LONDON AND WESTMINSTER BANK.

HC Deb 07 May 1834 vol 23 cc686-94

Mr. Clay

said, in rising to move the second reading of the Bill for enabling the London and Westminster Bank to sue and be sued in the name of its Chairman, he did not anticipate any serious opposition to his Motion. Some doubts had arisen as to the exclusive nature of the privileges of the Bank of England, and as it was clearly the intention of the Legislature to secure its privileges to that Establishment on the renewal of the Company's Charter, a clause explanatory of those privileges had been introduced. By that clause any company or association might carry on business as bankers within sixty-five miles of London, provided they did not issue notes within a less time than six months after date. On the strength of that declaratory clause a society had been formed, very numerous, highly respectable, and possessing a very large capital. They had commenced the business of banking, were every day obtaining fresh accessions of strength, and thereby conferring on the public those great advantages which every man conversant with commercial affairs was aware must arise from a secure system of banking. That community did not apply for any exclusive privileges or powers, but merely for the convenience of suing and being sued in the name of their Chairman, which would, in fact, be of greater advantage, and be a greater protection to the public than to themselves. On these grounds he could not anticipate that the Bank of England (although he had heard that the Bank did not display a very friendly feeling towards the new establishment) would oppose the second reading of the Bill, because, whatever doubts might have arisen as to their privileges, the clause to which he alluded, would convince the House that the present Bill was no infringement upon those privileges. His opinion was, that it did not, in the slightest degree, infringe upon them. He trusted that the rumour which he had heard, that the noble Lord, the Chancellor of the Exchequer, meant to oppose the second reading, was not correct. He knew enough of the noble Lord's sentiments to believe, that he was friendly to the principle of the Bill, and he thought the noble Lord could only oppose the measure on the ground that he stood pledged to the Bank to resist all such measures. He understood, that the Bank had accused the noble Lord of not having dealt with perfect fairness towards it, but he believed such a charge was unfounded. The present was certainly not a question which involved the interests of a few private individuals only; it was a question which involved a most important principle, and one in which the whole community was deeply interested. The rejection of the Bill would be a denial of justice to the people of England. For example, as the law stood, if any individual not having a special agreement with the Bank, had a claim on that he could only recover it by an action of trover, and if he omitted one of the partners' names, he would be nonsuited, and have the costs of the action to pay. If they refused to pass this Bill, that would add one more to the many disgraceful instances of legislative bungling which already disgraced the Statute-book. He trusted, that the House would not sanction such a glaring injustice. He (Mr. Clay) had no unfriendly feeling towards the Bank of England; there were amongst its supporters and managers many whom he reckoned as his private friends. The respectable banks of London had nothing to fear from the London and Westminster Bank. The law said, that joint-stock banks might be established, and he (Mr. Clay) claimed from that House that the London and Westminster Bank should not be put down. Within the last twenty years the privileges now sought by that Bank had been granted to no less than forty-two institutions, and he could not see how that House could extend the privileges in one instance and refuse them in another. He claimed but justice for that establishment, and with a perfect confidence, that the House would do it justice he would content himself by moving that the Bill be now read a second time.

Lord Althorp

said, that the hon. member for the Tower Hamlets had represented him as having no wish to prevent competition in banking establishments. But the hon. Member certainly might have known that, although he had no objection to a competition between banks that did not issue their own notes, between those which did issue their own notes he had stated that he entertained strong objections to a competition. He confessed he did not think, that the public would derive any advantage from such a competition; on the contrary, he could easily conceive that such a competition might in many instances be injurious, because the effect might be, to generate and continue an excessive issue of paper money in order to accommodate the public. He thought he could prove, that it would have a tendency to an excess of accommodation in the metropolis. He did not think that there would be any advantage to the public from such a state of competition as this Bill would give rise to. With respect to another point, whether the Parliament ought to give any additional privileges to joint-stock banks, he felt no doubt. In all the discussions upon the Bank Charter he had stated, that the clause which permitted the establishment of joint-stock banks, though it took away the privileges from the Bank of England, did not increase the privileges of other commercial companies against the Bank of England. The hon. member for the Tower Hamlets said, that he asked for what was of no consequence. If it was of no consequence, why ask for it? But the whole of the hon. Member's speech was intended to show, that it was of consequence, and that the effect of granting what the Bill asked, would be a great advantage to the joint-stock banks, for the exclusive privileges of the Bank of England interfered with the internal arrangements of those banks, and thus rendered it more inconvenient on their part to transact business, and more disadvantageous to the public, and, therefore, they claimed additional privileges. That it was of consequence, was proved by the fact that it was necessary to have an Act of Parliament to obtain it, which should give those banks additional advantages to those they possessed under the charter. He (Lord Althorp) did not think that Parliament would be justified in acceding to the Motion. They had made a bargain with the Bank during the last Session, and according to that bargain they would not be justified in granting any additional privileges to those banks. This was the main ground upon which he opposed this proposition; besides, he did not think, that the public would derive any advantage from it, but even if it would, he thought that they were bound not to depart from the terms upon which the last charter had been granted. He did not know, that the present system of banking of the metropolis was liable to great objections. He would not, however, enter into that point at present. He felt that the system generally acted upon in this metropolis was as much calculated for the convenience of the commercial interest as it could be. Looking at the question in this light, and not feeling that there would be any advantage in encouraging competition, but, above all, feeling that, after granting the charter of last Session, they would not be justified in extending the privileges of association in competition with the Bank of England, he felt it his duty to oppose the proposition, and he would, therefore, move that the Bill be read a second time that day six months.

Mr. Patrick Stewart

said, that all the Company asked to be given them by the present Bill was, that one of its Members be allowed to sue and be sued in the name of the Company. It was intended to remedy a glaring defect in the law, and the House could not with justice resist the Motion of his hon. friend. He never knew an instance, and he believed there was none on record, of the privilege which this Bill was to confer being refused, and he thought that this was not the occasion to make the exception, when an Establishment was formed of so much advantage to the public. The objections raised by the noble Lord rested more upon private than public grounds, as was proved by the attendance the noble Lord had upon the benches behind him. The noble Lord might have been inadvertent when he made his declarations last year, but it was upon the strength of those declarations, that the London and Westminster Bank was started. The noble Lord, by the speeches he made when the Bank Charter Bill was under discussion, led the House and the country to believe, that the noble Lord considered it lawful for banks with more than six partners to be established. On the faith of that understanding, this Bank had been established. The hon. Member referred to several passages in Lord Althorp's speeches on August 9th, 1833, to show, that the establishment of Banking Companies in the Metropolis was consistent with the law.^* No comment from him could make those declarations stronger, and he, therefore, was at a loss to know why the noble Lord should now oppose what he then had thought it right should be effected. An additional reason why this power should be granted, was to be found in the present state of banking in this country which was notoriously bad. He could confirm this by some of the greatest authorities that ever appeared in that House. The hon. Member read extracts from the ^* See Hansard (third series) xx. p. 469, 499. speeches of Mr. Huskisson,^* and Sir Robert Peel,^† to show that our banking system, and the law of partnership required revision. This was good practical sense. The opinions of those Gentlemen were decidedly in favour of a change in the defective law of partnership which would place our system of banking upon a sounder footing than it now was, and make it approach the system which had so long, and so beneficially existed in Scotland, where not more than one Bank had failed, and that had paid 20s. in the pound, in the same period that 704 had failed in England. A very short statement of facts would show the advantages and safety of the joint-stock plan compared with that which had produced so much loss in England. From the year 1810 to 1822, out of seventy banks in London, twenty-two had failed. The debts proved under them, amounted to upwards of seven millions, of which four millions and upwards were never paid. At the present time, there were only forty-nine or fifty banks in London, notwithstanding the great increase of the population. The London and Westminster Bank was intended, and would introduce into the metropolis all the advantages and safety of the Scotch joint-stock banks. It consisted of hundreds of wealthy partners, and all they wanted was, for the convenience of the public more than their own, to have the privilege of appointing one of their own number who might sue and be sued for them. To say, that it was an innovation, was no argument, for all improvements were innovations. He therefore begged leave earnestly to recommend the Bill to the House, as worthy of their support.

Sir John Wrottesley

said, he had stated before, that the "great panic" arose out of the misconduct of the Bank of England, which, in order to get itself out of a scrape, sacrificed the country bankers. But while he said that, he was a friend to justice, and must say, in his opinion, that the House had no power to recognise the establishment of any Banking Company within sixty-five miles of London. As to the success of the Scottish system, that was more to be attributed to the careful habits of the people, than to its intrinsic merit. The Parliament had sanctioned ^* Hansard (new series) xiv. p. 243. ^† Ibid. p. 292. the monopoly of the Bank for ten years, and it could not be done away with but by a general Act, to which he would agree, but he could not agree to the Motion of the hon. Member.

Mr. Gisborne

said, this question was opposed by the country bankers, by the London bankers, by the Bank of England, and by the noble Lord, (the Chancellor of the Exchequer) but he hoped the latter was not a Government opposition; but a local one only. The article in which banks traded, was the circulation of the country, which ought not to be refused one class of his Majesty's subjects any more than another. The Act said, that banks might be established, and the noble Lord said so too, but he added, "You shall be virtually outlaws." He (Mr. Gisborne) was willing to be bound by the words of the Act, but not by any private understanding between the noble Lord and the Bank of England. He could not believe the majority of that House would oppose this Bill, which was similar to those incorporating the Scottish banks, and Insurance Companies. The Liverpool Banking Company was exactly a case in point. It was supported both by reason and precedent, and should have his support.

Mr. Hume

would only occupy the time of the House for a few moments, while he begged to protest against the assertion of the hon. Baronet (Sir John Wrottesley) that an Act of Parliament prevented the passing of this Bill. The principle of it was one of justice; it was not the Company's interests which were consulted, but the public advantage, in affording a facility to any persons wishing to embark capital in the banking system. He was surprised at the opposition given to the Bill by the noble Lord (Lord Althorp), for the measure was one of public utility and justice. The monopolists were protected, but the public were neglected, by the course of the noble Lord; and he hoped that the House would give the Company that facility which all joint-stock companies should have.

Mr. John Smith

opposed the Bill. If it were passed, the effect would be the creation of twenty new banks in London, and the consequent withdrawal of the deposits from the Bank of England. The right hon. Baronet, the member for Tam-worth, in his (Mr. Smith's) opinion, had done an effectual service to the country by the introduction of that Bill which sup- pressed small notes under the amount of 5l. In his opinion, that system had been productive of misery to the people of England, and the country was much indebted to the right hon. Gentleman for having suppressed the circulation of the notes. He hoped the House would maintain its engagements with the Bank of England.

Mr. Baring

thought the whole question for the House to consider was, whether the present Bill interfered with the privileges of the Bank of England. He denied that it interfered with its legal privileges, and on this point he differed totally with the noble Lord opposite. There was a particular restriction in the clause which had been alluded to against the issuing of notes; and that being the only restriction, it was clear, that banks might be established, provided they did not interfere with that restriction. He did not think either the Bank of England or the private banks of London would be injured by the Bill, and it was absurd to assume the nature of our engagements with the Bank of England as a reason for not doing a simple act of justice.

Mr. Pryme

could not see on what ground a Bill like the present was to be rejected, and therefore he should vote for the second reading.

Mr. Cayley

conceived, that the extension of such an establishment would make the Bank of England more liberal in its transactions.

Sir Francis Burdett

complained of the illiberality which characterised the transactions of the Bank of England, and which would be obviated by the establishment of banks like that under the consideration of the House. He cordially supported the second reading of the Bill.

Mr. Alderman Thompson

said, that, within a twelvemonth after the Government had entered into an arrangement by which the Bank of England gave up a sum of 120,000l. annually, it was too bad that a proposition should have been made to interfere with the privileges of that establishment. The Westminster Bank, he admitted, was composed of most respectable and influential Members of that and the other House; but they could not, on that account, come forward and claim for themselves exclusive privileges not enjoyed by any other joint-stock banking company. The question was, whether, consistently with its former acts, the House could consent to pass that Bill? He contended that they could not; and the Westminster Bank had commenced their operations with their eyes open, and should abide by the consequences. The hon. Alderman referred to the letter written by Lord Althorp to the Bank Directors, and said, he thought, that that letter was a sufficient proof that the Government had no intention to interfere with the privileges of the Bank of England, and, under these circumstances, he must oppose the second reading of the Bill.

Sir Thomas Freemantle

defended the conduct of the London and Westminster bank from the imputations of the hon. Member (Alderman Thompson) who had last spoken. The hon. Member called upon the House to keep faith with the Bank. He called upon the noble Lord to keep faith with the public.

The House divided on the question, that the Bill be now read a second time—Ayes 141; Noes 35: Majority for the second reading 106.

List of the NOES.
Althorp, Lord	Mangles, James
Baring, T. F.	Martin, J.
Barnett, James	Marjoribanks, S.
Biddulph, R.	Mills, J.
Bulteel, J. C.	Parker, Sir Hyde
Buxton, T. F.	Russell, Lord J.
Crawford, Wm.	Roberts, W. W.
Fielden, J.	Smith, John
Finch, G.	Smith, J. A.
Foley, J. H.	Smith, V.
Gladstone, Thomas	Wall, Baring
Gronow, R. H.	Ward, Charles
Hodges, T. L.	Weylands, Major R.
Howard, Philip H.	Winnington, Sir T.
Hurst, R. H.	Wrottesley, Sir J.
Ingham, R.	TELLERS.
Lennox, Lord G.	Thompson, Ald.
Lyall, G.	Reed, Sir John
Maddox, J.