Lords Sitting of 22 July 1811

GOLD COIN AND BANK NOTE BILL.—
The Earl of Liverpoolmoved the order of the day for taking into consideration the Amendments made by the Commons to this Bill; and they having been read and agreed to, his lordship moved, that a message be sent to the Commons, informing them that the House had agreed to the said Amendments.
The Earl of Lauderdalethen rose, and took a review of the circumstances under which this Bill had originated, and the whole subject connected with it. His lordship attributed the adoption of the Bill by ministers, not to the notice given by lord King, but to the decision of the Judges in the case of De Yonge, and was of opinion that the real object of the Bill, as altered by ministers, was to give redress (if he might use the term upon this subject) against the decision of the Judges. The question as to the depreciation of Bank-notes, was one which certainly required the most deliberate investigation, and perhaps was a subject which rather "ought to be written upon than debated. There were, however, certain facts, which it was quite impossible to controvert, and which must, in his opinion, clearly demonstrate the depreciation. The gold coin of the country was not admissible in circulation, except it was of the standard weight and fineness. Five pennyweights eleven grains was the standard weight of the guinea, and it was gold of this standard weight that Bank notes promised to pay, or fractional parts in silver, of a fixed standard, if, therefore, the Bank note was convertible into gold, and the price of gold rose, the value of the Bank note must rise in the same proportion. If a

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Bank note promised to pay a yard of cloth of a certain breadth and fineness, and there was no difficulty in procuring the yard of cloth to discharge the note, if the price of the cloth rose, the value of the note would rise also. But if the cloth could not be produced in discharge of the note, then the note would become depreciated so, if the gold was not forth-coming to pay the note, the latter must also become depreciated. The price of gold having risen above the expressed value of the note, was complete evidence of the depreciation of the latter. The Bank note was of no value in itself but only of value from its representing a certain quantity of gold. It was impossible in any other manner to affix a value to it. Those who argued on the other side had a notion that the Bank notes represented certain commercial transactions, and that they were issued upon the credit of certain commodities. But if this were the case, the Bank note issued upon the security of any one commodity would fluctuate in value, according as the price of that commodity rose or fell. How, then, was any one to ascertain the value of Bank-notes from the value of all the commodities upon the security of which they were issued? This was beyond the reach of any one. The only criterion of the value of the Bank-note must be the sum in gold or silver of standard weight and fineness, into which it was convertible. It was in vain to setup any other criterion of value, for by none other could the value of the Bank-note he kept up, or the note be prevented from becoming depreciated. What, then, was the object of the Bill? It was nugatory as to preventing the landlord from insisting oh his rents in gold, as it left him all his legal remedies except that of distress. The object of the Bill, then, was to force the circulation of a depreciated currency at a nominal value. It bad been said, that the arguments applicable to a paper currency issued by the authority of government were inapplicable to notes issued by a private Company. But where was the security? The directors had a duty which they owed to their constituents, the proprietary, paramount to any interest of the public; and if a profit was to be derived to the proprietors from an additional issue of Bank-notes, it would be no excuse on the part of the Bank Directors for not doing so to state to their constituents, the proprietors, that the interests of the public required it should not
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be done. Their lordships had only "to look, in point of fact, to the documents on their table, to prove that the issue of Bank notes had been increased without reason. It would be seen that the amount of Bank notes in circulation, which in 1808 was I7,540,000 l. bad increased in 1811 to 23,420,000 l. making a difference of 5,880,000 l. in three years. It had been said, that the increase of mercantile transactions required this increase of circulating medium; but it was well known that if there was an increase of transactions there was an increase of credit, and that a less amount of circulating medium was, in fact, required. So far, however, from there being an increase of mercantile transactions, he had been informed by several commercial men, that there never was a greater diminution of mercantile transactions than within the last six months.—The noble earl then entered into a calculation to shew that the increase of Country Bank notes, against a further increase of which the security was taken away by the present bill, had within the last three years, amounted to a sum which, added to the 5,880,000 l. increase of Bank of England notes, made up a sum of 14,000,000 l. When such an excessive issue of paper had taken place, and when there was no security against a still further excess, it was quite impossible for any legislative measure to prevent its depreciation; and to attempt to force the circulation of this depreciated currency at its nominal rate of value, was pregnant with the most fatal consequences. This nevertheless, was the real object of the Bill, however it might profess to relieve the tenant from any supposed attempt at extortion on the part of the landlord. It did not, in fact, relieve the tenant, there was merely a hint to lord King; but the real object was to attempt to keep up the nominal value of the paper currency, and the only effect of which must be to reduce the value to be paid on all contracts to such a sum as the directors of the Bank of England, in conjunction with the country bankers, should please to reduce it to by the excessive issues, and consequent still further depreciation of their notes. The Bill would, at the same time, be productive of a serious evil to bankers. It was well known that they were now obliged to give a premium for silver, in order to obtain change to pay the fractional sums in checks drawn upon them by their customers. This they were

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forbidden to do by this Bill, under penalty of the pillory; and without being enabled to do it, how were they to carry on their trade? how were they to procure change to pay the fractional parts of checks? If, however, this Bill was considered so good a Bill by those who supported it, why was it not extended to Ireland? Why were the landlords in Ireland to be allowed to insist on their rents in gold, which the landlords in Great Britain were forbidden to do, unless upon the most vicious principle in legislation, that the crime, as it was now to be called, was so frequent in Ireland, that it was in vain to attempt to check it; and that it having only just commenced in England, it was to be met by a legislative enactment? In every point of view in which the Bill could be considered, it appeared to be nugatory with respect to its professed object, and most pernicious in its real one; that of attempting to force the circulation at a nominal value of a paper currency which was clearly proved to be depreciated, against the further depreciation of which there was no security, and in which there was proved to be an excess of issue of M millions, within the last 3 years—an issue which bad no parallel in the history of any country, with the exception of the French assignats.—He was aware that it might be very difficult to say how we were to retrace our steps in order to retrieve the mischief arising from the present state of the circulation. He however thought, that by proper management the Bank might be enabled, without risk, to pay in specie in a much shorter time than was generally supposed. But it was absolutely necessary that some steps should be taken to restore that sound and healthy state of circulation, without which the credit of the country could not long be maintained, and to place the paper currency of the country upon its only sure and certain basis, that of gold.
The Earl of Liverpoolcould not allow the question to pass without observing upon some of the statements of the noble lord. The value of the gold coin of this country was not to be estimated according to its weight in gold, but according to the value fixed upon it by the reigning sovereign of the country. The value of bank notes, as for every purpose of internal negociation, he contended, was by the general consent of the country declared not to be depreciated. There were no persons out of that House who had expressed their
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opinion, that the conduct of the noble lord who had given rise to this Bill, was so far proper that they themselves would wish to follow his example; and their not following it was a proof that they did not think any depreciation of our Bank paper had taken place.
The Earl of Lauderdale, in explanation, thought it was not fair to judge what the opinions of noble lords, or of any other persons, must be, from their following or not following the example of lord King. If every person who agreed that there was a depreciation of paper were to follow the line of conduct suggested by his noble friend (lord King), he suspected the noble Secretary of State would find the present Bill a less effectual measure than he now supposed it. The noble lord was bound to take them as they preached, not as they practised.
Earl Stanhopestrongly sopported the opinions he had formerly delivered, and in which he was happy to find the noble Secretary of State concurred, as to the cause of the value affixed to the current coin of the country. It was only by violating the law, which prohibited the turning guineas into bullion, that the value of a guinea could be raised above that conferred on it by the proclamation of the King, or the act of the legislature. Why noble lords and others had not followed the example of the noble lord (King) he could easily explain. They did not wish to expose themselves to the execration of the country. The noble earl had said this Bill was meant as a hint to lord King. Certainly he did mean it as a hint to his lordship, and to all who should act like him. He did not know whether the noble earl had ever studied at Oxford. Those who were acquainted with the University of Oxford, must have heard of John King's 'broad hint.' It was this: that when a person had been warned that his company was disagreeable, and that his further presence, therefore, was dispensed with, and he failed to take the hint, that then he should be kicked down stairs. He had now given lord King the hint; and, if his lord shop did not chuse to take it, he should move, next session, to give him John King's broad hint.
The Lord Chancellorbegged to remind the House, that, having already agreed to the Amendments made by the Commons on the Bill, the question now was, whether a message should be sent to the Commons, stating that they had agreed to those

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Amendments.—The question was then put and agreed to.

COPY OF THE GOLD COIN AND BANK NOTE BILL; COMMONLY CALLED LORD STANHOPE'S BILL.
The following is a Copy of this Bill, as it passed both Houses:
"An Act for making more effectual provision for preventing the current Gold Coin of the Realm from being paid or accepted for a greater value than the current value of such coin; for preventing any Note or Bill of the Governor and Company of the Bank of England from being received for any smaller sum than the sum there in specified; and for staying proceedings upon any distress by tender of such notes.
Whereas it is expedient to enact as is hereinafter provided: Be it enacted by the King's most excellent Majesty, by and with the advice and consent of the Lords spiritual and temporal, and Commons, in this present parliament assembled, and by the authority of the same, That, from and after the passing of this act, no person, shall receive or pay for any gold coin lawfully current within the realm, any more in value, benefit, profit, or advantage, than the true lawful value of such coin, whether such value, benefit, profit, or advantage, be paid, made or taken in lawful money, or in any note or notes, bill or bills of the governor and company of the bank of England, or in any silver token or tokens issued by the said governor and company, or by any or all of the said means wholly or partly, or by any other means, device, shift, or contrivance whatsoever; and every person who shall offend herein shall be deemed and adjudged guilty of a misdemeanor.
II. "And be it further enacted, by the authority aforesaid. That no person shall by any means, device, shift or contrivance whatsoever, receive or pay any note or notes, bill or bills of the governor and company of the bank of England, for less than the amount of lawful money ex pressed therein, and to be thereby made payable, except only lawful discount on such note or bill as shall not be expressed to be payable on demand; and every person who shall offend herein shall be deem ed and adjudged guilty of a misdemeanor.
III. "And be it enacted, by the authority aforesaid. That in case any person shall proceed by distress or poinding to recover from any tenant or other person
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liable to such distress or poinding, any rent or sum of money due from such tenant or other person, it shall be lawful for such tenant or other person, in every such case to tender notes of the governor and company of the bank of England, express ed to be payable on demand, to the amount of such rent or sum so due, either alone or together with a sufficient sum of lawful money, to the person on whose behalf such distress or poinding is made, or to the officer or person making such distress or poinding un his behalf; and in case such tender shall be accepted, or in case such tender shall be made and refused, the goods taken in such distress or poinding shall be forth with returned to the party distrained upon, or against whom such poinding shall have been used, unless the party distraining or poinding and refusing to accept such tender shall insist that a greater sum is due than the sum so tendered, and in such case the parties shall proceed as usual in such cases; but if it shall appear that no more was due than the sum so tendered, then the party who tendered such sum shall be entitled to the costs of all subsequent proceedings: Provided always, that the per son to whom such rent or sum of money is due shall have and be intitled to all such other remedies for the recovery thereof, exclusive of distress or poinding, as such person had or was in titled to at the time of making such distress or poinding, if such person shall not think proper to accept such tender so made as aforesaid; Provided also, that nothing here in contained shall affect the right of any tenant, or other such person as aforesaid having right to replevy or recover the goods so taken in distress or poinding, in case without making such tender as aforesaid, he shall so think fit.
IV. "Provided always, and be it enacted That every person who shall commit in Scotland any offence against this act, which by the provisions thereof is constituted a misdemeanor, shall be liable to be punished by fine and imprisonment, or by one or the other of the said punishments as the judge or judges before whom such offender shall be tried and convicted may direct.
V. Provided always. That nothing in this act contained shall extend to Ireland
VI. "Provided always, and be it further enacted. That this act shall continue and be in force to and until the 25th day of March 1812, and no longer."