HC Deb 17 February 1826 vol 14 cc537-55
The Chancellor of the Exchequer

rose to move the order of the day for the second reading of this bill. Before he did so, he wished to state to the House, that it was his intention, in the committee, to submit a proposition, not to the extent suggested by the hon. member for Newton (Mr. Hudson Gurney), which he thought went too far, but a modification of it. The proposition of the hon. member was, if he understood him right, that the circulation of small notes should be prohibited to the country banks, and yet the issue should be permanently allowed to the Bank of England. Now, this proposition would be very unjust to the country banks, and inconsistent with the whole principle of the measure. But, it had been represented to him, that a limitation of that proposition, so far from impeding the measure, would promote its success. It was his intention, therefore, to propose, that instead of prohibiting the Bank of England from issuing small notes dated subsequently to the 5th of February last, it should be left to them to issue such notes dated previous to the 10th of October next. The object of this proposition was, to give the country bankers facilities for preparing themselves for the effects of the bill, and the gradual withdrawal of their notes. It had been stated, that the greatest possible inconvenience would arise, if all the small notes were completely withdrawn at one moment. When the bill came into the committee, he should propose that there should be such a limitation as he had stated. He should, however, propose, that the notes of the Bank of England should be finally withdrawn, at the same time as those of the country banks.

Mr. Ellice

asked, what great relief was to be afforded by this- alteration, and Whether it was not, in fact, an abandon- ment of the main principle of the bill? And was this to be the result after all their anxiety to get the small notes out of circulation, and after all the executions at Newgate? There was no boon in the proposed change; it was a paltry alteration. He had been desirous not to discuss this question, so as to excite any popular feeling, especially when the country was in such difficulties; but, after the communication that had just been made, he could not avoid speaking of it as a paltry proceeding. A superior necessity had occasioned the recent issue of Bank of England small notes: to that necessity he bowed; but, after what had been promised, he did not expect this alteration, and thought the directors deserved to be arraigned for their conduct. He called upon the House to consider what they were about. Would they, or would they not, put down the evil which, by the gigantic rapidity of its advances, had brought the country to the brink of destruction? What was the paltry consideration that was to induce the House to abandon the original principle of the bill? For his part, he would not lend his humble countenance to such deviation, but would, even if he stood alone, divide the House upon the subject. It became the House to show the country that, however pressing might be the difficulties, they were resolved to surmount them by steadiness and discretion, rather than suffer themselves to be led into an abandonment of those principles which they proposed as the groundwork of a remedy to the existing evils.

Mr. Bright

said, he felt strongly for the distresses under which the country continued to labour; and would ask, were not he and his friends fully justified in voting against the bill? Were not he and his hon. friends justified in asking, whether the present was a proper time for the introduction of such a measure? Were they not justified in having voted against it, under the existing circumstances of the country? Were they not justified in the belief which they had expressed, that ministers could not carry it? Were they not justified in their assertion, that it was impossible that the country could bear the operation of the bill? Were they not justified in stating that, taxed and impoverished as they were, the people ought not to be additionally distressed by the withdrawal of the small-note currency? He had already declared his intention of accusing ministers of supineness, during the late distress, and had asserted that the measures proposed were not adequate to meet the existing difficulties. On what principle, he would ask, had the Bank of England been instructed by government to buy up Exchequer-bills within these three days? For the benefit of the public he would be told; but that was not the effect which that extraordinary proceeding was calculated to produce. Nothing but a large issue of Exchequer-bills could relieve the distress which prevailed at present; and, moreover, that distress was not confined to one class of persons. The stock-broker might, it was true, be relieved by that operation; but the regular, fair, honourable merchant, who was a much more important member of the community, would derive no benefit from it. There were other classes, too—the small trader, and those immediately connected with him—whose sufferings should be taken into consideration; and it was the duty of the House to provide funds to enable them to carry on their business. He would again complain, that ministers were inactive and supine, and, if they intended to continue to administer the affairs of the country, they must change their mode of proceeding, and become more active. He had hoped they would have profited by the recollection of what had been done by their predecessors in 1793, and the report of which lay upon the table of the House; by a reference to which, the strong analogy between the circumstances of that time and the present would be found. What did Mr. Pitt do, at that period, at the recommendation of the merchants? He issued a small number of Exchequer-bills, and the evils were cured; cured too, not merely without loss, but with absolute profit to the Treasury. The distress at both periods being the same in principle, the same principle of relief should be afforded. Why should we now adopt new expedients? Why not profit by the experience and the wisdom of our ancestors? He was no speculatist, no theorist. He disliked the fashionable philosophy of the day, and called on the House to adopt the wise measure of Mr. Pitt. He should not have risen, but was driven to it by the jibes of the right hon. gentleman opposite. He should reserve the rest of his argument for another day.

Mr. Huskisson

said, he was not at a loss to account for the extreme degree of heat displayed by the hon. member for Bristol; for, if the arguments which he had reserved for another day, were not of a better and more wholesome nature than those of which he had delivered himself, he was not surprised at their sitting so heavily and unpleasantly upon him; for, he would say, a speech more inconsistent, more directly opposed to sound reason, than that of the hon. member, had never been made in that House. The hon. member blamed ministers for their supineness at the period of the late distress, and then, when he found that they were about to bring forward a remedy, he proposed the appointment of a committee to inquire into the state of the country; and no sooner had he said so, but he told the House what he himself would do, without any committee at all. He next found fault with the prohibition of small-note currency, and in the same breath condemned the issue of small notes by the Bank. He blamed government for having directed the Bank to buy up the Exchequer-bills, and increased thereby the distress; and the next moment he said to them, "Issue a large number of Exchequer-bills, and you will effectually remove the existing evils." Where were purchasers to be found for those millions of bills which the hon. gentleman would thus throw into the market? No where, but in the hon. gentleman's own imagination. So that he condemned government for having, within a few days, bought up Exchequer-bills, they being then at a discount, and at the same time called for an extended issue of them. He should leave the learned member for Bristol to reconcile these inconsistencies. The hon. member for Coventry also had lost his usual placidity. He talked of impeaching the Bank directors for having lately reissued one and two pound notes. Now, he had yet to learn, why a body of men, authorized by the legislature to do an act, should be impeached for doing that which the law entitled them; and he thought it would require all the legal acumen even of the learned member for Bristol to draw up the articles of impeachment.

Mr. Ellice.

—I never used the word impeach. I said arraign.

Mr. Huskisson

—Well, arraign let it be; but let the House inquire what had been the conduct of those individuals. The moment the Bank directors found themselves in possession of a sufficient quantity of gold coin to supply the place of their small paper, they withdrew their one-pound notes from circulation. Did that look like a desire to force them into circulation? On the contrary, so well were they satisfied with the results of the step they had taken—so strong was their recollection of past difficulties, and of the thousand unpleasant circumstances attendant upon the existence of a small-note currency—that, so far from wishing to send their one and two pound notes again into circulation, they were most anxious, as their conduct had evinced, to withdraw them entirely. The hon. gentleman came down on one night and arraigned the government, and the next he inveighed against the Bank; but, he would ask the hon. gentleman, whether he really thought he had any grounds for those attacks? for it must be apparent, that, as far as the Bank was concerned, they had, in order to supply the vacuum created by the withdrawal of the country notes, issued a certain number of one and two pound notes, and they had no possible objection to withdraw them. It was reported to government, that the country banks were suddenly withdrawing their small notes, and it was to meet the want that would thus be created, that the proposed alteration was intended. He assured the hon. member for Coventry, that he could not be more anxious than he himself was, to make the pressure that would ensue from the withdrawal of the small notes operate as evenly as possible. If danger could be apprehended from that being done too suddenly, the House would give great facility to its own object, by averting that danger. There was this great difference between the two hon. gentlemen: one said, that the whole issues ought to be withdrawn, no matter what might be the consequence; the other said, "you never can withdraw them at all." He was quite sure, notwithstanding all that had been said to the contrary, that the metallic currency would, in a very short period, entirely supersede the dreadful issue of small notes.

Sir J. Wrottesley

said, he was apprehensive that the incidental wants of the country would oblige ministers to abandon their original principle, and that when they should have abandoned their principle, his hon. friends, of the philosophic club behind him, would come down upon them. Do what they would, ministers could not please. The system of going on upon principle and theory was to him so novel and extraordinary, that he found a difficulty in conforming to it. In after-years, when the history of this country should be narrated, it would be said, "This little island was originally called Lilliput, and it was then governed by dwarfs; it next assumed the name of Brobdignag, under the sway of giants. Finally, its name was Laputa, and its rulers were philosophers. From that period its glory began to vanish, its strength to decay, its might to decline, and it has degenerated into a state commensurate with the insignificance of its geometrical extent." The right hon. gentlemen on the other side had, as it appeared to him, deviated from their principle. They had set out on the theory of introducing a metallic currency and withdrawing the paper money from circulation. And what was the purport of their present proposal? Why, merely to substitute for the paper of the country banks, the notes of the Bank of England—notes which were more liable to be forged than any other. He (Sir J. W.) had never wished to see one-pound notes issued, but that they afforded facilities to manufacturers and workmen. He knew it to be a fact, that within fourteen miles of Birmingham, forged Bank of England notes had been offered eight and forty hours after the time those notes were re-issued. The bulk of the provincial notes came back to the country banks, upon an average, in six weeks. Now, if the banker must bring gold from London, he would not re-issue his notes, and the country would have no circulation at all. With respect to the metallic currency, he had been informed that ten out of every fifteen sovereigns brought to the Bank were not worth 18s. from their having been sweated down. In this dearth of genuine circulation, ministers were taking away country bank notes, which were seldom forged, and suffering the reissue of Bank of England notes, which were easily forged.

Mr. Hudson Gurney

said, that the degree in which the chancellor of the Exchequer had consented to enlarge the time for allowing the Bank of England to issue small notes, was, in his view, so far from being a dereliction of the plans which the right hon. gentleman had brought forward, that he was convinced, that it was the only possible manner in which they could be carried into effect. He had, on a former occasion, entered into the great distinction that existed between the cir- culation of the Bank of England and that which was founded on mere private responsibility, extendable, or liable to diminution, on every fluctuation of the credit of the issuers. The great and pressing danger of the country, at the present moment, was that of being left without any circulating medium at all. The gold issued was hoarded, the notes issued were run in on the bankers. The larger bankers would, of course, be anxious to withdraw a circulation rendered both dangerous and discreditable; and those who might struggle to continue their issues would find their notes return on them so fast, as to render any general circulation impracticable. With regard to the private bankers, he must again repeat, that the three years given for the gradual wearing out of the notes already stamped was, as regarded, the exigencies of the present moment, a mere fallacy. It was a discountenanced, and therefore a discredited medium. Indeed he had that very day been told of a banker, of great respectability in a manufacturing district in Yorkshire, who had only thirteen thousand pounds in circulation in one-pound notes. He issued them, and re-issued them; and, in the course of less than a week, had paid the whole amount three times over; on which he took them all up, and threw them into the fire. Under these circumstances, it was of the extremest importance, that the Bank of England should have the power to replace the paper withdrawn. This would prepare the way for allowing a metallic circulation to be introduced into the country; which all experience had sufficiently shown could never be co-existent with the private notes. Gold hitherto had been freely circulated only in the metropolis; and by allowing the Bank to continue their issues of small notes for a certain period after the private notes had ceased to be stamped, they would also be enabled gradually to get out the coin that might be wanted, but which, as a simultaneous operation, no amount of gold which could be supposed to be in their coffers, would be adequate to supply. He still thought it would have been safer to have left that period indefinite; but he believed the chancellor of the Exchequer's proposition would meet the existing exigences; though he should have much preferred inserting the month of January to that of October.

Mr. Cripps

said, he could not see the weight of the hon. gentleman's argument, that the country bankers notes would be driven out of circulation by the discredit which would attach to them from the prospect of the change about to be adopted. He was disposed to believe, that, in a few instances, bankers had withdrawn their notes with an injudicious precipitancy, but it was to be presumed that a little reflection would convince them that the experiment was one which could not with wisdom or advantage be repeated. The hon. gentleman had, indeed, stated an extraordinary fact, with regard to 13,000l. having been paid and returned three times in the course of a few days. Such instances were possible, but he was convinced they must be very rare. He wished much that not a word had been said on the subject of one-pound notes; but, as the question had been stirred, and as ministers had proceeded to the length they had done, delay would be dangerous: hesitation could be productive only of mischief. Since ministers had determined that these notes should, with the concurrence of the House, be ultimately withdrawn, he was of opinion that the course they had pursued was the wisest that could have been adopted. An hon. member had said, that the measure would have the effect of reducing the price of agricultural produce, and, undoubtedly, so it would for a time. Agricultural produce could not remain stationary if the price of every other commodity fell; but he did not expect that that fall would be of long duration. The quantity of the country bank-notes, of the value of one and two pounds, was much smaller than was supposed. With regard to the Bank of England notes, which were intended to be issued, the amount that would get into circulation would be trifling, on account of the liability to forgery; for such was the dread of them on this account, that if there was a country bank in the neighbourhood, of known stability, there was not a labourer who would not prefer taking its notes to those of the former. A great deal had been said about speculations, and, no doubt, there had been a great deal of that, both to the ruin of the country and of the banks. But he entertained strong hopes that much ultimate good would result from it, and that the lesson which had been taught would not be easily forgot. There were occurrences, however, in the natural course of business, in which as great loss had been sustained as in those speculations. A friend of his, who was no speculator, and who had a few thousands by him, of which he did not know very well how to dispose, determined on investing the one-half in Exchequer bills, and the other in consols. He had since had occasion for his money, and had lost more in that way, than he could have done in the worst species of circulation. He thought, therefore, that too much stress was laid on speculation, when it was possible to suffer to an equal, if not greater degree by government securities. With respect to the two millions of Exchequer-bills, it was wrong to think that the issue of them could do no good. It undoubtedly did do good to some; those, for instance, who wanted to sell out, though in a general point of view it was a mere idea—a delusion. What, then, would grant relief? One gentleman said this, and another said that; but what danger could there be from an issue of Exchequer-bills, on lodging merchandize as security for the amount? Hon. gentlemen said, that it would furnish a bad precedent. God forbid that it should be rejected merely on that account! Let it be recollected that, at a former time the very anticipation of a relief of this nature alleviated the distress. The opinions and conduct of some politicians brought to his mind the idea of a man who had got wet in his feet, and caught a cold, which fell upon his lungs. Should the benefit of medical treatment be withheld from such a person, because he had brought his misfortune upon himself? Surely not. He was willing to go the full length with those who charged speculators with having, by their own imprudence, drawn embarrassments upon themselves; but were they, on that account, to be debarred the means of rising again from their difficulties?

Mr. Calcraft

congratulated the right hon. gentlemen opposite on the new light which had broken in upon them. They now, it appeared, felt the force of the arguments which he and others had been in vain urging since the commencement of the session, in which they endeavoured to show the extreme impolicy of ministers, in crying down one species of currency, before they had another to substitute for it. And now, seeing that their measures could not be otherwise carried into effect, they had been driven to the expedient of supplying the place of the country notes with the small notes of the Bank of England. The mischievous nature of the course they were pursuing had settled the opinion of the country with respect to their utter ignorance and incapacity. From the correspondence which he himself carried on, and from the information of others who had still more extensive means of ascertaining the real state of public opinion, he was warranted in saying, that the sense of the country, as to their gross ignorance about these matters, was universal. If they, instead of crying down the existing circulation, had supported such of the country banks as had stood the test of the late trying times—and few of them, in comparison with the whole number, had failed, and many of those who had stopped payments had again commenced business, having paid 20s. in the pound—had supported them, they would soon have had an ample and secure circulation. They talked about getting gold as a substitute for the country small notes; but gold they could not get; and now, after having discredited the notes of the country banks, they were forced to bring into their place these notes of the Bank of England, which were well known to be the cause of so much crime. What was now to be the conduct of those who had supported the ministers on the ground of the metallic currency? It was to be hoped, that they would state the reason why they continued their support, or show, by their votes, that they abandoned ministers. If ministers could procure notes as difficult to be forged as those of the country banks, he should think that the supply of their paper would be a considerable improvement of the system; but, as his objection went to the whole bill, he would take the sense of the House upon it in every stage. It was lamentable to see the injurious effects that had resulted from the ignorance and incapacity of ministers. He had seen a letter from York, from a gentleman, who stated, that the people in that quarter had been reduced to the condition of the barbarous ages; and that, from the want of a circulating medium, they were forced to give their workmen provisions, clothes, and other articles, in barter for their work; whereas, if ministers had supported the country-bank circulation of small notes, no difficulty would have existed. He was perfectly astonished at their ignorance, and advised them to retrace their steps, and extend the term of stamping the country bank notes, instead of forcing into circulation those of the Bank of England, which were so objectionable, on account of the facility of forging them. He hoped the right hon. gentleman would be prepared to propose some such improvement on Monday.

Mr. Tierney

begged leave to assure the House, that though he had hitherto carefully abstained from taking a part in these discussions, it was not because he was insensible of their value, or indifferent to their results. On the contrary, he had uniformly felt the greatest anxiety to hear all that had been said on the occasion. He could assure the House, that during the course of a long parliamentary experience, he had never listened with more patience to the agitation of any great question than he had done to this; and never did he recollect one in which party feeling had so entirely given way to the calm and deliberate consideration of the imperative interests of the country. He gave at the outset his cordial assent to the principle upon which the contemplated measures of ministers were founded; namely, a speedy return to a metallic circulation. He knew it to be a sound principle: he thought the government were serious, and knew what they were about respecting it: indeed, he admired them for the apparent stoutness with which they had brought forward the measure. But, what was the case now? The ministers had no sooner announced their plan, accompanied by a firm declaration of its inviolability, than they came forward with a new proposition, which, mitigate as they would, was a material abandonment of the principle with which they had set out. Throughout the whole of these proceedings, indeed, he had witnessed the strangest indecision, and wandering from one point to another in their course—at one time exhibiting more firmness than the occasion required, and at another time the most compromising distrust. The chancellor of the Exchequer and the first lord of the Treasury had set out with what he would not call their well-considered letter to the Bank, partly because he did not think it had been well considered at all, and partly because (though he knew that meaning was not intended) it indulged in expressions which were liable, as they had been, to be misconstrued into indiscriminate reflections upon the country bankers. This letter was followed by the expose of the two branches of the system which the government had deter- mined to act upon; first, the increase of the number of banking partners, and the wider basis, to which all good men looked forward, on which the gold currency of the kingdom was to be re-established. Who could have believed that this wholesome plan was destined hardly to be developed, when it was to be materially altered? From the 5th of February no new stamping of country small notes was to be allowed, and their gradual abolition was decreed within three years. He thought, at the time, that this was intended rather to be too slowly, than too abruptly accomplished: he thought then, as he did now, that the government could have so arranged their resources, as to make the necessary supply of gold for the withdrawn notes as rapidly and conveniently as the nature of business could have required it. But now the Bank of England was, by a new manœuvre in the movement of the machine, to have nine months longer for issuing small notes, than was to be allowed to any other banking establishment; and an hon. gentleman near him (Mr. Hudson Gurney) had regretted, that twelve months instead of nine were not afforded for this operation. Now, he was at a loss to understand why the nine months would not answer as well as twelve, for every purpose of manufacturing their notes; for he thought that within a much shorter time, the Bank had it sufficiently in their power, or they never would, to provide a supply fit for any purpose. The whole position of the chancellor of the Exchequer in his former statement, was, that these small bank-notes, and a metallic circulation, could not go on together. That was a very clear and irrefragable position. It was not, at all events, one of the new-fangled ones of which they had heard so much; for it was at least a hundred years old, and to be found in many good books which had long ago promulgated the doctrine, that a good and a bad circulation could not co-exist, for that inevitably the bad would soon send the good about its business. Yes, and it would do more—it would prevent the good from coming in to recruit, even for a moment, where it was wanting. It was quite impossible to expect a gold currency, as long as this small-note process was continued. In the absence of the one-pound note, it might be relied upon that a metallic currency would flow in to supply the gap; but, if these small notes of the Bank of England were to be let in, what became of the right hon. gentleman's system? For gold never could circulate along with these notes. He did not then mean to enter upon a particular discussion of the general principle, but it appeared that the right hon. gentleman expected, that when gold came into circulation at the end of these three years, the Bank of England notes would give way. He had not seen the famous paper alluded to, as having been presented by Mr. Burke to Mr. Pitt; but he perfectly remembered Mr. Burke's declaration, that as long as the country kept a one-pound note in circulation, they could not expect to see a guinea. Now, he begged not to be understood as one of those who was panic-struck at the prospect of affairs. On the contrary, he had a great reliance on the strength and energy of her resources. He saw no cause of permanent alarm as arising from recent events; neither was he impressed with a belief that this want of confidence would endure. The resources of the people were, he was persuaded firm; their spirit and energy were still alive: distrust was certainly afloat, and what made it but this want of confidence, which the government seemed by their measures rather to prolong than to mitigate? What was the origin of the alarm and the difficulties which had seized upon men's minds? In looking to that point, it was impossible for him to exculpate the government, or to refrain from censuring their policy. The besetting vice of this country—that by which ministers were constantly doing their best to diffuse, by every exertion and energy they could command—was the rage to keep up prices. Every country gentleman trembled at a reduction of his rents—every merchant exclaimed against lowering the price of his goods—and all classes vied with each other in keeping up prices as high as they had been years back. In fact, they were all mad enough to wish to keep up war prices in a time of peace. He held the attempt to be utterly impracticable. It could not go on, he repeated; it was madness to think of it; and he would lay down this as an irresistible proposition—that a metallic currency and present prices could not exist at one and the same time. It was quite impracticable, and the idea of a radical error; and upon that point he would frankly and fairly speak out. He would listen to no man's nostrum that had for its object the continuance of the war prices, and at the same time, a metallic currency. He knew that this was unpalatable doctrine, but it was the truth; and this was not a time to abstain from stating the truth on so important a subject, though the truth might be disagreeable. Then, rushing from one extreme to another, what did ministers do? In 1822, they made an issue of Exchequer-bills, and the Bank, in concurrence with them, entered into measures which had the effect of giving a great stimulus to public-money-matters, and of lowering the rate of interest. What the Bank had done was, he had always heard, done on the suggestion of the government. The measures that were adopted on the occasion to which he alluded, were of a very unusual kind. The Bank thought it right to step out of its proper line of business, and to lend money on stock, and afterwards to make advances upon mortgages at four per cent. These proceedings had necessarily the effect of keeping up the prices both of stock and mortgages; while, contrary to all usage, it swept down the rate of interest throughout the country. It was not alone the advance of this 1,200,000l. on mortgage at four per cent that created this effect; its principle operated immediately, from one end of the country to the other, and commanded the payment of mortgages held elsewhere and under different engagements. No man would pay more than four per cent; and he was safe in saying so, for he could go to the Bank, and get the money there, to extricate himself from the previous dearer incumbrance. The money thus called in, was turned into channels of speculation of all kinds; but who had led the way for them? Why, the Bank and the government. Who had encouraged and fostered extravagant expenditures? The same parties. And yet, with this experience before their eyes, people were found to ask, who and what had caused all this wild and extravagant speculation? The Bank at length found itself getting into an awkward predicament, and began to waver between the influence of its two gods—the god gold, and the god government. Then, out went Exchequer-bills for sale into the market, and again went on the rage for speculation. And why should it not i Oh, but it was said, it was overtrading which had done all the mischief. Overtrading did they call it? What was the meaning of the word? It was, when a man did not succeed, he was nicknamed an overtrader: it reminded him of the distich about treason— Treason does never prosper—what's the reason? Why, when it prospers, 'tis no longer treason. So when success followed the speculator, then he became the sagacious and adventurous British merchant. But, as he had before said, the government had, from first to last, fostered this spirit, and not foreseen its consequences. Had they last October kept their eyes upon their own system, they ought to have foreseen its re-action. Then, indeed, some trifling assistance might have been afforded, and with beneficial effect. If it were said, that parliament was not sitting at the time, his answer would be—then why not convene them? for a little relief in time would have done what could not now be effected by the largest measure of relief. Some measure of relief at that time would have restored confidence; but unfortunately that period had been suffered to go by. The distress began to be felt, and Exchequer-bills were sold, and the Bank became the purchasers, and afterwards the sellers. The panic showed itself more and more every day. At last parliament met, and then government proposed the measures to which he had adverted. He knew that ministers were beset by men who were clamorous on the subject of the evils they were likely to suffer, and the purchase of Exchequer-bills by the Bank was gladly received as a means by which many of them could be relieved. This measure, however, would not answer the end proposed; nor did he think those proposed by government would have the desired effect. At the same time, he was not one of those who despaired of the country. The distress did not altogether arise from want of capital so much as want of confidence; and he was satisfied that if some measure was adopted, by which that confidence could be restored, the country had the means by which, when it was restored, its affairs would return to their former prosperous course. He thought that if an issue of Exchequer-bills were now made, as in 1793, it would do a great deal of good. But the purchase of Exchequer-bills by the Bank would not have that general effect; for, if a large purchase were made, how did they know that they would by this measure relieve the right man? The man who went into the market on Monday last and purchased Exchequer-bills at 20s. discount, would, no doubt, be greatly benefitted by having them raised to par, or at a premium; but the person who had traded, or overtraded, as it was called, would obtain no benefit by it; and perhaps, after all, the man who might be relieved was the last person who was entitled to relief. It was true that the holder of Exchequer-bills must be supposed so far to be a man of property; but, whether he was the man of property to whom relief ought to be extended, they had no means of knowing. Thus, the relief given by the purchase of Exchequer-bills would be altogether uncertain in its effects. A part of the proposed plan went upon the assumption, that the country bankers would not reissue their small notes any more. He did not believe a word of it. He did not think that any man among them was fool enough to throw 30,000l. into the fire, as they were told of by his hon. friend.

Mr. H. Gurney

said, he had mentioned only 13,000l. which were so used by one banker in Yorkshire.

Mr. Tierney

did not mean to say that his hon. friend had ever been guilty of any thing so imprudent. He was too well acquainted with the system, and knew much better than to adopt that course; but, if such large sums were not destroyed, they might be locked up for a time, until opportunity offered for their re-appearance. In the district in which this burning of the notes took place, he knew there was great distress felt. The bankers alluded to were, perhaps, in a state of great irritation; but that distress would, he had no doubt, be in time removed, and it might happen that the man who had so foolishly thrown his notes into the fire, would be glad to rake up the cinders, and to find some of those notes among them. Again, he would repeat that, in his opinion, all that was wanted in the country was, the restoration of confidence. That would call forth the hoards which were now left unemployed. There was abundance of the precious metals, he also believed, which would be forthcoming, if this confidence were restored. But, the fact was, the country bankers were offended. There was, here and there, a strong expression of blame to them, in the late correspondence of government with the Bank. Perhaps, those expressions were not meant to give offence in the quarter in which it was taken; but it did unfortunately happen that they were taken offensively. Was the present new course likely to conciliate the country bankers? On the contrary, was there any thing which could be more likely to crush those very bankers than the distinction that was now to be made of allowing the Bank of England to add to their issues of small notes, while the permission was denied to the private banks? Was it not saying, in direct terms, not that the Bank of England notes were so much more certain than theirs, but that theirs were not certain at all? Whatever was the intention, there was no doubt that the country bankers would so feel it. For his own part, he wished well to the country banks; for he thought their existence would be attended with great benefit to the country, as long as their issues were on a solid basis. He would wish to see them generally on the basis of those in Lancashire and London. The evil which arose from them was, not that they had the power of lending money to a great extent, but that they should have the power of making notes for the purpose of lending. If they really had money to lend, they would be a benefit, as long as they could say, "here is the money to lend, provided you give us the security;" but it would, in the end, be no benefit to say, "we will lend our notes," if those notes did not, at the same time, represent real property. He would wish to see the country banks flourish on a wholesome basis. If the country knew of a good security on which to rely, there would no longer be hoards of gold. There would be large paper issues; but they would be, as they ought to be, bottomed on a metallic security. If he were asked what measure would be productive of much good in the present state of the country, he would say an immediate issue of Exchequer-bills for the relief of the commercial distress. That would help many parties through their difficulties, and bring back a sound state of things. But, if government were to do any thing, let them do the right thing. He would not say what sum it might be proper to issue. If the whole sum of 5,000,000l., which had been spoken of, were to be issued on proper security (which no doubt, the commissioners would take care to obtain, as they had done before), it would, he was sure, have a most beneficial effect on the country. The money would soon be re-paid—things would speedily come about—the hoards now locked up would get into circulation—the bankers would again hold up their heads—and the country would return to a wholesome state of things. He meant a large circulation of paper, founded on a solid, substantial metallic currency.

The Chancellor of the Exchequer

said, he did not rise at that late hour to enter into a discussion of all the topics brought under review in the speech of the right hon. gentleman, nor did he rise to state the grounds on which he should be prepared to show that the opposition he had offered to the measure recommended by the gentleman opposite, was not inconsistent with the measure he himself recommended, nor that it would, in any degree, tend to counteract its effects. But he was anxious to say a few words on what had fallen from the right hon. gentleman respecting the issues of the Bank. He was perfectly willing to take his share of all the blame, if blame there were, as to the conduct which the government had held towards the Bank. He admitted, that the proposal for taking the dead weight proceeded from the government. It was adopted by the Bank, at the suggestion of the government; and if there was any blame belonging to that measure, that blame belonged to the government. But, the government had nothing to do with the Bank keeping those annuities. It might sell them; and that it had not chosen to do so, was entirely its own proceeding. With respect to the issues of the Bank, to enable the government to pay off the four per cent in October, 1824, that measure was proposed by the government, and for it the government alone was responsible. As to the other measures mentioned by the right hon. gentleman, he was bound to say, for it was the truth, that the government was in no degree responsible or to blame. As to the Bank lending money on stock, and thus increasing its issues, he would only say, that so far from its having been adopted at the suggestion of the government, government never knew of the measure being adopted until after it had ceased, and could not, therefore, be charged with participating in it. As to lending money on mortgage also, the government was not responsible for that step. He would say for himself, that he never heard such a measure was in agitation, until the Bank had told him it was done. For that also the government could not be responsible; whatever in- crease of issues it might have occasioned. Whether that measure was right of wrong he did not say; but he did say the government had nothing to do with it; but if it had not been done, the issues of Bank notes would not have been so great. With respect to the dealings in Exchequer-bills, he would observe, that the only part of that measure for which government were responsible, was that which arose from dealings between the Bank and them, in which they had advanced money upon them. It was not usual for the Bank to issue money on such bills to the public; but as to the selling of Exchequer-bills last summer, it was the act of the Bank themselves, and done on their own responsibility. In adverting to this, he would observe, that the government had not that control over the Bank which seemed to be generally imagined. It seemed to be the opinion of some hon. gentlemen, that government could control the proceedings of the Bank at pleasure. Government possessed no such power; nor did they wish to possess it. He had mentioned these circumstances with the intention that hon. members, in viewing the proceedings of the Bank and the government, would give to each the blame or credit which belonged to them, and not attribute to one what solely belonged to the other.

Mr. Ellice

said, he would not divide the House, because from the declaration of the chancellor of the Exchequer, he did not think he was opposed to the principle of the measure recommended.

The bill was then read a second time.