing his sentiments on this question, which he considered of the first importance, as it involved the safety, nay, the existence, of every man's property, of whatsoever kind that property might be. He had, ever since he had the honour of a seat in that House, given his support to ministers in all their measures relating to the commercial policy of the 254 country. With reference to the measures now under consideration, he could only say, that he agreed with them as to the principle, but differed with them as to the period appointed for carrying them into execution. In the first place, he agreed that the present embarrassments were partly attributable to an over-issue of paper currency, and partly to the general spirit of speculation which had so unfortunately prevailed. He was inclined to think that the excess of this bank paper had increased all these speculations; necessarily so, indeed, from the superabundance of money which they threw into the market. The excitement thus given, in the years 1822 and 1823, by the paper circulation, diffused a superficial currency throughout the country, which was eagerly caught at. On reference to the stamp returns for the country banks, for the years 1823, 1824, and 1825, the issues of their notes appeared to have doubled, as compared with the three preceding years; that of the year 1825 being by far the largest of all. The country banks, in this state of things, readily accommodated the manufacturer, who gave a high price in his turn; and this concurring impulse, at the close of the year 1825, had certainly carried the paper circulation to a forced and unnatural height. In this state a reaction occurred; for the chief resources of the country banker were, after all, in London—there he must depend for his money, and for obtaining cash for his discounts; but, when this reaction came the change was great. It was first clearly visible in the failure of an extensive banker in a western district, which was followed by a similar occurrence in a northern; and these were attended by a general rush upon all bankers, whether solvent or otherwise. Seventy bankers either failed at once, or their paper was thrown into a state of abeyance. Calculating their issues at 50,000l. each, which was, he believed, much under the mark, 3, 500,000l. of the circulating medium was in the short space of three months withdrawn from the country. Assuming 20,000,000l. to be the whole circulation of the country, and adding to the 3,500,000l. already with drawn, the additional amount of the paper money which must have disappeared in consequence of the recent shock, there would be a reduction of nearly 50 per cent within six months in the currency of the country. At all events, he thought himself safe in 255 assuming that there were now 6,000,000l. of paper-currency less than the public possessed six months ago. How was the vacuum thus created proposed to be supplied by the chancellor of the Exchequer? By gold, said the right hon. gentleman. "Where was this gold to be obtained? There was no way of obtaining the precious metals but by exports; and of what were these exports to consist? Their own manufactures were not in demand on the continent, neither were the foreign commodities which they possessed. Cotton was not in request abroad, nor sugar, nor coffee: in fact, none of their colonial produce. Though prices had fallen 20 per cent, business was still in a state of great stagnation. Every body acquainted with the commercial business of this great metropolis, knew, that within the last week, not one in ten could negociate upon the Royal Exchange the most undeniable bills he had to offer for discount. How, then, was this new measure to operate? They all knew, that the avowed intention of it, was the speedy suppression of small notes; but they also knew, that by far the greater portion of the trade of the country was carried on through the medium of these same notes, and that the largest circulation of them was in the most active manufacturing districts. He could, from his own knowledge of one part of the country, name a district where the total monthly payments amounted to no less than 200,000l., and this was uniformly paid in the one and two pound local notes. They could easily imagine what would be the effect of withdrawing this amount of circulation from one spot of the country. Besides, they should remember, that notwithstanding the general want of confidence which prevailed so recently respecting these local notes, how few comparatively had failed, though the demand upon all must have been immense, from the nature and extent of the panic. They ought to consider whether the manufacturer was at all likely to carry on his trade, if the assistance of the country banker were thus suddenly withdrawn. It might be said, that the same accommodation would be given to the solvent applicant after the resumption of cash payments as before. This he denied; for the banker would feel a very different disposition to discount the manufacturer's bills, when he had to advance the money in sovereigns, from that which he had evinced when his notes would answer the 256 same purpose. Entertaining these opinions, he must oppose the present proposition, believing it to be one which, instead of having a beneficial tendency, was likely to create a convulsion from one end of the country to the other. As to the idea of throwing open the Bank charter, in expectation of the establishment of joint Stock companies, it was a mere delusion, and must completely fail. It was a great mistake to imagine, that the solvency or solidity of a bank would be measured by any estimate formed upon the number of its partners. No. The prudential mode of conducting a bank, rather than the extended amount of its capital, would, as it ought to do, influence the opinion of its stability. Undoubtedly, much good would arise if the Bank of England established branches; but, until that event occurred, it would, in his opinion, be an act of great folly in the House of Commons to curtail by measures of this sort, the circulation of the country still further than late events had accomplished. To proscribe the country bank paper at the end of three years by a new law, was practically to put an end to it at once; for every banker must instantly withdraw his small notes, as fast as he could. This, he contended, would, in the present state of the country, be attended with evil; and, therefore, he opposed the project. It would, in his opinion, operate in a considerable degree, to destroy confidence; and it ought to be recollected, that it was much easier to destroy than to restore confidence.
§ Mr. Leycestersaid, that, instead of complaining of the conduct of his majesty's government in endeavouring to put an end to the mischievous prerogative exercised by the country bankers, of adding to the circulating medium of the country at their pleasure, he was disposed to give them the greatest credit for the effort. That prerogative of the country bankers was the cause of all the evil which we at present endured: that prerogative had occasioned the redundance of paper with which the country was inundated: that prerogative, by occasioning such a redundance of paper, had increased the price of labour and of corn: that prerogative, by occasioning such a redundance of paper, had forced the 3 per cents, up to 95, which had given birth to all the extravagant speculations by which the nation had been brought to the verge of ruin. The principles on which that mischievous prerogative of 257 the country bankers was exercised, were radically wrong; and opposed to the most important principles upon which the currency of every country ought to be founded. The most important of those principles was unity in the power of issuing currency, and in the power of controlling the issuing of currency. There ought to be only one officina for the issuing of currency; there ought to be only one officina for the control of that issue. Where the power was vested in one body, the knowledge of the amount already in circulation would necessarily lead to caution in further issues, or to prudence in calling in that already issued. But the issuing of currency was intrusted to the discretion of a number of independent bodies like country banks, the consequences must necessarily be most injurious. They could know nothing of the amount of circulating medium already in the country. They would pay no attention whatever to the state of our exchanges with foreign countries, for the purpose of ascertaining whether our circulating medium was redundant on the one hand, or deficient on the other. They would not be aware of the operation of all these circumstances on the public prosperity; or, if they did, they would, in too many cases, deem it an absurd sacrifice of their own interests to contract their issues; and would think it a duty which they owed to themselves, to issue as much of their paper as they found their immediate neighbourhood was disposed to receive. What, however, must be the result of such conduct? Depreciation of their paper in the first instance, and eventually bankruptcy. Such must be the inevitable consequences of leaving the power of issuing an unrestrained amount of money-paper, of leaving such a mischievous prerogative in the hands of a mob of country bankers; and the House might depend upon it, that a mob in the mint was calculated to be at least as destructive as a mob at the helm of the state. He was sincerely glad, therefore, that government had proposed a measure by which the prerogative in question was to be taken away. All he regretted was, that they had not proposed the measure sooner, and that they did not now propose to carry it further. Why not sweep away the five pound, as well as the one and the two pound notes? They were almost equally objectionable; and he had no doubt that in another year ministers would 258 come down to the House with a confession, that they had not proceeded sufficiently far, and with a proposition fur treating the five-pound notes as they were now proposing to treat those of smaller value. Having now expressed his sentiments with regard to that which it was intended to undo, he should proceed to state his opinion with regard to that which it was intended to do. The recommendation from government to the Bank of England to establish branch banks, in certain parts of the kingdom, had his entire approbation. The Bank of England were aware of the amount and effect of their own issues; they were aware of the state of the foreign exchanges; they were aware of the circumstances and situation of the country; and they would, no doubt, regulate their conduct on the soundest principles, and act sagaciously and advantageously. But there, he was sorry to say, his concurrence in the active measures proposed by his majesty's government terminated. As to the joint-stock companies which it was proposed to establish, they were liable to many of the peculiar objections which lay against country banks at the present moment, with this additional circumstance of evil—that as the individuals of whom they would be composed would be less responsible, as they would be less exposed to hazard, their avidity for gain, and the rashness of their proceedings, would be proportionably great. The consequence, he feared, would be, that when the time came, as come it would, at which their paper must be converted into gold, their poor creditors would fare worse than ever, and would, as it were, be cut off with a shilling. As to any enlargement of the existing country banks, to which it was supposed the measure would give birth, he did not think that any such enlargement would ever take place. Substantial banks would not be disposed to admit new partners, because they would not be disposed to share their profits with other persons; and unsubstantial banks would not be disposed to admit new partners, because that would be to generate a report of their unsub-stantiability—to hoist a flag of distress. But even if the contrary should turn out to be the case, a larger number of partners would not necessarily imply a larger capital; a larger number of partners would not necessarily imply a better character; for there would be more black sheep among twenty persons than among six. 259 Thus, such extensions would still leave country banks liable to all the objections to which they were liable at the present moment. They would be as liable to be seduced by the hope of profit to an over-issue of their paper; they would be as ignorant of the amount of circulating medium in circulation; they would be as inattentive to the state of the foreign exchanges, and to the other circumstances operating on the currency of the country. What, then, would be the consequence? Those which he had before described:—a depreciation of their paper in the first instance; and eventually bankruptcy. Against this he knew that the case of the extended partnership banks in Scotland would be quoted: but, how was it known that the success of those banks might not be imputed to local causes, and those very different from a mere extension of partnerships? Might not the cause of it be found in the national character of the Scotch for prudence and sagacity in their commercial transactions Perhaps, there was more caution used amongst them in lending and borrowing, than was to be found amongst the same class of monied men in England. In this country there was an universal cupidity amongst almost all classes of capitalists for borrowing and lending, and for lending and borrowing. All rushed precipitately into the vortex of speculation—"some to undo, and some to be undone;" but, in none was there the same prudent foresight which marked the money-transactions of Scotland. Why not, he again asked, attribute the success of extended partnership banks to that cause, as well as to the mere fact that they were extended? For his own part, he had no reliance upon this part of the plan.
§ Mr. T. Wilsonsaid, that if this measure had been proposed by way of trial, he should not have felt surprised at it, or at the manner in which it had been viewed by some hon. members; but, he must own that he lamented to find that it was proposed by his majesty's ministers, as founded upon part of his majesty's Speech, and that part, too, which referred to the distressed state of the country. As a remedy, or even a palliative, for that distress, it was nothing—nay, it was worse than nothing; for it served but to aggravate the existing evil, and carry it to a still much greater extent. Far from allaying the degree of distrust and alarm that prevailed, it would, in his opinion, serve but 260 to carry it still further. He did not view this question as a party man, or with reference to party feeling of any kind. He looked at it as a representative of the city of London, who was in the habit of hearing, day after day, of the ruin and distress, in which so many of our merchants, manufacturers, and traders were involved. It was his wish to see, if possible, in the measure before the House, some remedy for those distresses—some palliative of the evils—something which would have the effect of restoring confidence; but, he confessed that, turn it which way he would, he could find none. In order to see how far the propositions of ministers were likely to be efficacious, let the House consider what was the situation in which the country was recently placed, and what was that in which it now stood. A very short time ago, they had felt that the shock in mercantile and commercial confidence had extended to the banks; that numbers of them were failing, and many others were threatened. In that state of the public alarm, something was to be done: and here he could not but say, that the country owed more thanks to the hon. member for Taunton, for his conduct on that occasion, than it did to ministers on the present. His speech at the meeting of merchants at the Mansion-house, and the resolutions-there proposed, although they had been turned into ridicule, had done a great deal, if not to remedy the distress, at least to check a great portion of it which arose from, and to prevent a still greater portion which would arise from, a continuance of the want of confidence. To any measure of that kind his majesty's ministers could lay no claim. Most certainly they were not entitled to any praise for those they now proposed. Was this, he would ask, a time to take away the support which was derived from issues of small notes? What was our situation? Were we now suffering some dreadful calamity, the result of war, or famine, or earthquake? Nothing of the kind. Were we at the termination of a war, in which our finances had been greatly involved, and our resources crippled? Were we, in that state, called upon to make good a deficiency of some twenty millions? No such thing. Had we to pay ten or twelve millions for the purchase of foreign corn? No. What, then, was our situation? It was said, we had over-traded. That, very probably, was the case to a very great 261 extent; but, we had done so before without suffering to the same extent as at present. It was impossible that one portion of the trading or commercial part of the community could suffer without injuring the other. If the merchant suffered by over-trading, his distress extended to the manufacturer; and from him it proceeded to the other classes. This was, in a great degree, our situation at present. Now, thus circumstanced, what was best to be done? He would say, that the first step would be, if possible, to restore confidence. This was not to be done by force. People were not to be dragooned into confidence in banks, or any other establishments. The milder the means taken to ensure such a result, the more effectual would they prove. He did not believe confidence would be restored by such measures as those now before them. As to the situation of the country, and the remedy most effectual for restoring a sound state of currency, he entirely concurred in the view taken in the very able speech on Friday, of the hon. member for Taunton; for which he thought that hon. member was entitled to the thanks of the country. One part of that speech which was particularly deserving of attention, was that which related to a mixed currency. To that part, the president of the Board of Trade seemed to have paid particular attention; and he hoped that the House would soon hear some proposition from the right hon. gentleman on that subject. Why not, he would ask, as we had such large importations of silver from South America, bring it into circulation as a part of our currency, instead of being obliged to purchase sovereigns at a premium of one and a half per cent; or, what was the same, to purchase them by Bank paper, while the bullion of the Bank was uselessly hoarded up? Its issues of paper were thus increased, and the country injured by it; when, if the plan of the hon. member for Taunton was adopted, we might have the two currencies together. Upon this subject he would not dwell at present, further than to express a hope that the House would soon hear some proposition respecting it from the right hon. gentleman. One word as to an argument used in support of the present plan. It was urged, that if we did not come to the consideration of the evils of paper issues when in a state of suffering, we could not be induced to do so in a flourishing condition of our trade 262 and commerce. This was the argument of the right hon. the chancellor of the Exchequer; and, no doubt, he would have the support of the gentlemen around him, and of many of those opposite; and they would agree that the measure could not be carried in a season of prosperity. The argument was a bad one. He would say—let well alone. He did not mean to say, that we were well now; but we were comparatively so, to what we should be if this plan were adopted. If he thought it would have the effect of remedying any of the evils under which the country laboured, he would support it: he felt convinced that it would have a contrary effect. But, was the evil without any remedy? He thought it was not; and that which he would propose would be, to let the issue of our small notes not be meddled with, further than the taking of security to the extent of their issues. He did not care what kind of security that might be; whether stock, Exchequer-bills, or any other kind. All he thought necessary was, that it should be efficient, and such as to give satisfaction and confidence to the public. To the substantial banker, this could be no inconvenience. To the man who carried on business to the extent of 300,000l. it could not be difficult to find security for the issue of his small notes. That security would tend to his own advantage; because, the greatest danger of panic and alarm in times of distress arose from the holders of the small notes. These were found, in most cases, to begin the run; and the alarm they created extended itself to the holders of large notes: but, if the payment of the former was secured, such danger would be altogether prevented. He would not trouble the House further. The sum of his remarks was this—that the proposition of the chancellor of the Exchequer would be ineffectual; that instead of allaying, it would tend to increase the alarm; that it had already been productive of some, and would be productive of still greater mischief.
§ Mr. John Smithadmitted, that the question was accompanied with consider, able difficulties, which made him pause seriously as to the vote he should give; but, after having heard the speeches of some gentlemen on that and the former evening, he must say, that those difficulties were removed, and that he was prepared to vote with government in support of the proposition before the House. 263 Before he entered upon the general question, he must say a few words as to what fell from an hon. member, who had condemned the issue of paper en masse. He did not mean to justify the issue of paper, more particularly the issue of small notes, to the extent to which they had been carried; but he would appeal to the experience of all those who were acquainted with our manufacturing districts, and ask, whether the issue of notes in those districts had not had a most powerful and vivifying effect? In seasons of difficulty, they were of great use; but he would not say that the power to issue them had not been abused, and that, in times of panic, the loss had not fallen with great severity upon the labourer, from the suspension of payments by country banks. An hon. baronet had said, that, with reference to the one-pound notes, the labourer, or small trader, had the option of taking or refusing them at his pleasure; or that, having taken them, he might at once go to the Bank and demand gold, or Bank of England paper, in payment. It was true he might; but here was the mischief which it was desirable to avoid. The labourer, or small trader, dared not, in general, refuse those notes when tendered to him. It was well known, that in the country towns, the bankers were for the most part men of some influence; that they were magistrates of the county. It was also well known, that their notes were the chief, if not the only, circulating medium in that particular town or district. What labourer or tradesman dared to refuse one of the bank notes of his own town? If he had no fears of any ill effects from the banker or his friends, a motive of self-interest would induce him to take those notes; for there were few or none others offered in payment. So that, in fact, he had no option but to take, and he dared not refuse—except, perhaps, in a period of general panic, when such motives as he had alluded to would not affect him, and when he would be governed by his fears alone. It was here that a great part of the mischief lay; and it was here that a remedy was required; for as the taking of country small notes was almost forced upon the poorer classes, they ought to be effectually protected, or the issues altogether restricted. He had long been of opinion, that this species of circulation had been productive of great injury to the poorer classes—an injury, the nature of which no man could contemplate with- 264 out the most painful emotions. For, what was the effect of the present small-note bill? It was, that any man, whether possessed of property or not, who took out a banker's licence, could issue one and two pound notes; and there were instances of persons who had taken out such licences, and become bankers, for no other purpose but that they might be able to issue notes to pay their own workmen. In proof of this, he could refer to what occurred in 1815, 1816, and 1817. It would be found, on inquiry, that numbers of individuals had taken out licenses as country bankers, who were so in no other sense of the word than that which he had described, and for the reasons which he had stated.—The question now before the House was one of very considerable importance. There was (and he regretted to be obliged to make the admission) a great deal of distress and alarm still in the public mind; and it would be bad reasoning, and would lead to dangerous results, to say that no alarm existed because none ought to exist. That it did exist could not be denied; and therefore it was that he felt the question before the House to be one which, at first, presented considerable doubts to his mind. Those doubts were, however, now removed, by some of the speeches he had heard; and he hoped that government would persevere in the measure they had proposed. He trusted that ministers would remember, that they acted under a grave responsibility, and that they were bound to provide that remedy which appeared to them most likely to protect the country from the evils which at present afflicted it.—He would now say a word on the correspondence between ministers and the Bank of England. If he might use a very common mode of expression, he would say he would lay a wager that the right hon. the president of the Board of Trade had nothing to do with the drawing up of the long statement sent to the Bank. He was certain that the right hon. gentleman, who understood every branch of commerce as well as or better than any other man in the country, could have had nothing to do with the production of a document which betrayed so much ignorance of what really was the state of the country, or at least the cause of part of the distress which it now felt. In the second paragraph of that paper blame was laid, in very plain language, 265 on the country banks, as being the cause of all the speculations of the last year. This was really too bad. What, he asked, had they done to merit so serious a charge as this? He begged most distinctly to deny the fact. He could say, for he knew the fact, that the respectable bankers of Manchester and Liverpool had given no encouragement to the speculations which had taken place in those towns. The plain meaning of the letter was, that the banks had lent themselves to support such speculations. This was incorrect. In those speculations which had made us the laughing-stock of other countries, and of each other, the banks had nothing to do. The language, therefore, of that paper was not appropriate, when applied, in a period of alarm, to a body of men who might have been imprudent, but who had done no injury—on the contrary, who had been a benefit—to the country. It was true, that some of the speculations had the effect of causing a greater importation of iron, of cotton, of silk, and other articles, than it was prudent to have on hand at once; but even if some of the banks had been parties to such speculations, or were the means of encouraging them, which, if true, was only to a very limited extent, still the banks as a body did not deserve the censure which the letter sent to the Bank of England had cast upon them. The bankers, as was justly said by Mr. Burke in one of his papers, were in a great degree the supporters of the prosperity of the country. It was not fair, then, to hold them up, at such a crisis as the present, as the authors or abettors of the evils which had come upon the country from an absurd and mischievous system of speculation.—With respect to the question of the alteration in the currency, on which so much had been said, he did not think it was a matter which should be necessarily mixed up with the present question. He would rather have it made the subject of a separate discussion—or that it should be referred to a committee, in the old constitutional way—instead of being thus incidentally, and he must say imperfectly, brought forward. One thing which he would wish to impress on ministers, was, that supposing government determined to pursue the present plan, he hoped it would be suspended for a short time, in order to ascertain the real condition of the country; though, as to the real object which was 266 intended, he would rather incur at once all the evils of an abolition of the small notes, than keep the country in a state of suspense as to what was intended; for, in his judgment, the principle of the measure was substantially and radically sound. There was one part of the subject, on which he had some little doubt; and he lamented that he had been compelled, by severe indisposition, to leave the House on Friday night before the right hon. the president of the Board of Trade had concluded his speech; and he regretted it the more, as he had not been able to make out what he had said. The point to which he alluded, was the opinion which some gentlemen had put forth so confidently, as to the expediency of having a gold currency merely. This was an opinion which he could not at all understand; for all other nations were satisfied with a mixed currency of gold and silver. It would be no difficult matter at present; at least it would, in a short time, be easily obtained in considerable quantities. As he was on this subject, he would state, that he had noticed that country bankers were not fond of issues of silver, not because they preferred the circulation of their own notes, but because they were much annoyed by the extensive circulation of counterfeit coin; and this evil was, in a great measure, caused by the imperfect state of our criminal code on the subject. Of this he would state an instance. Some time ago persons were going about with an immense quantity of counterfeit coin. It was carried about in a cart with a false bottom, and disposed of at fairs and markets, to the great injury of thousands of the poor, on whom the loss in such cases generally fell most severely. They were at length detected, and about 2,500 pieces of counterfeit coin were found in their possession. They were tried and found guilty, and sentenced to only twelve months' imprisonment. This kind of punishment, for a crime involving such serious evils, was wholly inadequate; and, unless the law in this respect was altered, it could not be expected that this evil would cease, if silver should be a part of our currency as well as gold. He might add, that the very beautiful coin of crown pieces, which was some time ago in circulation, had not been counterfeited in any one instance that he had ever heard of. The reason was, that this coin had an inscription round the edge, which it 267 was extremely difficult to imitate; but the fact was, that no such imitation had ever been attempted that he had heard of He mentioned this with a view of encouraging an attempt to introduce that coin again into circulation; and, at the same time, he would suggest the propriety of extending the legal tender of silver from 40s. to 5l., which would have the effect of making a considerable circulation of silver in the country. That this was wanted in many parts of the country, was well known. It was within his own knowledge, that within the last fortnight silver was so scarce in a manufacturing town, that a great many of the workmen were paid by orders on publicans and others who supplied articles of food and drink—a mode of paying the wages of labour, the injurious tendency of which it was unnecessary for him to point out.—He would now trouble the House with a few words on the state in which the country was at the present moment, in order to impress on hon. members the necessity of coming, with as little delay as possible, to some decisive resolution on the subject. The House were aware, that a very considerable degree of alarm existed in the public mind, since the meeting of parliament, on the subject of our commercial and mercantile embarrassments. That a very great degree of alarm and panic had existed before the parliament met, would not be denied; and, perhaps, it would have been more prudent in ministers to have made some inquiries as to the actual state of the country, before they put forth the statement contained in the letter sent to the Bank on the 13th of January. At the date of that letter, however, the public mind was comparatively tranquil—not that all cause of distrust and alarm had subsided, for there still existed considerable grounds for both. Not so, however, was it on the 2nd of February, the day on which the House met. There was then a renewal of the panic which had partially subsided, and he was sorry to say, that the alarm had continued to increase daily. Such being the present State of the country, he thought it was most important that the House should not delay bringing the question before them to an issue. The state of doubt and anxiety in which the public mind was placed, with respect to it, was almost incredible. Various reports were going forth as to what was passing, and what was intended. He had heard that day, that it was re- 268 ported and believed in several parts of the country, that the one-pound notes were to be altogether suppressed; and there were a variety of other rumours calculated to add to the degree of alarm already existing. These doubts and surmises, he hoped, would be put an end to by the decision of that night. He would rather witness the suppression of the small notes altogether, with all the inconveniences of such a step, than the continuance of the present state of doubt and suspense. In conclusion, he would repeat the expression of a hope, that ministers would go on with confidence, and endeavour to meet the evil by the best remedy in their power; and in every such practicable attempt, he was sure that no obstacles would be thrown in their way from the opposition side of the House.
Mr. C. Grantsaid, he entirely concurred with his hon. friend as to the importance of the resolution before the House, and the necessity of there being as little delay as possible in coming to a decision upon it. At the same time, he could not but feel somewhat surprised at the inconsistency of his hon. friend, in advising, in one part of his speech, that the measure should be suspended for a time, and in another, that the House should not adjourn without coming to a decision upon it. It was equally inconsistent in the hon. member to censure government for not having delayed some time longer, before they proposed the very remedy to which he now attached such importance, and now to call upon them to come boldly forward and carry that remedy into operation. He would admit, that ministers might be blamed for not delaying to propose any remedy, if by such delay it could be hoped the evil would correct itself; but, if that could not be expected, then it was their duty to come forward and show that they were alive to the subject, to frame their measure so as, if it could not cure the disorder, it would prevent its extension, and guard against its recurrence. It was impossible to avoid doing something on the subject, even though they might not succeed in affording an immediate remedy. He was glad to perceive that there were no objections to the merits of the proposed plan. The chief that he had heard were as to the time. One hon. member had said, that at such a crisis as the present it ought not to be introduced; another had 269 objected to its not having been Introduced before; and a third had feared that it would have the effect of an inconvenient diminution of the circulating medium. He did not concur in these opinions. He thought the time was proper; and, under the circumstances in which the country was placed, that ministers would be shrinking from their duty, if they did not grapple with the difficulties of the case as well as they were able. Sensibility for the distress which existed they all felt; but true sensibility, while it felt the evil, endeavoured, at the same time, to devise some means by which it might be averted. It was on this ground that he was anxious for the progress of the measure. They all acknowledged that great distress had existed; but it could not be denied that its situation was becoming better every day; and he did hope that, in a short time, public confidence would be altogether restored. But it was always found, that in recovering from a state of great and sudden depression, the country rose with even greater rapidity than it had descended. In this unhealthy action of the system, the paroxysm was as sudden and as violent by which we emerged from, as that by which we had fallen into, a state of commercial distress. What would be the consequence of the sudden change? The spirit of speculation would again take possession of men's minds, over-trading would follow, and depression would once more be the result. Now, he would ask, was it not the duty of the legislature to guard against such frequent and sudden revulsions in our system-—to prevent the overtrading of one period, from being the consequence of too sudden an ebb of our commerce in the succeeding? And, what more effectual course could be adopted than by removing at once the temptation to such over-trading, by taking away the unsound basis on which it was made to rest? The hon. member for London had complained, that this measure would not meet the evil, and he had objected to it on that ground. This was because the hon. member had not looked to what was the real object proposed. It was never expected that the plan now before the House would of itself be a relief to the immediate distresses of the country. Let the House see what was proposed to be effected by the resolution before them. It never was intended as a plan capable of meeting all the 270 exigencies of our situation. Neither was it expected, that it should embrace every improvement of which the state of our currency was susceptible. Let the House judge of it then, only by what it did propose to effect, and not by applying it to matters to which it was not intended to have, and really could not have, any direct application. With respect to the currency he would observe, that the suggestions thrown out by the hon. member for Taunton, were well worthy of examination. The subject had, for some time, been under the consideration of his right hon. friend, the president of the Board of Trade. Undoubtedly it did, on the face of it, appear rather a circuitous way of obtaining silver to obtain gold first; but that was a matter which should be left for discussion to a more fit occasion, and would be introduced by his right hon. friend in its proper time. He only adverted to it now, for the purpose of saying, that it was a point which was not intended to be embraced by the resolution before the House. Neither was it hoped that this resolution would effectually guard the country against those fluctuations, in both species of currency, to which the country might, from a variety of causes, be liable in the best of times. These were matters which could not be foreseen, or prevented, by any human prudence; and when they did occur, must be left to remedies which would be suggested by the circumstances under which they rose—The measure before them did not profess to deal with every evil which might arise in any state of the currency. Its object was simply this—to prevent the ruinous effects of a system of over-trading, to which temptations would be held out under particular states of our currency, if left unchecked. It was said by some hon. member, that there was a tendency in every species of paper currency to displace gold, unless its progress should be arrested by some check; and the great problem of the country at that moment was to provide some such check, which would operate by way of prevention rather than cure. One hon. member seemed to think that the convertability of paper into gold on demand, would afford this desirable check. In that opinion the hon. member concurred with those of many eminent men, and with that which was so ably stated in the report of the Bullion Committee, He (Mr. C. Grant) agreed as to the convert- 271 ability of paper to gold. This, perhaps, was the general opinion at that time; but it must be admitted, that the science of political economy was still almost in its infancy: and that further investigations were daily throwing new light on the subject; and that we were as yet in a state of experiment with respect to it, as compared with what we might be in the course of time. There were some who thought that there was a kind of preventive check to the displacing of gold, by which the approach of the evil might be known; and the rate of exchange, as regulated by our issues of paper, was said to be of that description; but this would operate so tardily as to admit of the evil going to a great extent before it operated as a remedy, Besides, the opinions of those by whose will paper issues were regulated might differ as to the effect of those issues on the rate of exchange; or they might think that they had a sufficient quantity of gold in their coffers to allow them to continue those issues longer. He could easily conceive, how, under such circumstances, the rate of exchange against us might be allowed to proceed to a very injurious extent, before the remedy was called into effective operation. Some hon. gentlemen had the other evening given it as their opinion, that the present state of things had been brought about by over-issues: others had attributed it to overtrading. For his part, he conceived that both these causes had operated simultaneously in producing them, and that, in fact over-trading had created over-issues; and, in turn, over-issues had created overtrading. It had been argued, that the immediate convertability of paper into gold would be of itself sufficient to keep the currency of the country in a healthy state; but this, by experience, had been found to be far from being the case; indeed, the mere power of this convertability alone operated too tardily, to give a sufficient check to the recurrence of evils like those under which the country was at present suffering. This power of convertability might, indeed, serve in part to remedy the disaster after it had occurred; but as a preventive, it would have but a very weak effect; and surely it was better to adopt such measures as would be most likely to keep off the calamity altogether, than such merely as might in part relieve us from it after it had fallen upon us. When it was considered amongst what class of individuals 272 the circulation of one and two pound-notes chiefly prevailed, it must at once strike every one what a dreadful state of suffering and misery must inevitably be produced by the failure of the issuers of them. Amongst the higher classes of society, such an occurrence might, and indeed frequently did, reduce individuals from a state of affluence to a mere competency; but, amongst the poor and labouring classes of the community, who were the principal holders of these small notes, its effects were to reduce them from poverty to absolute beggary and starvation: besides, whenever a panic did take place, the poor man was the first to take the alarm, and by his apprehensions contributed to spread the dismay, which had a very great tendency to bring about the evil he apprehended. The more wealthy had better means of satisfying themselves as to the stability of their bankers; and it rarely occurred, that with this class the panic originated.—Another of the causes was, that the quantity of gold in circulation was gradually reduced to a point far below that which was adequate to the emergencies of the country. Now, if you can meet these two circumstances—if you can extricate from panic the great bulk of the consumers, and secure a fund of gold in the kingdom, sufficient to maintain public confidence—if you can devise a measure that will reach these two points, great progress would be made towards diminishing the frequency, of the recurrence of the existing distress; and when it did recur, of abating its violence. If he were not mistaken, the proposed measure, if carried into effect would introduce into our system of currency this corrective and renovating principle—it would remove the apprehensions of that class of the people who were most liable to danger, and would create and maintain a fund of gold in the country, so-palpable, that even should a panic seize the lower classes, the better-informed ranks of the community would know there was sufficient gold in the kingdom to-meet all exigencies, and would thus prevent those alternations which, when they occurred, almost disposed men to fling away all principles of currency whatsoever. This was his view of the measure before the House. He believed it had been urged against the adoption of the present measure, that it would be an arbitrary interference by the legislature with what they had no right to interfere with at all; but, 273 if this was a question that could be decided by the weight of authorities, great names might be adduced in favour of the adoption of the plan propounded. He was aware that a distinguished individual, now no more, the late Mr. Ricardo, was opposed to the principle; but if that eminent writer had witnessed what had occurred, there was great reason to believe he would have changed his opinions. Adam Smith approved of the restrictions now proposed, and suggested the plan, which, he trusted, was about to be carried into execution. His principle was, that between the issuer and consumer, the medium should be gold—between dealer and dealer, paper. Mr. Horner, in his early publications, had declared opinions hostile to this restriction; but in the course of the examination before the bullion committee, he found reason to change those opinions. The same views had been supported by the high authority of Mr. Tooke, and amongst the highest names he would place his right hon. friend the president of the Board of Trade, whose presence restrained him from expressing all he felt to be due to his judgment. Besides, this principle had already been recognized and acted upon by the legislature; for at one time ten shilling, indeed five shilling notes, were in circulation in Scotland; but these had been put a stop to by act of parliament. Should there then be any insuperable objection on the ground of arbitrary interference on the part of the legislature in the present case, such objection ought to have had equal weight when the act for suppressing these ten and five shilling notes was proposed. The United States bank, which had had considerable experience in these matters, had been obliged to have recourse to a similar measure of restriction. The right hon. member said, however, that he did not wish to justify this measure as being no departure from principle (although in his opinion, it might be easily justified on that ground); for the securing of such great benefits, and the averting of such dreadful calamities as this measure was calculated to effect, formed an ample justification to the legislature for interfering some little with natural liberty. In every wise system of currency it was a primary element, that paper should be convertible at pleasure into a metallic currency, and that all small payments and the great bulk of the circulation, should be in gold. It had been urged in opposition to this measure, 274 that it would have the effect of reducing prices to too low an ebb, and that, in the present artificial state of the country, and burdened as we were with debt and taxes, it would render our finances insufficient to meet our exigencies. For his part, he anticipated no such calamitous consequences We had only to place our currency on a firm and solid basis; we should thereby speedily restore confidence, and the industry, wealth, and resources of the country would instantly be called forth, and would shortly disperse the cloud which at present hung over us; whereas should we continue to go on upon the old system, the alarm would increase, and, increasing would necessarily bring fresh misery along with it. Public credit, instead of recovering, would sustain a fresh shock, and there was no knowing where the evil might ultimately end. For these reasons, he should give his hearty support to the resolution proposed by his right hon. friend.
§ Sir John Newportwished, that the hon. members who were adverse to the measures introduced by the chancellor of the Exchequer, with a view to prevent the issue of small notes, to consider dispassionately, all the evils which it produced. An over issue of them entailed upon every class of the community, evils, which not only affected the class who might be most prepared to meet them, but even the lowest class—those who should be the peculiar object of their care. They should consider how they would be circumstanced, if they were left with a currency, which was, at all times, liable to the panic lately witnessed in this country, and to be operated on by every rumour which malignant individuals might be disposed to propagate. As affecting the country to which he belonged, no country ever suffered so much. He spoke feelingly on the subject, having been himself concerned with many of his most intimate connexions in banking there; and from the knowledge he had acquired of the system, he considered the issue of small notes, not only destructive to the person who received them in payment, but injurious, eventually, to the bankers who issued them. It might be said, that no evil could arise, where notes of this description were issued by solvent bankers. He would show how soon the most solvent bankers might be drawn into the miseries incidental to an over issue. A solvent banker, for instance, acting prudently for a series of years, finds, started up in opposition to him, a 275 bank with little or no capital. It of necessity pushes out all the paper it can at first: the banker wonders how long the public can support men, who should not be considered trust-worthy. But by-and-by, he experiences a cessation of his own business, and, whilst one from design issues paper, the other, really solvent, is, from necessity, obliged to furnish capital, almost to every needy adventurer who applies for it. The paper once out, the solvent and the insolvent are alike liable to all the agitation and alarm which a sudden run brings with it, when that alarm, in many cases, is produced without any foundation. It was said, that the commerce of the country, or a portion of it, could not be carried on without such a currency. If it were so, he felt the evils to be of such a grievous nature, that if it was put to him as an alternative, whether such a currency should be continued, or a portion of the commerce abandoned, he would say, let the commerce be abandoned. He believed that such an opinion was most fallacious, and that the commerce of this or any other country could be carried on without those artificial means. It had been said, that this was not the time for such a change, and an hon. friend near him, had even expressed a wish that there might be a delay for some weeks, to give time for a better consideration of the subject. Now, that was, of all things, what he most deprecated. It was painful for him to differ from that hon. friend, but he must say, that nothing was likely to be so injurious as any postponement of the decision to which he hoped the House would come with the slightest possible delay. All parties were prepared—their minds were now made up—that was the very lime to bring the question to issue, and at once put to rest all the doubt and indecision, which had agitated all the transactions of society. He knew well the danger of this state of things, to that part of the kingdom with which he was more immediately connected, and he therefore most earnestly wished it to be put an end to. Since the time that the small banks failed in that country, there were no small notes, except those of the Bank of Ireland. This system, he repeated, ought to be put down; and, as far as his native country was concerned, the present was the best and safest time. He did not, of course, mean that it should be put down hastily and abruptly, but at a fixed period. Could any time be chosen more fit than the present, when all the 276 country bankers had drawn in their notes, in consequence of the alarm that prevailed? Once more allow every petty provincial banking establishment to deluge its districts with one-pound notes, and we should have the same ground to go over again—the same distress—the same panic—before we could effectually put down that issue, which must eventually prove the destruction of the country. He begged pardon for having troubled the House, but he felt called upon, from the situation in which he happened to be placed, to state his opinions upon the subject; and he could only add, that the luminous, and statesmanlike speech of the right hon. gentleman who preceded him, had left him nothing to add upon that side of the question, which he felt it to be his duty to espouse.
Mr. Alderman Heygatesaid, that the present question was not whether this was a prudent or an imprudent measure, but whether this was the proper time for interfering with the most delicate of all things—the currency of the country. Nothing had caused more astonishment in his mind, than the first sentence in the letter recently sent by the first lord of the Treasury, to the Bank, in which he found it boldly stated, that the panic was over, and that the pecuniary affairs of the country were once more flowing from their wholesome accustomed sources, and running through their wonted channels. For his own part, he was convinced that the panic had been increasing ever since parliament met, and that in consequence of the long continuance of this panic, the currency of the country had been reduced to so low an ebb, as to be scarcely sufficient for the carrying on of the commercial transactions of the country. The paper issues were now as much contracted as the most ardent admirer of the bullion system could wish: gold was flowing into the country as fast as possible; and it would necessarily continue to do so, for the country was full of merchandize of all sorts, which had been paid for, and which, when exported, must unavoidably in a short time bring back gold. But, at the present moment, the currency of the country was not sufficient, and in consequence of such insufficiency, there was a stagnation in all kinds of business. Ought the currency, then, at this critical period, to be still further diminished? Was it wise in the government, when such was the state of the pecuniary affairs 277 of the country, to issue a manifesto to the Bank of England, reflecting on all the country bankers in the kingdom, and threatening to compel them to withdraw their one and two pound notes from circulation, in direct violation of the understanding in 1823? He was no advocate for the country bankers, or for the system of banking which had prevailed for the last fifty years, to the disgrace of the country. There could be no doubt that a metallic was much preferable to a paper currency, and yet this latter currency had been strongly recommended by Mr. Pitt, in 1797; but he must say, that much obloquy had been cast on country bankers, when they were not the parties who deserved it. This class of individuals had never generally objected to the plan of giving deposits as a security for their notes. The dislike to this measure amongst the more numerous and respectable portion of them arose solely from the clumsy mode in which it was proposed to carry it into execution. If it had been proposed in a practicable manner, there would have been no difficulty in effecting it: for if some few of the bankers had been offended with it, and thrown up their business, others would have been readily found, to have supplied their place.—The hon. member proceeded to observe, that this question had been treated on far too narrow grounds. It had been discussed as if it merely related to the profits of the bankers; whereas it concerned the whole nation. It should have been well considered, whether the country could at present afford to provide eight or ten millions of bullion to supply the paper currency, which had been and would be withdrawn from circulation to that amount. He believed several theorists, who had written books on this subject, had stated, that it might be done, and that it would be a beneficial measure; but scarcely any of those theorists or book-writers agreed with one another, or even for two years with themselves. Mr. Tooke differed from Mr. Ricardo, and from Mr. M'Culloch, who had come down from heaven to illuminate us on the subject of political economy; but, in truth, there was no reliance to be placed on these theorists; all their schemes were visionary or impracticable. Should this resolution be passed—and he had no doubt it would be—the blessed effects of it would soon begin to discover themselves; but it would ill become hon. gentlemen, who were now 278 receiving the speeches of ministers with cheers, hereafter to complain of them. If this resolution should pass, every country banker must instantly begin to call in his outstanding notes, and to prepare himself for the state of things which was to take place at the expiration of the three years. What had been the conduct of ministers on this occasion? Notwithstanding parliament was sitting, they had issued an order to suspend the issue of any more one or two pound note stamps; thereby disregarding the licence of the bankers, breaking the law, and violating the principles of the constitution. When Mr. Pitt took upon himself to act without the authority of parliament, there was some urgent necessity, such as a threatened invasion, for his so doing, neither was parliament sitting; but, as soon as it was assembled, he came down to the House, and explained the circumstances which compelled him to adopt the summary measure he had had recourse to, and to pray for an indemnity. But, what was the urgent necessity for this extraordinary proceeding on the part of the ministers on the present occasion? Why, forsooth, it was to prevent the direful consequences which would have ensued from a few bankers issuing a few one or two pound notes! To avoid this dreadful disaster, individuals had been deprived of their legal rights, and the constitution of the country had been grossly violated. He should wish any practical man to be asked, what were likely to be the effects of this resolution. It was evident that it must compel the immediate withdrawing from circulation of all the country bankers' notes.—He would now proceed to another branch of the right hon. gentleman's scheme; he meant the establishing of joint-stock banks. If the right hon. gentleman had forty or fifty joint-stock banks ready to come into immediate operation, so as at once to fill up the void which would be created by the destruction of all the country bankers, he should not feel such decisive objections to the measure; for, although it might bear very hard upon, and be most unjust to an unoffending class of individuals, the country bankers, still it would not be injurious to the public at large; as it would make little difference to them, whether they got their exigencies supplied from an individual or a joint-stock bank. But, it must be recollected, that a considerable interval must necessarily 279 elapse before these joint banks could commence their operations; and what was to be done in the mean time? During this interval, the misery and embarrassment of the country must inevitably be increased to ten times the extent that they prevailed at present. The worthy alderman here proceeded to draw a lamentable picture of the times, and read to the House a letter which he had that morning received from a person of undoubted integrity, residing in a village in Lancashire where no one or two pound notes were in circulation, and which was to the following effect:—"This part of the country is in a state really dreadful; robberies are innumerable; the people are half starved; failures almost universal; the distress of the poor is not to be conceived; thirty families have been thrown on the parish in one week, and during the last six weeks things have been getting worse and worse." He did not make these statements for the purpose of annoying ministers. He would at any time rather support than oppose them: he had supported them when it was not popular to support them, and when a vote was worth something [a laugh]—he did not mean that he bad got any money by it; he did not want it. He opposed the ministry on the present occasion, because he felt convinced that their scheme, was replete with bad consequences. It would compel the country bankers, who had made advances to their prudent and industrious neighbours, immediately to call them in. This would not be done harshly on the part of the bankers, but it was impossible that a country banker could, in the present state of the country, call in 100l. without throwing three or four persons out of employ; for as no sales of goods could be effected at present, the manufacturer must withdraw the money to pay the advance from the capital which he would otherwise have laid out in his trade.—There was another great objection to the establishing of the joint-stock banks. A rivalry would immediately commence between them, and they would deluge the country with their paper. The measure would also have the effect of causing all the respectable country bankers to give up their business; and those only would remain to whom the winding-up of their accounts would be formidable, and who felt conscious that their circumstances were such, that they would lose their consequence by ceasing to be bankers. But, at any rate, if this 280 joint-stock plan was to be adopted, it would be but fair that the present country banks should have due notice, and a proper period allowed them, before these companies should be permitted to commence their operations. He conceived that the country banks deserved protection. For he was of opinion, that there were other parties to whom the recent convulsion in the commercial world ought to be attributed. It was, however, not impolitic in the government, when it had once got into a scrape, to attribute that misfortune to those who, from their situation, were incapacitated from saying much for themselves. He was well aware that there were but few people who entertained the sentiments which he did on this question; and that was the very reason why he was anxious to state them to the House. What, he would ask, were the chief causes of the distress which now prevailed? He had no hesitation in saying, that one of the causes of the late panic was produced by the operation of the act which was passed in 1819, for the resumption of cash payments, and which was generally known by the name of Mr. Peel's Bill. It was the fashion at the time to praise that bill; and he well recollected that it was predicated of it, that it had settled the question of currency for ever. Now, it was his opinion at the moment—and he had acted upon that opinion by forming one of the minority who bad divided against it—that it was one of the most hasty measures that had ever been passed by any grave deliberative assembly. It was ushered into the House by a speech, to which he had listened with delight and attention—for refinement and eloquence always commanded them—but which dealt in many topics which had no connexion with the subject matter in debate, and utterly neglected those which bore upon it. They were told, that they were then returning to a reformation of the coinage, equal to that which had been effected in the reign of queen Elizabeth. But, though such was the language then held out to them, not one word was said about the 800,000,000l. of debt, under which the country now laboured; not one word about its immense load of taxation, its exchequer-bills, its navy-bills, its treasury-bills, and its various other bills, all of which were unknown to queen Elizabeth. These omissions would have been of little consequence, had it not happened that these slight differences in the relative 281 situation of the country in the present time, and in the time of queen Elizabeth, had altered the appearance of the whole question.—It was said, that other nations, and especially France, had a currency of gold and silver; and it was thereupon asked, why this country should not have a similar currency too? The reason was evident. We had expended our means. In 1793, we had engaged in a war, which was called just and necessary, but which he was not certain that he should have supported had he been in parliament; and we had subsidized, during its continuance, every power in Europe, to fight our battles against the French republic. We had sent our gold out of the country day after day, notwithstanding the warnings which the Bank had given to Mr. Pitt, of the evil which it must eventually occasion. Mr. Pitt had said, that it was no matter, as it was absolutely necessary to save the country from the dangers which environed it. In the meanwhile, what was the conduct of France? Her governors were making her friends at one time, and her foes at another, defray the amount of her war expenditure. Her armies were plundering, in turn, every country which they visited, and were bringing back gold to it in enormous quantities. If the plan which Mr. Ricardo had proposed had been adopted, it might, perhaps, have been practicable to have resumed cash payments after the lapse of some time; but, to resume it immediately, and to persist in the resumption of it, was as impracticable as to expect a man who had reduced his income from 5,000l. to 500l. a year, to continue long that rate of expenditure. The bill of 1819 professed to bring us back to the standard of our ancestors. But, in his opinion, it did no such thing. On the contrary, it raised that standard considerably. Indeed, no man could doubt it, who saw the manner in which our gold coin was now exported to the continent, on account of its extreme fineness and beauty. The precaution which the hon. member for Taunton had suggested the other night, and which was then so much lauded, of guarding against the fluctuations of the currency by adopting a double standard, was then generally scouted and ridiculed. In short, every precaution which could have secured the Bank and the public was neglected as superfluous; and it was thought that the House had only to pass certain high-sounding resolutions, in the name of the Commons of 282 England, to bring back the currency to a sound condition. The bill founded upon them, it was asserted, would place the country in eternal peace and prosperity; and certainly that eternal peace and prosperity did continue till last year. But then an alteration took place in the prospect of affairs; and, what was it that produced it? Not the issue of country-bank notes; for the difference in the amount of them was but trifling, and even that difference, such as it was, was ascertained from the most fallacious of all criterions—the number of stamps issued. It was impossible, in the first place, to know how long the notes of bankers circulated; and then, nothing varied so much as the number of stamps issued by them at different periods. At one time a great, and at another time a small number were stamped. In seasons of adversity, when the circulation was diminished, a banker had not occasion for new stamps; but, in seasons of prosperity, when his notes were in demand, he was obliged to use a multitude of fresh stamps. But, suppose that the country bankers did increase their circulation to the amount stated by the right hon. gentleman, they had an excuse for what they did, because they did not know that they were doing wrong. The Bank of England had likewise increased its issues, and, as he thought, unwisely and improperly; for the quantity of paper in circulation had certainly an effect on the exchanges; though not to the extent which the bullionists contended. The Bank of England, he said, had increased its issues, and the extent of that increase might have been ascertained by the returns, which it was obliged to make periodically to that House. But, the increased issues of the country bankers could not be ascertained, either by the public or by each other; so that an individual, in issuing notes to supply the circulation of his own immediate district, might not be aware that by adding to the notes issued by other individuals in a similar situation, he was causing a glut of paper, which it was now said aggravated the misery of the country.—But, with regard to the increased issues of the Bank, he had one remark, which he conceived important, to make. Government had seen them, and had not remonstrated against them; at least he inferred so from the fact of their having made considerable use of them. They sold to the Bank the "dead weight" as it was called, and by so doing gave the Bank an opportunity of 283 sending forth an additional issue of its notes. Why had the government resorted to that scheme? Because a cry had been raised throughout the country against the weight of taxation; and they saw no other way of getting rid of it. It was his opinion, that the public at large had received considerable benefit from that issue. It had led to a reduction of some of the assessed taxes, and also to converting the five per cent stock into four per cent stock, and the four per cent stock into 3½ per cent stock. He believed there was some sense in this argument.—The House would further observe, that the government had entertained some fear that it would not be able to pay the dissentients to their plan of reducing the different stock, and had therefore asked the Bank, whether it would pay them for it. The Bank agreed to do so; and he believed had done so to the amount of six millions, which occasioned another extensive issue. The House would likewise observe, that the government reduced the interest on Exchequer-bills to 2¼ per cent—a circumstance which, combined with the issues of the Bank, had driven all the gold out of the country. All persons who held these bills during the war, when they found that they could no longer receive the high rate of interest which they had formerly received upon them, engaged in foreign loans, and risked their capital in the various wild projects which rose up, one after the other, with unexampled rapidity. If he were asked to lay his hand on his heart and to say, what he believed to have been most instrumental in producing the late rise in prices, and the numerous schemes which had been foisted on the credulity of the public, he should answer, the reduction of interest on Exchequer-bills; and he now said, that the wisest thing for the government to do was to pay on the unfunded part of their debt a rational interest. He should, perhaps, be told, that by that reduction of interest a saving of 200,000l. or 300,000l. had been effected to the country; but, allowing that to be the case, he did not conceive it to be of sufficient advantage to counterbalance the evils which it had created. He recollected, that at the time when all these reductions were effecting, the right hon. gentleman opposite was holding out to the country, that the prosperity of which he boasted so much was founded on a solid and substantial basis. That declaration, coming from so high a quarter, had ex- 284 cited a confidence which would not otherwise have existed among the dealers in shares of the several joint-stock companies. The repeal of the bubble act increased that confidence; as did the vote which two or three of the ministers gave in favour of some of the new companies; especially of that which went to erect new docks where no dock at all was wanted. He thought the conduct of ministers in voting for such measures very reprehensible; and the remarks which so humble an individual as himself had made upon the subject, had had the effect of inducing the hon. Secretary for Foreign Affairs to leave the House without voting. That confidence was still further augmented by the circumstance of the right hon. the President of the Board of Trade having become president of a company for the breeding of silk-worms—very innocently he had no doubt, and without any interested motives—and by the daily annunciation in the newspapers, that several of the ministers patronized other schemes for the improvement of the national resources. Conduct like this could not fail to produce an effect upon the country; and he therefore thought that when they were discussing the cause of difficulties like the present, and were laying all the blame of them on the country bankers, they ought to reserve a little share of it for those who had not turned the mind of the public in the proper direction, when they were enabled to do so, by their talents, their eloquence, and their information. After pursuing these topics at considerable length, and remarking, that two schemes had been proposed either as a remedy for the present, or a preventive of future distress; namely, the substitution of a gold in lieu of a paper currency, or the compelling bankers to deposit security for the notes they issued—the worthy alderman proceeded to ask, whether the present was the time for carrying either scheme into effect? He thought it was not. The country was not in a situation at present to bear the operation which would restore it to health and prosperity. Before either measure was attempted to be carried into execution, the government must restore the confidence and revive the credit of the country. There was no occasion for hurry. Delay would do good, and precipitation would certainly occasion mischief. If the House would let it go forth to the country, that it was not at present prepared to destroy 285 every thing relating to country banks; that it was willing to suspend its plans; that it would appoint a committee to examine, and would allow things to get cool again before it proceeded to legislate, it would do all that could be expected from it in the present emergency; and yet, even a determination so to act would be adopted too late. They might pass what resolutions they pleased that night—they might carry it with as high a hand as they pleased—they would nevertheless soon be compelled to retrace their steps; as such a convulsion would result from them as they were not prepared for. All men of sense and information viewed the situation in which the country was placed with apprehension and alarm. They were placed in circumstances in which talent and refined wit and eloquence were not only not calculated to do good, but were even likely to produce harm. They were discussing a dry matter of business, which affected the comforts and well-being of every man in the nation. Gentlemen ought, therefore, to consider that they had a serious duty to perform. It might be true that government had warned the country of their folly in embarking in these speculations; but it was not less true, that it was the duty of the government to protect its subjects from their errors when they had once got into them. Let them abandon theory, and look to practical experience. If they did not, this old country with all its artificial relations of society, would be torn entirely to pieces. Let them pursue their principles of free trade but a little further, and they would drive every bit of gold out of the country. Free trade between countries where there was a reciprocity of interest to support it, might exist with benefit to both parties; but, free trade between countries which had nothing in common, of which one was sinking under a weight of taxation, and the other was almost untouched by it, could not exist without enriching the latter country at the total ruin of the former. If government would carry the principles of free trade into practice, it ought to commence by establishing a free trade in corn. It knew, however, that it could not establish such a trade; neither was he sure that such a trade ought to be established. In saying this, he knew that he was going against all the doctrines in favour of cheap bread, which were so popular, at the eve of a general election; but it was. impos- 286 sible to deny that if they had bread at a cheap rate, the poor lands must be thrown out of cultivation; and if they were thrown out of cultivation the agricultural population would be thrown out of employment; and if they were thrown out of employment, where were the manufacturers to find a vent for their different manufactures? He knew that the political economists saw no evil in such a state of things: they had no objection to turn the agricultural labourers into mechanics, and the 'squires and the clergy into drapers and tailors, if profit were the result of the conversion. Profit was the perpetual burden of their song. If profit could be ultimately obtained, they overlooked the misery which was created in the interim. So long as they had profit before them, it mattered not whether all the aristocracy, clergy, and gentry of the country were turned topsy-turvy, and all the relations of society destroyed in one general convulsion. The country had grown great by the wise and cautious measures of our forefathers. He trusted that it would adhere to the plan upon which they had achieved its past and present greatness. If it did so, it would go on prospering and to prosper; and if it did not, it would sink, he was afraid, day after day, into deeper ruin. He implored the right hon. the Secretary for Foreign Affairs, to employ his great talent and extensive information in the investigation of this subject, to trust to his own goodness of heart, which he knew to be most excellent; to give fair play to his own admirable understanding, and to look at practice rather than at theory. If he did so, future generations would hail him as the benefactor of his country: if not, he would plunge it into a sea of troubles, out of which he might endeavour, but in vain, to extricate it.
Mr. Secretary Peelsaid, that in immediately following the hon. gentleman who had just sat down, he would endeavour to take advantage of his precept, by confining himself as much as possible to the subject under the consideration of the House. He could not, however, forbear expressing some surprise that the gentleman who had uttered that precept had himself so far departed from it as to introduce to the notice of the House a bill which he had formerly brought under its consideration; and that the hon. gentleman in adverting to that bill, had dwelt rather upon the speech which introduced 287 it, than upon the measure itself. He had spoken, however, in such flattering terms of that speech, that he could easily forgive the hon. member for having noticed it, irrelevant even as it was. He would not only obey the precept, but he would improve upon the practice of his great preceptor, by not saying one word of queen Elizabeth, or upon any other of the variety of topics to which the hon. gentleman had adverted, and which seemed to give him so much pain. The hon. gentleman had chosen a wide field for discussion; but over that extensive field it was not his intention to follow him. Some part of his representations as to the distress of the country, and its commercial embarrassments, he regretted he was obliged to admit. The continuance of them, in a considerable degree, he admitted also; and further he regretted, that he could not accurately see the end of them. He might also commence his address, by expressing his entire conviction, that if the House would give effect to the measure of his right hon. friend, they would discover, that those causes, which had been alleged by some as the operating causes of the present distress, were not in fact those to which that distress was properly attributable. He might further declare his entire conviction of the absolute necessity, on the part of the House, of turning their attention to the state of the currency of the country; and, notwithstanding what had already been observed on that subject, notwithstanding the doubts and predictions of some hon. gentlemen—he should not be deterred from exhorting the House, immediately to turn its attention towards the subject of the currency. He would ask, with the utmost confidence, whether it was possible for any man, who looked at the facts and arguments already produced in the course of this discussion, to hesitate for a moment upon the question, whether he would permit the currency to remain in its present state. For a period' now of nearly thirty years had that currency stood upon an insecure and a defective basis; and with every disposition to protect the interests of the country bankers, he must claim the right of examining with perfect freedom the different bearings of this important question. In doing so, he could not but express his astonishment at the feelings entertained by some gentlemen with regard to the expressions: of his right hon. friend near him, and 288 of his noble friend in another place. Those expressions were not, as was seemed to be supposed, directed against the individuals concerned in country banking, but against the system itself—a system which was alone responsible for the evils that flowed from it, and which, therefore, justly deserved the language which had been applied to it. If his right hon. and noble friends, instead of saying generally, that the spirit of speculation was fostered and encouraged by the system of country banks, and the conduct of country bankers, had said, in so many words, that he hated them as scandalous, that he execrated them as abominable, then it must be admitted that the phrases employed were hardly justifiable. The whole course of one hon. gentleman's speech seemed to have been directed to raise the imputation that the government had been industriously employing itself to blacken the character of the country bankers. Now, he must beg leave to disclaim that imputation in the most distinct manner. He, for one, entertained the sincerest respect for many of the gentlemen engaged in banking business in the country; he firmly believed there was as large a portion of honourable men in that class, as in any other; but, when he said so, he still claimed the privilege of a member of parliament to speak of them and of their conduct, in the same free manner as he would speak of the conduct of any other men exercising public functions, or filling private stations, whose duties and responsibilities almost amounted to public functions. What, he would ask, were country banks? At present there were eight hundred of these establishments in the country, issuing notes, which formed a considerable portion of its circulating medium. In Macpherson's Annals of Commerce, when speaking of the distresses in the year 1793, and considering the nature and the effect of country banks, he stated, that it was uncertain to what their exact number amounted, but he computed them at 288. Since that time, that number had greatly I increased; and at the present moment they amounted to no less than 800, issuing, as he had said before, notes that formed the circulating medium of the country, and in which the active labour and industry of the country was paid. Respecting these: banks, the hon. member had stated a fact, in which he found a strong presumption, that the present system of country banks was imperfect. That hon. member had 289 declared, that the issues of country bankers could hardly be estimated or foreseen; since one country banker might make an over-issue, as he could not know to what extent the issue was made by another. That fact seemed to have been stated by the hon. member as a vindication of the country banks. But that vindication was in truth not their blame, but the blame of the system, and of the system alone. The hon. member for Staffordshire had said, in the beginning of the debate, that the, increase of the issue of bank notes was not to be imputed as a fault to the country bankers, for it was the tendency of bank notes to increase with the increase of prices. He agreed with the hon. baronet—the fault alluded to was not the fault of the country bankers; it was not the fault of individuals; but of the system which they were engaged in conducting—a system that almost compelled them to assist in creating the evils of which the country now complained. That hon. member's proposition, however, did not go far enough; for he might have added, that not only would the increase of notes follow the increase of prices, but that they would decrease with the same rapidity, when prices fell; so that the tendency always existed in the system, to aggravate the evils of the country. It would act as a stimulus to speculation when the excitement was at its height; and when the weakness always consequent on fictitious excitement followed, it would increase that weakness, and add to the extent of the evil. These country banks, as they proceeded on their present system, contradicted that beautiful principle of mechanics on which the most powerful engines were constructed. In mechanics, when two powers were to be employed in order to attain one object, the principle on which they were united was this, that when one was contracted, the other would expand—when one was employed to disadvantage, the other would exert its utmost force, and thus supporting each other as each required support, they rendered the desired object sure of attainment. The country banks did the reverse of all this: they first increased the tendency towards the evil, and afterwards increased the evil itself. Hence it followed, that what formed the vindication of the individual, also offered the strongest ground for the condemnation of the system under which that individual acted. One argument of an hon. member had alarmed him; for it seemed to go to 290 the indefinite extension of the present system. It had been said, that the labourer was safer with the one-pound note than with the sovereign; and that when he received his note he ought to go to the savings'-bank, and there deposit it. Surely, when the labouring man was surrounded, as many must now be, with extreme distress, in consequence of the recent failures of country banks, it was not an answer to him, to say, "You are not to be pitied; the loss is all by your own fault; you might have lodged your money in a savings-bank," when, perhaps, the savings-bank was twenty miles distant from the place in which the poor man lived?—But, these were topics not immediately connected with the question before the House; he would, therefore, leave them, and confine himself strictly to it. He would request the House to consider what evils country banks had produced in the time more particularly within their own memory. And here he would beg the House not to suppose that he was inclined to overstate the evil—attributable to the circulation of the one and two pound notes of the country banks. All he meant to say was, that the tendency to speculation was increased by them, and that that circumstance, combined with the fluctuation of prices which it occasioned, was productive of real inconvenience in all cases, and of positive misery in many. It was easy to attack the measure of his right hon. friend, and to say that there was no remedy for the present evils in his resolution. Why, the resolution did not pretend to provide a remedy; it only tended to destroy that cause, which, added to excessive speculation, had produced so many distresses. The hon. member for Taunton, in criticising the resolution, had said, that it was merely skin-deep—that it was milk and water—that it was totally nugatory—that it was founded on vain principles—that the house was on fire, and that it was necessary to provide for the safety of those who were trembling in the garret. Now, he had listened with great attention to the means which the hon. member had proposed to rescue the people in the garret; and he found that the only ladder for escape which the hon. member offered to them was one which was liable to the very same exception which had been made against the measure proposed by his right hon. friend, the chancellor of the Exchequer. He was now alluding to the proposal of the hon. member for 291 Taunton to make silver a legal tender to any amount. One half of the hon. member's speech went to prove that that was an important measure, and worthy of serious consideration. He believed that it was so; but still it was as little calculated to give immediate relief as any proposition which could be mentioned. When he said that the hon. member's suggestion was an important one, he only meant that it deserved consideration. He was of opinion, that, if adopted, it would be necessary to accompany it with a measure to guard against any fluctuation in the price of silver; that it would be necessary to revise it from time to time; so that if there should be an increase in the quantity of silver, the man who had contracted an obligation in gold should not be allowed to discharge it in silver.—He was going, however, to take a view of the evil in which this system had placed us, when he was led, unintentionally, into another digression. He could not help thinking that if, in the year 1793, a set of banks had been established in this country, on the system of the Scotch banks, it would have escaped the danger in which it was then involved, as also the calamity which now impended over it. Now, when the hon. alderman referred to the maxims of our ancestors, and conjured the House to follow them strictly, he wished he would himself abide strictly by the advice he had given to others. It would not be an unapt illustration of the subject to refer to the state of the banking system in 1793. What was the number of failures which had taken place among country banks in that year? Why, not less than 100. In Yorkshire there were 12 commissions of bankrupt against country bankers; in Northamptonshire 7; in Lincolnshire 7; in Sussex 6; in Lancashire 5; in Leicestershire 9—all issued in the year 1793. And these commissions, it must be remembered, by no means showed the number of failures; because, by means of compositions, and in various other ways, the concerns of many of the bankers who were unable to go on were arranged so as to avoid bankruptcy. But, since these were the only data afforded him towards ascertaining any thing like the amount of failures, he would state the number of commissions issued for some time after the year 1809. In 1810, it appeared that against country bankers 26 commissions were issued; 4 in 1811; 17 in 1812; 18 in 1813; 29 in 1814; 26 in 1815; 37 in 292 1816; and that, in the late eventful crisis, there were 76 failures among the bankers of the country and the metropolis. For the reason he had stated, he should be justified in estimating the general amount of failures much higher than appeared by the returns of the commissions, it would not, perhaps, be too much to say, that the failures were four times as many as the bankruptcies; and it would, therefore, be a fair way of estimating the amount, by multiplying the number of commissions by four, during the series of years he had stated. Why then, he would ask, could any system be worse, or more prejudicial to every interest in the community, than one which, like the one at present subsisting, admitted of so enormous an amount of failures? Let the House now look at what had been the case, under a different system, in Scotland. It would be seen, by the evidence taken before the committee in 1819, that a Mr. Gilchrist, who had been a manager of one of the banks there for many years, was asked, how many banks had failed in Scotland within his memory. His reply was, that there had only been one; that the creditors were immediately paid 14s. in the pound as a dividend, and, upon the winding-up of the concern, the whole of their demands. If, then, the consequences of the system of banking had been to produce the number of failures in England which he had stated, while, during the same period, there had been only one in Scotland, was that not a strong presumptive proof that the system of the latter, if not quite perfect, was at least far preferable to that under which we had been so long acting? The mass of distress which must have been occasioned by the failures in England, was too extensive a subject to be now entered into. It had been felt not only by the commercial world; it had extended itself to the lower classes of society. He was inclined to look upon the effect which the present system of country banks had upon the payment of the wages of the labouring classes as one of the greatest of the evils it produced. It had been, he thought, satisfactorily proved, that the tendency of that system was to encourage speculation at one time, and at another to add to the languor which might affect the commercial interests of the country. For the benefit of the labouring classes chiefly it was, that he wished to see this altered, and that the manner in which their wages were paid 293 should be brought to a level. At present they were sometimes paid at enormous rates, and at another plunged into unlooked-for distress. He was satisfied, that very large wages, so far from being beneficial to the labouring classes, were really injurious to them. When they earned, as at some periods they did, 8s. or 9s. a day, the consequence was, that they never worked more than three or four days in a week, and the other days were spent in idleness and dissipation. Thus when the evil day came they had laid by nothing, and they were so much the worse for the unreasonably high wages they had before earned. This observation applied more particularly to that class of labourers who were employed in the manufactures of the country; but, the evil of the system was felt in a different, though not in a less severe shape by the agricultural labourer. He did not know whether the committee which had been presided over by the noble lord opposite, had gone very deeply into this subject, but for his own part he was satisfied, that the payment of agricultural labourers rested upon as unsatisfactory grounds as possible. He would not take upon himself to say in what respect this should be altered, because the subject required a more serious consideration than he was at that moment prepared to give to it; but, he was quite sure that a system could not be sound or politic, under which a man in perfect health and strength was unable to earn a sufficient sum for the support of himself and his family. Without, therefore, going into the causes of this state of things, he was quite convinced, that the restoration of the circulation of the country to something like its ancient standard, would have the effect of permanently ameliorating the condition of the labouring classes of every description. It was upon them that the distress produced by the recent failures had fallen most heavily. The man who held 500l. or 1,000l. of country bank notes, could probably afford to wait until the affairs should be wound up, or the dividend paid. It was not so with the poor man who held 5l., 3l., or 2l. To him to wait would be to lose the money altogether: the inconvenience to which he was exposed, the expense of proving his debt, and other obstacles which such a failure always produced, were fatal to his claim and he who was most in want of compensation was often the only one who 294 did not receive it.—Perhaps he was induced to dwell on this subject in consequence of the impression which had been made on his mind by the scenes of distress which he had witnessed in consequence of the failure of the banks in Ireland. He verily believed that the history of no country could afford instances of more aggravated misery and suffering, than those which he had himself seen in the province of Connaught. The breaking of French's bank alone produced in that part of the country which was most intimately connected with it, more poverty, and more of that misery and crime, which sprang from poverty, than any other event within his recollection. Any plan, therefore, he contended, which would enable the country to get rid for the future of these disastrous results, ought not to be discountenanced by the House, on the contrary, no pains should be spared to apply a remedy to the present evils, and permanently to prevent their recurrence.—Having thus stated the reasons which satisfied him that the present system had a positive tendency, at some times, to increase that spirit of speculation which ran to so mad a height, and at others to make the languor which prevailed still more debilitating, he would proceed to consider whether the remedy proposed by his right hon. friend was such as would prove effectual; and further, whether this was the proper time at which it ought to be applied, or whether it should be postponed. The last topic seemed to require no less consideration than the former; because, as the hon. member for Taunton said on a former evening, an operation might be necessary, but the moment for performing it must depend upon the nature of the danger which existed. He was first led to examine the objection which had been alleged against the principle of banks, as proposed by his right hon. friend; namely, that it would be impossible to carry them into effect, because persons would not be found willing to risk their property in experiments of this nature, and that the people in general would not place sufficient confidence in those by whom the concerns of the new banking establishments should be managed. He confessed himself sanguine in the hope, that gentlemen of property would be found, many more than enough, to execute the proposed plan, who would be actuated, not by the mere desire of profit, but by the 295 wish to see a better, firmer, and more useful system of banking in their districts, and that they would lend the assistance of their capital and their exertions to ensure the success of such establishments. He most sincerely trusted, that the great obstacle to the proposed institutions, namely, the want of a charter, would be removed. He hoped that the directors of the Bank of England would seriously consider, whether any great advantage could result to themselves from the absence of a charter in the proposed establishments; and whether, on the other hand, great advantages would not be experienced by the country, from their having that facility afforded to them. He declared, that he could see no one advantage which the directors of the Bank of England could derive from the refusal to grant charters to country banking establishments. Unquestionably they had the right to refuse the grant if they chose; but he trusted they would refrain from exercising that right. Having had occasion to mention the directors of the Bank of England, he would add, that the conduct they had displayed during the recent crisis of distress and alarm had increased the respect which he had before entertained for them. They had been placed in a most difficult situation; they had to perform an arduous and a double duty—to act at once for the advantage of the country, and for the protection of the interests of those who were connected with them. He could not conceive it possible for any body of men to have acted better, or to have exercised more judgment, discretion, and liberality, than the directors of the Bank of England had done. He hoped they would give one further instance of liberality, by waving their right to withhold from the proposed establishments the charter which they would require. There would then be none of that want of confidence which had been anticipated; and the extended scale upon which those banks would be established, would satisfy persons of their security, and they would not hesitate to give the direction of them to individuals who would be chosen by themselves. This, he trusted, would furnish a complete answer to the objections which had been raised as to the want of confidence. The success of such institutions, he thought, was sufficiently shown by the example of Scotland, where they had subsisted for so many years, and of Ireland, where two banks of this nature 296 had been established since the passing of the act of the last session, and which presented every prospect of success.—He now came to the conclusion of his right hon. friend, in which he concurred; namely, that it would be impossible to maintain the circulation of one and two pound notes together with a metallic currency. When the Bank of England purchased bullion with their own notes, the circulation was of necessity very much confined, and the notes were very soon returned upon the Bank. He had always thought the amount of the circulation had been overrated, and particularly by the late Mr. Ricardo, in the plan which he proposed. He insisted that it was not possible to maintain the circulation with so small a quantity of bullion as was in the country. The circulation was estimated at 24 millions; and as it was said the directors of the Bank had only four or five millions in their coffers, the greatest evils were anticipated from their stopping payment. The hon. member for Taunton had overrated the currency in stating it at 30 or 40 millions. He (Mr. Peel) should not despair that the resources of the Bank would be sufficient, and that there would be gold enough to conduct all their ordinary affairs. An hon. member had said, that it was impossible to ascertain the actual number of country bank notes in circulation, because all the returns that had been made were fallacious. Upon this point the hon. member's opinion differed from that of the hon. member for Midhurst, who had stated, in his evidence before a committee of the House, that the average circulation of country bank notes was three years. The smaller notes the hon. member thought were usually in circulation about two years and a half, and the 5l. and 10l. notes somewhat longer, so that the average might, perhaps, be taken pretty accurately at three years; and the evidence of all the country bankers, and of the engravers of the notes who had been examined, confirmed this estimate. In the last three years, from the number of notes stamped, it appeared that the amount of the circulation had been 7,600,000l. This was the maximum, as it appeared from the Stamp-office returns; but no deduction was made for that portion of the circulation which was always in the banker's own coffers. Every banker had also frequently a considerable amount of the notes of other, country bankers, which had been given 297 in exchange for his own. Some deduction must be made from the maximum on both these accounts, and also on account of the reduction in the circulation, in consequence of the recent disastrous events, which it was sufficient to allude to. Perhaps, for these reasons, it would be considered an outside estimate of the country circulation to take it at 6,000,000l. But, even if it should be rated at 7,000,000l., there was no reason to believe that the energies of the country would not be sufficient to supply this sum. Since the year 1819, there had been coined and issued from the Mint 25 millions of gold. Suppose that seven or eight millions had been exported from the country, which was indeed an extravagant supposition, there were 17 millions remaining—a sum sufficient for all the purposes of circulation. He believed that the prohibiting the issue of country bank notes would be the most effectual means of introducing into circulation many sovereigns which had been kept in the coffers of country bankers; partly from a prudent motive of precaution, and partly because they chose rather to see their own notes in circulation wherever they could accomplish it The reasons which he had stated were those which induced him to think the remedy of his right hon. friend a good one; and he had heard nothing stated in favour of postponing its present application, which induced him to think such postponement desirable. According to the plan of his right hon. friend, all these notes would be withdrawn in three years, and their place supplied with gold; and such a measure should have his most unqualified approbation. One argument brought forward by an hon. member against the plan appeared to him most singular. The hon. member considered, that as the Bank of England was to retain its privileges till 1833, the country banks ought to have the same period allowed them to prepare for the change. Now, the Bank of England and the country banks were quite on a different footing. The Bank of England had advanced large sums to government for the charter, and consequently could not be deprived of the privileges included in that charter without the greatest injustice. The country banks had advanced no money in that way, and consequently could not claim any right or privilege to have the period extended to 1833. They wanted only lime, the hon. member said. 298 They wished the measure to be postponed for one month, in order that the state of the country might be known. Now, he saw great objections to such a course. It would be holding out a notion that it was the intention of parliament to adopt the present measure at the end of that time; the whole of the session would probably be consumed in hearing evidence, until it would be too late to act upon it at all, and the embarrassment and confusion would be prolonged to a most injurious extent. He was fully convinced, that this was the time for putting the measure into practice, and that the House had come to the question of now or never. Either the remedy must be applied at the present moment, or it must be abandoned for ever. If it were proposed to wait until a time of greater prosperity, he should answer, that such a time would, in his opinion, be less favourable than the present. In the year 1818, when a proposal had been made for taking security from the country bankers, it would be remembered, that great exertions had been made, and successfully made, to defeat that measure. It could not be expected, when a time of greater prosperity should have arrived, that the country bankers would acquiesce in any similar measure if it should then be proposed. If it were true, as stated by the hon. member for the city, that the reduction of the country bank-notes had increased the circulation, and that gold was flowing into the country day by day in a larger stream, it was the more advisable to avail themselves of that opportunity. This was a favourable time for effecting that restoration of the currency which was admitted to be so desirable, and it would be impolitic and unsafe to wait the moment of returning prosperity, which would make the country bankers more reluctant to agree to it, and more able to oppose it. To stand gazing on the bank in idle expectation, now that the river was passable, would be an irreparable mistake. The time would, come when its tide would have increased—when
Monte decurrens velut amnis, imbresQuem super notas aluere ripas,Fervet, immensusque ruit.His conviction that the passage would then be impossible induced him to urge it now; and, if not made now, all hope of accomplishing it must be abandoned for ever.
Mr. Attwoodsaid, he had listened with great attention to the speech just delivered by the right hon. secretary; as he had listened also to the different statements of his honourable colleagues; but the conviction on his mind was, that they had altogether failed to make out any grounds for the measures they proposed, and had given none but the most inadequate and contradictory exposition of the causes and character of that condition of distress which they proposed to relieve. The arguments and course of proceeding of the right hon. secretary, indeed, though mistaken, were at least intelligible and consistent; but the arguments of his colleagues were in direct contradiction to the measures they recommended. The first origin and root of the distress under consideration, it appeared to the right hon. secretary, was to be found in the failure of some seventy country bankers, and so believing, it was consistent in him to support measures intended to limit the future circulation of the country bankers' paper, and to give it greater stability. But he desired to ask him, whether the fact were not, and if it were not well known to him, and to every gentleman whom he addressed, that it was not with the country bankers that the failures commenced? Every gentleman who heard him, knew that they began in London. Six or seven London banking-houses suspended their payments in about half that number of days, and those failures were the immediate, direct, and inevitable cause of the disasters among the country bankers. It was in London, and not in the country, that these pecuniary disorders began; in the heart of their monied system, and not in its extremities; and it was there that they must look for their cause. The failure at once of six or seven London bankers, from whatever cause it had arisen, was indeed a circumstance of great importance, and was well worthy the serious inquiry of parliament. No instance of a similar event was to be found in the pecuniary history of the country. Those houses held in their hands the active capital, the reserve for payments, the cash and funds of various kinds, of more than a hundred country banks. And, was it a matter of surprise that, under circumstances so calamitous, many of those establishments had themselves failed in the regular discharge of their engagements I It was rather matter of surprise that no greater number had failed, and that of 300 those who had been compelled to do so, the circumstances of so few were found in such a state as that their creditors could sustain any loss [hear, hear!]. These events afforded a proof, not of the unsound character of the country circulation, or of the necessity of legislative interference with it, but, on the contrary, that the country bankers were, as a body, as he was satisfied was the case, men of solid property, whose affairs were, in general, conducted with prudence. And, what had been the course of the right hon. chancellor of the Exchequer? On the first night of the session, he had stated, with great confidence, that their distress had arisen out of the wild, extravagant, and unmeasured manner in which the issues of the country bankers had been of late years increased. Their notes had been, according to his estimate, augmented within the last two, three, or four years, in the proportion which three millions bore to 8,700,000, being nearly 300 per cent—(a calculation, indeed, perfectly erroneous; for the country bankers' notes had increased in no such degree, nor in any degree very different from that in which the Bank of England notes had increased; nor was the calculation of the right hon. gentleman warranted by the document on which he had founded it)—and upon that statement it was, mainly, that he proposed the present measures, having for their object the regulation and control of the country circulation. But, the right hon. gentleman, in the present debate, appeared to him to abandon altogether this attack on the country circulation, as being the cause of the recent distress, and to have discovered in a body of men of integrity, property, and country bankers themselves nothing but prudence, who were entitled to the confidence of the country: and, in all this he (Mr. A.) was disposed to agree with him; but then he could see no ground whatever for the present measures. The course first taken by the right hon. gentleman was intelligible, though erroneous; the second was altogether without object or consistency. The course adopted by the right hon. president of the Board of Trade was still more extraordinary. In answer to the observations of the hon. member for Northampton, who had complained, that the chancellor of the Exchequer had given no consistent explanation of the cause of the disorders his measures 301 were intended to cure, the president of the board of trade said, the hon. member was mistaken, for the chancellor of the Exchequer had given an exposition of that cause, and that it was the true exposition, and the one he himself adopted; it was, that their calamities had arisen from overtrading; first a wide system of over-trading, then had failed a few rotten banks, then came panic, and thus a state of almost unequalled distress was fixed on the country. But, if over-trading were the cause of the calamities under consideration, apply your remedies, if you have any, directly to that evil. Did the right hon. gentleman mean to say, that the over-trading he spoke of in spices, pepper, and such articles as he had enumerated, had any thing to do with the country-bank circulation? [Hear!] Did he mean to say, that the country-bank circulation in the agricultural districts, the mining, the manufacturing districts, had any connexion with those speculations, or those speculations with the country circulation? They were confined to London, to Liverpool, where no country notes existed; to Glasgow, where the Scotch system existed in all its perfection [hear, hear!]. Consider, then, the consistency of the right hon. gentleman. He finds the country ruined by over-trading. That was the idea of the president of the board of trade. A great empire brought to the brink of ruin by speculations in pepper, spice, dry goods, and all the balderdash of the retailer; and on these grounds he proposes two measures—to do what? one to establish Scotch banks, the greatest incentives to over-trading ever invented [hear!]; over-trading going on more widely in Scotland than even in England, and the distress there being as great; and the other to destroy one-pound notes; the distress of Lancashire, where none of them existed, being greater than in any other part of England, and which description of paper, only three or four years ago, he himself proposed, or supported, a bill, to continue, on the ground of its utility [hear, hear!]. When a person of the sense and ability of the right hon. gentleman was driven to such inconsistencies as these, it might be relied on, there was something far deeper in the causes of the distress of the country, and in those circumstances by which he was intrammelled, than had been developed to the House. He asked the right hon. gentleman whether he did not know, that before any panic 302 arose, before a bank broke, great and alarming pecuniary embarrassments had been felt at the Treasury? [hear, hear]. Whether the pecuniary difficulties of the metropolis had not got to such a head, and the government paper fallen to so great a depreciation, as to give strong grounds to fear that the government would get nothing but its own paper in payment of taxes, and be unable, in consequence, to meet its engagements, without applying for assistance to the Bank, under circumstances which would render such assistance inconsistent with the security of that establishment? [Hear!] Was it overtrading, did he think, that caused the fall of Exchequer bills, in September, October, and November, to a discount lower than had been known for a long series of years? that caused government stock to fall 16 per cent, in the midst of peace, and with no political cause? The right hon. gentleman would have done well to show the House whence this state of things had arisen, and then would he have exhibited to them, at the same time, the real cause of the ruin of the bankers, and of those further evils which followed, and were now in progress [hear, hear!].
Mr. Attwoodsaid, he was as little able to agree with his hon. friend, the member for Taunton, in the cause which he had assigned for the existing state of things; and he was satisfied that further consideration would show him, that he had mistaken for the cause of the present distress, what was only one of its consequences. He saw the origin of the present distressed condition of the country, in the large advances of the Bank to government, by which the resources of the Bank had been locked up in unavailable and inconvertible securities, and that body rendered unable to assist, in the emergency which had arisen, either the government or the country. Now, he confessed, that when he heard his hon. friend recapitulate the resources of the Bank, and state, amongst these resources, six or seven millions employed in Exchequer bills, and six or seven millions in government annuities, he calculated on his coming to a conclusion very different from one which represented the whole funds of that body to be locked up in unavailable and inconvertible securities. What securities could be more convertible or more available than these? The question plainly was, whence arose that state of things which rendered such securities as 303 these unavailable and unsaleable? If his hon. friend had described the situation of a mercantile house, and had thus quoted amongst their effects Exchequer bills, and government annuities, he would scarcely have stated that such house had locked up its resources altogether, and was unprepared to meet any emergency. In what more available shape could the Bank have employed any portion whatever of its funds? In none, except, indeed, in bullion; but of bullion they had been deprived by Mr. Peel's bill. Suppose the Bank, instead of these ten or fifteen millions employed in Exchequer bills and government annuities, had employed them in discounting commercial bills for the merchants:—would this have been a resource more available or convertible than the other more applicable to the aid either of the government or the country? In the state of the money market which existed during the latter part of the last year (he was speaking of the period previous to the panic) could the Bank have called in money advanced to the merchants more readily than it could have disposed of Exchequer bills? The Bank could not then have called in any considerable amount of advances from the merchants, without spreading total ruin amongst the whole mercantile body. To call in discounts, would have broken the merchants; to have sold Exchequer bills would have endangered the credit of the government; and yet the security of the Bank rendered necessary one or other of these measures. This was their condition before any panic broke out, and for this condition of things it was, that an explanation was required.
He desired to make another observation on these operations of the Bank. The directors had been told, on repeated occasions, that it did not belong to them, nor become them, to regard, in the conduct of their affairs, the interests of the country. He remembered well with what arrogance this language was held in 1819 to the directors of the Bank. Those gentlemen, prior to the passing of Mr. Peel's bill, thought it their duty to represent to the ministers, that that bill would compel them to adopt steps for their own security, which they feared would spread throughout the country great and extensive ruin, and those apprehensions were fully justified by the events which followed. How were those earnest warnings received? The directors were told, that it was un- 304 suitable presumption in them, a body of merchants, to act with any reference to the interests of the country. Their business was with their own establishment. The interests of the country were in other hands, in the hands of his majesty's ministers. Now, if the Bank had acted on these maxims in September, October, and November last, if the directors had then looked (as they were told it became them) to the interest and security of the Bank alone, and to no higher considerations, the disasters which the bankers and traders have since experienced would have first fallen on the Treasury. The course, then, adopted by the Bank directors would have been, to sell every Exchequer bill they held, and all their disposeable government securities of every kind. They would have made these securities available at whatever price they might fall to; as bankers it was their duty so to act; the consequence would have been so great a discount on Exchequer bills, as must have thrown them in upon the Exchequer in payment of taxes. The government must have received its taxes in its own paper; it would have thus been left without the means of discharging its engagements, except by assistance from the Bank, given, if at all, under circumstances in which the Bank must have hazarded its own credit to save that of the government.
This was the condition of difficulty under which the country laboured, before the existence of what they called the panic. It was preposterous, with this state of the country before them, to direct the attention of the House to nothing but such questions as the instability of bankers, and the speculations of traders. The origin of their embarrassments lay deeper, and they must take a wider view of their cause. Now, it was certainly singular, that the very measure which his hon. friend, the member for Taunton, had fixed on, as the cause of their difficulties, was one which had been adopted, in the distress of 1822, as a means of relief. The advances of the Bank to government, which he complained of, sprung from measures adopted in the distress of 1822, for the purpose of relieving the country from the pressure of Mr. Peel's bill, by throwing into circulation an additional amount of Bank notes. It afforded relief. It laid the foundation of the prosperity that followed; but Mr. Peel's bill still remained, and rendered it impossible that 305 such relief could be more than temporary. The increased amount of Bank notes could not exist in conjunction with that bill: what was relief in 1822, was now embarrassment. The country was then relieved by the issue of Bank notes; the notes were driven back by Mr. Peel's bill, and the distress was renewed. The plain solution of all these difficulties and inconsistencies, and of all the distress of the country, was, in fact, no other than this; that the government was engaged in attempts to fix upon the country a standard of value, different from that in which its debts, and taxes, and monied engagements of all kinds, public and private, had been formed [hear, hear!]. It was not an endeavour merely to substitute gold money for one of paper; that would have been, under proper regulations, a safe and practicable measure; but, an attempt to establish a metal money of a different value from the paper it was intended to supplant. Their plan was not merely to change the substance, or material of their money, but to alter its value, and at that moment, after ten years of unavailing efforts, they had approached no nearer their object, than when they first set out. The government had twice succeeded in establishing its metal money on the standard of Mr. Peel's bill: that money was effectually and virtually established in the two calamitous periods first of 1815–16, and next of 1821–22, and in both periods it had spread throughout the country an extent of embarrassment, confusion, and ruin, which rendered it doubtful whether the people would sink under the rash and ill-advised measures of the government, or whether the government itself would be shaken to pieces by the efforts of the people for relief. They had on neither occasion pushed that experiment to a trial. They abandoned their metal money, and gave ease and relief to the people, by measures inconsistent with its continued circulation and, having failed in two experiments, they were now on the commencement of the third: the first consequences were the distress now suffered; and if that experiment were persisted in, the country, instead of having reason to expect relief, was on the verge of difficulties greater than any it had yet experienced.
But, it was necessary to look back more particularly to the distress of 1822, and the proceedings then and since adopted. 306 The ministers told them, of a great and wild increase in the country bankers' notes, effected since that time, and of the evils to which it had given birth; but they had been silent respecting the increased issue of the notes of the Bank of England. In another House, indeed, this latter subject had been slightly referred to, by the noble lord at the head of his majesty's government, who had said, whilst discussing and exaggerating the increase of the country circulation, that the notes of the Bank of England had, indeed, also been increased, but in a degree very immaterial and inconsiderable. But, he desired them to recollect, that up to this time it had been held, that the country circulation was governed by that of the Bank of England, and that it could not, be materially or permanently increased, except on the foundation of a previous and corresponding increase in the notes of the Bank. The contrary opinion to this was one taken up for the occasion; it was in opposition to all the principles which had been agreed on by those who were considered as authorities on the subject. That the country circulation was governed by that of the Bank, was the maxim of the bullion report of 1810, of the different committees which had since sat; and if he did not mistake, was asserted by the right hon. gentleman (Mr. Huskisson) in his elaborate pamphlet on the bullion question. But, he would show them, what the increase of the notes of the Bank of England in reality was. That body had effected, prior to 1822, a great reduction of its issues, in order to prepare for cash payments on the provisions of Mr. Peel's bill. The reduction effected, up to the end of 1821, left their circulation at about fifteen millions, taking notes of 5l. and upwards. In November 1821, the notes of the Bank in circulation were 14,800,000l. The circulation for the corresponding period of 1822, he had not the account of. But, in November 1823, the amount would be found to have increased to 19,800,000l.; in November 1824 to 21,200,000l. In February 1825, the amount was 21,200,000l. also; and in March 1825, beyond which period their accounts did not go, the amount was 19,300,000l. Here, then, was an increase of no less than 6,400,000l.; not a trifling and immaterial addition to the notes of the Bank, but an increase which amounted to full half of its active 307 and effectual circulation; and, to this increase of the notes of the Bank of England it was—a forced circulation as he should presently show, issued on advances to government, and bearing all the characters of government money;—it was to this he would venture to affirm, that the country owed whatever circumstances of evil or of good, had arisen from the growth of their paper money during this period; all that increase in the paper of the country bankers which had followed, and was no more than proportionate to it, all that advance in prices which they had witnessed, speculations and over-trading, if the chancellor of the Exchequer would have it so: and, to the subsequent reduction of this circulation it was also—a reduction forced on the Bank by Mr. Peel's bill, as the increase had been forced on them by the demands of government, a diminution effected by one measure of the government as the increase had been effected by another;—to this reduction it was, that the country had to ascribe all the calamities they had recently gone through, the sufferings they then endured; and to this same reduction they would have to ascribe also, all that further scene of wider calamities, severer sufferings and greater dangers, which then impended over the country, into which they were then plunging, and plunging the more rapidly, in consequence of measures proposed for their relief [hear, hear!].
He had said, that the increased circulation of the Bank of England referred to, was a forced circulation, and he would show how it had been effected. The notes of the Bank had reached their lowest point of diminution at the end of 1821. That was a period of dismal calamity and distress. The session of 1822 opened, and the House rang with demands on the Bank to increase the issues of their notes. Projects of every kind were brought forward by the administration to effect this object. At one time, it was proposed that the Bank should lend four millions upon land. Then, that four millions should be lent to government; then to parishes on the security of the rates. Now, to put the object of these schemes out of doubt, he would read to the House the explanation given at the time by the right hon. gentleman, Mr. Huskisson. "The government," said that gentleman, "disclaimed the advance 308 as an accommodation for the service of the year, and he was glad they did so; but they were willing to use it as the means of getting the sum into circulation, and in, the hope of affording some relaxation to the existing pressure." These projects were only partially executed, or found impracticable and abandoned; but were followed by that most extraordinary scheme denominated the dead weight; the effect and object of which was—to throw Bank notes into circulation founded on advances to government. Some gentlemen were of opinion, that Bank notes, by whatever means forced out, could not exist in excess; that they would, if excessive, be returned at once on the Bank. But, in what manner could notes thus forced into circulation by advances to government, find their way back to the Bank? The mercantile world in 1824, when these notes were at the highest, owed nothing to the Bank, and could therefore repay nothing. It would be seen, that, the credit of the Bank continuing, there existed but two methods by which any one of these notes could, whether excessive or otherwise, be withdrawn from the circulation. One was, the repayment of the advance to government, on which they had been issued. This advance still however continued. The remaining mode was, in exchange for gold [hear! from Mr. Peel], But notes would not be carried to the Bank for gold, their credit remaining good, until it should become the interest of some person to demand gold. An individual would find gold which he could not employ, as great a burthen as notes which he held in excess. But, it would be sent abroad? Not unless the rate of exchange rendered that operation profitable. When Bank notes were issued in excess, to whatever extent, the exchanges must first alter before any one of them would be taken to the Bank for gold to export; and that alteration in the exchanges would not be effected without a previous alteration in our dealings with other countries; arising nut of an alteration in the monied prices of all property and commodities; in fact, without a real and effectual alteration in the value of money.
Let the character, then, of these measures be considered. They had forced notes into circulation by one measure of the government; and when these notes were fully absorbed in the circulation of the country, they drove them back by another. They had adopted mea- 309 sures producing, of necessity, a depreciation in the value of money, and left standing Mr. Peel's bill, which, when that depreciation was perfectly established, must of necessity raise the value of money again. To what extent, then, had this operation been carried, this debasement of money by the government, and its subsequent enhancement? There existed three methods of determining this question. They might take the proportionate addition, which the increased circulation of the notes of the Bank bore to its previous circulation; or they might judge by the alteration effected in the general scale of prices; either or both of which measures would prove that money had been depreciated first, and then enhanced in value, to an extent of from 20 to 50 per cent; for the addition to the notes of the Bank had been six millions added to fifteen millions, and the advance in prices had been proportionate. Or, lastly, they might refer to the price of gold. But, in judging by this last criterion, they must bear in mind, that gold had been kept down by law, and by the consequent supply from the Bank, which, in 1824 and 1825, had been compelled to throw into the market its stock of gold, of perhaps ten or twelve millions, at a fixed and a low price. The question came to be then, what would have been the price of gold in 1824, and early in 1825, if the doors of the Bank had then been closed to gold payments, or if the Bank, still paying in gold, had been at liberty to demand the best price it could obtain? No man acquainted with the trade in exchanges, would, he was satisfied, deny, that gold would, under such circumstances, have experienced a great advance. He had himself repeatedly put that question in 1824, and early in 1825, to individuals, some of whom then heard him, members of the House, who were engaged in exchange operations. He had said, "there is now a great demand for gold: what would be the price of gold if no supply could now be procured from the Bank?" and the reply was uniformly, "gold would advance, probably, 20, or 30, or 40 per cent." If that were the state of things then, they had all the marks of depreciation perfect and complete. Their money had been depreciated, its value altered, and this had been done by acts of the government. On this most calamitous and fatal subject of the currency, it had 310 been much the custom of many of those who discussed it in that House, to condemn with indignation those operations by which different governments had, whether pressed by necessity, or from whatever motive, at particular times, debased the standard of their metal money, and at other times enhanced its value. But, in what did the essential vice of these operations consist? Not in the merely joining together two metals, both alike harmless; not in alloying gold with copper; but, in unsettling by this means the value of all property; in introducing by this operation fraud into all contracts; and in thus robbing one half of the community for the benefit of the other half. But, was not all this effected as completely by increasing, by forced measures at one time the quantity of paper money, and diminishing the quantity at another time, as by diminishing or increasing the weight of the coin? Let any man answer, if he found, during this tampering and juggling with paper money, his property steady in value; if he could rely without ruin on money as a measure of property? [hear!] The debasement of metal money, and the enhancement of it, when referred to in that House, was commonly stigmatized with terms of abhorrence; it was denominated fraudulent, iniquitous, and disgraceful. Of the justice of these epithets, he should give no opinion. He neither asserted nor denied it. But this much he would at least assert, that no terms of reprobation or reproach had been ever with Justice applied, to any measure of any government, which, under whatever circumstances, had debased metal money or enhanced it, which terms were not with equal justice applicable to the operations he had then explained [hear, hear!].
They had seen, then, the extent to which the notes of the Bank of England had increased. An increase of the country-bank circulation had followed in a proportion admitted to be at least equal; and he would now proceed to show how prices had advanced with the increased quantity of money. The notes of the Bank were reduced to their lowest degree by the end of 1821. The country-bank circulation was equally low. Fifteen millions was the circulation of the Bank. Four millions only was the amount of notes stamped for the country bankers in the year 1821. But little money existing in circulation, money could be obtained only in small quantities for property and com- 311 modifies. In other words, prices were low. Forty-three shillings would be found to be the price of the quarter of wheat for the average of the year 1822. That fact alone explained the condition of the country: it stood on the brink of ruin. Forty-three shillings a quarter for wheat was, in fact, the price of Mr. Peel's bill—as high a price as would ever be obtained in money, of the value then fixed, for any average of years; when no attempt was made to escape temporarily from its pressure. Gentlemen showed a great anxiety to believe, that with Mr. Peel's bill high prices might yet be obtained; but if any individual was prepared to maintain, that more than 40s. or 50s. a quarter could be obtained for wheat, on an average of years, in money so fixed, he would desire him to give his reason for that opinion. No one had yet done so. All property and commodities were, in 1822, equally low with wheat; the prices of all were equally ruinous. But the currency was, in what was called, a wholesome and healthful state. Their paper money circulated side by side with gold money. No demand on the Bank, no exportation of gold. At the prices commodities then bore, gold was brought into the country. And as to that question, so often discussed, respecting the difficulty which the country might experience in procuring gold for its circulation; some gentlemen maintained, that it would be difficult, or impossible; others would not believe, that a great and wealthy country like this, abounding in commodities of all kinds, could be unable to procure any given or necessary quantity of gold. The question was mistaken. It was not a question of quantity, but of price. Not whether the country could obtain five millions more or less of gold, but whether it could obtain gold at the low price which their law fixed, of 3l. 17s. 10½d. an ounce; and that it could only do, by the reduction of all its commodities to a scale equally low. A wealthy country could obtain its share of the precious metals, a share proportioned to its wealth and commodities; but a poor country would procure its share also, which would be equally in proportion to the extent of its wealth and commodities. The share of the precious metals which any country rich, or poor, could maintain, if there was any truth in experience, would be in the proportion of about half an ounce of gold against a quarter of wheat, which gave 40s or 50s. 312 a quarter of this money, and no more. If a country found it necessary to fix a higher price for wheat than this, and desired the price to be paid in money of the precious metals, that object could not be effected by attempting to get possession of a greater quantity in weight of gold or silver; it must either be content with a low price, or alter the standard of its money; and this country possessed no means or power of obtaining a high price of wheat, other than by altering temporarily or permanently, secretly or openly, the provisions of Mr. Peel's bill. All the experience of the last ten years confirmed this. They desired to obtain a high price for commodities, and to fix by law gold at a low price; and the consequence had been, that whenever, by issues of paper money, they succeeded in raising prices, gold disappeared. It could not be made to circulate after the rate of 3l. 17s. 10½d. an ounce in exchange for high commodities, for iron at 12l. a ton, for copper at 140l. and for wheat at 70s. a quarter. A drain on gold regularly commenced, drove in the paper money; and when commodities had, in consequence fallen, iron to 8l., copper to 100l., and wheat to 45s., then gold travelled back. All their measures since the peace had been one unceasing effort to reconcile contradictions, and achieve impossibilities. Whenever prices were high, and the country prosperous, then commenced a demand for gold, and the Bank of England became alarmed for its own security: their notes were then drawn in, and prices reduced: gold then returned to the Bank: that body was in perfect ease and security, but the country in a state of distress bordering on ruin. These two circumstances, a prosperous state of the country, and an easy condition of the Bank, which body regulated their money, had never yet been united at any period since the peace, and never would be united whilst they attempted to stand on their present standard of money.
But to return to the price of grain as it had followed the increase of paper money since 1822, 43s. was then the price of the quarter of wheat. Bank notes had been reduced to fifteen millions, the country circulation demanded only four millions of stamps in a year. The notes of the Bank were then increased to twenty-one millions, the country stamps to six or eight millions; the price of wheat advanced, in 1823, to 51s., the 313 average of the year; in 1824, it advanced to 62s., to 66s., and in March 1825, to 69s. Now, when it was considered, that this advance in the price of wheat was accompanied with an equal advance in the price of all other agricultural productions, and of commodities and property of every kind, could there remain any doubt as to the cause of this rise of prices? It was in the midst of what they had been pleased to call over-production, that this regular and steady advance commenced. Money being thrown into circulation in greater abundance by the Bank of England and by the country bankers, was given in greater quantity for property and goods; money fell in value, prices rose. Was it fit, then, that measures should be proposed to deal with this paper money, to drive it from circulation, and that the ministers who proposed these measures should conceal from the view of the House the important interests which these measures were calculated to affect? Were they to go on entirely blinded to all the important consequences of their own proceedings, and to pass laws affecting prices, and the value of money and its quantity, with their attention directed to nothing beyond speculations and over-trading? The right honourable chancellor of the Exchequer had told them in what degree the amount of notes stamped for the country bankers had increased; that the amount stamped in 1822 was four millions only, and then the quantity increased first to six millions, and then to eight millions, and to nearly nine millions; and was not this, he said, "sufficient to account for all the spirit of over-trading and rash speculation which had existed?" He would tell him that it accounted for something more than speculation and over-trading. It accounted for remunerative prices. It accounted for rents, which in 1822 had no existence in the country [hear, hear!], which the agricultural committee had told them were paid out of capital. It produced taxes, he would tell the chancellor of the Exchequer; that productiveness of the revenue which he had boasted of, and in short all that whole state of things which constituted prosperity, and which he had told them he was convinced rested on a solid basis, but which basis was no more solid than was that paper money, which, in utter ignorance of its character, he proposed to deal with. This paper money had produced wages; that employment for the labourer, which 314 had changed their innumerable population from a people driven to despair, oppressed by hunger, on the verge of rebellion, and taking up arms against the government, into a body of subjects at once the most orderly and powerful, the most loyal and contented that had ever existed on the earth; full of prosperity and satisfaction, and willing enough, with the chancellor of the Exchequer, to ascribe their prosperity to the perfection and profound wisdom of the House of Commons; but equally prone, he desired to tell him, to ascribe their calamities, whenever they suffered them, to the corruption of the House of Commons also, to its incompetence and its folly; and in so doing, they gave an example to the right hon. gentleman, which it would become his consistency to imitate [hear!"]. He urged, therefore, the House most earnestly, and his majesty's ministers more particularly, to pause in the measures they were pursuing. Greater interests depended on those measures than they dreamt of, and weightier events would follow them. In every step which they took, the ground before and around them was beset with dangers, of the character and nature of which, they had shown art entire ignorance. He urged them to call to mind that whole series of errors which had characterized every measure parliament had hitherto taken on this subject, and the calamities, all but fatal, which had followed them; from that first and portentous law of the year 1797, adopted by parliament in utter ignorance of its character, without being accompanied with any one measure calculated to provide against the evils obviously calculated to flow from it, down to these present measures, which, in equal ignorance of their character, were now proposed to parliament. Had they understood the character and tendency of the act of 1819, when that measure was passed? What spectacle had they exhibited to the country when, in passing that law, they had talked of a fall of prices to follow of three or of four per cent, and of difficulties, worthy only to be smiled at, and of setting that question at rest for ever; and had boasted of the unanimity of a vote, by which, amidst disorder approaching to tumult, and violence unbecoming the character of a grave and deliberative assembly, they then adopted a law, which had done more than oppress the people; which had put at hazard the safety of the government, and had shaken 315 the security of the empire to its base. He desired his majesty's ministers to look back to those declarations, which so recently as the latter part of the last session of parliament only they had made, in a body, without necessity; almost without occasion; that under no circumstances which it was possible to conceive of misfortune or distress, would they ever again consent to a restriction in cash payments at the Bank. He now desired them to call to mind those declarations; and he asked them how long it was, that those determinations, so solemnly pronounced in the face of the country, were held firm? Would they now repeat them? If they dare not, what confidence did they expect from parliament in any measures on those subjects which they proposed? Did they expect the House of Commons to consider with patience their measures, if proposed with confidence? If the recollection of all the errors, dangers, and sufferings, which had distinguished all their measures on this subject, did not infuse caution at least into his majesty's ministers; if it could not teach them the necessity of moving with consideration and circumspection, with doubt and dismay, in every step they took; if all this failed to impart caution at least to his majesty's ministers, though it might fail to give them wisdom, though it might fail to show them how to extricate the state from the complication of evils in which, by their proceedings it was involved; there remained no hope for the country whilst its interests were in their hands [hear, hear!].
The plain and undeniable explanation, then, he repeated, of their situation was this. They had relieved the distress of 1822 by pouring notes into the circulation. In 1825, Mr. Peel's bill drove those notes back upon the issuers. The increased amount of every description of paper money, both notes of the country bankers, and bills of all kinds, which had followed the increased issues of the Bank of England, were of necessity to be driven in also, when the notes of the Bank of England on which they had been founded, were withdrawn. The demand on the Bank for gold and for reduction commenced in 1824. Early in 1825 the work of reduction commenced. Pecuniary embarrassments immediately followed, and proceeded along with the reduction of the issues of the Bank, till in December the failure of the London, and then of the country bankers pro- 316 duced what they called the panic. Its origin was in London. How had it been put a stop to? By issuing again an increased amount of Bank of England notes. But that issue could not be permanently maintained. It was incompatible with Mr. Peel's bill. The Bank had been praised for the boldness of its conduct in December last. But, what was the nature of the risque, it had encountered? A risque imposed by Mr. Peel's Bill: and here now, as formerly, lay the source of their embarrassments. High prices and an abundant circulation were necessary, but neither could exist permanently in conjunction with the low price of gold which this bill attempted to fix. This was the source of their difficulties; and all measures of relief founded on other views, as would those which were now proposed, would lead them only to evils more complicated, and to greater dangers.
§ Mr. Hudson Gurneysaid, that after the admirable speech of the hon. member for Callington, he could have little to add, and the less, as he (Mr. G.) in the main, agreed with the right hon. Secretary for the Home Department, who had preceded him, in his view of the general working of the banking system. His object in rising was, therefore, principally for the sake of giving notice, that in case the House should go into a committee on the chancellor of the Exchequer's resolutions, he should move an amendment to leave out the words "or by the Bank of England." Mr. G. said, that the fluctuations and distresses which had been suffered by every interest, and most, perhaps, by the agricultural, were attributable to the blunders and narrowness of view, of the Bullion committee of 1810; the members of which seemed to have held a one-pound note before their eyes, and not to have been able to see through it. It had not been his good fortune to have enjoyed the acquaintance of the late Mr. Horner. He had no doubt that learned and much lamented gentleman came from Edinburgh profoundly versed in Scotch metaphysics and English law; and he gave him credit for the possession of every grace and every virtue that could adorn humanity; but, the question of the currency of this country he did not understand; and, consequently, though in the report of that committee he acknowledged a depreciation of 20 per cent, he did not perceive that it was the amount of debt and of taxation which, swelling our numerical reckonings 317 in every direction, had already passed the line in which it was possible to meet them in the golden coin of the realm of standard weight, and, after all that had passed in the interim, the right hon. Secretary, in bringing in his bill, of 1819, had acted under a degree of error still more surprising.
Mr. Gurneysaid, that in his view of the whole subject, it consisted of two parts; which, though much mixed up in these debates, it was necessary to distinguish—the one, the general state of the minor currency; the other, the present mercantile distress. Now it should be recollected, that in 1824, the circulating medium had so adapted itself to the wants of the internal traffic of the country, that no prices were extravagant, but every interest might be considered to be at ease. Towards the end of that year, from the sudden and enormous rise in the prices of the shares of one company, on which even the instalments had not been paid—company after company, bubble after bubble, sprung up; so that by the first of February 1825, there were 114 projects, for the most part utterly absurd, in existence; the shares of which amounted nominally to about a hundred millions. These paper shares might probably pass from hand to hand as an imaginary property of from five and twenty to thirty millions; which, by the first of November, were utterly extinguished. We were brought to the end of a South-Sea year; and no one could wonder at the concussion from the fall of such a water-spout. It was on this paper flooding the market, that prices of all things had been constantly rising, and, commercial adventure had run wild; and not on the unhappy one-pound notes, which formed the subject of the chancellor of the Exchequer's resolutions. Now, he repeated, that to the issue of the one-pound notes of private bankers, there had been no greater enemy than himself from the beginning; but, it must be obvious, that if these notes were to be called in, the only possible way of doing it, without bringing every thing to a stand-still, would be the substituting those of the Bank of England in the first instance, let, the final arrangement be what it might. At present, gold was only paid away to be hoarded. The conduct of the Bank of England had been, in this crisis, beyond all praise. Without their notes, nothing could go on; and, if they were withdrawn, the country would be left without a circulation, or any means of liquidating the ordinary transactions between man and man.
Mr. Secretary Canningrose, and said:—Before I proceed, Sir, to address the House, as briefly as I can, upon the very interesting and important subject which now engages its attention, I beg leave to set myself right with some honourable gentlemen, by assuring them, that in whatever I may say, of the present system of our currency, and of the necessity of a speedy reform in it, I do not mean, in the slightest degree, to impute blame, or imply disrespect, to a body of men, whose character has been drawn into the debate; the administrators of the system, as it at present stands [hear, hear!]. So far, Sir, from wishing to disparage the country bankers, I think they have been of great and essential service to the country. I believe them to have been the medium of communicating a wholesome stimulus to industry, and of directing into useful and legitimate channels, the industry and enterprise of the country. I believe that, if they have acted unadvisedly—if they have done any thing amiss—it is to be attributed to the nature of the system, under which they have been compelled to act, and not to any abuse of the power lodged in their hands.
Such, Sir, being my sincere opinion, I have thought it proper to make this distinct protest at the outset; because I am aware that, in the ardour of discussion, it not unfrequently happens, that, from misapprehension on the part of the hearer, or inadvertency on the part of the speaker, expressions are understood in a sense very different from that in which they are intended, that what was meant for the matter, is supposed to apply to the person. I wish to guard against any such mistake of my intentions. When I say, for instance, of the country bankers, what I said, upon a former occasion, of the directors of the Bank of England—that however respectable they may be in their particular capacity, they are, nevertheless, not competent to be in-trusted with the prerogative of the Crown, I say that which I hope I may be permitted to say without offence; and I am sure I say it without the smallest design to impeach the purity, or to derogate from the importance of their character [hear, hear!]. I attach no blame to the individuals, but only to the system, which they are the agents of carrying into effect.
I will observe also, with reference to this part of the subject, that it appears to me a mistake to suppose, that this question 319 may not be brought to a practical issue at the present moment, with less danger and less inconvenience, than at any other period. For, I state it as my sincere opinion, that the great mass of the country banks now in existence, are fixed upon a stable foundation [hear, hear!]. They Lave stood out the storm which has thrown down weaker fabrics to the earth—and there is, therefore, a reasonable presumption, that they have nothing to fear from the pressure, whatever that may be—(though I believe the apprehension of that pressure to be excessively exaggerated)—which the proposed measures for effecting a change in the condition of the currency, may bring upon them.
Impressed as I am, Sir, with this conviction, I think, that those persons would argue as illogically, as they would act unreasonably, who, after the passing of the measure now under our consideration, should proceed to act with harshness, if a country banker, towards his creditor; or with precipitation, if a holder of country bank notes, in hurrying with them to the banker, for immediate payment in gold. My opinion is, that this measure is absolutely necessary for the due regulation of our currency 5 but that it will not justify, or call for, either one or other of these courses in the two descriptions of persons interested in its result.
Sir, I felt anxious to clear the ground of these invidious imputations, before I proceeded to deal with the question before the House, with that frankness and sincerity which it demands.
Sir, the hon. gentleman who spoke last has divided the subject into two parts; and his speech furnishes the best answer to the several objections that have been urged against the proposition of my right hon. friend, the chancellor of the Exchequer, by the several speakers who preceded the hon. gentleman. On the one hand, the measure has been described as wholly inefficient for the end proposed—mere milk and water; on the other hand, it has been contended, that it will bring a pressure on the monied, commercial., manufacturing, and landed interests, which the country, in its present weak condition, is ill able to bear.
Now, Sir, both these characters of the plan of my right hon. friend, cannot be true; but, both of them may be, and both are, incorrect. My hon. friend has shown how unfounded and fallacious is 320 the first assertion, of the inefficiency of the measure, by pointing out how gratuitously it has been assumed to apply to causes, with which it does not profess to deal. On the other hand, he has admitted, that the pressure is exaggerated; and he has come to the conclusion which is expressed in the resolution of my right hon. friend.
Sir; one of the causes of the present distress—and it is one with which we do not presume, or attempt, to deal—has been that extravagant spirit of speculation, so well described by several hon. members, and by none better than by the hon. member for Northampton* (not now in his place), who in a speech which displayed the greatest ingenuity and ability, and, in a manner which came home to the feelings of all who heard him, brought fully and fairly before the House, the true character of that prevailing mischief. When the King's Speech informed us, that "some of the causes of the present embarrassments, lie without the reach of direct parliamentary interposition," to what else could it be intended to allude, but to those speculations which, at the time, fixed the public gaze, and so immediately excited their appetency, as to cover the nation, in the eyes of foreign states, if not with disgrace, at least with ridicule? The most wild and incoherent schemes were started-r-projects which sprung with the dawn, and expired before the setting of the sun, in whose beams they glittered for a few hours, and then fell; a puff of vapour sent them soaring towards the skies;—the puncture of a pin brought them to the earth. I really do not know, Sir, what legislative interference could possibly effect in such a ease. I do not know how a measure could be framed, to deal with those speculations of unreasoning avarice, which would not, at the same time, have borne so hard on honest industry and rational enterprise, that it would have been likely to do more harm than good. The inordinate appetite for gain, if left to itself, could not fail to work its own cure, through its own certain disappointment.
The public mind did, for a season, run riot; but is it affirmed that of this temporary insanity the conduct pursued by the country bankers was the cause? It has been, not fairly, inferred, from the observation of my right hon. friend, that
*Captain Maberly.321 he so considered it, and that he therefore calls upon the House to agree to the present resolution. No, Sir, I do not charge the country bankers with having originated this spirit of speculation; but I think it impossible to deny that the country banks were a source whence this inordinate speculation derived its aliment. The object of my right hon. friend is to have "the current in that place dammed up;" leaving the originating causes of that speculation to be operated upon, not so much by any specific measures which any human legislation could devise, as by the returning good sense of the country, by painful experience and by awakened reflection.Sir; there is another prejudice which it may be necessary to dispel, before I can expect the House to hear me upon this subject with patience and indulgence. I allude, Sir, to the fashion, set by the hon. member for Taunton,* on a former evening, and sedulously followed by the hon. alderman,† the member for Sudbury, this evening, of imputing to every man who thinks it possible to apply the principles of philosophy to questions of a practical nature, the character of theorist and enthusiast, a person disposed to resign the greatest benefits, and to sacrifice the dearest interests of the community, in order to give effect to his own abstract principles. The hon. member for Taunton—in a speech, the ingenuity of which I admit, but which was, I think, one of the most inaccurate in its facts, and unfair in its inferences, that I ever heard delivered in this House—has endeavoured to fix upon me, this character. I have no right, perhaps, to complain that, in the heat of debate, an hon. member should impute to me words which I never uttered, and things which I never did. If such an imputation results from a genuine error, although it leads to an unjust inference, I rest satisfied with simply denying the fact. But, Sir, the case is different, when I find that, out of this error, an inference is to be drawn;—when I find it imputed tome, that in the debates on the report of the Bullion-committee of 1811,I voted for the immediate resumption of cash payments—when I find this stated, and, more than this, the House solemnly warned by an hon. member, how they allow themselves to follow a blind guide who would preoipi-
*Mr. A. Bering.† Alderman Heygate.322 tate them from the solid and safe rock of a paper, into the troubled and tempestuous sea of a metallic currency—when, Sir, I see myself thus misrepresented, for the purpose of influencing the votes of the House—I am far from saying that the error was other than unintentional—but I must remark, that I never recollect to have heard any hon. gentleman fall into an error more fortunate for his argument. Sir, I not only did not vote, on that occasion, in the way in which I am said to have voted, but—
Mr. Baring.—I rise, Sir, to complain of the course which the right hon. gentleman is taking. I really do not think it quite fair, after I have apologized to the right hon. gentleman for the mistake into which I fell, that he should charge me with making that mistake intentionally [Cries of "No, no, unintentional"].
Mr. Secretary Canningcontinued.—I spoke of the error as not being intentional; but, I submit to the hon. gentleman, that the part which I took in 1811, having been, however unintentionally, misstated, that it is necessary for me to set myself right with the House. I voted, on the discussion of the report of the Bullion-committee, for all the resolutions moved by the late Mr. Horner, which went to affirm the true principles of our monetary system; and I voted against that resolution which fixed a peremptory and short period for opening the Bank to cash payments. I thought great good would result from recording what appeared to me a sound opinion as to the principles of our monetary system: but, although I did so, I by no means agreed with the conclusion come to by the Bullion-committee; that the existing system being wrong, it ought therefore to be immediately—in the middle of a war—abandoned. The only proposition which I ventured to submit to the House, in the Debates of 1811, was not a theoretical, but a practical proposition. It was this—that, during the continuance of the suspension of cash payments, the Bank should desist from either augmenting its capital or its dividends. Wise or unwise, this proposition was, at least, a practical one, and exhibited, therefore, the very reverse of that theoretical disposition, which has been charged upon me. And if, Sir, on the present occasion, I am for withdrawing, within a limited time, the one-pound notes from circulation, it is not from the mere love of theory, but because I have seen it practically 323 proved, in the experience of years which have elapsed since the Bullion-committee sat, that the circulation of the small notes cannot co-exist with a metallic currency [hear, hear!].
The House, Sir, cannot, I think, follow more wholesome advice than that which has been given to them by the worthy alderman, who recommended us to tread in the footsteps of our forefathers: and doing this, no part of their policy will be found more strongly marked, than was that for which I am now contending, up to the year 1797. Let the House look back to the first period of our commercial distress in modern times—I mean the year 1793. About that period, Sir, Mr. Burke—no mean authority—published a book on the French Revolution, almost every sentence of which, however canvassed and disputed at the time, has been justified by the course of subsequent events; and almost every prophecy has been strictly fulfilled. One passage in that book is so completely, to the worthy alderman's purpose, that I am surprised he did not recollect it upon the present occasion. Mr. Burke, in describing the paper system of the French Revolutionary government in 1793, took occasion to contrast it with that sort of paper currency, which, until then, had always circulated in this country. "They imagine," he observed, "that our flourishing state in England is owing to the Bank paper, and not the Bank paper to the flourishing condition of our commerce, to the solidity of our credit, and to the total exclusion of all idea of power from any part of the transaction. Our paper is of value in commerce, because in law it is of none. It is powerful on Change, because in Westminster-hall it is impotent. In payment of a debt of twenty shillings, a creditor may refuse all the paper of the Bank of England." Mr. Burke concluded his observations on this subject by saying—what I very much wish we could say now,—"never was a scarcity of cash, and an exuberance of paper, a subject of complaint in this nation." Such, Sir, was the state of the paper currency in England, up to the year 1793; and to this good old system of our forefathers I am as anxious to return, as the worthy alderman, or any other hon. member, can possibly be.
Now, Sir, I will inquire, what are the objections which oppose themselves to the measure of my right hon. friend. The 324 hon. member for Taunton has stated, that government has so embarrassed and clogged up the Bank of England,, that that body is no longer able to manage the circulating medium of the country. Another hon. member has, this evening, followed in the same strain. I trust, Sir, that I shall not be supposed to mean any thing uncivil to those hon. gentlemen, when I state them to be totally in error; and by going over the paper which I hold in my hand, point by point, I hope I shall convince the House, that, in every item of the account, they are decidedly mistaken.
The hon. member for Taunton has stated the different sums for which, as he alleges, the Bank has become security for the government. In the first place, there is, he says, a sum of 6,000,000l. which the Bank has advanced for the government, on account of Exchequer bills. The hon. member next stated, what are called the "deficiencies;", namely, the advances made by the Bank, on the faith and credit of the receipts of the current quarter, amounting, as he states, to 7,000,000l. but which, in point of fact, amounted only on the 5th of January, to 5,500,000l.; and I can assure the House, that, at the time at which I am now speaking, they are reduced far below that sum. The hon. member has fixed the sum necessary for paying off the dissentient holders of the 4 per cents at 2,000,000l. The Dead Weight, as it is termed, he has described as swallowing up 8,000,000l; though, in fact, it requires only 6,500,000l.; and lastly, he has noticed the sum advanced by the Bank on mortgages, which amounted to 1,500,000l.
Now, Sir, the objection of the hon. member does not seem to be so much directed against the amount, as against the nature of the different charges. The tendency of the hon. member's speech was this—that his majesty's government have committed the crime of laying this heavy load on the shoulders of the Bank, and that the Bank, in consequence thereof, has been rendered incaple of exercising its proper functions.
Now, Sir, to take the hon. member's items in the inverse order of their introduction. In the first place, I must observe, that the sums lent by the Bank, in the way of mortgage, are no more a concern of the government than they are a concern of the hon. member himself. The Bank, Sir, thought fit,—and I certainly do not blame them for so thinking—in a 325 period of great public pressure, to do what appeared to them to be a great public good; at the same time that, by so making use of their resources, they were likewise benefitting themselves. They thought they had a right to obtain a just and fair advantage for the body of proprietors, by advancing, upon landed security, the sum of 1,500,000l. Whether they acted wisely, or unwisely, in entering upon this speculation, is a question which I do not propose to determine; and one with which the government had nothing to do. It was entirely in their mercantile capacity, and in the exercise of their mercantile discretion, that the Bank made the advance in question. It might be bad, or it might be good—but, it was a transaction with which the government had not any thing, even in the slightest degree, to do [hear, hear!].
Sir, as to the Dead Weight, I profess, as honestly for myself, as the worthy alderman professed for himself, that I have attempted to understand the arrangement. Though, Sir, it does not always follow—and in saying so, I mean nothing offensive to the worthy alderman—that the attempt to understand a subject, enables a man to arrive at that understanding [a laugh]. Sir, I am serious. I do honestly confess, that the arrangement of the Dead Weight I do not understand. But, whether the Bank made a prudent bargain, or a foolish one, with the government; or whether the government made a wise bargain, or an improvident one, with the Bank—has nothing at all to do with the present question. That which was done was simply this—the government sold an annuity, and the Bank bought one. The Bank took up the transaction entirely in their mercantile capacity. They might, if they had so pleased, have gone into the market the very next day, and disposed of their purchase to the best bidder. The government were no more responsible for the Bank holding in their hands that which they had bought of the government, than they were accountable for any indifferent transaction of that body. They had no more to do with it, than they would have had to do with the conduct of the hon. member for Taunton, if he, having taken a share in a loan, chose to keep that share entirely in his own hands, when, if he so pleased, he might have sold it. If inclined, the Bank had the power of getting rid of this bargain. They find, I 326 have no doubt, that they can make a greater profit by retaining it; and, such being the real state of the case, I must withdraw the sum connected with the Dead Weight, from the hon. member's argument; because, it must be evident to every gentleman who hears me, that if, in consequence of this bargain, the Bank are incapacitated from doing any act which may be considered beneficial to the country, it is their own fault, and not the fault of the government [hear, hear!].
Thus, Sir, I think I have fairly disposed of 6,700,000l. out of the 24,500,000l. with which the hon. member so confidently asserted that the government had loaded the Bank. The next item to which the hon. member adverted, was the sum of 2,000,000l. for paying off the dissentients on the 4 per cents. But this sum is in a regular course of payment; indeed, my right hon. friend, the chancellor of the Exchequer, intimates to me, that the debt will be entirely liquidated, in the course of the present year [hear, hear!].
Then comes the amount of Exchequer bills, and the deficiency bills, as they are called. And, with regard to these deficiencies, where, I ask, is the fairness and justice of the hon. member's argument? The hon. member thinks fit to assume, because the Bank is called upon to pay the quarterly dividends upon certain days, that that great body must therefore be considered to be out of pocket, during the whole quarter, to a large and embarrassing amount. The hon. member took no notice whatever of the constant and gradual reduction of the sum advanced. So far from it, the Bank may have, during a period of the quarter, large balances belonging to the government in their hands. The fact is this. The Bank, undertake to make certain payments on a certain day, on behalf of the government; and they are in the constant receipt of a portion of the revenues of the country, sufficient at once to repay gradually their past advances, or to prepare them for the advances of the ensuing quarter.
As I am not, Sir, very conversant in matters of this nature, I will endeavour to explain my view of the case, by supposing a parallel case in private life. I will suppose that a nobleman or gentleman, possessed of a large landed property, is bound to pay an annuity, say, of 4,000l. a-year, in four regular quarterly payments; and that he assigns to his agent the rents 327 and profits of certain parts of his estates, in order to meet this annuity. He would say to that agent—"All you have to do is to make my quarterly payments for me, and to reimburse yourself out of my rents, as they come in. If you should be in advance for the quarter, beyond what my rents will satisfy, then you will charge interest for such advance. On the contrary, if it should happen, that you have rents of mine in your possession, beyond what is required for the payment of the annuity, I ask no interest for the surplus money in your hands." With what justice, Sir, can it be said, that an agent, under such circumstances can be out of pocket? He may occasionally be in advance; but in that case he will be indemnified by receiving interest for his advance; while, on the contrary, he has the free use, without payment of interest, of any balance which may be at any time in his hands, beyond the amount of the fixed demand. Surely an agent thus circumstanced would have an advantageous agency; and is not the agency for the public, in the case which I have used this illustration to explain, a most advantageous agency for the Bank of England? The fact is, that in making this advance, the Bank of England are the bankers of the government, and the government deals with the Bank, just as the nobleman or gentleman would do with his agent, in the case which I have supposed.
The case will be still clearer if we examine how this arrangement between the Bank of England and the government works. On the 5th of January 1824, the sum advanced by the Bank for the public service amounted to 1,540,000l.—all of which was cleared off in the course of the next quarter. On the 5th of April following, there was an advance to government of 169,000l. This, Sir, was liquidated, in the course of a few weeks; namely, on the 28th of May: and, from the 28th of May to the 5th of July, the Bank remained in possession of a certain portion of the public revenue, with which it was at liberty to deaf, in the way most conducive to its own benefit, without being called on for the payment of interest. On the 5th of July following, the advance on the part of the Bank amounted to 1,600,000l. This, was cleared off on the 3rd of Sept. and, from that period, to the 10th of October, the Bank held a portion of the revenues of the government in its hands. 328 On the 10th of October the advance made by the Bank amounted to 1,400,000l. which was cleared off by the 10th of December: the Bank of England was again a gainer by the use of that portion of the public revenue which accrued between that day and the 5th of January.
On the 5th of January, in the present year, the advance made by the Bank for the public services—as has been truly stated by the hon. member for Taunton—amounted to 5,500,000l. But, Sir, on the day on which I am speaking, 2,700,000l. of that sum has been liquidated; and the remainder is in the progress of daily reduction [hear, hear].
Is this, Sir, a proceeding, that is likely to fetter the operations of the Bank? I deny that it is. I maintain, that it is an aid, instead of an impediment; and that, if the government, for any good reason, were to withdraw its business from the Bank, and place it elsewhere, the Bank so far from being relieved from a burden, would be deprived of a great and legitimate source of profit.
I am surprised, Sir, that it should have escaped the recollection of gentlemen, that in the report of the Bullion-committee of 1811, and again in the report of 1819, there is a distinct recommendation, that every statement of the advances made to the government, by the Bank, should be accompanied with an account of the balances of the public money which the government are in the habit of leaving in the hands of the Bank.
And what, Sir, is the average of those balances? The average of the balances left in the hands of the Bank by government—which balances the Bank is authorized to use for its own profit—amounts to no less a sum than 7,000,000l. So here, again, is an aid afforded to the Bank by the government, instead of an impediment thrown in its way, as stated by the hon. member for Taunton [hear, hear!].
Thus, Sir, I have explained away, item by item, this 24,500,000l., which the hon. member described as cramping and clogging the energies of the Bank, until nothing of the burden said to have been thrown on its shoulders remains, except, the six or seven millions of Exchequer bills, which the Bank now holds. I am sure the hone member does not mean to say—indeed he cannot mean to say—that this last is an objectionable item. The original charter of the Bank recognizes it. It is the 329 foundation of the whole superstructure. And, when the balance between the government and the Bank of England shall be struck, it must not be left out of the account, that the Bank are dividing 8 per cent upon a capital of 14,000,000l. instead of 7 per cent upon its original capital of 11,000,000l. The hon. member must be aware at what time, and under what circumstances, this change has been effected—that it has been accruing from a series of bonuses, divided amongst the Bank proprietors, in the years during which cash payments were suspended. And, Sir, it was with a reference to this fact, that, in one of my speeches, which I made in this House on the report of the Bullion-committee, I threw out, not a theoretical, but a practical proposition; namely, that during the continuance of the restriction of cash payments, the Bank should not be allowed to increase their dividends.
I think, then, there is nothing in the present state of the Bank of England, which justifies the complaints made by the hon. member for Taunton. Sorry should I have been, if the hon. member had made out his proposition, even to the extent of this last item; for if, as I gathered from one part of the hon. member's speech, he looks forward to some plan not yet divulged, for affording temporary relief, the Bank of England is the main instrument, by means of which any such plan can be carried into effect. It would be the greatest misfortune for the country, to induce a belief, that this mighty establishment is not competent to wield the great powers which are intrusted to it. So far as the government is concerned, I maintain, that the Bank has never been more disencumbered than it is at the present moment.
If, then, there is no difficulty, as between the Bank of England and the government, in carrying into effect the proposition of my right hon. friend, what are the difficulties, militating against that proposition, which exists with regard to the country banks?
It is admitted, Sir, that we have only an approximation to the amount of country bank-notes in circulation. No certain estimate can be made. But, it appears, from a comparison of the different calculations, that we should compute the amount rather too high, if we took it at 6,000,000l.; and, rather too low, if we took it at 4,000,000l. What will be the effect of my right hon. friend's proposition? Why 330 that this amount—be it 6,000,000l. or be it 4,000,000l.—will be paid off in the course of three years, that is to say, will be withdrawn from circulation. There are about 800 country banks. That number has, perhaps, been reduced, by the late unfortunate events to about 700. If we divide between that number of country banks the amount, say six million, of one and two pound notes in circulation, it will give a proportion of somewhat above 8,000l. to each bank. That would be about the sum which each country bank would, on the average, have to call in, and for this process it is proposed by my right hon. friend to allow a period of three years. In other words, time is to be given, to enable the country bankers to withdraw somewhat more than 2,000l. and somewhat less than 3,000l. per annum, from their small note circulation. After all that we have heard—and after all that I am quite ready to admit, with regard to the solidity and respectability of the country banks—surely, Sir, it will not be contended, that such an effort will so strain their capacities, as to bring ruin and confusion upon the country [hear, hear!]. Quite sure I am, Sir, that the proposition of my right hon. friend, however it may have been exaggerated in apprehension, is one, which, when reduced to its proper dimensions, and gauged by the rules of arithmetic, will shrink into so small a compass, that no feeling will remain, but that of surprise and astonishment that it could ever have been swelled to such apparent magnitude and importance [hear, hear!].
Now, Sir, white I deny that the effort is one which the country cannot easily bear, and while I observe that some hon. gentlemen treat the proposition as one of too narrow and confined a nature to produce any considerable effect, I think it necessary to remind the House, that however diminutive the immediate object may appear, it is great and mighty in principle [hear, hear!]. It is, I repeat, great and mighty in principle—if the effect of the gradual diminution of the paper circulation of those different establishments, shall be to restore, in the opinions and minds of men, the fixed and unerring principle of a metallic standard, for the currency of the country. If, Sir, it shall produce such an effect, the present effort, trivial and puny as it may appear in itself, will have achieved a great good, and conquered a growing evil—an evil which, if 331 not stopped in time, will go on increasing, until it becomes incalculable and insurmountable [hear, hear!].
Sir; we have all seen something of the growth and progress of the one-pound note system. I have already quoted Mr. Burke's account of the state of our currency, as it stood before the breaking out of the French Revolution. I came, Sir, into parliament, two years before that great man retired from public life. I had the good fortune to enjoy, during the short remainder of his natural life, a small portion of his private friendship. A letter—the only letter which I ever received from him—and which I have treasured up as a memorial of departed genius, was on this very subject. It was written at Bath, on that bed of sickness from which he never afterwards rose. After discussing the arguments for and against the measure of the Bank restriction, the letter concluded with this remarkable sentence—"Tell Mr. Pitt, that if he consents to the issue of one-pound notes, he will never see a guinea again" [hear, hear!]. Mr. Burke, like most prophets, was not believed at the time of uttering his predictions. One-pound notes were issued in abundance; they expelled, as had been foretold, guineas from circulation, and at length, as the hon. member for Taunton and myself must well remember, in the debates on the Bullion question, in 1811, it was found necessary to hedge the one-pound note with a divinity, which was never before supposed to belong to it, by the famous resolution of this House, which equalizes it with sterling gold. In the division of that day, the hon. member and myself opposed that resolution—to which my noble friend was the god-father, but not the father [a laugh, and cries of "Name!"]. No, Sir, I will not gratify gentlemen's curiosity by naming the father, but I can assure them Mr. Vansittart was not the father of the bantling, though he took upon himself to answer for its sins.
Seriously, Sir, the existence of that resolution forms a very good reason for acceding to the proposition of my right hon. friend. This, Sir, I am satisfied must be evident to every thinking man; and the fact becomes more evident, from something which passed in this House, in the course of last year. An obscure notion was prevalent throughout the country, that the one-pound country bank note was not necessarily convertible into gold, 332 on demand. This appeared from a petition, presented by the hon. member for Montrose, in which it was stated, that a respectable banker had refused to give cash for a one-pound note—grounding his refusal upon the mistaken assumption, that, by law, he was not obliged to do so.
Now, Sir, when such a mistake could have been made by a man of business, an educated man, is it not a strong reason for our coming to a resolution, by which the possibility of such a mistake being made in future may be avoided?
The hon. member for Callington (Mr. Attwood) has said, that, in passing the present resolution, his majesty's ministers are about to do more mischief than they had imagination to conceive. The hon. member must be a very inattentive observer, if he has failed to discover, in the mistake which I have just noticed—a germ of mischief which it becomes the bounden duty of government to smother, before it shall arrive at a fatal maturity. The hon. member has also asked, whether his majesty's ministers have, or have not, repented of the declaration which they, at that time, made, relative to another suspension of cash payments. The hon. member seems to think, that a period may arrive, nay, that there has been a period, at which that resolution was on the point of giving way. For myself, I will say, that I do not contemplate the possibility of such a thing; and, if any one asks whether our resolution has at any time been shaken—for myself and my colleagues, I unhesitatingly answer—No; not for one moment [hear, hear!]. The hon. member has said, that this is all vapouring—that the time may come, when hard necessity will compel us to depart from our determination. The hon. member is mistaken. Sir, what we said—and what I now repeat—and what, under any circumstances we shall be found not to deviate from—was this—that we will not again fix on the Bank a coercive measure, to prevent them from paying in specie [hear, hear!]. A time may possibly arrive—though for my own part I have no more idea of the arrival of such a state of things than I have of a general convulsion of nature—a time, I say, may possibly arrive, when events may impose upon the Bank the necessity of a voluntary restriction: but this I will say—that no lapse of time—no change of events, will induce us to ward off that evil by consenting to interpose the powers of the 333 government, to put a stop to the regular circulation of the country, and to substitute for it a forced paper currency, not convertible into gold, on demand [hear, hear!].
If then, Sir, I have shewn, that there is no practical difficulty in removing so much of our paper circulation as is contemplated by the present resolution—and if, on the other hand, it would appear that a positive benefit would be derived from doing so—I would ask of those who oppose the measure, to point out what good can be derived from the continuance of the issue of such paper? I would even ask them, whether its continuance is so perfectly harmless as to call for no interposition? Is there nothing, Sir, independent of the swelling of prices, and the raising the value of commodities—is there, I would ask, no practical reason, which comes home to every breast, to call for an alteration in the system. Are there no opinions in the country in favour of those who support this proposition? Is there no district in the empire, into which these small notes are not permitted to enter—no province in which the use of them is entirely unknown? Do not gentlemen know, that a project for the issue of one-pound notes was unsuccessfully tried, some time ago, at Manchester? It is sufficient for me only to mention the names of Lloyd and Heywood—to which I could, if necessary, add others of equal weight and respectability—to convince every one who hears me, that the objection to the enterprise could not have had its foundation in any distrust of its authors. Nevertheless, Sir, as soon as an attempt was made to carry the speculation into effect, a public meeting was held at Manchester, at which the Boroughreeve presided; and, so loud and so general was the disapprobation of the projected measure—so violent was the hostility to the introduction of an element, without which some gentlemen seem to suppose the ordinary business of the country cannot go on—that the enterprise was, of necessity, abandoned [hear, hear!].
Are gentlemen aware, Sir, that a circle drawn round the great trading town where the above resolution was come to, would embrace a population of about two millions of souls; and that a similar circle drawn round the metropolis, would include an equal population, amongst whom the circulation of small notes is unknown? 334 And, do they reflect, that here are four millions of Englishmen, who know not practically what a one-pound note is? And yet, Sir, we are gravely told that without this species of circulating medium, not only is prosperity unattainable, but the very fabric of society is in danger of being dissolved [hear, hear!].
But, Sir, is there no other incentive to the adoption of the measure now proposed by my right hon. friend? Is it not known, that, not many weeks back, in consequence of the failure of the banks, a deputation waited upon his majesty's government, from the neighbourhood of one of the dock yards, and represented that they had not the means of paying the workmen their wages? All the banks in the neighbourhood had failed; and, such was the state of things, that not a bank note was to be procured. Is a state of things like this to be suffered to continue? Is it not a mischief, the possible recurrence of which, it is the duty of government to prevent? I trust that nearly all that was frail and feeble amongst the country banks is already gone. But though I am persuaded that the confidence which I place in such of them as have stood the shock is not ill-founded, does not the example of the past render it incumbent on us now that the opportunity is afforded us, to fix on a more solid basis, the circulation of the country?
But, Sir, it is vain to think of introducing gold, amidst the overwhelming spread of small paper circulation. So long, Sir, as that circulation shall continue, so long will the gold, of necessity, disappear. The small paper chokes up all the ordinary channels of circulation, so that the gold, though issued from the Bank, cannot flow into them, but is returned back to the source from which it came. We are accused of wishing to confine the circulation to the precious metals; but, in this respect, our views have been greatly misunderstood. Gold may be adopted as a medium of circulation, without trenching upon the use of the paper currency of a higher designation, or coming into collision with that article which furnishes the means of so large a proportion of mercantile dealings; namely, bills of exchange. Such paper you may pile mountains high, and those mountains will stand, provided their basis be irrigated with gold [hear, hear!].
But some hon. gentlemen have expressed their surprise, that the same indivi- 335 duals who halve raised such an outcry against the smaller species of bank notes, should declare themselves in favour of notes of a higher denomination. Now, Sir, the only surprise is, that there should have been any surprise at all [a laugh]. Sir, the one-pound note possesses qualities which the larger notes do not. The larger notes, indeed, like the smaller, are so many promises to pay the equivalent in metal: but it is in the one-pound notes, that these promises are daily put to the test. When the labourer, or mechanic, presents a one-pound note, and finds that, instead of gold, nothing is to be had in exchange for it, but another piece of paper like itself—what is the consequence? A want of confidence grows up amongst the lower orders—through whom—and from them to their superiors—that want of confidence spreads with increased rapidity—involving in it the destruction of commercial credit, and depriving thereby the working classes of the present mean's of subsistence.
In the one-pound note there is this marked difference from the larger paper—that it is the representative of the sovereign—the express "image and superscription of Cæsar." The king coins not bills of exchange, nor large notes, but sovereigns. The inability to get a sovereign for that which professes exactly to represent it, and to be equivalent to it, is a more sensible disappointment and breach of faith than an exchange of paper for paper; and it is a disappointment and breach of faith which falls directly on the poor. The coiner of the one-pound note, if he does not exercise the prerogative of the Crown, fabricates a manufacture which takes the place of the king's coin. The resolution of my right hon. friend, should it receive the sanction of the House, will go to correct this evil. I am convinced, that the legislature cannot do an equal quantity of good, in any other way, with so little sacrifice, and with so slight an effort.
It is impossible, Sir, to have attended to the course of the present discussion, without discovering, that the opponents of the measure are divided into two classes. One class—and that, I am afraid, by fat the larger of the two—while they openly profess to have no other object but to procure delay, and to have the measure postponed to a fitter time, really mean quite another thing; and are desirous to choke—to use a word which has been more 336 than once employed in the course of the debate—the measure altogether; this professed object of gaining time is neither more nor less than a cover for a rooted, fundamental, unsparing, and unextinguishable objection to the circulation of any other currency, than that which prevailed daring the war.
There are others—and these constitute the second class—who realty seem to think, that to gain time is itself an object of importance; and, at the head of this class, is the able and enlightened member for Taunton; who, however unaccountable his present views may appear, is imbued with as just and correct a general notion of what sound circulating medium should be, as any of the supporters of my right hon. friend's proposition. Some of this class are of opinion, that there is something peculiarly unfavourable in the time that has been chosen for carrying my right hon. friend's proposition into effect. Now, Sir, I contend, that the present time is the very best that could be fixed upon. If any of those who object to the present time mean to say, that the thing should have been done long ago, I agree with them. But, in justice to his majesty's government, I must be permitted to say, that in 1822 they were foiled in a similar attempt. Had not the bill then brought in to extend the circulation of small notes for two years been altered in this House, and the period of ten years substituted for their original design, for that of two, I believe that England would now have been m the state of prosperity from which she has momentarily fallen; and I am convinced we should not, at this moment, have had imposed upon us the necessity of devising means for the preventing the recurrence of calamities similar to those which we now experience.
Let the past be a lesson to us for the future, and having once erred so fatally by postponement, and feeling as we do the ill effects of it, let us seize the present time as the most appropriate for an effort to restore the circulating medium to its proper, sound, and healthy condition.
As to those who, under the mask of delay, are fondly looking to a perpetual, unlimited, unregulated circulation of paper, I beg them to recollect how the law, with respect to the currency, at present stands. The existing law will, at the furthest, put then favourite one-pound notes to death, in the year 1833. That is 337 the remotest period to which their existence can be protracted, under the provisions already made by parliament. That extinction, let gentlemen remember, will be coincident with the expiration of the charter of the Bank of England. Will any gentleman tell me, that that would be a convenient time for the withdrawing at once of these small notes; or, if not, for again discussing and disposing of a question of such vital importance? I presume that no one will assert, that it would be particularly convenient to make the expiration of the Bank charter, and the withdrawal of the one-pound notes contemporaneous. I take for granted that the stoutest advocate for delay is not prepared, at least at the present moment, to extend the circulation of the small paper of the country bankers to a later period than that to which the Bank charter is limited—that, indeed, would be to meet the question boldly, and to call for a circulation of perpetual paper unadulterated with gold.
All that is proposed by my right hon. friend is, to get rid of this system four years sooner than was contemplated by the act of 1822, as it passed this House, but not by the bill as brought in by the government. The abundant space of three years is still to be allowed, for carrying into effect the alteration: not one of the many gentlemen who wish for a little more delay—only a little more delay—in passing the measure, have attempted to assign any reason for the precise period of further delay which he has required. The hon. member for Taunton thinks that one year of grace would be necessary; while, on the other hand, another hon. member is of opinion, that even a month's delay would be sufficient.
Sir, I confess I object alike to both these suggestions, and cannot approve of any delay, because I am convinced that—no matter what the assurances, or pledges, or explanations may be, with which it is accompanied—out of doors delay will be considered as a defeat of the proposition of my right hon. friend. Such, assuredly, will be the construction put upon it, by that party in the country, whose interests induce them to look to the indefinite prolongation of the circulation of the one and two pound notes.
But, Sir, supposing the advocates of delay to deny my conclusion, supposing those hon. gentlemen to be, really and 338 bonâ fide, sticklers for time, merely to gain an opportunity for preparation, on the part of the country bankers—will they, or will any one of them, undertake to answer, that the interval given them with a view to preparation will be so used? On the contrary, Sir, may it not, I ask, if granted, be employed, not in such preparation, but in taking steps to prevent the possibility of a recurrence to cash payments?
The hon. Baronet* opposite seems, by his manner, to admit the justice of my suspicion. And, indeed, he has too open and ingenuous a countenance to indicate any thing except what is really passing in his mind. I am almost tempted to ask my hon. friend, whether he has not heard of schemes in preparation for the defeat of this measure, which would, if put into execution, render it idle to resume the discussion of this question in a year, aye, or a month from the time at which we are now speaking.
Let us see, Sir, what encouragement we have to concur in the line of conduct recommended by the advocates for delay. For years and years his majesty's ministers have been assailed with representations, urging the propriety of throwing open our commercial system. We were called on, session after session, by enlightened members on the other side of the House, to make our trade free as the air, to enlarge it by opening it to all the winds of heaven, to extend it to the very ends of the earth. This, Sir, we were called upon to do; and, I am willing to admit, in perfect rectitude of intention, by men generally holding political opinions different from our own.
Sir, we have attempted to free the trade of the country from those restrictions which cramped and encumbered it; and to establish an enlarged system of commercial policy, more consonant with the spirit of the age, and with the demands of our situation. In adopting the regulations necessary for the carrying such a system into effect, we found, that if there was any one branch of our trade which, more than another, called for revision, it was the silk manufacture of this country: and, acting upon this conviction, and aided by the honest, honourable, and effectual assistance of those who had previously, from time to time, preached
*Sir J. Wrottesley.339 similar doctrine, we succeeded in carrying their opinions and our own into effect.What was the course taken by the opponents of that measure. After the entire defeat of their opposition to it, what did they do? They asked for time, to enable those who were engaged in the silk trade to prepare for the altered system. Sir, the time was given. And how was that time employed? In preparing for the opening of the ports? In taking steps to adapt the silk trade to the state of things that was about to arise out of the new law? No such thing, but, in raising every possible obstacle to the operation of that law—in doing every thing that human ingenuity could devise, to make the new arrangement, which comes into effect in July next, impracticable. Has there been, Sir, any gradualalteration adopted in the mode of manufacturing and trading in that article, calculated to meet, and to give effect to, the proposed regulations? No. Was employment gradually reduced in extent, or the importation of the raw material lessened? Neither. The market has become glutted with a redundancy of manufactures, sufficient in itself to have occasioned the existing distress in that branch of our trade; and by the increased importation of the raw material (which, in the last year alone, was more than doubled) the distress has been still further increased. And, after all this, an outcry is now raised upon those very difficulties which have been thus wilfully and purposely contrived, and a fresh appeal is founded upon them for a still further prolongation of the restrictive system [hear, hear!].
Is this any encouragement to us to comply with the call for delay in the present instance? On the contrary, with such an example before our eyes, to grant a further delay would, in this case, be to fall twice into the same error; in fact, to stultify our own measure, and to render it impossible, when the time shall arrive, to carry it into effect.
I hope, Sir, it is entirely unnecessary for me, or for any member of his majesty's government, or for any member of an English parliament, at this time, to avow the sorrow and anxiety which every feeling man must experience, at the commercial and financial distress which prevails to so large an extent throughout the country. Indeed, I am bound to confess, that, much as I differ in opinion with several hon. gentlemen who have taken part in 340 the present discussion, there has been, nearly on all hands, a prudent and generous avoidance of such topics and expressions, as might, if introduced into debate in this House, have been made use of out of doors, whether mistakenly or mischievously, to enhance the difficulties of parliament, to embarrass the ministers of the Crown, and to aggravate and inflame the national distress. The question has been fairly argued on its own merits, and with an honourable abstinence from every thing that could have had a tendency to create unnecessary irritation. It cannot be necessary for an assembly of Englishmen to declare, that they feel for the distresses of persons, with whom every individual of that assembly must, necessarily, be more or less intimately connected, or acquainted: and far less, to make a protestation of their sympathy with the privations and sufferings endured by the more humble, but not less valuable, class of our fellow subjects, upon whose labours, and upon whose comfort and happiness, the well-being of society depends. It is with regard to those humbler classes of the community that I think this measure, important as it is to all, of the most immediate importance.
I am not so absurd as to assert, that the proposed alteration of our currency will directly put an end to those commercial embarrassments, which have mainly arisen out of the unwholesome and preternatural extension of commercial speculation; but this, Sir, I do say distinctly, that I believe it will tend materially to prevent the recurrence of that distress, which, beginning with the higher, is sure to find its way, sooner or later, to the lower classes of society.
Sir, it was the wish of the most favourite monarch of France, that he might live to see the day when the condition of his subjects would be so far improved, that every peasant in his realm should have a fowl in his pot on a Sunday: and sure I am that if this resolution of my right hon. friend should be acceded to, it will at least do this much for the peasant and artisan of England—that it will ensure to every man at the end of his week's toil, that he shall carry home, as the earnings of his week's toil, not a piece of, perhaps, worthless paper, but a portion of the precious metals in his pocket [loud cheers].
§ Mr. Pearsedefended the conduct of the Bank of England, and complained 341 that justice had not been done either to the motives or interests of that establishment. The public had been taught, as it seemed to him, to form a very erroneous estimate of the profits of the Bank; which had been by no means so large as some hon. members had insinuated. Allusion had been made to the subject of the dead weight, and to the loans upon mortgage. The fact was, that public establishments could not always act as they pleased. Both those undertakings had been reluctant measures on the part of the Bank. For the first, when it was found that the plan could not be carried into effect without their assistance, sanctioned as it was by parliament, they were anxious to give their aid towards putting it in execution, if possible. Then it was said, that the Bank might have disposed of a part of this incumbrance; but so, let it be recollected, might the government have funded part of their Exchequer bills, and they had not done so. If there was any fault, one side had as much of it to answer for as the other. Large balances of the public money, it was said, had lain in their hands, and by these they had profited largely; but, it was not remembered that they had also lent the public a large sum for eight or ten years, without interest. Of the profits which the Bank was charged to have made during the war, he could undertake to show, that the greater portion had reverted to the public. The charter held by the Bank too had been held up as an exceeding grievance. All he would say was, that if the terms of that charter were to be materially changed, he should think it a very unfortunate thing for the country. All he wanted from the charter was, that it should secure the Bank from having a rival establishment set up in London. He would explain why. If there were two rival Banks in London, the contest would immediately be, which should get the greatest quantity of paper out. Responsibility would be quite out of the question. Let the House regulate the privileges of the Bank by its charter as they would; but let them guard against having a competition between two establishments in London. He would now notice the extraordinary change which had lately occurred in the circumstances of the country. He felt quite certain, that neither the circulation of country bank notes, nor the issues of the Bank of England, had in any degree worth mentioning contributed to it. England 342 was a country in which every thing like mercantile speculation was sure to be pushed to the utmost. Only open a new field for effort of any description, and the effort was sure to be made. The fact was, that it was by bills of exchange, and not by any country notes or bank issues, that the enormous capital used during the late speculations had been provided. He believed he could address himself to one banker who was a member of that House, and who, at one time, held in his possession from three to four millions' worth of merchants acceptances, which he had discounted. That which had been called abundance and surplus of capital, had, in fact, been abundance and surplus of paper; not country or London Bank notes, but bills of exchange—some good, some indifferent, and some very bad indeed. This had given rise to overtrading, and that had essentially produced all our difficulties. When one banking-house in London stopped, more than forty country banks suspended payment. Other banks followed: this produced a panic: the panic once commenced, confidence was gone; and as it was impossible to restore confidence, the country still remained in a state of dismay.
Mr. Baringsaid, it was not his intention to take up a great deal of the time of the House, nor would he, in fact, have troubled hon. members at all, but that he intended to propose an amendment, in order to bring the question at once to a decision; because he was quite convinced that discussion from day to day, whatever might be its result, would have the certain effect of aggravating the difficulties under which all interests at present were labouring. What the country wanted mainly was, that the question should be set at rest. Let the decision of parliament be taken and made known, and interests would endeavour to accommodate themselves to it; but, if the House was to go into a committee, and argue the subject at length, so long as that discussion lasted, the country would be kept upon the rack. Therefore, under such circumstances, he felt it his duty to take the sense of the House at once upon the proposed measure. He felt most strongly that it was an ill-advised measure, and would add to the distresses of the country, but that, whether carried or rejected, the sooner it was dismissed the better. What he meant to embody in his amendment, was an opinion, common, he believed, to 343 all the opponents of the proposed measure; namely, that the state of the country at the present moment was an unfit one for making experiments. As far as he was concerned, if the House supported ministers against him upon this division, he would consider the issue as decisive, and give no further opposition to the measure; which, if it was to pass, he desired should pass as speedily as possible. Before dividing, however, he thought it his duty to say a few words, and would in the first place desire to call the attention of the House to the very peculiar situation in which the country stood. No man who had known the country, however long, and its commercial affairs, had ever, he would venture to assert, beheld so entire an absence of confidence as existed at the present moment. For, though a very clever speech, like that of the right hon. foreign secretary, delivered in the House of Commons, might conciliate and give confidence to those who heard it; yet, to the country at large (who did not hear it) that confidence would not extend; and the practical necessity which many people would find, notwithstanding that speech, of paying up immediately all sums that were due from them, would tend greatly to interfere with their otherwise sense of the right hon. gentleman's flattering and conciliatory view. Let it be recollected that, in spite of all eloquent speeches, the House stood in this situation—the men of business in it, from one end to the other, told the right hon. gentleman to beware. He did not believe there was one banker or merchant in the House, on whatever side he might be accustomed to vote, who would venture to say, that he thought this measure could be carried without injury to the country. The hon. member for Midhurst (Mr. John Smith) was the only individual who had come near the mark; and he had gone no further than to say that, upon the whole, he should be inclined to vote for the measure. On the other side of the House there was great strength in the way of talent—great reinforcements from the Temple, and from Lincoln's-inn—great force of those who studied from books, and held practical men in contempt—but no other man of business had supported the measure but the hon. member for Midhurst; and all he had said was, that, upon the whole, he should be inclined to vote for the measure. And, moreover, with all the brilliant eloquence of the right 344 hon. secretary, who was a great orator, a profound statesman, and possessed a hundred other qualities calculated to persuade and to attract admiration, that right hon. gentleman would not feel offended if he said that, upon a point like the present, he would prefer taking the opinion of the right hon. gentleman on his right hand, the president of the Board of Trade. The right hon. secretary seemed to him to stand pretty much in the situation in which lord Chesterfield expressed himself once to have been placed. "Some plain man," said his lordship, "from a corner, made a long heavy discourse upon the matter, which he understood very well; but he mumbled and stammered so that nobody cared to listen to him. I then got up, and without knowing any thing of the subject at all, made a most brilliant and dashing speech upon it, and, on concluding carried every thing before me." Let the House, however, resist the effect of this kind of fascination, as far as they could do so, and look at the question coolly. What he said was—do not lose sight of what should be done eventually; do not forget what it will be wise to bring our currency to; but first soothe the country and quiet it, and then come, if you will, with your experiments, which, however ingenuous they may be, must, if passed at the present moment, be brought about at the expense of very considerable suffering. The chief difference, in fact, between him and the hon. gentlemen opposite was, as to the question of time; and upon that question, he did think the men of business in the House were better qualified to judge than the abstract reasoners. The one-pound notes, which there was this hasty anxiety to get rid of, had a great deal laid upon them for which they were no way bound to answer. The country bank notes were charged as having caused, or aided, the late unreasonable and visionary speculations. Why, the fact was, that the bubbles, every one of them, were town made. It was the country booby, who was the dupe of the London sharper. London, Manchester, Liverpool—these were the spots in which the vile schemes for speculation had been invented—places in which no country one-pound bank notes at all existed. If the notes had nothing but the speculations to answer for, he would venture to say that they stood entirely clear. In the same way, with reference to what had been said of the offence against the pre- 345 rogative of the Crown, upon what principle it could he shown that making a one-pound note was a greater offence against the prerogative than making a five-pound note, he was entirely at a loss to imagine. But, he neither defended nor supported these notes upon principle. He agreed that they were a nuisance, and a nuisance which ought to be abated: and, if no other argument could be adduced against them than the danger to which they exposed the working classes, that argument alone, he should hold, was quite sufficient. Besides, he agreed that, by taking away the notes, it would be possible so to saturate the country with gold and silver, that we needed not to mind the loss of any quantity which would be carried away by such an accident as the fluctuation in the exchange. The only question between him and other gentlemen, was that of time. Some of them put the case as if the present instant were all that was to be considered. It had been argued, that now was the time or never. The argument seemed to treat them like children. If the country bank small note circulation was inimical to the welfare of the country, who could doubt but that, when the proper period should arrive, the House would do that which would become its dignity and functions? What need, then, of this precipitancy? The case was put always as if the paper circulation had grown up in opposition to the connivance and contrivance of the Bank and the government. It was the parliament who had raised up the paper circulation. He complained of the great fondness that was entertained by some gentlemen for their particular views; who, when once they got the patient within their power, a theory having opened to them previously, proceeded with their operation; the agony and suffering of that patient causing no remorse or abatement in the rigour of their practice.—If any practical man in that House could show how the step could betaken without danger, he would freely give up his judgment to the philosophers and theorists; but until then, he thought the right hon. gentlemen opposite were taking a great responsibility upon themselves. Adverting to the conduct of the president of the Board of Trade, the hon. gentleman said, that two years ago, he had expressed the opinion which he now held, that in the manufacture of silk the English manufacturer could not compete with the manufacturer of France and Switzerland. 346 Suppose now, that the government, and those who sided with them, should finally discover themselves to have mistaken the subject. Was not one mistake enough for one period? A great deal was expected from the measure of taking off the restrictions on the importation of foreign silk. He was convinced that those who entertained such expectations would be deceived. But why, in the same year, do something else which must aggravate the distress which was now felt in almost every country town in the kingdom? The right hon. the president of the Board of Trade could not possibly be aware of the real state of the country. He could not—it was plain from his declarations, that he did not—understand the cares and anxieties which beset thousands as to their ability to pay according to their undertakings. But, suppose they should be right in one of those measures, why should they persist in making this great experiment on 300,000 or 400,000 manufacturers, who would, in all probability, be turned out of the means of existence? Why not be content with one difficulty at a time? To say the least, either of those measures was a novelty. If they resolved to try this novelty in regulating the currency, why choose that very time for trying the experiment of a competition with France in an open trade in silks? Suppose they should afterwards see their mistake. Ruin would fall on millions, while, at the same moment, the country would be labouring under the accumulated distress which must be incidental to the withdrawing of a considerable portion of the currency. Trade, already in a state of great confusion, would be still more confused. And, by the middle of the year, they might witness such scenes as were acted throughout the country in 1819. The blacking-man would go round the districts, aided by crowds of itinerant patriots. The stomachs of the unhappy people being empty, their credulous ears would be open to suggestions of sedition and discontent. He pronounced this policy to be the most foolish risk ever incurred by any administration. Now for a few words on a very important part of the case. When this discussion opened, he had stated the awkward and ill-managed contrivances of government in resorting to the Bank of England for aid, when they might have raised money far more easily and economically; the 3 per cents, being at that very period at 95. He had stated, 347 that at the end of the American war, the Bank had all but stopped payment: in 1797 it did actually stop payment. In both these cases the causes assigned for the pressure on the Bank, both by the Bank and the public, were the aids given by the Bank to the government. On these occasions, the Bank having made a forced abundance, and promoted speculations in schemes by that abundance, next resorted to a contraction of their issues, which produced the calamities ascribed to these unfortunate country bankers notes. They had, to use the language of the right hon. foreign secretary, raised the balloon to the skies, and had then put a pin through it and sent it to the earth. The right hon. gentleman had found fault with the statement which he had made of the Bank having 24,500,000l. locked up by government, as being uncandid and unfair. How did the case stand, according to the admissions of the right hon. secretary? The amount of Exchequer bills he did not attempt to overset. As to the dead weight, which he had taken at 8,000,000l. the right hon. gentleman took it at 5,500,000l. The dead weight actually paid in July, 1805, was 6,917,000l.; the dead weight paid in January of the present year was 1,100,000l. The right hon. gentleman deducted the advances made by the government towards the current payments, but did not seem to take into the account, that these advances were, in fact already disbursed by the Bank; though it might be very true that, upon a scale of four years during which the annuity continued, they would be refunded with sufficient advantage to the Bank. But how did this disprove, that the Bank had already 8,000,000l. of their present capital locked up in the dead weight? With respect to the payment by the Bank of the dissentients on the reduction of the 4 per cents he had taken it at 2,000,000l. The right hon. gentleman had taken it at nearly 4,000,000l. so that here he had been mistaken, and had calulated it at too little by 1,500,000l. As to the deficiencies, they were, it was true, received again and again, and perhaps most frequently within the quarter. What he had said was, that at a period of great difficulty, the Bank was in advance with those deficiencies: so that altogether it had locked up, by the wants of government, no less than 24,500,000l. It was true that government had cash at the Bank usually to the amount of 6,000,000l. but that money was continually subject 348 to be recalled, and appropriated by the vote of parliament. He begged the House to recollect that his comparison had been drawn between the present period and 1797; at the former, the government had 24,500,000l. of the capital of the Bank engaged in its transactions; in 1797, the Bank had only 10,000,000l. locked up by the wants of government, and then the Bank was obliged to stop payment.—Upon the whole, he saw no reason, for dread or apprehension, now, under a wise and discreet management. He differed from those of his hon. friends who thought that the country could not go on under its present burthens. He did not wish to urge his own sentiments beyond an amicable difference of opinion; but he thought that with care and management in the State, with a rigid economy enforced in every department of government, and a disposition on the part of the people to bear something more than the mere burthen of providing an income, all might yet go well. It had been said, that though the Bank had so largely accommodated government, yet that there could be no embarrassment, because it held government securities and Exchequer-bills to an equal amount. The hon. member himself could make these securities available. But the Bank could not. In a time of difficulty the Bank could not raise 5l. upon these securities. He was convinced, when he heard that the Bank was disposing of Exchequer-bills, that it would lead to considerable embarrassment, and the result had shown, that the derangements of the money-market were aggravated by the Bank just at the time of selling Exchequer-bills. Referring to the resolution of the House in 1816 that a one-pound note and a shilling were equivalent to a guinea in gold, the hon. gentleman said, he was sorry that the author of that celebrated production, "that great unknown," who had favoured the parliament and the country by so luminous an entry on their journals, was not here to enjoy his just triumph. He believed it was lord Bexley who had made that important disclosure. At any rate, if lord Bexley was not the father, he was the godfather of that sapient declaration, and had notoriously introduced it to the House, in a long speech of his own. As to the immediate question, he would say, leave the thing alone for the present. Whatever number of country-bank notes had been out they were now considerably diminished; and the state 349 of the country rendered any precipitate contraction of the remainder higly inexpedient. He would therefore move, by way of amendment, "That, it is the opinion of this House, that in the present disturbed state of public and private credit, it is not expedient to enter upon the consideration of the Banking system of the country."
Mr. Grenfellsaid, he could not tell whether his hon. friend would consider him a practical man. However, be that as it might, he would give it as his deliberate opinion, that not only might this measure be with safety adopted, but that in his conscience he believed there would be no safety for the circulation of the country without it. Further, he would say, that, in all his communications with practical men, he had not found one who did not declare that the cause of the pressure originated in the country-banknotes, and that one of the remedies was their removal.
§ Mr. Broughamsaid, he could not, on a question of such importance, content himself with a silent vote. Whatever opinion his hon. friend might hold of his being a practical man, he would endeavour to state, as shortly and as practically as he could, the reasons why he differed from him, on the only ground respecting which there could be any difference of opinion. His hon. friend, practically speaking, was of opinion, that a recurrence to a metallic currency was necessary to the support of our commerce; and that, without getting rid of the small notes, it would be utterly impossible to arrive at the desired result. Thus far they were agreed; and the only question between them was as to time. Now, a few words on that point only. His first reason for dissenting from his hon. friend as to time was one as purely practical, and as little visionary or theoretic as could well be imagined. His first reason for the immediate adoption of the measure, as contradistinguished from a postponement, was, that the plan was already partly in execution. His first practical reason was, the consequence of the over-trading and panic by which the mischiefs had been aggravated. The small notes did not cause the over-trading, or originate the mischief; but, when the mischief had arisen, it was then very materially aggravated by the small notes in circulation. Runs were accordingly made: and it could not be denied, that when fear seized the minds of the holders of notes, the 350 persons rushing in were not the holders of large notes, but those persons who had saved up small sums of money. In this way the public calamity was increased. The consequence was to diminish the confidence in the banks; then to produce failures, and then to displace the small notes; which displacing of the small notes was as completely accomplished as by the full execution of this measure. The mischief had been felt; and the question was, shall we go back, or take such measures as may guard against a recurrence of the evil?—His other reason for differing from his hon. friend was this.—Did any man entertain a shadow of a doubt, that if this measure was not accomplished now, it never would be? His hon. friend would not say when. He had hinted something about a year; but this measure gave more time than even that hinted at by his hon. friend. His third and last reason for differing from his hon. friend and others, was this, that although they foretold evil as likely to result from the measure, they did not condescend to show how. Was it by increasing the indisposition of the banks to make issues? There was a great distrust of narrowing issues, and refusing discounts; the reason of which was, that the customers were not deemed so trustworthy; but, if any man of good credit were to go to a country banker, he would not say he would receive as much accommodation as before, but he was satisfied he would receive as much credit as he ought to receive at any time. If they should come—unfortunately, he must say—to a resolution, that the old notes were to be allowed to wear themselves out without taking proper and efficient measures to prevent the re-issue of the stamps, the consequence would be, that they would be renewed, and at the end of two or three years, they would find themselves just where they set out. If they should abstain from touching these small notes at all, and listen to those who prayed for delay, why then, they might be assured, that the gold would be effectually kept out; and if, at the end of a year and a half, as one hon. gentleman seemed to think, or three years, as was held to be a sufficient time by another, or any other period, no matter what—they should flatter themselves with the idea of the small notes being given up, he would tell them that that time would never come. Nothing could, therefore, be gained by delay. There was a point of theirs, con- 351 nected with the question, to which he had been unwilling to give up his mind, but which had been forced upon him at length by experience of practice; namely, that a paper currency, convertible into gold, could not exist with gold. This was contrary to all theory upon the subject, and at variance with all the positions laid down by political economists; but it was a truth which he could no longer resist, that when there was a paper currency convertible at will into gold, and a gold currency at the same time, the gold would Boon disappear from the circulation. If, therefore, they yielded to the present request for delay, when the time came which had been conceded to their request, if it proved to be a season of difficulty, they would say, "this is not the time, wait yet a little longer, till the present storm blows over; this is not the time for changes or innovation, do not interrupt the course of things by speculative theories till the present danger is passed." If it should happen to be a time of prosperity, why then they would be told to leave well alone; they would be reminded of that cordial virtue of their ancestors, the quiet contentment under all abuses; they would be told, that they might better themselves a little to be sure, but they might be much worse, and they should know when they were well off. In short, take it as they would, they would find, that no alteration could ever be brought about with their consent. There might, it was true, be some argument adduced against those who now wished to put an end to the system of small notes, if they were beginning to displace them at this moment, but the ground for that argument no longer existed. Few of the banks which would be affected had any paper of this description in circulation. He had already stated how, in his opinion, the theory upon the subject of the gold currency differed from the practice; for, that the gold disappeared when in co-existence with a paper convertible into gold, was a fact undeniable. Whether it was that the greater portion of small notes circulated among poor people, who were ignorant of the power they possessed to convert it into gold; or, whether they did not consider themselves free agents to require from those who uttered these notes, the amount of their bond—the fact was undeniable, that the gold did not get into circulation by means of these notes, and that, contrary to all theory, it did not 352 retain its place in a circulation of mixed paper and precious metals. One hon. member had gone the length of maintaining, that no currency was more fitting and proper than one composed entirely of paper; for his part, he thought that no country could have a sound and wholesome circulating medium from a paper currency, deprived of gold and silver; because, these precious metals seemed to be naturally designed for such a purpose, from their intrinsic value.—The hon. member for Taunton, with whom he regretted upon the present occasion to differ, had recommended silver to be added to gold as a standard of value; although he had not exactly explained how that was to be accomplished. One word he would say about tampering with the currency. If ever the time should come (and God knew it pained him to make any allusion to such a subject), but, if ever the time should come, when, by tampering with the currency, it should come to be depressed, he hoped they would look their difficulties fairly in the face; he trusted they would meet them manfully and honestly, and bear without shrinking, and without artifice, the duty which might be imposed upon them. His reason for objecting to silver as a standard instead of gold was, that gold was less easily procured, and subject to no other loss than the wear and tear of its transition from one hand to another; whereas silver, from the mines of America, by the discoveries of modern mineralogists, and the improvements introduced in machinery, was much more likely to sustain great fluctuations in value, which would render it unfit to be a permanent or universal standard.—He had only one observation to make in conclusion; namely, that whatever might be the result of the bill which he hoped to see introduced—whether it might have the effect of remedying the evils which they had all seen to be the result of the system intended to be put an end to—or whether those evils continued, and even increased, after it had been called into operation; if those who now opposed it should hereafter, as he, without being endowed with the spirit of prophecy, could foretel they would—if, he repeated, they should, when the miseries of the times continued, or perhaps increased, call upon the advocates of the bill to look at the consequences of their work, and recal to their recollection the arguments and entreaties used to prevent 353 the passing of a measure which had produced such calamities; he would tell them, if any or all of those miseries happened, to recall to their recollection the month of December—that gloomy and fatal period—the most disastrous, and most horrible, perhaps, in their commercial annals. He would say, let them look back to that period, and if they pointed to the distress or the distrust which may hereafter exist, remind them of the last fourteen days, or three weeks, before the discussions in that House—let them call to their remembrance the bankruptcies, the universal want of confidence, the unparalleled misery which then existed in every part of the country—and then let them attribute that wretchedness to the measure now in contemplation, if they can do so with any shadow of reason. The only consolation they could offer to the sufferers—for sufferers there would be, not only from the state of the last few months, but from that diminished consumption of all the productions of other classes, inflicting the heaviest pressure upon that moss honest, industrious, meritorious, and most numerous class of the community, the working class—all they could offer to them, in return for their patient endurance of evils, would be, not a vain pretence to remedy their afflictions, but a steady and invariable currency to buy and to sell—a currency which may save them a renewal of those disasters from which they have lately, in some districts, suffered miseries, compared with which the very lowest rate of wages that could, be accorded was as nothing; inasmuch as the one was only a diminution of profit, while the other became a total and irretrievable loss, attended by calamities too melancholy to be dwelt on. Whatever difference of opinion might exist as to the principle of the measure which had been proposed, or however they might differ in the details, as he believed a state of suspense to be the very worst in which the country could be left, he, for one, would give a cordial vote for the immediate production of the bill.
Mr. Secretary Canningsaid, he agreed completely in the justice, of the observation with which the learned gentleman had concluded his speech, and he believed that the sentiment was fully participated in by every member of the House. As the question, however, which was then before the House, namely, "that the Speaker do leave the chair," was merely a question of form, the decision of it might not appear 354 to express the opinion of the House on the principle of the measure. But, after the protracted debate which had taken place, and as it was desirable, on every account, to have the opinion of the House ascertained with as little delay as possible, he thought the most expedient course would be, to have it understood, that the present question, although one merely of form, involved the consideration of the measure before them, and that the decision of one would be considered as a decision upon the other.
§ Upon this understanding the House divided; for Mr. Baring's amendment 39, against it 222. Majority 183.
| List of the Minority. | |
| Attwood, M. | Irving, J. |
| Bright, H. | Kemp, T. R. |
| Benett, J. | Martin, J. |
| Bridges, Ald. | Maberly, J. |
| Blair, James | Maberly, W. L. |
| Baring, sir T. | Palmer, Fyshe |
| Calcraft, J. | Plummer, J. |
| Calvert, N. | Robarts, A. W. |
| Farquhar, sir R. | Robarts, col. |
| Gurney, Hudson | Robertson, Alex. |
| Gordon, Rt. | Robinson, sir G. |
| Griffith, L. W. | Smith, S. |
| Graham, sir S. | Smith, Abel |
| Grosset, J. R. | Thompson, Ald. |
| Gascoyne, T. | Wilson, T. |
| Hume, J. | Whitbread, W. H. |
| Heygate, Ald. | Wood, Ald. |
| Heathcote, G. | Walker, J. |
| Honywood, W. P. | TELLERS. |
| Innes, J. | Baring, A. |
| Ingilby, sir W. A. | Wrottesley, sir J. |
§ The original question was then agreed to, and the House resolved itself into the committee. On the Resolution being read,
§ Mr. Hudson Gurneyobserved, that, if government destroyed all the country bankers' notes, and, at the same time, stopped the issue of one-pound notes by the Bank of England, they would leave the country in a state of destitution, of which they could not have any adequate conception. That establishment was not liable to the imputations thrown out against the country banks, of being desirous to put out their small paper without rule or guide. He should therefore move, as an amendment, that the words "or by the Bank of England" be left out of the resolution.
The Chancellor of the Exchequersaid, that although much of the inconvenience that would result from permitting country bank notes still to circulate, would not attend the continued circulation of the 355 small notes of the Bank of England, because they were more immediately under the eyes and control of government, and of course their issues could be more easily restrained and regulated, still he could not agree to the amendment of the hon. member. He conceived that such an exception would be extremely unjust to the country bankers in general. Although the hon. gentleman might not entertain that opinion, yet he felt that it would be invidious and unjust to make the distinction. It would be a very fair distinction, without producing any adequate benefit [hear].
Mr. Maberlysaid, that he could not discover the expediency or consistency of suppressing the small notes in England, and allowing them to circulate in Scotland and Ireland. If the principle were good for one kingdom, it would be equally beneficial for the others. He had received letters from Scotland which represented that country as being placed in the utmost state of alarm and apprehension as to the course which government proposed to pursue. It was not so much that the people there were anxious for the carrying of any particular measure, as that they were solicitous to know what was to happen. "Let us," they cried, "only know what you intend to do, and we shall be satisfied."
The Chancellor of the Exchequeragreed with the hon. member for Abingdon, as to the extent to which the principle should be carried; and as he perceived that the hon. gentleman had not been in the House on a former evening, when a noble lord had asked the same question, he would repeat, that it was his intention to carry the principle into full effect, both in Scotland and in Ireland, and that the only grounds for making any variation depended upon the question of time. It was his intention, however, in a very few days, to lay before the House his plan for the suppression of small notes, both in Scotland and other parts of the country.
Mr. Baringsaid, he considered that the object of the amendment, namely, to allow the small notes of the Bank of England to circulate, whilst those of the country banks were suppressed, would be utterly intolerable, on any sound principle.
§ Mr. Humesaid, he did not rise to continue the discussion of the night, but merely to protest against the measure which had been just adopted. He thought 356 that the House had acted prematurely, and had proceeded upon an error; and he hoped soon to have the opportunity of stating at more length, the grounds on which he entertained the conviction, that the causes of the present distress were unconnected with the small-note circulation. He hoped to be able to show, that they were, as fast as possible, retracing their steps, and giving up the principal point suggested by Mr. Ricardo, and acted upon in Mr. Peel's bill. He thought that they were doing wrong—he was sorry for it; but all he could be would do, to disabuse the House and the country.
§ Mr. Peelsaid, that the hon. gentleman had rather mis-stated the tendency of his bill, when he said it was founded on Mr. Ricardo's principle; whereas it was well known, that Mr. Ricardo's proposition was to pay Bank notes in ingots of gold. But, the principle of his bill was, to render notes of the smallest amount convertible into gold; and there was, in addition, a positive prohibition against the circulation of country bank notes after the lapse of two years from the passing of the bill; and if that bill had been carried into complete effect there would not now have been a country one-pound note in circulation.
§ Mr. Hudson Gurneysaid, he felt the amendment which he had offered to be of so much importance, that he should persist in pressing it. He was firmly of opinion, that had it not been for the issues of the one-pound notes by the Bank of England at the time that they took place, the recent calamity would have been greatly aggravated. These issues had done the greatest good; and in the event of a similar emergency, he thought that means of similar assistance should be available to the exigencies of the country.
§ The House then divided—for the amendment 7; against it 66; majority, 59.
| List of the Minority. | |
| Attwood, Matthias | Thomson, Alderman. |
| Buxton, T. F. | Wodehouse, Edmond. |
| Gordon, hon. W. | TELLER. |
| Martin, John | Gurney, Hudson |
| Palmer, Fysche |
§ The original resolution was agreed to.