Commons Sitting of 1 July 1833

MINUTES.
paper ordered. On the Motion of Mr. O'CONNELL, an Account of the Number of Stamps issued to each Newspaper in Ireland, from the 5th January, to the 7th June, 1833.—On the Motion of Mr. FINN, an Account of the Union compensations laid before parliament in 1805: of all Claims for Compensation on Account of the Representative Franchises of Ireland which were admitted, and also of such as were disallowed, and rejected.—On the Motion of Mr. Alderman THOMPSON, an Account of the official Value of Good warehoused in the port of London, in the years 1831 and 1832: also an Account of the Imports and Exports of the United

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Kingdom, for the years 1830, 1831, and 1832, and of the Quantity of the different Articles retained for Home Consumption.
Bills. Read a second time:—Artillery Pensions; Church Building Act Amendment.—Read a third time:—Highland Roads and Bridges.
Petitions presented. By Sir JAMES GRAHAM, from Leith, against the Edinburgh Community Estates Bill.—By Mr. CAYLEY, from Richmond (York), against the proposed Alteration in the Bank of England Charter.—By Mr. KEMYSS TYNTK, from certain Retail Dealers of Hminster, that 2l. Notes may be in Circulation.—By Mr. HUME, from St. Luke's, Chelsea, for Poor Laws to Ireland; from several Places, for placing Retail Dealers of Beer on a Footing with Licensed Victuallers; from Prisoners for Debt in the King's Bench Prison, in favour of the Imprisonment for Debt Bill; from the University of Glasgow, for the Repeal of the Apothecaries Act; from the procurators of the Sheriff's Court, Fife, for an Alteration of the present System of Conveyancing in Scotland; from a Friendly Society at Hounslow, fur the Repeal of the Laws on Benefit Societies; from Hendon, against the Assessed Taxes; from Lawrence Kirk, for an Alteration in the System of Lay Patronage; from a Dissenting Congregation in the City of London, for making Marriages performed by their own Clergymen Legal; from the Committee of the Working Classes of Edinburgh, for an Inquiry into the State of Ireland; from the Presbytery of Aberdeen, in favour of the New System of Education in Ireland—By Mr. BETHELL, from the Sugar Refiners of Kingston-upon-Hull, for allowing the Use of Foreign Sugar in Refineries.—By Mr. DENIS O'CONNOR, from Kilmiston, against Tithes and the Commutation Act.—By Mr. WILLIAM DUNCOMBE, from three Places, against the proposed Alteration in the Bank Charter.—By Mr. GREENE, from Lancaster, and Mr. MABRYATT, from Deal, against the Notaries Public Bill.—By Mr. GREENE, from the Medical Practitioners of Lancaster; and by Mr. FRANKLAND LEWES, from the Royal College of Surgeons, London, against the Apothecaries Bill.

SPIES—CASE OF POPAY.
Mr. Cobbettsaid, he hoped, that before the noble Lord moved the order of the day, the noble Lord would allow him to move for a Committee to inquire into the allegations of the petition he had presented on Friday.
Lord Althorpobserved, that the introduction of this subject was rather irregular, but he was very glad that it had been mentioned, as he wished to set the House right on the subject. He fully agreed with the hon. Member, that the employment of spies, such as was practised abroad, was a most abominable system, and he was sure would not be for a moment supported by the House; but the question was, whether it was not only allowable, but even the duty of Government, to ascertain what took place at public meetings. Private espionage was a system never contemplated by the right hon. Baronet, who was the author of this force, nor by his successor in office; and he was sure that the two Gentlemen at the head of this force would never sanction so abominable a system. All the meetings at which the police had been present were essentially public meetings: at these meetings it had often occurred, that most inflammatory language was spoken; and he must submit, that Government
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would have failed in its duty, had it not taken measures to know what took place at these meetings. At these public meetings—and at public meetings only—therefore, were the Police present; and, as it would be out of the question for them to appear otherwise, they went in their plain clothes. Popay was, in the petition, accused of using inflammatory language. If he had done so, no words which he could use would be too strong to express his detestation at so base a line of conduct; for it was precisely the worst kind of conduct attributed to spies, to excite those very disorders which the police force would afterwards be called upon to repress; and, if Popay had done that, he had acted quite contrary to his instructions. With reference to the Committee prayed for, he had not the least objection to it. He was well content to allow any inquiry into the conduct of Popay. He had merely risen to explain what the conduct of Government had been on these occasions; and strenuously to deny, that the police were ever instructed or authorized to interfere in private society.
Mr. O'Connellsaid, that this frank conduct of the noble Lord entirely did away with any suspicion which might previously have attached to the Government on this subject. It was strongly asserted, however, that this Popay had been guilty of all the acts of espionage, so justly condemned by the noble Lord—that he had subscribed for arras—used inflammatory language—offered to teach the broad-sword exercise, &c. It was, therefore, essential that this subject should be sifted most searchingly; and he was, therefore, delighted, that the noble Lord had so frankly and cordially co-operated in promoting the inquiry.
Mr. Cobbeltsaid, it could be proved that Popay had done all the hateful things described. The witnesses were quite ready.
Mr. Tennysonrejoiced in the frank and manly assent given by the noble Lord to this Committee. It was a most important subject; lie would observe, however, that the charge against Popay was not his going to public meetings, but his enrolling himself as a Member of the National Union for treacherous purposes—using the most inflammatory language, offering to subscribe for arms, and to teach the use of them. He had in his hand a petition from 500 of his constituents, praying for the most strict inquiry into this most important and alarming case, and they would be pleased to hear how readily this inquiry was assented to by his Majesty's Government.
Lord Althorpobserved, that the man Popay denied the inflammatory language, the subscription for arms, and the offer to teach the use of them. All he said lie had done was, to throw a few half-pence into a hat which was carried round for some subscription, but the object of the subscription he was not aware of. He also denied being a member of the Political Union. He would take care that the Committee should be appointed in the course of the evening.
Mr. Hawesalso expressed his gratification at the assent thus given by Government to the formation of a Committee. He was, however, disposed to believe, on most particular inquiry, that the case was as stated by Mr. Cobbett. He did not exactly understand where the blame rested, but he had every reason to believe that the accusations against this Popay were matter of the most undoubted fact. Indeed, he knew persons who were fully prepared to come forward and substantiate the charges.

BANK OF ENGLAND CHARTER.
The House resolved itself into a Committee on the Bank of England Charter Acts.
Lord Althorpsaid, that in moving the second Resolution, he begged to state to the Committee an alteration he proposed to make in his plan—an alteration which he did not think of much importance, but which he was willing to make, to meet the apprehensions of those who were afraid that from payment in gold being obtainable solely in London for notes of 5l. and upwards, a scarcity of coin might be caused in the country. He proposed, therefore, to alter the reading of this Resolution, excluding payments in the country for all sums "above 5l.," so that a person presenting a 5l. note at a banker's in the country would be entitled to demand five sovereigns. He did not think that made any difference in the Resolutions which he meant to propose. In general, the demands on country bankers were not for small sums. Another point to which he wished to advert was this: he had been asked when he meant to introduce the bill for renewing the Bank Charter? He wished to say, that if the Committee would confine the discussion to the other Resolutions, excepting the sixth and eighth, about which there would be some difference of opinion, he would, as soon as the Resolutions were passed and reported, bring in one bill. The sixth and the eighth Resolutions related to Joint-Stock Banks, and were not strictly connected with the renewal of the Charter.
Sir Robert Peel: If I rightly understand the noble Lord, he means that for every 5l. note a man presents, he shall receive five sovereigns. Of course, then, if he takes one hundred 5l. notes, he may make a separate demand for each, and will receive gold for them all.
Lord Althorp: No, no.
Sir Robert Peel: If he takes them separately then?
Lord Althorp: Not in the same day, for that would occasion a serious run upon the Bank. I do not apprehend any such thing would occur; but if the effect of the alteration would be to destroy the effect of the Resolution, I shall not persevere in it.
Sir Robert Peel: I am sorry if I have shaken the noble Lord's confidence in his own proposition, which I most certainly cannot think he has well considered. Nothing could be so absurd, as that a man presenting a 5l. note should be able to get five sovereigns, but upon presenting two 5l. notes, should not be able to get ten sovereigns.
Mr. Warburton, with reference to what had fallen from the right hon. Baronet on a former occasion, and with a view to prevent the issue of notes for 5l. 10 s. which might banish all the gold from the country, suggested that the noble Lord should not allow the issue of any notes except for 5l. or 10 l. or some multiple of the 5l. note, as 10 l., 15 l., 20 l., and so on, when it would be impossible to evade the intentions of the Legislature. He hoped it would be considered, whether it was not possible to prohibit the issue of any notes which were not multiples of the 5l. note.
Mr. Evelyn Denisonsubmitted, that it was important that the noble Lord should make it understood what would be the effect of the alteration. Did he understand that the proposition would have the effect attributed to it by the right hon. Gentleman? For if all 5l, notes might be convertible into gold, it would make a must material alteration. He would go so far as to say, that it would put an end to most of the inconvenience apprehended from the noble Lord's plan, and to all its advantages. He hoped that the noble Lord would, before entering into the discussion, give the Committee full information of the extent to which he supposed the alteration would go.
Sir Robert Peelsaid, that the hon. Gentlemen need not be alarmed—no demand would be made on the country banker which the country banker would

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not get rid of by issuing notes for five guinens instead of 5l.
Mr. Robinsonsaid, with respect to the two last Resolutions, the noble Lord's (Lord Althorp's) object, he supposed, was to avoid any discussion upon them until those more immediately affecting the renewal of the charter were completed; but as there was a greater diversity of opinion upon those two Resolutions than on all the others, he would suggest their withdrawal altogether, in order that the others might be proceeded with. At present those two Resolutions would greatly embarrass the question of the renewal of the charter, and it might, therefore, be difficult to get through them this Session. He could not see what necessity there was, in discussing the renewal of the charter, to consider all the circumstances respecting Joint-stock Banks. The latter, he would submit, had better be left for discussion early in the next Session.
Mr. Ponlett Thomsonthought, that all this discussion arose from the misunderstanding of the object in view by making Bank of England notes a legal tender. If hon. Members would refer to the evidence before the House, they would see that in 1825 the danger of running the Bank dry for gold arose not from the demand for gold to meet the Bank notes, but to enable the country bankers to be prepared to pay their deposits. In most of the districts, the amount of notes issued by the country bankers bore but a small proportion to the amount of their deposits and engagements, for which they were obliged to provide in times of pressure, by applying to the Bank of England for bullion. It was to guard against such a danger, that it was thought advisable to make notes a legal tender, and not in reference to the amount of notes of country bankers, which bore so small a proportion to their other engagements. The fact was, that in a moment of commercial panic, the country bankers came up to London, and, as was the case in the year 1825, they asked, not simply for sovereigns to pay their notes, which never could wholly be returned on them—for he believed, during that panic, the amount of notes returned bore but a small proportion to the amount of paper in circulation—but they asked for gold, to be prepared to meet all their other engagements. Many country bankers, having a circulation of only 15,000 l., or 20,000 l. in notes, required as much as 100,000 sovereigns to enable them to meet those engagements. Thus the Bank
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of England was constantly in this situation—namely, it must be prepared in a period of panic to deal out gold, not only to meet the demand occasioned by the returning of country notes, but also to meet all the country bankers' anticipations of a demand to the amount of their deposits. This fact made it advisable, that the Bank of England notes should be declared a legal tender. If that were done, he believed all difficulty and all danger would be avoided.
Sir John Wrottesleywould not now discuss that important point, whether Bank of England notes should be made a legal tender. Certainly it was not called for by the country bankers. He did not speak in their name; but he must say, in his own opinion, it would not be beneficial. He thought it would tend, in the opinion of the public, very much to depreciate the country bank-notes, if it was known that those notes could not be paid in the way in which they had hitherto been paid—in gold. He could not agree with his hon. friend, that the measure would be of any advantage whatever to the country bankers. As was stated by the right hon. Gentleman, their notes were not numerous; and on a panic, the deposits were not called for. Country bankers could not give interest on the deposits made with them, and, at the same time, have gold ready to pay those deposits at a short notice. He was sure that no prudent country banker would ever take deposits without an engagement that they should not be removed except after a certain notice.
Sir George Phillipssaid, the right hon. Gentleman had forgotten that when the run on the Bank of England was made in 1826, the 1l. country bank-notes were in circulation, and the Bank of England had no 1l. notes to issue in the stead of them. At present its 5l. notes would serve as well as sovereigns to pay country bank-notes. The proposed plan would make a legal tender of its 5l. notes. The bankers said, that there was now no opportunity of making a run on the Bank, as there were no 1l. notes in circulation. At present the Bank of England notes for 5l. were supported by the whole credit of the Bank; but if the Bank itself were to be doubted, it would be no good making the Bank of England notes a legal tender. He must say, that he looked upon the Resolution making Bank of England notes a legal tender, as having a tendency again to expose us to a Bank Restriction Act, and to all those evils and dangers which we had

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already encountered. Which he first heard that it was the intention of the Government to make Bank of England notes a legal tender, the impression on his mind was surprise and sonic doubts of its advantage. The more he had considered it the more he was convinced that it was not required. He could not see the necessity of making any alteration in the present system. No facts had been mentioned to show that it was necessary; on the contrary, he thought it would be disadvantageous. Suppose a run were made on the country bankers; they had now the Hank of England to apply to; it was stable and solid; and what advantage could be obtained by making its notes a legal tender? If the country bankers offered Bank of England notes, nobody would reject them, if the run were for gold, and Bank of England notes were not liked, the proposed plan could only put off the evil for a day or two. The notes of the Bank of England obtained from the country bankers could be sent to the Bank of England. The consequence, too, of that would be, that the whole pressure, part of which was now borne by country bankers, would be thrown on the Bank of England; and that pressure would be exclusively for gold. A demand of that kind, coming from the whole country, would be greater than the Bank could resist. The more he reflected on the subject, the more he was struck with the danger of interfering unnecessarily with the present system. After going through great suffering, we had got a currency established on the precious metals—it was stable and safe; and why should it be meddled with? It was most unwise to tamper with it—most unwise to interfere with it, by making the Bank of England note a legal tender. The currency was at present stable, and why run the risk of involving the country in ruin? At present the country bankers were the means of distributing through the country a copious supply of credit; and if they were destroyed, and the supply were not so copious as at present, what would be the consequence? The consequence, he believed, would be, that the people would demand the 1l. notes. If that demand were complied with, the consequence of that again would be another Bank Restriction Act, and all the evils which followed in its train. He was extremely sorry that such a measure had been proposed. He spoke doubtfully, indeed, of its effects, for he observed that there was a great difference of opinion among the
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best informed men. Another point occurred to him. It was slated in the evidence taken before the Committee last Session, by his friend, the hon. member for Walsall (Mr. Forster), and Mr. Stuckey, that there was a time when the people in their neigh-bourhoods had doubts about Bank of England notes, and that they had been Supported by the credit of these country bankers. But suppose that such a doubt should arise alter the Bank of England notes were made a legal tender—and suppose that the effect of his noble friend's plan would be, as he believed, to put an end to country bankers, on what then could the Bank of England notes rest? At present the credit of the country bankers supported those notes; but when they were gone, the Bank of England notes would have nothing to rest on. He maintained that, in the country, the banker there supported the credit of the Bank of England. He had no doubt, that his noble friend (Lord Althorp) had done his duty in making the proposition, and he had only done his duty in disclosing his opposition to the principle of making bank-notes a legal tender.
Mr. Baringadverted to the varieties of opinion which were entertained on this subject, which made it extremely desirable to be very cautious in forming and expressing an opinion. It was, however, the conviction of his mind that our paper currency would not be safe unless the Bank of England paper were made a legal tender. On that ground he should support the Resolution. He understood that the noble Lord had made, at an earlier period of the evening, what he (Mr. Baring) thought an improper concession. He supported the Resolution, not on the grounds that it would operate as a relaxation of the currency, but because it was his conviction that the country could not have the full advantage—and which it was most desirable should be extended—of the circulation of paper, unless there was some security that we should not be exposed to those continual changes in prices, and those continual difficulties to which we had been exposed, and which might be avoided, by enabling the country bankers to offer the Bank of England notes as a complete payment. Gentlemen were alarmed at the sound of the Bank Restriction Act, but let them consider what was proposed. It was not to make a legal tender of Bank of England notes in place of specie—it was only removing the demand on the Bank one step. The country bankers would give

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Bank of England notes instead of gold, but gold might be obtained for Bank of England notes, and they might be securely converted into specie at sonic place or other. The bankers of the city of London, who were as respectable and wealthy as any race of men in existence, made their payments by means of the Bank of England. If any gentleman was to go to a banker in Lombard-Street, and present his check for 50,000 l., and demand cash, the banker would not give him gold over his counter; he would give an order or note on the Bank of England for the money, where it would be obtained. That was not a denial of payment in specie. He saw, then, that the proposed plan was only making the parties who desired specie take one step more before obtaining it. An additional security would be given to the paper currency of the country—the security of the Bank of England, and an assurance, founded on its credit, that gold might be had on being asked for there, though not paid in the first instance. The measure was not introduced for the benefit of the country bankers; but it was a desideratum to keep out as much paper as possible, and to prevent those panics or frights which sometimes arose, from damaging the Bank of England. It was to guard against such fears, by giving those who were alarmed a delay of twenty-four hours in getting gold, that he thought the measure good. Any Gentleman must be fastidious to say, that such a measure would injure the credit of the Bank, or endanger the stability of the currency. The hon. Gentleman opposite (Sir George Phillips) said, that we had at present a stable currency, founded, as all currency ought to be, on the precious metals; and that it was not good to alter it from any crotchets of any man. But what security, or what stability was there in 1825? Then we had the beautiful currency, which the hon. Gentleman thought so secure; but when the pressure came, it was found wanting. In fair weather, and under ordinary circumstances, it was stable and secure enough, but not when it was tried. So the hon. Gentleman might so to sea in some tub of a ship, and find it safe enough in fine weather, but when the gale came, he would find her unfit to stand the sea. We were only saved with our beautiful currency from thumping on the rocks by a miracle in 1826—that of the discovery of a box of 1l. notes. With these facts before them he could not say that our currency was the best possible. Setting
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aside all reasoning and all theory, experience showed them, that our present currency did not deserve the description given of it by the hon. Baronet. The panic and difficulties of 1826 were yet fresh in their recollection; and it was to make a provision against a recurrence of them that the noble Lord made his proposition. The hon. Gentleman had spoken of the country bankers; but be believed that they would find themselves in no comfortable situation if the credit of the Bank of England were to fail. There was no practical man in all Lombard-street—and there were no more practical and respectable men in the Empire—who would not tell the hon. Gentleman, that nothing would be more dangerous than for any banker to boast of being able to fulfil his engagements without the support of the Bank of England. In fact, it was the great credit of the Bank of England which was the foundation of all individual security. Any attempts made against the security of the Bank of England would find it unassailable. The most solid of the country banks would not be solvent but for the Bank of England. It would be impossible that the currency could be placed on a safe footing, except by relying on the Bank of England. It seemed to him most unfortunate to assert, that the Bank of England might get into discredit without the assistance of the country bankers. It was the duty of the House, in renewing the Bank of England Charter, to render events of the description of those of 1826 impossible. The great object was to guard against such events—to stop the panic among the people, and secure the Bank against danger. It was the demands made on the Bank of England, to provide against the demands on account of deposits, as the right hon. Gentleman stated, which caused the principal run on the Bank. He admitted, that the bank-notes returned were not of so much importance. In panics, the country bankers were obliged to be prepared for the demands for their deposits; and, on this account, he was prepared to support the plan.
Sir Robert Peelsaid, the argument was, that the abundance of small notes stimulated undue speculation, and that an issue of one and two pound notes had the effect of encouraging the departure of coin from the kingdom, and whenever a crisis arrived, whenever there was a commercial panic, all the deposits were immediately demanded in gold, because the depositors had no confidence in a paper currency. But his hon.

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friend, the member for Essex (Mr. Baring), had no right to assume that the paper currency was the same now as it was formerly. One and two pound notes were now prohibited, and consequently a more equal diffusion of gold currency was secured, whilst the existing paper was convertible into coin on demand. There was now, therefore, no risk of any commercial panic similar to that of 1825; for the inducement that formerly prevailed no longer existed. His hon. friend said, it was highly desirable to secure the country against the effects of political excitement. His hon. friend was quite right in making that statement, and he admitted that some advantages would accrue to the country by establishing unlimited confidence in the Bank of England. Everything which tended to confidence and security in the country was good; but was it possible to give this confidence by an Act of Parliament? His hon. friend had referred to the confidence placed in bankers' checks on the Bank of England. True, but whence did that entire confidence arise? Because there was no interference of an Act of Parliament. As Burke had said, commercial confidence gave bankers' checks a currency on the Exchange, because they had none in Westminster-hall. All depended on commercial confidence; and if his hon. friend were to pass a law to force people to place confidence in checks, the result would be directly opposite to his wishes. His hon. friend had also referred to the want of confidence which risk of war or convulsion was likely to produce; but where, he would ask, was that want of confidence likely first to arise? Not in remote country towns, but in London. Much, too, had been spoken of the advantages resulting from the intermediate stop necessary to be taken before obtaining gold; but what had been the effect of this in the case of the Scotch banks which had issued notes with an optional clause? The Scotch banks formerly issued notes which contained a clause giving them the option either of paying their notes on demand, or six months after sight, giving interest in the meanwhile. The results of this, as Adam Smith stated, was, though the banks were perfectly solvent, that the exchange was against Dumfries as compared to Carlisle, full four per cent, in account of these notes. Take the case of a banker at Plymouth, who pays his notes in Rank of England paper: the person who received them, though be wanted gold to embark for Portugal or the West-Indies,
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would not be able to get a guinea without travelling or sending all the way to London. The form was preserved; and if a panic should arise, he was satisfied that the greatest mischief would result, because the country banker would rely on a false security. He did not see any reason why the proposed interference with country bankers should take place. He would say, let the country bankers issue notes convertible into metallic currency, and let them provide what securities might be thought right for the deposits put into their hands, but give them the right of claiming notice of the withdrawal of any deposit. This would be much better than compelling them to pay in bank paper. Besides, how open was this plan to evasion! As there was no bank note under 5l., depositors would only have to draw as many checks as they pleased for 4l. 19 s., and they could compel payment in metallic currency. This, of course, would not be resorted to on ordinary occasions; but, then, on ordinary occasions, there was no danger. The object in view was to provide against the effects of a panic, whether general or partial; and when this existed, nothing in the world could prevent depositors from resorting to every possible expedient to withdraw their deposits and obtain payment in the only currency in which they could place confidence. The noble Lord and the right hon. Gentleman appeared utterly to have discarded from their consideration the various means of evasion to which this plan was open. The noble Lord came down to the House tonight, and, much to his surprise, proposed that 5l. notes should be convertible into gold on demand, and this was a most serious and important alteration. The effect of it would be this—to give a direct legislative premium on the with holding of 5l. notes from the market. It would also, in his opinion, operate most injuriously on the country bankers in a time of panic. For the whole scope of this Bill was, to induce country bankers not to keep gold in their coffers, but to rely on the Bank of England for supplying them with the means of meeting all demands; and if a panic were to arise, the bankers would come up to town and carry back, not gold, but Bank-notes. What, however, would those bankers say when they found the holders of all Bank of England 5l. notes pressing them for gold, which they most assuredly would do? The noble Lord had, indeed, said, that no man was to take two 5l. notes together and claim gold for them, because that would, in fact,

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Le demanding gold for 10 l.; but what would the noble Lord say, if the holder of several 5l. notos were to present one at the interval of every half-hour—or suppose he had 50 l. in 5l. notes, and were to employ all his servants in obtaining payment for these separately—how would he prevent it? The noble Lord had proposed another very important regulation—that the notes of the Bank of England should be payable only at the places where they were issued. According to this, the whole issue by a branch bank would be payable only in the town where it was issued. But he would look at it further. What security had they that the Bank of England would continue to employ branch banks at all? Why should it? If, indeed, Government issued this currency, it might say, we do it with no view to profit—we seek only the general interests of the country, which would be benefited even were the system carried on at a partial loss. But the Bank of England was in a very different situation. It was a Company established for the purpose of profit, and owed duties to the proprietors of Bank Stock. By the provision for the formation of Joint-Stock Companies, a direct inducement was held out to withdraw the branch banks, for the Bank of England would find it much more economical to employ Joint-Stock Banks, with a few partners as agents for the circulation of their notes, than to keep up their branch banks. The consequence would be, that Bank of England paper would be payable in London only. Yet this paper was to circulate in every part of England. Under such circumstances, no Act of Parliament could give confidence to a currency which had no intrinsic value even were it issued by an institution which had ten times the stock, and which was ten times more solvent, than the Bank of England. This would inevitably lead to an agio on gold. Only suppose a man in the country wanted to leave England, or for any other occasion to convert 500 l. into gold—he would be unable to get his notes exchanged except in London—that man would readily give a premium for gold. It was important also to consider what effect making Bank of England notes a legal tender would have in promoting forgery? It would be most difficult to detect forgeries of bank-notes at a distance of 200 miles from the persons who alone were competent to distinguish them. The time at which the noble Lord proposed this measure was equally objectionable. About two months ago his hon.
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friend, the member for Whitehaven (Mr. M. Attwood) proposed an inquiry into the currency, with a view to its relaxation. The noble Lord negatived the proposition, and moved a Resolution, declaring his determination to adhere to the standard; but at the same time said, he would appoint two Committees—one to investigate the state of agriculture, the other that of commerce, which Committees had since assiduously prosecuted their inquiries, and had particularly directed their attention to the effects of the banking and currency system on trade and agriculture. What a mockery, however, were these Committees, when the noble Lord would not condescend to wait for their Reports—now, doubtless, nearly ready—but came forward and proposed this great alteration in the currency, without paying the slightest attention to their suggestions. He was never so surprised as when the noble Lord and his colleagues proposed this alteration, so repugnant to their former principles. He had always understood the doctrine of the noble Lord to be—"Issue what paper you please, only let it be payable on demand, and in a metallic currency;" but to take up one particular class of paper, and propose to destroy all other classes, in order that this might circulate on their ruin, was the most extraordinary proposal he had ever heard. One and two pound notes ought not to be issued because they interfered with the gold currency, but beyond that he thought it right to have no check beyond that of immediate convertibility. He agreed with a writer of great eminence on this subject, whose opinion was the more worthy of confidence because it had been confirmed by subsequent events. Adam Smith said—"It were better, perhaps, that no Banknotes were issued in any part of the kingdom for a smaller sum than 5l. Paper money would then, probably, confine itself in every part of the kingdom to the circulation between the different dealers, as much as it does at present in London, where no Bank-notes are issued under 10 l. value; 5l. being, in most parts of the kingdom, a sum which, though it will purchase, perhaps, little more than half the quantity of goods, is as much considered, and is as seldom spent all at once, as 10 l. are amidst the profuse expense of London. Where paper money, it is to be observed, is pretty much confined to the circulation between dealers and dealers, as at London, there is always plenty of gold and silver. Where it extends itself

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to a considerable part of the circulation between deniers and consumers, as in Scotland, and still more in North America, it banishes gold and silver almost entirely from the country; almost all the ordinary transactions of its interior commerce being thus carried on by paper." The same author also said, at the conclusion of his chapter on metallic and paper currency—"If bankers are restrained from issuing any circulating bank-notes or notes payable to the bearer, for less than a certain sum, and if they are subjected to the obligation of an immediate and unconditional payment of such bank-notes as soon as presented, their trade may with safety, to the public, be rendered in all other respects perfectly free. The late miltiplication of Ranking Companies in both parts of the United Kingdom—an event by which many people have been much alarmed—instead of diminishing, increases the security of the public. It obliges all of them to be more circumspect in their conduct, and, by not extending their currency beyond its due proportion to their cash, to guard themselves against those malicious runs, which the rivalship of so many competitors is always ready to bring upon them. It restrains the circulation of each particular Company within a narrower circle, and reduces their circulating notes to a smaller number. By dividing the whole circulation into a greater number of parts, the failure of any one Company—an accident which in the course of things must sometimes happen—becomes of less consequence to the public. This free competition, too, obliges all bankers to be more liberal in their dealings with their customers, lest their rivals should carry them away. In general, if any branch of trade, or any division of labour, be advantageous to the public—the freer and more general the competition, it will always be the more so." This was the reasoning of Adam Smith, a priori, fifty or sixty years ago; and the system which he recommended as the best which could be established, now existed in this country, and that was the system which the noble Lord proposed to change. The noble Lord now, on the 1st of July, without waiting for the Reports of the two Committees he had appointed, came forward with one of the most startling propositions he had ever heard, founded on the most slender body of argument possible. The noble Lord said, it was all to prevent panic: but no Act of Parliament could prevent panics. The noble Lord might depend
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upon it the people would never place confidence in Bank paper, merely because an Act of Parliament called on them to do so. The noble Lord might be assured, that the confidence would not be obtained for a paper currency, founded on a compulsory enactment.
Mr. Poulett Thomsoncould assure the Committee, that he agreed with the right hon. Gentleman as to the necessity of approaching this question with the greatest care. He felt all the difficulties of the question, and was perfectly ready to give every attention to the arguments which might be urged against the view of the question which he took. The right hon. Gentleman, on a former occasion, laid down, in the most distinct manner—and every Gentleman must admit the importance of it—the necessity of distinguishing between the difficulties which might arise as regarded the circulation from commercial or political causes. He wished that the right hon. Gentleman had kept this distinction in mind, but it appeared to him, that in the speech he had just made, the right hon. Gentleman had confounded them. The right hon. Gentleman had throng-out the greater part of his argument, confined himself to what lie supposed would happen in periods of excitement. He was ready at once to admit, that there was nothing in this measure to provide against political alarm; and indeed he had no hesitation in saying, that it was impossible that the paper currency of any country could be made perfectly secure against periods of political alarm, when convertible into gold. He believed, that no hank of issue was ever established in any country—with perhaps the single exception of the Bank of France—which did not circulate its paper with a view to profit; that is, no bank which retained in its coffers gold to the full amount of its notes in circulation, but yet only such an amount of gold as, upon the best calculation, it was probable would be demanded in exchange for notes. It was an absurdity to suppose that any bank—be it the Bank of England, or a country bank, or a Joint Stock bank—could keep gold in its coffers to the full amount of its liabilities. If that were to be done, lest inconvenience should be experienced in times of political excitement, all profit would be put an end to, and there would be no inducement to establish banks of issue. It was, therefore, most true, that there was nothing in this plan to secure the Bank of England against periods of political excite-

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ment. That was a condition which must always remain utterly unattainable. The question, then, resolved itself into this, whether the system now proposed, did not afford material safe-guards to the circulation of the Bank of England. The right hon. Gentleman had stated a number of reasons which he supposed would prevent the success of this plan. The right hon. Gentleman said, that the present measure would seriously affect the country bankers, and materially interfere with their issues. He denied that, and he could by no possibility, conceive how the country banker could be affected by this measure. The country banker, as regarded the legal tender, would remain as before. As his hon. friend, the member for Whitehaven, said, the country banker, wishing to fulfil his engagements, must send—as he is obliged to do now—his securities up to London, to obtain gold or Bank of England notes; and of course, therefore, he must be at some expense to discharge his engagements. It was immaterial to him whether he paid in gold or Bank of England notes. The only difference would be, that he would procure Bank of England notes for his securities, whereas formerly he obtained gold. He said, then, that the Government did not intend to provide by law for the security of country banks; the only sufficient security for them being, that they should not enter into engagements which they were not prepared to fulfil. The right hon. Gentleman said, "That one effect would be to induce the country bankers not to keep gold." There was nothing in the measure holding out any such inducement. It was possible that country bankers, in consequence of not having to pay their notes of above 5l. in gold, might keep less gold in their coffers; but he was by no means satisfied that such would be the case. In his opinion a country banker would keep nearly, or quite as much gold as at present, as it was obvious that he must provide himself with sufficient gold to accommodate his customers. It would be the interest of the country banker to keep as much gold as would supply his customers; and, if he did not, his customers would not continue their accounts with him—so that it appeared to him that there would be very little difference in the amount of gold, that they would keep. The right hon. Gentleman also said, that the country bankers had a manifest advantage in keeping Bank of England notes instead of gold. But they had no advantage in one case more than in the other. He challenged
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the right hon. Baronet to show what advantage they would have in making their payments in Bank of England notes instead of gold. The country banker would still have to pay every 5l. note he issued in gold; and would the right hon. Gentleman tell him that any possible disadvantage which could result from the country banker keeping gold, would induce him to forego the advantage he obtained by issuing 5l. notes? The only occasion upon which he would be enabled to pay in paper was when his notes were large in amount; for he must pay his 5l. notes in gold. Now, what advantage could a country banker derive from keeping Bank of England notes instead of gold? The only possible advantage would be, that there would be a slight additional charge on the conveyance of the gold to him above that of the carriage of the notes. The circulation of the 5l. notes of a country banker must be a very worthless and unprofitable matter, if it were not worth sending up to London for gold for the payment of them. Another argument of the right hon. Gentleman was, that by this plan the country bankers would be taught and induced to rely too much on the Bank of England. But, at present, a country banker relied upon the Bank of England for supplies of cash: he sent his securities up to London, and he had sent down to him, in return either Bank of England notes or gold. That state of things would continue: and if a country banker were not called upon to pay in gold, he might prefer paper to be sent down to him. At the same time, there would be every inducement for him to keep an ample supply of gold in his coffers. But he confessed he did not perceive what there was in this plan to make the relation between the country banker and the Bank of England stricter than at present. It appeared to him that the right hon. Baronet had overlooked the arguments which really bore upon the question. The fact was, as stated by the hon. member for Essex, that making Bank of England notes a legal tender in payment of country notes, was only meant as a protection against the mischievous consequences of a commercial panic. He did not wish to dwell on any question of this delicate nature; but he did not sec any security in the Bank of England supplying its notes, unless they were made a legal tender in the country. It was well known that during the panic, the demand for gold by the country bankers on the Bank of England, was far beyond their wants. It was in fact, equal to the entire

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amount of their issues, from a desire on their part, to be prepared to pay every one of their notes in gold. On this point he could refer to the evidence of Mr. Horsley Palmer, who gave a most lucid description of the transactions of the time. The right hon. Gentleman read the following extract:
Was not the consequence of that—the general distrust—that all the country bankers that remained solvent, but who were, from accidental circumstances, in the state of discredit you have described, were obliged to come upon you for specie to meet their engagements, and to meet the fears and apprehensions they entertained of what might possibly come upon them?—There were very extensive demands made by the country bankers direct upon the Bank; but I presume that it was equally large by country bankers upon their London correspondents.
And that gold coin was sent to every country town in the kingdom?—I believe so.
Did not the banks of Scotland equally fall upon the Bank of England at the same time?—Certainly.
At the time that took place, was there any doubt or any discredit attaching to the Bank of England throughout that transaction?—None.
Had not the Bank of England specie sufficient to meet any demand that might arise from the simple difficulty of the foreign exchanges?—Certainly, the foreign exchanges had risen, and were in favour of the country.
Did not the very fact of the distress in the interior produce a revulsion of the foreign exchanges and bring money into the country?—Immediately.
But, still was there no such a drain of specie from the Bank that even that return of money from abroad was hardly sufficient to meet the demand from the country?—From the difficulty of getting the necessary supply of coin from the Mint.
So that, at that time, when the Bank was deemed so low, still the specie had not gone out of the country, but was in the coffers of the country bankers?—Certainly, in the possession of the public.
Such was the evidence of Mr. Horsley Palmer. It was well known that such was the demand for gold during the panic, that the Bank was run within a few hours of its deposits; and it was perfectly clear both from this evidence, and from every other testimony, that at that time the exchanges were in favour of this country, and gold was sent to England from the Continent. It was evident, then, that a great portion of those inconveniences to which the country was then exposed might have been avoided. The Bank, therefore, had not to meet demands for bullion or gold to be sent
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abroad, but only for the use of the country bankers. Now what was the nature of the demand of the country banker? The demand, at a period of panic, was net proportionate to what it is in times of tranquillity. It was not in proportion to the paper that the country banker might have issued, but to every security which he might have given, and to the full extent of his engagements. A country banker had, at such a period, to calculate that he might be called upon to pay all his deposits, and to meet all his engagements, in gold. The conscquence during the panic, was, that the run on the Bank of England for gold was far beyond the necessities of the demand; so that it was by no means an unusual case to see packages of gold which had been forwarded by the Hank of England to country bankers returned unopened. Indeed, it was well known that thousands—nay, some hundreds of thousands—of sovereigns were sent down to country bankers, which were returned untouched and unpacked, but which were merely provided as a security against the run which might arise. In one ease, which came within his own knowledge, a gentleman, who issued not more than between 20,000 l. and 30,000 l. in notes obtained 100,000 sovereigns, in order that he might be perfectly prepared; and this money was returned untouched, when the run was over. But the danger to the Bank was not the less imminent, because the fears of the holders, of country notes were unnecessarily great. The main advantage of the pre-sent plan, then, was, that in times of ordinary occurrences, the circulation of the country would go on just as at present, as regarded the country bankers. They, of course, would be anxious to accommodate their customers, and would, therefore, always keep a considerable quantity of gold in their coffers, and sufficient to supply the ordinary demand of the country. At the same time in an extraordinary emergency, such as that of the general want of confidence in 1825—he hoped that such a calamitous event would not occur again; and he believed that this plan would go far to pre-vent it—the country banker, instead of taking down gold for the extraordinary demand, would only keep gold to the extent of a little more than the ordinary demand of his customers, and would provide himself with Bank of England notes for the probable extraordinary demand. At a time of commercial or political panic, persons often hastened to the country bank and withdrew their balances, and returned them

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at the end of two or three days. There, fore, the country banker was obliged to provide for cases of this nature; and one advantage of the plan they were discussing was, that notes could easily be procured to provide for such demands, and prevent the extraordinary demand for gold. Some measure of this sort was absolutely necessary for the security of a bank of issue, like the Bank of England. The right hon. Gentleman and other hon. Members, had stated many disadvantages which, in their opinions, were likely to result from this measure; but most of them appeared to be greatly exaggerated, or without foundation. The right hon. Baronet stated, that he was satisfied that if this measure were carried, before a very short time had elapsed, there would be an agio on gold in the remoter parts of the country. He did not think that this would be the case; and he believed that his hon. friend, the member for Warwickshire (Sir George Phillips), would hear him out in stating that there had been no difficulty in procuring gold for Bank of England notes in Manchester. [An Hon. Member: But they are not a legal tender.] The hon. Gentleman said, that Bank of England notes were not now a legal tender; but that fact would make no difference, for the same facilities would still exist for affording a supply of gold, without an agio. A Bank of England note was not a legal tender at Manchester, and yet it was received as an equivalent for the same amount of gold. The same thing happened in 1827, previous to the establishment of branch banks. His hon. friend had stated, that before 1827, there was no difficulty in getting gold for notes at Manchester. But what would be the greater difficulty under this law, than there existed previous to the establishment of the branch bank at Manchester? There was no difficulty experienced, now, in getting gold for Bank of England notes, in those places where there were no branch banks. At present a man at Leicester might have a 5l. note of the Bank of England; and if the right hon. Baronet's argument were good for anything, the man would be liable to a charge for agio, if be got it changed, but no one ever heard of such a charge at that place; nor did he believe it ever would arise. He repeated that his hon. friend, whose opinion on the subject, from his long residence in Lancashire, was entitled to every attention, said—that there never was any difficulty experienced in getting gold for Bank of England notes in
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that county, previous to or since the establishment of the branch banks, and that no one ever heard of a charge for changing a note, on the ground of the greater expense of sending down gold than Bank of ling-land notes. As at present there was no agio for gold at Manchester, he conceived that when the Bill passed, there would be no agio charged there, But, then, said the right hon. Gentleman, look to Scotland. There was a difference of four per cent in the exchange between Carlisle and Dumfries. That was in bills; but it appeared to him, that there must be some error in the statement of a difference of four per cent between Carlisle and Scotland. [Sir Robert Peel: it was the statement of Adam Smith.] He could not help feeling that there must have been some extraordinary circumstances attending the transaction. The charge for agio could not be greater than the expense of sending gold from one place to the other; and, therefore, the charge for agio, between Carlisle and Scotland, could never amount to the sum stated by the right hon. Gentle man, unless their was something peculiar in the transaction. The statement referred to notes having an optional clause, and probably the charge for interest was to be calculated, as part of this four per cent. The agio was only the equivalent of the expense of sending gold from London; and when they found that Bank of England notes in Lancashire are—and were, previous to the establishment of the branch banks—convertible into gold without an agio, he did not conceive that an agio could exist under this Bill. There was one point dwelt upon by the right hon. Baronet, on which he fell into a complete fallacy, and to which he would take the liberty of adverting. The right hon. Baronet, in taking up what fell from his hon. friend, the member for Essex, respecting the circulation of 1825, said, that the making Bank of England notes a legal tender, would have the effect of driving gold out of the circulation. The right hon. Baronet seemed to argue as if we were to have 1l. and 2l. notes as a legal tender, the effect of which certainly might be as he stated; but there were to be no Bank of England notes in circulation of a less value than the country notes. He could not imagine how gold would be driven out of circulation, or the security of the country hanks be diminished by this measure. At present the country banker did not keep a much greater or less amount of gold in his possession than en-

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abled him to pay his notes in gold, or to meet the demands of his customers. He could not conceive how it was possible that the measure could operate in the way the right hon. Baronet supposed. The only way that the country banker could discharge his obligations, and change his notes into coin was, by sending up to London to convert his securities into money. If there were a large demand for gold for the country circulation, he was obliged to obtain fresh supplies from the market in London. The gold, in periods of distress or excitement, did not find its way back into the coffers of the country banker; for in those periods he paid much more gold than he received, as his notes crowded in; all the gold that he required he must procure from London. He could readily conceive a state of things in which gold might be circulating all round a country bank, and yet the country banker might not be able to obtain gold on the spot to satisfy the demands on him for it. That this measure had a tendency to drive gold out of circulation, or to ruin the country bankers—was to him perfectly unintelligible; for the security would be the same. The facility of raising money to meet his demands would be the same as at present, and the circulation would be nearly the same. The country bankers must now come to the market in London for gold, when they had a demand for it; and this they would have to do still. The making Bank of England notes a legal tender would, of course, induce them to take those notes to a certain extent: and, therefore, although the Bank of England notes might take the place of country bank-notes, they would not drive out gold, nor materially diminish the amount of it in circulation, as the demand for it would continue nearly the same, and the country bankers must keep a supply to accommodate their customers. He contended, therefore, that Bank of England paper would not drive gold out of circulation, but could only displace notes of the same kind as itself; but he very much doubted whether such a result would follow. He wished it distinctly to be understood that he was confining his observations to this clause—he did not allude to the effects of the other parts of the measure on country banks; but he could not see how, by the operation of this clause, country banks would be materially affected, or country-bank paper be driven out of circulation by Bank of England notes. If country bankers found it for their advantage to issue paper—and there was nothing
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in this measure materially to alter their present situation as regarded the issue of notes—they would continue to do so without reference to Bank of England notes being a legal tender. The only other argument of the right hon. Baronet to which it was necessary to advert, was that respecting the branch banks. The right hon. Gentleman said, that the effect of this measure might be to destroy the branch banks of the Bank of England. In the course of the discussions on this subject, they had heard a great deal said against these branch banks; and an hon. friend of his had repeatedly expressed his opposition to them. He knew, that many persons denied that these establishments had been productive of good. He was not one of those who entertained such an opinion; but, after all the great abuse that had been heaped upon them, it was not a little extraordinary that the right hon. Gentleman should call upon those hon. Gentlemen around him not to sanction this part of the measure, as it might deprive us of the great advantage of branch banks! But he did not believe that the branch banks would be closed, as they would have their local circulation in the same way as the country banks, or the Joint-stock Banks. They would have to pay 5l. notes in gold, in the same way as the country banks, or Joint-stock Banks; and would not he more liable than the latter to run for gold. He did not believe that this measure would operate so as to lead to their abolition; but even if it were, what would be the great mischief? If it were, there would be one place, London, in which the Bank of England notes would be payable in gold. Now, he did not see that any great evil would arise from the payment of notes being limited to one place. He agreed with Mr. Ricardo, that Bank paper was not rendered more secure by making it payable in half a dozen places, or branch banks—or that it would be injurious to make Bank of England notes payable in one place only. With regard to forgery, he admitted that it was an objection difficult to meet; but he at once turned to those who put this forward as an argument, and called upon them to show that there was a temptation held out in this measure to commit the crime. He confessed he saw no reason to think, that the crime would be increased by the effect of this Bill; and it was, therefore, for those who urged that argument to prove that such risk would be increased. For his own part, he believed nothing of the kind; nor

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did he think, that Bank of England notes were more liable to be forged than country paper. It was well known that the notes of the Banks of Scotland circulated far beyond their place of payment; and yet there were not many instances of their being forged. He did not think, that ubiquity of payment of Bank of England notes would greatly increase the security against forgery. The main object of making Bank of England notes a legal tender was to give security to the circulation. He considered this to be matter of the very first consequence; and he was sure that no man in the House would be more unwilling to vote for this Resolution than he should be, if he thought that it would not tend to that object. If he thought that it would lead to a depreciation of the standard of value, he would not vote for the measure; but, according to his conception of the standard of value, it was sufficient that paper should be convertible into gold speedily and readily:—and with Bank of England notes convertible and exchangeable, he denied the possibility of a depreciated standard. For these reasons he gave his cordial support to the Resolutions of his noble friend.
Sir George Phillipswas understood to say, that one-eighth per cent was paid in Manchester as an agio for gold before the establishment of the branch banks.
Mr. Cayleyconceived the right hon. Gentleman's (Mr. P. Thomson's) statement to be, as far as it went, a satisfactory answer to the statement of the right hon. Baronet. The question was not, after all, the affording security to the Bank of England or to the country bankers in case of a panic, but to the public, and that could only be done by making Bank of England notes a legal tender, as Ministers proposed. He, however, could not approve of the proposition to make country 5l. notes payable in gold on the spot, for the very amount would only facilitate the means of entering into a conspiracy to injure a bank by a run for gold, more so than for 1l. or 2l. notes. One of the objections urged was, that there might be a premium upon notes of 5l. and upwards. If, however, there were any danger of an agio between bank-notes and metal to be apprehended, the remedy was easy,—namely, to make silver a legal tender to the amount of 5l. Then the issue of small notes had been objected to as a cause of the panic of 1825; but there was ample evidence to prove, that the real cause was over-speculation, and that, in point of fact, it was the issue of 1l, notes by the Bank which
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put a stop to that panic. That panic had been justly attributed by a Minister of the Crown to a want of a sound circulation. In 1822 the proposal was to increase the quantity of Bank notes, by which prices rose above the value of gold, and the consequence was the exportation of specie, which, in fact, was the principal cause of the panic. It was a mistake to suppose that; the circulation of the country was dependent upon the quantity of specie in it. The amount and value of the circulation depended upon the property or security of those who issued notes. A political and a commercial panic were, if not the same, at all events identical in their effects: the effects of neither could, however, be dreaded in this country, nor did they ever last beyond a week. A panic was, indeed, a nine days' wonder and no more. Although he might wish some portion of this arrangement to be different, he would not look a gift-horse in the mouth, and would consequently support the Resolution.
Mr. Warburtonagreed with his right hon. friend, the Vice President of the Board of Trade, that in case of an internal commercial panic, arising from the temporary discredit of country bankers, there would be a great benefit in their being enabled to meet a run by means of Bank of England paper. This, however, was the only argument in favour of the present measure; but he did not think this a sufficient argument for so great a change, which had only this one leg to stand upon. It was not, in his view, enough to show that such a change was merely calculated to meet one species of difficulty; and if it was admitted, as it was, that a sound circulation was a subject of the highest consequence to the country, then, when a change was made, care ought to be taken that it should be so made as not to alter the habits and associations of the people, nor infringe upon the security felt by them in that circulation. But by the present measure they were about to change that security, for the metallic standard would be affected by it. In all other institutions, whenever a change was operated, they were fenced round with securities, to prevent the possibility of danger, without relying on the intrinsic benefits to result from the change. He, therefore, would found the metallic standard on the habits and feelings of the people—they should be accustomed to weigh and to feel what they possessed, so that when an attempt was made to remove this, he would have the people so wedded to it as at once to revolt

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at the notion of its removal. These were the grounds of his objection to this Resolution, which, although in republicâ Platonis it might be very good and feasible, yet when he knew that there was in this country a considerable party always anxious to get rid of the metallic standard, he would, at the hazard of some inconvenience, object to the change. If, however, the measure was to be carried, he admitted, that one of his objections was met by the alteration introduced by the noble Lord (Althorp) in his own Resolution. It was his belief that if the Resolution stood as it did originally, they would be soon rid of all the sovereigns in circulation; but he was astonished to perceive, that after the Bank had received the privilege of their notes being made a legal tender, there was no clause to enforce their keeping up their branch banks. The least that could be done when such a privilege was given was, that every facility should be afforded to the people to change their notes. If this were not so, how could people know what they were to get? What were the bankers in the country to issue, and were the notes to be payable at the branch banks or the Bank of England? He hoped that the notes would be made payable either at the one or the other, at the option of the holder. If the present measure were passed, they should recollect, that the whole superstructure of bullion in the circulation would be now diminished, and in this way. Now it was considered that one tenth of their circulation was kept by country bankers to meet demands in gold, hereafter they would keep this one-tenth in Bank of England paper. It was said, that the Bank of England generally had one-third the amount of its issues ready in gold, but now the country banks would not need to make their demands, and the supply would be reduced to a third of the one-tenth. Another great evil would be the revival of forgery. It was well known that a Royal Commission had formerly been appointed, to inquire into the best means of preventing forgery: and that, after all their investigations, they had been unable to discover any species of note which might not be imitated in such a manner as to deceive the great mass of the people. These were the two grounds on which he resisted the present proposition—first, because it would remove an impediment to the establishment of a general paper circulation, by diminishing the connection of the feelings, habits, and associations of the people with a metallic currency; secondly, because it was
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not possible to discover any mode of avoiding those difficulties which were formerly occasioned by forging the notes of the Bank of England. He hoped, therefore, that this part of the measure would not be carried. But, if it were carried, he hoped it would be accompanied by a clause multiplying the number of branch banks.
Mr. Ginbornedeprecated the idea of Parliament's generally entering into petty regulations, such as declaring how many branch banks there were to be. He was, however, aware of his hon. friend's reasons; and although he supported the present Resolution on grounds directly the reverse of his hon. friend's, he would have, in this instance, no very great objection to legislate similarly. One of his chief reasons for supporting this Resolution was because of its tendency to do away with part of the gold circulation. Another ground that he had was that stated by the right hon. Gentleman near him (Mr. P. Thomson), that in cases of local or partial panics, it would prevent a run for gold. That it was desirable to do away with a metallic circulation, provided the standard of value was maintained, was the doctrine inculcated by Hume, Ricardo, and Horner, as well as by the hon. member for Essex; and when Ricardo found that prices were lowered twenty-five instead of five per cent, he ascribed it to the folly of the people, who had in his opinion so secure a system, that such a desire for metal as was evinced was to him an astonishment. He (Mr. Gisborne), however, felt that in arguing thus, he laboured under a difficulty, from having before contended against exclusive privileges to the Bank of England, or any other body. In this, however, he was overborne, and he therefore hoped the noble Lord would adhere to his Resolutions.
Mr. Frankland Lewisthought, that this was a question they ought to put to themselves—namely, whether any sufficient inducement was shown to them to make so great a change as was now proposed? And also, was there any one who could contemplate the right of any man possessing a note to demand gold, and not tremble when he heard that Bank of England notes were now to be made a legal tender? Would such a course not shake men's habits, and perhaps injure what ought to be the legal security of the country? He admitted, that the amount of gold in circulation was not likely to be diminished by this measure. Country bankers would now not have that necessity to make a store to

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meet demands upon them, and thus, pro tanto, there would be less absorbed from circulation. But suppose the country bankers to have now 1,000,000 of sovereigns constantly in deposit for this purpose, what would be the effect of adding this to the money now passing? Nothing upon the price of gold, for it was known, that larger sums were frequently hoarded without any sensible effect on the market value of the metal. The right hon. Gentleman dwelt upon the panic of 1825, and the trembling and agony experienced at the time, to prove that these commercial panics Were far from being a mere nine days' wonder, but of the most serious importance. Notwithstanding all that had been said by his hon. friend opposite, he contended that the removal of the 1l. and 2l. notes had greatly diminished the chance of panic; and a further security against its occurrence was to be found in the fact that they had reduced the amount of the country bank circulation one-third. He had no objection to allow those who chose to take Bank of England notes in payment of their demands to do so; but any act which compelled a man to take the notes of an institution the stability of which he might have cause to distrust, was an act of tyranny. The noble Lord's proposition had been described as replete with advantages to the country bankers; all he could say was, that if he were a country banker, he should deprecate the boon. The hon. member for Essex had said, that in the event of war breaking out, a bank restriction must be resorted to; and in that case he begged the House to consider what situation the country bankers would be placed in. Suppose Parliament not to be sitting at the time, and that an Order in Council should be issued to prevent the Bank of England paying gold. The country bankers would still be liable to pay in gold;—their coffers would be drained;—and when they sent to London for gold, they would find that a restriction was placed upon the Bank. If the noble Lord's original Resolution had been agreed to, he would at last have been forced to have recourse to a 1l. note currency; and he had only escaped from that evil by the proposition of a measure, the effect of which, if not a nullity, would be full of hazard.
Mr. Cobbettsaid, he did not rise for the purpose of stating at the present moment what his sentiments were with respect to the Resolution proposed by the noble Lord, but to show the House what weight ought
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to be attached to the authorities quoted by an hon. Member opposite (Mr. Gisborne). The first authority referred to by the hon. Member was Mr. Horner. That Gentleman was Chairman of the Committees which sat in 1810 and 1811, and which recommended Parliament to pass a law to compel the Bank of England to pay in gold at the end of two years from that priod. If that scheme had been followed, the whole concern would have been blown up in a very short time. Thus much for the hon. Member's authority the first. Authority the second was Mr. Ricardo. Now it was well known that Mr. Ricardo, in recommending the measure of 1819, said that it would not reduce prices more than three-and-a-half per cent. However, he afterwards went as far as four per cent, and at last got to five per cent. The third authority was the hon. member for Essex, who quoted Hume to the effect that the effects of a change from paper money to cash payments would only be felt during the transition. The hon. member for Essex, however, did not seem to recollect that Hume had not in his contemplation a debt of 800,000,000 l., the amount of which would not be diminished by the transition from paper to gold. With respect to the question under discussion, all he would say was, that this was not the time to endeavour to patch up the concern by propositions for making Bank notes legal tender, but it was their duty now to come to such a settlement as would give the King's coin to their fellow-countrymen for the rest of their lives, and to their children after them. When the noble Lord's resolution arrived at such a stage as would enable him (Mr. Cobbett) to say "this is the thing at last," he would then offer some observations on it; but before he sat down he could not help expressing his astonishment when he recollected the kind of reception he had latterly met with, that the House had on the present occasion listened to him so long and so patiently.
Mr. Richardsalso supported the Resolution, and he did so on the ground that it would tend to check panics arising either from political or commercial causes. It was well known that many bankers kept 50,000 l. in coin to meet a run upon them, while in ordinary times 5,000 l. was quite enough. When the panic came, however, then they were like others forced to crowd to Lombard-street to procure means to meet the demand. He approved also of the alteration which the noble Lord had made in his

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original resolution, and trusted that he would not be induced to abandon it. Had such a measure as that recommended by the noble Lord's resolution been in operation in 1797, no panic would have occurred at that period, and consequently no Bank Restriction Act would have been necessary. He admitted that it would operate to create an agio on gold; but he was far from thinking that this effect would be either pernicious or unjust. He believed that it would prevent that distress and difficulty taking place which had always occurred in times of commercial embarrassment, in consequeuce of persons holding country bank-notes, simultaneously demanding their payment.
Mr. Grotesaid, he must admit that up to a short time ago this measure met with his concurrence; but subsequent inquiry had convinced him that it was calculated to effect more harm than good for the country. He was perfectly ready to admit, that to a considerable extent it would be advantageous in distrusting (assuming it was not carried too far) the country circulation; but there would be no advantage at all if the feeling should be carried, as possibly it might be, to a distrust even of the circulation of the Bank itself. The measure did not give the means, as he once believed it did, for maintaining what he might term the retail circulation of coin. On that ground he must withhold his assent from it. He admitted that from the competition which would arise amongst the country banks, gold would be extended over many of their localities; but he doubted if it would be so to a proper extent all over England. There would not be, in his opinion, an adequate supply of specie over the poor districts as well as the rich ones. In fact, there would be a certain commission charged on gold over that which would be demanded for notes. This had been the case in Manchester on the establishment of the branch bank, to the extent of one-eighth, and the knowledge of the fact had tended materially to alter his views upon the subject. It would prove a great hardship on the poor and remote districts, more especially those far removed from a town where there was a branch bank. A further reason for his present view of the subject, was, that by the working of this clause it would have the effect of hindering small depositors—men who had their thirty or forty pounds—from carrying gold to the country bank. They took it there now because they knew they could have it back
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on demand, but they would of course cease to do so when they had no longer a legal title to its repayment in the same coin in which it was deposited, Thus would they deprive country bankers of the means of conferring benefit on their neighbourhood, for it was by receiving these small savings that they were enabled to spread capital over the country. It was from the great suspicion he now entertained that there would be a deficiency of local specie, and that consequently there would be a great liability to the occurrence of a commercial panic—it was in a great measure from a suspicion on that head that he should withhold his assent from the present Bill. He could not give his consent to the measure unless he saw perfectly that there would be always a sufficient amount of specie distributed through the country, and he must say, that he did not see any provision for such a result in the present Bill, nor was he convinced that such would be its effect. He had a further distrust of this measure from the circumstance that it was adopted and praised by Gentlemen who held certain opinions on the question of the currency, which he bad no doubt they held sincerely enough, but which he could not avoid considering as likely to be injurious to the country if they were adopted. He thought that they ought to refrain from any alteration of the currency, such as was now proposed, without having first proved to them that there was a clear and distinct evil to be remedied, and that the remedy itself was one that not only would meet the evil to be provided against, but that would not occasion an evil of a different kind, and perhaps of a greater extent. This was the more necessary, as there was scarcely any evil that could happen that would not be ascribed in the minds of most men to a change in the currency. It was always made responsible for all the distresses that might befal the country at that period. This might be right or it might be, wrong, but the fact was so. He should not pretend to say, that the present system of the currency was free from all imaginary objections: but so far as he knew, there were none to which it was liable, against which might not be opposed equal if not greater objection's in the plan now proposed. Till, therefore, the danger to be remedied and the safety of the remedy itself were fully made out, he should not feel himself at liberty to accede to the noble Lord's propositions. He knew that what he had now said was not in accordance with his former

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opinions on this subject; he distinctly called the attention of the House to the fact; but more extended experience had bad the effect of showing him his mistake, and he left this confession of his error, which truth required him to make, to operate on his reputation as Gentlemen might think fit it should.
Lord Althorpobserved, that the change in the hon. Member's opinions had taken place since the evidence he gave before the Committee on the Bank Charter, and certainly the hon. Member had little right to find fault with his (Lord Althorp's) opinions, since those opinions had been much influenced by the suggestions of the hon. Member, as given in that evidence. The noble Lord then referred to some answers of the hon. Member, given to the Committee, to show that, in those answers, the payment of country bank-notes by Bank of England notes had been recommended. The hon. Gentleman, however, now said that, since giving that evidence, other circumstances coming to his knowledge had altered his opinions, and especially the fact of the commission paid for gold in Lancashire since the establishment of the branch hanks. He must say, that he could not agree with the hon. Member in supposing that the poorer districts of the country would suffer from this measure—indeed, he believed that all the evils anticipated by the hon. Member as likely to occur in such districts would be prevented by the competition among the country hankers. The hon. Member had supposed that the poorer classes of tradesmen in the country would dislike to place coin in the hands of the country bankers, because they would not be able to draw it out again. Now, though they would not, under this Bill, have exactly a legal claim to draw it out again, yet, if there were two banks in one place, and one was ready to pay, when required, in gold, and the other was not ready to do so, that difference in their mode of dealing would make the people select one of these banks in preference to the other, and that selection would cure the evil. He believed, that the anticipated evils were never likely to be felt, except in times of great difficulty, and against such occasions the measure had endeavoured to provide. In times of difficulty it was of the greatest possible importance to increase the security of the Bank of England—and times of difficulty, like those of 1825, might again occur. But then, said the hon. member for Bridport, the effect of this measure must he to tend
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to produce a considerable depreciation in the standard of value. The hon. Member knew as well as any one, that the effect of such a circumstance would be to turn the foreign exchanges against this country, and that being so, the Bank must have such a drain of gold as would have the effect of restoring the exchanges. There was nothing but a Bank Restriction Act that could keep the exchanges permanently against this country. He believed, that the fears of the hon. Member were groundless, and that the change would be productive of the greatest advantage to this country. Instead of affording any ground for apprehension that it would produce bad effects on the circulating medium, he believed that all such evils were fully guarded against, and that it would be most desirable that the Resolution should be adopted.
Mr. Claythought, that the manly and noble conduct of the hon. member for London, in thus frankly avowing what he now considered to be an error of opinion, was above all praise; and instead of detracting from his character for talent and judgment, would only increase his deservedly high reputation. With respect to the plan which the Government had proposed, he thought the noble Lord had altogether failed, both in showing that there was any difficulty or danger in the present system, and that the proposed plan would obviate it. The noble Lord had shown no necessity for such a change in our monetary system, and in his opinion, no such panic as that of 1825 was likely again to occur. He believed, that the plan of the Government was not calculated to obviate any real danger; but he feared that it was likely to create some. He thought that they incurred danger, in infringing on the principle of the convertibility of Bank paper; and he should oppose that part of the plan most decidedly. Country banks had already sufficient facilities for circulating their paper; the issue of it was favoured by several different circumstances. He knew that there were instances in some of the manufacturing districts in which manufacturers paid their men in a body, so that they might give among three or four men one 5l. country bank-note, instead of giving to each the amount due to him in sovereigns; and these men were charged, at the public-house where they spent their money. 1s. for each note changed for them. This was a serious evil in these places. [Cries of "name," and "where."] In the manufacturing districts of Lancashire and Yorkshire he had known instances of it.

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He could tell the noble Lord, that there was already a feeling against this plan, even in those parts of the country where Bank of England notes now circulated instead of country notes; and that in these places indignation was already expressed at the attempt of the Government to make Bank of England notes a legal tender, and there was already a disposition to combine and prevent their circulation. What were the intentions of the Government with respect to Scotland and Ireland on this part of the subject? Did the noble Lord mean to make Bank of England notes a legal tender in those parts of the Empire? for if he did, he might as well resort at once to a Bank Restriction Act, the evils of which he had just confessed. So persuaded were the Americans of the necessity of a perfect convertibility of paper into gold, that there were no Charters now given to incorporate banks there, except upon the condition that they were to be forfeited, the moment they were unable to pay a single sum in gold.
Mr. John Smithcommenced by praising the liberality with which the Bank of England had acted in every crisis of public difficulty, and especially in the year 1825, when such a panic occurred as, he believed, would never occur again. At that time the Bank had committed a mistake in the extent to which it carried its liberality. Now, it was the interest of every man, manufacturer as well as agriculturist, to protect public credit; and a second mistake in the Bank of England might be injurious to the whole country. This mistake, however, could not occur if the notes of the Bank of England were made legal tender. He was of opinion, that making them a legal tender would not occasion any great scarcity of gold. Though it might be true that a publican had charged 1s. for changing a 5l. country note into sovereigns, he would not say that he doubted—he would say at once that he disbelieved—that any country banker had ever done such a thing. He contended, that the right hon. member for Tamworth, on bringing in his Bill of 1819, had rendered great service to the country. We had now done, thank God! with 1l. and 2l. notes: if they should ever again be permitted to return into circulation, he would retire from banking and live as well as he could on his means, believing, as he did, that our ruin would infallibly follow the recurrence to such a practice. He thought that the first opinion of his hon. friend, the member for the city of London, was tie best. As to the fears which some
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hon. Members seemed to entertain of the injurious effects of the measure on the currency, he thought they were altogether groundless. Looking, then, at the measure in every point of view, he thought it would benefit the country, and he would, therefore, give it his cordial concurrence.
Mr. Blamireexpressed a hope, that as so much depended on the judicious settlement of this question, it would receive the most serious consideration. He trusted, therefore, that hon. Members from all parts of the country would state what were likely to be its effects in those places with which they were best acquainted. On these grounds he would say a few words as to what he thought would be its effects in the northern parts of the country, in which he considered that it would be productive of no advantage whatever to the country banker, and would be a serious inconvenience to the community. He could not but regret, that the noble Lord had not brought his plan to some perfect form before he submitted it to the House, which was thus inconveniently called upon to pronounce upon a part of the plan before it was made acquainted with the whole. That part of the measure which would tend to diminish the circulation of country notes, and to substitute those of the Bank of England, would be found greatly inconvenient to the people of some of the northern counties, where they had a strong objection to Bank of England paper, and preferred country paper, as they had much less difficulty in detecting forgeries of the latter than of the former. One effect of the plan would be, that the demand for gold in the northern counties would be increased, instead of being diminished, for those who now took country notes were satisfied with them, as being better able to detect any forgeries of them, but now, if the circulation of those notes was limited, they would seek for gold rather than take Bank of England notes, with which they were not acquainted.
Sir John Wrottesleysaid, that this was one of the most important subjects that had ever come under the consideration of that House. It was one which at different times had occupied the attention of some of the greatest statesmen of modern times, who, differing in most other points, concurred in that of the impolicy of making Bank of England notes a legal tender. Both Mr. Pitt and Mr. Fox had disclaimed the intention of making Bank of England notes permanently a legal tender. Even after the restriction of 1797 it was not

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admitted, that in all cases they were a legal tender, and this went on till 1811, when a noble Lord, whom they all lamented (Lord King), raised the question in that year, but not for the motives falsely attributed to him, and demanded the payment of his rents in gold. On that occasion the late Lord Stanhope brought in a Bill, which was to have the effect of making the Bank of England note a legal tender for its full nominal amount. Lord Liverpool at first declared that he would oppose it: but, after some consultation with the Bank, he, in a few days, consented to the Bill. If the House would allow him, he would state why Lord Liverpool was induced to pass that Act. Lord Liverpool said:—'By it one great and material objection—that which referred to making bank-notes a legal tender—was in a great measure obviated. Generally speaking, the subject in question was not proper for legislative interference, except in cases of positive necessity, of which, as yet, he saw no proof. It would be preferable to rely upon the general principle of mutual confidence, and the good sense of the people at large. Here he did not see a sufficient case made out to induce a departure from that principle.'* This was the opinion of Lord Liverpool; and it should be remarked, that the noble Lord supported the Bill because it did not make bank-notes a legal tender. But it might be said, perhaps, that he was only quoting a departed authority. If the House would allow him, he would give them the opinion of a living authority. Earl Grey said:—'The consequence of this proceeding must be, that the bank-notes will become a legal tender, and then this country would be subjected to the greatest evils experienced by the French government in the time of the Assignats.'† But lest it should be said, that these reports of debates might not be correct, he would quote an authority with respect to which there could be no mistake. It was no other than a protest against that Bill, and it contained these words:—'Because we think it the duty of this House to mark, in the first instance, with the most decided reprobation, a Bill which, in our judgment, manifestly leads to the introduction of laws imposing upon the country the compulsory circulation of a paper currency—a measure fraught with injustice, destructive of all confidence in the legal security of contracts, and, as invariable experience
* Hansard, xx, p. 765. †Ibid. p. 838.
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has shown, necessarily productive of the 'most fatal calamities.'* And who did the House think signed that protest? He found the names of Grey, Lansdown, and Vassall Holland appended to it. The hon. Baronet then went on to contend, that this measure might be productive of great injustice to individuals. A man, for instance, might purchase an estate in Cumberland for 100,000 l., and the seller would be obliged to take the amount in Bank of England notes, when probably at that very time the Bank might have ceased to pay in gold.
Mr. Forsterconcurred in the view of this question taken by the hon. Baronet, and contended that the result of an approximation to making paper a legal tender would necessarily be a depreciation of Bank paper. He greatly regretted, that such a change as this should be brought about at the present time, when we had got a sound and settled system of circulation, resting on the principle of convertibility. The chief ground for diminishing the circulation of country paper was, that a large issue of that paper rendered the exchanges less manageable by the Bank than they otherwise would be. This he denied, and contended, that the influence of country bank paper was so indirect and remote, as to render no additional precautions necessary on the part of the Bank. As to the panic of 1825, it was impossible that such a panic should recur again so long as the 1l. notes were kept out of circulation. In conclusitm, he implored the Committee to pause before it took a step where to advance would be extremely dangerous, and to retreat extremely difficult, and yet retreat they must:—
Revocare gradum, superasque evadere ad auras, HOC opus, hic labor est.
Mr. Robinsondenied, that the cases of Lord Stanhope's Bill quoted by Sir J. Wrottesley had any application to present circumstances. Formerly notes of every description were received in payment, but by this measure all sums of 5l. were payable, on demand, in gold. What would be the effect of this? It was said, that it would give a check to payment in gold. No doubt it would in a slight degree: but that was the object of Government, to prevent a sudden demand for gold more than Was necessary. It was only a choice of evils: it was perfectly well known that there was not gold enough in the country to pay all the demands between man and
* Hansard, xx. p. 831.

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man. How could they pay 28,000,000 l., the interest of the National Debt, in gold? They must, therefore, have some of those payments represented by a paper currency, which, on the present plan, he must again contend, would suffer no depreciation. What was the fact in 1825? Why, it was well known, that country bankers came up to London in that year, and took away with them large masses of gold, which were found afterwards not to be necessary, though great trouble had been gone to to procure it. The great object of this Bill was to guard against the recurrence of such a demand for gold.
Mr. Mark Philipsopposed the Motion. When he remembered that the Bank of England was in itself merely a mercantile speculation, and that it extended its circulation further, in proportion to its capital, than the country bankers did, he could not but have doubts as to the propriety of making the issues of the Bank of England legal tender. And when he saw the readiness with which hon. Members seemed inclined to adopt this Resolution, it only tended to increase his doubts; and he thought it, therefore, his duty to oppose the Resolution. He denied, that the practice, stated by an hon. Member to exist in some parts of the country, of paying labourers in Bank of England notes of 5l. was at all general. In Lancashire it did not exist. There wages were regularly paid at four o'clock every Saturday; and every man, woman, and child carried off their earnings in hard cash. In duty to himself, and to the large constituency which he represented, he felt himself bound to oppose the Resolution.
Colonel Torrenswould have had no objection to make Bank of England paper legal tender, provided that were done on the plan proposed by Mr. Ricardo, or provided the Bank issues were on the same principle as those stated by Joplin; but he had the strongest possible objection to making the Bank of England notes a legal tender, constituted as the Bank of England was. He believed, that the whole of the distress which had afflicted this country proceeded from the mismanagement of the Bank of England. The Bank of England was bad in practice, but in theory it was worse. Their rule was to keep to the amount of one-third of their liabilities in gold, when the currency was full; but when a foreign demand came, then they diminished the gold in their coffers below that proportion, and in order to a readjustment, they were then obliged either to re-
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duce the circulation or re-establish the amount of gold in their coffers. When, however, they had too much gold in their coffers, they changed (hat gold into securities. That this was the practice appeared from the evidence of Mr. Horsley Palmer. He (Colonel Torrens) thought those two rules incompatible, and he, therefore, said, that the theory of the Bank of England was worse than its practice. He was of opinion, that if they extended the monopoly of the Bank they would draw upon the country all the evils which had been felt from the fluctuations in the currency, and that when they established the Bank paper as a legal tender, they abandoned all the principles which science had brought to light upon this important subject.
Lord Sandonobserved, that the object of Government appeared to be to relieve country-bankers from the necessity of procuring gold in the event of a panic, by making Bank of England paper a legal tender in the counties above a certain amount (5l). How would the system satisfy the holders of 5l. country-notes, and the depositors, who were the two classes of the country-bankers' customers? The holders of 5l. notes could still demand gold, and the depositors might draw checks for small amounts, in order to get gold. Such being the case, the country bankers would naturally send to London, not for Bank of England notes, which might not be accepted, but for the article (gold) which he was quite sure would answer his purpose in the event of a panic. Thus it appeared, that the Government plan was, to say the least of it, inefficient: a sufficient ground to justify him in opposing the Resolution.
Mr. Ewartsaid, that the great objection which he had to the change proposed by this Resolution was that a case of necessity had not been made out; and he thought, such a change was not to be justified but by absolute necessity. The evidence on the subject went against, rather than in favour of, its necessity. He had been on the Committee on the state of our commerce, and had, therefore, had opportunities of inquiring into the subject, and, he was convinced, that the currency of the country as it at present stood was sufficient for the necessities of the country. He objected to the Bank of England because it was a monopoly. If there were other large establishments, the rivals of each other, he would not object to making the paper of that Bank which had shown itself deserving of the public confidence legal

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tender. Neither would he object to the paper of a National Bank, but he could not support such a proposition in the case of the Bank of England. He would, therefore, oppose the Resolution, in the first place, because it was not necessary; secondly, because the Bank of England was a monopoly; and, thirdly, because the measure had a tendency to depreciate the value of the currency.
Mr. Poulett Scropesupported the Resolution. He said, that some people were of opinion, that every liability should be as easily convertible into gold as possible. He was of a contrary opinion. He thought, that it might be advantageous to throw some obstructions in the way of converting responsibilities. The promise to pay in gold was one which could not be fulfilled; and it was the business of the Legislature to take care that debts should be ultimately paid. He thought, the present clause would tend to that, and, therefore, he supported it.
Sir Henry Willoughbysaid, that if a panic arose from a distrust of paper money, it could not be cured by a tender of paper money. The people in such a case wanted gold, not paper, and an offer of paper would increase rather than diminish the alarm.
Mr. Herriesbegged to ask the noble Lord, before the House divided, whether the plan now proposed was to be permanent, and whether measures were to be taken to oblige the Bank of England to retain the present number of Branch banks?
Lord Althorpstated, that he thought he had already answered the questions satisfactorily at the desire of other hon. Members. However, as it would appear that he had not made himself perfectly intelligible to the House, he was ready to repeat what he had stated first, in answer to the hon. member for Whitehaven, as to the duration of the arrangement. The hon. Member had asked him whether it was to be considered as permanent or otherwise? He had stated, in answer to this, that the hon. Gentleman must be aware that this was a regulation, not for the benefit of the Bank, but for the benefit of the public. He added, that as it was proposed to insert in the Act of Parliament that it was intended to renew the Bank charter for a period of twenty-one years, it followed, that the regulation could not, under that Act, exist beyond the terra fixed for the maintenance of the charter. With respect the possibility of the arrangement being
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altered in the mean time, he was of opinion, that if it should be found detrimental to the public interest, it would be competent to Parliament to alter it. He had been asked, in the next place, whether he intended to introduce a provision into the Bill for the purpose of compelling the Bank to keep up a certain number of branch establishments to pay in gold in the country? He did not believe it possible for him, or any other man, to state with precision in an Act of Parliament how many branch establishments the Bank ought to support, and, therefore, he declined interfering in the matter. With respect to the third question, he did not think the alteration he had made in the Resolution, which was intended, not to satisfy any doubt of his own as to a possible deficiency of coin in circulation under the Resolution as it before stood, but to satisfy the apprehensions entertained by others on that subject. He did not think that the change would produce any material effect. 5l. notes were payable in gold, but for all amounts above 5l. Bank of England paper would be a legal tender. If, as had been suggested, a bank issued five-guinea notes, a Bank of England note would certainly be a legal tender for part of that amount.
The Committee then divided on the Resolution—Ayes 214; Noes 156: Majority 58.
Resolution agreed to.

List of the Noes.

Aglionby, H. A.

Chapman, A.

Andover, Lord

Chaytor, Sir W.

Astley, Sir J.

Chaytor, Colonel

Baillie, J. E.

Clay, W.

Bainbridge, E. T.

Clive, E. B.

Baldwin, Dr.

Clive, Viscount

Barry, G. S.

Clive, Hon. R. H.

Bell, M.

Cookes, T. H.

Berkeley, H. C.

Coote, Sir C.

Bethell, R.

Cornish, J.

Bewes, T.

Daly, J.

Blake, M. T.

Darlington, Earl of

Bolling, W.

Dare, R. W. H.

Bouverie, D. P.

Dashwood, G. H.

Bowes, J.

Dawson, E.

Briggs, R.

Denison, J. E.

Brocklehurst, J.

Duffield, T.

Brotherton, J.

Egerton, W. T.

Buckingham, J. S.

Ellis, W.

Buller, J. W.

Evans, W.

Buller, C.

Ewart, W.

Bulwer, H. L.

Faithfull, J.

Butler, Colonel

Fancourt, Major

Calcraft, J. H.

Feilden, W.

Calley, T.

Fellowes, Hon. N.

Cartwright, W. R.

Fellowes, H.

Castlereagh, Viscount

Fenton, J.

Chaplin, T.

Fielden, J.

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Finn, W. T.

Pigot, R.

Forester, Hon. G. C. W.

Plumtre, J. P.

Forster, C. S.

Potter, R.

Fryer, R.

Powell, W. E.

Galway, J.

Price, R.

Gaskell, J. M.

Ramsden, J. C.

Gaskell, D.

Rickford, W.

Gladstone, W. E.

Ridley, Sir M. W.

Gladstone, T.

Roe, J.

Grimston, Viscount

Ronayne, D.

Guest, J. J.

Russell, C. J. F.

Halford, H.

Ruthven, E.

Hall, B.

Sandon, Viscount

Handley, B.

Sanderson, R.

Handley, W. F.

Sanford, E. A.

Hanmer, Sir J.

Shepherd, T.

Hardy, J.

Staunton, Sir G.

Hawkins, J. H.

Stanley, E.

Hayes, Sir E.

Stewart, J.

Heathcote, J.

Stormont, Viscount

Herries, Rt. Hon. J. C.

Strutt, E.

Herbert, Hon. S.

Sullivan, R.

Hodgson, J.

Thicknesse, R.

Hope, H. T.

Throckmorton, B.

Howard, P. H.

Todd, R.

Hughes, W. H.

Torrens, Colonel

Hume, J.

Trelawney, W. L. S.

Ingilby, Sir W.

Turner, W.

Irton, S.

Tyrell, C.

James, W.

Vernon, G. H.

Jephson, C. D. O.

Vigors, N. A.

Jervis, J.

Vyvyan, Sir R. R.

King, B.

Walker, R.

Lambton, H.

Walter, J.

Lefroy, Dr.

Warburton, H.

Lefroy, A.

Wason, R.

Lewis, Rt. Hon. T. F.

Welby, G. E.

Lister, E.

Whalley, Sir S. B.

Lloyd, J. H.

Whitmore, T. C.

Locke, W.

Wilks, J.

Martin, J.

Williams, Colonel

Molesworth, Sir W.

Williamson, Sir H.

Morrison, J.

Willoughby, Sir H.

O'Brien, C.

Wood, G. W.

O'Connor, Don

Wrottesley, Sir J.

O'Dwyer, A. C.

Wynn, Right Hon. C.

Ord, W. H.

Wynn, Sir W. W.

Palmer, R.

Young, J.

Parker, Sir H.

TEILERS.

Parnell, Sir H.

Ross, C.

Peel, Rt. Hon. Sir R.

PAIRED OFF

Philips, Sir G.

Poulter, J. S.

Philips, M.

Romilly, E.

In reply to Mr. Herries on the third Resolution being read,
Lord Althorpwas understood to say, that he thought that the amount of debt which would remain due to the Bank after the repayment of twenty-five per cent which Government proposed to make upon it would afford ample security to the public. It was, no doubt, most desirable that an adequate security should remain for the public, in the shape of debt due by the Government to the Bank, but he was of
1402
opinion that after reducing that debt to the extent of 3,500,000 l., a security as ample as was necessary would be still provided for the public.
Mr. Frankland Lewisremarked, that they should have some explanation as to the manner in which this returned capital of the Bank was to be employed. If the Bank should be driven to employ a portion of its capital that was now in the hands of Government, in some other direction, it might lead to risk and to those fluctuations which were so mischievous.
Mr. Alderman Thompsonsaid, that with respect to the reduction of the capital of the Bank, which formed part of the general arrangement proposed to the Bank by Government, the Bank was satisfied that the amount of capital which would remain, after the proposed payment of 3,500,000 l. would be quite sufficient for the discharge of all the functions which the Bank at present discharged, or which it might be called upon to discharge, in consequence of the adoption of the new arrangement. It was first proposed by the noble Lord to reduce the capital of the Bank one-half; but to that proposal the Bank Directors very properly felt strong objections, and the statement of those objections on their part had, he thought, fully justified the noble Lord in departing so far from his original proposition as to limit the reduction to 3,500,000 l. He was quite satisfied that the amount of capital which would remain would be adequate for all purposes, and would be ample security for the maintenance of the public confidence in the Bank.
Mr. Baringsaid, that as it was proposed by this Resolution, that the Government should pay back a part of the debt due by the country to the Bank, it was necessary to inquire what was the object of doing so. If the object of the Government in doing so was to make a better bargain with the Bank on the present occasion, he would admit, that a diminution of the capital of the Bank for such a purpose would be perfectly legitimate; but when he looked at the proposition contained in the next Resolution, he found that the Government had by no means made as good a bargain as it might have made with the Bank under the circumstances. That was the point in this transaction which, as it appeared to him, had not been satisfactorily explained by the noble Lord. This reduction of the debt due to the Bank began with a loss to the public of 20,000 l. a-year, as the Government would have to pay back to the

1403
Bank the proposed amount (3,500,000 l.) at a much higher rate than it was borrowed. Instead, therefore, of 120,000 l. a-year being deducted from the payments made to the Bank for the transaction of the Government business, the real deduction after taking into account this loss to the public of 20,000 l. a-year, would only amount to 100,000 l. per annum. What he was now discussing had, perhaps, more connexion with the next Resolution. He could not avoid repeating, that the loss which the public would sustain, and the advantage which the Bank would derive, from the reduction of the capital of the Bank, afforded the noble Lord good grounds for making a much better bargain than he had made with the Bank.
Lord Althorpremarked, that the bargain which had been made with the Bank would come more conveniently under discussion when the next Resolution was before the Committee. In proposing the reduction which the Government proposed in the capital of the Bank, he conceived that it would be effected upon advantageous terms for the public at present, considering the state of the money-market. It was impossible to foresee what changes might take place in the money-market hereafter, and that consideration of course had been taken into account in making the bargain which he had made with the Bank. He did not think that, all circumstances considered, he could have made a better bargain for the public.
Mr. Matthias Attwoodsaid, that the noble Lord appeared to be more anxious for the interests of the Bank than for those of the Exchequer, over which he presided. One of the noble Lord's reasons for reducing the debt to the Bank, was that the money had been lent at a low rate of interest. Now, if the interest was lower than the market rate, the Exchequer would be a loser pro tanto, as it would have to purchase at a higher rate to repay the amount proposed. For his part, he would rather see the noble Lord exhibit an anxiety to reduce the expenses of the Exchequer, so as to effect some reduction in the public taxation, than manifest such an anxiety to secure their dividends to the Bank proprietors. He saw no inclination exhibited on the part of the Bank for a reduction of the debt due to it, and he saw no reason for supposing that the Bank in the first instance would have asked any thing for managing the Government business.
Mr. Poulett Thomsonsaid, that the statement which had just been made by
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the hon. Member was so completely at variance with the papers that had been laid before the House, that he could not avoid noticing it. If the hon. Member would only look into those papers, he would find that the Bank charged the Government 144,000 l. a-year, or one per cent upon its capital of 14,.500,000 l. lent to the country. That charge was distinctly specified by the Bank Directors, and the grounds on which it was made were, that they lent the money to the Government at three per cent, and that if they returned it to the Bank proprietors they could get four per cent for it. He only regretted that the original proposition to pay off one half of the debt to the Bank did not still form a part of the proposed arrangement, as he was sure the remaining capital would afford ample security to the public. It should be recollected that it was most advantageous for the public, at a momemt when the funds were so high, and when the rate of interest in the market was so low, to get rid of a portion of the debt due to the Bank. If the doing so should be postponed for ten years more, when the renewal of the Charter would come before Parliament, who would engage that the three per cents would not then be at fifty or sixty? See then the disadvantage under which the country would labour in being obliged to fund with the three per cents, at fifty or sixty, instead of being, as they now were, at ninety. But hon. Members would say, that the three per cents were more likely to march the other way. Now, the Government had only to look at the probable state of things, and it was obvious that there was a small margin for a rise, while there was a large margin for a fall in the three per cents at present.
Sir Robert Peelsaid, that although the discussion in which the Committee was at present engaged might be more appropriately taken upon the 4th Resolution, yet, as the present Resolution was so much connected with it, he thought the time of the House would be saved by having that discussion now. It was to be remarked, that in all the Reports of the Committees that had sat with regard to the Bank, the amount of the debt due by the public to the Bank had been always taken as the security for the public—as the grounds for its confidence in the Bank. It was so in the Committee of 1797, and so likewise in the Committee of 1819. The debt of 14,000,000 l. or 15,000,000 l. had been uniformly assumed as the security for the stability of the Bank circulation. The noble Lord now proposed

1405
to pay off a portion of the debt due to the Bank, and if the circulation of the Bank was to remain as it was, perhaps 11,000,000 l. of debt would be a sufficient capital as security for that circulation. But the noble Lord's plan went on to extend the circulation of the Bank indefinitely. The noble Lord wished to give the Bank a monopoly of the circulation of the country, and he seized the very same opportunity to effect a diminution in that fund, which afforded one of the grounds of public confidence in the Bank. The noble Lord proposed to add indefinitely to the paper circulation of the Bank, and at the same time he proposed to diminish the debt due by the public to the Bank to the extent of 3,500,000 l. If that amount was to be repaid to the proprietors, it would be a complete diminution pro tanto in the assets of the Bank. He wished to know whether that would be the case? [Lord Althorp was understood to say, across the Table, that the Bank would be bound to pay it to the proprietors.] If the Bank, then, would be bound to do so, he (Sir Robert Peel) would maintain, that it would be a diminution pro tanto of the assets of the Bank. At the same time this repayment of a portion of the debt to the Bank would not be effected at a loss less than that of 20,000 l. a-year to the country. The result was, in consequence of the arrangement contained in the 3rd and 4th Resolutions, that the Bank would only have to pay 100,000 l. a-year for the renewal of its Charter. The Bank on the former occasion, be believed, paid 280,000 l. for the renewal of the Charter. It lent the Government a sum of 14,000,000 l. at three per cent, when the rate of interest was five per cent, which was tantamount to paying 280,000 l. a-year. Supposing, as an hon. Member said, that the market rate of interest was four and a-half per cent only, it was still certain that the Bank at all events, paid much more than 100,000 l., and the privileges acquired by the Bank at that period were much less than now. But, although the noble Lord had made a bargain with the Bank which he thought improvident, he would not refuse to ratify the bargain. His confidence in the Bank Directors had indeed, greatly increased since these nogotiations; for if they had got all the privileges, and paid less than they paid before, although he would not say they had outwitted the Chancellor of the Exchequer, they had made a capital bargain for themselves. Although he was not prepared to nullify the bargain the noble Lord had made, still it would be satisfactory to the House and
1406
the country if the noble Lord would give some estimate of the mode in which he had calculated what the Bank should give for the renewal of their Charter; and if it was less than the former consideration, his reasons for not making a better bargain.
Lord Althorpobserved, that the right hon. Baronet had said, that he (Lord Althorp) was reducing the capital of the Bank at the same time that he was increasing their liabilities. He would first observe, that in 1797 the amount due by Government to the Bank was 6,000,000 l. less than at the present time. When the charter was renewed in 1801 the Bank advanced 3,000,000 l. for six years without interest. Therefore they had advanced at that time about 10,000,000 l. or 11,000,000 l. to Government. Before the last addition the amount of the liabilities of the Bank was a great deal larger than at present, or than any arrangement he proposed was likely to make them; being nearly 30,000,000 l. In 1816, the Bank advanced 3,000,000 l. or rather 2,910,000 l. at three per cent. These advances were never made in consideration of the security of the Bank, but merely for the renewal of their Charter. In 1801, about 150,000 l. per year was given, in consideration of which some additional privileges were conferred on the Bank. He did not recollect the interest of money when the last 3,000,000 l. was borrowed from the Bank, but he supposed that the Government might perhaps have gained one per cent on that sum by the transaction. The right hon. Baronet had asked what was the principle of the bargain he had made with the Bank? In his first negotiation with the directors, their proposition was founded on a statement of their accounts. The actual capital of the Bank was 19,000,000 l., yielding 1,164,000 l. a-year: he did not think this a very large profit. He proposed to reduce the funded capital from 14,500,000 l. to 7,000,000 l., and he agreed with the Bank Directors, that they might divide ten per cent on the nominal capital, or eight per cent on the whole capital of the Bank. The proposition made was, that the Bank proposed to give Government 50,000 l. a-year for the renewal of the Charter, and a division of the surplus profits of the Bank. He thought this sum inadequate, and made a proposition which he thought not unfair, but which the Directors could not recommend to the proprietors, and he was led to consider the course he must pursue. Ha felt, that it was a matter of much greater importance than a question of how much

1407
the Bank should pay; that, it was important that the Bank affairs should be put upon a proper footing; and he considered that though a new Bank with a capital of 10,000,000 l. might be established, it was a question how much such a Bank could afford to do the business of Government for. He found, that if they paid the same amount for its Charter as the Bank of England was to give, the result would be, that it could not make more than six per cent on 10,000,000 l., and could not therefore manage the public business cheaper than the Bank of England proposed to do it. He thought it better, therefore, to make a bargain with the existing Bank than to set up a new bank. The principle he took as a guide was, how much a new bank, giving the same security as the old one, would do the Government business for? It might be said, that the Bank made a larger profit than he had calculated, and he believed it did; but this was the principle upon which he had proposed the bargain; he wished, of course, to make the best he could, and he did not think he had been outwitted.
Mr. Baringasked whether it was the intention of the noble Lord to decide that night upon the Resolution that contained the before-mentioned bargain? The noble Lord certainly stated with a great deal of ingenuousness, the principle of the bargain between him and the Bank. The noble Lord seemed to consider only the profits of the Bank with respect to its transactions with Government. When he looked to the correspondence lately published, it would seem that the Bank lost 147,000 l. a-year on its capital lent to Government, for the noble Lord took it for granted, that they deducted one per cent on the interest they might otherwise obtain. He should like to know what were the average profits of the Bank on the whole of their capital. In the account given by the Bank, the noble Lord had allowed them to deduct 147,000 l., being one per cent, on the capital which they lost in consequence of lending it to Government. But, in the paper they gave in, they stated how the whole capital of 16,000,000 l. was employed—namely, 9,000,000 l. in Exchequer-bills, at two and a-half per cent.; 800,000 l. stock at three per cent.; 100,000 l. for the circulation at three per cent.; 500,000 l. country discounts at three per cent: and 4,700,000 l. at four and one-eighth per cent: so that, in fact, the whole 16,000,000 l. was
1408
not employed by the Bank at a higher interest than three per cent; yet they stated their loss on the capital lent to Government at one per cent. The consequence was, that if the noble Lord had been a little more alert in making his bargain, he would have obtained better terms; and there would have been no necessity for establishing a new bank. When he looked at the result of those figures, it was impossible for him not to say, that the Bank had the better in this bargain.
Mr. Humethought, that if the third and fourth Resolutions were to be discussed together, it would be better to defer them; and he would take that opportunity of saying, that the bargain with the Bank was a most profligateone, and that the Bank had its monopoly continued to it absolutely for nothing. The third Resolution might be passed pro formâ as a matter of no great consequence; but he hoped that the fourth would be deferred.
Mr. Alderman Thompsoncould not join in the general condemnation of what was called a bargain; and he contended, that unless the circulation of the Bank was increased, and its notes made a legal tender, it would not pay a sufficient dividend to the proprietors for their capital. At any rate it would not pay them as it had hitherto done. The Bank could not be called upon to make large concessions; and he thought that the noble Lord could not obtain fairer terms than he had obtained.
Mr. Ellicehad one observation to make with respect to the calculations of the hon. member for Essex. If the Bank could make a statement of its former profits, it would be found that its capital brought five per cent, and not three per cent, as that hon. Member calculated. The opportunity the Bank had formerly of realizing those profits no longer existed.
Mr. Matthias Attwoodremarked, that that was no reason why a better bargain should not be made, for the Bank were not in a worse condition than the rest of the country in this respect. He conceived the bargain which had been made by the Government with the Bank was most monstrous; they had, in fact, made themselves partners with the Bank, but possessed no share in the management of its concerns and none of its profits.
The third Resolution agreed to.
The House resumed, the Committee to sit again.