§ Order for Second Reading read.
§ SIR JOHN HAY
Sir, in rising to move the second reading of this Bill I wish to say a few words in explanation, because when the Bill was introduced there was no opportunity of explaining fully the object it has in view. It cannot be said that legislation is unnecessary, because in the present Session two Bills have already been introduced to the notice of this House—one by the Chancellor of the Exchequer, which he withdrew with a view at some future time to legislate more largely and comprehensively on the subject. The other Bill was introduced by three Members of this House, representing three of the large commercial constituencies of Scotland; and that measure was also withdrawn on the understanding that the Chancellor of the Exchequer would at an early period consider the whole subject, and bring in a comprehensive measure to meet the wants of Scotland in this particular. It must be known to this House that Scotland differs from England, there being no legal tender there except gold. In England, to avoid expense, the Bank of England is authorized to issue notes which are convertible into gold when presented at their establishments. Now, for the solvency of the 110 Bank of England paper the whole kingdom stands pledged; and while Scotland and Ireland are pledged to this solvency, England alone has the benefit of the issue of the notes. The £14,000,000 which is guaranteed by the country is by the taxation of the whole kingdom. In fact, in times of great, pressure the country has stepped in and has relieved the Bank by suspending cash payments to meet the notes payable on demand. As I have already stated, this has been done by pledging the credit of Scotland and Ireland as well as of England for the solvency of that establishment. It was only yesterday that the hon. and learned Member for Clare (Sir Colman O'Loghlen) intended to introduce the Bill of which he has given notice, to endeavour to extend to Ireland the privilege which this Bill contemplates extending to Scotland. Now, this was no narrow question, agitated by any particular individuals; but it is the general wish of the commercial classes, both of Ireland and Scotland, to derive the benefit which is afforded by the credit of the paper of the Bank of England, and in their transactions to avail themselves of the credit of that establishment to whose solvency they are pledged. Some gentlemen have doubted, whether it would be advantageous in the interest of free trade in banking, that the issue of Bank of England notes should be made a legal tender in other parts of the kingdom; but I venture to say that the monopoly in Scotland is already so stringent that the introduction of those notes to relieve the commercial classes from the monopoly of the present Scotch banks, would be found to be a great advantage to them. The reason why this measure has not been asked for has been, that the people have rested contented with the assurance of the Chancellor of the Exchequer that he would introduce a Bill upon the subject. At the present time, few new banks are opened in Scotland; and while commerce has largely increased, the number of banks has diminished. In 1844, I think, there were twenty-three banks in Scotland, and to them was guaranteed the power of issue upon their credit, without reference to the bullion they held, but in accordance with the amount of issue during the three years previous. Since that time, two of the banks have disappeared entirely from the scene, and others have amalgamated; so that, at this present moment, there are only fourteen banks in Scotland carrying 111 on the business of banks, and they have concentrated in their hand the whole of the issue of the country. It is true that in addition to the fixed issue guaranteed, which was £3,000,000, and has now been reduced to £2,500,000, they have the power to issue against the gold which they hold; but the introduction of the Bank of England paper would relieve them from considerable pressure. Annually the banks, at certain periods, have to be inspected under the sanction of the Government, and they are to show that they are in possession of the amount of bullion to cover that issue which they have over and above their fixed issue. I am informed that early in this year considerable pressure existed in London, and that to satisfy the Government Inspector in Scotland, something like £1,500,000 was withdrawn from the Bank of England to be carried to Scotland, there to be exhibited against the issue; and having performed that duty was returned to the Bank of England. It seems to me that it would have been a far wiser and more satisfactory mode of procedure if these banks, instead of running the risk of removing bullion from London at a time when there was a tightness in the money market, had had it in their power to produce Bank of England paper as a certificate of their solvency, that their credit was good, and that gold was forthcoming if required to meet their calls. I would also add that I think there would be very great commercial convenience in extending the benefits of a uniform currency, generally recognized by all portions of the United Kingdom. I trust to hear from the Chancellor of the Exchequer that he is shortly about to extend this privilege to Scotland, and I beg to move the second reading of the Bill.
§ Motion made, and Question proposed, "That the Bill be now read a second time."—(Sir John Hay.)
§ MR. FINLAY
said, that in proposing that the Bill be read a second time that day three months, he would state in a very few words the reasons which had led him to take that course. The object of the Bill was to make the notes of the Bank of England a legal tender in Scotland, with especial powers to the Bank to establish branch establishments in Edinburgh and Glasgow. Now there was no law to prevent the people of Scotland from accepting the notes of the Bank of England at pre- 112 sent if they choose to do so. These notes were, as far as that goes, exactly on the same footing as the Scotch notes. There was, therefore, no grievance to be redressed, nor any injustice to be removed. If this Bill passed into law, the people of Scotland would have no choice in the matter—they would be obliged to receive the notes whenever they were tendered, whether they willed it or not. Such a law would be in entire opposition to the fundamental principles upon which the issue of bank notes had always been carried on, and which he hoped would not be departed from—namely, that every creditor was entitled to demand the payment of debts due to him in the coin of the realm, and if he accepted Bank of England notes he did so for his own convenience and at his own risk and responsibility. They all knew that the Bank of England had no power to issue notes for smaller sums than £5, whereas the Scotch banks had the power to issue £1 notes. They should, therefore, have this anomaly—that the branches of the Bank of England in Glasgow and Edinburgh would be restricted to £5 notes, while their rivals next door would have the power of issuing £1 notes. Such an inconsistency could not long be allowed to exist. Further legislation would be necessary, and they would either have to allow the Bank of England in Scotland to issue £1 notes, or to prevent Scotch banks issuing notes under £5 It was not very likely that the Bank of England would issue £1 notes in Scotland, for if they did, then they would have to do it in England. If they did not do this, then they would have to adopt the other alternative and prohibit the Scotch banks from issuing £1 notes, and the excellent system of banking in Scotland would be destroyed. Besides it was not fair towards the Scotch people themselves to introduce such a Bill as this without giving them ample opportunity of considering its scope and tendency. There was another objection to the Bill. If it pass into law it would create a new and perhaps considerable demand for Bank of England notes. How was this to be met? The great complaint against the English Bank Act of 1844 was that it did not supply a sufficient number of notes in times of panic. Therefore, by creating new demands for notes, they would increase the evil, which had already led twice to the suspension of the Act. The fact was if the Bank of England note should be made a legal tender in 113 Scotland, that House must be prepared to go into the whole currency question, and he submitted that this was not the time for bringing under the consideration of the House a measure of such vital importance and interest.
§ Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day three months."—(Mr. Finlay.)
§ Question proposed, "That the word 'now' stand part of the Question."
§ MR. K. HODGSON
thought that the question as regarded the circulation of the notes of the Bank of England in Scotland could only be treated as a great public question. He did not see how it would be possible to carry out this Bill, making the Bank of England notes a legal tender in Scotland without providing some place in Scotland where Bank of England notes could be exchanged, as they were done at the Bank of England and its branches. Now, that would be attended with considerable expense. The system of banking in Scotland and the system of banking in England were so widely different that it would be scarcely possible for the Bank of England to carry on banking business in Scotland in order to compensate them for the expense that this new issuing department would cause. Although it might be right that measures dealing with the circulation in Scotland and Ireland should be introduced, still he thought that this must form part of a great measure, which must deal with the whole banking system in England, Ireland, and Scotland, and that it would be quite impossible to consider the case of Scotland alone. He thought a great deal of weight ought to be attached to the objection that the Bank of England had no lower notes than £5, and that if it were to establish branch banks doing business in Edinburgh or Glasgow they would have to carry on their business in gold and in £5 notes, and that if they were to use £1 notes they could only do so through the issues of the other banks. That would be a great anomaly; and, under all the circumstances, he thought his hon. and gallant Friend would do well not to press the Bill on this occasion. It was part of a great measure; by itself it could not be worked to any great advantage, and he thought his hon. and gallant Friend would best consult the objects he had in view by withdrawing his Bill.
§ SIR EDWARD COLEBROOKE
did not think that any great danger would be likely to arise from making Bank of England notes a legal tender in Scotland; nor did he believe that the anomaly which it would introduce would be greater than that which now existed—that £1 notes were allowed on one side of the Tweed and were not allowed on the other. But he thought there would be some difficulty in the way of introducing such a measure as that now proposed. When his hon. and gallant Friend (Sir John Hay) brought forward his former Bill, he (Sir Edward Colebrooke) gave him his support, considering that the present system of banking in Scotland laboured under a defect which was not foreseen when the Bank Act of 1845 was passed, which it was for the Legislature to consider, and the duty of the Government to deal with. He agreed with his hon. and gallant Friend that they should use every effort to break down the monopoly which now existed, and to restore the system to something like the condition in which it existed before these unwise restrictions were placed upon it. The objections which had been taken were not so much to the currency as to the question of banking. The principle of the late Sir Robert Peel was to place restrictions upon the currency, but to leave banking perfectly free. In dealing with the question, however, Parliament acted on different principles with regard to Scotland and England. The effect of Sir Robert Peel's measures had been to lead to a large extension of the banking system in England, especially in London, but it had acted in an opposite direction in regard to Scotland. He could not say that any great evils had arisen from the restrictions now existing; but he could not regard the subject without alarm when he saw that the present banking system was like a Tontine proprietorship, and that on the failure or absorption of one of the banks the currency was taken up by another, which extended its branches to the different parts of the country. There was no doubt that, in the public opinion of the country, there practically existed an impediment in the way of the establishment of new banks. This system could not be safe or sound, and it was one which the Government should attempt to remedy. But the question was—Would the Bill before the House act in that direction? He was for free trade in banking; but he felt some alarm lest, if they allowed the Bank of 115 England the privilege of establishing branch banks in Scotland, and if they were thus to get a share in the monopoly, they should turn round and act as an obstruction in the way of the change which was desired. The hon. Member for Bridport (Mr. K. Hodgson) had stated that, in consequence of the different banking systems which prevailed in Scotland and England, the issue of bank-notes in Scotland would not be a profitable business. That showed the extreme difficulty that would arise from the banks seeking to trade simply upon an extension of issues of Bank of England notes. They might, by depositing gold in the Bank of England, have a command of them; but all that they would gain by that would not be sufficient encouragement for them to do so. But if the Bank of England, by the establishment of branch banks in Edinburg and Glasgow, entered on banking business in Scotland, they might become interested in the maintenance of the existing monopoly. It was desirable that the subject should be considered more largely than could be done by discussing the Bills introduced that Session, and he trusted that the right hon. Gentleman the Chancellor of the Exchequer would tell them what were his views, and that he would, if not this Session at least in the next, bring in some legislation on the subject. If he did not do so, he (Sir Edward Colebrooke), for one, would not consent to allow the question to rest, and should certainly press for inquiry into the operation of the system as it had hitherto existed.
§ SIR ANDREW AGNEW
said, he was sorry to have to oppose his hon. and gallant Friend, but the fact was that a great number of his constituents were excessively suspicious of the English sovereign, and they certainly would strongly object to have Bank of England notes forced upon them, instead of their own £1. He submitted that the people of Scotland should be allowed, as far as possible, to manage their own affairs; and he hoped that on the present occasion the Scotch Members would not be overridden by the tyranny of an English majority. Scotland was prepared to stand by its £1 notes, and there was no reason in the world why it should be obliged to accept English paper.
§ MR. DALGLISH
said, he would be one of the last men to oppose any real improvement in the banking system of Scotland, but he protested against this constant meddling on the part of private Members 116 who have no specific knowledge of the improvements required. If the Government would bring forward a measure to improve the Scotch banking system he should gladly give it his earnest and cordial support; but he objected to so important a question being constantly brought before the House for no other apparent object than to benefit certain Joint Stock Companies who wanted to establish themselves in Scotland. The hon. and gallant Member (Sir John Hay) has stated that the Government give their security to the Bank of England for their notes. But he (Mr. Dalglish) was not aware that the Bank of England notes had any such security. The Bank of England had no guarantee for the excess of their circulation but the bullion in their cellars; but the hon. and gallant Gentleman wished the Scotch banks to hold Bank of England notes as the security for their excess. Now, although the people of Scotland were always very glad to get Bank of England notes, yet they would prefer gold as a security for the excess of their circulation, and he was sure their opinion was entirely adverse to the present Bill.
§ MR. THOMSON HANKEY
said, that as the hon. and gallant Gentleman had been good enough to show him this Bill, and to ask him if he saw any objection to it as connected with the Bank of England, and having stated that he saw no objection to Bank of England notes being made a legal tender in Scotland, he wished to state the reasons why he should vote for the Amendment. This Bill appeared to him to involve a new principle of legislation in banking, and he did not think that they were prepared to go into so wide a question at the present time. It was necessary to consider well before they arrived at the conclusion that Bank of England notes should be made a legal tender in Scotland. His hon. and gallant Friend complained, as he understood him, of a want of paper circulation in Scotland; but he begged to remind him that the banks in Scotland could issue their own notes provided they had gold to meet them in their banks. The Banks of Scotland could issue any quantity in exchange for gold. Why did they not do so? Because the expense was so great that it did not pay them to do so. It was an expensive operation to the Bank of England to issue notes; and the Scotch banks found that it was not profitable to do so. He thought, therefore, that it was too bad to ask the 117 Bank of England to undertake what the Scotch banks found an unprofitable business. He trusted his hon. and gallant Friend would not press the Bill.
§ THE CHANCELLOR OF THE EXCHEQUER
I think the hon. and gallant Gentleman (Sir John Hay) must feel from the discussion that has taken place that it is not agreeable to the House to proceed further with this Bill. I confess I am of opinion that there are various reasons why we are not in a position to do so. In the first place, a Bill of this sort cannot be proceeded with without concert with the Bank of England. It is an extraordinary proposal to give powers to the Bank of England without knowing that the Bank of England is prepared to exercise those powers; and to entail upon the Bank of England responsibilities of considerable importance without having obtained its assent beforehand. It is impossible to consider the question of making Bank of England notes a legal tender in Scotland apart from the question of the establishment of branches of the Bank of England in Scotland. We cannot consider that question without entering into an inquiry on the subject touched upon by my hon. Friend the Member for Argyleshire, as to the manner in which the Bank of England is to conduct not only its issuing business, but its banking business in Scotland. This is a consideration which I do not think falls within the view of the hon. and gallant Member. No doubt he contemplates the establishment of branches by the Bank of England, but he knows nothing of the willingness of the Bank of England to establish these branches. He is providing for matters in which he must have the assent of the Bank of England, without knowing that he will have the co-operation of that important body. The hon. and gallant Member seems to think that Scotland and Ireland, in common with England, guarantee the circulation of the Bank of England to the extent of, at all events, £14,000,000. That is an erroneous supposition altogether. There is no guarantee for the circulation of the Bank of England, or any part of it, by the State. The state of the case is this: that the Bank of England has lent the State £11,000,000, which stands in the form of a debt to that institution; and it has besides £3,000,000 invested in the public securities The State is, therefore, a creditor to the Bank to the extent of £14,000,000; but surely the fact that the 118 Bank has lent to the Government that sum does not afford any claim to Scotland or Ireland to make a demand upon the Bank of England. I agree with my hon. Friend the Member for Argyleshire that a measure of this kind would be viewed with the greatest suspicion in Scotland. Hitherto it has been the policy—and I think, under the circumstances, the wise policy—of the State to keep entirely apart the treatment of the subject of circulation in the three kingdoms. I believe with my hon. Friend that to force the Bank of England notes on Scotland would be greatly resented—partly by the existing Scotch banks, and to a very great extent by the people of Scotland. There is a great deal of national sentiment still remaining in Scotland. My hon. Friend the Member for Wigtonshire (Sir Andrew Agnew) expressed a hope that in this matter Scotch Members will not be overridden by an English majority. I am quite certain that the Scotch Members, although they may not be very numerous, yet backed by the opinion of the people of Scotland, are perfectly well able to take care of themselves; and the last thing which we will see is the representatives of Scotland overridden by a tyrannical English majority in the matter of their small note circulation. Now, apart from this there is, in my opinion, this objection to the measure. It is a measure which belongs to a state of things entirely different and very remote from the state of things which now exists. You cannot possibly combine a system of legislation with respect to the circulation of the three countries in the present state in which the circulation exists. It is needless to enter into the question whether, abstractedly, that would not be desirable. I think it would be most desirable to have a uniform system throughout the three kingdoms; but, looking at the state of affairs which exists in Ireland with regard to the currency, and also to the system which prevails in Scotland, I must say that I consider the realization of any scheme at present for a uniformity of currency in the three countries as altogether impracticable, or at any rate remote. The proposal of the hon. and gallant Baronet seems to me to presume that we have already arrived at a point in our currency legislation little short of absolute uniformity. If there is to be a note which is to circulate in Scotland and Ireland, it ought to be a note proceeding from some authority which 119 stands in direct relation to the people of Scotland. But the Bank of England is an institution which is absolutely and entirely English; it has no relation to the people of Ireland or of Scotland, and I do not know how we could consistently establish a system of uniformity of tender unless that legal tender rested on the authority and guarantee of the common Legislature. In my opinion we are still remote from that state of things in which a national issue could be the rule of currency in this country. I do not at all recede from the opinions which I ventured to state on a former occasion in reference to the law relating to banking in Scotland—namely, that some amendment is required. But I admit that there is a speciality in the case of Scotland arising from the usages of the people, and the conditions upon which banking is carried on there. I should not, therefore, think it wise or safe to presume to give any authoritative pledge as to the time or the mode in which it would be right to attempt legislation on the subject. All I will say is, that I consider it the duty of the Government of the country to look for a suitable opportunity for such legislation; but, on the other hand, I think it is the bounden duty of the Government not to attempt legislation of a comprehensive character on a subject so difficult and so important, except at such a period and under such circumstances as would afford a reasonable hope that the proposals they made were likely to meet with the assent of Parliament. There is much to bear in mind with regard to the relations of the three countries, and the time of bringing such a matter under the notice of the House, which must be thoroughly digested and matured before any decision is arrived at. I think the House is not called upon to arrive at such an abstract decision as that which is involved in the Motion of the hon. and gallant Baronet. At the same time, it would be utterly futile at the present period of the Session to pretend to deal with questions affecting the national currency, or the uniformity of a paper currency throughout the three kingdoms. Those are questions which, at this moment, the House would be wholly incapable of entertaining with the slightest prospect of advantage. Let us be content to proceed in a question of this kind step by step, and not to deal with it as one of abstract principles, but rather with a due regard to the practical wants of the three countries. Further 120 improvements may doubtless be made in the law which regulates the state of banking and currency, but they should be introduced cautiously and circumspectly, and not by a measure premature in its character, and which, if adopted by this House, would be productive of great inconvenience.
§ MR. HUBBARD
said, the right hon. Gentleman had not alluded to the circumstances which fully justified the hon. and gallant Member for Wakefield in introducing this subject to the notice of the House—namely, that, notwithstanding the very great progress in Scotland in wealth, there had been no new banks established; while in England they had multiplied to an extent hitherto unknown and unprecedented. In point of fact, in Scotland there had been an absolute diminution in the number of those institutions. Was it right that the banking facilities afforded in Scotland should be confined to the number of existing banks, which had among themselves an absolute monopoly? It was as a free trader opposed to monopoly that he joined in asking for Scotland the same avenues for the use of capital which existed in England. The hon. and gallant Member did not ask to share with the existing institutions the power of issue they now possess—that would be properly refused by the Government—but he asked simply for the power of existence. He tells you that he could not open a bank in Scotland without having some means of currency. He must use either gold or notes. If he issues gold, according to the hon. Baronet (Sir Edward Colebrooke) the people of Scotland hate sovereigns to such an extent that they will not take them. Then how was the hon. and gallant Member to work his bank? He must issue notes. And whose notes is he to issue? They must be the notes of the existing banks—of his own rivals, in fact; and every time he undertakes a commercial transaction he must advertise his rivals in trade. The hon. and gallant Member simply asked that a new banking establishment should be released from the liability of advertising its rivals, and should be enabled to supply notes of the Bank of England. He asked no more than that he should be provided with Bank of England notes. At present, Bank of England notes in Scotland were not a legal tender; but Parliament can make them so. The objection which his hon. Friend the present Governor of the Bank of England (Mr. Hodgson) entertained to that course was that by such an issue the 121 Bank of England would have to incur considerable expense. It was perfectly true that they would have to incur considerable expense, for which they would get no equivalent if they issued against bullion; but by allowing the Bank to issue for Scotland against securities a remuneration would be provided to the Bank, while the net profit of the issue would be received by the State. The object of the present Bill was simply to constitute Bank of England notes a legal tender; but surely the moderation of the demand ought not to be a reason for rejecting it. If a bank in Scotland is satisfied to take Bank of England notes, the demand is so moderate that, taken by itself, one would be puzzled to find a reason for refusing it. Having now said so much in justification of his hon. and gallant Friend's measure, he would not advise him to press his Motion to a division against an unwilling Government. No such measure could be satisfactorily introduced without the cordial assent of the Government, and it would be impossible to carry such an operation out without the assistance of Government. There was a great contrast between the existing state of things in England and in Scotland with regard to banking, but it was not so much with regard to the system of banking as to the currency. The whole subject was well deserving of the attention of the Chancellor of the Exchequer, and he trusted the day was not far distant when there would be one uniform Imperial currency.
§ SIR COLMAN O'LOGHLEN
observed, that having taken a great interest in the subject, he had given notice of a Motion for the introduction of a Bill to render bank notes a legal tender in Ireland, as the hon. and gallant Member opposite proposed to do in regard to Scotland. He was disappointed at the remarks of the right hon. Gentleman (the Chancellor of the Exchequer), because he seemed to hold out no hopes that the principle on which this Bill was based would be accepted in another Session. Still he thought that this discussion would not be without some good, as it would tend to facilitate the introduction of some general scheme of banking whenever the Chancellor of the Exchequer should turn his attention to the subject. He did not think that the real question before the House was a question of currency at all. It did not in the slightest degree affect the issue of £1 notes. It would be just as well to say 122 that making sovereigns a legal tender in England or Ireland would affect the question of making £1 notes a legal tender. There ought to be some note which should be a legal tender in Scotland; and as a £5 Bank of England note was a legal tender in England, he did not see why that should not be adopted in Scotland, so that there may be as great uniformity as possible between the three countries. Great stress was laid upon the objection that the establishment of such a system in Scotland would necessitate the institution of branch banks in Edinburgh, Glasgow, and other places. He could not see the force of that argument. For instance, years ago London was much further from Cornwall than it is now from Edinburgh, and yet there had been no difficulty in rendering the tender of a £5 note legal in Cornwall, notwithstanding there was no branch bank there. If Bank of England notes were not made a legal tender in Scotland, he was afraid that the banking business in that country would become an absolute monopoly. At this moment there were only twelve banks in Scotland, while in England there were more than 100 joint-stock banks, and above 300 private banks. He believed that during the present year the Scotch banks had issued notes to the extent of £1,172,000 in excess, and therefore they had none to give to any new banks that might be started; whereas, if Bank of England notes were a legal tender, they could readily get them from the Bank of England. It was not proposed that the Bank of England should be compelled to give notes; the Bill was simply permissive. At present the Bank of England note could not be used in Scotland without paying a percentage; and that would be done away with if they were made a legal tender. Upon account of the convenience, he thought the Government ought to render its assistance towards putting down the monopoly which at present existed.
§ MR. BLACK
Sir, we are certainly greatly indebted for the sympathy and compassion which the hon. Member opposite (Mr. Hubbard) has displayed towards poor Scotland. He states that we are suffering under such a monopoly that, even supposing he were to bring gold into the country, it would be impossible for him to obtain as many notes in exchange for it as would be required. Now, I can assure the hon. Gentleman that if he will only bring proper security, or 123 bring the gold, he will find it a very easy matter on our part to print as many notes as he may desire. The hon. Member has also stated that there has been a great progress in the population and wealth of Scotland, and that it has not been met by the currency, which ought to have gone hand in hand with it. Now, what has been one great cause of the prosperity of Scotland? In my opinion it has been these very banks, and the machinery upon which those banks have carried on their business. They have done more than anything else I know of to promote the prosperity of Scotland. And the hon. Member for Buckingham (Mr. Hubbard) tells us that at present there is an entire monopoly in the banking system of Scotland, and that there are only in existence some thirteen banks. Now, if he would allow me to correct him, there are upwards of 600 banks in Scotland. I do not know that there is any country in the world so well supplied with banks. In every village where there are not more perhaps than 1,000 inhabitants, you will find one or two banks. I gave the House some time ago a calculation of the number of banks which we possess in Scotland in proportion to the population, and in proportion to the value of property, and I believe we have nine or ten times as many banks for the population as there are either in England or Ireland. In such a town as Inverary, for example, where there are not more than 1,000 inhabitants, there are two banks, and the competition between those banks is quite as keen as between any of the banks on the joint-stock principle in England. In point of fact, I do not believe that any country in the world is so well supplied with banks as Scotland is at the present moment. What is it that is sought to be enacted by this Bill? It proposes that the Bank of England notes shall be made a legal tender. But the hon. and gallant Baronet has not told us whether the people of Scotland desire to have these Bank of England notes imposed upon them at all. In my opinion they are perfectly satisfied with the notes they now have; and I believe if Scotland were polled all over it would be found that they would far sooner take the notes of the banks of Scotland than those of the Bank of England. And even the Bank of England has no desire for a change. Surely, then, if neither the people of Scotland nor the Bank of England desire a change, why 124 should this Bill be introduced? If the object of the Bill is to make Bank of England notes a legal tender all over Scotland, why should not the same privileges be given to the Glasgow and Edinburgh banks? Why should they not have the power of opening branches in England in order to assist their issue? Why, at any rate, should the privilege of opening branches of English banks be confined to Glasgow and Edinburgh? Why should they not be allowed to open branches anywhere? I believe the question to be so important that it is entirely futile to suppose that we could legislate upon it this Session, and I therefore join in the appeal which has been made to the hon. and gallant Member to withdraw his Bill.
§ MR. PEACOCKE
said, the question raised by the Bill was not an abstract but a practical one. The simple proposition was that Bank of England notes should be made a legal tender in a country where it might fairly be said there was no forced circulation except bullion. There was an opposition to the Bill on the part of twelve Scotch banks which objected to having their monopoly broken in upon; but the general mercantile community of Scotland desired to have some such measure as that passed; and if the hon. and gallant Gentleman pressed his Motion to a division he should certainly vote with him. It was said that it would be a hardship to make people in Scotland accept these notes, and that it would be impossible for the £5 Bank of England notes to circulate side by side with the £1 notes of Scotland; but how, he asked, could the one description of notes displace the other?
§ MR. GOSCHEN
thought, that simple as might be the proposal to establish Bank of England notes as a legal tender in Scotland, the House ought to be very careful before adopting it. The object of the Bill was to compel the people of Scotland to take a description of notes which it was said they did not want; and it appeared that those who took them would be obliged to incur the expense of sending them up to London to be exchanged for gold.
said, that one of the reasons why the people of Scotland did not care to have Bank of England notes forced upon them was that they held their own notes to be as good, if not better. When the Western Bank of Scotland failed, its notes were as good on the day of the failure as they were the day before. The people of Scotland do not care to have 125 Bank of England notes forced upon them. Whenever a person presents a Bank of England note to be cashed at a small village, he is asked to write his name across the back of it. The probable reason is that the people of Scotland, however good the Bank of England notes may be in England, are rather alarmed at having such a document placed in their hands in Scotland. I should like to know whether any gentleman was ever asked to write his name over a £5 note issued in Scotland.
§ MR. BAXTER
thought the hon. and gallant Member opposite would do well to rest satisfied with the discussion that had taken place, which had been very much in favour of the principle of his Bill. The speech of the hon. Member for Edinburgh (Mr. Black) would give the impression that the Scotch system of banking was perfect, and could not possibly be altered for the better; but every one who was well acquainted with the subject was perfectly aware that the law relating to it was extremely defective, and must sooner or later be amended. But as the Chancellor of the Exchequer had held out the prospect that probably next Session there would be a revision of the whole system, and had guarded himself against expressing an opinion hostile to the principle of the present Bill, it was not advisable to press the matter any further on that occasion.
§ COLONEL FRENCH
said, he had not heard a word in that discussion to show that there would be any impropriety in extending to Scotland and Ireland the privilege which England had enjoyed for the last thirty years.
§ SIR JOHN HAY
believed that it would be unwise, after the appeals which had been made to him, and considering the period of the Session, if he were now to go to a division. At the same time he thought that the discussion which had taken place, and the interest displayed in the subject, fully justified him in introducing the question to the notice of the House. The Chancellor of the Exchequer had said that in his opinion it was desirable that any change should be made step by step. He sincerely trusted that the discussion which had now taken place would be one step towards the change, which the majority of the people of Scotland desired to see. He hoped that early next Session the Chancellor of the Exchequer would bring in a Bill to give to Scotland and other parts of the United Kingdom those privileges in connection with banking of 126 which they are now deprived. He would now, with the leave of the House, withdraw the Bill.
§ Amendment, and Motion, by leave, withdrawn.
§ Bill withdrawn.