§ MR. HASTIE
said, he rose to complain, on behalf of the bankers, merchants, and traders of this country, against the Standing Orders of that House. By Standing Order, No. 39, it was rendered necessary that deposits on account of Railway Bills should be paid to the Accountant General of the Court of Chancery. He (Mr. Hastie) did not complain of the amount 10 per cent., but of the mode of payment, and the delay occurring between the Accountant General and the Bank of England. When the money had passed into the hand of the Accountant General, a week must elapse before the Bank could use the deposits. It was estimated that this year the deposits would amount to eight or ten millions, which amount must all be paid within two weeks of the sitting of Parliament. Any one who had the least acquaintance with the currency of the country must know that to lock up so large a sum must create great alarm and difficulty. What he complained of was the delay between the Court of Chancery and the Bank of England. The Bank of England, if the money were paid directly into their account, would feel itself at liberty to use the deposits; discounts would thus go on as usual, and the great inconvenience to the mercantile world of which he complained would be avoided. He was aware that many representations had been made to the Government on this subject, and he blamed them not for the caution with which they had acted; but while they were anxious to discourage mere speculation, they should take care that their caution did not affect others than those against whom it was directed, and limit the commercial transactions of those who had no connection, and were wholly unacquainted, with those railway speculations. It was well known to all commercial men that nearly the whole of the mercantile transactions of this country were carried on by means of bills of exchange. All the goods sent from hence to South America, China, and the West India Islands, were paid for by bills; the remittances were wholly in bills, which could immediately be discounted in London at the current rate of discount, and thus 372 the inconvenience which would be occasioned by the locking up of the money until the bills became due was prevented, and the operations of commerce facilitated. But the course that had been adopted in regard to these deposits had stopped this accommodation, and during the last three days it had been found impossible almost to obtain discount in the City. The extent of the inconvenience might be judged of by the fact, that the bills connected with the South American, West Indian, and China traders, alone discounted in the year, averaged about 150,000,000l. If these railway deposits were removed from the account of the Accountant General of the Court of Chancery, and placed to that of the Bank of England, the Bank, knowing the requirements of the mercantile community would still give that accommodation which it had been usual for the last fifty years to afford. If he thought such a relaxation would in any way tend to encourage undue speculation in railway schemes, he would be the last person to ask for it; but he did not believe it would have any such effect, while to continue the present arrangement, would embarrass the mercantile community, which had nothing to do with such speculations, and put a stop to commercial operations. He had given a notice upon this subject on a previous evening, but had been informed by the Speaker, that as the restriction he complained of was imposed by an Act of Parliament, such notice would be ineffectual for his object. Under these circumstances, he was anxious to press the matter on the attention of the Government, in the hope that they would propose some alteration of the law, by which the evil would be prevented.
The CHANCELLOR OF THE EXCHEQUER
could assure the hon. Member who had just sat down, that he deplored as much as the hon. Member the effect which undue speculation had had upon the innocent individuals who had embarked in them. But the embarrassment alluded to was one of the misfortunes incident not only to railway speculations, but applied to all those other mercantile speculations which had occurred at a time when railway speculation could not have been among the causes of such embarrassment. He doubted, however, whether the hon. Member had taken a correct view of the evil, or had suggested that which would afford any remedy. The hon. Gentleman said that the House, by a Standing Order, required parties to a railway to deposit a certain amount of the sum 373 subscribed. By an Act passed in the beginning of the reign of Her Majesty, it was enacted, that whenever a deposit was required to be made by either House of Parliament, it should be paid into the Bank of England, and placed to the credit of the Accountant General of the Court of Chancery. The money, therefore, that was now paid on account of the deposits required, was paid into the Bank of England, and, in fact, was there transferred from the account of bankers who had an account with the Bank, to the account of another individual, who also had an account with the Bank—viz., the Accountant General. The deposits were, therefore, as much available for commercial purposes, when standing in the name of one individual, as if they had stood in the name of several individuals, with this advantage, that when they stood in the name of the Accountant General they could not be drawn out of the Bank without certain preliminaries in the Court of Chancery, which gave to the Bank an opportunity of knowing the particular time when the demand would be made upon them. The hon. Member said that it would be of material benefit if these deposits were placed to the account of other parties in the Bank of England, and that he would recommend an alteration of the Act in this point. He should be glad to hear when the hon. Gentleman brought forward his Motion, what benefit he proposed to derive from the deposits standing in the name of any other party than the Accountant General? He did not see how that could affect the power of the Bank in making advances on bills in the ordinary manner, as their doing so did not depend on the number of parties in whose name deposits were placed, but on the amount of deposits in their possession. The hon. Gentleman would, therefore, see that what he proposed would not remedy the evil, and that the payments to the Accountant General did not call for the absorption of the circulation which he complained of.
§ MR. HASTIE
said, that the right hon. Gentleman was quite correct in saying that the money was transferred from one account in the Bank to that of the Accountant General. His complaint was that when so transferred it was locked up from general use.
The CHANCELLOR OF THE EXCHEQUER
said, that the hon. Gentleman was altogether in error. If the money were placed to the credit of any ordinary account 374 with the Bank of England, the person who had that account might draw on the Bank at an hour's notice. But when placed to the credit of the Accountant General, it would require the party wishing to draw to undergo a delay of about ten days, as notice to that effect was rendered necessary.
§ Mr. P. M. STEWART
said, the mercantile community in general must feel obliged to his hon. Friend (Mr. Hastie) for bringing the matter forward; and as the mischief was at work, whether it rested on the authority of an Act of Parliament, or on an Order of that House, he hoped he would not delay in pressing it upon the attention of the House. He was quite sure that any Bank Director present would admit that, so far as commercial accommodation was concerned, the distinction drawn by his hon. Friend the Member for Paisley was perfectly correct. Supposing the money to be placed in the Bank in the names of five of the provisional committee, he admitted that they had the same power over it as a private individual would have, were it placed in his name; but if it was placed there under the authority of the Speaker's warrant, it would remain in the Bank, and could only be drawn by parties possessing certain official documents passing from the Speaker. The parties lodging it had no power to draw it, and it became available to the Bank of England for commercial purposes. But in the case of deposits paid into the credit of the Accountant General, there was no power to dislodge them for such purposes. The purpose of the law that had been made on that subject was to secure the public from injury, and that object would be amply effected by the lodgment of the money in the Bank of England, under authority from the proper quarter. No practical man or Bank of England director would contradict him when he said, that if the money were placed in the Bank of England under restraint, it would not be available for commercial purposes. Whereas if it were paid in, as he had said, under the authority of the Speaker's Order, it would be available to-morrow. During the last few days it had been impossible to get discounts; and what he contended was, that this money was so abstracted from circulation, and the mercantile transactions of the country brought to a stand-still, for no good purpose whatever. Six or seven millions were thus lodged as deposits, occasioning the withdrawal of about one-fifth or one-sixth 375 of the whole circulation of the country. It would be so for a certain time at least. He trusted that the Government would turn their attention to the subject. If any good reason could be shown for continuing the law, let it remain; but his belief was, that it was a defect in the law to require these deposits to be placed in the hands of the Accountant General; and if that law were not altered it would inflict great injury on the commercial interests of the country.
§ MR. GISBORNE
was anxious that the interests of depositors—the shareholders in these railways—should be considered. The hon. Gentleman who had just spoken proposed that the money should be paid into the Bank, under the Speaker's warrant, and only taken out by the authority of the Speaker's warrant; that was in effect to say, that the money should remain in the Bank — unavailable to the depositors — until either the Bill passed or was thrown out. This would be most unjust, as the Bank allowed no interests on such deposits.
§ Mr. HUDSON
would offer a practical suggestion to the Chancellor of the Exchequer, which he was persuaded would obviate the difficulty complained of. If the companies seeking to obtain the consent of Parliament to Railway Bills, were, in place of money, to be allowed to deposit Exchequer bills, or stock, the difficulty would be met. By requiring the deposits to be made in money, the promoters of railway schemes were prevented from investing their money in good securities; but were they allowed, as they ought to be, to make the deposits in securities, the only object being that security should be taken for the due execution of the works undertaken—then the deposit of 10,000l. or 20,000l. of Exchequer bills or consols would be as good as a deposit of hank notes to an equal amount, and the inconvenience complained of be altogether avoided. The House of Commons wonld get the security, if required—the railway companies would be receiving interest on their money, the circulation would not be interfered with, and all parties would be benefited: whether the deposits in that case were paid to the account of the Bank of England, or the Accountant General, would not matter; and he agreed with the right hon. the Chancellor of the Exchequer as to the advantage of the notice in the latter case—in either case the evil would be remedied. He was satisfied if his suggestion were adopted, it 376 would remove the difficulty, and advantage all parties.
§ MR. RICARDO
said, the observations of the hon. Gentleman the Member for Sunderland had changed the nature of the discussion. This was not a question of convenience to the railway companies; but as regarded the public whether the circulation of the country should be diminished. It mattered little whether the deposits were paid to the credit of one name or another, and still less did it matter by whom the money was invested; neither did it appear to him—though large payments of money to one particular purpose must always occasion disarrangement to the currency to some extent—that if the bankers themselves had confined their operations to legitimate accommodation, and not attempted to commit certain imprudencies of which many of them had been guilty—if they had acted with common prudence, no difficulty would have arisen. In regard to what had been said by the hon. Gentleman who spoke last, he thought much of the inconvenience might be avoided, if at the period of registration the time were fixed for the repayment of the deposit: say that the money should remain there four months after the date of registration. The Bank would thus know, as soon as the money came into their hands, when they would have to repay it, and might deal with it with certainty.
§ MR. MUNTZ
concurred that it mattered not by whom the money was paid. He thought that it was very strange that the Government should refuse to receive their own securities as a payment into the public Treasury, especially when they were only held as a trustee fund; and he conceived that the Chancellor of the Exchequer was throwing something like disgrace on the credit of those securities. The proposal of the hon. Member, for Sunderland was a proper one, and if he had not made it, he would.
§ SIR R. PEEL
hoped the House would not lightly interfere in this matter. It was impossible to place any check upon extravagant speculation in railways, without subjecting the public to some inconvenience. One of the securities Parliament had thought fit to require for the purpose of preventing, as far as possible, delusive speculations in railways, was, that before the petition for the Bill should be presented, a certain deposit upon the capital to be subscribed should be made. Formerly that deposit was five per cent.; but that being thought 377 too small, the House, with the view of discouraging unsound speculations, only last year determined that it should be increased to 10 per cent., and at the same time required that the amount to be paid into the hands of the Accountant General should be in money. He must say that looking at the many notices of railway speculations that were given in July last, he thought those who dealt in money had had full notice of the probable pressure that would ensue; and it was quite open for them to refuse discount on long bills, and to take the necessary precautions against that pressure. It would be unwise for Parliament lightly to interfere, now that the difficulty was beginning to be felt, and to relax those checks which it had imposed to discourage improper and unwise speculations. Above all, it would be unwise for Parliament to make alterations in the rules it had laid down, which would not give the relief required—as, for instance, the making of the Bank of England the party to whose account the deposits should be paid instead of the Accountant General. With regard to the subject of discounts, by the Bank of England, the hon. Gentleman said he hoped the attention of the Government would be called to it. He assured him that both his hon. Friend the Chancellor of the Exchequer, and himself, had had their attention called to it, and had had repeated interviews with the highest authorities in reference to it; and the hon. Gentleman would find that many of the most important authorities in the monetary world deprecated Parliamentary interference, with the view to relax the checks that now existed. As to whether or not it might be proper to permit deposits to be made in Exchequer bills and stock, he would not now enter into that question. It was a new proposal, which he had not yet considered; but he hoped they would consider whether any advantage or relief would result to those who required the accommodation of discount for the purpose of carrying on their mercantile operations, that the money should be lodged to the credit of the Bank of England, instead of to the account of the Accountant General. His belief was that the Bank could use the money with greater security now than if the proposed change were made. But as to saying, as the hon. Gentleman who last spoke suggested, that there should be a period of time, as three or four months, elapse before the money deposited should be returned, that would be most unjust to the 378 promoters of these speculations. They might fail before the Standing Orders' Committee, or at an early period of the proceedings, and it would be most unjust to refuse to return their money at the earliest possible moment after the decision of the House against them was known. Such an arrangement, therefore, he considered, would be most unfair.
§ MR. P. M. STEWART
rose to explain. He thought the interval between the depositing and the release of the money could be determined by the fate of the Bill when certified by the proper authority.
§ SIR R. PEEL
objected, on the ground that the fate of a Bill might not be decided for perhaps two or three months.
§ MR. F. T. BARING
considered it would be hard to lock up money for an indefinite time, without interest, until the fate of the Bill might be known. He confessed—but he might be mistaken — that he could not understand what disadvantages could arise from the deposit of Exchequer bills instead of money. The object of the deposit was, that the Government and the public might have a security that the undertaking for which it was proposed to obtain an Act of Parliament was of a bonâ fide nature. He hoped the House would well consider the subject.
§ The Question of Adjournment agreed to.