SILVER COINAGE BILL. (Hansard, 18 February 1920)

§ Colonel WEDGWOOD
Before we vote on the Second Reading, we should hear some explanation from the Government as to this measure. We know, of course, that the price of silver has risen enormously during the last 12 months, and that silver coinage instead of being a source of profit to the Government has become a source of loss, but still we are entitled to some explanation as to why we should cut down the value of silver in our coins to just one-half of its present value. We ought to also know what the result of this change will be on our currency, because, of course, the first law in currency is that bad currency drives out good, and we ought to know how much of the good silver currency is in the country, what is the means of calling that money in before it is all hoarded, and how the Treasury intend to save themselves against loss? Further I would like an explanation from the Chancellor of the Exchequer as to the profits on coining silver for the colonies, particularly for the West Coast of Africa. In the old days great profit was made on the West Coast of Africa by supplying silver coins. That should have gone into the local Treasury. Now that the profit is going to be larger there is all the more reason for revising that system. I particularly want to know what is the meaning of this latest rule which we have had in East Africa fixing the value of the rupee at one-tenth of a pound?

§ The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)
I would remind my hon. and gallant Friend that this does not arise under this new Bill. It is a matter of colonial administration, and is not under the control of the British Treasury.

§ Colonel WEDGWOOD
We are in a difficulty in not having had the Bill moved with a speech of explanation. Then we should have known exactly what was in the Bill.

§ Mr. CHAMBERLAIN
My hon. and gallant Friend will believe me when I say that there was no conscious discourtesy to the House. I had reason to believe that certain hon. Gentlemen wished to speak. I have only the right to speak once. I have been waiting for those hon. Members whose names have been given to me, but they did not rise. My hon. and gallant Friend must not think that I wished to slip the Bill through. I was waiting to hear those who wished to address the House.

§ Colonel WEDGWOOD
I jumped into the breach because I saw that the Bill was going to be read a second time. There would have been no speech at all if I had not got up. I think that the question of the coinage in West Africa does come within the Bill. I see that the Under-Secretary for the Colonies (Lieut.-Colonel Amery) is present, and I think that there ought to be some protest made against appropriating for our own benefit revenue which ought to go to the West African colonies. The important thing is what is going to be done with the present currency, and how is it going to be called into the bank instead of being hoarded.

§ Mr. R. CARTER
I would ask the Chancellor of the Exchequer, is it necessary to have the three-penny bit, or would there not be a saving if it were left out in the coining of the next lot of silver? If possible a larger amount of copper coinage should be circulated through the country. I know that there is a shortage of copper coinage to supply the needs in our large towns and cities. I have never yet known anybody who wanted particularly to get a three-penny bit. [An HON. MEMBER: "On Sundays."] I am not speaking about the first day of the week. I think that as long as the present position continues, with the reduction in the value of the coins, of course it naturally follows that the less silver coinage is struck the better. If in those circumstances the Chancellor of the Exchequer would consider the elimination of the three-penny bit and the striking of a considerably larger amount of copper coinage it would meet the general wish.

§ Mr. OMAN
I wish to appeal to the right hon. Gentleman, on three grounds, to think twice before we pass this measure. The first ground is that of 941 national sentiment. The Chancellor of the Exchequer is no doubt aware that he is endeavouring to change what has been the rule for 1,200 years. British silver currency from the time of Offa onwards has, with the exception of 14 unhappy years, always been good silver.

§ Mr. CHAMBERLAIN
dissented.

§ Mr. OMAN
11.2 oz. to 18 dwt.—the old English standard. There has been one unhappy interval of 14 years in the reigns of Henry VIII, Edward VI, and Mary. These are the 14 unhappiest years almost in English history, and that unhappinoss was to a very large extent caused by the horrible debasement of the silver currency which the right hon. Gentleman may read up if he likes in Acts of Parliament and Bishop Latimer's Sermon. Bishop Latimer's Sermon on the base shilling is a particularly interesting one. Throughout the Civil War of Charles I and the Commonwealth and all other periods when there was a temptation to issue base money, we kept clear of it. May I ask the right hon. Gentleman to think twice before he puts an end to what has been the good history of English currency which has retained practically the same purity from the time of Alfred and Edward I until now. Compare the English penny with the French denier and the German pfennig. The German pfennig started by being equal in value to a penny, but was down to one-tenth of the English penny before the War. The French denier, which started by being equal to an English penny, during the eighteenth century was down, I believe, to 1–240th of an English penny. All that was due to debased currency. We kept our currency clean while the other countries did not.
No doubt it is pure sentiment that we should desire to maintain that purity of the eleven ounces two pennyweights against eighteen dwts. of alloy, but there is something moral in my opposition as well. All through English literature and through every literature I know, from the Greek downwards, you are riddled with taunts of base money. From the Greek tragedians down to Shakespeare you find taunts of base money. Why is that? Because there is something in the spirit of honest men which revolts at putting out what looks like the money of other generations, 942 but which is something that no longer has that value.
"German silver" may serve as an example. "German silver" means those token which were issued after the Thirty Years' War by the unhappy bankrupt States of Germany. The very term "base money" has an evil sound in it. Not only that, there is something else of a practical kind. Gambling with tin tokens or half-tin tokens is a very different thing from gambling with honest money. When you receive honest money there is not by any means such a temptation to gamble, it is the worthless or half-worthless stuff that, passing from hand to hand, easily tempts to thriftlessness. There is an absolute temptation to throw it away, because it is in itself intrinsically comparatively valueless. It is a well-known fact that the old gamblers of the last century, when they played with counters rather than guineas, were more reckless in their play. If in return for your one pound you get, not the well-known old shillings, but something that docs not contain all pure metal, the moral feeling is very different. Token money dependent upon the good old standard sovereign of gold—the St. George and the Dragon sovereign—is very different from token money dependent upon a one-pound note or the Bradbury. A token depending upon a token is very different from a token dependent upon gold. What the right hon. Gentleman is proposing to induce us to undertake is that we should substitute "obscurius" for "obscurum"—for the doubtful Bradbury the still more doubtful half tin token. What the value of the Bradbury is at present I am sure I do not know. It varies from day to day in New York. From reading the English police reports, I believe that a great deal more than one Bradbury is required to purchase a golden sovereign now, as appears from the cases of those offenders against the law who are already trafficking in sovereigns. I cannot think there is any security in money secured on what has already begun to be the sinking paper note. On the sovereign it is a very different thing. We cannot even call this a token currency, because it is a token on a token, in fact a double-token currency.
The third point I want to make is on the economic question. When you demonetise the old complete silver 943 currency and begin to replace it by one which is not all silver, there is is a terrible economic crisis at once. That was seen in the reign of Henry VIII., and it has been seen in Germany quite recently. People are not quite simple when they are told, as they have been told, that their shilling is worth more than a shilling and that their half-crown is worth more than a half-crown. They will treat it as bullion. It will not go into the banks. It will go underground. It will be hoarded or melted and go out of the country. The right hon. Gentleman will have to produce on the spur of the moment an enormous sum of money that will be wanted to replace the suddenly vanished good money. Sir Thomas Gresham's "Law" says that the bad money drives out the good. The sudden appearance of this bad money will cause good money to disappear. It will go out of sight. In the meanwhile, there will be the economic necessity to produce thirty-seven million pounds or so of this stuff to be shot all over the country at once. The crisis will be an extremely difficult one for whoever has to see to this matter of the sudden change. Perhaps I shall be asked what I recommend. I am going to implore the right hon. Gentleman to stop coining for a bit. I went to the Mint by chance at the end of January and found they were turning out two-shilling pieces as hard as they could go, some time after they had ceased to be profitable. That seemed to me to be extremely thriftless. What did our ancestors do in a similar situation? They stopped coining for years. There was no silver coinage from 1763 to 1787, and again there was no official silver coinage from 1787 to 1816. The results were tiresome, but much less deplorable than they would be in the case of adopting a method of this kind. I do not know whether the right hon. Gentleman realises that we passed through the American War of Independence without striking any silver money at all. There was no money struck by the Mint from 1763, when the Northumberland shilling was struck, down to 1787. After 1787 we did not strike any Government silver at all. There were other arrangements. The Bank of England struck money of a lesser standard, and although the Bank was pledged the Government was not. May I implore the right hon. Gentleman to put 944 this Bill off for a bit. Let us see to what the price of silver is going to settle down. For 104 years it has been possible to mint profitable silver, but for the last three months it has been impossible to mint it at a profit. It is only during the last three months that the matter has become a pressing one. Instead of waiting a reasonable amount of time to see what silver is going to do—it fell 4d. last week suddenly—the right hon. Gentleman produces, this extraordinary Bill to do what no Minister, except the Ministers of Henry VIII. and Edward VI. ever thought of doing—debase our coinage. I think it will send up the price of everything. Silver, the Pale and common drudge 'Tween man and man, as Shakespeare called it, will be disappearing and something coming in its stead. That will tempt everybody towards recklessness and thriftlessness, and the only possible result will be higher prices. I represent a Constituency which, perhaps more than any other Constituency represented in this House, is composed of the new poor. I suppose that the clergy, teachers and others, who form the Constituency of the University of Oxford, have got nothing and have suffered frightfully from this War. The salaries at Oxford were fixed by the University Commission in 1880, and have not been changed since. We of the new poor cannot face any more high prices, and we implore the right hon. Gentleman to do nothing that may send anything up one penny higher than it stands to-day.

§ Mr. DENNIS HERBERT
I have to ask the indulgence of the House in following the very scholarly sentiments we have heard from the hon. Member for Oxford University (Mr. Oman). While I feel that perhaps sentiment and morality may be a little too expensive for these commercial days, there is a great commercial objection to this Bill. I understand that if the silver coinage is debased in the way proposed by this Bill, it will be extremely difficult to tell what is legally a good shilling from a bad one. I would suggest to the Chancellor of the Exchequer whether what he requires could not be met to some extent by reducing, perhaps a great deal, the size and weight of the silver coinage, and yet keeping it up to the present standard of fineness. That, no doubt, would involve the abolition of the threepenny-bit, but certainly, as a church-warden, 945 I should not regret its disappearance. If he proposes to proceed with the Bill, we ought to have some assurance that the shilling made under the Bill will be as easily distinguishable as our present shilling is from a bad one.

§ Mr. STEWART
I would ask the Chancellor of the Exchequer if he could see his way to go very slow with this Bill and, if possible, to adopt the suggestion of the hon. Member for Oxford University (Mr. Oman) and not coin, anything for some time to come. Otherwise the result may be higher prices which will affect adversely the poorer members of the community. There has been a campaign for some time in the Press about nickel coinage, and I am very sorry to see the Chancellor of the Exchequer has given his favour to it. There is something elemental in human nature which will prevent a man giving the same amount of what he has to sell for an inferior coin as he would give for a coin to which he is accustomed. Take the case of people who have to meet their little weekly requirements. A man will not give them as many herrings, bananas or potatoes for five nickel shillings as he would give them for five shillings of the quality to which we are accustomed. There are many people whose weekly financial budget is a few pounds and no more. If the retailer says to them, "We are not giving you so much because the money is inferior," I think it will lead to a good deal of worry and dissatisfaction, and probably trouble, before very long. Let me give an example of what might happen. I do not say it will happen here.
About 12 or 14 years ago there were violent riots in many Chinese cities and people were killed. The ordinary member of the public said they were anti-foreign riots. They were nothing of the kind. The Chinese Government had debased the copper cash, which was the money with which the wages of the poor were paid. The poor found that they could not get the same amount of rice as they were accustomed to receive for their money. They raided the shops and there were considerable riots. What happened in one place may happen in another. I do not say there is a likelihood of anything as serious as that, but when people gift hungry and find they cannot get for their money as much food as they are accustomed to, they are liable to be very 946 cross about it. In this Bill you are simply giving a great deal of ammunition the agitator, who can go about and say that this is a dodge to reduce the value of wages, and that the workers must therefore ask for more wages. We shall have the ever vicious and widening circle increasing. There will be a demand for more wages, and there will come higher prices and an increased cost of production. I can understand there is a loss on the coinage of silver at the present price, but I think it better that that loss should be met, and it is better to meet it directly. It is really a ease of the department against the public. Lot the department say, "We have to buy that silver and we lose so much by it." Let them put it into the national accounts.
What is the position now? During the last 30 or 40 years the Government has gained on coinage a profit of millions of pounds. It is always advisable to keep something in hand for emergencies. Silver has for 3½ months gone above the coinage price of 66 pence, a very short time, and I think you are doing an unwise thing in introducing this Bill, The very day this Bill came out with 8S pence appearing on the first page as the price of silver, owing to the Chinese new year, when all Chinese try to pay their debts, they sold some silver and it fell 4d. on one day and 2¾d. the next day. In two days, therefore, 7 per cent. of the loss disappeared. At 66 pence you can coin without loss. What is the loss? Only about a shilling an ounce, the forward price being 78 pence. For a small thing of that kind it is not worth while disturbing the whole economic life of the country, especially in view of the subsidies which the Chancellor of the Exchequer has to pay on bread, coal, the railways, and so on. If the country desires to avoid another cause of worry and trouble, it, would be much better, if it be necessary, to spend a few hundred thousand pounds to fill up gaps, especially in view of the enormous profits made in years past. If you say you must have more currency, I would rather see an issue of 5s. notes. There is plenty of silver in the world, and directly American exchange gets to about 4 dollars, which is not an impossible thing, we hope, and if you stop buying, the speculators who are holding silver in America would be bound to disgorge.
947 The hon. and gallant Member for New-castle-under-Lyne (Colonel Wedgwood) made a very interesting point. He spoke about West Africa. We finance West Africa with British silver coinage. It is one of the fancy coinages—a gold currency without any gold. Trade in West Africa is increasing by leaps and bounds. A few years ago we received from West Africa cocoa to the value of £30,000 per annum; now its value is £3,000,000 or £4,000,000 per annum. From that country also we get palm oil, edible nuts, and the component parts of margarine, which is now a staple food. It is said that people will not put up their prices under this Bill. Even if the British retailer is noble enough not to do it, the native will certainly not give the same quantity of what he has to sell for a coin 500 fine. Therefore the price of palm oil and cocoa will tend to rise, and by spreading this thing over all the country for all time, as this Bill does, our people will pay on their breakfast tables time after time a great deal more than you will lose by meeting the loss on coinage with a grant of a temporary nature.
I know that the right hon. Gentleman looks upon some of us who voted for premium bonds as not very respectable people, but I do say that it is quite as respectable to vote for premium bonds with a little exchange of interest between one Englishman and another, as to try to work off a nickel coin on a West African negro. In my view the unsettling possibilities of this Bill are greater than are recognised. I would, therefore, add my appeal to that of my hon. friends. The good silver coinage will be molted down and will disappear, and your position will be worse than it was before. I asked yesterday a question about the silver coinage. The answer I received was that we did our business before the War with 13s. worth of silver coinage per head of the population, that we bought £33,000,000 worth of silver during the War, and that we have now in this country 27s. 6d. worth of silver coinage per head of the population. I think that if we have doubled the amount of silver that we had before the War we might call a halt at this particular moment and not uproot the old currency that we are used to.
The Chancellor of the Exchequer need not be afraid that silver will always be at the present price. I have had a certain 948 amount of experience of silver and it is always a tricky thing—it goes up and down. By the position the Chancellor of the Exchequer takes up in this Bill he is evidently a "bull" in silver at 88 pence. I wish he had been a "bull" at 22 pence. I would like the right hon. Gentleman to look at the way the China banks work. China is the only free silver market in the world. The right hon. Gentleman will not find that the banks there share his confidence. They fix the rate always below the bullion point and keep a safe margin. If silver falls a penny, the rate drops twopence or threepence. I do not think that when the world settles down there will be any difficulty about the mines getting to work in producing silver. I think we may reasonably hope that silver will be back somewhere to the level of 66 pence or a little under. For these reasons I ask him not to act in a great hurry. I agree that it might be useful if we had nickel coins up to, say, sixpence; at all events, I do not think that would do much, or any, harm. But when you come to shillings, two-shillings and half-crowns outside this country, I ask the right hon. Gentleman to be very careful. I would ask him not to proceed very far with this Bill, but to put it into his pocket as a sort of reserve bargain. I ask him, as a prudent Chancellor of the Exchequer, not to be led away too far. He might let the matter remain in abeyance for six or eight months, and I am not without hope that we shall see silver come down.

§ Mr. CHAMBERLAIN
I hope the hon. Members who have spoken will not think that I wish to detract from or to depreciate the "interest of their speeches if I say that I have seldom listened in so short a space of time to so magnificent a display of confused thinking. I hope that before I have done I shall have convinced the House that, in the first place, what I am proposing is a simple and common sense application of our past practice to existing conditions; in the second place, that there is no reason to fear the disastrous consequences which my hon. Friends have suggested; and, thirdly, that if I were wrong on both these points, the alternatives suggested by my hon. Friends are open to exactly the same objections as they have alleged against mine, and to other objections in addition. Let me first state the case for the Bill. The Bill proposes to reduce the fineness of Imperial silver 949 coin current in the United Kingdom and in certain Dominions and colonies where these coins circulate from 925 fine pure silver to 500 fine. The reason for the change is the greatly increased price of silver bullion, due partly to reduced production in the mines and partly to the exceptionally heavy demands for silver in Eastern currency. In 1914 silver was worth 28d. an ounce; it is now worth over 80d. an ounce. My hon. Friend (Mr. Stewart) says I was a "bull" in silver at 88d. I do not advise him to speculate on that basis. Although I by no means anticipate that this immense rise, or the whole of it, will be long retained I think if, extremely unlikely that for a long time to come we shall get back to anything like the pre-war level. When the price of silver is 66 pence per ounce then the silver of our silver coins is more valuable than the legal value of the, coin, and it becomes profitable, if it were not illegal and punishable by severe penalties, either to export the coin and sell it, or molt it down and use it as bullion. The export is prohibited and there are heavy penalties for melting. As long as your silver coin is worth more when melted and sold as bullion than as legal tender you are offering a premium on the commission of an offence in the melting of the coin. The result is that our silver coins have ceased to be what they wore, namely tokens. What the Bill proposes is not a novelty as suggested by the hon. Member for Oxford University (Mr. Oman), who in addition to his other attainments is a distinguished numismatist. We simply go back to what has been our practice for many years and restore the token character of the silver coinage.

§ Mr. OMAN
Was it done by putting base metal in?

§ Mr. CHAMBERLAIN
Yes, that is the way it was done before the War. You put in silver very much less than the face value of the coin.

§ Mr. OMAN
How much base metal?

§ Mr. CHAMBERLAIN
Of course what was not silver was base metal.

§ Mr. OMAN
Eighteen penny-weights-not one-half of the coin.

§ Mr. CHAMBERLAIN
We propose to make the coinage which has lost its token character resume its token character. 950 With a fineness of 500, which is the fineness we propose, the melting point of the new coin will be slightly over 122 pence per ounce, so long as the price of silver remains in and about 88 pence. When it remains over 46 pence per ounce, the intrinsic value of the new coin will be more than the intrinsic value of the old coin up to 1914.

§ Sir P. MAGNUS
May I remind the right hon. Gentleman that for many years the price was 60 pence per ounce?

§ Mr. CHAMBERLAIN
It has always been a token coinage in recent years. It was a token coinage with a smaller pro-portion of intrinsic value to face value in 1914 than it will be when the new coins are issued under this Act.

§ Sir P. MAGNUS
What about the years from 1870 to 1914?

§ Mr. CHAMBERLAIN
As the price of silver varies the value of the silver, whatever it may be in any particular coin, must vary, but never from 1816 has our silver coinage been anything but a token coinage. Nobody ever thought in 1914 that because silver was 28 pence per ounce, that the shilling was not worth a shilling or a half-crown worth a half-crown for the purposes of a coin. No argument has been deduced to show that a coin, the intrinsic value of which is relatively higher to its face value than our silver coinage was in 1914 can now properly be described as a debased coin, or that any of the ill consequences which my hon. Friend has foretold should follow from adjusting the amount of silver in the coin to the value of silver at the present day. I do not go as far as that, but I say as long as silver is at 46 pence per ounce or over, the intrinsic value of the new coin will be more than that of the old coin in July of 1914. That is my case for the Bill, and I now come to examine the criticisms that have been urged against it. The hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) was interested in the effect of the proposal on West Africa. But it has its own silver-coinage and retains the seigniorage upon it. It only applies for our coinage when for any reason it is short of the coinage which it strikes for itself.

§ Mr. STEWART
Is its fineness altered by the Bill?

§ Mr. CHAMBERLAIN
It does not affect any coins except the coinage of the United Kingdom, wherever that coinage is current. There are other parts of His Majesty's Dominions which use our coins. In the case of the self-governing Dominions, in order to make it perfectly clear on the face of the Bill' that we should not act except with and upon the advice of the local government in making this coinage legal tender there, I propose to put down an Amendment in Committee. This applies only to our coinage where that coinage may be used. The hon. Member for the Withington Division of Manchester (Mr. Carter) suggested that instead of taking the course proposed here we should stop the coinage of threepenny bits and increase the bronze coinage. He said he did not want threepenny bits, and he did not know who did. I can assure the hon. Gentleman that there is an immense demand for threepenny bits, and I should certainly got into very hot water if I proposed to abolish the coin of that denomination.

Sir F. HALL
Into hot water by whom? Nobody wants them.

§ Mr. CHAMBERLAIN
How does the hon. Member think they get into circulation? Does he suppose that the Mint sits down, and says, "What kind of coin should we like to strike? We have not taken a turn at threepenny bits for a long time—let us strike them."

Sir H. HALL
Does the right hon. Gentleman not recognise the fact that this is the time in which it has to be considered whether these coins are really desirable or not, and is he aware, practically speaking, that nobody wants them?

§ Mr. CHAMBERLAIN
There are two questions, namely, as to whether those Coins are desirable or desired. I will finish my argument. Does my hon. Friend suppose that the Mint followed its own fancy in selecting what coins it should strike? It does not; it follows the public demand. The customers go to the banks, the banks go to the Bank of England, and the character of your coinage which is apportioned between the different coins follows the law of demand and supply. We have to find what the public want. When my two hon. Friends say that they do not find the threepenny bits to be a useful coin for their purpose, 952 I accept that statement, but I suggest as there is a great demand for the threepenny bit clearly the experience of my hon. Friends and myself is not typical of that of the country at large.

§ Mr. CARTER
I was speaking of 30 years' experience in Manchester.

§ Mr. CHAMBERLAIN
Coins do not go out unless they are asked for, and of all the coins the threepenny bit is the one that I would soonest retain. If you ask me whether it is an economical coin and a desirable coin from my point of view it is not, but there is a public demand for it and a very large public demand for it. There is a demand also for increased copper coinage not wholly unconnected with the coins temporarily lying idle in the penny-in-the-slot machines. The increase in wages and in spending power naturally call for a considerable increase in the silver currency, and I think an increased demand for small coins has been largely produced by the split sums which owing to the action of the Insurance Act have constantly to be paid in wages now instead of round sums. I come now to the main criticism of my hon. Friend the Member for Oxford University. He appealed to me, on the ground of historic sentiment and morality and the fear of an economic crisis arising if this Bill were carried into law, to withdraw it and to adopt some other method.

§ Mr. OMAN
To hold it up.

§ Mr. CHAMBERLAIN
Yes, and not to proceed with it. I venture to say there is a good deal of confused thinking about this matter. Our silver coinage has always been a token coinage. I think my hon. Friend is misled by recollections of the Middle Ages.

§ Mr. OMAN
I was referring to times up to 1816.

§ Mr. CHAMBERLAIN
By recollections of the Middle Ages when there was no gold standard and when the monarch by reducing the amount of silver in the silver coin did in fact debase it and lessen its value. Ever since 1816 silver coinage has been a token related by law to the pound. My hon. Friend the Member for Oxford University thought the introduction of the paper pound note introduced an entirely disturbing factor, but no such thing was the case. Bradburys 953 and the silver coins are both tokens relating to the pound in gold, and the fact that you have pound notes affects neither one way nor the other the value of your token silver in its function as coinage.

§ Mr. OMAN
Will the right hon. Gentleman promise to make them interchangeable at 20s. of these new coins for a gold sovereign? All my objections would fall if that were so.

§ Mr. CHAMBERLAIN
I am delighted to answer that, and I will give my hon. Friend at once the assurance he wishes. Our silver coinage is legal tender up to 40s. only, and the new silver coinage will be legal tender for the same amount only. In exactly the same way twenty shillings will still make a pound. I did not know the objection of my hon. Friend was so much on the surface and was so easy to remove. What was my hon. Friend's remedy? His remedy was that we should stop coining silver altogether.

§ Mr. OMAN
Not altogether; for the present.

§ Mr. CHAMBERLAIN
Stop coining for the present. Then what is to happen? There would be an insufficiency of coins. My hon. Friend who spoke last provides an alternative, and he says, "Do not reduce the fineness of your silver but issue small notes." Why, may I ask in passing, is a person to attribute to a five-shilling note, which is a pure token with absolutely no intrinsic value, a sacredness and a solidity which he will not attribute to two half-crowns which at any rate have an intrinsic value?

§ Mr. STEWART
Only as a temporary measure.

§ Mr. CHAMBERLAIN
But if my hon. Friend's line of reasoning is right, the economic crisis will follow also as a temporary measure, and the disturbance of prices also will follow, as well as the rather doubtful morality vis à vis the West African native—all these direful consequences which my hon. Friend suggests will follow the reduction in the fineness of silver coins will follow on the substitution of paper for a silver coinage.

§ Mr. STEWART
You have twice as much silver coinage now as you had before the War.

§ Mr. CHAMBERLAIN
My hon. Friend is not answering my argument, but merely 954 interrupting it. My hon. Friend recognises that you would have to have more coinage. The hon. Member for Oxford University says, "Stop coining," and I will follow that suggestion up presently; but my hon. Friend the Member for Wirral recognises that you could not stop issuing coinage, and says that therefore you should issue notes. Very well, I point out to him that the notes have less intrinsic value, are a pure token, and' are, therefore, open to all the objections of the token coin and to all the direful consequences and predictions which he draws from the fact that we propose to restore the token character of our silver coinage. I took some trouble to ascertain whether an issue of small notes would be acceptable to the country. As a matter of fact, I have got a large stock of five shilling notes and smaller notes printed in case it might be necessary to issue them, so that we might be ready to meet a crisis, but the result of my inquiries was a unanimous reply from employers and workpeople alike, that they did not want paper notes for small values. I thought the replies evinced really more dislike of the existing pound and ten shilling notes than I had anticipated, but there was no doubt about the immense body of objection from all classes to the adoption of my hon. Friend's suggestion of issuing five shilling, half-crown, one shilling, and I do not know whether he would go as low as sixpenny notes, in addition to the pound and ten shilling notes. But if you are not to issue silver and not to issue notes, what is to happen? My hon. Friend referred to the period during the Napoleonic wars, when the striking of the silver coin of the realm was suspended; but what did happen? My hon. Friend knows that if you enter the museums of any of our great towns you will probably enough find in them a collection of local tokens issued by firms or individuals in those towns to make good the default of the Government to provide the public with the currency that they required, and to supply the lack of a public currency by a currency issued on the private credit of individuals and, of course, received only where those individuals were known.

§ Mr. OMAN
Nine-tenths of it was issued by the Bank of England, which coined many millions between 1804 and 1814.

§ Mr. CHAMBERLAIN
My hon. Friend, I am sure, will not dispute that you will find in all the great centres local tokens. I have got somewhere a standard Birmingham coin, a token issued by Birmingham firms because there was not enough currency to serve. It had a special value, of course, as coming from Birmingham, but what it was worth at the time was exactly what the credit of the individual who issued it was thought to justify, and it had necessarily the most restricted circulation. My hon. Friend recognises the inconvenience of that but apparently thinks that while the Mint should cease working, the Bank of England should go on issuing currency. What would my right hon. Friend the Member for the City of London (Sir F. Banbury) think of that proposal? The Government is to cease to meet the needs of the community in the matter of coinage, and the Bank of England is to take their place with an issue of token currency of its own I Why is the issue of a token currency by the Bank of England exempt from all the evils inseparable, in my hon. Friend's opinion, from the currency of the Government?

§ Mr. OMAN
I never advised it in the least, but I said it was done from 1804 to 1814, and it began ten years after the last silver money ceased to be struck at the Mint. It was more than ten years before the Bank of England began to strike the small currency after the expiration of the last issue of the royal money.

§ Mr. CHAMBERLAIN
I cannot hold up the silver coinage. I have no guarantee that that is possible, and I must do one of three things within a short time. Either I must issue small notes, but I do not believe that the representatives of the commercial community for one moment desire a fresh issue of notes of smaller denominations, notes of half-a-crown, one shilling, and the like. The second is that I should coin at a loss, that every coin struck should be struck and put into circulation at a loss to the taxpayer. My hon. Friend says cheerfully that it is not worth disturbing the whole community for such a trifle as this; it is a question between the public and the Department. Is not that an illustration of confused thinking on his part? Who are the Department? Does he think that I, as Master of the Mint, or my Deputy, will, as private individuals, bear the loss? It is a question as between the public and 956 the public, and if the coinage is issued at a loss, it is the taxpayer who will have to meet it.

§ Mr. STEWART
I say you ought to have the moral courage to accept the loss, and say, "We have lost so much on the silver coinage; we made millions in the past, and we think it is as well now to keep the coinage on at a small loss."

§ Mr. CHAMBERLAIN
I think the rights of seigniorage are one of the oldest rights of the Crown, and I think they are rightly applied as part of the revenue of the Crown for the public service of the country. My hon. Friend may think differently, but, at any rate, that has been the practice approved by Parliament, and the money has been spent. There is no reserve on which I can draw, and if I am to issue coins at a loss, taxation must be so much higher, or something else must be foregone which could otherwise be done, and as long as I issue coins at a loss it is the same thing as saying that I am issuing a coin which it pays every man to melt the moment I have minted it. If he is caught, he will be punished, but is it wise to go on putting that temptation in his way? Is it wise to spread a bait, as it were, for those who can be tempted? Is it not more reasonable to put that temptation out of their path by reverting to the old token character of the coin? Then, if you do not coin at a loss or issue notes, there is only one other thing to do, and that is to reduce the fineness of silver, and I come back to the point where I started, that even so reduced the intrinsic value of the coin, quite apart from its legal tender, is likely to be higher for a long time to come than it was immediately before the War: that in all the years of the nineteenth century, and of this century, up to the War, the silver coinage was a token coin, and that really our people are not so easily seized with panic that they will imagine that, because the token character of the silver coinage is restored, the most calamitous results are going to follow. The fact of their being a token coin does not raise prices. It is not the currency that raises the prices; it is the amount of credit which is in existence, which is created, and the relationship of that credit to the amount of the commodity. The coin is merely an expression of the amount of credit interpreted through the needs of the people in their daily transactions, and, 957 if you restrict it in one direction, the only result will be that you will have a larger demand for currency in some other form, and if you refused to coin silver you would get back, very probably, in a short time to the situation which we may remember prevailed for two or three days at the outbreak of war, when, owing to the succession of bank holidays—I think there were four bank holidays in succession—the currency did not return to the banks, and got back into circulation, and we all went about with five pound notes, begging someone to change them, and failing to find anyone who could. That is really not a possibility I can contemplate. I want to avoid the issue of these small notes. I want to avoid the issue of coinage at a loss. I beg the House to give me the Second Reading of this Bill, and allow it to go upstairs to a Committee, where, of course, it will have a proper examination, and to pass it into law rapidly, so that I may neither be driven to fresh coinage of silver at a loss to the public, nor to the issue of notes, to the great annoyance and inconvenience of the public.

§ Mr. HOPKINS
I should have liked the right hon. Gentleman to have dealt with the question, perhaps, from the other side. Surely it would be a great economy to the country if this coinage were made entirely of some base metal. No doubt the right hon. Gentleman has some good reason, but I should have been very grateful if we could have had an explanation.

§ Sir F. BANBURY
The hon. Gentleman who has just sat down is, I am sorry to say, encouraging the Chancellor of the Exchequer to issue valueless coins and so to increase inflation and increase currency.

§ Mr. HOPKINS
As a token.

§ Sir F. BANBURY
But, at the present moment, there is some value in the token, and so long as there is some value in the token we may rest assured it will not be created indiscriminately. It is the printing of all these notes that has, in my opinion, to a certain degree, led to the inflation of prices, and, with regard to what my right hon. Friend said, that it was not the creation of currency notes but the creation of credit, if he will allow me to say so, I thoroughly agree. The necessity for currency notes only arises 958 when credit has been given, and it is the giving of the credit which is wrong and which we ought to stop as far as possible. With regard to the particular question before the House, I rather think the House is making too much of what is more or less a small measure. What really are the facts? Sir William Harcourt altered the value of the rupee, which, I think, was something like 93 or 94, and from that day to 1914 the Mint made considerable profit in silver coinage, with the result that the profits went to reduce the amount raised in taxation. My hon. Friend talks about profits made in the past being used in the future, but those profits have gone to reduce taxation and have been spent, and cannot therefore be used again. Now the position is changed. Instead of there being a profit to the taxpayer, there is a loss, and my right hon. Friend says, "In these hard times I cannot make that loss, and, as silver is a token, I can reduce the amount of silver to such an extent that we do not make a loss." Is that right?

§ Mr. CHAMBERLAIN
Yes.

§ Sir F. BANBURY
I do not think, on the whole, there is very much harm in that, provided the advice of the hon. Gentleman who has just spoken is not followed. I am a little nervous whether in doing this we shall not encourage the very suggestion which the hon. Gentleman has just made. But, provided that is not done, I do not see very much objection to the Bill. With regard to West Africa, I am not very much concerned. Of course, silver is only a legal tender up to 40s., and therefore the West Africans can perfectly well say they will not take it in silver provided the debt amounts to 40s. So that I do not think, even if the Amendment, which my right hon. Friend has stated he will put in the Bill, were, not in the Bill, the West Africans need be frightened. But, on the whole, I think the House will do no harm if they pass the Bill, and if there is to be any further discussion on details, it should be in Committee. I would suggest one word of warning. I hope my right hon. Friend will not be beguiled by the suggestion of the hon. Member (Mr. Hopkins).

§ Mr. BIGLAND
I should like to say a word or two in support of what the hon. Member for Oxford University (Mr. Oman) 959 and the hon. Member for Wirral (Mr. G. Stewart) said. To my mind, this is a most serious proposition. It is bound not only to affect people in this country if the Chancellor of the Exchequer debases the silver coinage of this country, but the debasement of their rupee may affect 300,000,000 people in India, and, moreover, the Chancellor of the Exchequer in every country in the world may begin to take cognisance of the action of our Chancellor of the Exchequer. The argument I would adduce for the postponing of this measure is that now we have the League of Nations, and silver is the coinage in almost every nation in the world, the reducing of the value of the British coin is a matter of enormous moment, I say that that Council should take into consideration whether united international action can be taken with regard to fixing in some way the value of silver. If the International Council fixed for a period of years the value of silver, I believe silver mines all over the world would open, and you would have a stable production of silver and a stable price.
We are proceeding to-day, in my opinion, in a very haphazard way. The Chancellor of the Exchequer claims that, from the revenue point of view, we ought to have as much profit as the Exchequer received in 1914, when, he told us, the price of an ounce of silver was 28 pence. The difference between that and 66 pence was what the revenue received in profit in silver coinage. To-day he is reducing, as I understand it, the value of the silver in the florin to the equivalent of the difference between 28 and 66. That margin he is going to hand over to the revenue. I do not think that is a reasonable position to take up. Could he not take the old value of 66 pence to the ounce and set a good example to all the world by instructing the Mint to coin at that equivalent? Why should he seek to go below that? He might say it is a matter for the Committee stage of the Bill to alter the fineness of the silver proposed in the Bill, but there is, to my mind, a great deal in the principle of the Bill. I think one of the speakers was perfectly right. The day these new shillings, half-crowns and five shillings will be issued, in my opinion, will see the total disappearance from the currency of this country of every 960 silver coin that exists. I say as a business man that will be the result. The people will know that these old coins are worth a great deal of money and will hide them away, and the Chancellor of the Exchequer will have the greatest difficulty in finding currency to pay wages. There will not be enough currency, and he cannot make it quickly enough to get it in the' hands of manufacturers and merchants in order to make disbursements.
The right hon. Gentleman says—and I recognise the difficulty—that owing to the increased amount of wages paid in this country the volume of currency must be greatly increased. I hear to-day that there is to be a demand from the textile workers for an enormous increase of pay from 1st April next. That will certainly necessitate more currency of some kind in the country, and I utterly fail to see why the five-shilling note should not meet that difficulty. I am aware the Chancellor of the Exchequer says people do not like it, but I do not think he put the question: "Which do you prefer, a five-shilling note or a debased coin?" I do not want to see half-crown notes or anything less, but I think the issue of five-shilling notes, which the right hon. Gentleman says are already printed and ready for distribution, should be used in an attempt to overcome the difficulty that, in order to meet the ordinary day-to-day currency requirements of this country, a large increase of new currency of sonic sort must be had. I would certainly vote for the five-shilling note rather than the debased silver coin that is now proposed. I think the House will be well advised, while giving a Second Heading perhaps to this Bill, to make up their minds that it has got to be thoroughly discussed before we pass it into law.