HC Deb 13 April 1875 vol 223 cc866-76

moved "That the Select Committee on Banks of Issue do consist of Twenty-one Members."

Motion made, and Question proposed, "That the Select Committee on Banks of Issue do consist of Twenty-one Members."'—(Mr. Chancellor of the Exchequer.)


said, he could not help saying that the Government had not shown much judgment in the selection they had made. In the county he had the honour to represent (Cumberland) the Scotch banks had established three agencies for carrying on their banking business. It was from the attacks made on the English banks in Cumberland that the opposition to the Scotch hanks establishing agencies in England originated. He had waited on the Chancellor of the Exchequer in company with the manager of one of the chief banks in the North of England to represent to him the difficulties they were labouring under in consequence of the raids made on the English counties by the Scotch banks. But although they were very civilly received, he could not say that they obtained much redress. But he (Mr. Hodgson) believed it was in consequence of the representations made on that occasion that it was now proposed that a Select Committee should sit upon the question. It was rather singular, then, that while this opposition to the operations of the Scotch banks in England originated in Cumberland, a county that sent eight Members to the House of Commons, and while the adjoining county of Westmoreland sent three, making a total of 11, no one Gentleman had been selected from either of those counties to sit on the Committee. Only yesterday he received a communication from one of the managers of the chief bank in the North of England, in Carlisle, asking him several questions about the giving of evidence before the Committee, and the writer expressed himself as greatly astonished that no Gentleman from Cumberland had been nominated on the Committee. He (Mr. Hodgson) hoped that the right hon. Gentleman would consent to the three Northern counties being represented on the Committee. If that was not done, the people in those counties would not have much confidence in the Committee. He therefore moved that one Member from one of the three Northern counties should be added to the Committee.

Amendment proposed, to leave out the words "Twenty-one," in order to insert the words "Twenty-two,"—(Mr. William Hodgson,)—instead thereof.


said, the House must first decide on the number of the Committee. The Amendment would be to leave out 21 and insert 22.


suggested that two Members representing Scotch constituencies should be added to the Committee. The Committee as nominated included four Members of Scotch constituencies, two of whom were officially connected with banks, and the third had taken a leading part in conducting the case for the Scotch banks. He did not object to any of those Gentlemen, and should vote for all of them as being well qualified to serve. But it was essential for the interest of the property and trade in Scotland that other names should be added. If the question was simply one of the Scotch banks carrying on business in London, the composition of the Committee would not signify much; but from the observations of the Chancellor of the Exchequer, the right hon. Member for Greenwich (Mr. Gladstone), and other influential Members of the House, it was certain that the carrying on of business by the Scotch banks in London would be the least important of the questions brought before the Committee. The inquiry would open up the whole question of the constitution of the Scotch banks; and if the Committee should think of permitting those banks to extend their business to the metropolis, the people of Scotland would look for the breaking up of the monopoly which those banks now enjoyed. There were only 11 banks in Scotland—five in Edinburgh, three in Glasgow, two in Aberdeen, and one in Inverness. Those 11 banks formed one of the most perfect trades unions that could possibly exist anywhere. They had purchased up all the other banks, about 10 in number; and they acted together in every respect as one institution. The five in Edinburgh could advertize any day that the rate of interest was altered, and every bank was bound to obey that decision. The effect of the Bank Acts of 1844 and 1845 had been that no new bank could profitably be established in Scotland; that the Bank of England could not establish branches in Edinburgh and Glasgow, as he thought they ought to be able to do; and that Bank of England notes were not a legal tender in Scotland. Looking at all the circumstances of the case, it was impossible to allow such a monopoly as now existed to continue. The banks had a nominal capital of £9,500,000; but so successful had they been in their monopoly that the selling price of the shares now represented in the aggregate £26,000,000. The deposits amounted to £77,000,000; and the House was as much bound to look after the interests represented by the £77,000,000 as after the interests of the £9,500,000 of the shareholders. "When there was fair competition in banking in Scotland, the rule was, whatever they charged for discounting bills at three months—supposing, for instance, it was 4 per cent—they always allowed 3 per cent for balances in their hands. But, in Edinburgh, for the last year the average rate for discounts was 4⅓ per cent. whilst the average interest allowed on deposits was only from 1 to 1½ per cent. The banks having such a monopoly, could do whatever they liked. The large traders, it was true, could discount their bills and get accommodation in London, but the smaller traders were entirely at their mercy. There were above 800 branches in Scotland which could be carried on with comparatively no capital, their notes being payable in gold only at the head offices, where the notes were first issued. Under the circumstances, he thought it was a very reasonable request that the Chancellor of the Exchequer should add to the Committee two Members unconnected with any existing bank. He should move that the number of the Committee be 23 instead of 21, and if that were agreed to, he should propose the hon. Member for Forfarshire (Mr. J. W. Barclay) as one of the additional Members, leaving the Chancellor of the Exchequer to nominate the other. The hon. Member for Forfarshire had paid great attention to the question of banking, and was well qualified to serve on the Committee.


pointed out that there was already an Amendment before the House to the effect that the Committee consist of 22 Members, and until that had been disposed of the hon. Member could not move his Amendment.

An hon. MEMBER on the Liberal Benches agreed with a great deal of what had been said by the hon. Member for Cumberland (Mr. W. N. Hodgson). It was well known that the question was one affecting the Northern counties more than any other part of England, and he considered it very hard that they should have no Representative on the Committee.


said, he had intended to make his strictures on the composition of the Committee at a future stage, but perhaps he might as well say what he had to say on the Amendment now before the House. He agreed to a very great extent with the remarks of the hon. Member for Edinburgh (Mr. M'Laren) as to the monopoly of the Scotch banks. He was no friend of theirs, though on this occasion he appeared so, because the right hon. Gentleman the Member for the City of London (Mr. Goschen) thought proper to bring in a restrictive Bill which he, being averse to all restrictions and all monopolies, had felt bound to oppose. He was for free trade in banking as in other matters. The Scotch bankers were great monopolists, and although they did not look on him in general as their friend, yet he wished to see that House in the question now before it gave them fair play. The proposed constitution of the Committee would not give them that fair play. In objecting to certain names, however, he had not the slightest personal motive, his one simple reason for objecting being that they were practical bankers, engaged in the practice of their profession and taking their daily profits from it. Personally, he had great esteem—and in some cases strong friendship—for the hon. Members whose names he desired to expunge from the Committee, He hoped they would take no offence at the course he was pursuing. It was always an unpleasant and invidious thing to move the rejection of any Member of a Committee, and the House properly looked with jealousy on such a Motion, which certainly ought not to be made except under special circumstances. In this case he should justify the making of such a Motion by showing that a very important principle was involved, and that it was a case in which there were justifiable grounds for making a change. When the Chancellor of the Exchequer first spoke of appointing this Committee, he (Mr. Anderson) warned him that it would be exceedingly difficult to please everybody; and, indeed, that in all probability neither the Committee nor its Report would satisfy anybody, and that therefore it would be better to have a Royal Commission. What did the right hon. Gentleman think of that advice now? He must have already discovered the fact that the proposed Committee satisfied nobody, for his opposition had been by no means the keenest which the right hon. Gentleman had had to contend with. The Scotch bankers had certainly been dissatisfied, but others had been equally so, and hon. Members must have observed that for a week back it was impossible to go about the Lobbies without stum- bling in every corner on knots of two and three dissatisfied bankers, looking as like conspirators hatching plots as it was possible for respectable elderly Englishmen to do. And they were hatching plots; and the result of their conspiracy had been that the right hon. Gentleman had been obliged to alter his original proposal, and he need hardly inform the right hon. Gentleman that in doing so he had contrived to make his proposal less acceptable to Scotland than ever; for he had added to the list three English Members and one Irish, but no Scotch, and two of the English were practical bankers. He would not have been surprised if the Chancellor of the Exchequer had come down at the eleventh hour in despair to please anybody, and had abandoned the Committee in favour of a Royal Commission. There might be some chance of such a proposal pleasing at least somebody. As to the names which he wished to remove from the Committee, he felt obliged to appeal to the House to do justice, and that was an appeal which he was sure would never be made in vain. The Committee originated in a Bill brought in by the right hon. Gentleman the Member for the City of London, at the instance of the London and English bankers, for the purpose primarily of preventing Scotch bankers coming to London, of depriving them of privileges which they had at present by law, and, further, of driving out of London those banks which had already established themselves there, which had created a business under the sanction and protection of the law, and created a good-will which was entirely their own property and their right. The first question that had to be discussed, and the primary one, was a mere question of privilege between the London banks as against the Scotch and the Irish banks. Under those circumstances, how was the House to decide fairly between the contending parties? It seemed to him there were two ways, and only two ways, of doing it. One was to select a given number of practical bankers from each party, and then to fill up the Committee with men of commercial knowledge and judicial minds; the bankers would then array their evidence, and the Committee would decide. That would be fair to both parties. Another way would be to keep the bankers off the Committee, and to allow no practical banker to be on it at all, but allow them to give their evidence; to construct the Committee entirely of commercial men and men of judicial mind, and let the bankers array their evidence on which the Committee would decide. Either of those two courses would be perfectly fair, and he would assent to either. But the right hon. Gentleman had selected a third course which was undoubtedly most unfair to one party. He had put English bankers on the Committee, while he had put no Scotch bankers on it to meet them. It might be a remarkable fact that while the Scotch bankers had shown a considerable desire to establish themselves in London, they had not shown a desire to establish themselves in that House. Accordingly, they had not in the House one single practical Scotch banker to represent their interest. Under those circumstances, he thought there ought to be no English bankers to oppose them. The English bankers had insisted upon their being on the Committee. They said they must be on, and if the Scotch bankers were not on, it was not their fault. The reason they gave for that was that if bankers were not on the Committee, the only men who knew anything of the subject would be left off it. That was, in his opinion, an entirely fallacious reason. It was only part of the mystery with which bankers endeavoured to surround their business. Commercial men and fair business men knew quite enough about banking to be able to take an intelligent place on the Committee. Besides, they did not wish to get the views of the bankers on the Committee, but the opinions of bankers as witnesses, in order to get information on both sides. The Committee originally consisted of 17 Members, four of whom were Scotch, but there was not one Scotch banker. However, the Committee was now proposed to be 21, and still to include only four Scotch Members. In the form now proposed there would be on the one side the right hon. Gentleman the Member for the City of London, assisted by no fewer than six practical English bankers, while to meet them there was not one single Scotch banker on the Committee who had any practical knowledge of the question to array the evidence and make the best of the Scotch case. If his (Mr. Anderson's) Amendment were adopted—namely, to strike out the practical bankers from the Committee—there would still be the right hon. Gentleman to array the evidence of the English bankers, and if the right hon. Gentleman was not a banker, he was so nearly the same thing as to have all the necessary practical knowledge. There was one other reason, and he thought it showed still more strongly than the others the unfairness that was done to Scotland, and would cause the interests of Scotland to be altogether crushed in the Committee. The reason was this—that all these practical English bankers had a direct pecuniary interest in the issue to be placed before the Committee. It was a well known Rule of the House that Members should not vote on any question in which they were immediately and personally interested, and he could not imagine any subject with which they could be more immediately and personally connected. It would be only an act of justice to the English bankers themselves to relieve them from the necessity of acting on such a Committee; because one of the principal questions to come before them was whether Scotch bankers should be allowed to come to London and compete with them for the business and profit which they had been in the habit of considering as their own. Under these circumstances, he could understand some hon. Members being so sensitive of their honour, so anxious not to be influenced by their own interests, as actually to vote against themselves, and this he submitted would be unjust. It was unfair to hon. Members to put them in the dilemma of having in the vote to choose between their pocket and their honour. He hoped the Chancellor of the Exchequer would agree to put ordinary business men, who were not connected with banking, on the Committee, and leave the bankers to appear in the character of witnesses.


, referring first to the proposal that the number of the Committee should be increased, said, it was found that 15 was as large a number as was usually found workable, and he thought he had gone far enough in proposing that this Committee should consist of 21 Members. A larger number would lead to a great waste of time, for the Members were likely to be irregular in their attendance, and a considerable repetition of evidence would be rendered necessary. Besides, he would remind the House that a Committee—and especially one like that which they were discussing—was not appointed to take upon itself the function of deciding finally upon the question which had been submitted to it. The House did not part with its own prerogative in these matters. What they had looked to in the appointment of the Committee was that the Gentlemen appointed to examine the subjects which were referred to them should draw out in an intelligent form all the views that ought to be brought before the House, and placing them then in juxtaposition, lay them before the House. It then fell to the House to decide upon the questions at issue. It was really, therefore, not a question whether there happened to be a majority on the one side or the other. It was only important that the Gentlemen who were appointed should be capable of going into the questions at issue, drawing up the necessary information, and placing it before the House in such a way as to enable the House to form an opinion upon it. He looked upon this Committee as one that was calculated to be of great use with reference to future legislation. He did not think that the question was one on which they should count heads, and say the constitution of the Committee was not a fair one, because there happened to be more Scotchmen than Irishmen, or a larger proportion of hon. Members from one district than another, and infer that this fact would give a certain turn to the decisions of the Committee. What was desired by those who had nominated the Committee, was to have a fair representation of the different interests and persons acquainted with the questions to be considered. With reference to the number of bankers on the Committee, there would be representatives of the Scotch banks, of the Irish banks, the London banks, the provincial banks of issue, the provincial non-issuing banks, the joint-stock banks, and representatives of persons engaged in commercial pursuits. Great pains had been taken to form a Committee which would be qualified for the work, and he was very sorry to find that it had not been possible to satisfy everybody—he hardly expected it would. He knew a great number of Members were anxious to serve on so interesting a Committee. The number he proposed was 21, but it was proposed by an bon. Member to add 10 names more. It was necessary, however, to draw the line somewhere, and he submitted that this was really a very fair proposal. He hoped the House would adhere to the number of 21, and there would then be a prospect of getting through the work in reasonable time, which was the more requisite as the Scotch banks had entered into an engagement to suspend any extension of their proceedings for another year with a view to the operations of this Committee.

Question, "That the words 'Twenty-one' stand part of the Question," put, and agreed to.

Ordered, That the Committee on Banks of Issue do consist of Twenty-one Members:—Mr. CHANCELLOR, of the EXCHEQUER, Mr. GOSCHEN, Mr. STEPHEN CAVE, Mr. CAMPBELL-BANNERMAN, Sir GRAHAM MONTGOMERY, nominated Members of the said Committee.

Motion made, and Question put, "That Sir John Lubbock be one other Member of the said Committee."

The House divided:—Ayes 184; Noes 58: Majority 126.

Motion made, and Question proposed, "That Mr. Hubbard be one other Member of the said Committee."


pointed out that not a single person who had voted in the minority had done so from any personal objection to the hon. Member for Maidstone (Sir John Lubbock), but solely on the principle that no banker ought to be a Member of the Committee. He hoped, therefore, his hon. Friend the Member for Glasgow would not ask the House to divide again.


said, he had expressly disclaimed any personal feeling against the hon. Baronet the Member for Maidstone, who was one of the most popular Members of the House; but so many hon. Members had entered the House when the Question was put who did not hear his reasons for objecting to the nomination, and he had been so strongly urged by many of his hon. Friends to test the opinion of the House upon the subject that he would take another division on the Question that Mr. Hubbard be not a Member of the Committee.

Question put.

The House divided:—Ayes 160; Noes 66: Majority 94.

Motion made, and Question proposed, "That Mr. Anderson be one other Member of the said Committee."


moved the omission of the hon. Member's name from the Committee. He considered that the hon. Member had made himself such a partizan that there would be no chance of the Committee reporting at all this Session if he was on it. He was like 20 Scotch bankers rolled into one. Of course, he disclaimed all personal feeling in the matter.

Question put, and agreed to.


gave Notice that he should take an early opportunity of moving that the Committee be increased to 23 Members, for the purpose of placing two Scotch bankers upon it.


said, he had now entered sufficient protests against the composition of the Committee and he should not contest any further names.


Power to send for persons, papers, and records; Five to be the quorum.