§ On the order of the day for going into a committee on this bill,
§ Mr. Hume
said, whatever difference of opinion might exist in the minds of hon. members as to the causes of the present distress, they were all agreed, at least, in a sincere desire to alleviate it as much as was in their power, and to prevent a recurrence of similar disasters. He was sorry to be obliged to differ from the introducers of the present bill as to the causes of the evil, and he could not but consider the present measure wholly uncalled for, and extremely mischievous in itself. He begged to remind hon. members, that if they supported this measure for England, they could not consistently oppose the extension of it both to Scotland and Ireland; for it was but right that the same system of currency should prevail through every part of the united kingdom. The supporters of this bill must also be guilty of a decided retracta- 879 tion from the principle so ably set forth in the report of the bullion-committee, that the best system of currency was a paper one, convertible at pleasure into gold. One of the arguments which he had heard urged in favour of this bill was, that the issuing of one and two pound notes was an interference with the prerogative of the Crown; but, if this were so, surely it was an equal interference with the prerogative of the Crown; to issue five or ten pound notes. If this argument were to have any weight at all, it must hold good to its full extent; and then it would tend to prevent the issue of all notes. Some other supporters of the bill had endeavoured to recommend its adoption, by describing, in pathetic terms, the lamentable situation in which the poor working classes of the community were placed, who happened to be holders of these one and two pound notes aft the time of the stoppages of the country bankers who had issued them; but he believed the loss on these one and two pound notes had fallen much more heavily on petty tradesmen than on the working classes; though, be this as it might, how did the present bill prevent a recurrence of these evils? The holders of the five and ten pound Dotes would still be continually exposed to the risk of bank failures, and the fess of 5l. or 10l. might quite as much distress a petty tradesman as the loss of 1l. or 2l. would a labouring mechanic. He must protest against any bank-notes of any kind being driven from circulation, because they must be replaced by a much more expensive currency, which would have to be purchased by substantial capital, and must, Consequently, withdraw so much of it from being applied in advancing the trade and manufactures of the country. It had been recommended in his Majesty's Speech, that the banking system should be placed on a sure basis; and indeed it was the duty of ministers to see that this should be effected. If any country bank should fail between the present period and 1829, in his opinion ministers ought to be held responsible to the community for any loss it might sustain by such failure, unless they required deposits to be lodged by the country bankers. It was a notorious fact, that many individuals who were possessed of scarcely any property, had been in the habit of issuing notes to an enormous extent. The workmen at the dock-yard at Plymouth had been paid to 880 the amount of 700l. or 800l. a-week in the notes of a country bank which had recently suspended its payments; end he had been informed, that at present the greatest distress prevailed amongst the small shopkeepers in the neighbouring villages who had taken these notes in payment from the workmen. Bank notes might be suffered to remain in circulation without any evil consequences, if the issuers of them were required to lodge deposits; and there would be no great difficulty in effecting this. Commissioners might be appointed, and some office established at the Exchequer, or elsewhere, for receiving deposits of Stock of Exchequer-bills from country bankers, equal to the amount of notes issued by them, of course accounting to such bankers for the interest which might accrue on their respective deposits. If any note should be presented for payment, and dishonoured, upon its being so certified by a magistrate, it should be competent for the commissioners of deposits to transfer a portion of stock sufficient to discharge the amount of the dishonoured note, to the holder of it. But this would be a case which would scarcely ever occur in practice; for the credit which the country banks would derive from its being generally known that they had lodged deposits equal to the amount of their notes in circulation, would be so great as altogether to prevent any runs upon them; and thus, without any risk, there would be realized a saving of from 23,000,000l. to 24,000,00l. of gold to the capital of the country.—Another provision which he wished to have introduced into the bill was, that all bank notes should be payable on demand at the place where they were issued; for it had been the practice with some bankers not to make their notes convertible into gold, except at some place from two to three hundred miles distant from the spot where they were originally issued. This must, of course, have been attended with very great inconvenience to parties who wished to have gold for them.—He should also wish to see a provision in the bill, that both the Bank of England and all other banks whatever, should be required, on the 15th of every month, to publish an account of the amount of their notes in circulation. He expected he should be told that his plan was a mere theory, which could never be reduced to practice; but he would remind the House, that during the last year there had been an in- 881 crease of 2,000,000l. in the paper circulation of Ireland, and still that country bad not met with similar disasters in its banking establishments as had befallen England. Scotland had also escaped; indeed it was scarcely possible that any loss could arise from the chartered banks there. America also afforded an instance of the good effects of adopting the system of banking which he had proposed. In the province of New York there were thirty-five chartered banks, and no private bankers whatever. It was invariably required, that all the capital should be paid up, before they were allowed to issue a single note. They were also required to furnish an annual account of their issues, and indeed of all their transactions, to the government; and if there appeared the least suspicion as to the solvency of any of them, a commission was immediately appointed to examine into, and report on the matter. Such were the good effects of this system, that since the year 1816, only one failure had taken place amongst these chartered banks, and that had arisen from its being connected with a private bank in another province. In Massachusetts and New Hampshire there were both chartered and private banks. With the chartered banks the non-payment on demand ipso facto amounted to a forfeiture of their charters; and it certainly was worthy of remark, that whilst almost all the private banks had been obliged to suspend their payments on account of the great depression which took place during the war, every one of the chartered banks continued to pay in specie all the time; sad whilst other paper circulation was depressed from 15 to 25 per cent, the paper issues of the chartered banks were not depressed a farthing.—The hon. member concluded by moving, "That it be an instruction to the committee on the Bill, to provide for requiring from Banks and Banking establishments, deposits (to be lodged in the Exchequer or other proper office), equal in amount to the amount of Promissory Notes payable on demand, issued by them respectively."
The Chancellor of the Exchequer
said, he should be inclined, on principle, to object to the introduction of any amendments to the effect of those proposed by the hon. member into the present bill; for this bill was of a mere temporary nature, and it would be a very inconvenient, not to say a very clumsy, mode of proceeding, to introduce, into it measures 882 of a permanent nature, and of such very great moment in themselves, those suggested by the hon. members. The House had already come to a decision, that these small notes, which the hon. member considered so innocent, and indeed so useful, had a most pernicious tendency; and, indeed, the present bill was founded on the principle, that it was desirable to effect their gradual extinction, whereas the provisions which the hon. member wished to have introduced into the bill proceeded quite on different grounds, and professed to prevent a recurrence of the late disasters, by quite a different mode from the one pursued by the present bill. He thought that after the House had given its almost unanimous assent to the principle on which the present bill was founded, it ought not, at this late stage of the business, to abandon it; which it must necessarily do if it should adopt the suggestions of the hon. member. Now, he owned that of all the powers which could be vested An the Treasury, this appeared to be one of the most objectionable. He did not wish to pry into the private concerns of every country banker. The power of doing so would be as intolerable as it would be inquisitorial. Though he might not be inclined to avail himself of it, he would not attempt to conceal from the House his opinion, that it would be dangerous to intrust government with the knowledge of the amount of property which every man, had vested in a country bank. It was a power that the Treasury might use with partiality and injustice, and he should therefore; he averse to see it vested in those who had the direction of it. It appeared to him that the hon. member had completely forgotten that there were two species of creditors to every country bank; namely, those who held their notes, and those who had deposited money with them. Now, the security which the hon. member wished to exact from the country banks would be much better for the first description of creditors than it would be for the latter. Indeed, the hon. member's plan would prevent the country banks from being any longer banks of deposits, and would thus destroy one of the chief advantages arising from the present banking system. This was a decided objection to the proposition which the hon. member had just laid before the House. The hon. member might think it easy to establish country banks on the plan which he had 883 proposed, but, for his part, he must confess that he had great doubts about it. If they might judge what the feelings of those who had vested their property in this manner would be on hearing of such a scheme, from what they had been when a somewhat similar scheme was proposed some years ago, they would find that these country banks, which were of considerable use when properly regulated, would not be established; or, at least, would not be established under such circumstances as the hon. member proposed. If they were at liberty to establish charter banks with a limited liability, he could understand the argument which might then be addressed to them: "We have given you extraordinary privileges, and we therefore require from you a compensation in return, and that compensation we demand in a deposit of capital." He thought, however, that, as in all other cases where no extraordinary or exclusive privileges were asked, the adoption of the course recommended by the hon. member would be an impolitic and inconvenient restriction on the fair employment of capital. The measure of gradually extinguishing the circulation of small notes appeared to him to be a more convenient and salutary mode of checking the proceedings of country bankers; and as the hon. member proposed his scheme as a substitute for that measure, he felt bound to oppose its being given as an instruction to the committee. He was sorry the hon. member had not proposed his scheme at an earlier period. If he had, the House would have been spared a long discussion completely lost. Thinking, as he did, that the proposed clauses were not of the slightest value; that they would materially cramp the powers which country banks ought to enjoy, if they were to be permitted to exist at all; and that they would be a miserable substitute for the measure which he himself had proposed, he should give them his decided opposition.
§ Mr. Sykes
said, he was of opinion that government would have acted more wisely if it had let the subject rest, till the arrival of quieter times; though he thought they had amended this bill considerably by extending the time during which the Bank of England was to have the power of issuing small notes. The sooner these discussions were ended, the better it would be for the country; for the alarm which they occasioned was inconceiva- 884 ble. Whilst he was on his legs, he would mention the cruel effect of the misrepresentation of an observation which had recently fallen from the president of the Board of Trade. That right hon. gentleman had mentioned the names of two banks which had failed; and, by some involuntary error, it had gone forth in one of the public papers that one of the banks belonged to the town which he had the honour to represent. Now, he was well aware that nothing had fallen from the right hon. gentleman which could warrant the publication of such an idea; and he hoped he would rise in the course of the evening to set the matter right.
said, he was anxious to address a few words to the House, in consequence of an observation of the chancellor of the Exchequer; namely, that it would be inconsistent in any hon. member, who had supported the former measure of the government, now to give his assent to the proposition of his hon. friend. He was one of those who had supported the government on that occasion, and he had seen nothing since to induce him to regret that vote. He was sorry that ministers had departed from the correct principle which they had carried so triumphantly through the House; and it was on account of the ministers that he lamented the departure, not on his own. He was one of the minority of twenty-four who went out on that question of principle; and, therefore, he could not see how he was open to the charge of inconsistency in now voting with his hon. friend. Unless something was done to strike at the root of the present banking system, the country would be exposed to the constant recurrence of those evils under which it now suffered, and which it was impossible to say how long might continue. He denied that there would be any interference with the employment of capital. The instruction would only impose a wholesome restraint on the manufactures of the coin of the country. Why, the Bank of England itself gave security for the amount of their issues. Why? Because it traded in the coin of the country. For the same reason we had a right to demand of country bankers a deposit of capital to a certain extent, as a guarantee to the public that they should not throw the community into such a disastrous state as it had lately been involved in. The real cause of the present calamity might be traced to the 885 augmentation and contraction of its paper currency; not only of that proceeding from the Bank of England, but, of that proceeding from the country banks. Every body acquainted with the commercial history of England knew, that whenever there had been great distress, there had previously been a great augmentation followed on the sudden by an unnatural contraction of the currency. It was the currency of the country that determined the value of every species of property within it. Those who held the issues, held the property of the country in their hands; and it therefore became the duty of parliament to adopt some measures to control them in those issues, if it wished to guard the country from the recurrence of such distresses as those under which it was now suffering. So long as they allowed 800 country banks to trade in the currency without giving security for their issues, so long must they be exposed to disasters and dangers. The bankers whose property was vested in those establishments were, generally speaking, men of education and respectability; but though the individuals were good, the system on which they acted was most pernicious. On this point he might avail himself of the opinions of the late Mr. Ricardo, who had declared it to be his belief, that in the major part of the failures of country banks, the parties might be fairly charged with something worse than want of prudence; and had recommended as a remedy against future mischief, that they should be compelled to deposit with government security in proportion to their issues. This opinion was the more valuable, as it came from a person who was thought to have carried his notions on the subject of free trade too far, and who had, in consequence, been branded with the title of theorist and visionary. Mr. Ricardo, advocate as he was for free trade, deemed it necessary for the government to interfere with the dealings of the traders in paper-money, and to secure for the community a guarantee against loss; which could be effected in no other way than by these deposits. The right hon. gentleman had said, that he did not like this plan, because it would make the government acquainted with all the concerns of the private bankers. Why need it? Could not the securities be vested in the funds by means of commissioners? With respect to the deposit banks, his hon. friend did not intend to 886 interfere with them, but only with those who usurped the prerogative of manufacturing money for the country. He was of opinion that the government had originally taken a right view of this question, but that they had not dared to act upon it, lest they should irritate the feelings of the country bankers, whom they knew to be a powerful body. He felt it to be quite impossible that such accute and intelligent men as the president of the Board of Trade, and several of his colleagues, should be ignorant of the evils which arose from the large issue of country notes. If some measure was not taken to check it, the next step that the House would be called upon to take, would be, to destroy the country banks altogether, a consummation which he, for one, should not be sorry to see effected. He could not see why the Bank of England should be the only bank in the country under the control of the government. The banking system of the country, generally speaking, was carried on without capital. He did not mean to assert that there were not many establishments with whom the case was quite the reverse; but the want of capital was much more generally the case. If the government had the courage to deal with the question, they would introduce a radical change in the system, and thereby prevent the recurrence of the existing evils.
§ Mr. Huskisson
said, he should not have troubled the House at all upon this occasion, if he had not been called upon by the hon. member for Hull, to set right a misrepresentation, which had occasioned uneasiness to several of his constituents. In a former debate, having had occasion to notice an argument of the hon. member for Cricklade, who had opposed the bill for the regulation of the one and two pound notes, on the ground that they could not be suppressed without producing great injury to the agricultural interest, he had endeavoured to show, that even if that inconvenience should ensue from that bill, there were other and greater inconveniences likely to ensue from the want of it. In looking about for a proof of that assertion in a country unconnected almost with commerce, he had referred to what had occurred at Horsham, in Sussex, where, ten years ago, the bank, which was the only one in the place, had failed, and had involved the inhabitants of the town and neighbourhood in the most severe distress. After that failure had oc- 887 curred, another bank was formed; and that bank, he was sorry to say, had stopped payment during the late crisis. The distress of the district was again renewed in an aggravated degree, and the pressure on the farmers had been more than usually heavy. By one of those accidents for which no member of parliament could be accountable, and over which he had no control, it did happen that, in one of the Vehicles of public information, it was stated that in the town of Hull—where there were more banks than one, and banks, he believed, of the utmost solidity—this failure, and this consequent distress, had taken place. When that misrepresentation reached Hull, it appeared to many persons of great respectability there to be calculated to do great evil. The mayor had, in consequence, written to him upon the subject, and he had immediately written back to the mayor, rectifying the misrepresentation which had been committed. He had not read the debate in which the misrepresentation had been made; it had therefore not attracted his notice, or he should have taken an opportunity of rectifying it immediately. He hoped that whatever inconvenience might have ensued from the mis-statement had been corrected by the letter which he had addressed to the mayor of Hull, and that the occurrences of that evening would set the matter right in every other quarter.—He would now come to the question before the House. His right hon. friend had never said that there would be any inconsistency in supporting the proposal which was now before them, and in supporting the bill for putting an end to the circulation of the one and the two pound notes. Undoubtedly, the hon. member for Westminster would be guilty of no inconsistency in supporting them both; but, unfortunately for the hon. member's observation, the hon. member for Aberdeen had proposed his amendment not to vender the one and two pound note bill more perfect, but as a substitute for it. [Mr. Hume, "No such thing."] So it appeared to him; for the hon. member had all along declared his wish to extend the time for the circulation of the one and two pound notes; contending, that if they were convertible into specie, there was no harm in that circulation. What he had said upon a former occasion had been strangely misrepresented by the hon. member. He had said, that the issuing of these small notes was an interference 888 with the prerogative; but he had not attributed the same character to the circulation of a banker's capital. He had complained, that the putting into circulation that which was equivalent to a sovereign was an infringement on the functions of royalty, and had stated that such a currency could not exist together with, a metallic standard. In so doing, he believed he had stated very clear and rational doctrine. He had never been guilty, he never could have been guilty, of such an absurdity as the hon. member for Aberdeen had put into his mouth; namely, that the paying away a bill for 10l. or 20l. was an interference with the prerogative. Why, without such bills, the commerce of the country could not be carried on. With respect to the proposition before the House, he intreated the House to look at it in its true colours. True it was, the country was in difficulties. A general want of confidence existed amongst all men, which rendered it impossible to carry on the common affairs, at the common fairs and markets of the countries, or to effect the interchange of the common necessaries of life; and at a period like this, the hon. member proposes that the country bankers should make a deposit to the amount of the value of their issues. The hon. member for Westminster said, he would not interfere with any establishments that were banks of deposit; but, no bank could go on without that branch of business; and if this resolution were carried into effect, the consequence must be, that all the deposits would be immediately withdrawn. It would, in fact, be telling the man who had sufficient confidence in a bank to deposit his money there, "Take care what security you have for the payment of your money: the holders of the notes in circulation are guaranteed by the capital of the bank, and your deposits will only come in when all the rest are paid." Only consider what the consequence of introducing such a system, and particularly of introducing it at this moment would be! He believed that if they could ascertain the amount of the notes which the country banks had in circulation, and also the amount of the sums deposited with them previously to the commencement of the late panic, it would be found that the deposits exceeded the notes in the proportion of five or six to one; and yet it was now gravely proposed to relieve the existing distress by telling the depositors that they were not to have as good secu- 889 rity for their money as the holders of the notes. It was not fit, he contended, to broach such principles at the present moment. If it were consistent with the permission which they had recently obtained from the Bank of England, to erect chartered banks, with a limited responsibility, the House would have a right—nay, more, it would be his duty—to impose upon them some obligation of this kind. But did the hon. member expect that any bank could be formed, in consequence of his resolution, in which the parties engaging with unlimited responsibility were liable to be called upon for securities such as the hon. member had mentioned? If the hon. member had such expectations, he would find them wofully disappointed, if ever it became necessary to see how far they could be realized. He should hail it as an improvement of the banking system, if the Bank of England would relax its charter still further than it had yet relaxed it; and if it would permit the establishment of other chartered banks besides itself, with limited responsibility. Such a relaxation would add greatly to the permanent advantage of the country, and would entitle the Bank to its deepest gratitude. He hoped to see the day when the Bank would concede to the public that part of its privileges; but, in the mean time, they must take things as they were, and legislate as well and as wisely as they could. To introduce such a regulation as was proposed by the hon. member for Aberdeen, into the banking system at present, would be a great hardship on those whose interests would be affected by it. It was his opinion, that if this instruction were given to the committee, it would greatly enhance the difficulties of the country; and such being his opinion, he felt it to be his bounden duty to give his opposition to the motion.
, from some details furnished by the late earl of Liverpool, argued, that taking a comparative estimate of the total of our currency and of the population of England and Wales in 1774, and the present population of all Great Britain and Ireland, and the additional amount of uniform currency now demanded for Scotland and Ireland, in which countries their own monies formerly circulated, we should want, in the present year 1826, a currency double what it was in 1774; that, whereas, in 1774, it was in all about 28,000,000l., we should now require a currency of 56,000,000l.; and 890 that, taking Scotland and Ireland into the account, we stood in need of one of not less than 78,000,000l. sterling. In France, which had a third more of population than the whole united kingdom, they had a currency of about 85,000,000l. If the House considered the enormous price of provisions, and all the necessary articles of consumption in this country, they would allow that our population, although only two-thirds of the population of France, required as great a currency as was necessary for the French people. But, if the present bill passed, where was all this money to come from? It should be recollected, that for twenty-years past, the mines of America had been comparatively unworked, and that the produce of the precious metals had been proportionately deficient, and inadequate to supply the demands and wants of commerce. If the currency was restored to the condition in which it stood in 1793, it would be found to be infinitely enhanced by the wants of the country. It was necessary, in this respect, to look narrowly to the wants of the landed and manufacturing interests. As for the merchants, their own bills might, for a time, supply among them a deficiency of currency; but with the other two classes, the case was very different. He thought the establishment of branch-banks would be a measure productive of great benefit; and that the same might be said of joint-stock banks. He, however, decidedly objected to the principle of limited responsibility, which it had not been found necessary to act upon in Scotland, where the banking system was most efficient. He concluded by recommending that the country banks should be made to pay in gold, as much as possible, as the best means of forcing them to accumulate gold in their coffers. He deprecated the passing of this bill, until the House had investigated more closely into the causes which were alleged as an excuse for it.
§ Mr. Leycester
said, he conceived this measure to be a mere temporary one, intended by the chancellor of the Exchequer as a stepping-stone to further improvement. He thought that the security of the country depended upon the facility and certainty with which the paper issues—of whatever description they might be—could be converted at the will of the holder into gold. Not to do this would be to give a loose rein to the wild enterprises of those who had already proved that 891 they were not to be trusted, and to suffer the poison to go forth without an antidote. If that convertibility should be put out of sight, the right principles which had been universally acknowledged would be eluded. He thought than an amendment should be introduced into the bill to guard against any possible violation of the convertibility of paper into gold; and he should look for the support of the right hon. gentleman opposite to that amendment, because they had already explicitly declared their recognition of that principle. He trusted that nothing would tempt the chancellor of the Exchequer to deviate from the course he had proposed; and that no opposition, cither in that House or elsewhere, would induce him to relax in his firm adherence to measures, which, however they might be assailed by clamour, or the "civium ardor prava jubentium," were the real means of preserving the prosperity of the country.
§ Mr. Monck
said, that the system of a paper currency subsisting at the same time with one of gold, was the most objectionable in principle, as well as in practice, that could be imagined. The tendency of the one was always to drive out the other, and to cause the most serious inconveniencies to the country, by keeping up a ruinous fluctuation of prices. Money, and not money's worth, was the basis of a well-regulated currency; and whenever this principle should be departed from, the consequences must be highly detrimental. Much had been said lately of the respectability of the country bankers. He did not mean to say that there were not some of those persons who, in every point of view, deserved all that had been said in their favour; but it was not less true that some who called themselves country bankers were little better than swindlers. There was, therefore, the greatest reason why a difference should be made between persons who were entitled to confidence, and those who had no other object than to defraud those who were so unfortunate as to trust them. It was obviously the first duty of the ministers of any country to maintain the safety of the country. In discharge of this duty, they ought to prevent the persons he had alluded to from taking the king's coin out of circulation, and afterwards that which was the next best thing, the Bank of England notes, and substitute for them nothing 892 but their own worthless paper. Was such a practice to be tolerated? There was now an opportunity for putting a stop to it for ever, and that without interfering with the trade of the country. If ministers did not now step forward and avail themselves of it, they would incur a heavy responsibility, and would have themselves alone to blame for the disastrous consequences.
said, he thought his hon. friend had not applied his usual discrimination to this subject, and that the amendment which he had proposed would fail to do any possible good, while it might produce serious evil. The security which he proposed must be an incomplete one, because, although it would protect the holders of the notes, the persons depositing their money with the bankers would be left without any security whatever. He thought also, that as the amendment went, in effect, to produce a great alteration in the law of the land between debtor and creditor, he ought to propose it in a substantive shape, when it might be discussed upon its own merits. He trusted, therefore, that his hon. friend would withdraw his motion, and bring it forward at some future opportunity.
§ Mr. Hume
said, he understood the right hon. gentleman to agree with him as to the principle, but objected that this was not the time for carrying the measure he had proposed. As, however, the right hon. gentleman had not said what time he thought would be a favourable one, the same objection might always be made. He was desirous to ascertain what was the feeling of the House upon it, and for this purpose should press his motion to a division.
§ Mr. Huskisson
said, he had stated, on a former occasion, that although it was his intention to propose a measure with respect to chartered banks, he should wait until some steps had been taken towards the establishment of such banks.
§ The House divided: for the amendment 9; against it 120. Majority against it 111.
|List of the Minority.|
|Baring, sir T.||Palmer, C. T.|
|Burdett, sir F.||Wood, ald.|
|Maberly, major.||Webb, col.|
|Monck, J. B.||TELLERS,|
|Lloyd, S.||Hume, J.|
|Knight, Rob.||Hobhouse, J. C.|
§ The House having resolved itself into a committee,893
The Chancellor of the Exchequer
observed, that at the time of the last adjournment, the committee had been occupied in the discussion of a proposition of the hon. member for Abingdon, with respect to a regular publication of the issues of the Bank of England. He had stated then, that although he was not an enemy to publicity in the transactions of the Bank, he did not conceive that there were the same reasons for demanding a compulsory statement of all its issues, as there were for requiring an account of the circulation of small notes. The House, he admitted, might exercise its power in requiring the amount of issues for a particular purpose; but as a general rule, it was his opinion, that it would lead to serious inconveniencies. He had then stated his objections to the hon. member's motion, to be founded on these grounds; and he begged now to say, that his judgment remained unaltered. It would therefore be better that the subject should now be taken up at the point where it had been broken off.
The Chairman then read the clause enacting that the Bank of England should every month make a return of all the one and two pound notes in circulation since the preceding month, and the amendment moved by Mr. Maberly on Friday, "and also an account of the amount of all the notes in circulation since the last day of the preceding month." On the amendment being put,
expressed his surprise that the right hon. gentleman should oppose a proposition so little liable to objection. He need not remind the right hon. gentleman and the committee, how materially the whole transactions of the country were affected by the issues of the Bank of England, and there was nothing in his opinion so likely to prevent any ill consequences from their operation, as the knowledge of the full length to which their issues extended. The right hon. gentleman seemed to consider that knowledge of very little consequence; but in truth it was more material than gentlemen were fully aw are of. Government denied that they interfered with the Bank of England; but without going to inquire whether they did or did not, he would say that in a case like the present, it was their duty, as ministers of the Crown, to interfere for the protection of the country. Without the publication he called for, they never could be secure against the fluctuations produced from the 894 extensions and contractions of the issue of Banknotes. He would read to them an extract from the pamphlet of Mr. Tooke, whose opinions seemed to have formed the basis of a great many of the right hon. gentleman's measures. His words were these—"In the mean time there are two specific evils which are severely and extensively felt, and of which the remedy is so obvious and easy, as to admit of being immediately applied. One of the evils is that to which I have already alluded—viz. the secresy and mystery in which all the proceedings of the Bank of England are enveloped. While that secresy prevails, all investments of capital, all mercantile engagements, and all contracts of whatever kind, are exposed to an element of uncertainty, in addition to any other that can have been in contemplation, and plans, otherwise well combined, may be defeated by some great operation of the Bank upon the currency, which if it were known and exposed to public scrutiny and discussion, would either be quickly abandoned, or would admit of being appreciated and acted upon. It may, I believe, be set down as a rule, that the administration of all institutions, of which the functions or operations in any degree affect the public interest, ought to be constantly and strictly subjected to the supervision of the public. Such supervision is the only effectual safeguard against errors and abuses. Next to the administration of the state, there is no administration of any office so immediately and extensively affecting the interests of the community, as that which is intrusted to the persons invested with the privilege of issuing paper-money, and who, by the manner in which they exercise that privilege, have it in their power to produce great changes in the property and condition of every individual in the kingdom. No man, nor set of men, ought, in my opinion, to be intrusted with that privilege; but being so intrusted, their exercise of it ought to be subject to the constant control and correction of public opinion. Such publicity would enforce a steady and consistent adherence to some settled rule, the uniform operation of which the mercantile world might understand and be prepared for. There is no reason whatever why the accounts of the Bank of England should not be published with as much fulness of detail as is exhibited in the accounts published half-yearly by the Bank of France."
895 He did not mean that they should exactly take the Bank of France as a model, which published every thing, even to the amount of their loans, but he thought that they should know something of a circulation which had been known to alter six millions in seven days. He could not understand, what reasonable ground could be urged against the publicity he required; but, if the Bank did refuse, he conceived that government, as the guardians of the public interests, were bound to compel them. Did they consider the injury to the exchanges—the incessant fluctuation of prices—and the various evils which might be in a great measure corrected by the knowledge of the extent of the issues of the Bank of England. The power which that body possessed was a most dangerous power, and ought to be subjected to the check of public observation.
said, it was not because the Bank felt reluctant to give this account that he opposed the amendment, but because it appeared to him extremely objectionable. In the first place, it had nothing to do with the measure now before the House. Nothing was proposed by that measure, but to regulate the Issues of one and two pound notes. If the amendment should be introduced, there was no subject relating to the Bank of England that might not, with equal propriety, be engrafted upon it. There was another objection to it which he thought even stronger than this. The actual amount of notes in circulation was never any criterion either of the superabundance or deficiency of money; and be could conceive nothing more likely to produce confusion than the publication of such amount. It would, perhaps, gratify the curiosity of the hon. member; but it could produce no good effect. Suppose it should appear by the monthly account, that a large issue of Bank-notes had taken place, and at the same time, from some Other cause wholly unconnected with that, a fall had happened in the rate of exchanges, the inference would undoubtedly be, that the one was the cause of the other, and the greatest alarm and inconvenience would immediately be experienced. There were many other objections; but he mentioned this alone as sufficient, in his opinion, to show the inexpediency of the amendment.
supported the amendment, which he thought was calculated to be Useful to the public, and could do no 896 harm to the Bank. The bill contained a provision, that an account like that called for by the amendment should be furnished with respect to the one and two pound notes. If, then, the principle was recognized, and was acknowledged to be beneficial as to the smaller notes, how much greater would be the security to the public by having an account of that which formed the more important circulation of the Bank. There was, besides, an annual return made to the House of all the Bank issues, and he saw no reason why they should refuse to disclose, at the end of every month, that which they were compelled to make public at the end of every year.
The Chancellor of the Exchequer
said, the hon. member seemed to assume that the House called, as of course, for the return from the Bank every year. The hon. member was mistaken. During the period of the Bank restriction, the House did call for such returns, and they were made; but that was under a clause in the Restriction act for that purpose, and when the act was repealed, the practice was at an end. He had always stated that when circumstances made it expedient to have such a return, the House ought to call for it. He adhered to that principle, and was content to be bound by it on all occasions, when the circumstances should be proved to exist. He, however, objected strenuously to compelling the Bank to make such an account, periodically, because it was an interference which could not be justified but by necessity, and which would tend to mislead much rather than to inform all who might inspect those accounts. His hon. friend had just put a case in which great inconvenience might arise. Suppose the converse of that case to happen, and a rise in the exchange to appear to be the result of the Bank issues, instead of the alarm which the other circumstances would occasion, a confidence as unfounded, and in the end much more mischievous, would immediately be created, and the distresses under which the country was now unhappily labouring would be renewed. But then the hon. member for Wareham said, that if the plan was good with regard to the one and two pound notes, it must also be good as to the greater circulation of the Bank. But, these two things were in themselves entirely different. The regulation was applied to the one and two pound notes, because the Bank was per- 897 mitted to issue those notes until October. In all other respects, the Bank of England was on the same footing as to the issue of notes as any other banking establishment in the country. For these reasons then—first, because for consistency's sake it would not be right to call upon the Bank to do that which no other similar institution was called upon to do; and secondly, because the publication might lead to serious inconveniences, he opposed the amendment.
declared himself to be a friend to publicity, and said that if his hon. friend pressed the motion to a division, he would vote for it.
§ Mr. Pearse
objected to the motion on the ground that it would, if carried into effect, create considerable public inconvenience. If parliament had called for such an account of the Bank issues, as was now asked for, during the continuance of the Bank restriction, there would have been some plea for doing so; but now that cash payments were resumed, the Bank stood in precisely the same situation as any other Banking establishment. He was decidedly of opinion that if a periodical account of all the Bank issues was published, it would give rise to all sorts of rash speculation, and particularly with respect to the exchanges.
§ Mr. Hume
said, that the greatest advantages would result to the public from the monthly publication of the amount of the issues of the Bank of England and of all he country banks. There were eight hundred banks in the country, and each of these, as well as the Bank of England, should be obliged to make a monthly return to the Stamp Office of the amount of their issues. The names of the bankers need not be laid before the House; but the returns might be made, so that the information of the amount of circulation in the country might always be easily ascertainable.
§ Mr. Hudson Gurney
could not see how any of the inconveniences which the honourable Bank directors apprehended could arise from the Bank periodically making known the amount of their notes in circulation. All commercial transactions alternately resolving themselves into payment in Bank notes, the Bank issues must so materially affect the prices of every thing saleable, that it appeared of the greatest importance that this information should be given. It might be doubted, possibly, whether the House had the 898 right of compelling the return; and he decidedly objected to such a clause being introduced into this bill, which was passing for a different object; but he thought the Bank would act wisely in giving the information periodically, to their own proprietors; and that so far from either encouraging speculation, or leading to inconvenience, the knowledge of how the thing really stood would prevent all those exaggerated and erroneous reports of the supposed proceedings of the Bank, which were calculated to produce these mischiefs.
thought that there was much in this suggestion of the hon. gentleman, and that there would be no necessity for the amendment, if the Bank would undertake to publish in the Gazette monthly accounts of their notes issued. The conduct of the Bank amounted to restriction, in fact; for instead of paying their larger notes in sovereigns, they paid in one and two pound notes. What was this, but a restriction of cash payments. He wished the hon. director would state whether the Bank were disposed to consent to publish a periodical account of their issues.
Mr. Secretary Peel
differed from the hon. member who spoke last, in the view which he took of the question. The most erroneous inferences might have been drawn from the accounts of the issues of the Bank about the period of 1797. The average amount of the Bank of England circulation for two or three years previous to 1797 was 11,000,000l; but in January 1797, just before the restriction took place, their circulation was contracted to 8,000,000l. The publication of that fact, unaccompanied with any explanation, would have led to the most erroneous inferences. He felt it his duty to oppose the introduction of the amendment, being of opinion that parliament had a sufficient check upon the Bank in calling from time to time for accounts of their issues. The publication of a weekly account would answer no good purpose, and might induce false inferences.
§ Mr. Hudson Gurney
observed, that though false inferences might be deduced from authentic facts, inferences much more false and much more mischievous might be drawn from assumptions which 899 were totally erroneous. For example, the right hon. gentleman had instanced the year 1797, when the circulation of the Bank had been contracted from eleven millions to eight, no returns then coming before the public. Now, in 1796, Paine, whose object was, to bring the Bank into discredit, had in his "Decline and Fall of the English System of Finance," stated the Bank circulation at sixty millions, instead of the eleven, at which it really stood.
said, he could not vote for the amendment, not because he did not wish for publicity, but because by so doing it would appear as if he recognized the principle, that the Bank directors were acting as trustees for the benefit of the public, instead of for the benefit of those who elected them to their offices. He was not aware of any inconvenience that might arise from the disclosure required; but, although he would be glad to see such a course adopted by the Bank, he was unwilling to introduce it as a clause into the present bill. He would recommend his hon. friend to withdraw it.
said, he considered the check which it was the object of his amendment to impose upon the directors, indispensably necessary. The Bank had departed from all the true principles of banking, as appeared from their own statements. When he spoke of the statements of the Bank, he did not allude to any public document, but to those detached portions of information, which, from time to time, escaped from gentlemen connected with the Bank. It was admitted that the Bank had contracted to pay 13,000,000l. on account of the dead weight. Would they have dared to do that, if they had been compelled to give a periodical account of their proceedings? The Bank had lent all its capital to the government, and that had occasioned an extensive issue of paper. The time would come when it would be necessary to contract their circulation, and then, if the exchanges should be against us, the prices of commodities would be reduced more than 10 per cent. One of the Bank directors had stated before the bullion committee, that the Bank acted as trustees for the public. Could he venture to say that now, when the Bank had engaged its capital to government, to the extent of 25,548,000l.? In every way the Bank had departed from the true principles of banking. Independently of their engage- 900 ments with government, they had locked up a portion of their capital in mortgages. Political events might suddenly arise, which would render it necessary for the Bank to contract its issues. It was not impossible that Russia might march an army into Moldavia. A sudden contraction of circulation, and a consequent reduction of prices, would then take place. Ministers had assigned no reason for not agreeing to the amendment, except that the present was not the time for proposing it; but they had not stated why the time was not suitable.
§ Mr. Pearse
said, that the proprietors of Bank stock, who were chiefly merchants of the highest character and talents, though naturally anxious to obtain a knowledge of the concerns of the establishment with which they were connected, were nevertheless so satisfied of the abuse which might be made in the commercial world of the information, which the hon. member desired to have made public, that they had constantly resisted every endeavour which particular individuals had made to procure its production.
§ Mr. Irving
said, it had been remarked, that it was difficult to ascertain at what particular period there were too many or too few Bank-notes in circulation. The correctness of that observation had been established by recent events. A few months back 20,000,000l. of Bank-notes, with the rest of the country notes, had been found sufficient for the country: but at the present moment not less than 30,000,000l. or more were sufficient. This was owing to the contraction of the paper of the country banks. He was satisfied it would be injurious to afford persons an opportunity of drawing inferences from the amount of Bank-notes in circulation, by the publication of periodical accounts. Great inconvenience would arise from disturbing the public mind oh a subject of such importance. He did, however think that the Bank ought not to observe any mystery with respect to the general course of their transactions; nor could they be fairly charged with doing so. The connexion between the Government and the Bank had been made the subject of much reprobation; but his own opinion was, that the connexion should subsist. The existence of the connexion was very convenient for both parties. [a laugh]. The connexion was absolutely for the well-being of both, and 901 stood on the same footing as the connexion between a private individual and his banker. It was said, that the advances which the Bank made to Government were frequently too large; but how were the Bank to supply that portion of currency which was necessary for the convenience of the public, otherwise than by advances to Government? The discounting of bills and the purchase of bullion were not sufficient to supply an adequate circulation. He had no hesitation in stating it as his opinion, that the best mode of regulating the issues of the Bank was by the sale and purchase of Exchequer-bills. He knew no reason on earth why the Bank, when the premium on Exchequer-bills was high, say 60s., should not sell, and when they were below par purchase. It had been stated that the Bank had departed from the true principles of banking when they lent part of their capital on mortgage. In his opinion, the Bank had rendered the greatest service to the country by that proceeding. At the time it was adopted, the rate of interest in all the great commercial towns of the continent varied between 3 and 4 per cent, whilst in England the mortgagee was compelled to borrow, on the best of all possible securities, at the rate of 5 per cent. The sum which the Bank had advanced on mortgage was only 1,400,000l. It should, however, be recollected, that the Bank had funds of their own, with which the public had nothing to do. Those funds, it appeared from papers on the table of the House, amounted to between 3 and 4,000,000l. Under these circumstances, ought they to be denied the privilege of lending 1,400,000l. on mortgage?
The Chancellor of the Exchequer
observed, that the question suggested by the hon. member for Abingdon did not require the committee to go into these details. The hon. member wished simply for the whole amount of the Bank issues; it was therefore unnecessary to go into details.
§ Sir John Newport
said, that the public had a right to claim of the Bank the information required, and no possible danger could result from affording it.
§ Mr. Manning
said, that if the return was made as required, it would tend rather to mislead than to inform the House; for the subject could not be understood without many details.
§ The amendment was then negatived. On the succeeding clause being put,
§ Mr. Hume
said, that as the House had not adopted a previous suggestion which he had made, he now meant to offer an amendment, which would enable the poor to obtain payment from country bankers of their one-pound notes. He held in his hand the act of 37 Geo. 3rd. one clause, of which enacted, that if any country banker should refuse to pay gold for his small notes, within three days of demand, it was in the power of any magistrate to distrain upon his property by summary process. The 37th Geo. 3rd, had fixed the period at three days, but a subsequent act, passed in the same session, had made it seven days, and thus it had continued throughout all the subsequent measures, until it was left out altogether. He reasonably believed that the omission had not been intentional. At present, a person holding a one-pound country bank-note was in a similar situation to a person holding any commercial promissory note, or other undertaking to pay. The holder of the one-pound note, in order to recover its value, must bring his action against the banker; which was attended with great expense, and occasioned a delay of six months. Under these circumstances, the poor had no means of recovering the value of any small note they might hold. What poor man could bring such an action against a banker? It was absolutely necessary to give the public some summary means of redress against country bankers who issued more paper than they could command specie to meet it. The substance of his clause was, that if any banker should refuse to pay in specie the value of his note longer than seven days, the magistrate might proceed by summary process.
The Chancellor of the Exchequer
said, that the purport of this bill was to replace the currency in the state it was in prior to the Bank Restriction act, at which period no clause like this existed, nor was there any such compulsory mode of proceeding. He thought the proposal liable to serious objection, and that it would be almost impossible for country bankers to carry on business if it were adopted. It was no justification of the proposal to ground it upon antecedent measures. Creditors of a country banker holding promissory notes would by this means have a better hold upon him than other 903 creditors. He had never understood that, before the Bank Restriction act, any practical inconvenience had been felt for want of this summary power.
§ Mr. Hudson Gurney
said, the hon. gentleman's amendment was intirely at variance with the principle of the bill. The hon. gentleman wished the continuance of the issue of small notes, under such regulation as should protect the public from inconvenience; but the object of the bill was to put an end to them, and (if it could be compassed) by such gradual extinction as would allow of their being replaced by a better medium. If the hon. gentleman's clause were admitted, in the present temper of the country, no banker, in his senses, would issue another note.
§ Colonel Johnson
said, unless the clause was adopted, the poorer classes would have no means of recovering payment for their notes but by an action at law, which was leaving them without any remedy.
§ Mr. Monck
observed, that country bankers could not object to the proposed clause at the present time, when specie could be so much more easily obtained than when it was formerly in existence. How could a poor man compel the payment of his note in specie, when he was forced to bring an action? The clause had been continued in all the Bank Restriction acts, until the 3rd of his present majesty, when it was left out. It would be strange that the clause should be continued when there was no specie to pay, and expunged when there was. If they did not adopt this clause, they would allow gold to be put out of circulation, and trash of paper to be substituted in its places, without giving any remedy to recover its payment but by an action at law. Such a course was the reverse of returning to a metallic currency.
Mr. Alderman Heygate
said, the hon. member charged the country bankers with putting gold out of circulation, and substituting trash of paper in its place. Now, in 1797, country bankers had no more to do with issuing notes than the rest of the king's subjects. The gold was sent out of the country by government to defray the expenses of the war, and one-pound notes were then issued at the recommendation of Mr. Pitt; and, in 1822, they were again allowed to be issued with the unanimous concurrence of the House. During all this period, so far were the country bankers from being abused, that they were lauded as of great benefit to 904 the country. The issuing of one-pound notes was the least profitable part of a banker's business, while it was the most troublesome, inconvenient, and onerous; so much so, that nine-tenths of the country bankers would be happy that they were precluded from issuing them.
§ Mr. Warre
observed, that the worthy alderman admitted, in using the words of the hon. member who preceded him, "that gold was put out of circulation, and trash of paper substituted for it," that there could not be a current circulation of the one-pound note and a sovereign. This was the plain English of the words; but indeed it was already pretty well known, from good authority, that they could not co-exist. When country bankers issued their one-pound notes, and these notes filled up the place of gold, what was it but issuing so much trash? But it was said, that country bankers derived no profit from these issues—that they would be better pleased to be precluded from issuing one-pound notes. This he was not very willing to believe. If they so expressed themselves, it must be a sort of nolo episcopari. That they were so inconvenient, onerous, burthensome, and what not, he could not believe. That they were profitable he had no doubt, and that in proportion to the amount of their circulation. He drew a distinction between the holder of a one-pound note and the holder of a promissory note. The claim of the holder of the currency was much stronger. He had no choice; he was obliged to have it whether he would or not; but the holder of a promissory note had a choice; he might refuse it if he pleased. The lower classes, particularly, had no choice left them but to take this trash; and, if they were obliged to take it, they had a right to have a more summary power for its recovery.
§ Sir R. Wilson
was of opinion, that the clause proposed was in favour of country bankers, and one which they ought to support. The universal complaint was, that their notes were discredited. It must, then, be their wish to impart credit to them. If the clause was introduced, many persons would take their notes who would otherwise refuse them, and thence credit would be restored to this part of the circulation.
§ Mr. Hume
would ask the right hon. the Secretary for Foreign Affairs, who described the situation of the lower classes, with respect to these one-pound notes, in 905 such pathetic language the other night, if he would now give them no other remedy than an action, by which they could not recover their money for six months?
§ Lord A. Hamilton
observed, that the bill itself was a compulsory measure to force the payment of gold instead of paper. It had been argued, on a former occasion, by the right hon. Secretary for Foreign Affairs, and the President of the Board of Trade, that, according to the state of the law, the bankers were bound to pay on demand; but was it not a mockery to oblige men to bring an action at law to compel them? The amendment, let it be remembered, was not proposed to extend beyond notes under 5l. Unless some measure was adopted for this object, the chancellor of the Exchequer would depart from the very principle of his measure.
§ Mr. Monck
said, that if this clause was not adopted, the holders of small notes would be in a worse situation than they were in 1797, and up to 1823; for, up to the 3rd of the present king, the clause now proposed had been law; so that if it were a hardship, it was one to which the country bankers were accustomed. If they were compelled to issue small notes, they might have some reason to complain; but now they must take the good and the bad together. When they knew that it was always in contemplation to return to a metallic currency, they had no reason to complain that they would now be compelled to pay in gold by a summary process.
said, that when this question was brought under discussion last session, on the occasion of a petition being presented by the hon. member for Montrose, from a person in Bristol, complaining that he had been refused gold for notes, he then entertained the opinion, that a summary process would be most expedient on account of the deficiency of security to the holders of one-pound notes. But the circumstances of the country were now essentially different. When the question was then discussed, the country was inundated with country notes, many of which were now swept away. The principle upon which there was an extension of time in the original measure was to prevent the too rapid contraction of the issues. To guard against this danger he supported that measure. The clause of his hon. friend would, he thought, increase that rapidity, and there- 906 fore counteract the effect of a measure for which he had already voted.
§ Mr. Home Drummond
said, he differed from the hon. and learned gentleman in considering the present proposition as tending to force the one-pound notes more rapidly out of circulation, by diminishing their credit. On the contrary, he was inclined to think that the certainty of obtaining the value of them in a summary manner would tend to maintain the public confidence in that species of circulation. In Scotland the process for recovering all small debts under eight pounds was extremely summary, and not very dissimilar from that provided by the clause in question, with regard to one-pound notes; and he believed that the facility with which debts could be recovered in Scotland, contributed to maintain the credit of bankers notes in that country. If, therefore, he was not to vote for the proposition of the hon. member, it could only be on the ground that he did not see why this advantage should be given in the case of one-pound notes (for such he considered it both to debtor and creditor) over every other species of small debt.
§ Mr. Hume
said, he expected his proposition would be supported by every banker in the House; but he would not rely on the bankers alone; he should expect the support of the ministers themselves. The system in its present form, afforded no security. The bankers might again get out immense amounts of notes, and might again spend large sums for their own living, as too many had done, if there were not some check upon such a system. He was sorry to see the day arrived when Mr. Cobbett's prophecies were realised; when, in fact, they were threatened with his feast of the gridiron. The prophecies had been realized; for the ministers now, in reality, acknowledged that notes were not equal to gold; that they were admitted to be not convertible into gold; and that was the fact respecting them, if the amount in specie could be rufused by bankers, and not be recovered but by an action. He would enforce his proposition, if he divided alone; but he expected he should have the support of every solvent banker in the House [Cries of "Order."]
§ Mr. R. Martin
considered the expression of the hon. member to be unwarrantable and indecent. To imply that there were insolvent bankers in the House was indecent.
907 The Chairman said, he felt it necessary to call the hon. member to order. His speech was more disorderly than that of the hon. member of whom he complained.
said, that if he was disorderly, he begged pardon; but he would ask whether the hon. member was entitled to say, when there were bankers of great opulence and respectability sitting in the House, "I expect every solvent banker will vote with me." If that was not disorder, he did not know what disorder was. It followed that if those persons did not vote with the hon. member, they were to be published as insolvent. Such language was indecent.
The Chancellor of the Exchequer
thought the House ought not to be involved in a discussion on this subject. The hon. member would perhaps be willing to admit that the use of the word "solvent" was not quite proper. He was sure he would say it to save the House from a squabble.
Mr. Secretary Canning
said, that this clause would imply an injurious degree of suspicion, and throw unnecessary discredit on the country banks. There was a good deal of difference in the situation in which they now stood from that in which they were in last year respecting this part of the currency. Then it was expected that the small notes were to continue for a considerable period; and if the system were to be continued, it might be advisable to consider the propriety of adopting some such remedy as the one now proposed, to remedy the evil now complained of. But what had the House resolved to do? Not that the small-note system should continue, but that it should altogether be put an end to in three years. The measure was to facilitate the return to cask payments, and to decrease the inconveniences that might result from the suddenness of the measure. It was at first imagined that inconvenience would result from suddenly contracting the issues of small country notes. He thought such would not be the case, but he had found that inconveniences would result from a sudden contraction of the currency, and therefore had they been obliged to remedy this evil by substituting, for an extended period, the Bank of England small notes. 908 But, would not the effect of the clause now proposed be to undo what the House had done? By the alteration of their measure they had endeavoured to guard against the consequences of the sudden withdrawal of the country notes; but if they adopted this clause, the pride and the prudence of the country bankers would alike impel them to withdraw all their small notes from circulation, to avoid the pain that any one might inflict on them, by dragging them before a magistrate on account of some small note. He therefore opposed the clause.
§ Lord Milton
was of opinion, that if the bill passed with the clause, the evil would be increased tenfold. He was sorry that ministers should have thought it necessary to introduce the measure at all. In his view, the measure was calculated to do nothing but mischief to the country; and if he had been present at its introduction, he would have voted against it. What did the bill do but create fresh alarm, when the only cure for the evil was to inspire confidence? The persons against whom it was directed were not those whose flimsy means had failed in the panic before Christmas, but those who, by weathering the storm, had given proof of their competence and security. He regretted that ministers had legislated at all upon the subject. If left to themselves, matters would in due time have found their level. As it was, he could not conceal his Opinion from the House, that the end of the panic was not yet arrived. He believed, on the contrary, that the most serious period of the storm was yet to come; and felt convinced that what had been done by government would only aggravate the danger. As he was decidedly hostile to legislating at all, he thought that the fewer powers the bill passed with the better, and he should therefore resist the proposition of the hon. member for Aberdeen.
§ Lord A. Hamilton
could understand very well how the noble lord could object to the clause, objecting as he did to the bill altogether, but he was at a loss to understand how those who had introduced the bill could object to a clause calculated to ensure its effect.
§ The committee divided: For the clause, 19; Against it 163. Majority 144.
|List of the Minority.|
|Burdett, sir F.||Griffith, P. W.|
|Denman, T.||Hamilton, lord A|
|Evans, W.||Hobhouse, J. C.|
|Johnson, Col||Warre, J. A.|
|Knight, R.||Webb, col.|
|Leader, W.||White, S.|
|Leycester, R.||Wilson, sir R.|
|Maule, hon. W.||Wood, alderman.|
|Monck, J. B.|
|Sykes, S.||Hume, Joseph.|
§ Mr. Hume
again rose. He said, that he held in his hand four or five Bank notes, such as those which were to form the circulating medium of the country, and carry the House to the accomplishment of its object. Now, he called the attention of the committee to the inconsistency of ministers, for the notes which he held in his hand were not, strictly speaking, convertible into gold upon demand, and the holder was left to his remedy by an action at law. It was true that a rich man might obtain justice in this way; but what was to become of the humble holder of a single pound note, about the necessity of relieving whom so much had been said? It appeared that ministers were about to leave the poor man without any remedy whatever. The country banks were all alike; their "promise to pay" was false. They would not pay their notes in the country unless compelled to do so. One of the notes he held in his hand was the issue of a Warwick bank for five pounds, and it ran thus—"I promise to pay at the banking-house of sir R. C. Glyn and Co., London, the sum of five pounds, for value received here." But the receiver of this note in the country, "for value received," could not convert it into specie, unless he hired an agent in London, or came to town himself; and, in the latter event, the expenses of the journey would absorb the whole of the money. Another note belonged to the Stratford-upon-Avon bank, and was so much worn as to be scarcely legible. He would state, in order to show how long these rags would last, that this note was dated 1818, so that it had been eight years in circulation—a proof how little the return of stamps issued yearly was likely to show the actual number of such notes in circulation. All these notes were payable in London only. As this was an extreme hardship, he proposed to enact that, in future, all promissory notes should be made payable at the places whence they were issued.
§ Mr. Huskisson
said, that it was his intention to propose a clause to that effect. When an hon. member first stated, that 910 country notes were made payable in London only, he was not aware that such a practice prevailed. Having found that such was the practice, he had determined at once to remedy the evil. But how to do so most effectually was the question. The plan which he proposed was, that country bankers should issue no notes under 20l. unless such as were made payable in gold at the place where they were issued, leaving it to the country bankers to consider whether they should also make them payable elsewhere.
was satisfied the hon. member for Montrose had no doubt of the solvency of all those banks whose notes he had so ostentatiously displayed. The hon. gentleman had shown his confidence in the notes, by keeping them in his possession; and no doubt he entertained a sanguine hope that now they had anwered the purposes of his speech, they would not be refused payment.
§ Mr. Benett
thought it would be advisable that the notes of country bankers should be made payable in the country and in London also.
§ Sir J. Wrottesley
said, it would be a great hardship to compel country bankers to make their notes payable in two places, as in that case they would be obliged to provide double funds to meet the demands in each place.
§ Mr. Huskisson
was not prepared to compel country bankers to pay their notes in London, but he felt it right that they should pay them where they were issued, leaving it at their option to make them payable elsewhere also.
Sir W. Ridley
said, he had not been aware that there were such things as notes not payable at the place of issue. There were none such, he could take upon himself to state, current in the north.
Mr. S. Rice
said, that the notes issued by the branches of the Bank of Ireland were all made payable only in Dublin.
said, that his majesty's ministers had throughout acted, with respect to this measure, in the greatest degree of ignorance of the actual state of the country, and the nature and operation1 of its currency. They had at one moment rejected a measure proposed to them, and in twenty-four hours after, and under precisely the same circumstances, they had come down and themselves proposed the adoption of that very measure. The right hon. Secretary for Foreign Affairs had told them, on the authority of another 911 great statesman, that if a pound note and a guinea were circulated together, the guinea would disappear. The right hon. President of the Board of Trade said, it was impossible that a pound note and a sovereign could circulate together; and yet the right hon. gentlemen introduced a measure which was to keep that pound note in circulation with a metallic currency! The right hon. gentlemen excused this course by saying, that circumstances had arisen pending the discussion which had not been anticipated; but there had arisen no circumstances but such as any practical man of business in the House could have told the right hon. gentleman must be inevitable from the course they were pursuing. The custom of drawing notes payable in London only had long been general in the midland counties, and particularly in Leicestershire.
§ Mr. Mansfield
rose to set the hon. member for Callington right, upon the custom which he said was so general in the midland counties. The fact was, that in Leicestershire all notes above one pound were made payable, both at the place of their issue and in London. And he would add, as a practical man, that, in ordinary times, he could not see what difference it could make to a country banker whether he paid his 5l. or his 20l. notes in the one place or the other, or whether they were payable in London only. And in times of alarm like the resent, that man must possess more oldness than he himself possessed, who would venture to refuse to pay one of his five-pound notes in the country, even though justified by the form in so doing.
Mr. Secretary Canning
said, that the hon. member for Calling ton had reproached ministers with having acted without consulting practical men. He could assure that hon. gentleman, that they had consulted those whom they considered best informed upon the subject, and had done their best to procure the necessary information. The hon. member had complained also, that ministers had ill-treated country bankers, and had imputed to them an attempt to thwart the measures of government by suddenly narrowing their issues. They had not directly made that charge before; but if the hon. member would have it out, he now asserted that the country bankers had, by suddenly narrowing their issues, endeavoured to defeat the measure now before the com- 912 mittee. Ministers perceived their object, and proposed the remedy for the evil.
§ Mr. Hudson Gurney
said, that if any combination or understanding amongst the country bankers to call in their smaller notes, in order to defeat the measures of government, existed, he was entirely ignorant of it, and totally disbelieved its existence. He wished to meet the right hon. gentleman's assertion with all deference; but thought he must have been greatly misinformed on the subject. The House in which he was concerned, had never issued one-pound notes; and, therefore, personally he could wash his hands of the imputation. The branches, indeed, connected with that Bank had been in the habit of issuing them, and, he believed, continued issuing them still; but every one knew, particularly since the commencement of these debates, that the small notes being brought in on the bankers for payment, the amount in circulation must, of necessity, have been much reduced.—The hon. member for Montrose wished this private issue to be continued without limit. He (Mr. G.) wished to see it put an end to; and he was satisfied the only possible way in which the measures of government could have been carried into effect, was by the course which they had recently taken; namely, the allowing the Bank of England to continue to stamp their notes for a certain limited time, in order to take the place of the country paper, which might be cancelled or discredited. He acquitted the right hon. gentleman opposite of any inconsistency in conceding this alteration of their original plan; but he must repeat, that it had been forced on them by the obvious necessity of the case, and not by any conspiracy of the country bankers.
§ Mr. J. Martin
thought it would be a great tax upon country bankers to make them find a fund for the payment of their notes in two places.
said, he was bound to enter his protest against the imputations which the right hon. Foreign Secretary had cast upon the country bankers, and to say that he defied the right hon. gentleman to prove his assertion, or to show that there had been the slightest combination among them for the purpose of withdrawing their notes. That the notes had been withdrawn was the fault of ministers themselves. They had cried them down when they were the main, and almost the only currency of the country; and the consequence was, that the bankers 913 had been compelled to withdraw them. The imputations conveyed in the paper circulated under the signature of the earl of Liverpool and the right hon. gentleman opposite, had led, in a great measure, to the alternative which was now made a ground of accusation against the country bankers, by throwing a discredit upon their notes. The panic had nearly subsided, credit was about to be restored, and the circulation of the country was on the point of resuming its wonted channels, when the right hon. gentleman brought in his measures; and from that time the notes of the country bankers were returned so quickly upon their hands, that no prudent man would continue to press upon the public that which as often as he offered was as repeatedly rejected.
§ Mr. Sykes
said, that the suggestion for making the country notes payable both in London and in the country, would impose the greatest hardship upon the bankers. Not only would the country bankers be under the necessity of providing double deposits, but their notes would no longer form part of the local circulation of their districts. He felt convinced that the country bankers were incapable of yielding to the impulse of such a principle as that imputed to them.
said, that nothing could more clearly show the gross ignorance of his majesty's ministers, of the real state of the circulation, than what had just fallen from the right hon. Secretary, relative to country bankers. His observation was utterly at variance with their credit and character, and he was quite sure the country would think so as soon as the expression used by the right hon. gentleman found its way abroad. He would venture to say, that a degree of ignorance, almost incredible, prevailed amongst those who ought to be acquainted with the real state of the country. He did not pretend to say that, in some of the country banking establishments, an erroneous system might not have been pursued; but he denied that this was the general character of the banking system throughout the country. After what had been stated by the hon. member for Leicester, he begged to withdraw what he had said of the midland banks, as far as regarded the banks of that district.
Mr. Alderman Heygate
said, that if a disposition to contract their circulation had been observable amongst the country bankers, it had not arisen from a wish to 914 obstruct the measures of government. On the contrary, whatever might have been their impression as to the policy of the course selected by ministers, as that course had been acted upon to a certain extent, they were now anxious, as far as lay in their power, to co-operate with them in pursuing it to a favourable issue.
§ Mr. Carus Wilson
was acquainted with three country banks, whose notes were always payable at the places from whence they were issued; and this was certainly the most secure guarantee to the public, as the property and responsibility of country bankers must be better known at the places in which they reside than at a distance. For this reason he should give his cordial support to a measure which would have the effect of making country bank notes payable on demand at the places from which they were issued.
§ Mr. Huskisson
said, that the clause he meant to propose would, he believed, meet all the objections. That clause would compel the payment of all notes under 20l. after the 5th of April, 1829, at the place where they were issued, and at such other places as the banker might please to insert. Unless they were so made payable, the banker should not have the power to issue them. If it suited the banker's purpose to have them made payable in various places, that was a consideration of considerable importance to him, but certainly they should be made payable, primarily, in the place where they were issued. As to the objection raised on account of the increased capital which would be required, that was a question for the bankers, and not for that committee.
§ The clause proposed by Mr. Huskisson was then agreed to.
The Chancellor of the Exchequer
did not mean to say that some arrangement of this kind might not hereafter be advisable, but he felt considerable objection to the adoption of such a proposition now. If such a motion was agreed to, it would be leading to surmise and speculation with respect to particular banks, and such surmise and speculation would probably lead to disastrous consequences. He therefore hoped the hon. member would not press it.
§ The clause was withdrawn.
§ Mr. Monck
rose to move a clause, pro- 915 viding that the holders of 1l. notes should, in the event of a banker's failure, have the priority of proving their debts before all other creditors; and that they should be paid 20s. in the pound before other creditors received any thing. This, he conceived, was due to the interest of the poor, who were the most likely to suffer, in consequence of their having a number of these small notes in hand.
opposed the proposition. It appeared, that some gentlemen thought the chancellor of the Exchequer had not done sufficient to injure the country bankers, and came forward, in consequence, to assist him.
The Chancellor of the Exchequer
could not conceive any principle, in law or equity, which could bear out the hon. member in giving, a preference to one set of creditors over another. Where was this preference, if once allowed, to stop?
§ The clause was negatived, and the House resumed.