Lords Sitting of 16 July 1811

CIRCULATING MEDIUM.
Earl Stanhopemoved the order of the day for resuming the adjourned debate on his Resolutions relative to a proposed Circulating Medium. [See p. 908.] His lordship observed, that he should be trespassing on their lordships' patience, and insulting their understandings, if he were to adduce any argument to shew the importance of the subject, as without a circulating medium the taxes could not be paid, the public creditor could not be paid, nor could our army or navy receive any pay. He was perfectly aware that the Bill which had passed that House would not of itself be sufficient; and that if that Bill passed into a law, there would be a necessity, as the law would then stand, for further measures, with the view of establishing a fit and proper Circulating Medium. He admitted, that that Bill was only a coat for a humpy; and that it was adapted to a distorted state of things. He had brought it forward as an immediate remedy for a pressing evil, but without having any idea that that alone would be sufficient. By that Bill, under the clause very properly, added to

981
it by the noble lords on the other side, landlords insisting upon their rent in gold could not distrain upon their tenants—so far was undoubtedly proper. But then other remedies were still left to them, a landlord insisting upon his rent in gold, might say to his tenant who urged the impossibility of procuring gold, "then you must turn out." The tenant might urge his compliance with all the terms of his covenants, and his having laid out a large sum of money on his landlord's property, but still the landlord might say—"If you don't pay me in gold you must turn out." He did not know how far a court of equity might interfere in such a case; there was an instance in the last war in which the court of chancery had refused to allow a mortgagee, under the circumstances of the times, to foreclose a mortgage. Whether this was right or not he did not pretend to say;—suppose, however, the tenant should endeavour to procure gold for any part of his stock; suppose he should bring malt or hops for instance, to a brewer, take any brewer in a large way or a little way,—brewer Whitbread for instance,—he tells Mr. Whitbread he has brought some excellent malt or hops, but he must have gold;—but, says Mr. Whitbread, I can't get gold for you—take Bank notes now, and I must see and procure gold for you next time. Then Mr. Whitbread goes to his friend the publican who buys his beer, and tells him, he must have gold;—I can't get gold, says the publican, you must take Bank-notes now, and I must see what I can do. What, if Mr. Whitbread still insists upon gold, why, the publican will take down "Whitbread's intire," and put up "Meux's intire," or "Calvert's intire," or any other intire. How now, says Mr. Whitbread, we have always agreed very well together, why should you leave off taking my beer? Why, then if the publican is to find gold, what is he to do? He says to his customers whom he serves with pots and pints of beer, and chalks it up, "you must pay me in gold." What would be the consequence of all this? Beer, and meat, and bread, and every necessary of life would rise to an enormous price. To those who supported this gold system, and who thought it popular, be would say, Call your county meetings, call one in Kent, and I will be there; and if you are not satisfied with the number of hands held up against you, call for a division; let those who are against you, go to the right side of the street, and those
982
who support you go to the left, and then you will see the paucity of their numbers; or call a meeting in Westminster, and put the question in Palace-yard, whether they would have bread and meat and beer dear or cheap, and see what the decision would be. There were some who, like parrots and magpies, could say nothing but "Gold, gold, gold." To believe gold necessary to a circulating medium was an idea only fit for Hottentots. To think a circulating medium of gold necessary was only shewing that we were just at the commencement of civilization, or rather on the verge of barbarism. A noble friend of his on a former night had found it difficult to conceive the abstract idea of a, pound sterling. He however (lord Stanhope) could see no difficulty in fixing a standard which should not be liable, like gold, to variation and fluctuation. If he wanted to measure that House, he would of course take for the purpose some certain and definite measure, and not a thermometer, which would expand in his hand. So with respect to the pound sterling, fixing its value at the tune of passing the act, it might remain a permanent standard, fixed and invariable, and which would be a certain and definite measure of value. It had been said, that plenty of gold was to be had, but how were we to get it if the balance of payments was against us; and how were we to keep it when we had got it? Would it not, under such circumstances, go out of the country as fast as it came into it? Conceiving it then to be impossible to procure gold; and that if it could be procured it was not a fit substance for a circulating medium, from its fluctuation in value, he thought it time to look to some other resource as a circulating medium; and if the system of Bank entries, which he proposed, was adopted, the difficulties we had encountered would be a fortunate circumstance, in leading us at last to a sound and permanent system. To make Bank-notes a legal tender he had a decided objection, from the impossibility, in transactions between individuals, of knowing whether they were forged or not. A man, after accepting a Bank-note for a debt, might; on taking it to the Bank, be told that it was forged—they would keep the note, and he would get nothing for his debt. The security of the public creditor was, that he was certain the Bank notes he received were not forged, because he received them at the Bank of England.

983
Under the system he proposed, a similar security would exist, as every person wanting to make a tender must deposit his Bank notes at one of the branches of the Bank, where it would be immediately discovered whether they were forged or not, and where he would have credit given him for the sum deposited, which entry of credit he might transfer to another, and which might be safely made a legal tender because there would be no possibility of forgery. These Bank entries might, he contended, be rendered a circulating medium fit for every purpose for which a circulating medium could be required, would be secure from all risk and danger of loss from invasion, insurrection, robbery, or accident, and the system might be carried into effect with the greatest facility. His lordship read a letter he had received, to shew, that a similar system was already practised by a country banker, and concluded by moving that the Resolutions be printed.
The Earl of Liverpooldid not wish to enter now into the discussion of the subject adverted to by the noble earl, but would only generally observe, that he had always considered it a safer and a better course to derive principles from experience, than to lay down speculative principles to act upon, and to try whether those principles would operate to produce the good expected from them. With respect to this second child offered by the noble earl for adoption, he should merely now say that he did not object to the printing of the Resolutions, but at the same time he wished expressly to guard himself from the supposition that he there by approved of them. He assented to the printing of them as a matter of convenience, that they might be better understood by their lordships; wishing it, however, to be distinctly understood, that he did not by that vote mean to express any opinion upon the subject matter of the Resolutions.
The Earl of Lauderdalesaid it was highly satisfactory to him to hear the noble earl on the other side decline to adopt this second child of his noble friend, but he still thought that to vote the printing of these Resolutions would be giving a sanction to them which the House ought to pause long before they agreed to. He could not but consider some parts of his noble friend's speech as inflammatory and mischievous, although undoubtedly not intended to be so. When his noble friend talked of calling a meeting in Westminster,
984
and putting a question, whether they would have dear or cheap bread, what would it be but raising a clamour upon a subject which those who were called upon to decide did not understand? When men's minds were agitated as they now were by this subject, he could not think that his noble friend's Resolutions, or his speech were calculated to do any good. He had heard, with feelings of pain and regret, those parts of his noble friend's speech, in which he had so strongly urged the absurdity of having gold as a circulating medium, recollecting that the very same arguments were used in Paris, at the time of the Revolution, when gold was equally said to be unnecessary, and when it was said, "Let the dirt return to the earth from whence it came." These very same arguments which led to the forced currency and consequent depreciation of assignats, and all the dreadful consequences which followed! Could any thing be more mischievous than for his noble friend to state, that if we returned to a cash circulation, the taxes could not be paid, that the public creditor could not be paid, or that the army and navy must be disbanded for want of pay. On the contrary, it was impossible that a sound and healthy circulation could be restored without resuming payments in gold. The convenience of a paper circulation was always admitted, but it could only be received as part of a healthy circulation when convertible at pleasure into cash. The effect of his noble friend's propositions would be to make Bank notes a legal tender under another form, it would alter the nature of all pre-existing contracts, and must produce an enormous rise in the price of all commodities. The natural consequence must be a maximum. What also was to prevent the Bank entries from being depreciated in the same manner as the Bank notes were? It was impossible to prevent this depreciation whilst the present system continued. He could bring evidence to prove at their lordships' bar, if the subject was gone into, that 3 per cent. consols had been bought at 57 for gold, and at 64 for paper. It was also notorious, that there "ere shops in this metropolis where two prices were regularly noted in gold and in paper. He was old fashioned enough to believe that gold was necessary to a sound and healthy circulation; and he thought the House ought not to give currency to the doctrines contained in the resolutions of his noble friend, by ordering them to be printed.
Earl Stanhope, in explanation, said he had not alledged that the taxes, the public Creditor, the army and navy, could not be paid without gold, but without a circulating medium. His noble friend, who had made one of the best speeches upon the Roxburgh case, had made as bad a speech now as his speech was good then. As to a meeting in Palace-yard, he really believed that there were many persons amongst the inhabitants of Westminster who understood this subject quite as well as his noble friend.
The Earl of Lauderdaleobserved, that the subject might be discussed any where, it depended upon the manner in which it was treated.
The Resolutions were ordered to be printed.