COMMERCIAL CREDIT BILL. (Hansard, 28 March 1811)

§ Earl Bathurst
moved the second reading of the Commercial Credit Bill. Upon the question that the Bill he committed, the noble earl observed respecting the Bill, that if the commercial embarrassment arose from overstocked markets, the consequence of excessive speculation, then such a measure could not be advisable; because to hold out that a relief from government would be given to commercial men under such circumstances, would be removing the salutary check that ought to exist upon excessive speculation. The commercial embarrassment, however, which at present existed, was not wholly attributable to that cause. It arose from the circumstances, that returns had been made from South America for the goods sent there in produce, to be sent to the Baltic and the European markets, but which, from the circumstances of the continent, could not be sent there, and were warehoused here. From this circumstance, the merchants, and consequently the manufacturers, bad become embarrassed; these goods could not be sold except at a ruinous loss, and in the mean time money was wanted by the merchants to pay the bills which they had accepted. The merchants, therefore, and the manufacturers, required time in order to bring their concerns round again to their natural course, and for this purpose it was that this measure was resorted to.

Lord King
observed, that the situation of affairs now and in 1793 were extremely different: at that period, the great evil complained of was the want of a circulating medium. Surely no one could now complain of the want of a circulating medium of Bank paper. It was admitted by the noble earl, that a measure of this nature ought not to be resorted to, to cure the evil arising from an over-stocked market through excessive speculation. But if the evil was the want of a market, how such a measure could remedy it did not appear from the speech of the noble earl, and at least it ought to be shewn, before such a measure was resorted to, that the evil was only temporary, and Would, in all probability, cease in a certain 530 and no very long period.—The noble lord then asked, what security the public was to have for the sums so advanced; they could only have goods which were at present unsaleable. How could they be judges what bills were good and what not This was entering upon a duty which those whose profession it was to discount bills, had difficulty enough to discharge and for which the members of the government were totally unfit. He could not see the necessity of this measure. The Bank of England had of late years issued much larger sums than they had ever before issued; and one of the causes of overtrading was the excessive issue of Bank paper since the renewal of the Bank restrictions. By this facility the old and established houses had been driven out, and the old and general mode of trading departed from. There had been a connection established between the commercial interest and government, not more dangerous to the true principles of trading, than to the principles of the constitution; the West India merchants were in distress, the general merchants were in distress, and being assisted by the government, must be disposed in turn to assist the government.

§ Viscount Sidmouth,
adverting to the precedent of 1793, observed, that upon consideration he was inclined to doubt of its wisdom and policy. In 1803, application had been made to him by several merchants who experienced distresses at that period; but he was persuaded it would have been impolitic and ultimately injurious to encourage their application. At the same time, on this occasion, the cases were so different, and the calamity of such a nature, that he could not bring his mind to refuse the relief proposed to be granted. He was not prepared to say the relief would certainly be attended with its desired effect; but it was calculated to do good, and on that account it should not incur his opposition.

The Marquis of Lansdowne
said that he could not conceive any measure to differ more from that of 1793 than the present. Then a relief became necessary to the internal circulation of the country, while at present that circulation was not in the least affected. There was no want of circulating medium at this moment in the country, and the present distress was such as no circulating medium could remedy. In truth the government could not interfere in the present difficulties without violating all the general and received rules 531 of political economy. The report did not touch upon the real causes of the present difficulties. What were the trivial and collateral circumstances mentioned in the report of the committee, compared with the real difficulties? Could any man hope to see America open to our commerce the year after next? or could any man hope to see the continent of Europe opened in the course of two years? It was stated in the evidence of one of the greatest merchants in this country, sir Francis Baring, that such was the facility in obtaining credit in this country, that even persons in the situation of clerks had no difficulty in obtaining it to any extent. It was stated even by the commissioners themselves, that the great occasion of the difficulty was the accumulation of produce and the total want of vent. Now nothing could establish more clearly than this fact the impolicy of the government, which had prevented the nation who alone could carry that superfluity to the continent of Europe, namely, America, from carrying on that trade, whereby the commodities of our own merchants were a drug in the market. He therefore felt himself warranted in opposing the Bill.

§ The Earl of Harrowby
, although he did not approve of the violation of the general principles of political economy, yet the emergency was so urgent, that he thought the extension of this relief likely to produce very important benefits.

The Earl of Lauderdale
did not see any grounds for departing from the acknowledged principles of political economy on the present occasion. He thought that the man must be bold indeed who, in the present commercial distress, durst oppose the present measure. The reason alleged for the distress in the report was contradicted by the magistrates and merchants of London, who considered that the overtrading to South America was but a very small part of the cause of that distress, and that it was principally to be attributed to the warehousing system. An additional capital could only then add to the calamity. A noble earl had strongly urged the benefit derived from the measure in 1793; but the difficulties then were such as without any legislative interference would have had a favourable termination. To attribute the ensuing prosperity to that measure was like the physician taking credit for a cure which nature would have operated without his assistance.

The Earl of Ross
observed, that those 532 who speculated excessively before, would not be the objects of relief from this Bill, as they were removed from the power of carrying on those speculations any longer. The increase of paper currency had been mentioned; but he would call their attention to the state of Ireland in that respect. The noble earl then proceeded to take a view of the issue of Bank paper, shewing, contrary to the opinions stated in the pamphlets respecting Bullion, that the rate of exchange against Ireland did not increase in proportion to the increase of paper currency.

§ Lord Grenville
rose and addressed the House at considerable length upon the policy of this measure. He adverted to the irregularity of discussion which had interfered with the natural course of the debate, for he did not perceive how the calculation of the rate of exchange in Ireland was connected with the merits of the Bill upon their lordship's table. It had been expressed by some noble lords during this night's debate, that no one, whatever variety of opinion might exist upon the policy of this Bill, would be bold enough, to give his opposition to granting this relief to the distresses of our merchants. For himself, he was desirous that he should not be included in that general observation. No love of popularity, no dread of public obloquy, should ever intimidate him in the discharge of his parliamentary duty. During the many years of his public life, he had ever been determined to act on ail occasions as it seemed best to his own judgment, without any regard to the praise or the censure of the world, ever satisfied with the consciousness of having done his duty according to his own notions of rectitude. From these principles, which had at all times actuated his public conduct, he was determined never to depart; and on this occasion he must declare, for one, that he was prepared to give his opposition most decidedly to this Bill. But at the same time, it should be understood, that he was by no means disposed to deny relief to the distresses of the merchants and the manufacturers of this country. No; on the contrary, it was from his wish to afford them relief that he was led to oppose the present measure. The very ground and reason of his opposition was, that instead of this Bill being likely to produce in its effects any relief to the distressed commerce of the country, it was calculated to aggravate all our commercial calamities. Even the very evils 533 alleged by its supporters as the causes of these misfortunes, must, in his judgment, be materially increased, and not lessened, by the remedies proposed. The principles of all commercial and political economy would be departed from, without any of those excuses which, under extraordinary circumstances, might justify such departure. It had been said by a noble friend that he rejoiced to hear this night so many noble lords admit the policy and justice of general principles, and that he was glad to find a general concurrence of that House in their propriety, although they departed from them upon this particular emergency.—On the contrary, he (lord Grenville) was sorry to hear the general admission of just principles in debate, because it seemed the growing habit of the noble lords opposite, to admit every wise and just principle in their speeches; and that seemed in their minds to authorize a decided departure from every thing just and wise in their conduct. It reminded him of the preambles of the edicts of the comptrollers of France; for, in proportion as the preamble breathed sentiments of justice, morality, and benevolence, in the same proportion the laws which were founded upon them contained provisions fraught with injustice, oppression, and wanton cruelty. It would be found, that these preambles were remarkable for their composition, for the sentiments of justice and clemency they expressed; and the laws succeeding them, equally detestable for their oppression and cruelty, exceeding those of every other legislature. Just so the noble lords opposite were continually admitting the justice and expediency of general principles, but it by some means happened, when they assented most to the justice of such principles, it was the precise time when they were violating them most in their practice.
He did not mean hereby to charge the noble lords with a deliberate intention of thus violating these principles, or intentionally devising a measure to injure the true interests of the commercial world; and least of all would be ascribe such intentions to the department in which this measure originated; but, on the contrary, he would give them the credit that they were, on this occasion, actuated by a wish to relieve the mercantile interest of the country. At the same time, either from the urgency of particular calamities, or from causes of another description, it had 534 become their general, and he must add, their preposterous policy to try to avoid permanent evils by means of partial remedies. Could any noble lord venture to say, nay he would defy any rational man to prophesy, that the present distress of the commercial world would be of temporary or short duration?
The precedent of 1793 had been introduced as a maxim for the propriety of adopting the present redress for the distress of the merchants and the manufacturers. With respect to that precedent, as it was termed, he was one of those who were concerned in devising the measure; but as it had been correctly observed, the distress of that period was wholly different from the calamities of the present day: still, however, he must add, that from experience and reflection, he was convinced the measure was founded in wrong policy. As one of those who were concerned in the measure, he was perfectly ready to take upon himself the avowal of his error, for he was afterwards satisfied in his own mind, that, although he had acted from the best of his judgment at the time, the measure of 1793 was unwise and impolitic, as likely to be productive of considerable injuries to the mercantile world. The present discussion was one of those injuries; for he had now seen the danger which resulted, when the proceeding of that year was argued to be a precedent, and thus the trading world would be induced continually to look towards parliament for relief from every misfortune which might arise, from not only casual misfortune, but from failure in speculation. He was glad to hear this night what he had not understood before, that the noble viscount (Sidmouth), when in office at the beginning of the present war, had rejected the applications of many merchants for relief, and that he did so upon the ground of his considering such interference as contrary to the general principles of commercial economy. He honoured the noble viscount for his conduct upon that occasion, and he agreed with him that mature consideration had demonstrated the impolicy of the measure of 1793; but he was considerably surprised to find the noble viscount disposed, notwithstanding, to give his support to the present measure, and yet under doubt and hesitation of its being likely to be successful. It was ever the conviction of his mind that no relief ought to be granted to any class of individuals, but under two 535 particular conditions: First, the relief should be called for and extended upon the principles of justice. Secondly, relief should be granted when the means which could be used would be adequate to obtain the object of redress. If he were to examine the claim for the present relief upon those principles he should find no existing ground for extending that relief in the mode proposed by the present Bill. Did any man conceive that the means would procure the relief intended? In his own opinion, as he said before, there was no doubt but they would increase the evil. The measure deserved no other appellation than a palliation.
In adverting to the report of the other House, now upon their lordships' table, he could not help noticing the partiality which pervaded it with respect to tin-assigned causes of this national evil. It was said that the cause was to be traced to the spirit of over-trading, which had induced our merchants to speculate to an extreme to South America Would then lordships suffer themselves to be persuaded that the whole of our exports to South America, taken in toto as loss from a spirit of overtrading, would account for the magnitude and extent of the evil which existed? Sure he was, that the whole of that traffic would hear a comparatively small influence upon the rest of our immense trade. He could not but wonder at such a report ascribing this evil to the overstocking of the South American markets. But did not the Committee recollect that the ports of the continent were shut against our commerce, which alone was a much more considerable cause of distress than the overtrading to the continent of South America? and though they denominated the latter a temporary inconvenience, were they not sensible that the former was an evil of a permanent description? Not one word was, however, said of this evil being the origin of our distress: indeed a noble viscount had that night observed that our trade had suffered from the malignant spirit of our enemy; but he had omitted to name another source, namely, our own policy, which in destroying our amity with the continent of North America, had tended most materially to affect the prosperity of our commerce. The policy of ministers had led to a fatal calamity in the commercial world. When in office, he and his friends had been attacked because they were unwilling to have recourse to measures of retaliation. 536 It was not from any hesitation to oppose the measures of the enemy that they forebore to retaliate, but they abstained from acts of retaliation out of regard for the salvation of the merchant. What they apprehended, the kind's ministers had since experienced to be true, and one part of their avowed boast had been woefully verified to the cost of the merchant; for this country, to use their own expression, was become the general storehouse and repository for the produce of the world. These triumphant predictions had come to pass, and the consequence of them was, the merchants and manufacturers were obliged to approach the bar of parliament with uplifted hands, and implore relief for that distress which they had incurred through the weak and short sighted policy of the present administration. But still our exclusion from the continent, or the interruption of our amity with North America, was not, in his judgment, the sole cause of his distress; there was another material source from whence our commercial calamities had arisen. We had been for some time making efforts to which our strength was not competent, and when they would have ceased from principles of limited resources and natural restriction, they were still continued by artificial means Perhaps the great facility of obtaining fictitious capital through the extended issue of bank paper, had led to the evil of the present day. While the Bank of England was not permitted to in rease the circulation of their paper currency, the evil was likely to correct itself. But that system of loan, and that facility of credit which he had long known and experienced as injurious to the country's welfare, had continued to increase the issue of bank paper, and to depreciate the circulating medium of the kingdom.
It was thus that fictitious capitals were raised, and unnatural efforts made lo extend commerce; and as that commerce became extended, still more paper was unavoidably issued to supply the want of fresh capital. Thus then paper and overtrading reciprocally acted upon each other—the issue of bank paper created a spirit of over-trading—the effects of over-trading rendered a still further issue of paper indispensible—and the consequences of both had been the depreciation of the circulating medium, and the commercial distresses now proposed to be relieved. He was not disposed to impute the smallest blame to the Bank of England; it was a corpo- 537 ration, and its directors, as its servants, were bound to consider and promote the interest of the bank, but responsible by no obligation of particular duly to the public or to the government. It appeared, however, since this system of policy had been adopted by the government, that the advantages gained by the bank had been immense: their stock having increased in value to the extent of 150l. per cent. whilst the stock of nearly every other company or commercial corporation had deteriorated. The public were losers certainly by the gain of the bank; hut still it was not to that corporation, which had as much right as any banking house to attend to its interests, that he imputed the blame. It was to the government and even to parliament itself that the censure was particularly due. He would ask their lordships how these six millions of Exchequer Bills granted for the relief of the merchants and manufacturers would operate upon the public? For himself he was of opinion that it would operate in the way of increasing the paper currency, and also by adding to the existing amount of fictitious capital, and thus in both ways it would be found equally injurious from the effect it must have in depreciating the circulating medium. Thus then one of the great evils, which gave birth to this application, would be considerably aggravated; for it was provided by a particular clause in the Bill, that the Exchequer Bills to be issued, should pass into the hands of the bank, which would cause a correspondent issue of bank paper, and enable new speculators to adventure still more upon such fictitious capital. It was his must decided opinion that parliament ought to look the difficulties of the country boldly in the face, and not content themselves with the adoption of partial or palliating measures, as if these difficulties and distresses were likely to be of a short and temporary duration. The war in which the nation was engaged would not probably soon be terminated; nor were the ports of Europe likely to be speedily opened to the commerce of this country. Would it not then have been infinitely better to regard the existing evil in us true light—to look the situation of the country manfully in the face—to resort to such measures as would afford some fair prospect of remedying the evil con-fessedly existing, rather than to content themselves with the adoption of half measures, in the doubtful and desperate hope, that they may alleviate for the moment 538 the severity of the mischief. His lordship then proceeded to comment upon the impolicy of the orders in council, which he reprobated in strong terms; as by their opera ion neutrals were prevented from importing into the ports of the continent the manufactures and produce of this country and its colonies, and concluded by declaring his decided opposition to the Bill.

The Earl of Liverpool
replied to the arguments of the noble lord who had just sat down. He observed, that if the present distress of the commercial world arose from the causes assigned by that noble baron, it was rather extraordinary that it was only a particular class of the mercantile community, that had experienced embarrassment. If the noble baron's opinion were correct, it was not any particular class, but the whole commercial body, that would have been affected. In ordinary times the established principles of trade and commerce should be inviolably observed, and any evils which might happen to arise, should be left to correct themselves in the regular routine of commercial enterprises. But there were moments of extraordinary and unnatural pressure, when it would not only be wise, but must be indispensible to depart from those general principles; when a feeling of humanity, no less than a regard to public interest, called for and authorised the grant of public assistance to the unfortunate sufferers, but most particularly when their embarrassments and distresses may have arisen out of the extraordinary circumstances of the times and the unavoidable difficulties of the country, brought on as they had been by the unparalleled injustice and monstrous measures of an unprincipled enemy.