§ On the order of the day for going into a committee on this bill,
§ Lord A. Hamilton
observed, that on a former occasion, he had applied to know whether this measure was, or was not to apply to Scotland. He had understood the chancellor of the Exchequer to say, that it was intended to apply to Scotland, at the end of three years. He now understood that the prime minister of the country, had said elsewhere, that the intention was, that the bill should be brought in, but should not commence for three years from this time, and should then take three years to complete its operation; thus extending the period for working its effects over six years from this time. He begged to state, that the agitation now pervading Scotland upon this subject was extreme. The Scotch thought this measure hostile to their interests. It was a very different thing to petition for the repeal of a measure, and to petition against a new measure. He had, therefore, a right 573 to expect, on behalf of that country, an answer to the question, whether the right hon. gentleman intended to introduce any measure this year to destroy the one and two pound notes in Scotland? There was one reason in particular why he thought he had a right to an answer at this moment. A number of cities and counties were in the act of meeting to petition against this measure, and he had been applied to, to know what was the best time for such meetings to take place. He could give no answer, not knowing whether the measure was intended or not to be introduced this session.
The Chancellor of the Exchequer
said, the noble lord had somewhat misunderstood what he had said on a former evening, as to his having no intention at present to propose the extension of this bill to Scotland. He certainly wished that the bill for England should first be disposed of; for, in his opinion, the state of the two countries with regard to this question was not precisely similar; and although it seemed to him that the measure would be beneficial for Scotland as well as for England, still, as the adoption or rejection of it might be argued on different grounds for the two countries, it would be a very inconvenient and confused method of proceeding to mix, up the two questions and discuss them together. It was, however, by no means his intention to defer drawing the attention of the House to this question, as it regarded Scotland, beyond the present session; for he understood that a very considerable ferment prevailed in the minds of people there on this subject; and it could not be expected that such ferment would be allayed, so long as it remained in doubt what course the legislature intended to pursue with regard to that country.
said, that if the new measure proposed for allowing the Bank of England to continue their issue of one and two pound notes should be adopted by the House, he would move that a clause be introduced into the bill, for having a return made every week to the privy council of the number of small notes in circulation in the week preceding; and also an account every quarter of the average amount of small notes issued in that quarter, for the purpose of being published in the London Gazette.
said, he could not but admire the dexterity which the chancellor of the Exchequer had evinced on the pre- 574 sent occasion. The right hon. gentleman had admitted that he intended, during the present session, to propose that this measure should be adopted in Scotland as well as in England, but still he declined including both countries in the same bill; by which means he hoped to meet with no opposition from the Scotch members in passing the English bill, and, in turn, to pass the Scotch bill by the aid of the English members. The right hon. gentleman seemed to be perfectly well aware of the truth of the maxim "divide et impera." He hoped, however, that he had fully reflected on the difficulty of the task he had undertaken; that he had not miscalculated his resources, but knew where to procure a sufficient metallic currency for England, Scotland, and Ireland; for, notwithstanding what was said the other evening, he had been informed, on the best authority, that a very great part of the circulating medium in Ireland was in one-pound notes. If the right hon. gentleman had seriously considered these matters, and was prepared to surmount the difficulties he would meet with in his present course, he had only to explain this clearly to the House, and by so doing he would at once do away with all opposition to his measures; but, if he had not seriously considered these difficulties, and if he was not fully prepared to surmount them, he would entreat the right hon. gentleman to pause before he convulsed the country, by attempting a measure which could not at present be carried into execution.
begged to call the attention of the House to one or two facts bearing on the question before them. He had supported this bill to the present time, and he was anxious to continue that support. He was glad to see the determination of government to carry cash payments, and he hoped the period was not far distant, when they would push the system further than they were now enabled to do. The soundest policy justified such a course of proceeding. The more he considered this subject, the more he reflected upon the large mass of paper which was issued, the more was he convinced; that the principle on which they ought to act was come at, only perhaps it would not go far enough. If they went to the root of the evil, they would do away with the issue of the five-pound notes. If this view were correct, there followed from it, that, whenever there was a large amount 575 of paper, there was a small amount of metals in circulation, and the gold always accumulated in the coffers of the Bank. This would appear extremely clear to any one consulting the scale to be found in Mr. Tooke's late publication; for in 1789 and 1790, the amount of treasure in the Bank was 10,000,000l., and the amount of notes about 9,905,000l.; whereas, in 1791, the notes increased to 11,691,000l. This expansion of Bank notes was followed by distress, and the gold was reduced to 3,580,000l. Then came another change in our affairs, and the Bank had in treasure, in 1794, 8,608,000l., and in notes 10,159,720l.; but in March 1795, the notes increased to 12,432,000l.; and in March, 1797, the treasure was reduced to 1,272,000l. In 1823, there was a large amount of treasure in the Bank; then came an immense issue of paper; then the spirit of speculation rushed forth, which, no doubt, was fostered and aided by the Bank issues of 1824. But then the Bank saw that their interest would be reduced, and their dividends lessened, if they did not let out their gold. These were facts which could not be gainsayed; and we should guard against a recurrence of such fluctuations. If his views were so far correct, the inference he drew from them was this—that they should not stop where they were, but proceed on, in enlarging the metallic basis of the currency. He did not mean to say, that this should be pressed at the present moment; but if it were not gradually proceeded in, before the next ten years they would find the country in as great distress as it was at this very moment. He did not think the system of his late lamented friend, Mr. Ricardo, beautiful as it was in theory, and captivated as he (Mr. W.) had been with it, was that which would practically work best. The measure which the House now adopted, was but a half-measure; but still there could be no question that the metals must form the basis of our currency. He did not wish to see a spirit of gloom fostered in the country; neither could he believe the rumour which prevailed, of augmenting the value of the currency. With the subject of our currency there was another connected; which he did not now intend to discuss, he meant the Corn-laws. But, of the necessity of their revision he was every day more and more convinced. He had heard a suggestion out of the House, which he thought entitled to some attention. It 576 was suggested, that Mint notes might be issued upon deposits of bullion in the Mint, as they would at once be founded on a solid basis, and possess all the conveniences of Bank notes. He would not further trespass on the patience of the House; but he had thought it his duty to make the few remarks with which he bad troubled them.
expressed his dissatisfaction at the course intended to be pursued by the chancellor of the Exchequer, in exempting the Bank of England from the operation of the measures originally submitted to the House by him, for restricting the issues of one and two pound notes. He considered much of the mischief that had lately been witnessed, to be owing to the powers enjoyed at will by the Bank, in limiting or extending their issues; and that the effect of such conduct on their part was, to render the property of every man insecure. They had issued, in October last, 18,000,000l., which they had suddenly increased, in February following, to 26,000,000l. What good reason they had for this sudden increase he did not know; but though it was said to be occasioned by the demands of the country bankers, he rather thought it was at the instance of government, with a view to raise a depreciated article in the money-market. At one time, he believed, that, from these causes, Exchequer-bills had been depreciated in the market to the amount of full 45s. per cent; and then, what was the consequence? Why, the Bank of England stepped in and by a large issue of their notes, brought these Exchequer-bills back again to par. But then, did the House take into its consideration the alarming changes of property, which were produced by that operation; the unfair advantages bestowed on some individuals, who might be holders of those bills; the losses incurred by others who might have been compelled to part with them; and the great national evil of any body of men having the power to produce such revolutions in the affairs of the mercantile community? The government had very naturally raised the interest when they suffered this fall, and the Bank, it might be said, could not, after that alteration, refuse to purchase them at the depreciation; but still, although they had produced such changes in property, and interfered in that manner with what ought to have been left to the transactions of private individuals, Exchequer-bills again fell, after 577 every effort, to 25s. discount. Now, that was precisely the evil the country complained of. First, government, at their pleasure, added by issue, the vast sum of five millions of Exchequer-bills to the quantity in the market; that was an over-issue, and although they had increased the interest, the bills became depreciated and could not support their price. Then they adopted another system, and allowed the Bank, by their authority, to purchase up two millions of these same bills from the hands of private individuals. On Saturday last, to be sure, Exchequer-bills were only at par. But again he begged to press upon their attention the injurious effects of such repeated intermeddlings upon the affairs of mercantile men, and the alterations which they were likely to effect upon the property of Exchequer-bills with reference to their holders, at the time when the Bank or the government might determine upon bringing their operations to bear on the market. The next point he would advert to was, the issue of notes by the Bank of England. Of that he begged to observe, that the over-issue did not, at all times, proceed from the fact of prices being considered too low, nor did the Bank always contract their issues because prices were too high. They very frequently issued and contracted for the purposes of bringing the exchanges right. When the exchanges were against this country, they contracted the amount of their notes; when they had succeeded in bringing them in favour of this country, they again extended their issue, affecting, in the mean time, most seriously, all the property of individuals, and all the varied transactions of an extensive commerce. Some idea of the extent of that evil might be given by the plain statement of the fact, that the difference of the issues at these periods was that of the amount between 18 and 26,000,000l. Government, he knew, had large fixed advances to make on account of what was called the Dead Weight, and which they necessarily paid in Exchequer-bills; and they were, therefore, compelled to make issues of that paper; but he was not at all prepared to make the same allowance for the changes at different periods in the issue of Bank-notes. The first proposition to which he would call the attention of the House, and which he would propose as an amendment to the measures of the right hon. gentleman, and as a means of guarding more effectually against the evils 578 which were sought to be remedied, was, that on the 15th of every month, the Bank should publish in the Gazette, an account of all the Bank-notes issued by it in the course of the preceding month, and, including, at the same time, an account of the whole extent of their notes in circulation at the period when the account should be published. That notice regularly put forth, would have the effect of checking the progress of any such alarm and distrust as they had lately witnessed, by giving proper publicity to the proceedings of a body which must always exercise such influence upon the affairs of the country. What was that publicity that it should for a moment be opposed? Why it was no more, nor so much as the Bank of France had always done. That Bank published an account of its issue of notes, and of gold, the extent of its discounts, and the amount of its profits; in short, it laid every part of its concerns fearlessly open to the inspection of the whole kingdom. And he was quite sure, that, by adopting a similar course, the Bank of England itself would be safer; the public, beyond all question, safer; and the right hon. gentleman, by giving his consent to such a proposal, would render an essential service to the commercial world in general—another point he would recommend related to the exchanges. Great differences took place at various times in the rate of exchange, creating, as he had explained before, an equal difference in the issues of the Bank of England. Now, to guard against that evil, and to avoid such differences, he would advise a re-consideration of the question of exchanges in general, so as to arrive at a better conclusion as to what was the real par of exchange. Opinions varied very much among commercial men as to what was the real par; and he would suggest a revision of the subject, preparatory to a regular publication of the rate of all exchanges in the London Gazette. By such a measure they would render persons not immediately resident in the metropolis able to regulate their affairs connected with those exchanges in a very different manner from the way in which they managed them at present; and perhaps in the end put a stop to the extensive fluctuations which had been visible under that head during a very short period. Another clause he would propose was, that there should be published in the Gazette, on the 15th of every month, an account of all the Exchequer- 579 bills issued during the month, as well as an account of all paid off or received in payment at the Treasury during the same time, and including the whole amount of the Exchequer-bills at the period in general circulation. For his part, he never could see the policy of granting a large amount of Exchequer-bills to be at the disposal of the government, and to be issued in quantities of four or five millions to-day, and bought up again to effect certain purposes in the market to-morrow. The House would see what a power they granted to ministers, when they consented to a vote of thirty millions of Exchequer-bills to be drawn for the public exigencies, without at all inquiring into the necessity of such a grant, or examining the consequences likely to ensue from its exercise. It was true, the chancellor of the Exchequer had only thought proper to apply for a vote of ten millions for the public service at present; but he would maintain, that unless some such measure was adopted as he intended to propose, by which the public could ascertain, at stated periods, with certainty, what were the dispositions of such a powerful force of Exchequer-bills, they still must, even with a limited issue, be subject to the same fluctuations as those they had lately experienced.—There ought, he conceived, to be also another statement published in the same manner, and at the same time, of the quantity of imports and exports which may have taken place at certain intervals. The fluctuation in the imports and exports was very considerable. In the last twelve years, he understood, the exports had exceeded the imports by a very large sum. Some people, indeed, had said two hundred millions, but that calculation was manifestly erroneous. At all events, it only shewed more clearly the necessity of adopting some plan for putting the country in possession of the true nature of their commerce; so that the public may no longer be misled as they had lately been by erroneous statements. These were the principal measures be bad to propose, and he could not but hope that the House would agree, that the evils they went to obviate, required the speedy application of some effectual remedy. If they adopted those which he bad brought under their notice, he felt convinced they would in future be free from those melancholy fluctuations and extraordinary panics, of which all had felt the effect, but few could rightly explain 580 the cause. In recurring to the measure of the chancellor of the Exchequer, he would say, that, after the able arguments and reasoning applied to it on a former occasion, by an hon. relation of his, it was not in his power to add any thing further; but he would take leave to mention, that he understood the bankers of Scotland to be in great alarm and agitation with respect to the measures of the right hon. gentleman, and excessively anxious to know at what precise period he proposed to carry his measure, upon the subject of their circulation, into effect. Under every circumstance, he could not conceive that any declaration as to time could at all injure the principle which the right hon. gentleman had taken as the ground of his operations, while the certainty of the precise intentions of the government would be of great importance to the bankers of Scotland in the present situation of their affairs. He therefore implored his right hon. friend to speak out, and perfect his system by removing all doubt and uncertainty.
§ Mr. Hume
said, he was fully aware of the anxiety, on the part of the House, to go into the committee; but he must beg leave to detain it for a short time, while he made a few observations. He was sorry to say he could not, after the most serious attention to the subject, bring himself to consider that there was any sound principle of policy in the measure which had been proposed by the chancellor of the Exchequer as a remedy for the evils they had lately suffered. If they took a review of the sentiments delivered by that right hon. gentleman on the occasion of his submitting his proposition to the House, and observed, that he attributed all their misfortunes to the issue of six millions, or four millions, as it was at one time stated, although he believed it not so much as either, of country bank-notes, he was sure they would see grounds for doubting the propriety of the remedy which had been proposed. In his opinion, if the exchanges had been against this country—and against it, at one time, they were—the evil was not at all occasioned by the issue of Bank-notes, and it had, he believed, cured itself by operations altogether independent of the Bank of England. Their issues had not, therefore, remedied that which was clearly remedied without them. Ministers had asserted, in their famous Letter to the Bank directors, that 581 all the evils of that, and every thing else, which created the panic and distress of the late season, proceeded from the system of issuing notes by country bankers; and had been very liberal of their charges against the whole of that body. In that charge of issuing too many one and two pound notes, they had, however, mistaken assumption for proof; for if they looked to the assertions of the bullion committee, they would find, he apprehended, that the whole of the data upon which that letter proceeded, ran counter to the declarations put forth in the report of that very committee. He remembered, he would just observe, upon the presenting of a former petition from the same individual (Mr. Cobbett) who had that night excited the attention of the House, in which he broadly asserted, that an issue of gold, and paper convertible into gold, could not exist together. The right hon. gentleman and others had held as an argument against the petitioner, and as a proof of his statements being contrary to experience, that, so sensible were the exchanges of any extraordinary overflow of paper, it was not possible for it to affect them beyond one per cent; for that, whenever the difference reached that amount, the surplus quantity of paper immediately indicated itself, and of course received instant correction. The bullion committee in their report, had laid it down as an incontrovertible principle, that there were no means of guarding against an over circulation of paper, except by making that paper immediately convertible into specie. Now, he would be glad to know at what period of the last three years, all paper, Bank of England and country, had not been instantly convertible into gold upon demand. If it had not been so, the paper currency would have been depreciated. If it had been so, then the measure proposed by the bullion committee had been altogether inadequate to the purpose for which it was intended. Much stress had been, indeed, laid upon the circulation of paper, but he confessed he preferred a paper issue; and, if it was convertible into gold upon demand, he would set no bounds to it but the wants of the country; for it was universally known, that much more might be wanted at one time than at another. He would go further and say, that much more might be required in the month of February than in the month of January, for the supply of commercial necessities; and 582 that if the issue required was in one month 21 millions, there might be very readily 25 millions required for the same demand in the next month. How, then, could it be said, if that was admitted—and he did not see how it could be denied—that the issue of three or four millions of country one and two pound bank notes could affect the whole commercial prosperity of the country. He maintained, that they had taken an unsound principle, when, with the paper convertible into gold, and therefore undepreciated, they could assert, that 25 millions of such paper could be called excess. They had, in fact, been only carrying into effect the report of the bullion committee; and if they were now about to depart from the principle laid down in that report, and insist that a metallic currency was absolutely necessary to the country, they were the causes of all the difficulties which had occurred, and the whole distress must be laid at their door. It behoved ministers, therefore, to consider the evils they were inflicting on the country; for the individual, who fancied himself worth 10,000l. one month in government securities, might find himself in another month, by the fluctuations which took place in consequence of this measure in the value of all kinds of property, not worth more than half that sum. Admitting, however, for the sake of argument that which, in point of fact, he must ever deny, that the over-issue of paper had created all the mischief, still he would ask the right hon. gentleman whether he meant to say that that over-issue consisted in the increased circulation of the one and two pound notes from 2,000,000l. to 4,000,000l. and not in the increased circulation of 5l. notes, which were trebled within the same period. If the over-issue were the cause of the evil, why was not the issue of 5l. notes to be restricted in the same manner as that of the one and two pound notes? If the principle were correct in the one case, it was equally so in the other; but, if it were applied to the 5l. notes, how was the circulation of the country to be conducted? Did the right hon. gentleman mean to say, that the commerce of this country could be carried on in a metallic currency alone? Surely not. He had seen in India the inconvenience occasioned by having nothing but a metallic currency. If half a million of money had to be transported for the use of government from one part of India to another, it could not be done 583 except through the instrumentality of two carts, and a guard of Sepoys. The inconveniencies of such a system were so great, that, the supreme government of that country had been obliged to establish a bank for the purpose of removing them. It had established it almost on the same principles that the bank of the United States was established. The government had a share in it, but was not allowed to borrow from its funds, which were left to the management of some of the most respectable inhabitants in Calcutta. He merely mentioned this circumstance, as a proof that neither in England, India, or indeed any commercial country, was it possible to carry on its commerce in a metallic currency. All his experience and reasoning led him to the conclusion, that in a commercial country it was impossible to dispense with a paper circulation. Upon what principle was it that a competition would be carried on between the paper and metal? If either of them was more valuable than the other, that which was cheapest would necessarily drive the other from circulation—a principle which, in his judgment, was quite decisive as to the inexpediency of adopting silver into the currency in combination with gold. The principle recommended by the bullion committee appeared to him to be that which would best bear the test of examination. The state of the currency, so far as the principle of paper convertible into gold at will was carried into effect, was found unobjectionable, and the evils which were now preying on the country were chiefly to be ascribed to the remissness of ministers, in not placing the country banks on the same stable footing as they did the national bank. But, the system on which the provincial banks were allowed to proceed was such, that the country was left a prey to sharpers and adventurers. If a man without capital set up a shop in town, and had his bills with which he obtained goods accepted by another person with whom he was in concert, such a transaction would be condemned by the law as a fraud, and the parties punished accordingly. Why should not those who set up a banking establishment upon just such pretences to security be liable to the same punishment? He had been told of a person who took a large manufacturing establishment, but was unable to pay the current expenses until he began banking, and in this 584 way he was enabled to go on for some time. It was not the amount of local injury done by such persons that was alone to be lamented; there resulted from the discovery of the fraud, general suspicion and want of confidence. If ministers considered it expedient that the weights and measures of the country should be placed under a definitive regulation, was it not of equal importance that a solid and regular standard should be assigned for the currency of the empire, that it might not be subject to incidental variations, or susceptible of depreciation or increase of value, at the caprice or for the profit of individuals? If the introduction of a metallic currency would not be adequate to attain the objects proposed, it was necessary to have that check which would arise from the immediate convertibility of paper into gold, and that would not be effected by taking the one and two pound notes out of circulation, because the amount of circulation in notes of five pound and upwards, was greater in a proportion of three to one, than that of the one and two pound notes. The right hon. gentlemen opposite admitted, that they were aware of this circumstance, but professed their anxiety to guard the holders of one and two pound notes from loss. He gave the right hon. gentlemen credit for this feeling. It was undoubtedly the duty of government to watch over the interests of all classes, and, as far as they were able, to protect all from loss or injury; and the way in which effectually to afford that protection was, not to suffer any banker to issue one pound notes without giving security to pay the amount of what he so put in circulation. It was strange that ministers would so attach themselves to a plan which could only delude the public by the expectation of relief, and a hope of the prevention of evil, which hope could never be realized. The hon. gentleman, after pressing this argument upon the House, and arguing from the fact mentioned by the hon. member for Newton of 13,000l. having been burnt by a banker, that no banker would, under a secure system, persist in issuing his notes, if he found that they were returned upon him too often, instanced the Scotch banks as a proof of his assertion, where they always limited their issues, and checked their discounts, if they found their notes returned to them within a certain period. There was, he repeated, no possibility of an over-issue 585 of bank notes, so long as they were convertible into specie, and in illustration of this, he would instance the Scotch. Till within a few years, the Scotch bankers were very much surprised that they were obliged, every now and then, to bring 200,000l. or 300,000l. of bullion from London to pay off their notes. They wondered what was the matter, till it was suggested that they had issued too many notes; and from that day to this, whenever they found their notes returning quicker than they ought to do (for there was a certain time during which they expected them to be out), they immediately contracted their notes; and every bank in England would be obliged to do the same thing, if the same power of convertibility into gold was given to the holder. Instead of the trifling measure of his majesty's ministers, the whole system of banking should be put under the same control. Let a commission be appointed, an office established, and let every banker be required to deposit securities before he issued a single note; and from the deposits so made, let the commissioner be authorized to make up any deficiency, and supply any defalcation that there might be. What would be the result of such measures? They would create such confidence, that every man would be ready to give the poor cash for such notes, knowing that he had a security against ultimate loss, by having recourse to the proper office. These measures would, indeed, establish security and confidence, and prevent the aggravation of existing evils. But more should be done even than this. It would be necessary to take from bankers deposits not only for the amount of their small notes, but also for at least two-thirds of their larger ones, and that their paper issues should be convertible into money by summary process, as was the law of the land in the year 1797. Honourable gentlemen had expressed much surprise when he had read an extract from the act, which enabled the holders of notes, in case of their non-payment, to apply to a magistrate, who was authorized, within three days, to issue a warrant, and levy the amount by distress. The time was afterwards enlarged from three days to seven; and in that state the act continued in force down to the year 1816, but at length it slipped out of the Statute-book—nobody knew how. Let this law be re-enacted, together with the exaction of deposits in the way he 586 had proposed. These deposits would bear interest, so that the system could not be attended with loss or injury to any party.—The House would be surprised at some statements which he would beg leave to submit, in reference to a rumour that had lately gained ground, of two or three banks in the United States having failed within a single week. In consequence of that report, he had made some minute inquiries regarding the most important city in the United States, New York. There were in that city thirty-five banks chartered by the legislature. Private banking was there unknown. Every party who wished to engage in banking enterprises applied to the legislature for its sanction, stating the amount of capital which they wished to embark. They obtained a charter accordingly; but upon what terms? On condition that they should pay up the amount of their capital. These speculations, therefore, could not be started by individuals who possessed no property or substance. The accounts of the banks also were laid before the legislature once a year, whenever it was deemed expedient, and the state of their concerns was so accessible to public scrutiny, that every man knew their real situation, and could estimate the security of their dealings. So ought every banking concern to be constituted. The currency, of which they were the source, was not to be made the mere tool of individual profit, but the instrument of public security and accommodation. Every man ought to be acquainted with their precise condition, and the Bank of England would never be safe until such a regulation was introduced and acted upon in its management. The system of secresy practised by the Bank of England was most fatally pernicious. It created a market between the Bank and the government which was destructive, as his hon. friend the member for Abingdon had said, to every man who was not in the secret; while any person who was fortunate enough to get behind the curtain, had the means of realizing a princely fortune. The discounts of the banks in the United States amounted to thirty-three millions of dollars, while their entire capital did not exceed thirty-five millions. How would this appear when contrasted with the Bank of England, which, with its enormous capital, of eleven millions sterling, never suffered its discounts to exceed two millions, or two millions and a half, 587 yearly. The banks of the United States fully realized the principle of affording commercial facility; while the Bank of England was perfectly innocent of any such offence. Happy would it be for the country if such a statement could be made respecting the Bank of England. He insisted that every bank ought to be compelled to give deposits to the amount of its issues. It was a fact worthy of observation, that of the thirty-five chartered banks in the United States, to which he had alluded, since the year 1815 not a single one had failed.—He would say, then, that the measures proposed by ministers were not competent to the ends which they were designed to effect, and he would repeat that for every pound that should be lost to the rich or to the poor man, and for every bank which should break henceforward, those ministers would be answerable; since they had the power, and on them devolved the duty, of averting these calamities. They did not sit in their places to please themselves only, but to perform most important duties; to protect the meanest individual in the country, as well as the highest. And it could be proved in a committee up stairs, that measures might be suggested, which would be most likely to prevent the recurrence of the evils that now pressed upon us. Every man in the kingdom ought to hold government responsible for those evils, should they refuse such a committee. It was very true, that responsibility on the part of government was, now-a-days, a matter rarely insisted upon; but hon. gentlemen must see, that if it were pressed a little more frequently and urgently, it was a subject the agitation of which might be attended with the most beneficial effects to the community. He now declared, and very gravely, to the right hon. the chancellor of the Exchequer, that it was he who had encouraged the mad speculations that the whole country was lately immersed in, to their greatest height; it was he who had cheered and hurra'd them on, as it were, by talking about the unbounded and indisputable prosperity of the country. It was the right hon. gentleman, who by such conduct had aggravated the mischief to which those rash and dangerous undertakings had led. He was chargeable with the evils that had ensued, and was bound to administer a remedy. From all that had passed, he would draw the conclusion, that until the Banking system should have been placed upon a proper footing, there would be no security 588 against the recurrence of dangers and difficulties, which were attributed to the over-issue Of paper money, but which, in his judgment, had their origin in different causes.—He would now come to his view of the cause of the present distresses. His opinion on this subject was, to a certain degree, mixed up with others which he had already offered to the House. The principal cause of the present condition of the country arose from the act of the government, in reducing the interest on money in conjunction with the Bank. These operations had not been conducted in a manner, and upon principles such as extensive measures of this kind should always be conducted upon, by the ministers of the Crown; but they had been measures bolstered up, conformably with the views of the Bank and other public bodies with which the government ought to have had nothing to do. The conversion of some of the public securities, and the reduction of the public debt proposed to be effected thereby (and sure he was, that nobody was more anxious than himself for every possible diminution of that debt) should have been set about and effected in a fair and honourable manner; not in the underhand way in which government had proceeded in it, calling upon the Bank to make advances for the purpose beyond its means. If he was correct in his notions, other operations were the first causes that had led to the lamentable results by which we were now surrounded. For what had followed upon this commencement? Why, those very gambling speculations, of which a great deal too much had been said by gentlemen in speaking of their effect in. producing the present condition of things; although, no doubt, they had had their effect, and a very considerable one, upon it. Certain it was, that in this manner had been generated the excessive confidence, as between man and man, which had directly led to that enormous overtrading which he looked at as the great cause of all the difficulties of the time. The chancellor of the Exchequer, in his speech on a former evening, had laid no great stress upon this topic, but bad left it to be enlarged upon by the right hon. the president of the Board of Trade, who had certainly attributed to this cause the major part of all the present distresses of the commercial world. In consequence of that reduction of interest upon the public securities, which he had spoken of, individuals naturally enough became ani- 589 mated with a desire to increase the interest of their capital by speculating in a variety of joint-stock companies and extravagant projects. But, he begged to say, that this feeling was not occasioned, as some appeared to suppose, by the facilities of a paper circulation. In the year 1720, when there were no Bank-notes at all, or rather, when the Bank-notes in existence were but to a trifling amount indeed, the same extravagance of speculation was witnessed, and perhaps even to a greater excess. Of the nature and extent of the wild schemes and projects of that time, the hon. member for Northampton had recently given the House some account, from an authentic paper. Now, if the right hon. gentleman would persist in attributing our late mercantile distresses to the issue of a few millions of paper money, he would beg to ask, what could have been the cause of a similar pressure in 1720, when there were scarcely any Bank-notes whatever; and what had produced that same species of calamity again, in 1793? In point of fact, the same evils would have happened at present, had our's been purely a metallic currency. The same causes would have produced the same effects, whether that currency had been of gold or of paper. Those causes, assisted by the conduct of government, and the measures carried on by the Bank, had created, he was warranted in saying, such a degree of commercial confidence, that it was scarcely possible to say what limits men were disposed to set to their dealings. The consequence had been losses to so vast an extent, as sufficiently to account for our present melancholy situation. He held in his hand a paper that had been drawn up by a very intelligent gentleman on the Stock exchange, who possessed the best means of obtaining authentic information on the subject, and who had there noted down the total amount of capital absorbed by all these joint-stock schemes, since the close of the year 1823. Now, he thought that, while high-flown praises were lavished from so many quarters upon the Bank of England, that they ought to be called to account for having done every thing to increase that fatal excess of confidence. Was it, or was it not, true that the Bank had lent to Mr. Rothschild, at one time, upon deposits of stock, one or two millions sterling, which advance, from the peculiar circumstances under which it was made, had had the effect of carrying so much gold out of this country, 590 for the political and other purposes of the foreign states to which it was transmitted. This was one of the matters about which he was very desirous that a select committee of that House should be empowered to inquire. This was one of the causes which had excited the fever of the mercantile interest, to the height it did at last attain to; and which, being withdrawn, had suddenly thrown every body back upon his own resources, and had led, in short, to the general panic, which had proved so disastrous in its operation. It appeared to him quite possible that the evils he spoke of might by this time have quietly expended their influence, had they been left to work out their own cure, and had not ministers interfered to prevent such a result; and by their interference to add to the mischiefs that had been previously called into existence. He held in his hand an account of the sums which had been raised in England in the years 1824 and 1825, in the shape of foreign loans, and to which, as they were the means of taking away the actual capital of the country, he was much more inclined to attribute the existing pressure than to any of those causes which had been before mentioned. The hon. gentleman then proceeded to state the following.[See next page, No. 1.]It was observed, that the Austrian loan did not take much specie out of the country, having been a transaction principally in paper. So that altogether there had been 25,200,000l. of capital of loans, contracted for in 1824, of which the principal money received on account of the parties raising them, was about 20,000,000l. sterling. From this amount, deducting the sums retained in this country for payment of dividends, interest, and so forth, there appeared a balance of somewhere about 12,000,000l. of actual capital, on account of these loan speculations, to have been really paid away, abstracted from commercial purposes. Then, for 1825, the paper gave the following statement:—[See next page, No. 2.]
The hon. gentleman proceeded to state the total capital of foreign loans at present the subject of speculation in the British money-market, to amount to 33,769,571l. The total loss accruing to the nation by the fall of price on this capital, below the contract price, 6,496,295l., and the total loss on this capital, as shewn by the present market price, 9,796,440l. Thus it would appear, 591
No.1.—ACCOUNT of all FOREIGN LOANS raised in ENGLAND during the year 1824; and an ACCOUNT exhibiting the country contracted with, the capital stock created during the same year, and the balance of money actually remitted from ENGLAND on ACCOUNT of FOREIGN LOANS, either in money or produce. Date of Contract. Country contracted with. Capital Stock created. Balance of Money actually remitted from England on account of Foreign loans, either in money or produce. 1824. £. £. January Portugal 5 per cts. 1,500,000 690,000 Ditto Mexico 5 per cts. 3,200,000 844,000 Ditto Austria 5 per cts. 3,500,000 170,000 March Greece 5 per cts. 800,000 252,000 April Colombia 6 per cts. 4,750,000 3,157,500 May Peru 6 per cts. 750,000 468,750 July Buenos Ayres 6 per cts. 1,000,000 540,000 August Brazil 5 per cts. 1,200,000 616,000 November Naples 5 per cts. 2,500,000 775,000 December France, 5 per cents. during the course of 1824. 6,000,000 4,992,000 Total capital stock created in 1824 £25,200,000 Total sums really paid away for Foreign loans £12,505,250 Deduct Austrian Repayment 2,500,000 Balance money paid by England in 1824 for foreign loans £10,005,250
that the contractors and others concerned in the foreign loans, raised in England during the last two years, were now sustaining a loss—between the present price which they could obtain in the market, and the price which they gave for the loans to foreign governments—of six millions and a half of money; and if we viewed the loss as exhibited by the high prices prevailing in the markets in the early part of 1825, compared with those Which could be obtained for foreign bonds at the present moment, there was a loss 592 sustained, by one or other of the parties engaged in them, of nearly ten millions of money; but this last observation affected those who had been buying and selling in those foreign bonds, and those who, having purchased them at any price, were holders at present. Thus we had a loss of ten millions in foreign bonds, added to six more of gambling losses in mining shares, six millions locked up, and four by the high price of goods, making altogether, or changes of property, or both, to the extent of at least twenty six millions sterling.
No. 2. Date of Contract. Country contracted with. Capital Stock created. Balance value actually remitted from England on account of Loans, either in Money or produce of Labour 1825. £. January Brazil 5 per cts. 2,000,000 1,060,000 February Mexico 6 per cts. 3,200,000 1,861,500 Ditto Greece 5 per cts. 2,000,000 760,000 March Denmark 3 per cts. 5,625,000 1,757,500 May Peru 6 per cts. 616,000 388,080 July Guatemala 6 per cts. 1,428,571⅛ 244,543 September Guadelajara 6 per cts. 600,000 288,000 Commercial Bonds Total Capital Stock created in 1825 15,469,57⅛ Add capitals created in 1824 25,200,000 Total Capital of foreign loans created in the years 1824 and 1825 £40,669,571 Total amount actually paid for foreign loans, 1825 £6,359,623⅛
593 Many of these shares, which were at one period at so high a premium as 200 or 300 per cent and upwards, were now reduced below par, and were not convertible to the least useful account. Such a system must inevitably be productive of infinite misery. Independent of the mischiefs resulting from these extravagant loans and speculations, the calamity was heightened by the increase of importations of cotton and other articles of merchandise over former years, and over a commensurable demand for them. This item might, in the absence of official documents, be thus estimated. The excess, from comparison of the prices current of 1824 and 1825, had been found to consist principally of wool, cotton, timber, coffee, silk. Increased stock of cotton, 220,000 bales; of silk, 1,600,000lbs.; timber, coffee, dye, goods, wine, &c. about the value of 1,300,000l. The total value of these articles of increased importation was about six millions of money. All these articles, he supposed, were locked up in warehouses; as there was no suitable demand for them to cause them to be withdrawn from thence. The following was the statement, up to the present date, of the advances made on foreign loans, mining shares, and adventures, &c. which shewed the total money and labour expended, for which the market was wanting;—
This sum, added to the four millions to which he had adverted, by the high price of goods, would make a total of nearly 25,000,000l. abstracted from the country.—Another injurious effect on the commercial state of the country, produced by the recent panic and distress was, an 594 actual alteration in the mode of doing business. Formerly, a merchant who exported goods to South America, could obtain money in expectation of the payment for these goods, which would be made on their arrival abroad, either in the way of money, or of the return of some article of merchandise. But this was no longer done. Such was the effect of the distress, and of the panic, which was an aggravation of the distress, that distrust prevailed where confidence prevailed before, and the ordinary transactions of commerce were diverted from their accustomed course. This change and disorder in mercantile business, and this large abstraction of a capital of from twenty-five to thirty millions of money, both of which were the effect of overtrading, accounted in a much more satisfactory way for the distress under which the country laboured, than the attempt to account for it by the over-issue of a few millions of one and two pound notes. It was altogether impossible that such results could have proceeded from causes so trifling in themselves; and it was his perfect conviction of this fact that induced him to object, as he now did, to the proposed remedy. To attempt to relieve the existing distress by withdrawing notes from circulation, would be worse than useless—it would be injurious, and could have no other effect than that of increasing the evil. There was only one way of supplying the vacuum which that measure would occasion; that was, by supplying the deficient capital. But the withdrawing the notes would necessarily occasion the conversion of their amount into gold, and this, which must be estimated at 6,000,000l., being added to what he had before stated, would make the whole amount abstracted from the capital of the country nearly 40,000,000l. In such a state of things, then, could the government justify, upon any ground of policy or expediency, the withdrawing those issues of paper money which, whatever objections might have been alleged against them at other times, the present exigencies of the country made necessary for its relief?—Before he sat down, he would say a few words respecting the joint-stock companies. Notwithstanding all that had been said on this subject, he did not believe that they could have had the effect of withdrawing from the country one pound of its capital. All the transactions which had taken place in those 595 companies had been between individuals; and he thought it most likely that the greater part of the speculators in those shares would find themselves, upon balancing their accounts, just where they were when they began. This, therefore, ought not to be brought into the account of the causes of the distress. It was true that when the fever was at its height, these shares were passed from hand to hand with the same facility and rapidity as commercial paper, if not as Bank-notes. Great variations had taken place, from time to time, in the value of those shares; and it appeared from a statement which he held in his hand, that many of them had fluctuated from 500 to 600 per cent, which were now below par. It had been calculated, that the whole amount of them had reached between twelve and fifteen millions. The amount of money which they had actually taken out of the country was inconsiderable, compared with the nominal value of the shares. He had learned, that, upon the Anglo-Mexican, the Anglo-Chilian, the Anglo-Peruvian, and other companies, the objects of which related to foreign countries, the whole amount of money paid up did not exceed 3,097,000l., and, of this sum, that not two thirds, scarcely one-half, had been sent out of the country in the shape of machinery or otherwise. The speculation in these shares, then, could have had no other effect than that of raising the spirit of too great confidence in the commercial world, and this to no very considerable extent.—Another evil, and a much greater one, which had been produced by the government and the Bank, was the great increase of prices in all articles of general consumption—an evil which was felt universally, and which would be painfully and intolerably augmented by the sudden introduction of a metallic currency. The government, by adopting this measure, would only prove themselves to be disciples of Mr. Cobbett; they would give the most forcible confirmation to the system which that individual was continually preaching up; they would echo the alarm which he was incessantly sounding, and would actually produce the very evils which he had attempted to excite, and had hitherto attempted in vain. As the law at present stood, all the advantages which could be produced by a paper currency, convertible at will into gold, might he obtained. To alter this would produce incalculable mischief, and would make it 596 impossible to collect that immense load of taxation, with which ministers, by their extravagance, had burthened the country. To relieve the enormous expenses of our establishments, for which a sum of 27,000,000l. was annually wrung from the people, would go further towards remedying the evils than any of the measures which ministers were so ready to follow; and it might be wise, in this respect, to accede to the petition which had been just presented for returning to the amount of taxation which, in 1793, had been found sufficient. The twenty-seven millions wanted to carry on our civil establishment, together with the payment of twenty-eight millions more, the interest of the national debt, was too large a sum to expect to raise in revenue, after so many millions as he had stated had been abstracted from the capital of the country. This they should bear in mind—that as to one part of the community his measure would have no operation—he meant the labouring classes, who could only be paid out of the capital, in whatever shape it might be taken. He intended to call upon the House to pause before they adopted the proposition of the chancellor of the Exchequer, and to accede to that which he was about to submit to them, for appointing a committee to investigate the nature and extent of the present evil, who would thus be enabled afterwards to come forward with some efficient remedy. If the House thought with him that this step was one which would have a beneficial tendency, he should be for postponing the present motion, until the committee he proposed should have made their report. That would probably arrest in its progress the evil which, great as it was, had now not reached its utmost extent, and which unless it should be promptly remedied, would involve in distress and ruin millions who were at present untouched by it. He must make one other remark with respect to the Bank of England. He, who had voted so often against the system of hanging by scores the poor wretches who were found guilty of fabricating and passing forged Bank notes, could not see without great apprehension the prospect of all those horrors being renewed. He thought that since the Bank persisted in its obstinate practice of adhering to that clumsy and imperfect form of a note, which every other banker in the kingdom had renounced and since they refused to issue a note which it should be more dif- 597 ficult to counterfeit, they ought to have no such extraordinary power as that which they possessed. He hoped, at all events, that a clause would be introduced to make the Bank liable to pay the notes which should be forged upon them, as all other bankers were. He declared that his opposition to the motion before the House was, because the measure proposed was inadequate; because the grounds alleged in support of it were not the real causes of the distress; and because its tendency would be, rather to aggravate than to diminish the existing evils. He therefore, concluded by moving, as an amendment, "That a select committee be appointed to consider the best means for placing the Banking Establishments of the united Kingdom on a better footing; for securing the holders of bank-notes against loss; and for ensuring a metallic circulation in the country, commensurate with the wants of commerce, and the security of the country at all times."
Advanced for Foreign Loans £8,125,753 Ditto, Foreign Mining Schemes and Adventures 3,097,000 Ditto, for excess of import of Goods, valued at the present low and ruinous prices 6,000,000 Ditto, for more paid for the Goods imported in 1824 and 1825 than can now be obtained, or has been obtained for them by sale, since they were imported, ten per cent. on the total import of 1825, 36,000,000 3,600,000 Total money and labour expended, for which the Market is wanting £20,822,700
§ Mr. Ellice
rose to second the amendment, not because he coincided in all the opinions of his hon. friend, but because he wished to see the present measure fairly brought before the House. He thought, besides, that it would be advisble to go into a committee on the subject, before the House resolved upon departing from the old and approved practice.
rose to express his disapprobation of the original measure. His hon. friend, the member for Aberdeen, had, in the course of his speech, put forth the principles held by the late Mr. Ricardo, whose disciple he avowed himself to be. The great advantages, however, which were supposed to be derivable from a paper-currency convertible at will into gold, were not so obvious. The efficacy of such a currency had been tried, and the result was now before the House, because such a currency we had at this moment. With respect to the system of calling upon bankers to make deposits by way of security for the notes they should issue, he thought it could never be brought into general operation. He had discussed the subject with a very intelligent country banker, from whom he learnt that the whole of the body to which he belonged expressed the greatest disinclination to act upon such a system. With regard to the observations of the hon. member for Northampton, on the exchanges, he did not think there was such a variation in them as would warrant the inferences 598 drawn from them. The conduct of his majesty's ministers clearly showed, that they were not prepared for these events, and did not see the way out of their difficulties. He was satisfied that they would find themselves involved more deeply, unless they retraced their steps, and returned to sounder principles. He could not see any good reason why the country banks should not continue to issue small notes, as well as the Bank of England, up to the proposed period. Now, supposing the Bank of England to issue a great quantity of small notes—and they might issue them to any extent, because they were not, of necessity, convertible into gold—was it not easy for any one to foresee the consequences? Would not the same difficulties be found in withdrawing all this paper from circulation at the end of three years? He objected the more particularly to this indulgence towards the Bank of England, on acount of the great wealth and influence of that body. His fears were greater still, when he considered how powerfully the Bank of England could enlarge or contract their issues at pleasure—how they could increase or diminish the value of all commodities. He was convinced that much of the present evils were to be ascribed to overtrading. He would not go at any length into that subject, but there were one or two points to which he wished to call attention; for from these he inferred, that the difficulties which had been felt at several periods for the last twelve years, might be traced to the over-issues of the Bank of England. By a paper on the table, he observed, that, in December 1813, the ports of the continent were first thrown open to commercial speculation, the paper circulation of the Bank was 24,100,000l. In the short space of a few months, namely, in the middle of 1814, these issues had increased to 25,500,000l., making about 1,400,000l. above the preceding year. From July to December of the same year, their issues were increased to 28,000,000l. making an increase of more than 4,000,000l. in one year. Every thing rose in price in consequence. In 1815 and 1816, these issues were contracted, and the diminution of the currency was to the amoun of 9,000,000l. The consequence was, general distress, which continued up to the end of 1819, when the Bank again increased its paper circulation. The country banks followed in the wake of the 599 Bank of England. Again, in the years 1824 and 1825, the increase of paper in circulation by the Bank of England was between three and four millions. It was the Bank of England, and not the country banks, that was the cause of the present misery, and it was the over-issues of Bank of England paper that had caused the over-trading. Matters, indeed, were in such a state, that if a Bank director chose to speculate, he could easily make a fortune; as the Bank could always command a rise or fall in the funds, by limiting or enlarging its issues.
Mr. Secretary Canning
rose, not for the purpose of entering into any discussion, but merely to submit to the House the situation in which they stood with regard to the business before them. He would leave it to the good sense of the House to decide, whether it was not better to proceed fairly with the business of the day, and place his right hon. friend, the chancellor of the Exchequer, in the only situation in which he could possibly answer the appeals which had been made to, him for three hours, without transgressing all order, and contravening not only the courtesy but the convenience of the House. What was very extraordinary was, that the hon. member opposite seemed to think that he was paying something like a personal compliment to the Speaker in pursuing the course which he had adopted. He believed he might venture to say, that the Speaker did not enter into the feelings of the hon. member, and would not at all take it amiss if he were allowed to leave the chair, for the purpose of the discussion taking place, the fruits of which would come before him in the usual way. Gentlemen might, he knew, oppose the question that the Speaker do leave the chair, as often as they thought proper; but, if that course were pursued, there would at once be a stop to all business. He trusted that his right hon. friend would not be betrayed into anticipating what he had to say, and that gentlemen would not object to the House resolving itself into a committee, in which they might state their objections to the principle of the measure, as well as to its details.
§ The amendment was negatived; and the House having resolved itself into a committee,
The Chancellor of the Exchequer
said, that the most convenient course to pursue was to proceed with the bill, until he 600 came to that part of it in which he intended to make the alteration of which he had given notice. The alteration would come in at the blank in line 19 of the second page, which he proposed to fill up with the words "at any time before the 10th of October, 1826." If it were the pleasure of the committee that those words should be inserted, it would effect the object which he had in view. There were one or two other blanks in the bill, which he would propose to fill up, and would likewise make some verbal amendments, but not of any importance.
§ On the question that the first clause be agreed to.
remarked, that a general alteration ought to be made in the bill, as a consequence of repealing the 37th would be to revive the 15th and 17th of the late king, whereby the holders of small notes would never be able to get value for them, as those acts said they were null and void altogether.
The Chancellor of the Exchequer
thought the noble lord had misunderstood the clause; but to prevent any mistakes, it might be as well to omit the word "circulate," if the noble lord thought it would have the effect which he attributed to it.
observed, that the clause alluded to said, that no promissory note should be issued, not circulated: now that was only a prohibition to the issue or re-issue of notes, but not to their circulation by the holders of them.
§ Some other verbal amendments having been disposed of,
The Chancellor of the Exchequer
rose to propose the amendment, of which he had given notice, relative to the power to be given to the Bank of England of stamping small notes up to the tenth October next. He felt grateful to the House for the manner in which they had received the appeal of his right hon. friend, for permitting the Speaker to leave the chair. He had thus, through the indulgence of the House, been permitted at an earlier period of the night to proceed in the explanation of his views on the important point he was about to submit to their consideration, and in removing the many mistakes which, from a misapprehension of its real object, and probable results, seemed to have taken possession of the minds of many honourable gentlemen. He thought it a little hard that he should have been treated as he had been, both 601 that night and also upon a former debate. He did not at all consider that he could, with propriety, have been called on, or that he was at all bound, as some honourable gentlemen seemed to think, to announce, on a former night, the nature of the amendment he meant to propose, or the motives that led him to such a course. He abstained, therefore, upon that occasion, from offering any reasons for it to the House, because he thought it an inconvenient opportunity. The only favour he then begged was, that the House would permit him to submit his proposition, and to state his reasons for it, at what appeared to him the most proper and convenient time. He did not, however, pretend to complain of the course pursued, and he felt obliged for the opportunity now afforded him. When the hon. member for Coventry (Mr. Ellice), upon a former occasion, expressed himself with so much warmth upon the step which government thought it advisable to pursue, and accused him, with considerable vehemence of proposing a course which he presented as utterly at variance with the principles which he (the chancellor of the Exchequer) had before laid down, he felt that the charge made by the hon. member was unjust, and not borne out by the facts of the case. Having heard the hon. member express himself in such language, and state a serious charge of deviation from principle so broadly, he could not at the moment avoid questioning himself, and endeavouring to call to his recollection, whether the hon. gentleman himself had not shewn a disposition, upon former occasions, of exercising a discretion, as to the time when some general principles, admitted to be right in themselves, should be brought into operation. He was inclined to believe, that if the hon. gentleman, who admitted the justice and policy of those principles of free trade on which government were disposed to act, and who had voted for them, saw any circumstance which might render their application inconvenient in a particular case, and afforded ground for relaxation as to time, he would be disposed, in favour of the particular case, not to be over rigid in the application of his principles. This, however, would appear when the hon. member brought forward the question of which he had given notice, and in which, he trusted, the hon. gentleman would not be successful. It would, however, shew 602 that he himself was not disposed to lay aside all considerations of time and circumstances, and all the suggestions of prudence and discretion, when the question was as to the application of general principles. He would not at present press that point further, but would proceed to state, as shortly as he could, the grounds of the amendment he was about to propose. It appeared to him that the proposition had been greatly, he would not say intentionally, misunderstood. It was necessary for him, in the first place, to state precisely what the nature of the amendment was, and to declare what it was not meant to do, rather than what was intended to be done. He did not mean, then, to propose, that the Bank of England should continue to issue one and two pound notes, when that power was withdrawn from other Banks. The object was, not to give the Bank of England the power of retaining their notes in circulation one moment after the lapse of three years. What did the proposition, in fact, amount to? It amounted only to this—that during the next three years, the small notes of country banks, stamped previous to the 5th of February last, should continue to circulate, and be issuable, but that the small notes of the Bank of England might be issued, though dated subsequently to the 5th February and up to the 10th October. The immediate effect of this would be, to enable the Bank to supply, if circumstances required, for a limited time, and to a limited extent, any sudden vacuum that might be produced by the withdrawing of country Bank paper from circulation. He could not conceive how any person could, for one moment, entertain a doubt, that if the effect of the bill should be to annihilate the circulation of the small notes of country banks, before the lapse of three years, the apprehensions entertained by some, of the inconvenience of the general measure, would not be greatly heightened, if there was no substitute provided by the issue of Bank of England small notes. The original resolution assumed, that the circulation of small notes could not be dispensed with for three years. How could it be contended, that a permission to the Bank of England to issue small notes, dated up to October, was at variance with this resolution? Though he would not admit that there was any se- 603 rious difficulty or danger in the way of the measure itself, still he never meant to shut his eyes to the consequences that might follow, if country banks were compelled at one blow to extinguish the whole of their circulation. They had had some proof, not very long back, of the danger to be apprehended from a concentrated rush on the country banks, from whatever cause it might arise; they saw the inconveniencies thus produced on the state of the currency, and through that on the general interests of the country, commercial, agricultural, and manufacturing. Whatever other gentlemen might think, he was not one who blamed the Bank of England for its issue of small notes; not because he thought it desirable upon principle, but because it operated to the diminution of an existing evil, that they should have possessed the power, and that they acted upon it, under the pressure of a peculiar difficulty. If they had not exercised it at the time, the mischief would have been more serious and extensive than it had been. The Bank, by the prudence and discretion with which it exercised its power upon that occasion, enabled many to weather the storm, who otherwise must have been completely overwhelmed by its fury. He had given the subject all the attention in his power, but had been unable to discover how a temporary or contracted issue could, by any person who took a candid view of the subject, be at all considered a departure from the principle of the bill. So far from seeing the amendment in that light, it appeared to him, as clear as any thing could be, that if some such provision was not introduced, the measure would, in fact, defeat its object. No objection he had yet heard was tenable in any rational view of the subject. By the principle of the resolution itself, it was expressly admitted, that some delay was necessary, before it could be carried into full effect, and the important end Attained, which it was the wish of all to arrive at, namely, a sound state of the currency; such a state as would in future prevent, as much as could be prevented by human contrivance, those fluctuations, which were admitted, on all hands, to be a most serious evil. This being his opinion, he thought that all who supported the original resolution were bound, in consistency, not to refuse their assent 604 to the amendment. They might differ as to the time during which it would be advisable to allow small notes of any kind to circulate, whether those of the Bank of England, or of country banks; but, on the propriety of some such provision as this, he did not see how, upon any rational view of the subject, a doubt could for a moment be entertained. One hon. gentleman was of opinion, that the permission to issue small notes should be limited to two years. Other honourable gentlemen were for four years; but, on all hands, whatever difference of sentiment there might be as to the time, the principle of the necessity of some delay, more or less, was virtually admitted by those who supported the original resolution. The amendment, therefore, they could not in consistency object to, without shewing that, in its nature and probable results, it was calculated to defeat the object of the measure itself. On judging of the effects of the alteration proposed, and the probable mode of its operation, it was necessary to consider for a moment the spirit in which it had been brought forward; and, to do this, he must recur to antecedent events. When, in December last, the idea occurred to the Bank of availing itself of the power it possessed of issuing small notes, his majesty's government felt themselves called upon to express their concurrence in the step; feeling and declaring, at the same time, that it could be justified only by the necessity of the case, and that it was the duty of the Bank so to avail itself of the state of the exchanges, as by judicious and proper arrangements, ultimately to bring about a sound metallic currency. It was in that spirit alone that the measure was assented to in December; and he solemnly protested, whatever might be the insinuations thrown out, as to the object of government then, that if he conceived the most distant idea that it could have the effect of tending ultimately to defeat the great object in view, he would sooner have suffered all the inconveniencies of the time, however great, than have given it his sanction. Was it to be supposed that he could now come forward and propose such an amendment as this, if he thought its tendency was to defeat the establishment of a more sound and a better currency? With sentiments so well known, and so often expressed upon the subject, could he stand up in his place, and subject him- 605 self to the disgrace of so mean, so paltry, so base, a deception, for the purpose of effecting a temporary object? But, he did not believe that such would be the result of the measure. On the contrary, he felt firmly persuaded that the consequence would be such as both sides of the House were anxious to see attained. It was objected, that if this privilege was granted to the Bank, they would, in the course of a short time, completely deluge the country with small notes. How could this be done? How was the Bank to get out its notes in such profusion? He begged gentlemen to consider the manner in which they must be issued. The only way in which the small notes of the Bank of England could get out was, to enable the country banks to meet any overwhelming pressure, to which they might be exposed. Their issue, therefore, it was quite clear, must be regulated by the degree of pressure on the country banks. The Bank, let it be recollected, did not stand at the window and throw out their notes to all who might be disposed to catch them. The country banks must be a party; and they could have no object in calling for the small notes of the Bank of England, unless circumstances rendered it necessary that they should do so, for the purpose of meeting any demands that might come upon them. The apprehension, therefore, of those who supposed that a complete deluge of Bank of England paper must be the result of this measure, would, when the subject came to be properly considered, be found to be visionary, and totally destitute of foundation. Such apprehensions were quite opposed to that spirit, in which the question was looked at by government, and at variance with the opinions entertained of it by the Bank itself. The Bank could have no object in extending its issues to this fearful extent. They could derive no advantage whatever from it. On the contrary, it must be attended with great inconvenience to them, if their issues should be carried to such an extent as gentlemen seemed to think. Either the country banks would want this aid, or they would not. If they should want it, the assistance given would be limited to the extent and violence of the press upon them; if they did not want it, the Bank of England notes could not, of course, get into circulation. The wants of the country banks would be a control on the issues of the Bank of England, because by their wants, would those issues 606 be necessarily limited. An hon. member had truly observed, in a previous debate, that Bank of England notes were not much liked by people in the country, as they preferred those of the neighbouring bankers. This being the case, what motive could the country bankers have for drawing the paper from the Bank of England, unless to serve a particular purpose? On the contrary, if there happened to be Bank of England paper in his vicinity, it would naturally be the wish of the country banker to have it withdrawn as much as possible for the purpose of substituting his own. Here, then, was a natural check to that unlimited issue, which appeared to be so much an object of apprehension. He must, therefore, contend, that the amendment was by no means inconsistent with the original principle of the bill; and, to convince him that it would produce the consequences apprehended, he must hear much stronger arguments than had been yet employed. Some hon. gentlemen had been pleased to say, with what justice he would leave it to the House to decide, that this proposition was submitted to parliament, because government found itself in a difficulty which it did not know how to get out of. He did not mean to deny that government might not be in difficulties. The circulation itself constituted a difficulty of a very formidable nature. But, admitting the existence of the difficulty, it was rather hard that they should meet with reprobation from any side of the House, because they had recourse to those measures which they considered best calculated to remove it—because they came boldly forward, and without disguising the state of things, submitted to the judgment of parliament, the remedy they deemed most applicable to the disease. In the beginning of the session, he had taken the earliest opportunity of declaring, that it was impossible, in the existing state of things, and after the evils which had recently occurred, for government not to come forward, and declare the view they took of the causes of the evils, of the means best calculated to alleviate them for the present, and prevent their future recurrence, or mitigate them if they should occur. They could, filling the situation they did fill, have acted in no other way. They followed, as he contended, the course which duty and prudence pointed out. They made no concealment of the difficulties they felt. To sit silent in their 607 places with an air of mystery, to abstain from suggesting any course from a fear of the consequences to which it might lead, or from a sense of the delicacy and difficulty of the case, to propose no measure, even at the risk of being in an error, would, in such a state of things, have been most absurd; a paltry course of proceeding, of which, if government had been capable, he should have felt ashamed.—They were not, then, to be reproached for having acted with precipitation; nor was it more just to say, that because a difficulty did arise, to which they strove, to the best of their power, to apply a remedy, they merely shaped their measures, so as to meet a particular case, if that case should occur. He contended, that such had not been the conduct of government. The measure was not one of mere temporary expediency, but such as, in his conscience, he believed, would be effectual; and not only operate beneficially for the present, but be productive of permanent advantage. Without it they could never be secure against such fluctuations as must always be productive of the most serious inconveniencies; and that being his impression, he should consider the loss of it a great evil. If those hon. gentlemen, therefore, who supported it on principle, and who, at such a crisis, and upon a subject of such vital importance to all the interests of the country, thought it their duty to sacrifice those feelings which were supposed to influence public conduct in the political contests of that House, who gave it that support with no other view, and influenced by no other motive than the performance of a great and vital public service; if those hon. gentlemen now refused their assent to the general measure, in consequence of the proposed amendment, he should feel disposed to conclude, that they acted so from an idea, that an opportunity was afforded them, by this slight change in the bill, of having a little fling at government. He could not bring himself to think that they could be influenced by so petty a consideration, and therefore he must hope, that having agreed to the principle, those honourable gentlemen would not now make any effort to deprive the country of the benefit of the measure. He felt thoroughly persuaded, that the bill was necessary, as a remedy for present, and a protection, against future difficulties; that the modification proposed, was calculated not to do mischief, but great good, and ultimately to render success itself more 608 successful. It was with this view, and with this conviction, he ventured to propose, that it might be competent to the Bank of England to issue small notes stamped up to the 10th of October next. Wishing, as he did, to guard the government, and the Bank, against the probability of a suspicion, that there existed any thing like secrecy, or that there lurked, under this measure, any hidden motive of giving to the small notes of the Bank of England a more extended currency than necessity required, he had intended to propose a clause to provide for the publicity of the amount that might be in circulation, from time to time. That object, however, was secured by a clause in the bill of 1819, by which the Bank was required to publish an account of all the small notes they might issue under it, which account was to be laid before parliament, if sitting, and if not, to be published in the Gazette. This was sufficient to guard against the idea of any combination between government and the Bank, and to defeat any miserable, dirty, paltry trick, if they could be supposed so mean and contemptible as to meditate such a thing, in proposing a measure which they felt firmly persuaded was essentially necessary to the present and future welfare of the country.
said, he had never heard a speech that had gone so short a way in producing a favourable impression in support of a proposition, as that just delivered by the right hon. gentleman. He was directly opposed to the amendment, because he conceived it to be quite at variance with the general principles which they all had in view. The great difficulty under which he laboured was the want of ability to do justice to the objections which he felt against the measure; and, in one respect, he concurred with the right hon. gentleman, who had said that his objection would be immoveable, if he thought it could defeat the general principle, in favour of which the House had voted before. But his principle objection was, that the House was called upon to support the inconsistency of the right hon. gentleman, without having had it shewn that any thing had occurred since last Monday to justify the change. And this course was the more objectionable, when we were endeavouring, in the face of the difficulties which beset us, to place our currency on sound and true principles. Nothing was more desirable, than that there should be no wavering or vacillation 609 in the measures of parliament, to create mistrust in our friends, or give a triumph to our enemies. In what other light could the measure of government be contemplated, particularly in conjunction with the speech of the right hon. gentleman, than as a direct acknowledgment, that, however true in principle the measure might be, in practice the government was obliged to shrink from its execution. The chancellor of the Exchequer had put the measure on its true footing, when he said, that he would oppose the amendment if he thought it warred against the principle to which they were all pledged. What was it but a question of time? The House of Commons ought not to be called upon to support a measure too rapidly, therefore it was most properly described as a question of time; and such was the impression produced by the whole course of the debate. The right hon. the Secretary of State for the Home Department had, as a practical statesman, taken a sound practical view of the case. The right hon. the President of the Board of Trade had expressed an opinion, that if the measure was postponed for a year, it would be a defeat for ever; and yet the chancellor of the Exchequer now proposed, that the plan should be delayed for eight months; for the proposition of the chancellor of the Exchequer was nothing else than to allow the Bank of England a period of eight months to manufacture what quantity of notes they pleased. And was this not calculated to defeat the principle which the House had in view? The right hon. the President of the Board of Trade had resorted to an illustration, and had asked, whether it would be wise to attack an enemy in the hour of his weakness, or wait till we found him in a state of vigour and energy? But, by the present proposition we were told, that we must raise the enemy from a state of weakness to a condition of vigorous resistance, and that in this there was nothing inconsistent with the principle which the House was endeavouring to establish. The chancellor of the Exchequer might, if he pleased, propose on one Monday a proposition which was quite at variance with that of the former Monday; but the right hon. gentleman must excuse him, if he declined following him. The Bank of England, we were told, good souls, had nothing to do with the transaction; but he would appeal to those gentlemen who had attended to the discussions on this subject, whether on 610 any occasion, since the consideration of the bullion question, the over-issues of the Bank had not been placed in the front of the battle. The statement they had constantly heard was, that the over-issues of the Bank had led to other over-issues on the part of country bankers, who then took fright, and then the panic which was created had led to all the difficulties in which the country was placed. Amongst the inconveniencies attending the question, perhaps the greatest was the circumstance of their not having the whole question before the House. There was a bill in progress in the other House; and if report spoke true, it had gone through an important stage that night. Was it not true, that the Bank of England was about to establish branch banks immediately? And the result seemed to be anticipated, that, whether by government or by what other means, the country banks would be ruined. In order to effect this object, all the Bank had to do, was to hire houses in different parts of the country, and to send down a trusty and confidential person to take charge of each establishment, and then they might go on issuing their one and two pound notes until the middle or the end of October. Did the chancellor of the Exchequer suppose that the directors of the Bank, feeling alive to their own interests, would not take measures so to increase the issue of their one and two pound notes in the interim, that the amount in circulation by the end of October would be so great as to preclude the possibility of carrying the proposed measure into effect? It was quite natural that they would; and, in fact, the right hon. gentleman, by this bill, armed them with power so to do. It was, in his opinion, the continuance of a system which, it was admitted on all hands, had already been all but fatal to the country. And what, he would ask, was the security which the country had against the abuse of this extraordinary power given to the Bank directors? There was none. And this alone was enough to induce him to withhold his assent to the amended proposition of the right hon. gentleman. He felt it most singular, most strange, that the chancellor of the Exchequer should have come down with a measure like the present, so very soon after his original statement, and that, too, without the slightest shadow of justification, without the slightest argument to fortify his change of opinion. The reasons now given for the right hon. gentleman's 611 change of opinion would have been equally forcible on Monday last; and since that period nothing had occurred to justify his change. There was no man more willing than himself to give support and efficacy to any measure introduced with firmness, and maintained with consistency, which had for its object, either the relief of existing distresses, or the prevention of their recurrence. But he could not so characterize the measures lately and now proposed by ministers. They were not only inconsistent with, but, in a great degree, opposed to each other. His great objection to the present plan was the extension to the Bank of England of a right, the exercise of which was taken away from the country banker. This regulation would, if carried into effect, leave behind it the seeds of distresses similar to the present; and those seeds would, in a little time, flourish and thrive, and bring about a return of that eventful crisis of depreciation which the country had so much reason to deplore. He paid no attention to the statements made relative to what would be the conduct of the Bank. This and that had been said, but every assertion made was falsified by a reference to what had already taken place. The principle of depreciation would go on. No rational hope could be entertained of getting rid of these one and two pound notes at the period fixed by law. The only possible hope that such an event would take place was to be found in the fact—that the bill for continuing that circulation would expire on the 10th of October—a period when parliament was not likely to be sitting; and when, of course, there would be no new bill for its further continuance; and it would be too monstrous for any minister to undertake their further issue. This was, at first sight, something like a plausible argument; but a great many things might occur in the mean time to give a colour to a further continuance of that bill; and who would venture to say, that there would not be found, in certain quarters, a power and an inclination to prevent the law from being carried into effect? Besides, would not the Bank itself have the power of doing something which would have that effect? It was said, that the measure formerly proposed would have the effect of setting the question at rest; but now the only security held out to the House was, the speech made by the right honourable gentleman last week. Since that speech was made, 612 however, the measures proposed were totally different; and yet, with an arrangement so different, the arguments urged in its favour were almost, if not precisely, the same. Surely this was a mode of proceeding which, to say the least of it, required explanation. If a large amount of one and two pound Bank of England notes were allowed to get into circulation, what, he would ask, would be the state of the country in the event of a recurrence of panic and alarm such as that which had lately taken place throughout the country?
§ Mr. John Smith
said, he differed entirely from his hon. and learned friend who had just sat down. He was as anxious as any man to remove, as speedily as possible, the panic which had recently taken place; but he felt, with the chancellor of the Exchequer, that the measure was not clearly understood. The recent distresses were not, in his opinion, to be attributed to the circulation of one and two pound notes; but to a series of other events. The chancellor of the Exchequer had, in the course of his speech on that and other occasions, talked about giving security to country bankers, but there was another body to whom he wished to give security and support; he meant the company of the Bank of England. What had been the conduct of that establishment in December last, when the panic which had run through the country was at its height? They had come forward with a degree of spirit and promptitude which could not be too highly praised, to support the credit and character of the trading interests of the country. They had, it was well known, afforded the most liberal assistance. Let the House recollect what had taken place in distant parts of the country. Individuals and companies of persons had applied for and received large sums of money from the Bank of England, and when the alarm became great, they turned round upon the Bank and said, "Now, we request you to give us gold for all this paper." The Bank of England had advanced, in the course of one week, more than a million in gold, and finding the demand for assistance still continue, they showed their good sense by returning to an issue of one and two pound notes. This they were entitled to do under the existing law, and had only abstained from doing by a feeling, that their circulation might be avoided without injuring the country. A similar circulation had been continued throughout the 613 country by country bankers; and he would not venture to say, that the issues, in some instances, had not been injudicious. But, he could assert, that the country bankers generally found out, that the issue of one and two pound notes was productive of little profit, but of much trouble, annoyance, and vexation. He mentioned these as facts which came within his own knowledge. The country bankers narrowing the issues of those small notes, how could the evil have been met, but by the line of conduct pursued by the Bank of England? It was true that a greater quantity of specie would be required to fill up the vacuum caused by withdrawing this paper circulation; but that it would be the wish, as well as the duty, of the Bank of England to provide; and thus the danger and difficulty apprehended would be avoided. It was not his intention to enter into the question; but he felt it necessary to state, that the vote which he should give in favour of the proposed measure would be in perfect accordance with that which he had given on the former occasion; adding his belief, that without the regulation now proposed, the measure itself would be ineffective. He did not wish to detain the House, but he felt it necessary to make a few observations upon the conduct of the directors of the Bank of England. He would defy any man to show in the history of the commercial world, a more strict personal integrity than was to be found in the conduct of the directors in the whole of their money transactions with the public. He would take, for instance, the period of 1816, when the Bank was deriving enormous profits—how acquired he would not stop to consider—and when they divided the immense sum of 25l. per cent upon the capital stock—a circumstance, the previous knowledge of which would have made the fortune of any individual; and yet, on examining the books, not a single director was found to have availed himself of his private knowledge, or to have possessed one shilling more of stock than was necessary to his being constituted a director according to the charter. The whole of the gentlemen who composed the directory of the establishment were men of the highest character and soundest principle; and were every way worthy of the respect and confidence of the country. He would ask, in conclusion, if the Bank were not allowed to make this issue of one and two pound notes, what 614 must be the state of the country, in the event of a return of a crisis so painfully distressing as that which had been recently experienced?
§ Mr. Pearse
said, that there was no reasonable ground for apprehension that the Bank of England would unnecessarily issue small notes. The period of the bank restriction had been referred to; but he begged the House to bear in mind, that at that time they issued their notes under no liability. Now the case was different; for they were bound to pay their notes in bullion. While much praise had been bestowed upon the Bank from all sides, charges had also been brought against the directors which were not altogether fair. At one time, it was said, they encouraged the circulation by over-issue; and, at another time, reduced it by undue contraction. In this latter charge, all sides agreed; but, in truth, neither the one charge nor the other was correct. It was only when there was a want of paper, and the bankers would not give discounts, that these issues were made. Truth and justice called upon him to declare, in the face of the House, that the charges brought against the Bank were not founded in fact.
Mr. Secretary Canning
said, he presented himself thus early in the debate, because he believed that the House needed only clearly to understand the measure in discussion, and to see that measure in the light in which it was meant to be brought forward, to come without difficulty to a fair, just, and conscientious conclusion. He agreed in the truth of the first observation of the hon. member who had last spoken; but not in the latter point, as to the manner or principle upon which the Bank was accustomed to regulate its issues. But this was a matter of no consequence; because the question was not, whether the Bank should have unlimited power to issue, or should be altogether restrained from issuing a particular description of notes; but whether the latitude given to the Bank, by the present amendment would, such as it was, defeat the original measure. Now, the hon. and learned member who opened the opposition to the amendment said, that no reason had been given by ministers, why that course which had not been proposed by them, or supported on the discussion a week since, should now be presented for the approval of the House? To that observation there were two answers: and the first was, that the measure before the 615 House was by no means that which had been negatived in the discussion a week since. It was so far like that negatived measure, that it referred to the Bank, and to issues; but, as regarded its spirit and effect, it was of an entirely different character. The original resolution passed on Tuesday, the 14th instant, and to which reference had been made that night, was as follows:—"That all promissory notes payable to bearer on demand, issued by licensed bankers in England, or by the Bank of England, for any sum less than 5l., bearing a date previous to the 5th of February, 1826, or which may have been stamped previously to that day, shall and may continue to be issued, re-issued, and circulated, until the 5th of April, 1829, and no longer." This being the original resolution, the amendment proposed by the hon. member for Newton, (Mr. H, Gurney), and negatived, was to leave out the words, "or by the Bank of England." But the effect of that omission would have been totally different from the effect of the present amendment. The measure now proposed gave the Bank of England eight months more to issue their small notes, and allowed them to keep those notes in circulation for a period of three years longer: the amendment rejected left the Bank unlimited as to issue, and kept their notes in circulation until the year 1833. During the whole of that debate, it had been argued that it would be a great abuse on the part of the country banks, as well as a great abandonment of their own interests, to withdraw their small notes suddenly from circulation. He had himself, in particular, dwelt upon that point; and had endeavoured to show the country bankers, that their interest, as well as the public convenience, lay in their spreading the withdrawal of these notes over a larger space of time. But the bankers had not taken this advice—his expectations had been disappointed. As had been predicted by the hon. members for Taunton and Wareham, the bankers, in many parts of the country, had taken that course which he had believed, in good faith, as well as in good policy, they would not adopt; and reports were coming in from all quarters, stating that they were acting upon the principle of suddenly and most materially contracting their issues. Now it was the imperative duty of government to consider what would be the effect of this sudden and complete withdrawal of all the one and 616 two pound notes in circulation through the country. On Wednesday, on Thursday, and on Friday last, accounts had been constantly, and still were coming in; and what was felt already, in consequence of these measures, showed sufficiently what the case would be, if the same course was persisted in and permitted to go on. Then it stood quite clear, that there was no remedy for this, unless gold could at once be found (which nobody pretended could be done) in sufficient quantity to fill up the vacuum—no remedy, but that which was proposed by the present measure, namely, to allow the Bank of England to go on issuing one and two pound notes. It was, in a minor degree, a repetition of the same panic which had taken place in December; and to which the Bank one and two pound notes had been applied, and had at once effected a cure. He believed, that practical statesmen would all agree, that in pursuing measures of public good, it was a duty to be as tender as possible of private interests and feeling; and the whole question which could arise was, whether the indulgence here granted to private feeling was so great as to place in danger the success of the public measure. Then, how stood the case? That the danger was not very imminent might be inferred, both from the practice of the Bank in past years, and from the conduct of government. He did not suppose, or expect, that the Bank of England, or any other establishment, would act for the public interest, to the disparagement of its own. He did not look for this from the Bank. It was no part of their charter, and the public had no right to expect it from them. Their real tie to the public was this (and it was always the safest and the surest one), that the interest of the public became collateral with their own. Now, when he looked to the conduct of the Bank immediately after the passing of the bill in 1819, he found that, long before they were compelled by law to withdraw their small notes from circulation, those notes began slowly to be withdrawn, and at length totally disappeared. Then, how was this? He was compelled to believe one of two things, and either was sufficient for his present purpose—either that there was nothing in the circulation of the one and two pound notes very profitable to the Bank, or that, from an opinion that they were injurious to the public welfare, and not very greatly advantageous to 617 itself, the Bank had elected to withdraw them: because, it was an error to talk of the Bank-issues, and of the Bank-issues of one and two pound notes as the same. The Bank might be greatly advantaged by large general issues; and yet not at all so, or very slightly, by the issue of small notes. While they were compelled to pay in gold, it could not be for the interest of the Bank to multiply that circulation for which gold was most likely to be demanded. And the fact was better than the argument: it appeared clearly that they had not been desirous to do so; for, in the month of December, when the question had arisen what should be done to fill up the vacuum in the circulation which the failure of the country banks, and the absence of confidence, were creating, the Bank of England being still empowered to issue small notes, had, for three years past, had none in circulation. He had actually believed, at that time, that the one and two pound notes of the Bank—the power of issuing them—had been extinguished. It appeared that it had not. They held the power, but had forborne to use it. Then, before honourable members expressed these violent fears, they ought to look back a little to precedent and practice. He did not say that the Bank of England had withdrawn their one and two pound notes purely because that House thought such a course would be beneficial to the country; but this he did say, and upon the facts he challenged contradiction, that it appeared plainly that those notes were not a circulation to which the Bank was favourable. It was perfectly notorious, in addition to this, that, many times within the last three years, the Bank had taken every means in their power to give a metallic circulation to the country. They had sent forth, over and over again, flights of sovereigns; and those sovereigns had returned to them, like the dove of old to the ark, so widely was the earth deluged with paper. There were these facts to argue from—the recall by the Bank of England of their one and two pound notes, when they might have kept them out—the non-issue when they were at liberty to issue them—and their repeated attempts to give the country a metallic circulation. Judging, as human minds must judge, from what they saw of human actions, did it seem likely that the Bank would be now anxious to force an issue of small notes much more than they had been heretofore. It 618 was not his peculiar province to communicate that fact; but the House should know, that the late issue in December of one and two pound notes was not a measure which the Bank had pressed upon the country. The Bank, during that period of distress, had been advised and pressed to issue their one and two pound notes. On being so pressed, they said,—"We have the power, but, after having so long disused it, we are unwilling to make such an issue without the direct sanction of government." His majesty's ministers, being applied to, thought it right, before they gave their answer, to draw up a memorandum of their opinion. They had not supposed such a record would ever be called for, but it had been taken; and the effect of it was this. The effect of the answer to the application of the Bank was—"That if, for the purpose of meeting the temporary wants occasioned by the sudden withdrawal of the country bank notes, the Bank of England was disposed to avail itself of the power which, by law, it had, to issue notes of 1l. and 2l., the government had no objection to such an issue, provided it was understood, that the measure was to be strictly temporary; and provided the Bank would take advantage of the present state of the foreign exchanges to increase their treasures so as to provide for the country a more extensive gold circulation." Such were the principles on which his majesty's government consented to, or rather concurred in, the opinion of the Bank, that such an issue would be advisable. These were the limitations with which it was thought necessary for them to accompany their consent, at a moment when they had no more idea that the question would be mooted and discussed in that House, than they had of the occurrence of any event, however apparently remote or unlikely to happen. It was exactly with the same limitations and the same views that the government now concurred in the amendment introduced by his right hon. friend. Their object was, that if, in the first stages of the contraction of the country one and two pound note circulation, a crisis should occur any thing similar to that which had happened in December, the same remedy might be adopted which had been resorted to at that period. He believed it was admitted, by the general concurrence of every practical man in the country, that the issue which was allowed at that time, was justified by the 619 circumstances, and was found efficient for its purpose. Therefore he thought the legislature ought not to put it out of the power of the Bank by law to adopt the same course upon the recurrence of a similar necessity. An hon. gentleman had said, with all possible fairness, that though he thought the alteration now recommended might endanger the final success of the plan, still he would rather pass the bill with that provision, than not carry it at all. Now, in adopting the measure proposed by his right hon. friend, it did not appear to him that they took out of the way one of the chances which might operate in producing the recurrence of a state of things like that which had happened in December last. Nothing, he thought, was more calculated to make parliament pause and hesitate as to the prudence of the step they were going to take, than the fear of the danger that must arise, if, in a month or three weeks after the measure had gone through this House, the same scene that took place in last December should be renewed, by the sudden contraction of issues, while the Bank had it not in its power to meet the mischief. The mischief to the country in case of the recurrence of such an event would be incalculable; and he was quite sure that ministers, who ought to know accurately how matters stood, would be taunted—ay, and justly too—for not providing for such an untoward state of things. For his own part, he would infinitely rather that no necessity existed for such restrictions with regard to the country bankers. He did not mean to blame them for what they had done when the necessity of imposing restrictions became apparent. They had taken a particular view of their own interests, and he was sorry that their duty did not prescribe to them the propriety of a gradual, rather than an immediate contraction of their issues. They had adopted a different course, and had created a crisis, to prevent the recurrence of which nothing but the amendment of his right hon. friend would be found effectual. No other antidote could repel the mischief. But, after this amendment were agreed to, let the hon. and learned gentleman compare the state of the law as it would be with the law as it now stood, with a view to his own expressed object—that of introducing a pure metallic circulation. Before the present bill was brought in, the law, as it stood, allowed an unlimited 620 issue to the country bankers and the Bank of England for seven years to come. Now, could any reasonable man imagine, that if this bill were unfortunately thrown out, and an accumulation of those notes were suffered to go on for seven years, that at the end of that period, greater difficulties would not be thrown in the way of the ultimate resumption of cash payments, than would be thrown in by the amendment now under consideration? The bill extinguished the circulation of country notes after the year 1829, or at the end of three years, instead of at the end of seven years. Thus, the increase of that species of circulation was effectually prevented; but symptoms had been shewn of the possibility of a crisis by the sudden contraction of the existing circulating medium, which might entail great evils on the country, and, in the period fixed, the most sanguine man could not anticipate that a gold circulation would find its way into the country to supply the deficiency. The amendment, therefore, went to provide for that evil—to supply the vacuum created by the withdrawing of paper, before it could be expected that sufficient gold would arrive; and he declared most solemnly, that he would not recommend it to the House, if he did not in his conscience believe, that instead of impeding the ultimate object, for which the bill was alone good for any thing, it would rather facilitate that object, by taking out of the way an impediment which would be ruinous to that operation; an impediment, which, if it occurred at all, must occur at the most critical and particular moment—the moment when that important operation was about to be carried into effect.
§ Mr. Tierney
said, he would endeavour to follow the right hon. gentleman, as nearly as he could, through the course of his observations. If he could be satisfied that the effect of adopting this amendment would be that which the right hon. gentleman had stated, he for one would certainly agree to it. But it was because he was of opinion, that no such effect would follow its adoption—it was because he was convinced that, in 1829, the legislature and the country would be placed in just the same difficulty as they had now to contend with, that he felt himself obliged to oppose the proposition. It appeared to him very strange, that gentlemen who had opposed the principle of the bill, without this new clause, was now 621 ready to support the principle of the bill with it. He asked how it happened that the hon. member for Newton who opposed the bill, as highly dangerous in principle, when unaccompanied by this amendment, now approved of it? For, let it be borne in mind, that the discussion hitherto related only to the principle of the bill. How did it happen, he asked, that the previous opposition was entirely done away, when the original intention of ministers was removed, and additional power was given to the Bank to issue one and two pound notes to an unlimited extent during an enlarged period? He would ask of gentlemen conversant in business, whether the general impression had not been, that this alteration bore a favourable aspect, with respect to the continuance of a paper currency? He thought it had that appearance. The paper currency was beginning to be at a premium. To use a familiar phrase, things began to look up in the paper department. The proposition of the right hon. gentleman appeared to have produced a most marvellous effect. Gentlemen who had hitherto looked on the measure with abhorrence, now began to consider it as something exceedingly good indeed. The right hon. gentleman had stated, in more moderate terms than he himself should have used, what he feared was too true, that there was a determination, on the part of country bankers to throw impediments in the way of a return to gold circulation. The country bankers, like good soldiers, appeared to obey the word of their commander very promptly. When they found how matters were going on, they cried out to their leaders—"If we are to mutiny, we are quite ready !" And they had acted, it seemed, upon this understanding; for no man could deny, that the whole of this new proceeding was an admission, that the steps taken by the country bankers to stop the country circulation formed the ground, and the sole ground for this measure. His complaint, then, against the government, without meaning to express any thing like hostility, was, that they had not had courage and firmness to face this threatened danger. If they had possessed that degree of resolution, and had dared to front the country bankers, he would venture to say, that in one week, they would have struck their colours, and come in. Looking to the quantity of gold in the country, they could not have per- 622 sisted in hiding it; they could not have continued to keep it out of circulation at a loss to themselves. Notwithstanding all that had been said to the contrary, he must, with due deference, deny the assertion. Common sense would not allow him to believe it. The right hon. gentleman said, it would be impossible to procure a metallic circulation, in the room of the gap created by the removal of the country notes. [Mr. Canning;—"Not on the instant."] Why, yes, it could not be effected on the instant, because the banks were all in a state of rebellion. But there was a general understanding, that a metallic circulation would be the substitute for the country bank notes; or, as ministers expressed it, that a wholesome circulation would be gradually introduced. Now, he believed that this was wholly impossible, with reference to the measure which they were pursuing. He knew it was difficult to speak of the Bank of England without appearing to attack that body. A great number of them, whom he had known for many years, he highly respected. In their individual capacities, he had no doubt they were men of the strictest integrity; but he had already often declared, and he now declared again, that, as a body, he would not trust the Bank of England a single step out of his sight. They were utterly unworthy of confidence, and he sincerely believed they had caused all the difficulties the country now experienced. And why did he believe so? Because he was convinced that the incautious manner in which they had proceeded with their discounts added greatly to the speculating disposition which had been so prevalent. Oh, but then it was said, "See how handsomely they came forward afterwards to check the mischief." So they did. They issued about 8,000,000l. of their own paper in the course of a few days. This was said to have given very great relief to those who were in danger. Yes; but let it not be forgotten, that they were merchants—that they were consequently in danger themselves—and that they had a right, for their own sakes, to smooth and soften down things in the commercial world as much as they possibly could. Hence the secret of their extraordinary liberality. So much had they imposed upon people in general upon this subject, that an hon. friend of his (Mr. Grenfell), not remarkable for his partiality for the directors, had actually stepped out of his 623 way to move a vote of thanks to them for their disinterested liberality. Nothing could be more preposterous than for the directors to claim credit upon this score. It was like a man claiming a reward from the humane society for saving a boy from drowning, and being met by the declaration—"but it was you that first pushed him into the water." Now this was pretty much the case with the Bank. In every official paper which had been published since the stopping of cash payments, and the introduction of restrictions, the Bank had endeavoured to show that they were adverse to those measures—that they had no more to do with those restrictions than any indifferent gentleman in that House. They said, "It is all the fault of the government. We do not wish to stop payment. It is the act of ministers, and on them we throw it." But, notwithstanding all this, it appeared from the inquiries before the bullion committee, that no set of men ever showed a greater disposition to issue a one pound note, and keep a guinea out of the way.—He did not think with the right hon. gentleman, that the present plan would effect the alteration which he expected, in the course of three years; and he would state his reasons for that opinion. The right hon. gentleman had observed, that there would be a considerable gap in the country circulation, which would be filled up by the paper of the Bank of England. Now, had the right hon. gentleman any reason to believe that the country bankers would alter the course of their dealings in the time specified, and come to their senses as usual? [Mr. Canning said, "I have."] Then, he was satisfied of this fact, that if ministers stood out for a few months, the country bankers—if the mere threat of government would bring them to their senses—would, if left to themselves, have come to their senses without further interference. "But, supposing the measure did no good, after all it can do no harm," said the right hon. gentleman opposite. It was very true, that a gradual reduction of paper currency was wanted, and he was indifferent whether it took place in two or three years; but he thought the time might have been shorter. Only let the House look at the situation in which the country might be, and probably would be, placed, in consequence of this measure. How happened it, in 1822, that a bill passed, enabling the country bankers to renew their issues of notes? This was 624 called for because there was a great reduction in prices. Suppose, at the end of three years, the same thing happened which had occurred before—suppose prices were again reduced—what was parliament then to do? If the Bank filled up the gap, what became of the principle of the bill? The original principle was, that when the small notes were withdrawn, the gap should be occupied by a metallic currency. The system now proposed would probably go on for the whole of the first year. Ministers said, that the change which they contemplated would be too suddenly effected if only two years were taken for the purpose; but yet the operation of this measure was to force that change. Well, suppose the system was carried on through the second year, and a large number of notes was kept in circulation—what, under such circumstances, could ministers do, if the country bankers stood out, six months before the stipulated period had expired, and demanded more time? How could they answer that body if they came with this appeal—"Surely you will not ruin us all, when you can prevent it by merely extending the term to four years." In his mind, there was the greatest probability that this would be the case. As to the Bank having a small amount of these notes in circulation, he did not much mind that circumstance. At this moment the amount might be but small. Possibly only 500l. But, what would this measure do? It would allow them to issue old paper, of any date, or new paper, for the next nine months. What was the meaning of this? It was merely leaving with the Bank the discretion of issuing as many notes as they pleased; and he had no doubt whatever, that every note so issued would exclude a pound sterling from the circulation of the country. Therefore he would contend, that at the end of three years the legislature and the ministers would be placed in the same situation as that in which they stood at the present moment; only that they would not have the opportunity of acting under circumstances less favourable; because it was impossible to understand how, at the end of the specified time, the country could be in a better posture for improving and correcting its circulation, or acting on the principles advocated by his majesty's government, than it was at the present moment. Gold it was impossible to keep out of the country. There was now no need of any 625 dexterity to keep it here. It flowed in rapidly. The exchanges were in our favour; we were at peace with all abroad; and there never was a time when the public tranquillity was placed on a firmer foundation. Every thing was in favour of making the contemplated alteration now. Why, then, should the change be postponed for so long a period? On a former occasion, the Bank had been asked, whether they had any suggestion to offer, or any objection to make, as to their resumption of gold issues in the course of three years? and that body had answered, that they did not know what might occur even in one year. At that time, the tone of the Bank betrayed a good deal of irritation at every step that was taken. They declared, at last, that they only submitted, because they wished to conciliate the goodwill of the government and the parliament; "and," said they, "let them take the consequences." So, he was certain, it would be again. If he could satisfy himself that the passing of this bill would be "the be-all and the end-all," of the paper system, and that at the end of three years a wholesome metallic circulation would be introduced, he would give the right hon. gentleman's measure no further opposition. But, being perfectly satisfied, from all he had heard and seen, that this was not likely to be the case, being deeply and conscientiously convinced, that evil would result from the measure which the chancellor of the Exchequer proposed, he felt himself called on to give it his opposition. He assured the right hon. gentleman, that he would rather support than oppose the measure, if he could do so upon an honest conviction; and he gave him and his coadjutors credit for intending in their hearts to do good. He lamented only that they did not possess more courage and firmness; that they shrunk from a temporary storm, which, perhaps, might have passed over even in ten days from the moment in which he was speaking. They saw the fluctuations which had occurred even that very day, merely from passing circumstances. Ministers seemed determined, by the course they were pursuing, to avoid some risk, certainly a very little one, while, on the other hand, they were incurring a much greater. They were giving a vast encouragement to the country bankers. That body knew they had nothing to do, when it suited their convenience or interest, but to withdraw a certain number of notes from circulation, to create, by that means, 626 difficulty throughout the country, and deter ministers from acting efficiently. If they saw that ministers could not stand the pelting of such a storm as the present, they would laugh at the government, and at all the plans which the right hon. gentleman might think proper to bring forward. He would press the subject no further, because he was afraid that he might say something which he felt no desire to utter. He should, therefore, content himself with having stated the grounds of his objection, and on those grounds he was ready to stand.
§ Mr. T. Wilson
said, it was well known that many parts of the country were at that time in a state of starvation, for the want of some sort of currency. In Yorkshire they were in such distress that the manufacturers could not pay their men, except by orders on the butcher and the baker. This was a growing evil, which called loudly for correction. If the country bankers were such a dangerous set of men, it was the more necessary that the people should have the security afforded by the amendment. No doubt, a circulating medium of small notes was, at present, necessary for the country; and if country bankers withdrew their paper earlier than the date prescribed, so much the better.
wished, as the right hon. gentleman had alluded to the eulogium which he had passed on the conduct of the Bank to say a word in explanation. He never entertained any sentiments with respect to the transactions of the Bank which he did not at present feel. With respect to the immediate point in question, it happened that a meeting of the Bank proprietors had been called, and the conduct which the directors had pursued in the latter end of December—conduct which tended to restore public confidence—was noticed as worthy of approbation. He, in consequence, moved a vote of thanks to that body, with this limitation—"that those thanks were voted with reference to the conduct of the Bank in the late crisis of difficulty and danger to the mercantile world." This acknowledgment he thought they merited.
Mr. Secretary Peel
said, that, although he felt that the arguments of his right hon. friend, the Secretary of State for Foreign Affairs, had exhausted the subject, still he thought k right to state the grounds on which he was induced to give his support to the amendment. He must, 627 in the first place, point out the fallacy into which the hon. and learned member for Calne had fallen. The hon. and learned member had reproached ministers for at once granting an extension of power to the Bank of England, when they had refused the hon. member for Midhurst the delay of a month to take the point into consideration. Now, he thought the hon. and learned gentleman must, in fairness, admit the justice of the reason which induced ministers to refuse that delay. They refused to postpone the business for a month, because they knew, that if they granted the delay called for, the evil would not be confined to that one month, but the inevitable inference would be, that government had changed its views, and were prepared to abandon the measure altogether. This was the reason why the application of the hon. member for Midhurst was not acceded to. The right hon. gentleman opposite said, that the whole discussion had hitherto turned on the principle of the measure; but he had heard it stated by another hon. member, that the whole question turned upon time. Here were two contradictory propositions, neither of which he thought was well-founded. In his opinion, the whole of the measure could not be viewed with reference to time, for many of those who opposed the motion on principle, did not concur in the propriety of the time. The right hon. gentleman had spoken of a mutiny among the country bankers, and had called upon government to resist it with measures of vigour. No doubt, in cases of mutiny, it was unwise to concede; but country bankers, by law, were at liberty to take their own course, and it would have been a gross misapplication of the functions of government, to treat them with the summary decision that ought to be applied to mutineers. It was the wiser course for the administration of a great country, not to push its principles to the destruction of any important interests, from a pertinacious objection to concede. It was not for any government to say that it would persist, without deviation, to the right or the left, any more than it would be wise in the pilot of a ship, through a rocky streight, to declare that he would steer through the danger without changing the direction of the rudder. The circumstances which the measures of government were intended to meet, were perfectly novel; and that man must, indeed, be peculiarly gifted, 628 and free from human fallibility, who could propose a plan from which he would not, and need not, consent to the slightest deviation. If the country bankers had pursued a course contrary to their true interests—if they were in a state of mutiny, and had produced a great local distress—it was wise in ministers to provide a speedy and effectual remedy. That remedy was contained in the bill upon the table; and, with regard to the clause now proposed, he only consented to it in the clear understanding, on the part of the Bank, that it was to be acted upon in the spirit in which it was proposed. When the right hon. gentleman alluded to the year 1819, and stated that the Bank then showed no disposition to withdraw their note circulation, he ought to have remembered, that the circumstances then and at present were entirely different. When the present measure was first proposed, it occurred to him and to others, that it would be desirable not to prevent the Bank, by law, from issuing these notes. There being 700 or 800 banks in the country, the paper circulation of which it was proposed to contract, he felt that peculiar circumstances might occur which would render it necessary that the Bank of England should be allowed to issue those notes, to prevent local pressure and distress. Therefore it was, that he approved of the amendment of his right hon. friend. The conduct of the Bank in 1822 formed a fair ground of presumption, as his right hon. friend had stated, that that body would not wantonly abuse the power which it was now proposed to intrust to them. If they did abuse it, they alone would not be responsible. The responsibility would attach as well to the government as to the Bank. He, for one, would not agree to the measure, if he did not feel the strongest conviction that the principle would be fairly carried into execution. The great object of all parties was to obtain a wholesome currency, and that object would be facilitated by the bill as amended. There lurked behind his assent to it, no expectation or apprehension that the prophecies of those who only foresaw dangers and difficulties would be realized.
§ Mr. Ellice
defended himself from the charge of inconsistency. His real fault was only this—that he had yielded, in an abstract opinion, to the pressure of circumstances. The question of free trade would soon come before the House, and 629 he did not doubt but he could then show, that the subsistence of thousands upon thousands depended upon it. The right hon. Home Secretary had said, that not only the Bank but the government would be answerable for the abuse of the power to be granted by this clause. In what way answerable, he should be glad to know? He had heard of no appointment of commissioners to regulate the issue of paper. That would in reality have been one way of dividing the responsibility with the Bank. In his opinion, after the passing of this bill, not a sovereign could remain in circulation. Every demand on the country bankers would be met by payment in one pound notes of the Bank of England. Let this bill once pass, and it would be to give the Bank a power which experience had shown could not be held by any set of men without the certainty of seeing it abused. He contended that, if there must be a mixed currency, the country bank notes were infinitely to be preferred. They were not subject to depreciation from forgery, and the poor man was not less likely to suffer from them than from the notes of the Bank of England. Suppose a poor man took a Bank of England note at York, he might have to travel to London before he could change it. This was one great evil which he was anxious to get rid of. He admitted the claims of the Bank to the gratitude of the country, for not going beyond the limits prescribed by law for their circulation. But what benefit had the country derived from all the measures hitherto adopted to restore a metallic currency, if this clause should be carried? He agreed with the right hon. Home Secretary, that the government was not, in their fondness for a particular plan, to pursue it contrary to the interests of the community. The sentiment was a good one, but no case had been made out. He had heard, indeed, that the country bankers had narrowed their issues; but what reason was there that the place of their notes could not be filled with gold? The scarcity of gold might justify the amendment; but he had heard no ground stated for such an opinion. The bill, in its present state, was a virtual repeal of the right hon. gentleman's bill of 1819. It gave a power to the Bank—a temptation to increase its issues, which, with the best intentions, that body would not be always able to withstand.
§ Mr. Irving
said, that there was nothing 630 in the circulation of the Bank of England notes to prevent a return to a metallic standard, because experience proved, that those notes would circulate in company with the gold coin, without displacing it; whereas, the inevitable tendency of the country notes was to cause the coin to be withdrawn from circulation. He was, therefore, much more reconciled to the bill with the amendment, than he should have been without it.
assured the committee that it was not his intention to take up more than a few minutes of their time. Whatever difficulty other gentlemen might have to prove the consistency and to justify the inconsistency of their opinions upon this subject, he could have no difficulty in proving that, he was perfectly consistent in now supporting the measure with the clause, though he had opposed the measure without the clause. He begged leave to remind them, what the position was which he had taken on the former discussion. He did not condemn the principle of that measure. On the contrary, no gentleman could be more fully convinced than he was, that the circulation of small notes was a perfect nuisance; and that with that evil present there could be no dependence on a return to a metallic currency. But his doubt was, that they could not, as he then expressed himself, come at their purpose by a direct course, "as the crow flies." Gentlemen talked of two years as an improbable period for attaining that object. The fact was, that two years would be more than enough time, if they could go on progressively throughout each of the four-and-twenty-months. But experience proved, that the moment they cried down any portion of the circulation, it went too fast. His complaint was, that the speeches and papers of ministers had acted like the cry of "mad dog" on the country notes, and that not only had the bankers themselves hastily drawn in their circulation through fear of being run down, but the whole country, as if nauseating that currency which before was found so useful, threw it upon the banks in overwhelming quantities. He admitted that it was a desirable object to return to a metallic currency. But, they seemed to wish to pass from a state of over-abundant circulation to the most straitened limits of it, not considering, that the very excess of paper, which was alleged to exist, the great extent to which schemes and 631 projects upon the resources of the country had attained, made it so much the more dangerous to attempt a return to a state of currency totally opposite in its nature. He had said, in corroboration of this, that people who a month before had not known what to do with their money then, did not now know how to raise enough to pay current demands. He praised the able, candid, and clear statement given by the chancellor of the Exchequer. Undoubtedly he considered this clause as a great mitigation of the measure itself; still he contended that they were going too fast. He remained in the conviction, that if they had precipitately passed that bill they would have set the whole of the concerns of the country fast. He felt quite sure that the power left with the Bank of England would not be abused. They could have no more certain proof of that than in the conduct of the Bank in withdrawing their one and two pound notes from circulation. Let no gentleman suppose that he wished to pass a panegyric on that body. On the contrary, he thought that their conduct during the last twelve months had utterly put it out of his power to offer them any panegyric. He had already expressed his sense of their conduct during that period, declaring that, to his mind, there could be nothing more fickle, though he attributed to them, at the same time, the most honest intentions. He agreed with his hon. friend, the member for Midhurst, that the country banker now would have less interest in circulating his own notes, because he must realize the means to get at the Bank of England note as well as the sovereign. At present, the country banker had a direct interest in endeavouring to keep the sovereign out of circulation. He could readily suppose that there would be no great affection felt towards the town-made note; and, as the note would be as costly to the country banker as the gold, the effect would be to preserve gold in much larger quantities in circulation. He would repeat his opinion, that, although favourable to the bill in principle, yet, though he still thought the House was going too fast with the measure; as undoubtedly much of the injury anticipated from it in its original state would be prevented by the amendment, he would support it.
§ Sir John Newport
said, he was anxious to explain to the House why, when he had supported the measure originally, he could not support the amendment. He 632 had advocated the measure on a former night, because it tended to restore our currency to a sound state; but that amendment was embarking them in a series of similar measures to which he could see no end. He did not think, under such circumstances, that he was warranted in giving it his support.
said, that consistency required him to vote against the amendment. He confessed that, if the bill had been introduced without any modification of the measure as to the time to be allowed to country banks and the Bank of England, he should have felt less objection to it. But, as he saw ministers in the act of yielding, and yielding, too, upon a point which they had declared to be mainly important, he had no hope that they would be able to resist the external pressure of circumstances on another occasion, and really get rid of the one and two pound notes. Their firmness had been tried already upon this very subject. The House was now in a committee on a bill to put an end to one and two pound notes at the end of three years; and only four years ago, from the pressure of circumstances, they were induced to pass that very bill which this was meant to repeal; and now there was a clause proposed which, in effect, wholly prevented that repeal. What reason had they to hope that they could ever arrive at the metallic currency, after so many experiments and failures? He had objected to the small-note bill at the time, because it prevented the country from recurring to that standard; and now the House were rushing upon a measure which was introduced to prevent the repeal of that act from being carried into effect. The right hon. the President of the Board of Trade had stated, that some of the evil of a former period had been caused by collecting gold in order to return to cash payments. At that time the Bank had a great quantity of gold accumulated in its coffers, and the measure of, 1822 was for getting it out. But it appeared that the measure of getting gold, out of their coffers had had no good effect; for, in five months afterwards, when four millions had been drawn from the Bank, they passed the bill to allow of the circulation of small notes. If difficulties were then great, what must they now be? The experiment, he contended, had been already tried, and he thought the House was only rushing into the difficulties from which they had extricated themselves by 633 that measure which they were now called on to repeal.
§ Mr. Monck
said, that the Bank of England note was the worst for circulation, as it brought with it the dreadful hazards of forgery. The parliament and the public were anxious to return to a metallic currency, and the scarcity of gold was the alleged difficulty. If gold was so scarce, silver was not. What objection could there be to leaving it to the bankers to pay in either as it suited them? That there were too many notes in circulation, would prove but an awkward confession, and that those who had issued them were not entitled to any confidence from the public. It had been said, that there was something approaching to mutiny among the country bankers. In his opinion, if any thing approaching to mutiny existed, it was among the people who held the notes, and who flocked in with them to demand gold. There had been meetings in Manchester and other places, where the mechanics had resolved not to take one-pound notes of country bankers. He highly approved of the conduct of the country bankers, and could not conscientiously give his support to the amendment.
§ Mr. Brougham
said, he could not go to the vote, without stating his opinion with regard to the amendment. With his right hon. friend, the member for Waterford, he had hoped the chancellor of the Exchequer would have enabled him to vote for the clause, as he had lent his support to the bill, and he did not feel the least disposition to give the measure any opposition—calculated, as he thought it was, to promote the restoration of the crippled commerce of this country, and guard it from similar convulsions, by restraining the issue of one and two pound notes, and restoring, at that favourable time, a healthy state of the currency. He had listened attentively to the arguments of the right hon. the chancellor of the Exchequer, and also to the more cogent statements of the right hon. the Secretary of State for Foreign Affairs; but, like his right hon. friend, his mind was made up not to vote for the clause; the doing which was quite consistent, in his opinion, with the support he had given to the bill. He considered the clause as founded on principles of an opposite nature from those on which he understood the measure to be framed, and on which he supported it; and, because the clause was 634 opposed in its spirit to the original measure, he opposed it. The arguments in favour of the measure had been brought to a short issue, by the clear and candid statement of the hon. member for Taunton. That hon. member did not object to the principle of the bill, and did not proceed, like the hon. member for Bramber, to oppose the bill, and afterwards support it, because that hon. member thought a paper circulation a benefit, and had no wish to see such a circulation put a stop to: that had not been said by the hon. member for Taunton; but he had agreed with the right hon. gentleman opposite, as to the principle of the bill, and had only objected to it on account of the time, saying that the measure was brought forward too soon; that things should be left to themselves for some longer period; and that the remedy should be postponed for a year. Now, what was his (Mr. Brougham's) answer to that? Why this—that if the Bank were told that, at the end of a year, such a measure would be adopted; if they received a year's notice to prepare for the measure; they would delay their preparations they would not set their houses, or rather their banks, in order, but would go on to the end of the year in the hope that something would turn up, which would call paper again into circulation; that government would once more lend its sanction to the measure, and the country would again have small notes to as great an extent as ever. His argument, which applied to the principle of the bill, applied to the eight months proposed by the new clause. He said, he would not give the Bank of England till the 10th of October, on the same principle that he would not give all the banks twelve months; and he therefore, had, on the same ground, supported the bill and must now oppose the clause. Another argument which had been urged in favour of the clause, in the strongest manner, by the right hon. Secretary for Foreign Affairs, was the limited state of the circulation at present, and the distress caused by the small notes having been withdrawn. The bankers in the country had confined their issues, and out of that much and wide-spread suffering which they bad occasioned, one benefit—one only benefit could arise; and that was that the measure which at other times might have dreadful effects, might now be with safety applied, when four-fifths, or even five sixths of the paper currency was with- 635 drawn, and gold was coming into circulation; and now, he would say, was the very time for carrying the measure; for, by postponing it, they would only again force out paper, and prevent gold from coming into circulation. That was his argument in favour of the measure; but now he was met by this ill-omened clause—a clause enabling the Bank of England to fill up the void made in the paper circulation, by other paper, so that it would be, at the end of some months, brought back to the same state of little else but paper, in which the currency existed before the distress began. The defence of the clause,—the necessity for it—all that the right hon. gentleman hoped to effect by it, was to fill up the void which had been caused, by what had been described as a combination—using a word, he supposed by an oversight, which was as offensive as any which could be used—of persons who exercised, in his opinion, that most useful profession, a country banker [hear, hear!]. That void, then, which had been caused by this combination, if so it must be called, of the country bankers, was to be filled up, by allowing the Bank of England to issue its notes until the void was filled up that had been occasioned by this recent combination. But, would the Bank of England then stop? When it got this power, might it not go on stamping and signing till it circulated as much as it could desire? It was to fill up the void occasioned by the combination of the last fortnight, that they were called on by this clause to allow other paper to be continued in circulation, which was against the very argument which he had urged in support of the bill. The hon. member for Taunton did not differ with him as to the principle, but they differed as to time; and he had taken up his ground for the defence of the bill on the principle, that there could be no time better than the present; but this ground had been cut from under him, by the last, "the unkindest cut of all;" for it proceeded from the fathers of that measure which he had lent his humble efforts to support. He wished to say a few words in answer to what had been insinuated to be a change between his present opinions and those which he had formerly held. Now, he had always maintained, that it was desirable that paper and gold should exist together, but he had never denied or doubted that they could not exist together. There had been no modification of 636 his opinions. He still thought, that that currency was the best which consisted partly of paper, convertible at pleasure into gold, and partly of gold; but experience had taught him, that a paper made by law absolutely convertible into gold, was not sufficient to keep down the paper to a proper level, and to ensure the country against a paper circulation from running into excess. The private paper might become of excessive circulation, although convertible into gold. Although large notes might circulate together with coin, small notes could not. Ten, twenty, fifty, or hundred-pound notes might circulate with one or two sovereign pieces; but, the moment you introduced into the paper circulation one or two pound notes, the one or two sovereign pieces would disappear. They could no more circulate together, than bad sovereigns could circulate with good. The hon. member for Taunton had said, that a difficulty existed in the circulation of country bank notes with coin, and that whilst the Bank of England notes would keep in circulation with the metallic currency, the country bank notes would not. Now, his opinion was, that although there might be greater facility in keeping up a joint circulation between Bank of Englank notes and coin, than between coin and country notes, yet the joint circulation of the latter could not be maintained; for the paper would remain, and the gold would vanish. He had understood, that a certain bill was about to pass elsewhere. It might not be quite regular to advert to the proceedings of the other House of parliament, but he hoped the importance of the subject under their consideration would apologize for any breach of order of which he might be guilty. He had heard that it was intended to introduce a clause into that bill, for the purpose of establishing branch banks, and it was said that the establishment of such banks would be injurious to the interests of the existing country banks; but, he could see nothing in the formation of branch banks to affect the interest of individuals connected with country banking. It was true, that the establishment of branch banks would operate as a restriction on country banks; but it was a restriction which would lead' to sound and wholesome effects. The establishment of branch banks would prevent individuals from embarking in the banking business without means or experience to conduct their concerns; and, 637 in this respect, who could deny that, by the formation of those banks, much good would not be produced? He had heard some persons express alarm on the occasion, and say "Are you aware that you are about to establish most formidable rivals to country bankers by the formation of branch banks?" But, he could not perceive the danger which was thus apprehended. Passing over, however, the apprehensions of such persons, he came to that portion of the proposed measure, from which he was obliged to withhold his assent. He alluded to the clause proposed by the right hon. gentleman relative to the extension of time as regarded the Bank of England. The House should look carefully to the probable effect of allowing the Bank of England to be exempted from the operations of the proposed law for the term of eight mouths. Poor persons who got hold of one-pound Bank of England notes would keep them in their possession in the same nay as they would keep the notes of country bankers; but could they turn those notes into cash with the like facility? The attention of government should be particularly directed to this subject. Would each branch bank be prepared to give cash for all Bank of England notes, which might be presented there, or was every branch bank only to be accountable for its own issues? He felt the more anxious on this point, because he understood that in Ireland, where the system of branch banks was at present in operation, the question had been tried, and the result had been, that the branch banks in that country did not pay notes on demand, excepting such as they had respectively issued. Now this was a very great grievance, and one which he hoped would be provided for in the proposed bill. Notes should be made payable, not only at the particular places at which they might be issued, but at every place where branch banks were established. The hardship would be very severe on poor persons who might have to go twenty or perhaps forty miles before they could get cash for their notes. This was a part of the subject to which he again hoped that the framers of the new measures would pay due attention. The way to legislate for such measures was to legislate openly and fearlessly. Now, he could not help fearing, not that the government wished to conceal their views, but that they did not evince sufficient determination in bringing 638 them forward. If they took fright, and suffered their opinion to be swayed by others, while they had to perform a great public trust, then could they never hope to benefit the country or satisfy themselves. He hoped he should not be considered as saying any thing harsh of ministers when he said, that any further departure from the principles proposed to the House, would entail on the government the just odium of the country. Enough, too much, had already been conceded, and he hoped and trusted that no further concessions would be made, as they would only have the effect of exposing the weakness of the government, and of giving encouragement to doubt and alarm.—Before he concluded, he wished to add a few observations on the proposed extension of time in favour of the Bank of England. One of the greatest blessings that would have attended the introduction of the measures, as originally proposed, would have been, that by the withdrawing of the one and two pound notes, the crime of forgery would have been deprived of one of its principal facilities; but who could question, that the moment those notes of the Bank of England again appeared, forgery would ensue, and that we should have to witness the renewal of those scenes of horror from which the feeling mind involuntarily shrunk. He had himself seen, in the course of his professional avocations, no less than thirty persons tried for the crime of forgery at one assizes; and what security would be offered, that those heart-rending scenes would not occur again? It was said, that those notes were not intended to go into general circulation—that they were to be confined to the country bankers; but was it not proposed to issue Bank of England notes, through the medium of branch banks? Who would take upon him to say that the same scenes of horror and distress to which he had before alluded, would not be again revived? In a former stage of the bill, he had given it his support, from a thorough conviction of its tendency to allay the panic produced by a series of disasters, a recurrence of which he hoped the country would never be called upon to witness; but, he must withhold that support from the amendment proposed by the right hon. gentleman opposite.
§ Mr. Huskisson
said, it had not been his intention to have troubled the House with any observations of his at so late a period of the debate; nor should he have arisen 639 at all, were it not that he felt himself called upon to explain something that had fallen from the hon. and learned gentleman who had just sat down. The hon. and learned gentleman seemed to apprehend, that there existed a difference between the Bank of England and other banks, as to the tendency of their issuing notes, and that the Bank of England had not the same interest with the country banks in regulating their issues. It was only on one principle that he had given his concurrence to the proposition. A country bank issued notes for the supply of the district in which it carried on its operations. It wrote to the Bank of England for gold whenever it had occasion for gold to pay its demands. But the Bank of England was obliged to pay all its notes on demand in gold itself. For this reason the Bank of England had not the same motives for over-issues that the country banks had. When the exchanges enabled the Bank to accumulate a quantity of gold, they were anxious to withdraw their notes, and to supply the country and metropolis with gold, and to pay the notes of the country bankers in gold. It being, however, the interest of the country bankers to prevent such a measure, and not that of the Bank of England, he gave his consent to the amendment. It was a fact no longer disputed, that there was a great diminution of country bank notes in circulation since the alarm created. He was ready to agree with the hon. and learned gentleman, that there was already a considerable diminution in the number of one-pound country notes. That diminution would increase; but he, for one, would not wish to see the bank-notes too suddenly withdrawn from circulation. He would not anticipate how rapidly the country bank notes might be withdrawn; neither would he insist, that there was not a disposition to take them out of circulation as speedily as possible, in the minds of some. From what cause such notions were entertained, he would not now inquire, but he was persuaded that a gradual progress to attain the object sought by the measure proposed was the most likely to lead to beneficial results. During the late panic, a vast quantity of gold had been issued from the Bank, which was still in the country, for the state of the exchanges rendered it impolitic to export it. This gold was now in the hands of the country bankers, not to pay off their one-pound notes, but reserved to answer those 640 sudden demands to which they were liable. For himself he could answer, that he never would desire to see more pound notes in circulation than there were when the prohibition by which notes were forbidden to be stamped took effect; but he must say, that we were bound not to be unprepared for an emergency; and who could tell but there might be, at no very remote period, an occasion to call for that aid which it was the duty of government to keep in reserve? The hon. and learned gentleman had asked, was it provided that the Bank of England, in the event of their establishing branch banks, should pay their notes on demand at their respective branches? He had no hesitation in assuring the hon. and learned gentleman, that it was certainly the intention of government, that in those districts where branch banks were to be established, the Bank of England should not be allowed to issue notes, without being liable to be called upon to pay instantly in gold on demand. Indeed, without such a clause, it was quite impossible that a salutary or absolute restraint could be imposed on those who issued the notes. He would go a little further, and call the attention of the House to the difficulties in which the Bank of England were placed, with regard to their large notes. The Bank was obliged to pay not only the small notes, but all the notes above 5l., whenever a demand for gold was made. Now, what was the state of the country banks? They were obliged, of course, to pay the one pound notes; but all those above five pounds were made payable only in London. [Cries of "no, no," from several members.] He understood this to be the case. It certainly had been stated by the member for Staffordshire, and he considered him good authority, that, in many of the counties, the large notes were not payable on demand in those counties but only at the banking-houses of their agents in London. This amounted almost to an absolute refusal to pay, as the inconvenience and risk of sending them to the metropolis was such, that it was seldom carried into effect. Now, if this was the case, was it proper that the country should be left in such a state? It was the duty of government and of the legislature to provide a remedy, and to watch narrowly the conduct of the country bankers, in case an attempt should be made to withdraw all the small notes. If the small notes should be withdrawn, and the country bankers were not obliged 641 to pay the large notes—if they were to say to the farmer, or tradesman, or mechanic, in case of any run upon them—"We are not obliged to pay you here, you may go to London and receive the amount;" what would be the state of that district? Why, the greatest confusion must follow, if the people were not only without the small notes, but could get no value for those of five pounds and upwards. It was absolutely necessary to provide a substitute to meet the danger, and he could see none so likely to succeed as the one proposed by his right hon. friend. God forbid that he should suppose any of the country bankers would have recourse to such a step, but the safest way certainly was to put such a course of proceeding entirely out of their power. The measure was one that involved a great deal, and it therefore became the duty of parliament to watch its progress, and examine its details. The directors of the Bank of England had no wish to issue one-pound notes. They ought not to put them out. He trusted that they would not; but, at the same time, it was proper that they should have the power, in order to prevent such a crisis as that which had so lately taken place. So long as the exchanges continued favourable, there would be no occasion for their issuing small notes; and, in case of the exchanges turning against this country, the Bank would find it necessary to contract the issue both of their small and large notes, in order to prevent a drain on their treasure. He confidently trusted that this power would not be abused, and he hoped that the House and the nation at large would see the propriety of the measure proposed by his majesty's ministers.
§ The committee divided: Ayes 187. Noes 24. Majority 163.
|List of the Minority.|
|Abercromby, J.||Monck, J. B.|
|Althorp, viscount||Newman, J.|
|Blake, sir F.||Newport, sir J.|
|Brougham, H.||Nugent, lord|
|Chamberlayne, H.||Rickford, J.|
|Davies, colonel||Russell, lord J.|
|Ellice, Ed.||Russell, lord W.|
|Hobhouse, J. C.||Tierney, rt. hon. G.|
|Ingleby, sir W.||Whitmore, W. W.|
|Johnson, col.||Wood, alderman|
|Lamb, hon. G.|
|Maberly, J.||Lord Folkestone|
§ Mr. Hume
then declared his intention to move the introduction of two clauses into the bill. One giving a summary power to magistrates to compel bankers to pay their notes in cash. Every act of parliament relating to banks, down to the 37th George 3rd, contained a clause to that effect. The other clause would go to compel bankers to deposit in the hands of certain commissioners, funds to the amount of the small notes issued by them. It would, he thought, greatly check over-issues if these commissioners were empowered to convert the stock, so in their custody, into money, for the discharge of the bankers notes, such a measure would produce great confidence. He was likewise anxious that the bankers should be required to pay their notes in the several places where they might be issued. The currency could not be said to be settled on a convenient footing, if persons were obliged to travel up to London to procure cash for their notes.
§ Mr. Hudson Gurney
said, that if the clauses proposed by the hon. member for Aberdeen were adopted, they would go to extinguish the small circulation altogether; as no banker, in his sober senses, as things now stood, would under them issue a note.
§ The bill was reported, and ordered to be taken into further consideration on Thursday.