§ Mr. Herries
wished to take that opportunity to ask the noble Lord, whether the report which had gone abroad, that it was the noble Lord's intention to postpone that part of his plan which related to Joint Stock Banks with limited responsibility, were true or not?
§ Lord Althorp
replied, that he had intended, before the Speaker left the Chair, to make a statement on this point. He begged leave to say, that in his opinion, the regulations relating to Joint Stock Banks not being banks of issue, was not the least important part of the measure he had introduced. He attached great importance to that part of the measure, though he knew that there were many persons who objected to it. He thought it was very desirable to establish safe banks of deposit in every part of the country. He was aware that the country bankers were very much opposed to that part of the plan; and their opposition was certainly not to be despised. Indeed, from all the information he had been able to obtain, he believed that they would be more powerful than he was—at least, it was probable, that they would be so powerful as to make it almost impossible to carry that part of his measure this Session. He 83 felt, therefore, or rather, he should say, his Majesty's Government fell, that it was not desirable to press forward that part of the plan. He had, therefore, to announce, that it was the intention of Government to postpone all that part of the plan which related to country bankers, except that portion of it which makes it imperative on them to compound for the Stamp-duties. He should not give up that part of the plan, in order that the House might at least have some knowledge of what was the amount of the issues of country bankers. It was desirable that it should be included in the single Bill he should now have to bring in. He did not give up the other part of his plan from supposing that he was wrong, or because he was convinced by the arguments which had been urged against it, but because (and he stated the true grounds) he should not be able to carry it.
§ Mr. Herries
rejoiced to hear what the noble Lord had stated; but he would beg leave to ask the noble Lord another question. The Committee had already passed one Resolution, about which there was some doubt—that relative to the making Bank of England notes a legal tender, and that subject seemed also a fit part of the plan to be postponed. He understood the noble Lord to have stated, that it formed no part of the bargain with the Bank of England. The public and Parliament, as he understood, were quite at liberty to dispose of that question as was most proper, without consulting the Bank. He thought it a matter of regret that a subject of such great importance should be mixed up with the enactments of a Bill renewing the Bank of England Charter. If he thought that the noble Lord would adopt his suggestion, he would recommend that it should form the subject of a separate Bill. It would be more consistent with principle, for the two things were not necessarily connected, and would be more convenient for discussion. He thought, that the two subjects ought to be introduced in separate Bills.
§ Lord Althorp
could not concur in the right hon. Gentleman's suggestion. He admitted, that he had stated that it was not proposed as a bonus to the Bank; but it was proposed as a benefit to the public at large, and was so connected with the measure he proposed, as to form part of it, and would induce him to give every opposition to the suggestion of the right 84 hon. Gentleman. He did not see any inconvenience which would arise from its forming part of the Bill for the renewal of the Bank Charter. There would be ample opportunity to discuss the measure. The only additional opportunity which would be given, by making it the subject of a separate Bill, would be on the second reading; for, in all the other stages, the measure might be as well discussed as if it were a separate Bill. He thought there were many reasons why it should not be a separate Bill.
§ Mr. Herries
distinctly understood, that the measure formed no part of the bargain with the Bank, and that it might be rescinded or altered without the Bank having any title to complain.
§ Lord Althorp
said, certainly it was proposed on general grounds, and it was quite clear, that it was a measure of such a description, that if it were found inconvenient, it would be in the power of Parliament immediately to alter it.
said, he had seen with pleasure that the noble Lord would not give up the Resolution he had carried. The more he considered it, the more he was convinced that it would be useful. He also considered, that the country bankers, generally, would not object to the Resolution, and that their general hostility was directed more against that part of the plan which had been given up, than that part of it which was retained. But, though he approved of the principle, he objected to mixing it up with the renewal of the Bank Charter. There were other Resolutions of the same kind. The one relating to the Usury-laws was not connnected with the Bank Charter. He did not expect so much good from that Resolution as some hon. Gentlemen, though he was not opposed to it; but it had nothing to do with the renewal of the Bank Charter. In the correspondence of the noble Lord with the Bank, it was not stated, that these things were part of the bargain; but in the correspondence it was said, "We are going to do so and so; we are going to alter the Usury-laws;" and as the ultimate consideration, the country was entitled to have the compensation augmented. It was rather too much, therefore, to say that the Bank might not put a veto on the arrangement as far as it was concerned, if the regulation about the Usury-laws were abandoned. The principle of making the Bank of 85 England paper a legal tender, was too important to form part only of another measure. It ought to be the subject of a specific measure, and not mixed up with the renewal of the Bank Charter.
§ Lord Althorp
stated, that the part of the plan which he had abandoned was undoubtedly part of the bargain. He thought, on that point, that the Bank of England might, if it pleased, abandon the bargain. The establishment of Joint Stock Banks, not of issue, and with limited responsibility, was proposed to the Bank, and the consent of the Bank was founded in part on that. If the Bank of England should consider that it had a right to abandon the proposition, it might do so, and he should have no reason to complain.
§ The House went into Committee; the Chairman read the fourth Resolution.
§ Mr. Clay
rose to submit an Amendment of which he had given notice. He said, that he did not blame the Bank for the bargain which they had made with the Government, because they had a right to obtain the best terms they could for themselves; but it was the duty of the House of Commons, as guardians of the public purse, to assist the Chancellor of the Exchequer, who, it was clear, had been overmatched. It was some consolation to him to know, that though he had the misfortune to differ from the Chancellor of the Exchequer of the 3rd of June, he agreed with the Chancellor of the Exchequer of the 1st of April last, for the proposition which he was about to submit to the House, was identical with that which the noble Lord, at the latter mentioned period, made to the Bank. The noble Lord had not stated to the House the reasons which had produced such an extraordinary change in his opinions between the 1st of April and the present time. It would, under those circumstances, be his duty to justify the noble Lord to himself, and to place him in the same state of mind in which he was on the 1st of April. The noble Lord and the Bank admitted, that the question now pending was to be decided with reference to this question—"What are the terms upon which a new banking company would undertake to do all that the Bank of England agrees to do?" He would undertake to show that a company would do the business at a cheaper rate than the Bank of England. He had no hesitation in saying, that the Members of that House 86 would stultify themselves if they entered into a rash bargain, supported on such accounts as those which were before the House. On looking over those accounts, he found, that the circulation of the Bank of England was 20,000,00l., and the Government deposits 4,000,000l., making 24,000,000l. altogether. Of this sum the Bank stated, that they reserved a third in bullion in their coffers, leaving 16,000,000l. of created money to be employed by them for the purposes of profit. Upon this sum of 16,000,000l. they obtained, by their own showing, an interest, of 467,875l. per annum. Now, what did the Bank do? They deducted from this amount of profit 147,000l. a-year (being one per cent upon the amount of capital lent to Government at throe per cent, on the ground, that if they employed it in another manner, they could obtain four per cent. How any body of men could have ventured to put such an item as that before persons of common sense he was at a loss to imagine. In the very same account he found that, upon the 16,000,000l. left at their own disposal, the Bank got less than three per cent—namely two and three-quarters per cent—and yet they had the assurance to claim 147,000l. from the Government, on the ground that they could make four per cent of the money lent to Government. The Bank actually charged the Government one per cent more for money than the Bank could make by any other application of it; and this they did as a favour, demanding privilege in return. Was not this perfectly outrageous? The attempt of the right hon. Gentleman, the Vice-President of the Board of Trade, to extenuate the conduct of the Bank for this overcharge was an insult to the House; but would it not be better to give back to the Bank its 14,500,000l. than submit to such an imposition? If it were refunded to them, he should like to know, by what means they would realize anything like four per cent by it at the present day? [Lord Althorp: By lending it out on mortgage.] He denied, that four per cent could be obtained for this money by lending it out on mortgage. In fact it could only be employed in the funds; and he should show, that the Government were made to pay 43,000l. more than an investment in the funds would produce. This would leave the Bank entitled to only 104,000l. for transacting the public 87 business, instead of 147,000l., as claimed by the Directors. The next item was, if possible, even more extraordinary than that which he had just touched upon. He meant the sum claimed by the Bank for the rent of the premises in which the public business was transacted. The Directors had dared to expect of the country no less than 35,300l. for rent. This was absolutely monstrous; for he was satisfied that a new company could erect new and convenient offices for the purpose, for a sum not exceeding 13,000l. This formed a fresh error in the accounts, that called for the attention of Parliament. The next item was forgery; and under this head the Bank stated their average annual loss to be 40,000l. a-year, although they included in the account Fauntleroy's forgeries, which, in one year, amounted to 360,000l. The Bank, however, took care not to refer to a circumstance which, of itself, was more than a compensation for any loss they might sustain by forgeries—he meant the large amount of outstanding notes for which the Bank had received value, but which it was probable they would never be called upon to pay. The amount of notes which had been outstanding more than twenty years was 280,000l.; more than fifteen years, and less than twenty, 95,000l.; more than ten years, and less than fifteen, 149,000l.; more than five years, and less than ten, 511,000l. These were all 5l. notes; but there were besides 297,000l. of 1l. and 2l. notes outstanding; and it was improbable that the Bank would ever be called upon to pay more than a small portion of the whole sum, amounting altogether to 1,234,000l. The last item to which he would advert, was the sum of 24,500l. a-year for pensions to the industrious men who had served the Bank as clerks, and enabled them to acquire their enormous profits. Would the Bank dare to say, that if they had no connexion with the Government, the public would be called upon to pay pensions to their servants? Then why should they do so now? If the Government should complete the proposed arrangement, the pensions of the Bank's servants would be as much paid by the public, as if they were charged on the Consolidated Fund. The amount of profit from all these items, now made the Bank stock worth 205 per cent; and he could prove, that if the Bank ceased to be a Corporation to-morrow, 88 which was in the power of the Government, their stock would not be worth more than 130 per cent; and the difference between that amount and 205, showed the enormous profits which the Company made by the public. He contended, that a bank might be formed to-morrow, with a capital of 10,000,000l., which would make 750,000l. profit, and not charge one farthing for the management of the debt. He was sure, that if such a plan were announced tomorrow, in one day the capital would be subscribed by the first names in the city, and that the stock would be at forty or fifty per cent premium in six weeks. He was confident that this was true; and he could not understand how the noble Lord reconciled it to himself to have come to such an arrangement as he had announced. He felt, that they should be failing in their duty to the public, if they stultified themselves by ratifying a bargain founded upon accounts and data so totally untenable. He, therefore, trusted, that the Committee would adopt the Amendment he should propose, and show to the country, that they were determined to discharge their duty as guardians of the public purse and the public interests. He moved as an Amendment, to substitute for the words standing in the Resolution, these words:—"That the allowances and remuneration now secured by law to the Bank of England for the management of the public debt, and other services rendered to the public, shall cease, and that such services shall be gratuitously performed."
§ Lord Althorp
begged the Committee to bear in mind, that the whole statement of the hon. Member was based on the assumption—first, that the Bank of England could not make more profit on the 14,500,000l. due to it by the Government, and, as such, to be considered as so much locked-up capital, than by lending it, as at present, to the Government at three per cent; and next, that another bank of issue, such as the hon. member contemplated, would discharge the same public service on cheaper terms. He was prepared to maintain the negative of both propositions. He could not admit, that the Bank could not employ that 14,500,000l. capital—say commercially—so as to realize a profit higher than the three per cent which they received from the Government. No man had any right to say, the Bank could not make more than three per- 89 cent on its capital. The argument could not apply to the dead weight; so that the only question was, whether, by lending money on mortgages, or commercially, the Bank could obtain higher profits than three per cent. He maintained that it could, so that the hon. Member's first assumption fell to the ground. As to the demand of the Bank in respect to forgeries, he was prepared to admit, that he thought that charge exorbitant, at the same time, that, taking the average of the two last ten years, the sum would be much less (he meant the difference between the losses of the Bank and the sum of remuneration demanded by it) than hon. Members seemed to anticipate. It should be recollected, that if the Bank included the losses consequent upon the forgeries of Fauntleroy within their last ten years' average, they had not calculated a large loss which they had incurred within the former ten years. ["That was a case of fraud, not of forgery."] Very true, it was a fraud case; but the loss was equally the same to the Bank. He, however, would not count this forgery item, as he was free to admit, that the Bank statements were exaggerated. The question then was, whether he, on the part of the public, could have concluded a better bargain than he had concluded with the Bank—that is, could he expect that a private bank of issue, such as the hon. Member had spoken of, would do the public business on more moderate terms? Let them suppose such bank of issue established, and then, taking the amount of the transactions of the Bank of England, let them consider whether the former could, according to the ordinary usage of bankers, perform the public functions of the latter on lower terms. The average currency issues of the Bank were 20,000,000l.; and he was applying his calculation to this supposed other issue bank; its average public deposits 3,500,000l., its average private deposits he would take also at 3,500,000l., being half of the present amount;—the other half would, he took it, go to the other establishment, making 27,000,000l., which, with 3,000,000l. surplus, that the Bank ought always to have to meet their various engagements, would make a total capital of 30,000,000l. If from this they deducted the 9,000,000l. of bullion necessary for the security, there would remain 21,000,000l., on which they might expect 90 a fair profit. Their expenditure was to be deducted from these profits, including 160,000l. for the management of the public debt; 170,000l. for the cost of their currency and note circulation; 70,000l. for stamps; and 40,000l. for private business. On the other hand, as a set-off against the cost of expenditure, they should take into account the revenue derived by the Bank from their capital employed in the Government securities, which, he admitted, with the hon. Member, was, under certain circumstances, the best test of the state of the money-market, relative to the employment of the Bank capital. There was 14,500,000l. at three per cent, producing 435,000l. per annum; 6,000,000l. in Exchequer-bills at two and a-quarter per cent, producing 135,000l. per annum; then there was an item of charge for agencies and other business, set down at 75,000l., but which, he thought, was not a fair statement. There was 7,000,000l. lent to the Government at three per cent, (and that also he thought greatly overrated), producing 210,000l., making with the sum at present received for the management of the public debt, a profit of 1,123,000l. to the Bank; from which deduct the cost of their expenditure, and there would remain a nett profit of 667,000l. Now, this sum gave a profit of but six per cent, and he was sure that no Joint Stock Bank, like that contemplated by the hon. Member, would embark 10,000,000l. of capital at a less rate; certainly not for the chance of five per cent. It was on this conviction that he entered into the negotiation with the Bank last April. He was not a commercial man, but he persuaded himself he acted on a wise and safe principle when he sought the best terms that he found, on inquiry, could be had in the market. If he wanted to purchase a house, he would see what was the lowest price he could obtain a house at; so with the Bank—he first ascertained what was the lowest rate of profit at which he could expect to get the public business, at present performed by the Bank, transacted. Acting on this feeling, he had negociated with the Bank Directors. If the House did not approve of his bargain, let it visit him, and not them, with its censure.
§ Mr. Matthias Attwood
thought, that the only mode of dealing with the subject was to refer it to a Select Committee, to 91 consider, on the one hand, what the Bank of England should be paid for the management of the public affairs; and, on the other hand, that most important figure in the account, which the noble Lord had totally overlooked, what the Bank was to pay for the monopoly about to be given to them. He should be disposed to move an Amendment to that effect upon the Amendment of his hon. friend. The arrangements made in 1788 and 1800 afforded another proof that the present arrangement for the renewal of the Charter had not been framed on as liberal a foundation on the part of the Bank as the country had reason to expect. In 1788, although the Charter had six years to run. The terms of its renewal were considerably more advantageous to the country than the present. In 1800 the case was similar. On the occasion of the renewal of the Charter in that year the Bank agreed, as a consideration for the advantages they were to derive by the continuation of their privileges, to lend to the public a sum of eleven and a-half millions at two per cent lower than the market rate of interest of that day, an arrangement by which the country was saved a sum of 230,000l., which it would have had to pay in raising the same loan at the Exchange at the market rate of interest, being at that time five per cent. By the present arrangement no such consideration was to be given, and the public would have to raise the eleven and a-half millions at the market rate. He knew it might be said, that the country was at the time engaged in a war and that the circulation of the Bank was very great; but he begged the Committee to consider what was the situation of the country and of the Bank in 1780, and what were then the terms of renewal. In 1780, the entire amount of the circulation of the Bank was but 6,000,000l.; and yet at that period they also lent eleven and a-half millions to the country, at a loss of two per cent on the market rate of interest. Now, taking all these circumstances into consideration, and comparing also the situation of the country and the Bank at the periods of 1780 and 1800, with their situation at the present time, he left it to the House and to the country to decide whether his Majesty's Ministers had made as beneficial terms as there was reason to expect they might have done. Moreover, the state of the country and the depressed condition 92 of the revenue made it incumbent on his Majesty's Ministers, even if there had been no precedent, to use their best endeavours to obtain as much compensation as possible in return for the privileges they found themselves qualified to grant; at all events, recollecting the pledges of economy and retrenchment in the transaction of the public business, they should have held out far more moderate terms for the management of that part of it which related to the national debt. It was a large and, he contended, a highly valuable property of which the country had to dispose, and, such being the case, they were bound in discharge of their duties not to proceed in disposing of it on the hasty, partial, and defective information with which the noble Lord had supplied them, or without, by that securest of all parliamentary tests, a well-appointed Select Committee, making themselves perfectly acquainted with the very highest price which their property was worth. He did not mean to blame the noble Lord particularly for the hasty and inconsiderate manner that the present agreement had been come to. All that could be said of it was, that it was quite on a par with the other legislative enactments of the noble Lord's Administration, and that it partook of that confusion which had marked all the proceedings, without distinction, of the present Session. From such confusion it was his object to rescue it, by the appointment of a Select Committee, to which it should be left to determine what would be the proper compensation to be made to the Bank for the discharge of the public business, as well as, on the other hand, what consideration should be paid by the Bank for the exclusive privileges they were about to receive. The sum which the noble Lord had proposed should in future be paid to the Bank for the discharge of the public business was fully, if not more than adequate. The Bank, it was true, alleged that the management of the public business cost them at the present moment 164,000l. a-year; but when he recollected that a calculation made by Mr. Ricardo in 1816—a period when the debt was highest, owing to a protracted war—proved it had not cost more than 150,000l., he found himself unable to give credence to such an allegation. Would any man tell him that the extensive business, which was valued on the termination of a pro- 93 tracted war at 150,000l. was at present to be estimated at more titan 100,000l? When, therefore, he found the noble Lord consenting to allow 128,000l. a-year for that which he firmly believed could be well managed for 100,000l., a-year, while at the same time the noble Lord received nothing for the exclusive privileges he proposed should be continued to the Bank, he thought he was fully justified in contending, that too much precipitation had been used, and that the House ought to require further information before they came to any definitive arrangement. Nothing was further from his thoughts than to object to the Bank having certain exclusive privileges; but when the Bank; was getting them the Bank should in justice be made to pay for them, more particularly when the exigency of the times rendered it necessary for the State to husband every resource from which money could be procured. Some time ago, when a deputation from the Regent-street shopkeepers waited on the noble Lord to pray relief from certain taxes which they found oppressive, he pointed to his empty Exchequer as an excuse for declining to entertain their prayer; and he thought it. somewhat strange that the noble Lord should have neglected an opportunity in the negotiations with the Bank Directors of endeavouring to replenish that Exchequer, and by that moans to meet the wishes of a certainly overburthened class of the community. What he wanted by his present Motion was to ascertain as nearly as possible the grounds on which the present arrangements had been come to, and then whether better and more equitable terms might not be had. With that view he begged to move as an Amendment to the Amendment of the hon. member for the Tower Hamlets, a Resolution declaratory of an opinion on the part of the Committee, that a Select committee should be appointed to inquire and report what might be the amount of a tit compensation to the Bank for the management of the public business on the one hand, and on the other, what might be a lit consideration to be paid by the Bank in return for the exclusive privileges with which it was proposed to invest them.
§ Mr. Clay
was quite prepared to withdraw his Amendment, in order to make room for that of the hon. member for Whitehaven. He perfectly agreed with the hon. Member, that the House were 94 not in possession of adequate means of deciding the important question under consideration. He could not think that the appointment of a Select Committee would cause any great delay, for there were only a few points to inquire into; and the appointment of such a Committee would give great satisfaction to the public.
§ Lord Althorp
observed, that even if the hon. number for the Tower Hamlets were to withdraw his Amendment, the Amendment of the hon. member for Whitehaven could not be proposed in the Committee. A Committee of the whole House must dispose in one way or another of the business before it, and could not refer that business to the consideration of a Select Committee. The only course to take would be to move that the Chairman do leave the Chair, which, if the Committee agreed to, that proposition would give the hon. member for Whitehaven, an opportunity of moving for the appointment of a Select Committee.
§ Mr. Matthias Attwood moved, that the (chairman do report progress, and ask leave to sit again.
§ Mr. Robinson
observed, that the effect of the appointment of a Select Committee would be to supersede the whole of the arrangement which and been made with the Bank by the noble Lord; and to leave the question to be recommenced. Now, although he certainly thought that the terms obtained by the Bank were too advantageous, he begged to ask whether it was likely, if the Select Committee decided that the offer to the Bank should be considerably diminished, the Bank would consent to such an arrangement? It had been supposed by the hon. member for the Tower Hamlets, that to obtain a renewal of their Charter, the Bank would be ready to do the public business for nothing. It appeared in the evidence before the Committee, however, that such readiness had been denied by one of the Bank Directors. He confessed, that he was not inclined to disturb the existing bargain. It had been contended by the hon. member for the Tower Hamlets, that there would be no new difficulty in making-a new arrangement with a Joint Stock Company, to which privileges should be given similar to those now enjoyed by the Bank of England, He did not think that 95 a plan of that kind would be so easy. It would make such an alteration in the whole banking system of the country, that the Committee ought very gravely to consider the proposition before they drove his Majesty's Government into its adoption. The hon. member for the Tower Hamlets had said, that such a company might be formed, with a capital of 10,000,000l., 7,000,000l. of which they might lend to Government, at three per cent, for one-and-twenty years—as the remaining 3,000,000l. would be sufficient for carrying on their own transactions. But let it be remembered, that, although the interest of money at present was little more than three per cent, some contingency might, in the course of a year or two, advance it to five per cent; by which the company in question would be subjected to great loss. Now, although he thought the noble Lord (he would not say had been outwitted in his negotiation with the Bank, for he really was not of opinion that that had been the case, but, on the contrary, thought the noble Lord had been too candid in his admissions on that subject)—had made a disadvantageous bargain, he believed that one great cause of his having done so was, that the question had been driven off to too late a period; and that the noble Lord had thought it absolutely necessary that the arrangement with the Bank should be concluded in the present Session. It should be remembered that one of the disadvantages of breaking off the connexion between Government and the Bank of England would be, that Government must immediately pay off all the debt due from the public to the Bank. No doubt that was a consideration which tended materially to influence the noble Lord. Looking at the whole question, therefore, although he believed the Bank had made a bargain advantageous to themselves, and somewhat unfavourable to the public, he thought it would be an inconvenient course to adopt the proposition of the hon. member for Whitehaven. At the same time he reserved to himself the right of ultimately determining upon the proposition, according to the arguments which he might hear, either in support or in contravention of it.
§ Mr. Robert Wallace
said, that upon the whole he should express his approbation of the plan; and though the arrangements were not, in his opinion, of the profitable nature for the country that they might have been, 96 still there was so much sound principle in the measure as to deserve his support. There was, however, one part of the measure that he should watch: he wished to see both Ireland and Scotland receive the benefit of the legal tender clause, should that part of the plan appear to work well. He hoped that there would be nothing in the Bill to prevent the Parliament from extending that clause to those two countries, should it be found beneficial here. He should, at a proper time, move a Resolution on the subject; and further, he should recommend that the time for continuing this bargain should be shortened, that we should not be bound longer than three years with any bargain.
said, that the question the House now had to decide was, whether the bargain made by the Government with the Bank of England was of such a nature—was so improvident—that the House could not ratify it? He could not agree with the hon. member for Whitehaven, that it would be right to send this question to a Committee up-stairs, even if there were time and opportunity to do it; for such a reference would be setting a precedent that ought to be avoided, particularly in these times, when that House possessed so much power over the other branches of the Legislature. It would be a delegation of the power of the Executive to a Committee of that House, in a way that ought not to take place. He agreed with the hon. member for the Tower Hamlets, that the noble Lord had made a bargain with the Bank, and submitted to conditions that he would not have acquiesced in, had he had more time to show his firmness on the question. He admitted, that the bargain was not so profitable to the country as it might have been; but then there was some necessity that the bargain should be made; and if it had cost the country 50,000l., or even 100,000l. more than it would now cost, he should not think the money thrown away in preserving the country from the shock to public credit which would have been given, had a different course been pursued. He did not know either that the money would be much more than adequate for the loss of the profits the Bank now received. He believed that, in this bargain, the noble Lord had been too much influenced by the fear of being obliged to establish a second Bank of England. He need not have feared that so much; for the Bank would 97 hardly have driven him to such a course. The Bank, as a private Bank, would be acting; under great disadvantages. Its present establishment would be far too large and expensive for such a purpose; and its mode of transacting business, what-ever might be the amount of its capital, would deter rather than invite customers; for few men would like to submit their want of an advance of money to a numerous body of persons to whom they must explain all the circumstances that rendered their demand necessary. He was perfectly convinced, that if the noble Lord had made a proposal which the public had thought reasonable, the holders of Bank Stock would have made their Directors consent to it, and the monied interest of the country would have supported the Government in the arrangement. He did not altogether approve of what the noble Lord had done; but he certainly objected to the Motion of his hon. friend, the member for Whitehaven, not because the principle of referring questions to Committees of that House was not the best mode of proceeding, but because to do so in this instance would be an invasion of the proper duties of the Executive.
Mr. Poulett Thomson
said, that the hon. member for Essex had rightly called the attention of the Committee to the fact, that the question involved in this discussion was, not only in what situation the Bank would stand, but in what situation the country would stand, if that House consented to re-open the question, more especially when it was recollected, that not only had the Government made up their minds on the subject, but, what was of still more importance, that House had already resolved on adopting the principal part of the plan proposed, and had consented that there should be but one Bank of Issue in the Metropolis. He thought that the hon. member for Essex had treated the arrangement which had been come to rather too severely. The hon. Member had not looked fairly at the question. He was not called on to contend, that the sum fixed on in the arrangements between the Government and the Bank was altogether what, under all possible circumstances, should have been settled between them; but the question was, whether the Government and that House were to run the risk of the refusal of the Bank, (supposing them to take exaggerated views of their own inter- 98 ests and of the profits and loss of this arrangement) to accede to the proposed plan; and if such was to be the case, what would be the condition of the public? With regard to the proposition of the hon. member for Whitehaven, he must say, that he agreed most fully with the hon. member for Essex, that to adopt that Motion would be improperly to delegate the powers of the Executive to a Committee of that House. It would be to establish, at least, a most inconvenient precedent, and it would have the effect of putting an end, for the future, to any power of the Executive to enter upon any arrangements or have any dealings with any great Corporate body. Suppose the Government had stood out on the terms sought by the Bank, what would have been the condition of the country, or what would now be its condition, in case of the consent of the Committee to the proposition of the hon. member for Whitehaven? The hon. member for Whitehaven had, as was usual with him, employed very strong language to express his disapprobation of the conduct of Government, and particularly of the course pursued by the noble Lord, the Chancellor of the Exchequer. He would not take the trouble to comment upon the language used by the hon. Member, for the House could not fail to feel the injustice of the charge made against his noble friend, of his having neglected his duty as Chancellor of the Exchequer and entirely taken the side of the Bank Directors. The hon. member for Whitehaven had made it matter of complaint against his noble friend, that he had not treated the Bank Directors in the same manner as he treated the shopkeepers of Regent-street. He begged to tell the hon. Member—he need not tell the House—that his noble friend's only object had been to settle this question in the most advantageous manner he could for the country. Supposing the question had been left unsettled, and Government had proposed the appointment of a Private Committee to consider it, what would then have been the conduct of the hon. member for Whitehaven? He would, if possible, have used still stronger language, and reprobated the Government for not having themselves decided upon a question the settlement of which was of so much importance to all the important interests of the country. The Committee should look at the other side, and should con- 99 sider what would have been the case if this bargain had not been concluded. Much had been said with regard to the terms of it, and no inconsiderable exaggeration had prevailed respecting the advantages which the Bank was likely to reap from it. He did not mean to say, that it was all that we had aright to expect, but he did mean to say this—that, under the circumstances, it was all that we could get; and that it would be better to confirm than to vitiate the arrangement. The hon. member for Whitehaven had in strong terms reproached his noble friend, the Chancellor of the Exchequer, with the terms of that bargain, and had even gone so far as to assert that, on this occasion, he had stood forward as the advocate of the Bank. Now, his noble friend had done no such thing; he had stood forward to vindicate the bargain which he had made. Hon. Gentlemen had said, that that bargain was unfair to the public, and too liberal to the Bank. In showing them, that it was not unfair to the public, his noble friend was obliged to prove, that it was not too liberal to the Bank, and thus, up to a certain extent, his noble friend was obliged to come forward as an advocate for the Bank. The hon. member for Whitehaven had asked "where the evidence was, to prove that any attempt had been made to drive a better bargain with the Bank? In negotiations between public bodies and the Executive Government, it was not usual to have a short-hand writer seated behind the chair of the negotiators. He was sorry that such a practice had not been adopted in this instance—for then it would be evident, that his noble friend had not failed to make endeavours to drive a better bargain for the public. The hon. member for the Tower-Hamlets had made out a case, in which he admitted, that there was a good deal of truth, but in which it ought not to be forgotten there was not a little of exaggeration; as, for instance, in his statement about the losses sustained by the Bank in consequence of forgeries on the funds. It was also an exaggeration to state, that the bargain of 1800 was a better bargain for the public than the bargain which was now under consideration. His hon. friend, the member for Essex, seemed to be of opinion, that the Bank would have acceded to better terms rather than have risked its exclusive privileges. He believed that opinion to be most erroneous. He believed that the Bank Di- 100 rectors had taken such a view of their own interest as would have induced them to reject those great advantages, if the Government had not proposed to them the terms which were now under discussion. His hon. friend had asked what would become of the Bank if it were deprived of the business of Government? His hon. friend answered that question by stating, that it would become a bank with a large establishment, and a capital of 10,000,000l., and in a very short time an extensive bank of deposits. Now, he thought that it would become no such thing, for it would return a part of its capital to the proprietors, and would remain, as it now was, a Chartered Bank, though deprived of the exclusive privilege of issuing paper-money. As far as he recollected the amount of property belonging to the Bank, it would be enabled to return to the proprietors 155l. per share, the price of stock now being 205l. per share; and would then proceed to trade with Shares of 50l. a-piece only. Returning so much of their capital to the proprietors, would it not be able to make a good dividend upon those 50 shares, or upon whatever sum it might be determined that a share should be? What, he would ask, was the situation of the Bank now? It had, at present, got 7,000,000l. of deposits, which it had received as a private banking body. Whilst upon this point, it might be as well for him to call the attention of the Committee to the alteration which had recently taken place in the mode of managing the business of the Bank of England. Some years ago the Bank did not seek to obtain private business—indeed, the mode of conducting business there was so tied up by rules as to prevent it from having much private business. Since the year 1825, however, the Bank had laid itself out for private business, and now it had a large amount indeed of private banking. He need not mention to his hon. friend, the member for Essex, nor indeed to any Gentleman who was at all acquainted with the commerce of the country, how high the credit of the Bank stood, and how valuable the goodwill of its name would be, even when deprived of the business of Government. He contended, that it would then be in a situation which would not require it to diminish, but which would enable it to extend, its private business. He, therefore, felt himself perfectly justified in saying, that the Bank of England, being 101 perfectly aware of the circumstances in which it stood, would have risked getting rid of the business of the Government and the country, and would have determined to carry on its own private business on its own private resources. Such being the feeling of the Bank, it was an additional argument for the Government's not risking too far a result which he had not heard one Gentleman, who admitted that we ought only to have one bank of issue, assert would not be attended with the most mischievous consequences to the country. If such had been the case when the Government was treating with the Bank, what would the case be now if the House determined to leave it to a Committee up-stairs to settle the terms of renewing the Bank Charter? Besides, the question, if referred to a Committee up stairs, would no longer be an open question. The House had already decided by a large majority that there should be but one bank of issue, and that that Bank should be a commercial body. The Committee up-stairs would, therefore, be precluded from establishing two banks of issue. As a pis aller, it might, however, get rid of the Bank of England, and set up in its place another commercial body as a bank of issue. Now, on these grounds, he thought that the House ought not to refer this question to the consideration of a Committee up-stairs, and also that it ought not to vitiate a bargain which, though it might not be so good as we might wish, was still as good as we could make.
§ Sir Henry Parnell
called the attention of the Committee to the extraordinary circumstances in which it was placed. It was going to vote a Resolution which every Member who had yet spoken concurred in describing as inexpedient. He insisted that every Member who had yet spoken had disapproved of the amount of the sum to be paid to the Bank, and added, that if opinion was so strong as to the impolicy of paying it within the walls of Parliament, it was still stronger out of doors. It would, indeed, be extraordinary if the Committee did not relieve itself from this situation; for it was evidently all owing to the obstinate determination of the Bank of England to have its own way. He felt lunch disposed to support any measure which would get the Committee out of the difficulty, and which would do justice to the public by taking care of their money. It was his opinion, that instead of 102 the public paying 120,000l. a-year to the Bank, the Bank should pay no small sum to the public for the privileges which it enjoyed. He thought, that the Bank should be required to manage the debt without any payment from the public, and that it ought to pay a considerable sum for the advantage which it enjoyed of holding the public money. He hoped, that the Committee would not adopt this Resolution. He did not see any inconvenience in referring this matter to the consideration of a Committee up-stairs. Instead of leaving it to the settlement of the Government in private, he thought that the House of Commons ought to undertake the settlement of it in the first instance. The only possible inconvenience that could by any accident result from referring this bargain to the consideration of a Committee up-stairs, to which, by-the-by, the Government last Session had expressly pledged themselves to refer it, was, that the settlement of it might be postponed for a short time. He would undertake to say, that, if a Committee were appointed, it would not take them more than a week, certainly not more than a fortnight, to conduct the inquiry, and to make their Report. He had no doubt that the House would adopt the Report of such a Committee, and if so, less time would be lost by appointing such a Committee, than by proceeding to embody the Resolution in a Bill, which, as it was agreed to without evidence, would certainly be debated on every one of its stages. For his own part, he could not see how any inconvenience could arise to the commercial interest of the country by allowing the Bank Charter to remain as at present for another year.
§ Mr. Grote
said, that though he felt inclined to agree to the Amendment of the hon. member for Whitehaven, it was from motives very different from those which had just been expressed by the right hon. member for Dundee. He differed from the right hon. Baronet, when he said, that no mischief would arise to the commercial interests of this country from the postponement of this question to another Session of Parliament. It was his decided opinion, that much mischief would be the result, if the settlement of this question were postponed beyond the present Session. A postponement of it to next Session was not, however, necessary, because there was time to appoint a Committee 103 and to receive its Report before the close of their present Session. It was from no wish to encroach on the duty of the Executive Government, that he now came forward to support the Amendment; but he thought that, if the Committee were called upon to approve the bargain into which the Chancellor of the Exchequer had entered with the Bank, it ought to know the principles upon which that bargain was founded. At present he believed that few, very few members indeed, knew anything about them. In his present state of mind he was not inclined to assent to so great a reduction of the bargain as had been proposed by his hon. friend, the member for the Tower Hamlets. Still he could not help reflecting that there was a general admission on all hands, even on the part of the Chancellor of the Exchequer himself, that the bargain was unfavourable to the public. He submitted that the House would be scarcely doing its duty, if it were to pass a vote ratifying such a bargain without fuller investigation. He certainly thought that the Bank of England, as a bank of issue, was useful as a national establishment, and the Bank ought not to compromise its popularity by making a hard bargain with the public, or by doing anything likely to give rise to the opinion that it was overpaid for its services. It was, however, contended, that the Bank was overpaid, and that this bargain, though it reduced the sum to be paid to the Bank, still left it more than, in common justice, ought to be paid to it. Might not the general notion, that the Bank was overpaid, increase the unpopularity to which it was liable, from having the management of the currency of the country? If the Bank, in consequence of the prevalence of such a notion, should become decidedly unpopular, might not that very circumstance lead to the loss of its property, at the very time when that loss would be most prejudicial? He wished that the House should forthwith institute an investigation, for such an investigation would lay open the principles on which a fair bargain could be formed, and by doing so, would enable the House to come to a better understanding of this question than it had at present. The great profits of the Bank had been alluded to. No doubt they were great; and though all that had been stated on that subject by an hon. Member might not be borne out by the 104 facts, it was certain that the Bank made large profits from sources independent of its connexion with the Government; but it still must be borne in mind, that one of its chief sources of profit arose from its monopoly as a bank of issue in the metropolis. All these matters would be fair subjects of inquiry; and if that inquiry had no other result, it would be of considerable advantage in satisfying the country, that that House had done its duty in seeing that the public had the best terms which could be made.
§ Mr. Matthias Attwood
felt very strongly upon this subject, as he did upon many others; but that strong feeling had reference to the interest of the public, without any regard to political prejudice. He considered, that the soundest principles of political economy had been sacrificed by the Government in the bargain which they had made with the Bank, and as such it could never meet with his approbation. Every one knew, that the distress of the public was now very great, that it was very generally complained of; and yet his Majesty's Government, while accusing their predecessors in office with a disregard to economy in the management of the public business, were sacrificing some hundreds of thousands of pounds a-year in favour of the Bank, and against the public interest. The Government should not pay the Bank while granting a renewal of the Bank Charter, but the Bank should pay the Government, ay, and liberally too, for the exclusive privileges with which they were to be invested. The country, at present, was in a state of considerable distress, and it was the duty of the Government, in every bargain which they made, whether with the Bank, or any other body of persons, to deal with them on the most economical terms for the public interest. This principle should be looked to in every case, whether in a dealing with the Bank, or in reference to the amount of salary enjoyed by the right hon. Gentleman (Mr. P. Thomson) himself. He was very desirous, that his Majesty's Government should delay the further consideration of this great question till the next Session. The delay could not lead to any unjust or improper excitement; on the contrary, it would afford time for deliberation and discussion, and it would enable this House, as the guardian of the resources of the country, to give the whole subject the best and most ma- 105 ture consideration. The policy of the Governments in 1780 and 1800 was widely different from that pursued by the present Government, and most decidedly more advantageous for the interests of the public. At these periods the Bank managed the business of the Government at a rate comparatively cheap to that which the Government now proposed; and yet the present Government had assumed to themselves the merit of being more economical than any other Government which had preceded them. The right hon. Gentleman (Mr. Poulett Thomson) had expressly admitted, that the best bargain which could be made by the Government with the Bank had not been made. The right hon. Gentleman had certainly said, that the bargain was not as good as could have been made under other circumstances. ["No, no."] That was, undoubtedly, the impression upon his mind as to the effect of the observations of the light hon. Gentleman. The truth should be ascertained upon this, like every other subject, before the House was called upon to legislate, and before it was called upon to sanction a bargain which he thought to be most improvident. He was also satisfied, that if the Government had acted with more dexterity, he should rather have said with more discrimination and discretion, they might have made a much better bargain with the Bank. The truth appeared to be, that the noble Lord (Lord Althorp) was overreached, and that he had thus been induced to make so bad a bargain with the Bank. If the noble Lord would consent to delay the consideration of this question, he might be able to retrieve his error and confer benefit upon the country. In short, the House would neglect its duty if they did not call for inquiry into this subject.
§ Lord Althorp
was sure that the expressions used by the hon. member for Whitehaven (Mr. Matthias Attwood) were meant only to apply to his political conduct; and unless he felt that it was otherwise, he should not think them matters of comment. He was not at all surprised at the use of strong terms by the hon. Member on this occasion. He was strongly opposed to the two bodies engaged in this bargain. He was strongly opposed to the Government, and therefore naturally enough found fault with all its measures; and he was also opposed to the Bank Directors, whom he believed to be the cause 106 of so much injury to the country by the course they adopted. It was no wonder, then, that he should feel and speak strongly; and he was sure that what the hon. Member had said arose from those combined feelings, and not from any wish to annoy him. Now, as to his giving way to the terms of the Bank, he would again beg of hon. Members to consider what would be the consequence if the Government had held out, and refused the terms offered by the Bank. A contest and competition would immediately arise between the monied interest of the city and the Bank, the result of which, under such circumstances, must be, that the Bank would give way; but what was to become of our commercial and monied concerns while such a contest was going on? He was convinced, that such a contest would be productive of most serious injuries, and therefore he gave way, because he felt—and he had felt it from the first—that the Bank would not consent to the terms offered by the Government. It had been stated, that he had not waited long enough if hon. Gentlemen looked to the dates of his correspondence with the Bank Directors, they would see, that a considerable interval elapsed between the date of his first letter and of his last, and that he held out until he was fully convinced that the Bank would not agree to his terms. It was said, that if a Committee were now appointed, it would not sit more than a few days. What guarantee was there for that? In the former Committee upon the Bank Charter it never was contemplated that the terms of the bargain between the Bank and the Government were to be regulated by that or by any other Committee. That, it was understood, was to be left to the responsibility of the Government. Indeed he could not imagine any less satisfactory way, or one less likely to be effective, than a negotiation between the Bank and a Select Committee. The precedent would, in his opinion, be an extremely bad one; and unless hon. Members were perfectly certain of obtaining a much better bargain by the intervention of a Committee, he thought the wisest course would be to adopt the bargain made by Government, and to censure the men who made it.
§ Mr. Lyall
was opposed to the appointment of the Committee, which, in a commercial point of view, he thought would be injurious to the country. Much stress 107 had been laid on the fact that in the present rate of interest on money, when discounts might be obtained at three or two-and-a-half per cent, it was no boon to the Government to have the loan of 10,000,000l. or 11,000,000l. at three per cent. That might be true in the abstract now; but it was a boon when the loan was made. Even, supposing it to be now made for the first time, as it would be admitted that it was no slight inconvenience to have a large mass of capital locked up for a number of years, he must say, that he knew of no capitalist in the City who would consent to have a large sum of money locked up beyond his control for three per cent. He was sure it would not be done for less than four per cent. When hon. Members talked of an active competition of capitalists against the Bank, he must be allowed to say, as having some acquaintance with the City, that he did not believe that 10,000,000l. could be obtained in the City for such a purpose. He had conversed with many persons in the city on the subject of the terms offered by the Bank and accepted by the Government, and he had, in almost every instance, heard them spoken of as very fair and reasonable, until within these few days, when some new light seemed to have burst in on men's minds on the subject. He thought that the appointment of a Committee would occasion great delay and inconvenience. Under all these circumstances he should, as a Representative for the City of London, oppose the Amendment, and give his cordial support to the proposition of the noble Lord.
§ Mr. Clay
replied. Not one word had been said which could be regarded as a reply to what he had stated. He repeated, that the whole of the Bank papers which he had referred to, and on which he had rested his case, were gross delusions. He had withdrawn his proposition, because he was informed that it would be more fair to refer his statements to a Committee, than to call on the House for an instant decision on those statements. If the noble Lord had insisted on the terms he at first proposed, he was convinced the Bank would have yielded, or if it had not yielded, the Government would have got the money to pay off the Bank in one week ["One day."] He thought better of the House and of the country than to imagine that the Bank 108 must be obeyed. He had established grounds which showed that the House ought not, and could not, in justice to its constituents, confirm the bargain made with the Bank without further inquiry. It was desirable that the Committee should understand the precise question on which it was about to divide. The hon. member for Whitehaven having proposed that a Select Committee be appointed to consider the subject, he (Mr. Clay) had withdrawn his Resolution in favour of that hon. Member's Motion; but the noble Lord (Lord Althorp) stated, that the forms of the House prevented that Motion from being entertained in the present stage of their proceedings, inasmuch as a Select Committee could not be appointed in Committee of the whole House, therefore it became necessary, with a view to bring the Amendment under consideration, to move that the Chairman do leave the Chair. On that Motion the Committee was about to divide; and if it were carried, the appointment of a Select Committee could then be brought before the House.
§ Lord John Russell
wished to ask, whether it was intended to appoint a Select Committee to take the place of the Chancellor of the Exchequer, and make a bargain with the Bank of England, or was it intended that the Committee should lay down the rules and conditions which were to bind the Chancellor of the Exchequer in his negotiation with the Bank—he reporting from time to time the state of the negotiation, and referring to the Committee for further instructions—or was it intended that the Committee should come to a Resolution to set aside the bargain made by the Chancellor of the Exchequer, and see that the Chancellor of the Exchequer made a bargain according to the wishes of the Gentlemen opposite? He wished to know what was intended, because this was an entirely new precedent, and a precedent which they might expect would have high and important consequences on their future proceedings. He felt that it was necessary that the House should know distinctly what was really proposed, as this precedent would be of importance even in its constitutional bearings.
§ Mr. Matthias Attwood,
in reply to Lord John Russell's question, whether it were intended to usurp the functions of the Chancellor of the Exchequer, said that the object of the Motion was to call on the noble Lord (the Chancellor of the Exchequer) to form a Committee to consider of the whole of the terms for remunerating the Bank on the renewal of the Charter. He wished to know in what such a Committee differed from the Committees that were continually appointed to investigate accounts, and appointments, and salaries, and all other things?
said, that the noble Lord had asked, whether the House of Commons meant to usurp the functions of the Chancellor of the Exchequer? He would answer that question by asking another. Did the noble Lord the Chancellor of the Exchequer mean to usurp the functions of that House, and make a bargain which that House would not have the power to alter?
§ The Committee divided on the Motion, that the Chairman do report progress: Ayes 88; Noes 176—Majority 88.
§ The Resolution was agreed to; as were the 5th and 7th Resolutions.
§ The House resumed.
|List of the AYES.|
|Aglionby, H. A.||Gully, J.|
|Attwood, M.||Harvey, D. W.|
|Baillei, J. E.||Hawkins, J. H.|
|Baldwin, Dr.||Handley, Major|
|Barry, G. S.||Heathcote, J.|
|Bewes, T.||Hodgson, T.|
|Blake, Sir F.||Houldsworth, T.|
|Briggs, R.||Hughes, W. H.|
|Brocklehurst, J.||Hutt, W.|
|Bowes, J.||Hyatt, W. H.|
|Cayley, E. S.||James, W.|
|Chaplin, Colonel||Jervis, J.|
|Clayton, Colonel||Irton, S.|
|Clay, W.||Langton, Colonel|
|Cornish, J.||Lister, E.|
|Chetwynd, W. F.||Lloyd, J. H.|
|Dashwood, G H.||Lowther, Colonel|
|Darlington, Lord||Methuen, P.|
|Duffield, T.||Marshall, J.|
|Ellis, W.||Molesworth, Sir|
|Evans, G.||O'Brien, C.|
|Ewing, J.||O'Connell, D.|
|Ewart, W.||O'Connell, M.|
|Fenton, J.||O'Connell, J.|
|Fielden, J.||O'Dwyer, A. C.|
|Galway, J. W.||Oliphant, L.|
|Gaskell, D.||Ord, W. H.|
|Gillon, W. D.||Oswald, R.|
|Gore, M.||Palmer, C. F.|
|Grote, G.||Palmer, R.|
|Guest, J. J.||Palmer, General|
|Parnell, Sir H.||Strutt, E.|
|Parker, Sir H.||Talbot, J.|
|Pigot, R.||Todd, R.|
|Potter, R.||Torrens, Colonel|
|Poulter, J. S.||Tynte, C. J. K.|
|Rippon, C.||Vigors, N. A.|
|Roebuck, J. A.||Wallace, R.|
|Romilly, J.||Walter, J.|
|Romilly, E.||Warburton, H.|
|Ronayne, D.||Wason, R.|
|Ruthven, E. S.||Whalley, Sir S. B.|
|Ruthven E.||Williams, Colonel|
|Scrope, P.||Yelverton, Hn. W. H.|
|Stanley, E.||Young, G. F.|
|Stavely, T. K.|