PROMISSORY NOTES BILL. (Hansard, 28 February 1826)

§ Mr. J. Smith
said, he must repeat what he had before said, that the government by bringing this subject before the country as they had done, had created much danger, which they might have avoided by adopting the more prudent course of previous consideration and sedulous inquiry. The evil was said, in the first instance, to have arisen from the speculation which the issues of the private bankers were alleged to have encouraged; and the existing, as well as the apprehended mischief, was now traced to the circumstance of the country bankers paving off their notes, and thus narrowing the circulating medium. One hon. mem- 964 ber, not content with what the country bankers were doing, and what they were compelled to do, was desirous that they should be made to pay their notes in a week; without considering, however solvent they might be, whether the Bank of England would be able in so short a space to supply the demand for specie. He considered the attacks that had been made on the country banks, generally, as unfair and unworthy. After all that had been said of them, he would contend that the country bankers had done much good. He should like to know which of his majesty's ministers it was, who wrote the letter addressed to the directors of the Bank, which had been the subject of so much observation. He knew not who wrote it; but this he would state, that it contained internal evidence, that it was not written by the right hon. Secretary for Foreign Affairs. They had recently seen documents drawn up by the right hon. gentleman; and he defied any individual to point out the least affinity between the style of those documents and that in which this letter was couched. He might say further, that it was not the letter of the right hon. gentleman at the head of the Board of Trade; nor of any of the right hon. gentlemen opposite. Instead of entering into this correspondence, ministers should have brought the question before a committee in a quiet and unostentatious manner. Had they done this, wise and timely measures would have been adopted, and much mischief would have been prevented. He thought the proposition for obliging every country banker to make his notes payable at the place where they were issued, was a good one; but he believed that was pretty generally the case at present. His hon. friend (Mr. Attwood) had mentioned some districts, in which he described a different system to be prevalent. The notes issued in those districts, as he stated, were only payable in London. Now, he must say, that in the districts mentioned, he was not acquainted with any banker who pursued that course. If any such instance existed, he should rejoice to see it put an end to. He was afraid that in adopting the measures now under consideration, the government was acting too hastily. The proper mode of legislating on this subject would have been by the appointment of a committee. Parliament would then have been enabled to come forward with a measure almost, if not entirely, free from objection.

Mr. Attwood
said, that the system which he had described prevailed in Wolverhampton, Stratford-upon-Avon, and other places.

Mr. Alderman Heygate
said, he had been represented as having asserted, that the country bankers were perfectly satisfied with this measure. He had stated no such thing. What he had said was, that the country bankers did not wish to throw obstacles in the way of ministers; and that they had done all in their power to arrest the growing distress. The cause of the diminution of their circulation was, the general panic which existed. Being pressed, in consequence of that panic, they wished rather to act at once, than wait for the expiration of three years.

Mr. F. Palmer
rose to express his strong disapprobation of the measure before the House. It was, in his mind, ill-timed, injudicious, and likely to bring most serious distress on the country. In 1822, a great issue of paper took place to meet the distresses of the agricultural interest. They were then said to go on well for a while; but, what was the country better for it now? At length the present misfortunes arose; and now fresh issues of paper-money were resorted to as a remedy. Arguing from the past, would not the state of the country, at a future period, and that not far distant, be just as deplorable as it was at present? The bill, he contended, was no remedy for the evil—It was merely a palliative; and when its effects had passed away, the patient would find himself worse than he was before. If the expenses of the country were not considerably reduced, there could be no safe return to a metallic currency. To attempt one without the other, would bring upon agriculture the severest distress; and then they must come to an amicable, or equitable adjustment—he did not care which term they chose for the purpose. He declared himself no friend to high prices. He knew that the manufacturing interests could not exist with high prices; much less could any natural competition be successful under them. But he knew, also, that if corn were not kept up to a certain price, starvation must ensue amongst the agricultural classes. Ministers had a really difficult task to perform. He believed they were earnest in their endeavours to do right. But here was their difficulty—they must have Tow prices for the manufacturers, and they mint have high prices for the other classes. 966 But, under these circumstances, they were not justified in the unbounded extravagance of the expenditure. If the difficulty was to be met, it could only be by the most rigid economy. The interest of the debt, and the expenses of government, could not be paid at their present grievous amount in a circulation of increased value. Notwithstanding these things, ministers went on with their expenditure. One specimen of their estimates had been brought forward, and the House had seen with surprise that it was greater than it was last year. Two other specimens would be produced in a few nights, and, if he was not greatly mistaken, they also would be on an increased scale of expense. There was another point to which he wished to call the attention of the House, and that was the present mode of paying the public creditor. The money had been lent to the government in one species of currency, and it was now repaid in another; by which the payment was greatly increased beyond the amount of the original loan. Now he was of opinion, that, with respect to this matter, some adjustment ought to be made, and that the public creditor ought to receive his claim, if not in the same currency, at least on a calculation adjusted by the same currency. As the matter at present stood, this was not the case; for the public creditor had advanced his money when the guinea was worth 28s. and his claim was paid at the same nominal rate, when the guinea had been restored to its old standard of 21s. He had said so much merely in discharge of his duty.

The Chancellor of the Exchequer
said, that there were some alterations which it was of importance should be made in this bill. The first of these was to expunge from the penalty-clauses that which empowered a justice of the peace summarily to levy the penalty inflicted by the act. His proposition was, that instead of this the penalties should be levied in the ordinary way, as in other cases of offences against the Stamp-acts. The other alteration was, that individuals should not be precluded from drawing checks upon their bankers for sums less than 5l.

§ Sir M. W. Ridley
said, that some persons had an idea in the north, that no one-pound notes of any description were to remain in circulation after the passing of the bill. If the right hon. gentleman would give that notion a positive contra- 967 diction, it would prevent any further misunderstanding upon a subject of much importance.

The Chancellor of the Exchequer
said, that the object of the bill was the extinction of small notes at the end of three years. But, in his opinion, that extinction should be brought about within three years by as slow degrees as were practicable. If any persons had acted under the idea that small notes were immediately to go out of circulation, they had assuredly laboured under a complete misapprehension.

§ Mr. Hudson Gurney
expressed a doubt whether, according to the present wording of the clause, any drafts for sums under five pound were not illegal, if they were drawn payable to order and not to bearer.

The Attorney-General
said, that the act of the 17th Geo. 3rd had been brought in to prevent the circulation of one-pound promissory notes, and parliament had thought fit to extend the operation of it to all notes under five pound. The object then in View was, to prevent small bills being given at long dates; which otherwise might have passed and circulated from hand to hand, as the small notes payable on demand had before done. The act, consequently, allowed bills to be drawn on bona fide debtors, at twenty-one days' date, in a certain form contained in the act.

§ Mr. Denman
hoped, that instead of going to the third reading of the bill, the right hon. gentleman would allow it to be reprinted. He objected to it wholly, as a most impolitic interference with the principles of free trade, which the right hon. gentleman had so honourably supported. This bill was of no effect. The last clause repealed it as to the Bank of England which was still permitted to issue one and two pound notes; a liberty which he did not think could be granted to them with greater propriety than to other banks. As, however, that liberty was reserved to them, he trusted that the Attorney-general would be directed to bring in a bill to mitigate the punishment of forgery, so as to prevent the recurrence of those horrid executions which were produced by the ease with which Bank of England notes might be forged.