HC Deb 29 June 1837 vol 38 cc1704-7
Mr. Grote

moved that the House resolve itself into Committee on this Bill.

Viscount Sandon

was not himself competent to discuss the question involved in this Bill, but he understood that it involved a great alteration in the law of the land. If so, he thought it ought not to be brought forward in the absence of Gentlemen on his side of the House who were fully able to enter into the merits of the subject.

The Chancellor of the Exchequer

said, that the object of this Bill was one which deeply interested the commercial community; and the measure itself had been much pressed by the commercial interest on the Government. The clause inserted in the Bank Charter which legalised the discounting of bills not exceeding three months' date at a higher rate of interest than five per cent, (and to that extent repealing the usury laws) had been proved in the recent crisis to be extremely beneficial, and had completely established the soundness of the principle of the Bank of England Charter Act. It was well known that a vast proportion of the commercial transactions of this country was not represented by bills of three months date. Much of the foreign commerce of the country was transacted through the medium of bills running through the period of twelve months. By the operation of the present law, the holders of such bills could not get them discounted (except at the ordinary rate of five per cent.) until nine months had expired. The consequence was, that means were taken to evade the usury laws by drawing four bills at three months each, and getting them renewed from time to time. But this imposed a very great expense on the borrower, without giving any advantage to the lender. It had been suggested that the measure should only extend to the operation of the clause in the Bank Charter. to bills of six months, but if that were to be the limit, the measure would not embrace that class of commercial transactions which was the most important. Under these circumstances he hoped his noble Friend would not oppose the progress of the Bill, the loss of which would be a serious calamity to the trading interests of the country. He begged in conclusion, to state that if his hon. Friend the Member for London had not moved that the Bill be committed, he himself should have felt it his duty to do so.

Mr. Wakley

felt convinced by the statement of the Chancellor of the Exchequer that this Bill ought not to be passed during the present Session, It was a subject of very great importance, the importance of which was not lessened by the fact stated by the right hon. Gentleman, that the subject had been pressed on his attention by the whole of the monied interest. The rich men, no doubt, were anxious that the Bill should be passed into a law. But what he wished to impress on the House was, the necessity of previously ascertaining what had been the effect of the experiment which they had already tried by the measure that had abolished the usury laws as far as regarded bills of exchange at three months' date. He was perfectly aware that the usury laws were unsound in principle. But at the same time he was bound to say that the whole structure of the monetary system in this country was artificial. He had been told that the alteration of the law, with regard to bills at three months had been injurious to the trading classes of the community. He could not, therefore, conceive why, at the end of the Session, with out investigation or discussion, the Government should press such a measure as this so hastily through the House. The trading classes had not petitioned for it. He had been informed that as much as ten, twelve, and fourteen percent. had been demanded for discounting bills which had only two months to run. He knew it had been said, that unless that interest were paid the parties would not have been able to obtain any money at all; but might it not be replied that those who knew they might legally receive such a high rate of interest would combine to prevent a lower rate being taken? He was aware that there were several bankers around him laughing at his statement because they knew that they were secure of a majority; but he would nevertheless declare that this was a Bill to promote the monied interest against the interest of the trading community. Had not this country, he would ask, prospered under the old law? At all events, had the trading classes called for its repeal? He trusted, therefore, that the House would not, in common decency, allow the measure to pass in the present period of the Sessin.

Mr. Hume

was very sorry to hear such opinions fall from his hon. Friend as those he had just expressed; and particularly the curious argument he had made use of as to this country having prospered under the old state of the law. If this really was an argument weighing with his hon. Friend, why did he ever vote against the Tories? Why, in fact, was he in favour of changing any of those measures he had so strenuously opposed, notwithstanding the existence of which this country had somehow or the other managed to get on? His hon. Friend had said, that no doubt the monied interest wished this Bill to pass. Why, the monied men did not want to get bills discounted. They discounted bills for others. Men of small capital could not get accommodation at the ordinary rate of interest, but by procuring it at eight or ten per cent, they were often saved from ruin. It was for this reason that the provisions of the measure relating to bills of three months ought to be extended.

Mr. Robinson

could assure the hon. Member for Finsbury, that he (Mr. Robinson) had never heard amongst his extensive connexions any one express a doubt as to the beneficial working of the clause in the Bank Charter, and for himself he was decidedly favourable, since the experiment they had had of that clause, to extending its operation. The hon. Member for Finsbury had said with a degree of simplicity which was rather surprising, that the country had gone on well under the old system. But surely it might be well said, that the country had gone on under other bad laws. It was said by the hon. Member, that this Bill was for the advantage of the bankers; but in this respect he was entirely wrong, for the persons who would benefit by it were the smaller traders.

Mr. Grote

wished to add his testimony to that which had been already given as to the beneficial effects which had arisen from the working of the clause in the Bank Charter Act with reference to the usury laws; and his strong conviction was, from the events of the last few months, that the present measure was essentially necessary, more especially in times of commercial difficulty. In the present state of the law a man holding a bill having five months to run, and having no other assets, was absolutely driven to an evasion of the law, because the law would not permit him to pay that rate of interest which such a bill would necessarily bear in the money market if discounted. There was an absurdity in the present state of the law; because a bill having six months to run was really worth a higher rate of interest than a bill which had only three months to run. That was to say, the risk was greater in discounting a bill at six months than at three months, and, therefore, the interest ought to be higher. But the law allowed ten per cent. interest, or any other rate, to be paid on a bill at three months, whereas, it would not permit more than five per cent, to be paid on a bill at six months although the rate in the market would necessarily be fifteen or twenty per cent. He did not think the hon. Member for Finsbury would find a second man to bear testimony to any evils having arisen from the working of the clauses in the Bank Charter Act, which relaxed the operation of the usury laws. There could not be a greater mistake than that of supposing that the interests of borrowers were forwarded by imposing restrictions on lenders.

Colonel Thompson

said, he was not a banker. He was the son of a banker, if there was any taint in that in the eyes of the hon. Member for Finsbury. But he would invite that hon. Member to consider, whether the cry that borrowers could not get money unless the lenders were made by force to lower their prices, was not of the same nature as the old-fashioned outcry against corn-dealers for not lowering their prices; and whether the contest after all, was not between having the respective articles at the price for which men would furnish them, and going without.

Mr. Wakley

finding his maiden effort to become a Conservative altogether unsuccessful, would abandon the attempt to check the progress of this Bill; but he certainly should make it his business to go into the city to ascertain what were the feelings of borrowers of money upon the subject.

The House in Committee.

The clauses were agreed to. The House resumed.