HC Deb 07 March 1826 vol 14 cc1184-92

On the order of the day for the third reading of this bill,

Lord A. Hamilton

said, that be would give his support to the measure, not because he thought it the best that might have been proposed for the adoption of parliament, but because it would, imperfect as it was, tend in some degree to amend the defects of the present system of country banking. He considered the introduction of the clause for authorizing the Bank to issue small notes for three years longer, a departure from the principle of the bill. He was surprised that ministers had consented to that measure. If had been stated as an axiom of political economy, that small notes and coin could not circulate together; how, then, could they justify themselves, for permitting the issue of small notes for three years longer?

Mr. Calcraft

said, he had intended to move an amendment at the present stage of this bill, but upon reflection he had abandoned that intention, and would content himself with declaring his opposition to the measure, with respect to which he would take the sense of the House, if he saw any members inclined to support him. He could look upon the measure in no other light than as a bill of pains and penalties against country bankers—a class of persons who had been most hardly dealt with. He thought that government, by the extensive issues of their own accommodation paper, had been greater encouragers of speculation than the country bankers; and was of opinion, that it would be impossible to obtain a sufficient quantity of metallic currency to supply the wants of the manufacturing districts. During the course of his parliamentary experience, he had never known a measure more calculated to produce mischief than the one under consideration.

Sir R. Heron

thought, that the country hankers had been shamefully treated by ministers and the parliament. The only measure which would give relief to the country was an immediate and extensive curtailment of the public expenditure.

Mr. J. Martin

said, that much unmerited odium had been thrown upon the country bankers. In a paper which purprorted to be a return of the number of bankrupt bankers, the names of several individuals were inserted who had never committed an act of bankruptcy, and of others who had superseded their commissions. In common fairness the hon. member for Aberdeen was bound to move for a return of the names of the country bankers who had superseded their commissions of bankruptcy.

Mr. Robertson

feared the House had overlooked the great difficulties which would accrue to this country from the quantity of gold to be drawn from the continent by the operation of this bill. Throughout the whole continent, he supposed there was about 200 millions of specie. Of this, not less than 50 millions would be required to establish a gold circulation in this country. Now, the effect of withdrawing that amount from the continent would be to raise the value of gold one-half; and to suppose that its value would be raised one-third in this country, was a moderate calculation. Now, could the chancellor of the Exchequer get the taxes paid to their present amount in a currency increased in value one-third 1 Then, again, we were to be called upon to lower our corn to a level with that of the continent; and, putting these two circumstances together, he would leave the House to judge of the consequences. The price of corn now was 60s. a quarter; and when the change of value in the currency came into operation, it would be down at least to 30s. He was of opinion, that the banking system of the country, as at present established, was necessary to its prosperity, as creating a degree of artificial capital, which would not otherwise exist.

Mr. Carus Wilson

spoke of the necessity of country bankers making their notes payable in the place where they were issued. In consequence of this salutary practice, the bankers of Westmoreland and Cumberland had been able to stand against the storm. In Lancaster, a degree of swindling was going on, in the absence of bank-notes, by the circulation of improvident bills of exchange. For the small notes of the Bank of England he entertained a great dislike, from the facility they afforded to forgery. He hoped, if they were to be circulated throughout the country, that means would be resorted to to make them less liable to imitation.

Sir F. Blake

said, that if he were asked whether he would prefer a metallic or paper currency, he should certainly vote for the former. But, having once begun with the paper, we could not stop short. The principal object of this bill was, to circumscribe the issues in paper, and thereby accelerate the return to cash payments. It was on that principle that he had supported it. But he did not understand why all the advantages of the bill should be topsy-turvy in favour of the Bank of England; nor why that Bank should be shown greater favour than the country banks, as to the privilege of issuing notes up to the 10th of October. No notes were so easily forged as those of the Bank of England. He understood, the chancellor of the Exchequer meant to extend this measure to Scotland; but he begged to ask that right hon. gentleman, whether he had well studied the Scotch character before he had made up his mind on the subject? He was quite sure that the people of that country would not receive that measure, unless it was forced upon them by act of parliament.

The House then divided: For the third reading 108; against it 9: majority 99.

List of the Minority.
Benett, J. Palmer, C. F.
Calvert, N. Robertson, A.
Heron, sir R. Wood, ald.
Heygate, ald. TELLERS.
Hume, J. Calcraft, J.
Lockhart, J. Martin, J.
Mr. Abercromby

objected strongly to the power given to the Bank of England of issuing notes to the 10th of October next. He thought it was to be regretted that those words had found their way into the bill; for it gave to the Bank the power of manufacturing as many notes as they pleased. It plainly appeared that ministers had been misinformed as to the danger of contracting the circulation of the country bankers. The effect of the amendment was, to destroy all the small country notes. What was the value of the responsibility of the Bank? As to the responsibility of government, he was at a loss to know what it amounted to. The doctrine maintained in that House (and in which he concurred) was, that the Bank should consult their own interest, and not be subject to the control of government. He supported the bill; but he did it with regret since the introduction of this amendment. In order to put his opinion upon record, he meant to move that instead of the 10th of October, the 5th of February be inserted.

The Chancellor of the Exchequer moved a clause, by way of rider to the bill, the effect of which was, to exempt checks or draughts on bankers from the operation of the bill; which was agreed to.

Mr. Hume

observed, that great stress had been laid on the quantity of paper in circulation. Now, he thought, that although no correct deductions could be made from the amount of paper currency on particular days, yet it was desirable that returns should be made by the coun- try bankers, as well as by the Bank of England, of the amount of their paper in circulation. He would therefore move a clause requiring country bankers to make monthly returns of the amount of their notes in circulation to be published at the discretion of the Treasury.

Mr. Hobhouse

seconded the motion. In the progress of this measure through the House, two propositions had, he said, been offered, neither of which had been agreed to; one was for securing the issues of country bankers by deposits; the other was for authorizing a summary process of compelling country bankers to pay in coin. His hon. friend had now offered a third, the object of which was, that the country bankers should condescend to give the country some account of the amount of their issues. It had been said, that the House had been legislating against the country bankers; whereas the House had been legislating for the country, and not for any particular interest. We had now no certain knowledge of the issues of the country bankers, and the House could not legislate properly without that knowledge. He thought his hon. friend might have gone further in his motion than he had done; for it was but just that those who dealt in the coin and circulation of the country should be similarly circumstanced with other traders. If the banking system was not put on a solid foundation, the country would soon be in a worse situation than at present. Fair as his hon. friend's proposition was, he supposed that, like the others, it would be rejected. He wished the chancellor of the Exchequer would imitate the conduct of his right hon. colleague. There was not an impartial man in the country who would not say that the president of the Board of Trade had acted on sound and just principles with regard to the silk trade. If the chancellor of the Exchequer had come down to the House and explained himself with the same frankness and firmness as the right hon. gentleman had done, in that admirable speech which he had listened to with the greatest pleasure, he would have done himself much credit. He should not have minded the obstacles cast in his way. He should not have minded the loss of votes in parliament, nor the clamour out of doors; but he should have pursued the straight-forward course, and the country would have supported him.

Mr. John Smith

said, that the appoint- ment of a committee in the earlier stage of the present proceedings would have saved the country from a great deal of unnecessary perplexity and alarm. As for the proposition of security referred to by the hon. member who had last spoken, it appeared to him decidedly objectionable. The instant the stamp upon a Bank note was such as to make that note, in the view of the receiver, perfectly secure, that instant there would be an end to metallic currency altogether. As for the project of compelling country banks to furnish accounts of their circulation, he did not object to its principle; but he objected to introducing it at a moment like the present, when the country bankers had already been most unfairly treated.

The Chancellor of the Exchequer

said, that he resisted the present motion, not at all in consequence of any representation from the country bankers, but because he thought it was, upon its own merits, open to objection. If any banking companies were established under the bill which was to be read that night a second time, or any chartered companies—any companies to whom peculiar privilege was to be given—he should have no objection to demand some sort of account; but, particularly at the present moment, he was adverse to putting the Treasury in possession of the private concerns of individual bankers; and there were reasons why government would be better kept without such information. The hon. member said that he did not wish to make the publication in the Gazette imperative, but would leave it to the discretion of ministers. Now, he thought that ministers would be better without such discretion. It was also to be in the judgment of ministers, whether to lay the accounts received before the House; but it was possible that the House might call for the accounts against the judgment of ministers. At all events, the clause, as it was proposed, was inoperative; because it provided no penalty in case of neglect to return a true account; and this was the mere material, as cases might be imagined in which the temptation to give an inaccurate statement would be almost irresistible.

Mr. Hudson Gurney

opposed the introduction of the clause into this bill, with the objects of which it had no connection; whether advisable, as a matter of future regulation or otherwise.

Mr. Pearse

said, it was a mistaken notion to suppose that there was no control over the Bank in its issues. The fact of the notes being payable in gold was itself a control. Besides, it need not be apprehended that many of these notes would be issued, as sovereigns were generally preferred, of which three millions had been issued since Christmas. The small notes, on the other hand, had been issued in very small quantities; as the Bank put out as few as possible. The Bank knew the difficulty of preventing forgery; for none of the schemes for accomplishing that object had been successful.

Mr. Alderman Heygate

thought that the amount of notes in circulation should be laid before the public, and gave it as his opinion, that one-pound notes issued on government security, would be preferable to those of the Bank of England, or of any other bank.

Mr. Ellice

wished to know from the secretary for the Home Department, whether government were at all responsible for any over-issue of notes. He certainly understood the right hon. gentleman to say, on a former occasion, that not only the Bank, but the government were responsible for any exercise of that power beyond due discretion. The fact just mentioned by the hon. director proved, that there would be no danger in agreeing to the clause.

Mr. Secretary Peel

said, that when the small notes were issued in December, it was considered a peculiar measure, and had the sanction of government; consequently, so far as regarded the issue of those notes since that period to this, government should bear the responsibility. But, as a general measure, they were not at all implicated.

Mr. Monck

observed, that although there was no penalty attached to the violation of the clause, yet such violation might be punished as a misdemeanor.

The House divided: for Mr. Hume's clause 24*; against it 143: majority 119.

List of the Minority.
Abercromby, hon. J. Johnson, col.
Althorp, visc. Knight, R.
Duncannon, visc. Macdonald, hon. J,
Evans, W. Monet, T. B.
Ellice, E. Newman, R.
Guise, sir W. Ord, W.
Graham, sir S. Pares, T.
Grenfell, P. Russell, lord G. W.
Heygate, ald. Tierney, rt. hon. G.
Heron, sir R. Warre, J. A.
Wood, alderman; Hume, J.
Wilson, sir R. Hobhouse, J. C.
Wyvill, M.
Mr. Hume

then proposed a clause to give remedy, by summary process, against country bankers refusing to pay their small notes in gold coin. He wished for security to the holders of the one-pound notes; but if the House did not agree to make cash payments compulsory, there would be no such security. The chancellor of the Exchequer, on bringing in this Bill, had said, that security to the holders of small notes was his object. Could he therefore consent to pass this bill without that security? As the bill now stood, there must be an action, so that it might be one or six months before the value of the note could be recovered; and the action might cost 10l. or 50l. It was clear that such a state of the law gave no security to the poor man. Without this clause there would, in reality, be a suspension of cash payments. The clause which he should move was that which had been negatived by the committee on the bill; it was an exact copy of the summary process clause in the 37 Geo. 3rd, with the alteration of "ten days," instead of "three days."

Mr. J. Smith

said, that if the hon. member's clause passed, not a respectable country banker would ever issue another one-pound note; and those which were out already they would get in as fast as possible. The fact was, that a remedy for refusal to pay in gold already existed. A one-pound note might be protested for non-payment just as regularly as a bill of exchange; and the cost of that first step—which the banker would be liable to pay—would be 22s.

Mr. Hudson Gurney

remarked, that the chief instances of grievance brought forward by the hon. member for Montrose, had-been from Scotland, where, it appeared, this summary process existed, and whence, it should seem, by the hon. member's own showing, it was utterly useless.

Colonel Johnson

observed, that the remedy was inefficient. The banker might be liable to pay the 22s. for protest, but the labourer must pay it on the spot. And where was he to get it?

The clause was negatived.,

Mr. Abercrombie then proposed to leave out the words "10th of October, 1826," and to insert "5th of Feb. 1826," instead thereof, which was negatived.

The bill was then passed.