[BILL 124.] SECOND READING. (Hansard, 21 June 1865)

§ SIR COLMAN O'LOGHLEN,
in moving the second reading of this Bill, said, its object was twofold—to make Bank of England notes a legal tender in Ireland, and to do away with some restrictions which now injuriously affected banks of issue in the latter country. As things at present stood, the only legal tender in Ireland was gold, which produced inconvenience when the sum to be paid was large; and in the case of a pressure for money in Ireland gold had to be sent over from London. 605 Country banks in Ireland were obliged to pay all their issues in gold; while ever since 1834 a Bank of England note was a legal tender for a country bank in England. It was a monstrous thing that a Bank of England note, a legal tender at this side of the Channel, ceased to be so on crossing the water. It might he said I that the same argument would apply to a bank of Ireland note. The bank of Ireland, however, was, in fact, a private bank, while the Bank of England had always been in close connection with the Government and had more of a national character, and everything which affected the Bank of England injuriously affected the whole commercial class of the Empire. Another reason for making a Bank of England note a legal tender in Ireland was that it would promote free trade in banking in that country, where the Bank of Ireland had not dealt liberally with the public or the other banks as regarded its powers of issue. The other object of the Bill was to remedy a grievance banks of issue in Ireland much complained of. As the law now stood, every bank note in Ireland was made payable at the place where it was issued, and the consequence was that considerable quantities of gold were kept lying idle in the local branches and the formation of branch banks was discouraged. He proposed that for the future bank notes should he made payable at the head office only, as in Scotland, of the bank which issued them. At the present stage of the Session it was hopeless to expect that the measure could pass. The Belfast Banking Company, however, had petitioned in favour of the principle contained in the Bill; the Royal Bank in Dublin passed a resolution in favour of it, and other establishments, though they had not taken any active steps, also looked on it with favour. After some further observations the hon. Member concluded by moving pro formâ the second reading of the Bill.

§ THE CHANCELLOR OF THE EXCHEQUER
said, it had been his fortune more than once in following his hon, and learned Friend (Sir Colman O'Loghlen) to admit the clearness of his views and the ability of his arguments. He must, however, dissent from his proposal that this Bill should be read, even pro formâ, a second time. He would not dwell upon the objec- 606 tion, undoubtedly applicable as a general rule, to every proposition that the House should commit itself in the abstract to views of legislation admittedly impossible to be carried into effect at the time; nor would he object to the Bill as an attempt at piecemeal legislation, for that was the characteristic of most of our financial measures. But there were many special considerations surrounding the main propositions of the Bill to which he should find it most difficult to give his assent. The Bill touched not only the question of currency, but also the question of legal tender, the most delicate and difficult, probably, of all the considerations connected with this extensive subject. In reference to this question he must say that the proposals of his hon. and learned Friend were altogether premature. There was, no doubt, a good deal of force in the argument, applicable to Scotland as well as to Ireland, that where there was a limitation upon the issue of notes, a limit practically, though indirectly, was imposed upon banking; but, supposing even that a new legal tender ought to be established in those parts of the kingdom, it would remain a question of very great importance, and one regarding which the House at present was totally disqualified from pronouncing any opinion, whether that new tender ought to be the English bank-note. The immediate consequence of establishing the £5 English note as a legal tender in Ireland would be that the action of the Bank of England would be carried into Ireland, both as an issuing and banking body. The Bank of England had not been consulted on that point; but, as far as his opinion extended, it found ample responsibility and ample profit in discharging the very weighty and multifarious duties attaching to it in its present sphere. If he might venture to anticipate the decision of the Bank, it would pause before it accepted such a new responsibility; for this was plain—that wherever the Bank of England note went the Bank must establish agencies at which the note could be cashed, otherwise the very note by law made a legal tender would at once be at a discount. His hon. and learned Friend seemed to think that the measure would be of advantage to the Bank of England, inasmuch as it would tend to prevent a drain of gold from the Bank to Ireland. But the Bank of England did not care whether it paid in notes or gold, its power of meeting all its issues being amply pro- 607 vided for. Although the Government were far from paying absolute deference on such a point to the views of the Bank of Ireland, it was fair to remember that the Bank of Ireland objected to this measure; and a great deal of consideration would be requisite before it could ever be adopted. Her Majesty's Government did not deny that there were various points connected with the currency in Ireland rendering it a subject deserving of attention, but the present was not a convenient or proper time for asking the House to affirm a general principle such as that laid down in the Bill.

§ MR. VANCE
said, that however ingenious might be the proposals contained in the Bill, or the arguments put forward in its support, he could not regard as a patriotic proposal the suggestion that a great corporation like the Bank of England should be brought across to Ireland and encouraged to enter into competition throughout the country with all the native banks. This very subject of legalizing the tender of a Bank of England note had been brought under the consideration of the Select Committee of 1858, composed of many of the most eminent and experienced men of the day, with whom he had enjoyed the honour of being associated, and the unanimous opinion of that Committee was opposed to taking any action in the matter. The directors of the Bank of Ireland were examined before that Committee, and they simply proposed that their notes should be made a legal tender in Ireland. The late Sir George Cornewall Lewis thought, under the circumstances, that was a reasonable proposition; but such an enactment had never been proposed. No practical inconvenience resulted from the present arrangement, for the rate of exchange, once very high, had fallen to a point only equalling what would be requisite to cover the transmission of gold between the two countries. The question was one that, if taken up at all, ought to be left in the hands of the Government, and the hon. and learned Baronet, he thought, would act wisely in withdrawing the Bill.

LORD RERMOY
thought that at this period of the Session it was futile to discuss this important question. He was, however, glad to hear the Chancellor of the Exchequer admit that the whole banking system of Ireland was in an unsatisfactory state. In Ireland there was a great desire to develope the agricultural 608 resources of the country: but it was impossible to do this without the aid of a liberal and sound system of banking. Now, the banking system in Ireland was of the very opposite character. He hoped that the Chancellor of the Exchequer would turn his powerful intellect to that question with the view of altering the law relating to it. He trusted that before long the whole law of Ireland would be revised.

§ MR. BLACKBURN
was also glad to hear the Chancellor of the Exchequer say that the present banking systems both in Scotland and Ireland were in some respects unsatisfactory. He (Mr. Blackburn) had brought in a Bill last night upon the subject as regarded Scotland, but without the slightest hopes of its passing into a law. The general feeling appeared to be in favour of free trade in banking. He trusted that the Chancellor of the Exchequer would devise an effectual remedy for the evils complained of.

§ SIR COLMAN O'LOGHLEN
said, he would withdraw his Motion.