§ The Chairman read Clause 6th, that Bills not having more than three months to run should not be subject to the usury laws.
§ The Solicitor General
apprehended, that it was quite clear, that the clause applied to the whole of the United Kingdom. When it was intended, that any measure should apply only to one part of 483 the empire, it was usual to say, "to that part of the United Kingdom called so and so," but in the clause before the House there was no such restriction, and therefore it applied to the whole empire. With the consent, however, of the noble Lord, the Chancellor of the Exchequer, he would introduce words that would clearly express the meaning of the clause, and so save any dispute.
§ Mr. Blamire
could not see, that there was any necessity for at all interfering with the usury laws. He was aware, that many great and good men had advocated the total abolition of them, but he thought they were more interested for the wealthy borrower than the poor one. He was of opinion, that considerable disadvantage would attend the removal even of part of them. The measure might be of service in times of panic, but still that would not counterbalance the evil at other times. He should be disposed to bow to the opinion of his noble friend, the Chancellor of the Exchequer, but he was compelled to confess, that he had heard no reason sufficient to induce him to change his opinion.
§ Lord Althorp
said, he did not expect to have been called upon to discuss the question of the Usury-laws, nor would he; he would argue simply the particular question before the House. He was of opinion, that the present measure would greatly benefit the poorer classes by adding to the security of the Bank. He did not fear, that the smaller class of tradesmen would find themselves pressed by a demand for an exorbitant rate of interest; the competition in the money-market would always prevent that evil. Supposing the ordinary rate of interest on good security were five percent, the only effect of the present proposition would be, that persons unable to give perfectly good security must give somewhat more interest for a loan. Supposing a man commencing business without a capital, and not at the time able to give the very best security; by giving a trifle more of interest he might become possessed of a capital, which in time would enable him to live comfortably and accumulate property. The objections to the repeal of the Usury-laws had generally been made by the landed interest, but the capital employed in mortgages was very different from that which was employed in discounting bills, therefore they had nothing to complain 484 of; indeed, he did not think they would have even though the Usury-laws were altogether repealed.
§ Mr. Thicknesse
concurred in the observations of the hon. member for Cumberland, and was of opinion, that this partial repeal of the Usury-laws would place the small tradesman in a much worse situation than that in which he was at present. By this clause a small tradesman would not be able to get a bill discounted without paying any exorbitant rate of interest, that might be demanded of him. The clause was one of the most important in the Bill, and he considered it would inflict a great injury on a class of persons upon whom, he contended, the commercial prosperity of the country greatly depended.
Mr. Alderman Thompson
supported the clause. He knew some mercantile houses that paid only two per cent for accommodation, while others paid four per cent; that was the natural result of large capital and high credit over small capital and lower credit. He thought it might happen, though very seldom, that a person of small capital would be obliged to pay six or seven percent, for the accommodation; but that would be a great convenience, and would be much preferable to a person being reduced to bankruptcy. He knew, in 1825, more than 1,200 tradesmen in the metropolis became bankrupt, although they were solvent, but it was because they could not get their bills discounted, and there were many persons who would have taken their bills if they could have charged six or seven per cent discount. He knew one instance, which he would relate. A person came to London, and wanted 10,000l., but not being able to sell out his stock and convert it into Bank-notes until after three o'clock in the afternoon of that day, he paid another person a handsome sum for the accommodation of the Bank-notes for the few hours that intervened; he thus saved his character and his credit. That was a strong circumstance to show the necessity of the banking and trading interests having some such protection as this clause gave them.
Mr. Mark Philips
was of opinion, that it would, under some circumstances, be greatly to a person's advantage to pay seven, eight, or even ten per cent for the advance of money. He should, therefore, support the clause. His only objection to 485 the clause was, that it did not go far enough. He could have wished that the period of three months were extended, for the clause gave a preference to bills at three months over all longer bills. In some districts, and in some trades, it was customary to draw bills at six months, and all those would be excluded from the operation of this clause. He was gratified, that a change in the system had, at length, been made, but he regretted, that it had not been more extensive.
§ Mr. Thomas Attwood
concurred in the opinion of the hon. Member who spoke last, that the clause should have gone further, and he suggested to the noble Lord (Lord Althorp) to include bills of four months' date. That would be of great importance to small tradesmen and small manufacturers, and would open the gates of accommodation to them, which had until now been almost closed. As to whether the discount might be six or seven percent, that was a point of no moment, for, as far as he knew, a person requiring assistance never inquired what discount he had to pay. Indeed, in some instances, even twenty per cent would be cheap if it saved a man from ruin. The clause would allow large tradesmen to obtain accommodation on low terms, while it would give protection and accommodation to the smaller classes.
§ Clause read and agreed to.
§ Clause 7th directing the Bank accounts to be transmitted weekly to the Chancellor of the Exchequer, and published quarterly in the Gazette, was then read.
thought it was fully understood, that an irresponsible power was an evil thing. It might be said, that the Bank was responsible to its proprietors, but that was not the public. And then it was argued, that if the Government had the control of the circulation, they were only nominally responsible. That was not true—for though not responsible with their lives, they were with their places, which the public, through their Representatives, might take from them. But this power of the Bank of England was wholly independent for ten or twenty years, and might be exerted altogether opposite to the interest of the public. It was like decennial or vigintennial Parliaments. It would not do to say, that the Government had a virtual control—the destinies and happiness of this country should be left to no hazards and uncer- 486 tainties. The Bank had the power to commit abuse, and past experience had shown that it had been abused. Let them consider what the materials were upon which the Bank of England had to operate. Why, neither more nor less than upon the whole property of the country—upon the millions of some, and the sixpences of all. The public, in the hands of the Bank, were as the mouse in the claws of the cat, or the fish in a stewpan. The power of the Bank could be exercised to throw labour out of employment; it could be exercised to bring it into employment, by expanding the currency. By giving better prices and higher profits it secured better wages, it alleviated distress, and subdued the discontent. By a contraction of the amount of the circulation, it could undo all this happy state of things; and, by a continuance of such a system, it could ripen distress into discontent, and hurry discontent into rebellion; it might end in an entire revolution, not only of Government, but of property. The truth was, the Bank had more power than all the Legislature put together, not ostensibly, but in fact. Whatever laws Parliament might pass, unless the Bank gave prosperity, and repaired the soil, good seed could not take root and flourish. This was a power which the King of this country might in vain struggle to obtain. In whose hands was it placed? In those of a company of private merchants, who had it in their power to reduce the currency when they wanted to buy merchandise cheap, and to increase it when they wanted to sell it dear—or, if they did not do it for themselves, they had connexions and friends for whom they might do it. The hon. Member here read the following extract from Mr. Gurney's evidence taken before the Committee, in support of his argument:—"Have you observed considerable fluctuations at different times in the amount of the circulating medium? Yes, I have observed there have been considerable fluctuations, and considerable effect produced by those fluctuations. To what did you attribute those fluctuations? Partly to the management of the Bank itself, and partly to causes operating upon them, out of their own control." Mr. Dyer also had said in his evidence," The Bank of England has, by its expansion and contraction of the circulation, induced an expansion and contraction following close upon its footsteps to 487 a ruinous extent." The hon. Member next quoted the evidence of Burt: "Then you mean, that commercial transactions are deranged, and the prices disturbed, by the issues of the Bank of England? I mean, that I consider the most judicious and best-laid schemes are frequently defeated by what takes place in the issues of the Bank of England. There is more real speculation now in general trade than in 1825; because, the prices being uncertain, the speculator naturally forms the best opinion he can with regard to what will take place; what the price of the commodity is at that time he knows, and he forms the best opinion he can as to what the price will be some two or three months hence; and there is a great uncertainty upon that point, in consequence of the fluctuation of paper by the Bank of England." He said, therefore, that the reputation of the Bank was not sufficient guarantee against its again acting thus. It had the power, and could do evil, and it was sufficient for the House, as legislators, to know, that it might do wrong to authorise measures to prevent the mischief. They had no right to speculate on remote possibilities of virtue. The predominance of the common vice having an interest, altogether precluded them from making, and even made it criminal in them to legislate with capricious exception. Was not the brightest and wisest said also to be the meanest of mankind? and was the confidence refused to one like him to be granted to the Governor of the Bank of England? Did they dare desert the proprietors? and if they did not, was the public to trust them? And if they did desert the proprietors, to whom they had sworn allegiance, how would they expect confidence from the public, to whom they had not sworn allegiance, and to whom they were in no wise responsible? They could not serve two masters, and they had shown in this bargain which they were most inclined to serve. He did not believe, that any Legislature dreamed of intrusting this power to private hands in any other country. He meant to propose an Amendment not only because the Bank Directors were irresponsible to the public—not only because they might abuse their power—but because the system had been most fluctuating and injurious under their control; and he now proceeded to adduce instances of it. In 1825, our monied and 488 trading concerns were as much without a ruler, we were as much at variance, and without a system of government, as if we had been without all the three branches of the Legislature. There were times when the money-market required a dictator—when it required the strongest and most resolute powers of Government, and just when the vessel required the most management, they left it to the mercy of the winds and waves. Accommodation gave relief at last, as Exchequer-bills in 1793 did. The mere virtual control of the Chancellor of the Exchequer, however, would not be sufficient. The Bank having the control of the entire circulation of the country, could at will influence all fluctuations, and it was too much to give to them an unlimited control, as by this clause would be vested in them, over the entire property of the country. The hon. Member concluded by moving, as an Amendment, the insertion in line 34, after "for the time being," of the words "who, if occasion shall require, shall, in respect of the amount of issue, be at liberty to call for the legislative advice and interference of Parliament.
§ Lord Althorp
thought the hon. Member had mistaken the security which the clause gave; it would give no additional security, he admitted, but would merely give information to the Chancellor of the Exchequer. The only question, therefore, was, whether this would be the best mode of giving security? If it gave the Chancellor of the Exchequer a complete control over the Bank, it might be productive of mischievous consequences.
§ Mr. Warburton
objected to the Amendment, on the ground that it would conceal that information from the public which it was entitled to have. The more immediately information was given to the public, the better the Bank would be kept in order.
Mr. Alderman Thompson
expressed his surprise that any one could argue that in 489 1825, the Bank Directors had acted without principle, when the first authorities in the country had declared, in the most unequivocal terms, their approbation of the conduct of the Bank Directors on that occasion. The fact was, that, regardless of their own interest, they had looked only at the broad question of the commercial credit of the country, and had effectually put a stop to the evil by which it was threatened.
§ Amendment negatived.
§ Mr. Strutt moved an Amendment, to the effect of requiring not the average of the quarter's issues of the Bank, but the publication in detail, at the end of the quarter, of the weekly accounts rendered to the Government by the Bank.
§ Lord Althorp
said, that there were several modes in which this publication might take place, and he must say, he thought that chosen by the hon. Gentleman the worst which could have been chosen. The proposition contained in the Bill was not exactly that of which he individually approved, but it was thought the best by his colleagues, and he had yielded the point to them. He had, in the early part of his correspondence with the Bank Directors, recommended the publication of their bullion accounts one week under the other, at the expiration of three months, shewing the state in which they had been three months previously; but the objection made to that was, that if the accounts were published in that manner, the public would be likely to imagine that the state of the Bank was the same at the moment of publication as it had been when those accounts were made up; and, therefore, the publication would rather mislead than inform the public. He then made a proposition for the weekly publication of bullion accounts, with a view to show in what state those accounts had been three months previous to each weekly day of publication; but it was said, that this would sometimes be injurious to the public, as it would be likely to create a mistaken impression of the state of the public accounts, for when the demand for bullion, arising from particular circumstances, became great, the public would see the demand, but not understanding the reasons for it, might be apt to draw erroneous inferences, from which some very mischievous consequences might arise. Great changes of this sort had taken place in the early part of this year. 490 The exchanges were then in our favour; but circumstances having given a large and increased value to gold in Paris, a great capitalist had drawn 1,000,000l. from the Bank, and sent it over to France. Now, had the accounts been published as he at first proposed, the public would have seen that bullion to the amount of 1,000,000l. had been sent out of the country, but, not understanding the causes, might have drawn very mistaken consequences from that fact. The principles on which the matter had taken place could not be explained in the accounts. The result, therefore, was, that it would be the best plan to publish accounts of the averages of every quarter, and that he had adopted as the most advisable course. Such a publication would enable the public to ascertain, whether the Bank acted upon sound principles, as completely as it could be ascertained in any way whatever; for that reason he had adopted that course, and framed the clause as it now stood.
§ Mr. Strutt
said, that his object was, to get a complete statement, and he should prefer the weekly publication of the accounts to the averages of the quarter.
§ Mr. Warburton
thought, that the arguments of the noble Lord against this peculiar mode of publication might have been used on behalf of any government which conducted its transactions in secret. Persons arguing in that mode fastened on a particular incident, gave it as an instance of inconvenience, and then formed their general rule upon it. That sort of argument would go to put an end to all publication whatever, and thus, from the fear of a particular inconvenience, they were to put an end to the steady control of public opinion. The result would be, that the public would find themselves kept in almost the same state of ignorance as before. No information would be furnished to the banks of issue all over the country, and yet they were continually finding tank with those banks for not regulating their issues according to the state of the foreign exchanges. The Government should give them the requisite knowledge, and then, no doubt, they would shape their conduct by it.
§ Mr. Poulett Scrope
said, that the publication of these accounts, was the only security that the public had for the good conduct of the Bank. The noble Lord had himself formerly declared, that the monopoly placed in the hands of the Bank 491 a power which they had a direct pecuniary interest to abuse. The only way to check the abuse was to give this publication. The average of a quarter would not give the proper information. In the course of the quarter there might be a difference of 20,000,000l. or 30,000,000l., and yet the average at the close be the same as before. The body of traders would not be able to form a correct opinion of the state of the circulating medium. This was the first grand objection to the present plan. The next was, that it would prevent the public from exercising, by the force of opinion, a proper control over the operations of the Bank. By the publication consisting of quarterly averages only, the Directors of the Bank would be the persons alone acquainted with the real state of the issues during the intervals; and, although he did not, of course, mean to say, that those gentlemen would, knowingly, make any improper use of the exclusive knowledge thus unavoidably gained, yet when their intimate connexion with the trade of the country was considered, it was, he thought, almost impossible that the exclusive information to which he referred, would not in some measure influence their private transactions. For that reason, if for no other, publication ought to be constant and instantaneous. But publication would give to the public a moral control over the Bank, That was a right which the public were entitled to, and in order to give them that security, the publication should be full, complete, and immediate. He trusted that the noble Lord would again come back to the first proposition he made to the Bank—namely, weekly publication.
§ Lord Althorp
denied, that the Bank Directors employed the knowledge which their situation gave them in their own private affairs; and, therefore, in discussing this Bill, he hoped hon. Members would refrain altogether from throwing out insinuations on their conduct. The object of the clause was, to frame the best mode of bringing under the control of public opinion the general affairs of the Bank; and the question was, how that could be best attained, and whether it was by a publication such as he had proposed, or whether by a more frequent publication? The publication he proposed, would give every information up to the period at which it was made. At the commencement of a quarter the issues of the Bank were considerably increased, and at 492 the close of a quarter they were generally much below what they had been at its commencement. But if the public could merely see the weekly accounts, and observe in one week that the issues were very considerable, and, in another week, at a short period afterwards, that the issues had very much diminished, they would think that these issues had been imprudently extended at one time, and contracted at another: yet this would, under all the circumstances, be a mistaken conclusion. He was aware, that, after a time, they would become accustomed to these things; but they would not be able to understand them otherwise than by getting an average of the whole quarter. As to the fluctuation of 20,000,000l. or 30,000,000l. in a quarter, it was like the issue of 1,600,000,000l. once spoken of by the hon. member for Birmingham—it was a thing not to be argued about. No such sudden changes to that amount ever took place. He thought that by the publication he proposed, there would be a complete mode of judging whether the Bank acted properly or not, and that was the whole object that any one had in view. He did not think there would be any danger of the Bank abusing the power it would possess.
§ Mr. Warburton
suggested, that the publication monthly, of the three preceding months, by which there would be twelve averages in the year, would afford a great deal more information, and give greater security to the public.
§ Mr. Grote
admitted the candid manner in which the noble Lord had treated this question; but what the noble Lord proposed was not the best mode of furnishing the required knowledge to the public. There should, at least, be a continuous series of the variations in the Bank circulation, and these ought to be laid before the public oftener than four times a-year, though the fear of danger from erroneous inferences in the public mind, appeared to him altogether chimerical. In his opinion, there ought to be a series of weekly accounts published in the way originally proposed by the noble Lord, carried up to three months anterior to the date of publication. The public would then be able to judge whether the fluctuations in the currency were too great. If he followed his own views, he should wish for a weekly publication in the Gazette, immediately after the communication made to the Go- 493 vernment. As, however, it was not likely he should be able to get the House to agree to a weekly publication of the Bank accounts, he should, certainly, when the Amendment of the hon. member for Derby was disposed of, move for the sort of publication which the noble Lord had in the first instance recommended. To oppose such a Motion would be to assume that the public were likely to be continually deceived by imaginary evils—an assumption that he did not think warranted.
Mr. Alderman Thompson
said, that after the explanation of the noble Lord, he had, perhaps, better leave the matter as it stood, but he must say a few words on this, which be deemed a most important question. What was the object they all had in view? It was to enable the public to regulate their transactions, as they would possess the same information as the Directors of the Bank. To that object he was not in the least degree opposed, but he contended that the weekly publication of the bullion accounts of the Bank, instead of giving information, would mislead the public. One instance had already been mentioned by the noble Lord, and it should be recollected that in this publication of the Bank accounts, the Bank would not be able to attach to each item an account of the reasons which had induced the Bank to make the alteration. That would be incurring a responsibility that they were not obliged, nor even called upon, to undertake. Yet, without such a note, the information would rather deceive the public than give them any real knowledge of the transactions of the Bank.
§ Sir John Reid
declared, that the only feeling which influenced the Bank directors was the desire to promote the public prosperity, on the increase of which they were perfectly convinced their own depended.
§ Amendment withdrawn.
§ Mr. Grote moved an Amendment to the effect that accounts should be transmitted weekly to the Chancellor of the Exchequer for the time being, of the amount of bullion issues, deposits, and other securities in the possession of the Bank, according to the terms originally proposed by the noble Lord (Lord Althorp) in his letter to the Bank directors on the 1st of April.
Mr. Alderman Thompson
opposed the Amendment, for he thought that the Bank of England ought not to be compelled to 494 publish accounts of the deposits made by private individuals, which were not required of other banks.
§ The Committee divided on Mr. Grote's Amendment Ayes 20; Noes 41:—Majority 21.
|List of the AYES.|
|Aglionby, H. A.||Potter, R.|
|Brocklehurst, J.||Scrope, P.|
|Dashwood, G. H.||Strutt, E.|
|Dykes, F. L.||Todd, J. R.|
|Ewart, W.||Torrens, Colonel|
|Fitzroy, Lord J.||Warburton, H.|
|Gisborne, T.||Wedgwood, J.|
|Hall, B.||Willoughby, Sir H.|
|Hawkins, J. H.||Wood, G. W.|
|Philips, M.||Grote, G.|
§ Clause agreed to, as were the Clauses to the 12th.
§ On Clause 12 being put,
§ Sir John Wrottesley
rose, not for the purpose of objecting to the bargain that had been made with the Bank by the Clause, but to draw the attention of the Committee to the particular inconvenience that arose from the length of time which was suffered to elapse before the dividends were made and the Stock Exchange closed. A deal of time was at present taken up in making up the accounts, from the fact of so many fractions of a pound being allowed. No inconvenience would arise from allowing of no fraction lower than 2s. This would be the tenth of a pound; and he would suggest as an additional facility in making out the accounts, that a coin should be issued of that value, to be called a Prince. This would be the tenth part of a sovereign; and an arrangement might be made with the Commissioners for the redemption of the national debt to adopt that mode of calculation; and he did not doubt but it would prevent the necessity of the public being put to the inconvenience they now were, by the length of time the Stock Exchange was closed. This would bring us so near to a decimal system, that he should hope to sec it lead to a general adoption of that system. Two of the most civilized nations in the world (France and America) had adopted that system; and if England, which might be said to govern commerce, adopted it, there could not be a doubt that it would lead to the most convenient results. He would show the House how near they already were to decimal calculations. If 495 silver decimal money were adopted in the way he suggested, it would only remain to provide for the copper money. Now our copper money was only half its nominal value, so that it was, in fact, a mere token. No harm, then, would be done by declaring that a penny-piece should pass for five farthings. By this means the same number of pieces of coin might be made to exchange for sixpences and shillings, as at present, and a hundred farthings would be made equivalent to a Prince, which as he had already stated, would be the tenth part of a pound sterling. No difficulty could arise to prevent the adoption of this arrangement, for the Crown was enabled by its prerogative to declare that such should be the value of the penny-piece. The plan would be attended with another convenience, which to some gentlemen might appear ridiculous—he meant the convenience of the poor having a proper supply of farthings. At present they were often obliged to give a half-penny for what, if there was a proper proportion of small coin, they would give only a farthing for, being a saving of fifty per cent—a matter of some importance to those whose incomes might only be 4s. a-week.
Mr. Alderman Thompson
said, that the statement made by his hon. friend had taken him by surprise, so that he could give no answer to the suggestion he had made, nor, indeed, did he know that he should have been able to have given one, even had he been aware of that statement. The period during which Consols were now closed was about six weeks; but he did not think that that period would appear too long when he came to state the number of transfers which took place at the Bank in the course of one year, and the other business which it had to arrange. By a paper which he held in his hand, it appeared that the number of transfers at the Bank in one year was 286,572, and the amount of stock transferred was 304,218,791l. The number of new accounts opened in the same period was 34,656. The daily average of transfers for the year was 1,069. The dividend warrants paid amounted daily to 279,751l., of which 87,176l., were received by persons whose dividends amounted to less than 5l. half-yearly. He was certain that the House would think that the period taken to arrange these accounts, with the accuracy for 496 which he thought he might take credit on behalf of the Bank, could not by any plan be materially reduced.
§ The Solicitor General
, in bringing up an additional Clause by way of rider, said, it had been prepared to put beyond all doubt the right to establish banks of deposits within the metropolis, and sixty-five miles round it. The Committee had been repeatedly informed that the basis of the contract between the Bank and the Chancellor of the Exchequer was the present state—that is, whatever monopoly they were entitled to they were still to enjoy, but nothing beyond it. Now, a question had been mooted whether the pre-existing monopolies entitled them to complain of the establishment of banks of deposit within the limits which he had described; and it appeared to him, after a diligent examination into all the cases, that there was no pretence for saying that the establishment of such banks was an encroachment on the monopoly of the Bank of England. A notion to the contrary had prevailed in some quarters, but, as it seemed to him, without the slightest foundation. He had looked into the Act, and he thought that no rational doubt could be entertained on the subject, and whatever doubt was entertained ought now to be cleared up, because it would be most discreditable to Government and the House to pass a law which was professedly equivocal, and thus leave it to Courts of Justice to put a construction on what they allowed to be doubtful. By the Act 6 of William and Mary, the Bank of England was established as a bank of issue. Now, in that Act there was nothing whatever to give it a monopoly, but there was in the 8th and 9th of William 3rd., which contained very general words, and on which, taken by themselves, without the intention of the Legislature, and without the context, it might be contended that, no private bank now existing in any part of the kingdom could be tolerated, because that Act expressly said. "That no other bank or any other corporation, society, or partnership, in the nature of a bank, shall be erected or established, permitted, tolerated, countenanced, or allowed, by Parliament, within this kingdom." But that must mean a bank ejusdem generis—such a bank, that was to say, as the Bank of England; and that construction had been put on it by all subsequent Acts, for the 7th of Anne, c. 62, recites, "That whereas corporations 497 of great numbers of persons had united together, and presumed to borrow large sums of money upon Bills." The enactment of the laws was," That it shall not be lawful for any corporation other than the Bank of England, or for other persons united in partnership, exceeding the number of six, in England, to borrow or take up any sum or sums of money on their note or notes, payable on demand, at any less time than six months from the borrowing thereof." This showed that the object was, that the monopoly should be confined to the issue of paper money. These words completely prohibited any other bank consisting of more than six persons from drawing, accepting, or endorsing Bills of Exchange at any date less than six months, or from becoming parties to any promissory notes, payable on demand. These words were repeated in every subsequent Act of Parliament passed for the maintenance of the monopoly, and it was upon those words alone that the monopoly rested. The words were repeated in the 16th of George 2nd, c. 13, s. 35; in the 21st of George 3rd, c. 62, s. 12; the 39th and 40th, of George 3rd, c. 28—the last Act which was passed for the maintenance of this monopoly. Banks of deposit were lawful at common law, and therefore it rested with those who said that it was forbidden to establish such banks of deposit, to show by what Act they were forbidden. It was clear, that the words of these Acts did not prohibit banks of deposit; the words being merely that they shall not "borrow, take-up, or owe," upon any paper, &c. Such were the opinions he entertained upon the subject, and such were the opinions of eminent men of the profession to which he had the honour to belong. He thought, therefore, that the Committee could have no difficulty in agreeing to the Clause, which declared what should be the law. The learned Gentleman read the following Clause:—"Be it therefore enacted, and declared, that any body corporate, or politic, or society, or partnership, although consisting of more than six persons, may carry on the trade or business of banking in London, or within sixty-five miles thereof, provided that such body corporate, or politic, or society, or partnership, do not borrow, owe, or take-up, any sum or sums of money on their bills or notes payable on demand, or at any less time than six months from 498 the borrowing thereof." The Committee would observe, that the words constituting the monopoly of the Bank of England were clearly recognized. Under this declaration any bank of deposit might be established in the metropolis, or within sixty-five miles of it, so that it was not a bank of issue.
§ Mr. Gisborne
objected to the Clause, and contended that while now the country bankers were virtually drawers of bills contrary to the provisions of this Clause on a very large scale, the effect of the adoption of the Clause would be entirely to put a stop to their business; for those banks would not be able to go on unless they had the power to draw bills to be accepted by their agents in town. He hoped that the Committee would take out from the Clause those words which would have the effect of preventing the joint-stock banks from doing business in the same manner as other private banks.
Mr. Alderman Thompson
said, it was impossible for him to allow this Clause to pass without making some observations upon it. According to the statements of the learned Solicitor General, it had been introduced for the purpose of making that clear which was admitted to be matter of doubt. He had every possible respect for the legal opinion of his learned friend, but he must be allowed to state, that there were lawyers of great eminence who entirely disagreed with that learned Gentleman as to the right of establishing banks of deposit in London, or within sixty-five miles of it, with more than six partners. He had always understood that Parliament legislated for the purpose of settling disputed questions; and when conflicting judgments had been given upon points by Courts of Justice, he had a right to contend, that the interpretation he had put upon the law, which was different from that of the learned Solicitor General, was the right one, because it had never been questioned in a Court of Justice, and had been universally acknowledged and acted upon by mercantile men. He thought upon this, as upon several other occasions, the noble Lord ought to have been satisfied with proposing one general Clause, reserving to the Bank those rights which it had hitherto enjoyed under the existing state of the law. The noble Lord had stated, no doubt 499 with great sincerity, that he had no intention of defrauding the Bank of any privileges which it at present enjoyed. The introduction, however, of this Clause would have that effect. With respect to the proposition of the hon. member for Derbyshire, it would amount to this—that the joint-stock banking companies now established in the distant provinces would, in effect, be no more than branches of joint-stock companies established in London, and would destroy that system of private banking which had so long existed, and which was so essentially necessary to forward the great interests of the metropolis.
§ Lord Althorp
said, he was not aware that the Bank of England possessed any exclusive privilege as a bank of deposit, and he had always understood that there was nothing to prevent any banks of deposit being established in the Metropolis. Undoubtedly the bargain which he had made with the Bank of England was, that their privileges were not to be diminished; but, in agreeing to that, he declared that he should not feel himself justified in agreeing to any extension of their privileges. He was not aware of any high legal authority, whose opinion was not that the true interpretation of the law was that which the clause set forth. He should feel himself bound to stand by the clause, as it was proposed by the Solicitor General. It was true that he had, in an off-hand way, on being asked a question in the House, told the hon. Gentleman opposite, that he did not intend to propose the establishment of banks of deposit in London consisting of more than six partners, and that was because he thought that such was then the law; but, although he wished the Bank of England to be the sole bank of issue in the Metropolis, he had no intention of giving it any additional privileges injurious to private banks. It appearing, then, to be the law, that banks of deposit might be established in London consisting of more than six partners, he could not object to clearing up what doubt might hang over the law.
§ Mr. Clay
held in his hand the opinion of two eminent gentlemen of the legal profession on this subject, and they entirely concurred in the opinion expressed by the Solicitor General, whose authority, however, required no corroboration. The Bank had certainly good reason for wishing to deprive the public of places of deposit so 500 secure as competition would give. In 1807, the amount of private deposits with the Bank was only 1,500,000l., whilst now it was between 5,000,000l. and 6,000,000l., arising from a growing feeling, on the part of the public, that a great society must afford better security to depositors than the most respectable private individual. If the question had been delayed, thousands would have come forward to sign the petitions against this measure. It was well understood why they did not come forward. There were many motives actuating them which it was unnecessary to state, but, on his own authority, he would tell the House, that there were thousands connected with that part of London which he represented, second to none either in wealth or respectability, that were most decidedly opposed to the measure.
§ Mr. Gisborne moved a verbal Amendment in the clause of the Solicitor General, the effect of which would be, to alter the date at which the banks in question could accept bills, from six months, as proposed by the clause, to two months. The object of this Amendment was, to give something like freedom to the banking system in London, and the hon. Member contended, that the two-months' bills would not be part of the circulation of the country.
§ Sir John Wrottesley
could not let so important a clause pass without making an observation upon it. One thing, however, which surprised him was, that, on so important a question, so comparatively few Members were in attendance. The present Parliament had been elected under the impression that all monopolies should cease. By looking at the public papers, he found that 300 out of the 658 Members were pledged at the hustings to vote for the repeal of all monopolies, more particularly the Bank and East-India; yet now, when they were discussing one of the most important of all, there were not above fifty Members present. In the year 1826, that House was engaged in finding a remedy for the panic that then took place. It did not, however, blame the Bank of England, but most unjustly, in his opinion, threw all the blame on the country bankers. The measures then proposed were hurried through Parliament, and, without inquiry, the greater part of the country banking establishments were most materially injured. The laws of that year stated the insufficiency of the country bankers, and the then Parliament agreed 501 to allow the Bank of England to establish branch banks, but also agreed to the establishment of joint-stock banks, with an unlimited number of partners, within 65 miles of London. Upon that occasion it was with the greatest difficulty that the then Government could persuade the Bank of England to allow joint-stock banks within that distance. As they were found to be good for the country—as they were found to be good for Southampton—he could see no reason why they should not also be established in Winchester. There was scarcely a man of intelligence before the Committee (and there were none but men of intelligence examined), who could give any sufficient answer to the question which he had put to all of them—why the joint-stock banks should not do as well in London as in the country. He had put it to several members of the Committee, but to that question he had not got one satisfactory answer. He was sorry that he saw so few Gentlemen present who had pledged themselves at the hustings to oppose this monopoly, otherwise he would have put them to the test, and acted on his intentions, which were, to move for the total abolition of the monopoly, without taking into consideration the interest of the Bank. As it was most important, however, that the measure should in some way be settled that Session, and as he saw no chance of succeeding in the proposition he should make, he was obliged to waive his opposition to the measure.
§ Sir Henry Willoughby
doubted extremely the policy of the clause introduced by the learned Solicitor General. Returns had been presented to the House which proved, that in London the system of banking was not by any means perfect; for, since 1824, 13 bankers had become bankrupt in London, and 36 within the district of 65 miles.
§ Mr. Grote
denied that any evidence existed to show, that any practical evil resulted from the London banking system. As to the returns alluded to by the hon. Baronet, he only wondered, from the manner in which they were made out, that instead of 13 there were not 113 who had been bankrupt. Several were included in those returns who were army and navy agents, and who could not, properly speaking, be called bankers. He, therefore, contended, that no practical evil had resulted from the present London banking system.
§ Lord Althorp
could not concur in the 502 Motion of the hon. member for Derbyshire (Mr. Gisborne), for altering the date of the operation of the clause, as it was a declaratory one.
§ The Committee divided on the Amendment; Ayes 16; Noes 49;—Majority 33.
|List of the AYES.|
|Buller, C.||Romilly, J.|
|Brocklehurst, J.||Scrope, P.|
|Clay, Wm.||Strutt, Ed.|
|Cayley, E. S.||Stanley, E. J.|
|Dykes, F.||Tancred, H. W.|
|Ewart, Wm||Wedgwood, J.|
|Gisborne, T.||Willoughby, Sir H.|
|Martin, J.||Wrottesley, Sir J.|
§ Clause agreed to.
§ Mr. Thicknesse moved the insertion of the following clause:—"That the said Governor and Company of the Bank of England shall not, after the 7th January, 1836, invest, or continue invested, in loan to Government, and Government securities, any sum or sums of money which, separately or together, shall in amount exceed their subscribed and surplus capital."
§ Clause negatived.
§ Mr. Poulett Scrope moved a clause to the effect, that "the Directors of the Bank of England, being by this Act appointed to a high public trust—that of regulating the entire circulating medium of the Empire—should be directly responsible to the public, and shall be liable hence-forward to impeachment by either House of Parliament for any criminal neglect of duty."
§ Amendment negatived.
§ House resumed; the Report to be received.