RESOLUTION. (Hansard, 18 March 1879)

§ MR. DELAHUNTY
rose to move— That, in the opinion of this House, a free circulation of specie currency, together with a full and adequate circulation of paper currency, convertible into specie on demand, is essential and necessary for the promotion and development of manufactures, commerce, and trade.

§ MR. DELAHUNTY
, resuming, said, he wished to determine the lines upon which the circulation of paper currency should exist throughout the country. In his opinion, trading operations would be impossible without a free exchange of money, and that exchange, to have the desired effect, should be an exchange based upon a metallic and not upon a paper currency. If they looked into history, they would see that all great statesmen and Parties that had given the matter consideration had come to the conclusion that it was essential and necessary that there should be a stated standard by which exchanges between man and man should be regulated. Let the House go through the whole list of political economists—from Adam Smith down to John Stuart Mill, or others later—and they would find that there 1186 was a unanimous opinion upon the question. Indeed, one went the length of expressing the opinion that with a free circulation of specie a country might have a paper circulation mountains high. This view was probably somewhat of an exaggeration; but it contained in it a great deal of truth. In order to have paper money they must have gold. He did not want to enter into the question as to how a free currency of gold could be obtained—that was a question of detail, to be discussed hereafter; but what he wished the House to affirm was the true principle that specie currency should be allowed to flow free, without any restriction whatever. He argued that the contraction and expansion of the currency frequently led to panics, and that to this cause was attributable the distress which at present existed throughout the different manufacturing and commercial centres of the Kingdom. It did more to destroy trade and commerce than almost any other thing of which he could think. It had the effect, too, of depreciating property to' an enormous extent. For instance, it was recorded by a correspondent in The Globe newspaper that, owing to the contraction of the circulation, four railways in the State of Pennsylvania, which in the spring of 1876 were worth $112,000,000, had been reduced in value to something like half that amount in 1877. That contraction was still going on in America, because she had sought to resume cash payments without allowing the gold to circulate; and he said emphatically that this would be the destruction of America. From 1874 to the 1st of January last, the currency of America had been reduced to the extent of over $100,000,000 in trying to resume cash payments. It was being further reduced, and the effect of that reduction would be not only to injure America, but to re-act most injuriously upon Ireland. If, owing to this cause, manufactures, trade, and commerce were injured, and even destroyed, in America, the result would be that the whole labour of the country would be thrown upon the land, which there was limitless, with a view to the production of food to be sent to this country and sold for whatever price could be obtained. Under such a condition of things, it would be impossible for the small 1187 farmers in Ireland to exist. Unless, therefore, the Americans acted on some such principles as those embodied in the Resolution which he was now asking the House to affirm, they must go down themselves and bring down Ireland with them. Already they had sent down the price of cereals very low in England, and they were sending meat here also, to compete with the home producer. What was wanted at the present crisis was not reciprocity, but Free Trade. A great many people who professed Free Trade were not entitled to the designation at all unless they were for free money. He maintained that wherever there was a free, sound, honest circulation, trade, manufactures, and commerce were developed, and the people always prospered. That was illustrated by the case of Ireland itself 100 years ago, when Arthur Young, in describing the industrial progress of England, Ireland, and France, placed Ireland before England and immeasurably before France, which everyone now said was so prosperous, while Ireland was in a hole. No country was in a sound financial condition unless it had a specie circulation. England, France, and Germany had no notes under £5, and their credit was undoubted; but in those countries where small paper existed—such as Spain, Italy, Austria, and Eussia—the public credit was not good. There ought to be a specie circulation, with plenty of paper to supplement and economize it. His object in bringing forward his Resolution was to obtain the assent of the House to a proposition which no one could gainsay, and to lay the foundation for future legislation by which the interests of every part of the United Kingdom would be promoted. In conclusion, the hon. Gentleman moved the Resolution of which he had given Notice.

§ MR. HOPWOOD
seconded the Motion.

§ THE CHANCELLOR OF THE EXCHEQUER
said, the hon. Member for 1188 Waterford (Mr. Delahunty), as the House knew, had now for a great number of years turned his attention very particularly to the subject of currency and other questions connected with it, and he thought the respect they all felt for the hon. Gentleman would render it incumbent on the Government to take some notice of the proposition which he had now asked the House to affirm. Therefore, he gladly rose in order to say that, as far as the terms of the Motion were concerned, he was prepared entirely to accept and to agree with the expression of the opinion of the hon. Gentleman. The only difficulty he felt was that in some parts of his speech the hon. Gentleman intimated very plainly that he was now asking the House to affirm a general principle from which he intended at some future time to deduce consequences, and upon which he intended to found propositions for legislation. But the hon. Gentleman did not tell them at all distinctly—in fact, did not tell them at all—what the nature of those proposals might be; and, therefore, while he (the Chancellor of the Exchequer) was prepared entirely to assent to the proposition the hon. Gentleman now asked them to affirm, he must guard himself and his Colleagues, and the House also, from being supposed, by any assent they now gave to the proposition, to assent to propositions which the hon. Gentleman might hereafter make. The hon. Gentleman was, in fact, issuing a note which was to be convertible at some future time. And they did not know what was the specie in which the note was to be paid. There were in the hon. Gentleman's speech one or two passages which would lead him to infer that the hon. Member had in his mind a proposition he had made on former occasions for the curtailment, if not the absolute suppression, of small notes. Now, whether small notes were a convenient medium of circulation or not, he did not see that they, any more than large notes, would be excluded by the principle which the House was now asked to affirm. They were asked to affirm that there should be "a free circulation of specie currency"—that, everybody, he should think, in England entirely agreed with—"together with a full and adequate circulation of paper currency." Well, that was now so convenient that 1189 it had become a necessary, he might say; from having been at one time convenient, it had become a necessary; and that you should have it considerable, full, and adequate, but not excessive, because the word adequate implied that it was not to be more than adequate. It was not to be an inflated paper currency, but an adequate paper currency, and that the currency should be secure by being convertible into specie on demand. That, as the hon. Gentleman truly said, and as all the great authorities whom he had quoted, and whom they all honoured for their teaching on these subjects, they always had regarded as the keystone to a proper system of currency—that if you had a paper currency, it should be convertible into specie on demand. They all entirely agreed with that; but they might have small notes as well as large notes, which would be convertible into specie on demand, and he thought they wanted some other principle than that stated for rejecting small ones. In fact, they would have by small notes a larger currency than if they excluded them. There could be no doubt that in. any country which used small notes there would be naturally the larger amount of paper currency in proportion than in the country which excluded them, because small notes were a great convenience, and they were used in those parts of the country whore they were legal, and they were used very freely, and were found to be exceedingly convenient. He should be exceedingly sorry to say anything to prejudice the country against the use of small notes if they were properly secured and properly convertible. At the same time, he perceived the danger of an abuse of the system, and that was a matter which ought to be carefully guarded. It was quite possible that unless proper regulations were made for securing the convertibility of the notes there might be a great inflation. He took the key of the hon. Gentleman's argument to be this—the hon. Gentleman wished to guard us against the consequences of inflation and contraction, as a large inflation followed by contraction must necessarily bring about confusion, suffering, and a great deal of mischief. The hon. Gentleman instanced the case of America, in which there was a large inflation of currency owing to the extensive circulation of greenbacks; and when 1190 these were called in, the effect of the contraction of that inflated circulation was that a great deal of trouble was occasioned. The hon. Gentleman also mentioned the case of a large circulation of Bank of England notes, and when circumstances caused them to be called in confusion was the result. He quite agreed with the hon. Gentleman that anything which led to unnatural inflation was sure to be followed by contraction, which formed a set-off to it, for nature would assert itself. In this country in 1819, because of the inflation which existed before, there was much suffering. But where the inflation and contraction arose from natural causes the case was different; and any attempt, by artificial means, to prevent the contraction which must, in the course of trade, follow inflation, or to keep the circulation at a uniform level, would fail, and fail disastrously. Having said so much, he could only express what he was sure was the feeling of all who had listened to the hon. Gentleman, or had seen the pains he had bestowed on this subject, that they held in respect the principles which he had enunciated. At the same time, they must guard themselves carefully against the consequences which might be some day deduced from the Resolution until they knew what those consequences were.

§ SIR JOSEPH M'KENNA
expressed satisfaction that the hon. Member for Waterford had introduced his proposition in terms in which they could all agree. He wished, however, to guard himself against being supposed inferentially to favour any theory for the suppression of £1 notes. Since the Acts of Sir Robert Peel, in 1844 and 1845, £1 notes stood on precisely the same basis, with regard to circulation and specie, that £5 notes and £1,000 notes did. No doubt before those Acts were passed there were grave objections to small notes, and they were suppressed in this country, but not in Ireland. As Cobbett said, £1 notes were the legs on which the £5 notes walked. Sir Robert Peel, in 1844 and 1845, removed the objection which might be urged against the circulation of small notes. His Acts laid down this principle—that the Irish banks might issue as many notes for the future as the public would take, provided that anything issued in excess of the previous average circulation of the banks in Ire- 1191 land should be represented by specie. The special objection to £1 notes in Ireland and Scotland had therefore been removed. He guarded himself, however, against being supposed to agree to a scheme of the hon. Member for Waterford which was foreshadowed, but was not now before the House. At the same time, he cordially welcomed the Resolution in its present form.

§ MR. BIGGAR
also approved the proposition of the hon. Member—in fact, he took it very much to represent the present system of circulation, consisting of bank notes based on specie. At the same time, he did not see that the adoption of the Resolution would effect any improvement in the present state of things. He was also at a loss to know what sort of legislation, that would extend the principle already recognized, the hon. Member for Waterford proposed to found upon the proposal. What had happened in America lately went entirely in favour of the views he (Mr. Biggar) held on the subject.

§ MR. DELAHUNTY
, in reply, said, he was satisfied with the result of the discussion, but not with the speech of the hon. Member for Cavan (Mr. Biggar), who had been up in the moon with regard to America, where contraction had been produced by the passing of the Act to provide for specie payments.