HC Deb 16 June 1845 vol 81 cc620-6

The Order of the Day for the Third Reading of the Banking (Ireland) Bill was read.

Sir R. Peel

observed, that the House was already aware of the two important alterations which had been made in the Bill since it had been in Committee—namely, the alterations with respect to the period for taking the averages, and that with regard to the account of specie. He trusted, therefore, that any objections which might be entertained to the measure would thus be materially diminished.

Bill read a third time.

Mr. Smith O'Brien

rose to bring forward the Amendment of which he had given notice, for securing the interests of the Hibernian and the Royal banks. He said he was fully aware that there was no use in offering any opposition to the Bill at the present stage, but he was anxious not to let it pass the third reading without offering a protest against some of its provisions. The Hibernian and the Royal banks had sustained for several years, and with very great advantage to the public, a competition with the Bank of Ireland, and he thought under such circumstances that it was very hard their interests should be sacrificed by the Bill, while those of other joint-stock banks were promoted. He would not trespass on the time of the House, but would simply confine himself to proposing the clause of which he had given notice. It was supported, not by his individual voice alone, but by the countenance of a very large proportion of the population of Ireland. The clause had been prepared by the agents of the Hibernian Bank, and would, he believed, meet all the objects which the Government had in view, while it protected the interests of the banks. The clause was as follows:— Be it Enacted, That it shall be lawful for any Bank now existing in Ireland, and which was not a Bank of Issue on the 6th day of May, 1844, to invest in the Government Three and a Quarter per Cent. Stock any sum whatsoever, and transfer the same to the Commissioners for the Reduction of the National Debt, or such other persons as the Lords of Her Majesty's Treasury, by warrant under their hands and seals, shall direct, to accept of such Transfer: and, thereupon, the said Commissioners for the Reduction of the National Debt, or such other persons, shall issue a Certificate to such Bank of the amount of Stock so transferred, and thereupon it shall and may be lawful for such Bank to issue their own Promissory Notes payable to bearer on demand, to the amount of such Stock so transferred: Provided always, that there shall not be a sum less than 50,000l. of such Stock so transferred at any one time.

Mr. O'Connell

rose for the purpose of seconding the Motion for the insertion of the clause, and in doing so he thought he might as well take advantage of the opportunity to address the few words to the House which he wished for the present to offer on the subject of that Bill. The right hon. Baronet had observed that he thought the two alterations which had been made in the Bill would give satisfaction. He was afraid the right hon. Gentleman was mistaken in that belief. There would still remain several branches, to the number of twenty or thirty, in every one of which it would be necessary to maintain a supply of specie on which no notes could be issued. He would ask the House to compare Scotland with Ireland in that respect. In Scotland, all the gold that a bank possessed could be represented by notes, while in Ireland the contrary was the fact. It was true that in Scotland they had no branch banks; but the difference between the countries would act most injuriously for Ireland. In Scotland the banks would have the advantage of being able to issue a note for every sovereign in their possession; whereas in Ireland, the banks would be allowed to issue notes for only one-fourth of the gold which they would be obliged to keep by them. The difference would be at once felt to be an advantage to the Scotch banks, which the Irish banks could not enjoy. Then again, with respect to the averages. Something would certainly be gained by the alteration as to the time for taking the averages, to which the right hon. Baronet had alluded; but he would ask, ought they to adhere strictly to the averages of former years? Would they read the Report of Lord Devon's Commission? They would find that 4,500,000 of the inhabitants of Ireland were in a state of distress—that they were ill-fed, ill-clothed, badly lodged—and having bad beds; that their food was potatoes, their drink, water, their houses in ruins; and that a blanket was to them a luxury; that they were, in a word, the most miserable population in Europe. These were not his words; but they were the words of Lord Devon's Report. The right hon. Baronet did not desire that Ireland should remain so. He would go further, and admit, of course, that the right hon. Baronet had a strong desire to alter that state of things; but if he recollected that the prosperity of the country was very much aided by banking facilities—instead of restricting—he ought to endeavour to increase the currency. He should recollect that any advance of the currency, was an advance of the interests of the country, and on both these grounds he ought to have treated Ireland in a far different manner from that insured by the present Bill. Nobody owed money to Ireland. On the contrary, five or six millions of the value of the produce of Ireland was annually transported from the country to pay the rents of absentees; and, therefore, the dearer they made the medium in which they had to pay that amount, the heavier would the debt become upon the country. Instead of being anxious to restrict the circulation, they ought, if they wished to improve the condition of the country, to extend the circulation as far as the public safety would allow. All that the people of Ireland were anxious for, was to get rid of the monopoly of the Bank of Ireland. They did not understand when a number of partners in a bank, up to six, might issue notes within fifty miles of Dublin, why there should be a different system adopted when the partners were extended to 300, or 400, or 500. In the one instance there was a possibility of loss through the Bank, in the other there was none. They had a monopoly against banks from which there could not by possibility be any loss; while they ceased to have a monopoly against that kind of banking which might and which actually did create very severe losses. It was then too late to enter further into any opposition to the Bill; and he had to apologize to the House for trespassing upon their time, but he wished to put upon record his humble opinion on the subject. He was old enough to remember the former currency Bill, which had been called after the right hon. Baronet; and he recollected that that Bill had created more mischief in the country than had been effected by the French Revolution in France. It caused more social injury, it ruined more families, and brought more destruction on individuals, than any revolution that ever occurred. That ruin had gone by — but what were they now doing? They were limiting the currency. In fact, the very restriction of the 30s. notes would, in itself, go to limit the currency. He would venture to say, from his knowledge of Ireland, that by enhancing the currency, they would diminish the price of every article produced in the country, and they would bring great dissatisfaction in the minds of those who had, at present, the least desire to be dissatisfied with the Government. He would not trespass further on the House, but would conclude by giving his support to the Amendment.

Sir R. Peel

believed that the permanent benefit of Ireland depended much more on the stability of the banking system, than upon any amount of circulation. The hon. Gentleman alluded to the poverty of Ireland; now, he (Sir R. Peel) had seen the same state of things in Ireland when there was most extensive paper circulation, upon which there was no restriction. Shortly afterwards he had seen every one of those evils to which the hon. and learned Gentleman had alluded; and when the time arrived, as was always the case with a too abundant issue of paper, there was the greatest and most wide-spread misery in the west and south of Ireland, and when almost every bank failed. He believed that upwards of fifty failed, and were unable to discharge their obligations. They had no wish to reclaim the notes; but there should be a security that they should be at once convertible into coin. He believed that the restrictions that were proposed in this Bill would not operate to prevent a sufficient circulation of notes in sound security. He believed that, after a short time, when people got confidence in the banks, it would happen, as in Scotland, where there was little disposition to change the notes.

Mr. Trelawny

said, he should be thought presumptuous in following such an authority on such a subject; but he only did so because he was anxious to protest against the policy of this banking measure for Ireland. He did so, however, not for the reason assigned by the hon. and learned Member for Cork. viz., because it would produce misery by lowering the price of all sorts of commodities. If that were its effect, he would not certainly oppose it. He opposed it because it was an encroachment upon what he believed to be true policy on this subject—perfect freedom in banking. The right hon. Baronet had pointed to Ireland, and said that all the evils which he attributed to free trade in banking had occurred in that country. The case, he said, fully bore out his opinions. But let them observe, that the case of Ireland had coexisted with a restrictive system in England, which had doubtless affected it disadvantageously. Let Government look to the state of Scotland, the only instance in which free trade had been approximated to—and what had been its results? Why, fewer monetary disturbances had occurred there than any where else. All the right hon. Baronet's rules were framed on an experience of a period of restriction. He had never observed what had happened under perfect free trade, because it had not been completely tried. He had, undoubtedly, more knowledge on the subject than any man in England; but that circumstance was precisely his disadvantage. If he were to forget all he knew about the matter, and brought his original and vigorous understanding to the subject, free and unencumbered with the erroneous views he had contracted from the working of a state of restriction, he would have established free trade as the true remedy for the evils which the working of the currency and banking laws present. A great philosopher had said the first step in education was to unlearn; and some of them ought to begin by forgetting all they knew on banking, and the result would have been the production of a better Bill. One reason for non-interference in such matters was, the extremely complicated character of the phenomena with which legislation had to deal. What legislator had ever succeeded in producing the effects he anticipated from a banking law? And did not this show the wisdom of not meddling with what was so difficult to understand? He could not conceive why there should be any greater necessity for laws to insure the presence of gold than mutton in the country. What would result from perfect free trade? Great companies would be formed, whose interest would compel them to keep sufficient gold in their coffers to meet the paper brought to them for payment. There would naturally be such companies, and their competition would keep down banking profits to meet the interests of shopkeepers and others. For this is the true object of banking. It is economy of gold. It is to render it unnecessary to every shopkeeper to keep a great quantity of gold in his shop. The banker takes it and trades with it, paying a percentage to the depositor, to the mutual convenience of both parties. And why this could not happen under free trade no one had ever shown. He did not know he had any other remark to offer; but he had felt it to be his duty to protest against this Bill.

Mr. Ross

did not think that four banks for the issue of notes was sufficient; and this would be particularly felt in the province of Ulster.

Mr. Hawes

considered that it would be highly beneficial if there was a great extension of joint-stock banks in Ireland. He did not conceive that this would necessarily be attended with an increase of paper circulation. He did not believe, however, that this measure would be attended with any serious consequences to Ireland; but still it might interfere with the formation of secure joint-stock banks. If he (Mr. Hawes) interfered with the system of banking in Ireland at all, he would endeavour, as much as possible, to assimilate it to the Scotch system of banking.

The Chancellor of the Exchequer

thought the solvency of the banks would be better secured by not giving them the power proposed to be conferred by this clause, and he must, therefore, oppose it.

Sir R. Peel

was fearful that if they gave too great facilities for a paper currency, they would in the end generate a tendency to get rid of a metallic currency. Let the House look at the manner in which the enormous transactions at Liverpool and Manchester were conducted; there the only bank notes in circulation were those of the Bank of England, representing sovereigns; and if these notes were abolished to-morrow, sovereigns would be used in their stead, without much inconvenience.

Clause brought up and read a first time.

The House divided on the Question that the Clause be read a second time—Ayes 24; Noes77: Majority 53.

Mr. S. O'Brien

moved as a second Resolution, that— And be it Enacted, That in the event of the said Bank stopping payment, or becoming Bankrupt, that such Stock shall be held in trust for the persons, creditors of the said Bank, who shall be holders of the said Promissory Notes of the said Bank, at the time of such stoppage of payment or failure; Provided always, that the said Bank shall be entitled to receive the half-yearly Dividends payable on the said Stock, until stoppage of payment or bankruptcy; Provided also, that the said Bank shall make Returns of their Issues of Notes as the several Banks of Issue in Ireland shall be bound to make such Returns under this Act, and that in case the issue of such Bank shall exceed, at any one time, the amount of such Stock so transferred, that such Bank shall be liable to the same penalties as the several Banks of Issue shall be liable to for their excess of Issue under the provisions of this Act; Provided also, that in case of their withdrawal of their Notes to an amount of 50,000l. or upwards, from circulation, then, on proving the same to the satisfaction of the said Commissioners, or the said persons so to be appointed, an equal amount of such stock shall be re-transferred to the said Bank.

Clause read a first time.

On the Question that it be read a second time,

The Chancellor of the Exchequer

said, he could no more agree to that than to the former clause of which it was a consequence.

Motion negatived. Bill passed.