BANK CHARTER—THE CURRENCY. (Hansard, 4 July 1844)

§ Mr. Wodehouse
rose to move the insertion of a Clause of which he had given notice, to the effect That any sum, not exceeding the sum of 25l. at any one time, shall be reputed in law or allowed to be a legal tender, within Great Britain or Ireland, according to its value by weight, after the rate of 5s. 2d. for each ounce of Silver. The hon. Member having read several extracts in support of his views from the evidence of Lord Ashburton and others taken before the Bullion Committee, proceeded to say, that that measure was dangerous in the extreme. He was upheld in his views upon this subject by no less an authority than Mr. Herries. That Gentleman told him that in dealing with this question of Banking great caution would be necessary, or it would be utterly impossible to calculate 316 the evils that might result. He was at a loss to find upon what grounds the hon. Member for Halifax (Mr. C. Wood) and the right hon. Member for Portsmouth (Mr. Baring) had given such a strong and energetic patronage to this measure. They had both addressed the House in laudatory terms of the right hon. Baronet's (Sir Robert Peel's) Bill, but neither of them had informed the House of the precise reasons which justified their approval of it. It was well to talk, as those hon. Members and Mr. Jones Loyd did, of approaches to perfection in their monetary system, but in his (Mr. Wodehouse's) opinion, it would be much more satisfactory to the country to prove that such approaches had been made.

§ Sir R. Peel
said, that a great portion of the speech of the hon. Member ought to have been addressed against the third reading of the Bill. If Mr. Herries had authorised the hon. Gentleman to state opinions against this Bill, it was upon the question of the third reading that he ought to have delivered them. He would, however, turn to the discussion of the particular Clause which the hon. Gentleman proposed, which he must admit would be a very proper clause, if silver were a legal tender up to 25l. But the fact was that the silver coinage was not a legal tender for any greater sum than 40s. If the hon. Gentleman wished to alter the standard currency of the country, the proper way to set about that would be to propose to repeal the Act of 1819. That Act established that gold should be the standard currency of the country. The silver currency was to be merely subsidiary and used as tokens, not being of the actual value it pretended to represent; the pound of silver being coined into 66s. instead of 62s., which proportion was its actual value. But if they made the silver coinage a legal tender up to sums of 25l. it was obvious that bankers instead of paying their 51. and 10l. notes in gold would pay in silver, upon which there would be a certain loss to the holder. The hon. Gentleman who had quoted the authority of Lord Ashburton in favour of a silver standard was mistaken in the views which the noble Lord had expressed on that subject. What that noble Lord proposed was, that there should be a recoinage of 317 silver fire shilling pieces, according to the original standard, that was according to the real value of the silver. The opinion of the authorities of the Bank was asked upon this proposition, and they declared themselves distinctly against the introduction of a double standard, which they said would be attended by many inconveniences. But his hon. Friend proposed to make the present depreciated silver currency a legal tender up to a certain amount, and this he (Sir R. Peel) could not consent to.

§ Mr. Muntz
believed, that if the Clause were adopted, it would not attain the object the hon. Gentleman had in view. He would take that opportunity of correcting a misapprehension which had occurred with respect to what he had said on a former occasion. He was represented to have said that he advocated a depreciation in the currency, a thing which he had never done.

§ Sir R. Peel
referred his hon. Friend to Mr. M'Culloch's work as to the supply of gold from the Russian mines. Mr. Murchison, a gentleman connected with the Geological Society, had also published a work as to the probable supply of gold from the newly-discovered mines in Siberia. His hon. Friend, however, did not seem to understand the object or effect of the measure. His hon. Friend thought it was intended by it to found a paper circulation upon a gold currency; but that had been done since the measure of 1819. Every man who had a 5l. note had a perfect right, under that Bill, to demand of the Bank gold in exchange for it; so that when the five sovereigns were of more value than the note, Mr. Rothschild, or any other man who had it, could, as the law already stood, receive gold in exchange for it. In this respect, therefore, the Bill made no change.

§ Mr. Wodehouse
said, he had determined upon bringing forward his Motion in consequence of a conversation which he had had only two days ago with Lord Ashburton, from which he understood that that noble Lord still adhered to the opinions he had declared in 1828. He would, however, withdraw the Motion, as the sense of the House appeared to be against it.

§ Mr. Turner
moved the following Amendment at the end of Clause 9:— And with a view to prevent loss to the working classes, that from and after the pass- 318 ing of this Act, the Governor and Company of the Bank of England, at their Bank or Branch Banks of Issue, shall take, as of the value of twenty shillings all sovereigns, and as of the value of ten shillings all half sovereigns, tendered to them, which equally balance in the scales, notwithstanding the same may not turn the balance; and that any loss arising to the said Governor and Company of the Bank of England from the taking of such sovereigns or half sovereigns, shall be deducted from the profit arising to the public from any increase of the issues of the Governor and Company of the Bank of England, before such profit be paid over to the public. The loss to the public from light gold was now very considerable. He found, by a return, that the average loss was 2¾d. on each sovereign, and the total amount of loss, taking it at this rate, borne principally by the working classes, from June, 1840, to April, 1843, had been 126,043l. In many cases, however, the loss to the working man was as much as six pence on each sovereign. He believed that many of these light sovereigns, after being paid into the hands of bankers, who charged the parties for the deficiency, were re-issued at the full nominal value, and again brought under circulation; and that the actual loss to the public was consequently much greater than he had stated it, and amounted to not less than 244,444l. What he contended for was, that some remedy should be devised for this abuse, and that the public should be protected from this excessive loss.

§ Sir R. Peel
said, that this Bill had nothing whatever to do with the currency, but left it as it found it; so that whether it were desirable or not to make any new regulations as to light sovereigns was a matter in no way connected with this Bill.

§ Mr. C. Wood
apprehended that at the present moment very little inconvenience was experienced from light gold. Whatever extent the evil might have gone to some time back, it was a satisfaction to know that it existed but to a very slight degree at the present moment. He knew of no mode, however, of taking light gold out of circulation, unless by sending it to the Bank. Before the passing of the Bank Restriction Act, it had been the custom for bankers generally to clip all light gold with a pair of shears kept for the purpose, so that it should no longer circulate, and that was still the practice at the Bank of England; but he could not at that moment see how they could com- 319 pel its general adoption. He quite agreed that some means should be devised for preventing light sovereigns again circulating after coming into the hands of a banker or other authorised person.

§ Mr. Hume
said, as the right hon Baronet was not disposed to entertain his Clause for abolishing the legal tender Clause, he did not propose to take up the time of the House in moving it. He could not, however, avoid expressing his regret that the right hon. Baronet had not, by adopting his suggestion, made his Bill more complete. With two standards of paper currency, one convertible immediately, and the other in a few days, he feared the right hon. Baronet would endanger the success of his whole plan. If they omitted the legal tender Clause, they might allow the country banks to issue as much as they pleased, and there would have been no danger.

§ Sir R. Peel
did not imagine that the abolition of the legal tender Clause would enable them, with any degree of safety, to permit unrestricted issues. In the United States, where the competition had been unlimited, the evils of unrestricted circulation had not been avoided, although the principle of that circulation was convertibility on demand. He thought it desirable to disturb as little as possible existing principles, and that they should adhere to the legal tender as laid down by Lord Althorp.