§ Order for Second Reading read.
§ MR. A. PELLATTsaid, he would now move the second reading of this Bill, and would take that opportunity of making a few observations to show its importance, and the magnitude of the transactions to which it referred. In 1849, it appeared from an inquiry that twenty-nine London bankers used the clearing-house to a large extent, but since the joint-stock banks had been admitted to the same privilege an immense increase had taken place in the number of cheques passing through the clearing-house. The cheque system was of great importance to the stockbrokers. Between the hours of ten and four they drew and paid very large sums, and used a great number of cheques; but, in present circumstances, if any one presented a crossed cheque about noon for a large amount the danger was that the stockbroker might be declared a defaulter. The object of the Bill was to restore that security to the public of which they had been deprived by a recent decision of the Courts of Law, and to enable the bankers and commercial community of London to continue with safety a custom which had existed for many years. He believed that the system of crossed cheques arose in this way: A gang of swindlers paid into a bank some bills due on a certain day at a certain house. When the banker's clerk presented himself at the house they seized him, tied him up, took away all his bills, went round with them to the different bankers, and then left the town with their booty. The system of crossed cheques was adopted in order to prevent the repetition of such wholesale robbery, and it had been found extremely useful by merchants, stockbrokers, and tradesmen. But it had been, surrounded with doubt by a recent decision of Lord Campbell to the effect that a document payable to bearer could not at the same time be payable to order; and the object of the present Bill was simply to provide that when a cheque was drawn payable to bearer it should be paid through some banker. The measure had been approved by a committee of bankers and by the entire Stock Exchange, and by Mr. Freshfield, the solicitor of the Bank of England, who, upon a reference from the Governor, had suggested some amendments, which had been adopted.
§ MR. GLYNsaid, he should support the second reading. He could assure the House that there was a universal feeling in the 440 City in favour of some legislation of the sort, in consequence of recent decisions in the Courts of Law tending to throw doubt upon the validity of the custom among bankers. He did not, however, think that the Bill under discussion ought to be passed in its present shape; but as regarded the question of security, which was the main object of the Bill, and of the original practice among bankers, it had his full approval. There were also other grounds upon which he was prepared to support some measure of the sort, and that was with reference to the currency. Within the last ten years the commercial classes of the metropolis had endeavoured to assist the Act of 1844 by economising the currency of the country, which some persons supposed to be based upon somewhat too contracted a basis. With that view many alterations had been introduced in the clearing-house and the general conduct of banking business, and immense sums of money daily passed through the clearinghouse, and were settled without the use or intervention of a single bank-note. The Bill under consideration would add materially to the efficiency of the system, and he was therefore prepared to support its principle, reserving to himself the right to oppose the third clause in Committee, as he did not consider that portion of the measure necessary or called for.
THE ATTORNEY GENERALsaid, that the result of his professional experience induced him heartily to support the principle of the Bill. At the same time he quite concurred with the hon. Member for Kendal (Mr. Glyn) that considerable alterations would be required in its details.
§ MR. JOHN MACGREGORsaid, he believed that the object of the Bill was a very proper one; at the same time he hoped the Bill would not be compulsory, but permissive as regarded Scotland.
§ MR. HANKEYsaid, he could not admit that there was a necessity for any legislation on the subject. Notwithstanding the decision of Lord Campbell, it was the custom of every mercantile house to cross their cheques, and their doing so effected the object for which it was done, namely, of making the bankers careful to whom they paid the money. But by the Bill now before them they were proposing that a cheque payable to bearer should only be paid through a banker. That would altogether alter the character of the cheque, and deprive it of the value its ready convertibility gave it. If the drawer in any 441 case desired to make the cheque payable to a particular individual, he could do so with perfect safety. The existing custom worked well, and there was no wish on the part of the Bank of England, he believed, that it should be changed.
§ MR. WILKINSONsaid, he should support the Bill on the ground that it afforded security to bankers against any damage for refusing to cash cross cheques, except in the way which had been established by the custom of the business men of the City of London, and on which the system of the clearing-house was founded.
§ Bill read 2o.