HC Deb 12 December 1857 vol 148 cc674-7
MR. SPOONER

claimed the indulgence of the House while he endeavoured to do justice to a most respectable gentleman, an old and esteemed friend of his own, who was rather unfairly dealt with last night by the Chancellor of the Exchequer; he alluded to Mr. Twells. The right hon. Gentleman read part of Mr. Twells's evidence before the Committee on Banking, but the way in which he quoted that evidence was calculated to give a wrong impression of the views held by him. The Chancellor of the Exchequer read a long series of leading questions—he should rather call them misleading questions—which had been put to Mr. Twells by the Chancellor of the Exchequer, and their answers, but he omitted to read other questions and answers in connection with them, which changed the whole character of the evidence. He did not read the questions consecutively, but omitted many intervening ones, and thus prevented the House from fully understanding the effect of the whole. The right hon. Gentleman began by saying that he had been led into the error of supposing that he (Mr. Spooner) was the advocate of an unlimited issue of inconvertible paper, but that he had been made sensible of his error by a statement which he (Mr. Spooner) made to the House that he held no such views. He said he had been led into the error by the evidence of Mr. Twells, whose sentiments he had supposed him (Mr. Spooner) to hold. Now, he begged to say that he concurred in all that Mr. Twells said before the Committee, but not in the construction put upon it by the Chancellor of the Exchequer. The right hon. Gentleman asked this question— You recommend the issue of £20,000,000 of bank-notes not payable in gold on demand, but receivable by the Government in payment of taxes.—Yes. But the next question and answer were omitted, namely— Do you understand that those notes would be issued by the Bank of England or by the Government?—I think it is perfectly immaterial. I should say by the Bank of England, on account of the completeness of its machinery. In order to avoid as much as possible violating the feelings of the people with regard to that to which we have been so long accustomed, it would be merely altering the words, and inserting, instead of ' I promise to pay,' something of the same kind as is inserted in an Exchequer bill, ' payable for receipt of taxes.' It would of course be sanctioned by Government, but whether the notes were issued by the Government or by the Bank of England I think would be very immaterial. The views of Mr. Twells were that we should have two sorts of currency, one for our own inland and domestic purposes, and the other to carry on our foreign trade. The Chancellor of the Exchequer also put the following question:— Of course it would be necessary to omit the words, 'I promise to pay,' because these notes would not, in fact, be promises to pay on demand?—Quite so. But he omitted to put the next question, which was one of great importance— What do you conceive to be the advantage of an inconvertible note of that kind over a convertible note payable to bearer on demand?—It would prevent a drain of bullion when it is required for foreign trade, and it would give us, what is so very essential, a domestic currency which is not influenced by any foreign transactions whatever. If France or America wants a quantity of gold it ought not to interfere with our domestic currency. Our merchants and all our trade surely should not suffer because America wants gold. Again he asked— Do you think that that currency would run the risk of ever being depreciated in value—that is to say, that inconvertible £5 notes would not exchange for five sovereigns?—I do not know as compared with sovereigns; that, I think, is of no consequence in the world. We want it for our internal commerce, and we want it to pay Government their taxes. But the next question asked, and not given by the right hon. Gentleman, was— How would you determine the value of a £5 note?—I do not want any value beyond its passing for £5 for taxes; whatever the Government demands from me as a tax of £5. What his friend Mr. Twells meant was that the Government which paid the five-pound note in discharge of a debt due from the Government, should receive back the same five-pound note due from the country to the Government. The Government, therefore, would be paid back in its own coin, Mr. Twells was afterwards asked his opinion as to the cause of the depreciation of the French assignats at the time of the Revolution, and his reply was— What I stated a little while ago, that a Government may issue in excess; it is very possible, and supposing it is a corrupt Government they have the power of doing it; but such an institu- tion as our Bank of England cannot do it, because they only issue against property, against something of equal value with their own notes, and we consider that the further value of their own notes is secured by the sanction of a well-established Government; that the guarantee of our Government, taking it as it is in England, is quite equal to £20,000,000 of gold deposited in a vault. I should be very sorry to think otherwise of it. There was enough in that answer to explain the difficulty of his right hon. Friend about the matter, and which excited so much mirth and merriment in the House. It showed that Mr. Twells meant all his answers to apply not to notes issued by the Bank of England, but to notes guaranteed by the Government. He hoped this statement, which he had deemed it his duty to make, would receive as wide a publicity as that which had been made by the Chancellor of the Exchequer. Mr. Twells was next asked— Under what does the country suffer, and why under a drain of bullion?—Because it cannot have supplied to it a sufficient circulation. The House of Commons was congratulated in the year 1811 upon the adoption of a measure for supplying the country with a circulating medium of undoubted credit proportioned to its wants; now I take it that to secure that is the object of a sound currency. From what is that an extract?—That was stated on Mr. Horner's Motion for the Bullion Committee. 'A circulating medium of undoubted credit, proportioned to the wants of the country,' I conceive, must embrace everything that can be required of a currency. Whose opinion is that?—That is what was stated by Lord Castlereagh, and he observed upon it that this circulating medium of undoubted credit had ' for the first time' solved the problem of reconciling national prosperity with a state of war; that the country had risen in manufactures, internal improvement, revenue, and commerce, with a velocity which had never been experienced in a year of profound peace. The gap which is created in the circulating medium by sending bullion out to purchase corn would be filled up for the time by the inconvertible note till the exchange is turned, and then gold would naturally flow in?—Yes, it would naturally flow in, just as any other commodity. But the bank-note, if issued entirely by the Bank upon the Bank's own responsibility, you would still keep liable to be paid in gold; you do not want to make any change in that?—Not at all. There would be no necessity for it?—None whatever. There are notes to the extent of £14,500,000 now issued upon securities?—Yes. Do not they, upon the face of them, bear a promise to pay on demand?—Yes. Supposing the demand was to extend to them, and to pay upon that £14,500,000, would they be able to be paid?—No, they would not be able to be paid; but the country is now put in such a position that they cannot demand it. Then paper is issued which is not capable of being paid on demand, but it is done in the confidence that the country would be in such a state before that demand could be made that it would be utterly impossible for the country to demand it?—Yes, quite so. Then it bears upon the face of it a fallacy, just as much as an inconvertible note?—Yes, just the same. Therefore I think it would be only the fair and judicious and honest course to take that those notes should bear an impress upon them of what they were intended to be. You therefore recommend that those notes, instead of being issued upon securities, and pretending that they are issued on gold, should bear upon the face of them that they are issued upon securities, and you would recommend that those notes so issued upon securities, should be made a legal tender'!—Quite so. And whether the amount should be £14,000,000 or £20,000,000 is a question upon which you do not give a positive opinion?—Not at all. But your experience has shown you that when there was a steady issue of about £20,000,000 the trade was carried on steadily and prosperously in the country?—Yes; that is why I say £20,000,000; but it is quite possible that £14,000,000 would effect a great deal; that is a matter which experience only can decide. Mr. Twells was a man of great experience and sound judgment, and was mixed up with no particular party. He came before the Committee to tell them the result of his long experience, and it was not treating fairly a gentleman now nearly eighty years of age, to attack him by ridicule and joke, and to take up garbled statements of the questions put to him and the answers he had given.