§ Earl Stanhopemoved the cider of the day, for going in to a Committee on this Bill.
The Marquis of Lansdownesaid, as it was probable he might not be able to attend the future stages of the Bill, he wished to say a few words now upon this very important subject. The object of the Bill which his noble friend had proposed, though not absolutely to make the notes of the Bank of England a legal tender, yet went near to that point, inasmuch as it made it compulsory to receive them, and he trusted their lordships would pause before they sanctioned a principle, by acting upon which so much mischief had been produced in other countries, when they had no security against the recurrence of similar mischiefs in this country, flowing from the adoption of the same principles, and when they had no proof that such a measure would be beneficial here, which had only been mischievous elsewhere. He understood that the amendments to the Bill, which it was intended to propose by noble Lords on the other side, would have all the effect of making the notes of the Bank of England a legal tender. His noble friend had, he thought, on a former evening, taken an erroneous view of the subject, when he stated, that the only objection to making Bank-notes a legal tender, was the impossibility of discovering whether or not they were forged. The objection to making a paper currency a legal tender was, that there was no security against an excessive issue, and therefore no security against depreciation. If horses were made a legal tender it was known that they could not be bred beyond a certain number; if wool was made a legal tender it was known that it could not, be grown beyond a certain amount, but if paper were made a legal tender, there was no limit to its issue, and no one could tell to what amount it might be issued. Where was the security to be found? they would be investing the directors of the Bank of England with a power of increasing to any amount the currency of the country, with a power which they had never en- 833 trusted to the ministers, of the crown—to those who were responsible to parliament for their conduct,—but which would now be entrusted to persons who were not responsible to the legislature or to the public. Was the security to be found in the discretion of the directors of the Bank of England? Upon this point it was proved that those directors were completely at variance as to the effect produced by the issue of their paper currency, and therefore, of course, as to the amount to which it ought to be issued? Was it to be found in the interests of the directors? On the contrary, their interests were directly at variance with those of the public, they having a duty which they owed to their constituents, the body of proprietors, and which was quite incompatible with the interest of the public, as to the issue of a paper currency. If, then, they had no security either in the nature of the thing it self, or in the discretion, or the interests of those who were to be entrusted with the issue of this paper currency, how could they, upon any principle of policy, attempt to force the circulation of a currency under such circumstances, and with the example before them of other countries, in which such conduct had uniformly produced the most mischievous consequences?—He was aware that great alarm had been excited, in consequence of what had been stated by his noble friend, and which had led him to propose this measure, and he admitted that it would not be expedient for parliament to separate with out adopting some measure.—But that measure ought to be, in his opinion, some recognition of those general principles upon which a safe and proper paper currency ought to rest, and not a Bill like the present, which must necessarily lead to other measures of the most destructive tendency. The good sense of the public had induced them to take the notes of the Bank of England at their nominal value, because they had the security that they might refuse them; but if once the receiving them was rendered compulsory, there was no security against unlimited depreciation. It was impossible, therefore, he could consent to the present Bill. If however it was determinned to persist in it be should feel it his duty to propose a clause in the Committee, to limit the issue of the notes of the Bank of England to their present amount. He could not go the length of some of his noble friends, whom he highly respected, in thinking it 834 expedient that the Bank should immediately pay in gold. He certainly thought that gold might be obtained in sufficient quantity, and that there appeared but little in the country, because owing to the extent of the paper currency, there was little demand for it. There was plenty of gold and silver in prance, because nothing else was taken in payment, and therefore the demand for it was great. We had in this country great quantities of colonial produce and manufactures, that he saw no reason why we might not also obtain, plenty of gold, if there was a demand for it. He did not, however, think it would be expedient suddenly to compel payment in specie. Such a sudden shock would produce injurious effects, in the immediate fall in the price of every commodity, which would be ruinous to individuals; The only safe mode would, be conceived, be to resort gradually to payments in specie, and gradually to restore the former circulating medium. He felt it, therefore, his duty to oppose this Bill going into a Committee, but if it was persisted in, he should feel it incumbent on him to move a clause to be added to it, enacting that the issue of the notes of the Bank of England should not be increased beyond the amount on the 1st of this month. This, he conceived to be at all events, absolutely necessary, as some security against the excessive issue of their notes and their consequent unlimited depreciation.
§ Earl Stanhopecontended that his Bill did not go to render it compulsory to receive Bank notes, and observed that such a proposition, and that contained in the Bill, were essentially different. Was there no difference between a man being compelled to take a Bank note, and his having the right to refuse it, merely being told, that if he did take it, and thereby acknowleged the Bank who issued it, to be solvent, he must take it at the value expressed in it. The object of his Bill was to prevent injustice. Would it not be admitted, that in the case of a mortgage upon an estate, the estate must pay the interest of the mortgage before the proprietor touched a shilling of the rent for his own use. Was not, in the case of money borrowed by the public, the whole landed property of the country pledged to the payment of the public creditor? Was it just, then, that the public creditor should be compelled, as he was to receive Bank notes in payment of his dividend at the full value expressed in them, that 835 he should receive only 100l. for his 100l. income, whilst the landed proprietor should receive for his 100l. rent 120l.? His object in this Bill was, that they should both be placed upon a par. He denied the depreciation of which so much had been said, contending, as he had said before, that for 21l. in Bank notes and 20 guineas, he should have an entry made for an equal sum in a banker's-book, that he could for each demand 21l. in cash if he so pleased of the banker, and that therefore, a pound note and a pound sterling were equal in Value. The impossibility of procuring gold to make payments rendered some measure absolutely necessary. His noble friend had spoken of the ease with which gold was to be obtained, but how was it to be procured? The quantities of colonial produce and manufactures which his noble friend had mentioned, formed the very reason why gold could not be had. If they could find their way through the barrier set up by Buonaparté, gold might be obtained. But if the balance of trade was against us, the gold must necessarily quit the country. Even if the balance of trade was in our favour, if large sums were to be sent out of the country in subsidies, or if large armies were to be supported in foreign countries, the gold must necessarily be gent out of the country for that purpose, and it would consequently become scarce. There was, however, no proof that in this scarcity of gold the Bank of England had made an excessive issue of notes. Take the gold coin in circulation to have been 25,000,000l. It would be difficult now to find 5 or 6,000,000l. in circulation. Take it at 5,000,000l. that 10,000,000l. Was hid, and that 10,000,000l. had been sent out of the country, what had the Bank done in issuing notes to the a mount of 10,000,000l. more than before, than merely supply the deficiency of the circulating medium occasioned by so much gold being sent out of the country? The evil did not arise from the notes of the Bank of England, but from country bank-notes. There were many country bankers, undoubtedly, who were men of large property, and of the security of whose notes there could be no doubt; but there were others who issued notes to a large amount, although they were not worth 500l. in the world, This was undoubtedly a serious evil. As to the conduct of his noble friend (lord King) he did not mean in the slightest degree to find fault with his motives, tie could only 836 say generally, that to landlords of large property a few pounds ought not to be an object, and that the country ought to be the first object. No consideration upon earth should induce him to oppress his tenants.—The noble earl again adverted to his scheme for making a legal tender of sums entered in bank books, and which he still contended would be the best plan that could be resorted to in order to have a sufficient legal tender in the absence of gold. The present Bill was, he contended in the mean time shewn by every day's experience to be more and more necessary. His lordship read a letter from Manchester, where an attorney's clerk had written a letter, demanding payment of 1l. 2s. 6d.; the person written to tendered a 1l. note, and 2s. 6d. in silver, but refused to pay 3s. 6d. which was demanded for the letter. The clerk then refused to take the Bank note, and the person went back for a guinea; in the mean time the clerk took out a process in the Salcoat's court, a court for the recovery of small debts, and then demanded 1l. 9s. 6d. To prevent such petty ad vantages as this; the Bill was rendered necessary. The latter went on to state, that guineas were bought at Manchester, at the rate of 20 percent, advance, by persons front" Ireland, for the purpose of paying their landlords, who insisted upon gold. He understood that it was the intention of a noble earl (Rosse) to move to extend this Bill to Ireland, to which he had no objection. As to the amendments intended to be proposed by the noble lords on the other side, they might render the Bill more technical, but they would not be so well understood by the common people as the Bill would be as it originally stood. He should, however, take no part in them. He was proud in being the father of the Bill, but having delivered it over to the nursery, he should leave the noble lords on the other side to nurse it as they pleased.
§ Earl Greyhad no intention, when he entered the House, of troubling their lordships with a word upon the subject; He could not, however, avoid taking notice of some observations which had just been made by his noble friend. A new system had, it seemed, now been introduced, under which noble lords, members of that House, were to be called upon, not only to answer for their public Conduct, but for their private conduct, for conduct which they, in their private concerns, had deem- 837 ed it necessary to adopt, under the sanction and authority of the law of the land, in order that they might secure to themselves the real value of their property. He depreciated the clamour which it was attempted to raise against landlords, who resorted to the means which the law placed in their hands of securing themselves against the loss which they must otherwise sustain from a depreciated paper currency. He was sure that his noble friend (lord King) never had it in his intention to oppress his tenants, nor could such a charge be with the least fairness made against him or others, who merely sought, by the means which the law gave them, to receive the fair value of their property. The present Bill was only the precursor of other measures the most mischievous to the country. They could not stop here. If once they adopted this measure, it must be followed by others the most destructive to the vital interests of the country.—His noble friend who spoke last had, in order to shew that there was no depreciation, given a most whimsical definition of a pound sterling, that is to say, what a banker chose to write in his book as a pound sterling, that is to say, what a banker chose to write as a pound sterling in his book. The noble lord must surely be aware, that a poured sterling was so much of lawful money of Great Britain, in the current coin of the country, of a requisite weight and fineness. The law had wisely provided this, in order to guard the subject against a depreciated standard; and were they now to be told that a pound sterling and a depreciated note were of equal value He should be ashamed to waste their lordships' time in proving that which was so clear, namely, that the notes of the Bank of England were depreciated. It was clear that compared with the price of gold they were depreciated; but they were told on a former evening that the fall in the price of sugar, hides, and other articles, proved that there was no depreciation. Let them, however, look to articles of daily and weekly expence, and then say whether the extreme rise in the price of those articles did not clearly prove the depreciation of the paper currency? The noble lord had urged the justice of placing the public creditor and the tenantry of the country upon a par. What, however, was this but saying, that however depreciated the state of the paper in which the public creditor received Payment, the proprietor of land must 838 be placed in the same situation It was not an act of justice to the public creditor, but of injustice to the landholder. The latter, in endeavouring to receive the fair value of his property secure from the effects of a depreciated currency, was acting fairly and legally. Suppose the paper to be depreciated 80 or 90 instead of 20 or 30 percent, was the landholder to submit to be stripped of the greater part of the value of his property by this depreciation? It was therefore, with respect to him, only a question of degree as to the point at which he would no longer submit to the depreciated rate. But in what a situation would the noble lord place the landholder? because the stockholder should happen to be compelled to receive his dividend in a currency depreciated 80 or 90 percent, he would reduce the land holder to the same situation, and compel him also to surrender the greater part of his income, by receiving his rents in the depreciated currency. Where was the justice of this? If paper was so depreciated, that 100l. nominal value would only buy a leg of mutton, the noble lord would compel the landholder to receive payment in the same currency, and thus reduce the value of his property to nearly nothing. The injustice of such a measure was too glaring to require any argument, and had as the measure was in itself, it was still worse, with a view to the consequences to which it must lead—The consequence of this proceeding must be, that the Bank notes would become a legal tender, and then this country would be subjected to the greatest evils experienced by the French government in the time of the Assignats. We were told that we were engaged in the contest to prevent such evils; and yet, strange to tell, we were ourselves now called upon to plunge into this very system, formerly represented, and justly represented, as so pregnant with injustice and calamity. If this Bill passed, the notes must be made a legal lender; they would then have a forced circulation, with all the calamities which experience proved to be dependant upon it. As to the prevention of forgery, and the other advantages ascribed to this Bill, he believed all this would make but little difference in the effect of the measure. It had been said that the legal tender had been in contemplation at the time the restriction was imposed in 1797 He had been present at the debates on that occasion, and certainly, as far as he 839 could form any conclusion from the speeches then delivered, nobody was more decidedly hostile to the principle of the assignats than Mr. Pitt was. Adverting to the conduct of ministers, he said that he never saw men in office so utterly unable to form an estimate of the difficulty; so utterly undecided and ignorant as to the proper means of overcoming it. The noble lord on the opposite bench, who had first spoken ort the subject, gave no opinion at all, but contented himself with stating that he would not vote for the rejection of the measure While the debate was going on, a family council was held, and the result was, that the noble Secretary of State declared he would support that which three days before he had considered as unnecessary, and therefore ought to be rejected. Did ever ministry exhibit such indecision and pusillanimity, such fatality and total unfitness for their situation, such contemptible policy, if policy it might be called? But if their lordships valued the prosperity of the country; if they wished to escape safe out of the contest of which there appeared little prospect of a speedy termination, they must oppose this motion. Much more might be said on this subject, but he Would conclude by observing, that he was convinced in his own mind, that if this measure was carried into execution there would be no end to the depreciation—no further security for the property of this country.
§ Earl Stanhope, in explanation, said, that there was no such thing in this country as a measure founded on a quantity of bullion of standard fineness. The legal coin was the money with the stamp upon it. The stamp was what made it the lawful coin, not to be melted nor transported, and not the weight and fineness. He did not know what mathematicians he had to deal with, but if Bank notes and gold bore a fixed proportionable ratio to the pound sterling, by law, they were equal to one another; and to prove this, he need go no farther than the first book of Euclid, where it Was laid down as an axiom, that things equal to the same are equal to one another. As to a compulsory tender, if one tender was gone another must be substituted.
§ Earl Grey, in allusion to the observation, that the noble lord did not know what mathematicians he had to deal with, replied, that he could not conceive a standard without length, breadth or thickness.
The Earl of Westmoreland, in defence of ministers, said that this subject had not been introduced by them. They were at first averse to the Bill, because they saw no necessity for it, but if it was found that there really was an evil to remedy they must remedy it. The noble lord who had given the notice to his tenants, it was said, had been hardly used, and his patriotism and great merits had been extolled; but when it was found that patriotism and private interest were so closely linked together, ministers naturally began think that there might possibly be a great many patriots; that many might lake up the principle, and while they demanded their rents in specie, or in paper 10 or 20 percent, below par, would hate no scruple in paying their debts with this paper at par. When this cry of patriotism was raised, no one could say how far it might lead; no one could tell how far those who partook of the noble lord's sentiments might be disposed to follow his example. As the noble lord had not given this notice till near the prorogation, it became ministers to consider what effect such patriotism might have during the recess—it became them, as far as they could, to prevent the oppression of tenants by such patriotic landlords.—The noble earl then proceeded to argue against the existence of the depreciation. For every legal purpose Bank notes still retained their relative value to gold. Gold in coin and Bank notes had a relative value fixed by low, and this could not be altered without violating the law, by melting and exporting the coin. The melting and exporting of coin was illegal, and therefore by law and for every legal purpose, there was no depreciation. The noble lord on the other side had said, that the dearness of all commodities was a proof of depreciation; but the rise in price, he maintained, might be accounted for on the ordinary principle of supply and demand. Colonial produce, and goods the produce of this country, which could not find their way to a foreign country, were cheap, while timber and other things, which from the present state of the continent could not be easily procured, were dear. Timber and cotton had risen 30 or 40 percent, according to the state of the demand, a thing not to be accounted for from this magic operation of a depreciated paper. But the cause of this depreciation, they said, was the excess of the circulation. He denied that there was any such excess. 841 He presumed the Bank was allowed as solvent, and if it was, how could a few millions more or less make any difference, considering the immense quantity of business done in this country? The whole amount of the Bank of England notes was only 23,000,000. Now 5,000,000 per day passed through one house, in this city, and let any one look at the circulation in proportion that must take place in the country, and say, whether the amount of notes was too large. Ten millions per day passed in this country, 60 millions per week; 3,000 millions per annum! The whole of the notes must change hands in the course of three days business. What signified, then, a few millions more or less in the circulation. It was said that we expended 90 millions annually; then the whole circulating paper of the Bank would be received at the Exchequer three or four times in the year I But he might be asked why, if there was no depreciation, he supported this measure. He could only say, that he supported it on the same ground as his noble friend the Secretary of State, lest the example of the noble lord should have a had effect, for such a proceeding might occasion depreciation where it did not exist before. As to the fatuity of ministers, he had long been accustomed to such language. But when the noble lord prophecied the great mischief that would result from their proceedings, he trusted, that if he found himself mistaken, he would do himself the credit to confess his error, as he had done in regard to transactions in other countries. The expectation held out was the removal of the restriction by their great talents; but he was convinced that without that restriction the country could not have sustained the exertions it had made.
The Earl of Lauderdalewas anxious to see how the Bill could be amended in the Committee, but he could conceive no amendment that would make it a proper measure. That proposed by his noble friend was plausible, but he was satisfied it would have no extensively good effect. The restriction of the Bank of England issues might not prevent the excessive issues of paper by private banks, and the evil might still go on increasing. There was, he believed, no remedy but payments in cash. As to the assertion, that those who thought with him were theorists, and that the opinions of practical men were against them, he had to observe, that their opinions were to be estimated by the cir- 842 cumstances under which they were given. Before the restriction, Mr. Giles, the late Bank director, and other eminent practical men, were clearly convinced of the necessity of cash payments; but when it became the interest of practical men to hold a contrary opinion, they changed accordingly.—His lordship proceeded to state, that when the measure of Bank restriction was first agreed to, all men joined in regretting it. He was surprised, however, to observe, the ministers of the present day did not concur with Mr. Pitt in regarding this as calamitous in an extreme degree, but as a circumstance which had enabled the country lo make the exertions she had made. If so, would it not be considered as an argument equally strong, that if the issues of Bank paper were continued in an increased degree, the country would thereby be enabled to make still greater exertions? Noble lords on the other side considered this to be the system on which the salvation of the country mainly depended. There were persons among the administration, whose opinions on this subject he was particularly anxious to hear. The opinion of the noble secretary for foreign affairs, for instance, (marquis Wellesley), who, on a former occasion, in such glowing colours, contrasted the compulsory state of the paper currency of France with the unrestrained currency of this country, he was extremely desirous of hearing, hoping that the extreme difference between the two measures would be made apparent. He had also been given to understand, that the idea that Bank-notes should be convertible into money was the offspring of barbarous times. He was anxious to know how this could be made out; and he was there fore desirous that ministers should have an opportunity of bringing out the present Bill in the most perfect way they could devise. He conceived this to be a most important measure. When originally proposed by his noble friend, ministers were pleased to represent it as one wholly unnecessary, and it was only from what had followed, coming from the side of the House on which he sat, that ministers had thought the measure either necessary, or at all worthy of their support. What opinion was this holding out to the country, of themselves? Was it not to say, "We have no opinion as to what is good or had for the country, and can form it, only from what you say on the subject. That the country should, at such a moment as the 843 present, be reduced to such a state from the want of all mind in its ministers, he could not consider but as truly deplorable. That ministers should now support a measure which they deemed wholly unnecessary, merely because it met with the disapprobation of those who were in general opposed to them, he confessed himself utterly at a loss to reconcile to any principle either of utility or of sound policy. He was decidedly of opinion, from what he could collect from the experience of every other part of the globe, that the only remedy which remained was the restoring of payments in cash. He hoped, therefore, that ministers would ponder before they gave effect to a measure which, as had already been found in France, could not be resorted to without the danger of ruin. If they persevered in the present measure, he should esteem himself called on to resist it more than any other which could be devised, conceiving it to be most pregnant with mischief.
The Earl of Rosse, alluding to what had fallen from the noble earl on a former night, said, if the notes of the Bank of England were depreciated, and those of the Bank of Scotland were not, how did it happen that the rate of exchange was not turned against England, which was not the case? It was agreed, that if the notes of the Bank of England alone were taken into consideration, there was no depreciation; and that the depreciation only arose from the country Bank-notes. It was, therefore, at any time in the power of the House to apply a remedy, by limiting the issue of country Bank-notes. Supposing, therefore, that the Bank-restriction act had never taken place, the country might still have been in the same situation from the excess of country Bank-notes.
The Earl of Lauderdalerose to put himself right with the House He contended that he was accurate as to what he had said relative to Scotland, and that there the Banks were liable to pay in specie, in the same manner as they were previous to the year 1797. So much as to matter of fact, there being no clause in the Bank Restriction. Bill, which could be construed to extend to the Bank of Scotland. As to the question, how it was to be accounted for, that no depreciation of the rate of exchange had thus been produced against England, he could only suppose this to have proceeded from the circumstance, that no landlord had made a demand of payment in gold till this year. 844 He himself had long seen that it was in the power of any man, if he chose it, to, make all the Banks in Scotland stop payment. He had known 500 guineas received in due payment, from a Bank in Scotland, within a short period.
The House then went into a Committee when the original clauses in the Bill were agreed to, with some technical amendments.
The Earl of Liverpoolsaid he was satisfied that in framing the act of the year 1797, an omission had occurred, purely from inadvertency, in the clause protecting persons from arrest where a tender of the debt was made in notes of the Bank of England. He had no doubt it was fully meant that this should extend to distresses for rent also. As the law now stood, though no arrest could take place where a tender of the debt was made in bank-notes, still the party might refuse to accept of it, and might proceed in his action. This he meant now to extend to cases of distress for rent; and to provide that, though in such circumstances, the summary process must stop where a tender in bank-notes was made, still the landlord might go on with his legal remedy, if he chose it, till he should see how far that would avail him.—The clause being put, was agreed to.
The Marquis of Lansdownethought that some limit should be put to the issues of paper by the Bank. He therefore proposed a clause, limiting the future issues of the Bank to the sum to which they should be found to amount on the 1st of July 1811.
The Earl of Liverpoolsaw no evidence of any excessive issue, and thought that to specify a limit might produce inconvenience. The issues of the Bank had been encreased last year, in consequence of the failures of a number of country Banks; when the evils thereby felt, however, were done away, the issues of the Bank were reduced, and in February of the present.; year were under their necessary amount. To make the extent of the present issue, therefore, a criterion from which to judge of what might be the proper amount, would be by no means expedient. For the purpose of guarding the public, however, as much as possible, he should propose a clause, limiting the endurance of the pre, sent Bill to the 25th March, 1812 so that, if it was renewed, it might at an, early period become the subject of parliamentary inquiry.
§ Earl Stanhopesubmitted that some limit I should be put, even though it should extend to one, two, or three millions beyond the present amount.
Lord Hollandconceived that the clause should at least be introduced into the Bill, to allow the House to judge of it as well as of the other provisions of the Bill, when it should be printed in its amended state.
The Earl of Liverpoolsaid, he should move that the Bill be recommitted, that it be printed as amended, and that a day be then appointed for taking it into consideration.
Lord Hollandstill submitted that this clause was as well entitled to full consideration as any other clause that might be introduced into the Bill could be The question on this clause Was then put and negatived.
The Earl of Liverpoolmoved a clause, limiting the endurance of the Bill to the 25th of March 1812, which was agreed to and the report ordered to be received tomorrow.