Mr. Secretary Peel
brought up the Report of the Select Committee on the Banking System of Scotland and Ireland. On the motion, that it be received,
§ Mr. Tierney
rose, pursuant to notice, and said, that, as the report now brought up involved the consideration of that sys- 1412 tem which had been recommended to parliament at the opening of the session, he wished to have an opportunity, as briefly as possible, of stating his opinions upon the subject. The House would not fail to remember, that one of the very fares points in the King's Speech, at the commencement of the session, had been a recommendation to the House to lose no time in taking steps to place the currency of the country upon its ancient high foundation; and, in consequence of that recommendation, certain measures had been brought forward by ministers, founded on those principles upon which he understood lord Liverpool to have acted. For his present purpose, he would take the tendency of those measures, chiefly from the details of the letter transmitted by the earl of Liverpool, and by the chancellor of the Exchequer, to the governor of the Bank of England—a document which explained the grounds upon which it had been recommended to parliament and to the country to proceed upon the question. In that letter it was first declared, that a great portion of the distress and difficulty under which the kingdom laboured had been produced by over-trading. How far he had agreed in that statement, or not, it was not necessary now to discuss; because, let the distress have arisen from what cause it would, he had coincided in the course proposed for relieving and preventing its recurrence; and the remedy brought forward with that intent by the earl of Liverpool was the getting rid, within a limited period, of the one and two pound notes out of circulation; in addition to which, with the concurrence of the Bank of England, that body were to establish branch banks in different parts of the kingdom; and to wave so much of its exclusive privilege as prevented the formation of private banks with more than six partners within sixty miles of the metropolis. Now, he hoped that the House understood clearly what it was that they were called upon to adopt, as a remedy for those distresses which so cruelly pressed upon the country. Nothing could equal the vigour with which lord Liverpool had set out in his plan. Not a moment was to be lost—not even for inquiry; but the further issue of stamps for one and two pound notes was stopped by a course absolutely illegal. He begged not to be understood as complaining of that violation of the law. Approving, as he distinctly had done, of the main measure, 1413 he thought it quite right that the House should shut its eyes to the somewhat irregular manner in which that measure had been carried into effect. In fact, however, an order had been sent off to the Stamp-office, by which the possibility of any addition to the existing stock of one or two pound notes was prevented; and the next step was, to bring a bill into the House to prevent the circulation of any one or two pound notes after the month of April 1829. Upon the expediency of these measures a variety of opinions had prevailed; for himself, he had believed, that his majesty's ministers were acting upon a sound principle, and therefore he had given them his support. In doing this, he had executed an unpleasant duty; because the measures seemed to wage war against a most respectable and honourable body of men. Towards those persons, he entertained no ill feeling, and all he could say was, that in what he had done, he had thought that he was acting for the best. Were the matter to come over again, he should again take the same course, with all that he had seen of its operation, up to the present stage, at least, of the business. Thus far, then, all the measures of ministers had gone on smoothly, until an hon. member, not now in his place, suggested that, although the country banks were restrained from any further issues of small notes, the Bank of England should be allowed, for the general convenience, to continue such issues. At first, ministers had been steady to their system, and resisted that proposal; but in a week their courage seemed to evaporate, and they assented to it. Now, if the Bank of England, as had been promised, would have confined itself to the smallest possible issue of these one and two pound notes, issuing no more than were absolutely necessary to meet any temporary deficiency in the quantity of circulating medium, this measure might not have done much mischief. But, he believing that the Bank would do no such thing; that, on the contrary, they would consult their own interest, by pushing out their notes to the very utmost of their power; had taken it to be a measure likely to produce very considerable disadvantage. At the same time, it was but a modification—though an unlucky one—of the original plan which he had considered to be sound; and therefore, though he disapproved of the alteration, he had continued to give the government his support. Under these 1414 arrangements all, then, had gone on well, until the physic which was found so wholesome for England was about to be administered to Scotland. Of Ireland, at present, he said nothing; because he understood that the report contained very little upon the affairs of that country—a mere outline of some plan, subject to the reconsideration of a committee in the next session. But, with respect to Scotland, the case was widely different. Since the rebellion of 1745, such a combustion had never, he believed, been raised in that country, as the very first mention of touching any of her banking institutions had created. And this fact was the more extraordinary, because all the Scotch members, except one,—every soul of the forty-five, except his hon. friend near him (Mr. Hume),—had concurred in the plan of ministers for introducing that abolition of one and two pound notes into England, which they so vehemently—nay, so furiously deprecated, when the benefits of it came to be extended to them at home. Nothing could exceed the firmness with which the Scotch members had supported the new system, until they found it approaching their own doors; but then, if the House had been attacking all the rights of Scotland in one single measure, the cry of alarm—the call to resistance—could not have been greater. The effect of the first demonstration was magical—such as he had no powers of eloquence equal to describe. The great Unknown's well-known picture of a "Gathering"—an arrangement in which, by the exertions of a single man speeding from House to House with a signal, a whole clan was mustered, and every individual at his post in half an hour—was the only recorded process, the effect of which seemed at all to approach it. In one fortnight only, petitions had been presented from all parts of the country, against the projected alteration; the hubbub had been curious—nay dangerous—for there had absolutely been hints of resisting it by actual violence. He had supported ministers in the beginning, because he hoped that they were acting upon a steady system; but the troth was, they had been acting upon no system at all, but upon measures of expediency from day to day. Would any man believe, who did not see it, that, after the declarations which had been made, the acts which had been performed, in the first part of the present session, as regarded the system of currency in England, 1415 the last day of the session should produce a report admitting the principle of what ought to be done in Scotland to be entirely different? "In England," said the earl of Liverpool, in the beginning of the session, "let us take the earliest steps towards adopting a system by which gold shall be enabled to drive out paper." The very last step of the session was, as regarded Scotland, to recognize a system which was to make paper drive out gold. In Scotland, men were to go on as they had done, At least, as regarded Scotland, it was necessary to inquire. Why was it that we had had no inquiry in England—that we had been so sure as to be able to run before the law, not lag behind it? The plain truth was, that the tried prudence—the approved integrity—of our Scottish neighbours—in impeachment of which prudence or punctuality, far be it from him to say one syllable—that these great qualities shed such a degree of sanctity over all their arrangements, that the least of them could not be meddled with without deep inquiry; while, in England, without any inquiry at all, but by the mere strong arm of the law, and almost by the strong arm without it, we put a change into instant operation, which had been felt from one extremity of the kingdom to the other. For there could be no question, that the first part of the late measures had been hastily brought about. No one could doubt that to touch the currency, in the way, and at the time that we had touched it, was likely to be attended with prejudicial consequences. He had supported the measure, because he thought it right—sure to be eventually beneficial—though severe; but he had supported it as a measure for the whole of the country, not one which was to press upon a part of it. But, after the measure was passed as to England, it turned out that with the treatment of England we were to pause. We came to Scotland, and she claimed as a right—demanded almost by dint of menace—that her currency should not be interfered with, but that she should be allowed to go on as she thought fit. He desired not to be misunderstood. [Some slight interruption had occurred from an hon. member on the ministerial side.] He knew his hon. friend opposite would be the last man to put an exaggerated construction upon his words. But, in truth, he used the term "menace"—his hon. friend would recollect that there had been 1416 some mention, with reference to this question—of the "claymore." The ground, however, upon which this exclusive right for Scotland was set up, as far as he understood it, he took to be this—that Scotland, for a long series of years, had acted upon the principle of entirely excluding the precious metals; that no inconvenience had been found to result from this system, but that on the contrary the trade and commerce of the country had flourished under it. Now, the long continuance of this system, he could not admit to be a powerful argument for its further continuance; because it must be remembered, that allowance had to be made for the difference between what Scotland was when that system had commenced, and what Scotland was at the present moment—that what we had connived at, or even encouraged, in a poor and rising country, might be outrageous, as claimed by a country as rich and thriving as ourselves. To Scotland, while she was a poor country, every aid that could be given had been most important, but Scotland now was a poor country no longer: on the contrary, there was no country in the world which, during the last thirty years, had made such progress in wealth and prosperity. He stated this fact with the highest possible satisfaction; feeling as he did, that every thing which added to the prosperity of Scotland, added to the strength and to the prosperity of England; but then, it was only fair to demand, in return, that Scotland should identify our welfare with hers; and not, when we were about to make a change which seemed highly important to the common good, turn against us. And as for the operation of this system which was so much relied on—Scotland's prosperity had not been got up, it must be recollected, merely by the advantage of her banking system. There was another source of advantage from which wealth had been showered into her lap. Let the House recollect the wealth which had been poured into Scotland from India. All the gentlemen who went from Scotland to India—he spoke it to their credit, to their honour, all felt a desire, if they returned and indulged that desire, to settle in their native country. If the witnesses who spoke in such warm terms of the gains which Scotland had made by her system of banking, were asked, whether she had gained most by her banking system, or her returns from India, he suspected the scale would turn in favour of the latter.— 1417 Then, to prevent those inconveniencies which had arisen under our own system, the second part of the measure proposed by ministers gave the same power of forming banks with an unlimited number of partners in this country, as already existed in Scotland: so far, therefore, the two countries would be placed upon a level; but, the moment we attempted to touch the question of the Scotch issues, the cry raised was—Will you attack a system under which we have thriven? Now, no doubt the system was a profitable one; for, nothing but paper being ever seen in Scotland, the whole real capital of the Bank of Scotland was employed here in England, and all that was got into use in Scotland—being, in fact, only so much credit—was clear gain. No doubt, therefore, that system was profitable to the individuals; and the process by which it was kept up—the scheme of what were called "cash credits"—he would endeavour shortly to explain. A "cash credit" was this: suppose any man beginning the world—a tradesman—found it would be a great advantage to him to have a 100l. at some bankers, which he could, if necessary, apply to his own use. Under these circumstances, without any deposit of his own, he procured two sufficient friends to become responsible for him; and any bankers would then place his name upon their books for this sum, of which he might draw the whole, or any portion, when he pleased; subject to the stoppage of this credit, either by the persons who gave it, or by the bankers themselves, in case they became dissatisfied with the appearance of their security. In addition to this, the borrower had the further advantage, that, in drawing out and paying back what sums he pleased, he only paid interest, to a farthing, at any time for the sum which he had actually in his hands; but, to sustain a scheme of this kind, it became necessary to exclude all coin from circulation; and the practice accordingly had constantly been that, if a trader received ten guineas in his business, he directly carried them to his bankers, and received ten promissory notes in exchange. Nothing, however, could be more clear than that, in upholding a system like this in Scotland, we acted entirely in the teeth of what we were doing at such a present sacrifice of public convenience, in England; because the boast of Scotland was, that by these "cash credits," she excluded gold entirely from 1418 her circulation—excluded that currency entirely, to which we were desirous entirely to return. There were six-millions of "cash credits," existing in Scotland; no doubt arrangements of great convenience to those who possessed them, and which would be regretted by those who had to give them up. The other forms of banking in Scotland were similar to those of this country; with the exception, that an interest of 4 per cent was allowed on all monies lodged, and 5 per cent charged for deposits. This was calculating at a high rate of interest for money; probably, when the value was lower, the rates, instead of 4 and 5, would be 3 and 4. But then, although all this, no doubt, was very advantageous to the good people in the north, what reason in the world was there that, because any gentleman happened to live in Scotland, he should possess all that exclusive privilege above his fellows? It seemed as though persons fancied, that it was quite sufficient to justify their retaining any exclusive privilege, if they could show that they were gainers by it. Scotland might be a gainer; but the rest of the country would lose very materially by the continuance of this exclusive privilege. Because, if a metallic currency was the best—the most desirable—the safest, still it was by far the hardest to be got at. If it was advisable to have it at all, it ought to be universal; otherwise, one man had the better of another, by law, in the same community. Can any man (continued Mr. Tierney) assign a single reason why Scotland is to be so peculiarly favoured? Why is she to be allowed to continue a paper circulation, while England suffers so severely, and meets with so many obstructions in her march to the goal of a metallic circulation? This cannot be called acting on a system. It may be right, or it may be wrong; but no man can deny that lord Liverpool is blowing hot and cold, when he pretends to put the currency of the empire on a solid and secure basis, and yet does all in his power to make that basis, in Scotland, unsolid and insecure. I dare say, when the report comes to be read, it will be found fairly drawn up; I have every reason to believe it; but I will venture to say, before it is read, that it contains materials for a manifesto in favour of a paper currency, from one end of the kingdom to the other. No more effectual method can be taken than by the publication of all the 1419 evidence. Ministers lay it down for a rule, that there is nothing so good as gold; but, read the report, and the world will be satisfied that there is nothing so good as paper. This is really the result of the investigation; and before next session we may depend upon having a cloud of pamphlets upon this long-disputed question. "Paper against Gold," and "Gold against Paper," will flourish on hundreds of title-pages, and happy the man who never reads a line further. The temper of the country will be fully tried upon the question, and the minds of the people may very reasonably be turned either way, when they see that the king's ministers do not know which way to turn their own. After being driven and goaded into a metallic currency, we are to be told at last, that we ought, for all purposes of profit and convenience, to prefer a paper circulation. No man can think of the return to a paper circulation with more horror than I do; I know that wise and well-informed men differ from me; but upon that point I am more obstinate than on any other, although I affect to know no more, and to see no further, than my neighbours. On this subject, I have uniformly resisted the projects of Mr. Ricardo and other political economists; and I shall persevere in my resistance. Coin and paper cannot travel in company; and I lay it down as indisputable, that if there be in circulation at the same moment a piece of paper of the denomination of twenty-shillings, and a piece of coin of the same actual value, the coin will very soon be missing.—There can be no doubt, but as soon as the metallic currency shall have been introduced, if it can be introduced at all, there will arise a strong inclination in many quarters to resort to any thing that may produce a rise of prices. And how is that to be done? Why, by recurring again to a paper circulation. "See what advantage Scotland has by her paper," will be the general cry. "Remember how happy we were during the war with our paper circulation. We must have the price of our corn raised to a fair amount of remuneration, and for that purpose we ought to have the same advantage as they have in! Scotland." And then I ask, whether, if the Bank of England does not continue to issue small notes, while such notes are allowed to be freely issued in Scotland, you can go on for two years together? I hold it to be utterly impossible that you 1420 can; and the result will be, not that Scotland shall be assimilated to England, but that England shall be assimilated to Scotland. The forty-five gentlemen of the North will, after this, find a great number of coadjutors. The English country gentlemen will say, "Why do you refuse us the same advantages which you allow to the gentlemen of Scotland;" and what answer can we give to that? "You see," they will say, "how Scotland is flourishing under the small-note system, and why should we not also have the benefit of small notes?" If you are of opinion that it is expedient that Scotland should have a paper circulation of this kind, why should it not be expedient for England likewise? It will be very difficult to give a sound and rational answer to such expostulations. And, again, suppose a war should arise, in what situation shall we then be found? The consequence will be, that having done nothing in the last years of peace for the placing of our currency on a solid and secure foundation, we shall be compelled to engage in the war with the state of our circulation in the utmost confusion: and foreigners will look with contempt on our financial knowledge and regulations; for foreigners understand the state of our currency, perhaps, in some instances, better than we do ourselves. Some foreign nations, at least, understand the proper measures to be adopted with respect to their own circulation, better than we understand the proper regulations which ought to be applied to our circulating medium. Look at the condition of France in this particular, every thing perfectly regular—the gold and currency plentiful without excess—nothing doubtful—the Bank accounts submitted to public view without the least disguise; and all this while we are involved in a series of vacillations, doubts, and difficulties. It cannot be otherwise. The only question is, what are you to do in 1829? Are you about to restore a metallic currency, or are you to retrace your steps and resort to paper? That will be the difficulty; and, from the course you are pursuing, the latter alternative is most likely to be adopted. I say so, because I think that will lead to much more important consequences than gentlemen are at present aware of; since it is clear, from these proceedings, that you are not prepared to follow up your own act, by reverting to a sound and solid state of currency—The right hon. gentle- 1421 man went on to observe, that this was a question of the utmost difficulty, and one that required the most serious attention. It was on these grounds that he called the attention of the House to this report; because it appeared to him to be fraught with circumstances more important, and of deeper interest to the country, than he could easily describe. He knew of no subject that was better calculated to arrest the attention of parliament, or that called more loudly for serious consideration than that report. And why so? Because it was the last act of the present session of parliament; and because they had been led to believe, that the inquiry on which it was founded would have placed the currency on a settled system. He had but one or two other points to touch upon. It was much to be regretted that the earl of Liverpool had undertaken to do that, with the details of which he was not well informed, before he undertook it. He (Mr. Tierney), in forming an opinion on that subject, must depend on any casual information he could collect: and, if he were wrong, his error might be attributed to the ignorance consequent on his situation. But the case was different with the earl of Liverpool. He was a minister of the Crown; and, before he took any step, he had it in his power to consult the highest authorities in the kingdom. He might send for them, examine them, receive from them the most extensive information on this important question. What had the noble lord proposed? He suggested, that the Bank should establish branches in different parts of the country; and he (Mr. Tierney) agreed in the propriety of such a measure. It would be a most excellent thing if such branches were established. But the fact was, that the earl of Liverpool never understood the intention of the Bank from that day to this. Instead of coming to a clear understanding, there had been much squabbling, and much asperity of expression, between the government and the Bank, from that time to the present; and if the latter did not choose to agree to the proposition, things in that respect must just remain as they were. Here government appeared to him to betray a want of firmness. It was very unfortunate that, having brought matters to a certain point, ministers did not adhere to their first intention. He did not wish to see measures precipitately brought forward, but, when once introduced, he 1422 thought the minister ought to stick to them. The sort of minister he liked, was one who would say, "I know what is to be done, and it shall be effected." The contrary course—a course of vacillating policy—always destroyed confidence. Now, what was the end of all this? Why, that the Bank of England had one branch, and one branch only—at Gloucester. Another suggestion was, to allow bankers to enlarge the number of partners, in order to give stability to country banks. There were, he knew, a number of banks in England that did not stand in need of new partners—the character of which had been so long and so well established—whose credit had been unshaken for so many years, that they did not require any adventitious assistance. But there might be other banking establishments, to which the union of persons possessing large fortunes might be extremely advantageous. So far he thought it would be desirable to see what good might be effected by joint-stock companies (for such they would be) of that description, by allowing the banks in England to be conducted on the same system as now prevailed in Scotland. But the House would scarcely believe, that the bill which had been passed tended to prevent the formation of any one joint-stock company. No one banker could say, "I will form a junction with certain individuals, for the purpose of giving strength and solidity to my house; because I am not allowed to draw any bill on London under 50l. be the circumstances what they may." If the earl of Liverpool had sent for two or three country bankers, they would have told him that it would be impossible for them to extend their establishments, and carry into effect the system which had been proposed, while they were precluded from drawing on London for less than 50l. But, before they were a month older, he doubted not that they would find the means of evading the provisions of the bill. The letter of the bill utterly precluded the possibility of carrying on the banking system by the extension of partners; but he understood there had been several meetings on the subject, the whole object of each of which appeared to be to discover how the provisions of the measure could be evaded. Whether the mode proposed for effecting that object was a safe one or not, he would not say; but it seemed that a mode was 1423 pointed out, by which joint-stock companies, notwithstanding the provision to which he had referred, might be formed. Some of the banks were solid—some were not—and the latter, of course, would try the experiment and add to the number of partners.—He now called the attention of the House to the end of this system. England was to be precluded, in three years more, from the circulation of one-pound and two-pound notes—the system of Scotland was to be protected for the present, and she might issue as much paper as she pleased—whilst Ireland was not to have her doom told till 1833. But why should not Scotland return to this wholesome currency? Could any gentleman assign a satisfactory reason for that distinction? In this instance, contrary to her usual good fortune, Scotland seemed to have come off second best. This, then, was the state in which, at the end of the session, they delivered up the currency of the country. Such was the report they had to make on this important question. With that report he did not wish to find fault; but he wished to justify himself. He would make no injurious comments; but he felt it right to clear himself from having given any assistance to, or having participated in, what he conceived to be a system of delusion. In his opinion, ministers had proceeded on a system that was fraught with danger. They had found that the course which they intended to adopt towards Scotland would not answer, and they deemed it necessary to alter that course. They had previously spoken out pretty strongly on the subject; but their after-conduct was opposed to their declarations. They had gone into this committee, pretending a sort of innocence of all information on this subject. They had, it seemed, no previous communication with the gentlemen of Scotland on the subject; but the moment they received their evidence in the committee, they changed their original intention. The English banker thought, therefore, that he had reason to complain. He said, "Why did you not act in the same manner with respect to me? Why did you not send and examine me, before you passed the recent act? I could have produced man for man, as respectable as those of Scotland. I could have produced banker for banker (some of them ten times more respectable than those of Scotland), to have proved the impolicy of the measure." He meant 1424 nothing offensive by this last expression. He admitted the high respectability of the bankers of Scotland; but there were bankers in this country, who, for wealth and talent, were equal to any body of men in the world. Why, he asked were not they examined? No; ministers assumed the demerits of the English bankers, and said not a word with respect to those of Scotland, who were allowed to make out their own case. This was a most unjustifiable proceeding, and he washed his hands of it. The purpose for which he rose was, to disburthen his mind. He had done so—"liberavi animam meam:" he had called the attention of the House to this great question; and he had, in the face of the country, pointed out the miserable appearance which they made at the end of the session. He had no motion to make; and he should only further observe, that in what he had said, he felt no hostility towards lord Liverpool. He wished him every possible good that could attend him as a man whom he respected; and he also wished him a little more nerve and firmness as a minister.
Mr. Secretary Peel
said, that in rising to address himself to this subject, he felt that he was placed in a most embarrassing situation, owing to the extraordinary manner in which it had been introduced by the right hon. gentleman. It should be recollected, that the report which the right hon. gentleman had made the subject of remark, was not in the possession of a single member; neither was any individual, except those who attended the committee, acquainted with the evidence on which that committee had arrived at a certain conclusion; and when this was the acknowledged fact, was it not utterly impossible for those to whom the right hon. gentleman had made his appeal, to come to any fair or prudent judgment? The committee had continued their inquiry until a very late period of the session. They had laboured until no more time remained than was sufficient for the consideration of that evidence on which they had formed their judgment; and he hoped the House would suspend their opinion until that evidence was laid before them. He never sat on a committee that was more disposed to listen to every representation. He never sat on a committee that was more disposed to cast aside every consideration, and every proposition, except what was connected 1425 with, and founded on, the statements of those who were examined. The right hon. gentleman had asserted, that the conclusion to which the committee had come was an entire departure from the principle which ministers had originally laid down—that it was wholly at variance with the previous declarations of his majesty's government. Now, he denied that his majesty's ministers had ever made such a declaration as that which was imputed to them. His majesty's ministers never expressed it to be their opinion, that the application of the law, which abolished the circulation of small notes, in England, in 1829, must necessarily be extended to Scotland. Why, indeed, should they come to such a conclusion? That measure, which the right hon. gentleman had described as totally inconsistent with the principle previously laid down by ministers, was neither more nor less than a return to the state of things which existed in this country prior to 1797. Supposing cash payments, to the fullest extent, to be resumed in 1829—suppose that measure to be sanctioned by the legislature (and that was the system to which he was decidedly friendly)—could that be deemed a departure from the principle previously advocated by ministers? Was not that the system under which he himself admitted, that the country had flourished up to 1797, when the restrictions were by law imposed on the Bank of England? Prior to that, England had a metallic currency as the basis of its circulation. For twenty years preceding the Bank Restriction Act, that was, from 1777 to 1797, it was illegal in any body to issue notes below 5l. Before that period, there were no notes in circulation under 5l. and the circulation was, for every practical purpose, composed of the precious metals; but, from 1777 to 1797 (when our commercial transactions were on a greater scale than they had previously been), it was rendered unlawful by act of parliament, to issue notes for less than 5l. But what was the case with respect to Scotland? Why, during the whole period that had elapsed since 1700, there had existed, in point of fact, a small-note circulation in Scotland, and nothing else. He would not exactly say "nothing else," because he did not wish to state any thing incorrectly; but, for twenty years preceding the union with Scotland, the small notes practically had the effect of pre- 1426 venting a metallic circulation. In 1775, it was calculated by Dr. Adam Smith, that there was in Scotland gold in circulation to the amount of 500,000l.; but the quantity which was in circulation just preceding the Bank restriction was not worth speaking of. Now, he would venture to say, that, before the present session of parliament no person had ever thought of, at least no person had proposed, that the permission to issue notes below the value of 5l. in Scotland should be done away with. In 1810, a committee was appointed to consider of the resumption of cash payments. That committee entered into the whole subject, and came to this conclusion, that cash payments should be resumed in two years from that period; but that committee did not recommend that, with the resumption of cash payments, the issue of notes under 5l. in Scotland should be done away. In 1818, another committee was appointed to consider the state of the whole circulation in the country. That committee made a report; but no part of it recommended, that in Scotland the privilege of issuing notes of 5l. and under should be taken away. He did not, however, mean to say that the committee forgot that subject—it was not a lache on their part. No, they had evidence before them with respect to that question. Mr. Gilchrist was examined; who informed them, that for a century preceding, Scotland had an issue of Banknotes under 5l.; but the committee did not think it essential to the principle which they then laid down, that Scotland should at that moment be compelled to issue gold. That formed no part of the plan which he himself, as chairman of the committee, brought forward in 1818. It was not at that time deemed necessary to interfere with the Scotch currency. There was then the practice of a hundred years previous to 1797, and there was also the fact, that the reports of two successive committees never did state that it was absolutely necessary, in returning to a stable and solid currency, that the system which had been so long adopted in Scotland should be altered. He would then ask the right hon. gentleman to state on what declaration of the government it was, that he founded his accusation? He protested that he knew nothing of it. His own feeling was, that the measure should be extended to Scotland—but certainly not without an inquiry. He could not see where lord Liverpool had, in the slightest de- 1427 gree, committed himself. To prove that the noble lord had done so, the right hon. gentleman referred to the noble lord's letter to the Bank. Now, if he wanted to show that lord Liverpool had not committed himself, he would quote that very letter. His lordship there gave his view of the case to be, that the state of the gold circulation was not the cause of the distress. He alluded to the year 1793, and observed, that though there was no issue of one-pound notes then, there was at that time, very great distress. His lordship distinctly stated, that in 1793, when that distress prevailed, there was a metallic circulation; and therefore, he came to this conclusion, that the issue of paper in the instance then immediately under consideration had not the effect of creating the distress which he was anxious to remove. By the act of 1819, it was directed, that, in 1822, the Bank should resume cash payments, and that two years after, both the country banks and the Bank of England should be restricted from the issue of small notes. With the exception, therefore, of the difference between 1824 and 1829, the plan adopted by his majesty's government would, in every point of view, have the effect of bringing into full operation the recommendation of the committee, with which the measure of 1819 originated. It would provide, that the basis of the circulation should be a metallic currency: but, under the peculiar circumstances of the case, it was not thought necessary to interfere with the currency of Scotland. Long since it had appeared to the earl of Liverpool, that there was something unsound in the banking system; and when Mr. Vansittart was in office it was proposed that the bankers should find security. The earl of Liverpool, at that time, acted from his own view of the case, without having recourse to evidence. The proposition then made was, to call on the bankers of England to find security for their issue of one-pound and two-pound notes. And, what was the conduct of the right hon. gentleman on that occasion? He turned round, and said it was a measure which Mr. Pitt, in the very zenith of his power, would not have attempted without due inquiry. That was the very course which was taken on this occasion. A committee was appointed to inquire into the subject; but the right hon. gentleman was not satisfied with that proceeding which he had himself formerly contended 1428 for. If he wanted arguments to prove the necessity of grave and serious inquiry—if he wanted reasons to show the propriety of appointing a committee—he could find them in abundance, in the speech of the right hon. gentleman, to which he now alluded. When the earl of Liverpool acted without a committee, the right hon. gentleman was ready to move for one; and when the noble lord acted with a committee, the right hon. gentleman said, "I disapprove of that course, and think the measures ought to have been at once taken at the table of this House." He would contend that, in proposing that a metallic circulation should be the basis of the currency of this country, there was nothing inconsistent with permitting the paper circulation of Scotland to remain; neither was there any thing inconsistent with the principle on which he proposed that cash payments should be resumed (a principle to which he adhered as firmly as the right hon. gentleman did); nor, in fine, was there any thing inconsistent with the declaration made by his majesty's government at the beginning of the session.—He now came to consider whether the decision of the committee could be defended as wise and prudent; and he called on the House to suspend their judgment until they had seen the evidence. The right hon. gentleman said, he deprecated the publication of the evidence, because it contained many statements that would support the doctrines of different pamphleteers. The right hon. gentleman further stated, that he did not complain of the report, although it embraced certain points which he condemned. Now, the right hon. gentleman must know, that individuals would give their evidence in that way which pleased them best; and if they stated matter that went to the support of any absurd principle, the right hon. gentleman must feel, that it would be far more difficult to expunge that part which he might object to, than to give the whole examination without curtailment. For the first time the circulation of Scotland was, on this occasion, brought before a committee. As he had said before, his opinion was, that the system which had been laid down for England should be extended to Scotland. He had gone into the committee with that impression; and he thought that all general reasoning was in favour of that principle. He himself examined many of the witnesses, and he threw on them the onus of 1429 proving that Scotland formed an exception to the application of the principle.
It was represented to him, after the committee had been formed, that it was not fairly constituted, and that Scotland was not duly represented. He acceded to the proposition for extending the number, and an hon. gentleman opposite was added to the committee. He knew that that hon. gentleman's opinion was hostile to a change in the law; but he agreed to the suggestion, because he wished to avoid the appearance of any thing like partiality. The hon. member for Malmesbury also proposed, that the hon. member for Aberdeen should be added to the committee. This proposition was met with the same fairness; and that hon. gentleman was also appointed on the committee. On general reasoning, he certainly conceived that the same principle ought to be applied to Scotland as to England. But, when they had heard the evidence, the committee came to this conclusion, "that, under existing circumstances, they could not recommend a change in the law which had prevailed in Scotland for upwards of a century; and that another trial should be made to see how far a paper currency in Scotland was compatible with a metallic currency in England." He did not think it could be said that they had pronounced, by this declaration, a decided opinion in favour of the Scotch system. They had listened to, and set forth, the arguments for and against that system, and they had stated their own opinion "that, under existing circumstances, they were not prepared to propose an alteration of the law." But they added that new circumstances—the increase of wealth, trade, and population, in that country—might arise, which might call for an alteration of the system. That was, he conceived, a fair way to treat the question. Were they not, under all the circumstances, justified in stating, that they did not think it expedient to alter the system at this moment? He believed it was by no means an over-statement, that there was a universal impression in Scotland, in favour of the existing system. He, however, would declare, for one, that he was prepared to have disregarded that feeling, if conclusive evidence had been adduced on the other side. He believed that the system of a paper currency was advantageous to the bankers and traders of Scotland, and therefore he was prepared for a general concurrence of 1430 opinion on that subject throughout every part of Scotland, so far as those bodies were concerned. But he was of opinion that the House of Commons was, practically, capable of forming a more accurate opinion on the question of currency, than any body of persons out of doors; and if he had thought it better, under all the circumstances disclosed in evidence, that the system which had been so long continued in Scotland should be departed from, he certainly would not have abandoned the alteration. Ten or eleven gentlemen from Scotland were examined, and he regretted that, from circumstances which he need not mention, the inquiries of the committee were not more extensive. But he was bound to say, that all the opinions of those gentlemen, and most of their facts, were in favour of the present system. What were those facts? In the first place, they were told that the practice had existed in the best days of Scotland, a hundred years before the year 1797, and those who were interested naturally asked, "Why should you disturb us, who have prospered under this system? Why meddle with us, who have never interfered with you?" They also called the attention of the committee to the country banks of England. Here he begged leave to observe, that he never threw any slur on those banks. He would say of the country bankers, not that a few of them were respectable, but that taking them as a class, they were most respectable. And the very best thing that could be done for them was, to remove that imperfection in their system, which had operated unfavourably to them in the public mind. The system was doubtless defective in practice; and the conduct of some individuals had not tended to improve it. A return had been laid before the committee, of the number of bankers in Scotland who had become insolvent, from the 1st of January 1816, to the present time, and a similar account had been made out with reference to England. When he compared the result, he was astonished. He could not help making that comparison; but he did not do it for the purpose of casting any reflection. He found, that in Scotland, there was but one application since 1816, on the part of an insolvent banker, while in England, during the same period, there had been 158 commissions of bankruptcy sued out against bankers. [Mr. Tierney said, "That is the fault of the system."] The 1431 right hon. gentleman observed, that the system was to blame. He admitted the fact. God forbid that he should impute the circumstance to any wrong or improper cause! But the remark of the right hon. gentleman was precisely the same that was made by the people of Scotland. They also exclaimed against the system pursued in this country, and extolled their own system, which produced so different a result. That which he contended for was, that there was no evidence adduced before the committee to show that the English and Scotch systems of small currency were likely to derange each other. The witnesses proved that the Scotch system had gone on well for upwards of a hundred years, during which the paper circulation had been greater than the gold. In that time it appeared that Scotland had suffered great political commotion. Two rebellions had broken out, and the changes of government were of an extraordinary nature. Yet the mercantile credit of that country had not suffered any shocks like those which had frequently, within the same time, convulsed the mercantile credit of England. The chief ground of the support which he had given in this instance to the Scotch system of circulation was the system of cash credits, which, acting through branch banks connected with the thirty principal banks of Scotland, encouraged and enlivened agriculture and manufactures in the remotest parts of that country. The argument of the bankers against the application of the new law was this—If the government should prohibit the issuing of notes under 5l., the chief banks would have no motive for continuing to support the branches of their several establishments now spread among the Highlands, and to the farthest bounds of the country. The power of issuing small notes was the only advantage of which the banks could avail themselves in those distant parts, where the circulation was almost wholly notes of the small denominations. The bankers would therefore naturally look to their own safety, and withdraw their branch banks. He would call the attention of the House to a comparative statement of the paper circulation in Scotland and in England at the same periods. By the labours of the committee which sat in 1819, it was ascertained, that the entire circulation of paper in England was somewhere about 40,000,000l., of which the Bank of England had issued 1432 between 23,000,000l. and 24,000,000l. The rest consisted of the issues of country banks. He would take the circulation of the small notes of the Bank of England at 6,000,000l. or 7,000,000l., which were but a small proportion to the whole currency. In Scotland, it might be said that there was now no gold at all in circulation. The whole of the circulation, as nearly as the committee could ascertain the amount, was at this time about 3,300,000l.: of this sum, 2,000,000l. were estimated to be in notes of value less than 5l. He had gone into the committee with the impression, that the circulation of Scotland ought to be regulated by the same law which was to be applied to the small note circulation of England. But, after hearing the evidence, he owned that he was afraid, without further evidence being produced to prove that the two systems of Scotch and English currency were incompatible, to resolve on doing away with that of Scotland. He was still ready if that incompatibility could be proved, if it could be shown that the trade of Scotland would go on as well, or better, by immediately assimilating its currency to that of England, to carry that resolution into effect. At present, he felt the safer conclusion to be this—that they were not to be enamoured of the Scotch system; but to let it abide some further trial, rather than risk the danger to which the trade and interests of Scotland might, according to the evidence, be subjected by too speedy and rigid an application of the same law, under very different and varying circumstances, to the currency of the two countries. He regretted, though opposed in politics to the right hon. gentleman, to have to bring forward any report which did not meet with his approbation; but he never signed a report as chairman of a committee—he never did an act as a member of parliament—which gave him more unqualified satisfaction than he felt in having come to the conclusion which he had formed upon this subject.
said, that he went into the committee with a full persuasion of the extreme absurdity of having one set of principles regarding the currency for England, and another set for Scotland, and he had heard nothing, in the course of the inquiry, that had altered his opinion. Every position in the report was in favour of the general principles the House had adopted for this country, but the con- 1433 clusion led to quite the contrary result. He therefore objected to the report. There bad been no evidence that the system of cash credits would be destroyed by the abolition of small notes. The committee, indeed, in one passage, expressed their unwillingness to derange a system which had proved so beneficial in practice; but that House was bound in justice to its own principles, to impose them on Scotland, unless it was prepared to pronounce much more decisively than this report. If the currency of Scotland were left in its present state, there would be an excessive issue of paper in that country, and the whole burthen of keeping up the supply of gold would be cast on the bankers of England. Why were they not heard in their defence? If the same indulgence had been extended to them that the Scotch Bankers had received, a very different result would have ensued. A striking fallacy in the speech of the right, hon. Secretary was, that he stated his case as if there had been no distress at any time, during the last century, in Scotland. No mistake could be greater. There had been a recurrence of public calamities, quite as often as in this country. The solidity of the Scotch banks, in consequence of the great number of partners in them, was a reason why, above all others, they ought to be put under restraint, as to the issue of their notes. By dividing the responsibility among so many individuals, the temptation to over-issue was greatly increased. The people of Scotland had suffered as much as any people from excess of paper. Prices had been raised, and the labourer was mulcted of his wages by the over-issues of the Scotch banks.
"Not then, only. I affirm, that this state of things existed during the very last year."
continued, he did not dispute that. He stated a general proposition, which he knew was equally applicable to both countries. A great deal had been said of the loss occasionally sustained by the English labourer, by the failure of a country bank; but he was convinced that the Scotch labourer suffered a much more severe loss by the depreciation of the currency, resulting from over-issues, because this loss was of longer continuance. There could be no doubt 1434 as to the principles on which the currency should be founded. They were established incontrovertibly by the Bullion Committee. That was the sole and exclusive object of its labours. In 1819, they underwent a second ordeal, before the committee on the resumption of cash payments. The condition of Scotland was every day approximating more closely to that of England. It was idle to pretend, that the Scotch bankers] had always conducted their business with all the prudence to which they laid claim. Was there no distress at Glasgow, and in other manufacturing districts of Scotland? Another objection he had to the Report was, that it recommended a measure which had never before been heard of—the exclusion of Scotch notes from circulation in England. If such a law were passed, it would be the most vicious, odious, and detestable, in principle, that had ever received the sanction of parliament. When the proposition was made in the committee, he had offered no opposition to it. He had patiently heard all that could be urged in its favour; and at the close of the discussion, he had stated, that he would not pledge himself to support it. He had often passed the boundary between the two countries without being aware of it; yet this act, which any one might unconsciously commit, was henceforth to be subjected to possibly a severe penalty. Sure he was, that if any individual suffered under it, the country, from end to end, would sympathize with him. The only offence to which this new crime was analogous, was that of smuggling. The smuggler, atleast, cheated the Exchequer; but the introducer of a Scotch note would be guilty of fraud against nobody. If the new parliament disgraced the Statute-book, by an enactment of this character, it would infallibly disgrace itself in the eyes of all mankind. The Report, in no point of view, would be satisfactory, either to the people of England, or to those of Scotland. The concluding part said, in effect, to the latter—"You are too much for us now, but we will do what we intend another time." He contended, that the course now proposed justified, in appearance, all the objections which had been thrown out against their principles by practical men, and displayed an inconsistency extremely prejudical to the interests both of England and Scotland. It was, in his opinion, quite impossible to maintain any law upon the subject of the 1435 currency in England, unless they made it equally applicable to Scotland. The Report was an argument against themselves, and against all those who had, on either side of the House, supported those principles, which the course now recommended, would most decidedly controvert. No obstacles had, he could assert with confidence, been thrown in their way by the gentlemen on his side of the House. They had joined most cordially in prosecuting the inquiry to a beneficial result; but he must say, that the result contained: in the Report upon the table was not very satisfactory, and that his majesty's ministers would find the two systems which they recommended totally incompatible. He concluded by declaring, that the course recommended in the Report would prove injurious in its progress, and unfortunate in its results; for it must be productive of confusion in the circulating medium of the country, and might lead to the re-establishment of a bank-note issue in England.
§ Mr. J. P. Grant
denied that it was at all necessary to assimilate the currency of Scotland and England. A difference had existed in that currency for a very long and difficult period, and yet they had the evidence of three Bank directors, decidedly declaring that it had no bad effect upon the commerce of that country, or the transactions of its inhabitants. During a period of little less than a century, there had been, in fact, but two failures; the whole loss from which amounted to only 36,000l. If facts, therefore, were brought to establish the necessity of interference; in the paper system of Scotland, the burthen of the proof lay, he conceived, the other way. Considering what the state of Scotland was, when the banking system was first introduced, and to what a state of prosperity it had advanced, now that it was brought to perfection, it ought to be a very strong case which could warrant their interference. The whole system of banking in Scotland was founded on the issue of one and two pound notes; and the whole of the profits of the bankers were derived from them. The whole country, too, participated in those profits; for all monies lodged with them, the bankers allowed an interest of 4 per cent, and as they afterwards lent that money at 5 per cent, it followed that one per cent was the whole sum which the banker obtained to defray his expenses, make good his losses, and repay him for his trouble. 1436 A system of that kind, in which the profits were so small, the risks so little, and the advantages enjoyed by the many so great, should not be meddled with upon slight grounds. The House should have, what they had not, the fullest proof of its absolute necessity. The hon. gentleman then entered into a detail of the advantages proved by the Report to result to Scotland from a paper currency, and contended, that cash payments could not be supported without it. If the present method adopted with regard to England, did not produce the benefits which were anticipated, the system of Scotland might hereafter point out the expediency of allowing a small-note circulation to England.
§ Mr. W. Gordon
said, that the Scotch were perfectly right in preferring their own system of banking to that of England. No complaint had been made against the Scotch system of banking; no overtrading, no rash speculation had been attributed to that system, and no failures had occurred in Scotland in consequence of its being adopted. That system had given the greatest satisfaction to the trading interest of Scotland, and to the country at large. It would, therefore, have been both unjust and impolitic to interfere with it. England was differently circumstanced. An alteration in England was an act of necessity; but in Scotland, the present system of banking having given satisfaction for so long a period, there was no necessity whatever for a change. It ought always to be recollected by those who considered the subject, that in England they were only returning to the system which had once universally prevailed, and which had been interrupted by a succession of circumstances; but in Scotland it had been always the same, and with it they had gone on advancing in power and prosperity. If a paper circulation enjoyed the confidence of the people, he, for one, would always support it.
§ Sir M. W. Ridley
said, that as he had abstained from making any observations upon the system of banking at the time when the subject was discussed with reference to the English country bankers, he might perhaps be asked, why he proposed to make any observations upon the subject now. In answer to that, he could say, that as an English country banker, as one of those whose proceedings were said to have produced all the misery which afflicted the country, he had 1437 avoided taking any part in the debate, lest he should be supposed to have a personal feeling upon the subject, and to be swayed by prejudice, in opposing any measures which the legislature might think necessary for the protection of the country. He was one of those who opposed the chancellor of the Exchequer's project some years ago, which proposed; to compel country bankers to lodge a large sum in the funds, as a security for their issues; because he considered it most unjustifiable to deprive men who were liable to sudden demands, of the means which enabled them to meet them with perfect facility; but, although he had resisted that security, he challenged inquiry into their conduct, and declared, without hesitation, that they had been most unjustly and most unfairly treated. The right hon. gentleman opposite, and the noble lord at the head of the Treasury, had thrown out insinuations against them which he was sure they must regret. The expressions contained in the Letter to the Directors of the Bank of England had, in his opinion, done more mischief than all the failures which had preceded them. He did not mean to say that the right hon. gentleman actually meant to produce such an effect; but the expressions which cast such a reflection upon the conduct of the country bankers were very ill-advised. He had no objection to any inquiries which went to a strict examination of all the concerns of the English country banks, and for them he demanded inquiry. He felt well convinced that their solidity of means and soundness of principles would stand the test, if they allowed that they had lately stood the effect of such a storm as had never before been witnessed. When the country bankers were subjected by the right hon. gentleman to that measure, which extended only to 1829, and then took away from them the power to issue any more notes, he said there must be something wrong in our system, compared with that of Scotland. Now, he demanded inquiry on the part of those bankers, and he was confident, if it was granted, that it would be found that no well-conducted bank in England was different from any well-conducted bank of Scotland. He was one of those who held an opinion upon this subject somewhat opposed to the doctrine of political economists. He believed that a paper currency, upon a secure and solid basis, convertible into gold, was better than a me- 1438 tallic currency. He was willing to admit that a paper currency was favourable to over-speculation; and it was in this light that he viewed the arrangement, with reference to Scotland, with the most jealousy. Scotland, by the continuance of her paper currency, would be able to lend assistance to interests which were in want of such aid; whilst England, by the alteration in her currency, had her hands, as it were, tied in this respect. He did not feel any grudge towards Scotland for the advantages she was to gain, but he did not like that she should gain them at the expense of England. The two countries, he knew, must go on together, sharing equal advantages. These being his opinions, he should move, in the course of the night, a resolution to pledge the House to take the earliest opportunity next session to enter into the consideration of the effects likely to be produced by the existence of currencies of different denominations in the two countries. He was convinced that it was requisite to put Scotland upon the same footing as England, or to cause England to return td that state from which she had departed; and he thought investigation would sh6w it to be more desirable to return to the one than persevere in the other. He understood that some means were to be taken to prevent Scotch notes from circulating in England. The Secretary for the Home Department had had some experience in the penal laws of the kingdom; but he thought his ingenuity would be puzzled to frame a penal law which should successfully prevent the Scotch notes from crossing the border. Before the year 1797, it appeared that there were not fewer than sixty or seventy thousand pounds of Scotch notes in circulation in England. At present, the Scotch banks had their agents every where in this country, and there was no reason to suppose the circulation was not kept up. The reissue of notes in England might be prevented; but how they could prevent the traveller in Scotland from bringing the notes of the country away with him he did not know. The Bank directors, when asked the question, relative to the continuance of paper currency in Scotland, said, that it would not hurt them, provided the notes did not pass beyond Scotland. An hon. member suggested, that the evil could be prevented by country bankers not changing Scotch notes when brought to them; but to that plan 1439 he as a banker objected. He saw no reason why the odium of refusing accommodation should be thrown upon the country bankers. He was sure that, if any honourable member on his way from Scotland, were to come to Newcastle, and he were to refuse to take his Scotch notes in exchange for something more substantial to carry him up to London, he would not easily forgive him. He hoped, therefore, that this project, if seriously entertained, would be abandoned. The hon. baronet, in conclusion, declared that he should take the earliest opportunity to put upon record his opinion of the injustice, the unfairness, and the illiberality with which, in the course of the present session, the country bankers of England had been treated by his majesty's ministers.
was of opinion, that a currency founded on a metallic basis, was the only one on which the country could rely for security.
§ Mr. T. Wilson
objected to the restrictions which had been imposed on English country bankers, while those of Scotland were exempted from their operation. He was of opinion, that if the currency of this country had been let alone, it would have righted itself, and we might have gone on as well as before; but to begin our alterations by depressing the country bankers, and by placing them under restrictions from which Scotch bankers were exempted, merely because there had been fewer failures in Scotland, was a course which he thought entirely wrong. He disagreed with those who had advised a different course to be pursued with regard to the two countries; as he considered that England and Scotland ought to have been left to work together, and he was sure, if they had, it would have been to their mutual advantage. To impose these restrictions on English country bankers, was to advance Scotland at the expense of England; for he was convinced there were no means of circumscribing the Scotch paper currency to the limits of that country alone. If the principle on which ministers acted was a good one, it ought to be applied to both countries.
Mr. Alderman Heygate
thought, that a great deal of injustice might have been avoided, if an inquiry had been entered into sooner; but all inquiry was, in the first instance, refused. The true requisite of a currency was security, and that was not to be obtained by abolishing paper-money altogether; for, if that was 1440 the case, England, Scotland, and Ireland ought to have been put on the same footing. He believed, that if an inquiry had been granted, some modification of the present system might have been effected; and that modification would have tended to prevent much of that want of employment which had been lately felt in the country. The modification he alluded to was, by requiring a security from the country banker, by which the danger of over-issues might have been checked, and the small country bank-notes of England rendered as secure as those of Scotland. He considered the report of the Committee appointed to investigate the state of the Scotch and Irish Currency a sound and wise report, in the conclusion to which it arrived; namely, that a paper currency might be rendered available for all the purposes of a country.
§ Mr. Ellice
said, he could not come to the same conclusion as the hon. member who had just taken his seat; namely, that the report of the committee was a sound and wise report. The principle on which their report was founded was unknown to him, and the report itself was diametrically opposed to what he expected, after the events which had occurred at the beginning of the session. He agreed with the member for Knaresborough, that if Scotland was to be exempted from the operation of the new measures, on account of the evidence which had been presented to the Committee, he could have produced evidence equally strong to exempt the bankers of the various counties of England; and he would appeal to the hon. member for Newton for evidence to except Norfolk from the operation of these bills. He asked, therefore, with the hon. member for Newcastle, why they had not heard evidence for England? Ministers had not acted with more propriety on this occasion than they would have done in making different Corn-bills for England, Ireland, and Scotland. They had been asked, what pledge the ministers had given that they would not pass the measures for England without making them embrace both Scotland and Ireland? He answered, that that pledge had, in effect, been given by the chancellor of the Exchequer, in the discussion that took place on the first proposition of the measure. He had then asked the right hon. gentleman, what was intended to be done with respect to England and Scotland? and he was answered, that it was 1441 merely a question of time, but that it was impossible to conceive there could be a permanent difference in the currency of the three kingdoms. Why, therefore, had the measure been abandoned? Why had not some limitation been imposed on the Scotch, when so many restrictions were imposed on the English currency? It was said, that the circulation of Scotland amounted to three millions, of which two were stated to consist of small notes. Now, if it was impossible to obtain specie, into which to convert the whole of the two millions of small notes, surely we ought to have required the bankers of Scotland to afford some security against the dangers that might arise from their over-issues, by having one of those two millions, at least, converted into gold. That would, in fact, have been doing no more than requiring that one-third of their capital should be in specie. He called on the President of the Board of Trade to say what would be the effect of our changes with respect to foreign countries? In the years 1824 and 1825, by our over-issues of paper-money, gold, to the amount of eight millions, had found its way from this country into other nations; and what was the consequence? Why, as no people lived so fast as those who lived upon borrowing, the demands of those nations for our money, and afterwards our manufactures, became very great. As we possessed more than enough of paper money for our purposes, the new stales of South America borrowed a large portion of our superabundant wealth; and became our best customers for our manufactured goods. In 1825 and 1826, our paper credit beginning to fail, we were obliged to call on those countries to repay the money we had lent. We suddenly deprived them of the capital on which they had begun to trade, and by which the amount and value of their dealings must, of course, have been regulated; and then, having suddenly made them poorer, we experienced the effects of their poverty, by their ceasing to call for those manufactures which, for want of their demand, were now rotting in our warehouses at home. He deprecated this constant vacillation of conduct, and asked, what security had the country that, in one or two years, ministers would not return to the system which they had now partially abandoned. The exemption of Scotland from this change of currency, while it 1442 was invidious towards England, did not benefit the former country; since her surplus produce must be sold in the English markets; by whose currency, of course, their value must be regulated. He had more than once hinted, that the country could not pay its taxes and its expenditure, upon a scale regulated by the ancient standard of its currency. Prices must be relative. Corn must find its level, like all other commodities; and he doubted whether the country gentlemen would approve of the system of cash payments, when they found the price of corn fall so low as 45s. Sugars had fallen from 70s. to 55s.; but the old duty of 27s., which was a main ingredient in the price, did not fall in the same proportion. He was never against a reform in the currency; but nothing could be so prejudicial as to announce a change one day, and recal it the next. He could not conclude without calling upon the chancellor of the Exchequer to recal the hard words he had applied to his friend Malachi Malagrowther, who, he thought, since the change in his sentiments, had some reason to complain.
§ Mr. Hudson Gurney
said, he was convinced, that all the trading and commercial concerns of Scotland were so interwoven with her system of paper money, that distress and ruin would follow any attempt to break it up. He did not, however, present himself as a panegyrist of that system, per se, being of opinion, that it was liable to this great objection—that under it a greater quantity might be thrown into circulation than could possibly be the case under the system carried on in England. What advantage had been found, by the committee, in the Scotch over the English banking system, he could not conceive. The only difference that he knew of in the two plans was, that in England the bankers exchanged each other's notes on the day following that upon which they received them, whereas in Scotland that operation was not performed with so much speed. The effect of obliging this country to return to a metallic currency at the present moment was greatly injurious to us. The present was a period of great stagnation; and though the exchanges were favourable to us—of great distress; so much so, that we were actually purchasing the sovereigns that were coming into the country at the rate of 30s. or 40s. each. That this was the fact any one 1443 might satisfy himself by merely considering the price at which goods were now exporting; and by which, he maintained, that there was a loss of one-third or one-half to England. So much, then, for the policy of the currency measures at a moment like the present. If they looked back to the operation of the measure of 1819, they would find that precisely the same effects had been visible. There was then the same commercial distress, followed by a stagnation—the same, in a different degree—and followed by severe agricultural distress. He hoped that they would examine the question of the currency more fully, in order to see whether relief could not be given from those consequences, which, he contended, must result from an adherence to the standard of gold at 3l. 17s. 10½d. per oz. He hoped that silver would be admitted into the standard, or that government paper, in some shape, would be issued; not, perhaps, to the extent of being a legal tender, but in some form or other. Unless this, or something having the same tendency, were adopted, the country would not be long able to support itself.
thought, that the bankers of England had reason to complain that a committee of inquiry had not been granted, before their circulation was limited by the alteration in the currency. They were as much entitled to that favour as the Scotch banks. With respect to the Bank of England, he thought it had many difficulties to encounter, before the establishment of the branch banks; but these difficulties it had laudably endeavoured to surmount; and he hoped, that before the next session those banks would be in operation, much to the advantage of the public.
expressed his firm conviction, that it would be impossible to keep faith with the public creditor, and at the same time to continue a metallic currency. The only way to support such a currency would be, to reduce taxation; and he for one would vote for such reduction, without reference to any consideration of whether or not the reduction would prevent faith being kept with the public creditor.
The Report was then laid on the table. After which, sir M. W. Ridley moved, "That it is advisable, in the next session of parliament, to institute an Inquiry how far the interests of England and Scotland may be affected by a different 1444 system of Currency in the two Countries; and to consider whether any or what means may be necessary to assimilate it, so as to promote the general interests of both."—The motion was put, and negatived.