HC Deb 18 June 1879 vol 247 cc110-8

Order for Second Reading read.


in moving that the Bill be now read a second time, said, he wished, at the outset, to state that the House, on the 18th of March last, affirmed the principle on which this Bill was founded—namely, that a free circulation of specie currency, together with a full and adequate circulation of paper currency, convertible into specie on demand, was essential for the promotion of the development of manufactures, commerce, and. trade. The object of this Bill was to extend in a modified form to Ireland the principle of a free circulation of specie currency. At present, a specie circulation did not exist in Ireland; and, therefore, there could be no free circulation of specie there. In England, France, and Germany, where there were no small notes, the specie circulation amounted, on an average, to £5 per head of the population. In Ireland, on the other hand, owing to the circulation of £ 1 notes, which amounted to £2,000,000 for a population of 5,500,000, the average circulation per head was only 8s. And as for every sovereign in circulation they had about 10 £1 notes, it was clear that in Ireland the amount of specie currency was only l0d. per head of the population. That was a very small sum, and he thought that they ought to have equality in this respect in Ireland. Up to the year 1826 the circulation, both of large and small notes, in Ireland, was the same in proportion as in England, and his country kept pace with England until the law was made different. Now, he only asked the House to agree to the withdrawal of notes under £2 from circulation, and he hoped it would extend the principle of the Resolution which it had unanimously affirmed in a modified form for the benefit of Ireland. Now, the Bank of France, with a capital of £8,000,000, had power to issue £120,000,000 in notes, while the Bank of England, with a capital of £17,000,000, had power to issue only £15,000,000 of notes, which, considering the reserve that had to be made, was, in fact, only £5,000,000; therefore, he believed that England required an alteration in her paper currency laws. That question, however, he did not touch by his Bill though he had the opinion at the same time that the paper currency, both in England and Ireland, required extension and alteration from what it was at the present time to meet the requirements of trade. The point he wished to enforce was the necessity of making an alteration in specie currency; and he thought that when the specie currency of Ireland was not more than 10d. per head of the population, the time had arrived when something ought to be done in the direction he had indicated, and that Ireland ought, at least, to be allowed to have as high an average circulation as that of the world —namely, £2 per head. His opinion was, that there was sufficient energy and power of development in Ireland to bring the circulation of specie of that country up to the proportions of England, France, and Germany. He had looked into the question, and he could safely say that if Ireland was depressed, and if her manufactures did not exist, it was not for the want of energy and determination and means in the people of Ireland. If they looked back to the history of that country for the last 100 years, they would see that Ireland formerly progressed in industrial development fully as much as England, having regard to her circumstances and the state of her laws. Arthur Young showed that up to the time when he wrote the development of Ireland had been as great as, if not greater than, that of England; while he asserted that France was nowhere as regarded development and prosperity as compared with Ireland. In his opinion, there would now be 13,000,000 people living in affluence in Ireland, instead of a population of 5,000,000, if there had been the same currency laws in that country as had existed in England since the year 1826. Among the high financial authorities who endorsed the views which he entertained were Adam Smith, M. Necker, John Stuart Mill, Dr. Thomas Cooper, Mr. M'Culloch, and Mr. Huskisson. In 1811, while the wages of house carpenters in Glasgow were 2s. 8d. a-day, and in Manchester 3s. 10d., they were 4s. in Waterford and other Irish towns, though provisions at that time were cheaper in Ireland than in England or Scotland. It was a fact, which no one could gainsay, that up to 1826 the shipping entering the ports in Ireland was fully equal to that which entered the ports of Great Britain, taking into account the area of the two countries. But what was the case now? Last year, the number of ships which cleared out of English ports was 44,977, with a tonnage of 19,000,000, while the number with cargo that cleared out of Irish ports was only 117. It was quite plain, therefore, there was something " rotten in the state of Denmark." In England the number of passengers carried by rail was over 500,000,000 in the year, and the amount of minerals and merchandize over 180,000,000 tons; in Ireland the number of passengers was only 7,000,000, and the amount of minerals and merchandize not more than 3,000,000 tons. What, then, was to be done? The most essential thing was that there should be free exchange between man and man, and that could only be secured by giving a specie circulation to Ireland. He called upon the House to extend to Ireland the principle of the Resolution which it had adopted three months ago; but if they did not do so, he would only say that they must be certain to hear more about the matter before long. In conclusion, he begged to move the second reading of the Bill.

Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Delahunty.)


in moving that the Bill be read a second time that day three months, said, he felt himself under considerable difficulty in following his hon. Friend. He had travelled over an immense extent of ground, and if he touched on all the various topics introduced in his speech, he should occupy not only the remainder of the Sitting, but the rest of the Session. But he complained that what his hon. Friend had advanced had no connection whatever with the measure now before the House. He had failed altogether to bring the logic of his speech to bear on the provisions of the Bill. He had shown by his illustrations that Ireland was extremely prosperous some 100 years ago in spite of the penal laws; but what they had now to deal with was not a historical retrospect, but simply with this Bill. His hon. Friend had enunciated what no one had denied, and refuted what no one had stated. He thought the hon. Gentleman had failed to explain his Bill in the least degree. No doubt Ireland had suffered in past times from one kind of misgovernment or another; but he failed to understand by what process a remedy for that suffering was to be found in the mind of any rational person under what it was proposed to enact in that Bill. If £1 notes were injurious, why would not £2 notes be injurious also? Last year his hon. Friend would extirpate impartially all notes under £5; but now he drew his cordon sanitaire to protect £2 notes. What magic was there in £2 notes? The Bill commenced by stating that— Whereas it is expedient to amend the money laws of Ireland by prohibiting, after a certain period, the issue of promissory notes under the sum of £2. He ventured to say that the Preamble was altogether begging the question. Nothing had been produced to show that it was expedient, after a certain period, to prohibit the issue of notes under £2. The hon. Gentleman had devoted two hours to a speech on the Bill, and not two minutes of that speech had been devoted to stating what connection he saw between the historical facts which he quoted and the provisions of the Bill. He thought the best way to deal with the measure was to treat it as private, and hold that the Preamble had not been proved. He admitted that on some of the hon. Gentleman's statements arguments might have been founded 50 years ago; but in 1844 and 1845 Sir Robert Peel made a radical change in the conditions under which bank notes were to be circulated. He did not believe that there was any Member returned from Ireland who had more the interest of his country at heart than his hon. Friend; but whether he was well read in the arguments used in 1826, and from that time to 1844 was not important; for he had, notwithstanding his great astuteness and his historical research, failed to grasp the effect of Sir Robert Peel's legislation. He (Sir Joseph M'Kenna) would shortly state the effect of that legislation. Sir Robert Peel's Act of 1844 saved the rights of bankers generally in England to issue for the future an amount of notes on the old credit basis, limited for each bank, to the precise amount of its actual circulation for the year ending 1st May, 1844. He abolished all further power of circulation by these banks, whether on a special basis or not. The whole power of expanding the note circulation of England was vested in the bank of England; and beyond the amount of £14,000,000, it was provided that the bank's circulation should rest strictly— that was, henceforth, entirely on specie. In 1845, Sir Robert Peel passed the Irish Note Circulation Act, identical in principle, but varying slightly in details, from the English Act. Sir Robert Peel did not consider that the Bank of Ireland was in an analogous position to that of the Bank of England, because there was not such an association and interchange between the banks of the country and the Bank of Ireland as existed between the country banks and the Bank of England. Sir Robert Peel felt bound to slightly vary the conditions of the legislation in regard to Ireland from that relating to England; but the principle of a specie basis for every pound of expanded issues was equally maintained. He regarded the Act as one passed in a thoroughly benevolent and statesmanlike spirit towards his country. By the Act, the Irish banks were obliged to furnish similar returns after the 1st of May, 1845, such as the banks of issue already furnished in England. Once all expansion of the note circulation was against specie, it was immaterial whether the actual circulation was maintained in large notes or small. Some of the banks might dispense with their £1 notes; but he knew one bank which issued such notes because their customers preferred them, although a full circulation would be equally maintained by circulating £5 notes as £1 notes. It was no advantage, under such circumstances, to the banker to circulate £1 notes, but in some respects a disadvantage, because the banks had to represent them by an equivalent amount of gold, and to bear the expense of their note issue. He trusted that the hon. Gentleman would not press his Bill to a Division, because, being conversant with the matter, he felt that no good purpose would be served if the Bill were passed into law.

Amendment proposed, to leave out the word " now," and at the end of the Question to add the words " upon this day three months." — (Sir Joseph M'Kenna.)

Question proposed, " That the word ' now ' stand part of the Question."


said, he could not agree with the last speaker in the opinion that there was not the slightest disadvantage arising from the circulation of £1 notes. His (Mr. Bruen's) desire was to place Irish commerce and trade in as good a position as they held in England; but he felt that the circulation of small notes was injurious to the progress of the country. They could hardly suppose that a great commercial community like England would forego the advantages to be derived from the circulation of £1 notes, if there were any such advantages. England, having voluntarily deprived herself of the power of issuing £ 1 notes, the inference was that they were not desirable, and if not desirable for England, he failed to see why they should be forced upon Ireland. The question was one between large and small notes, and the issue of small notes was generally a sign that a country was in difficulties. If the circulation of small notes was a good thing, why were they not adopted in all great commercial countries? He had, on former occasions, felt it his duty to oppose the hon. Member for Waterford; but, on further consideration, he had changed his views, and felt bound to support the second reading of this Bill. In his opinion, the circulation of specie currency should be made identical in both countries.


said, they all sympathized with the desire of the hon. Member for Waterford (Mr. Delahunty) to improve the trade of his country; but most of them must differ from him as to the means by which that object was to be secured. The only way to increase the wealth and commerce of Ireland was by the industry and efforts of her people. To hold forth to Ireland that there was any other way of increasing her prosperity would be a mistaken and mischievous course to adopt. The circulation of £1 notes had been a most useful and excellent thing for Ireland, and the best test of that was that throughout Ireland the great bulk of the circulation was in notes of £1.


said, the people of Ireland had perfect confidence in the £1 note. They preferred them to gold, and for this reason he opposed the Bill. He had, however, a stronger reason, and that was that the Bill would inflict a great blow on the banks. The hon. Member (Mr. Delahunty) had represented to them that Ireland was not so prosperous now as in the time of Arthur Young; but he did not prove that the banks of Ireland were more useful or more flourishing then than now. If the argument of the hon. Gentleman were carried out to its logical conclusion, it would be this—that to restore Ireland to its former prosperity all the laws that existed then should be re-enacted.


said, it had not been shown that there was any connection between £1 notes and the decline from a former condition of prosperity in Ireland, which existed, in fact, along with the circulation of £ 1 notes. A change ought not to be made unless stronger arguments could be urged. The Bill would lessen the resources of the banks, and would not increase the circulating medium which had hitherto worked for the benefit of the general public. The currency laws, no doubt, required considerable amendment; but, so far as Ireland was concerned, the subject should be approached in a more practical manner, and from a totally different point of view. The House would, in his opinion, do well to refuse its assent to the Bill.


said, he had given considerable attention to this subject, and certainly should ask the House not to make any such alteration in the law as the hon. Gentleman proposed. He could bear testimony to the efficient working of the present banking system in Ireland, and to the great accommodation it afforded to the Irish agricultural and commercial classes. When they talked of the depression of industry in Ireland as being the result of the £ 1 note system, he would point out to them the progress which Scotland had made under the same law. He believed the progress of Scotland during the last 100 years had been greater even than that of England; and if they applied the usual tests, he believed it would be found that the progress of Ireland had been very great during the last half-century. So long as there was no question as to their convertibility—and there was no such question—he trusted nothing would be done to abolish £1 notes in Ireland.


said, he must bear testimony to the care and consideration which the hon. Member who introduced the Bill had given to the question. In support of the Bill it was urged that there was a certain amount of manufacturing inertness in Ireland; and the question, he thought, they had really to consider was whether, if it were true that there was a want of manufacturing energy in Ireland, the want of manufacturing energy could be traced at all to the fact that the circulation of bank notes in Ireland mainly consisted of these £1 bank notes? Under Sir Robert Peel's Act of 1845, a limitation of notes, issued by any particular bank, was declared, and for any issue beyond the amount, banks had to deposit and keep in reserve a certain amount. As to the kind of note the bank should issue, as long as they retained the amount in reserve, the law imposed in no way any kind of restriction upon the denomination of note. If it suited the banks of Ireland, if they felt it a convenience to their customers to issue these £1 notes, for the issue of which a demand seemed to be made, he was informed, and he believed correctly, that there was no limitation. Whilst the banks retained their proper balances of reserve in proportion to their notes of issue, there was nothing to prevent them, for convenience of their customers, arriving at any decision as to the form in which they should issue their notes. They had heard to-day of the popularity of the system of £1 notes in Ireland; and some years back a Committee on Banks of Issue had investigated the question, and the evidence given before that Committee, by witnesses from Ireland, showed that £1 notes were a practical convenience both in Scotland and Ireland, and that any interference with the issue of them would be unpopular; and the hon. Member would have to answer those objections before he could expect the House to pass the Bill. As a matter of evidence, it was clear that the system had worked well both in Ireland and in Scotland; but, provided the conditions were complied with, the banks could issue other notes.


in reply, said, it was all very well to talk about there being a reserve. They must know very well that there was none. In Ireland the amount was so small that it was not worth talking about. The Bank of Ireland had not £500,000 specie, because gold had fled the country. It was necessary to have gold in England to sustain the country; but Ireland had none at all. What Ireland wanted was manufactures, commerce, and trade; and if there was not a circulation of money, it was simply impossible to have manufactures, commerce, and trade. People said—"Let Ireland be industrious." Ireland was industrious; but, unfortunately, she had not plenty of money to sustain the manufacturing interests of the country. He therefore hoped the House would sustain him in passing the Bill he had introduced, and to give an opportunity he would leave the Bill in its hands; but if the Bill were defeated, he would bring the matter before every constituency in Ireland before they returned to the subject next Session.

Question put.

The House divided:—Ayes 30; Noes 146: Majority 116.—(Div.List,No. 123.)

Words added.

Main Question, as amended, put, and agreed to.

Second Beading put off for three months.