Lords Sitting of 25 April 1826

PROMISSORY NOTES LOCAL PAYMNTS BILL.
The Marquis of Lansdow having moved the order of the day for oing into a committee on this bill,
The Earl of Liverpoolsaid, that, as far as he understood the principle of this bill, he entirely concurred with it. That banks should pay at the places where their notes were issued, and that this should be done, not only by the chief banks, but by all the principal branch banks, was a proposition to which he perfectly agreed, both on the ground of principle and expediency. But, he confessed that he found many objections made to the application of this principle at present; and he also perceived many difficulties in the way of carrying it into immediate effect. It was, therefore, well worth the consideration of the noble lord who had introduced this measure, and of the House, whether it would be proper to proceed with it at present. A very important branch of the subject to which the present bill related had been referred to the consideration of a committee. He meant the question relative to the currency of Scotland and Ireland. Much evidence had been given before that committee, which it would be important for their lordships to consider when the report should be laid on their table. Now, whether the report might be made or not, there was, he thought, no probability that any legislative measure could be founded upon it this session. For this reason, he was of opinion, that it would be better to postpone the present bill until after the inquiry now going on was completed. When the result was before their lordships, as it would be next session, they would have an opportunity of considering the whole subject. A bill had gone down to the other House. He meant the measure which their lordships had passed, authorizing the establishment of chartered companies in this country. He had anticipated that that bill would have a salutary operation, and that opinion had not been hastily taken up. The effect of the

559
principle, as applied to Ireland, was already known. Throughout the whole of that country, with a very slight exception, there were no banking establishments, except the branches of the Bank of Ireland, and those which had been formed under the act passed last year. He understood, too, that some very respectable establishments in this country had taken it into consideration, if the bill now in progress should pass, whether they would not unite and form joint-stock banking companies. This, certainly, would be the very best operation the bill could have. Their lordships would, in the course of a few days, have this bill before them; and this was an additional reason why he wished to delay the bill which stood in the order of the day. He thought it advisable not to embarrass the measure which was about to be passed; and he should be sorry to see any thing done which might tend to counteract its operation, or prevent experiments from being fairly made under it. Having again declared that he approved of the principle of the present bill, and that his proposing to postpone it to next session arose from no objection but as to the fitness of the time for considering the measure, he would move, that it be committed this day three months.
The Earl of Lauderdalesaid, he knew not what might be the merits of the bill now in progress through the other House, nor did he know in what form it might come before their lordships; but of this he was convinced, that the measure, if once adopted, must be ruinous to Scotland. Ireland was differently circumstanced from Scotland, with regard to the banking system. There were in Ireland notes of the provincial banks, as well as those of the bank of Ireland, and that too in one and the same town. But it should be observed, that the bank of Ireland had a decided advantage over the provincial banks; for its notes were made payable only in Dublin, whereas, the notes of the provincial banks were convertible into cash at the places where they were issued. In fact, the branches of the provincial banks were made engines for providing gold for the bank of Ireland; and this he looked upon as a very great hardship to the parties concerned. He thought it only fair that a clause should be introduced into the bill, empowering the provincial banks to have their notes payable at head quarters, upon the same principle
560
as that acted upon by the bank of Ireland.
The Earl of Limerickrejoiced to find that the measure proposed by the noble marquis was not likely to pass into a law this year. He believed that no measure was more pregnant with danger to the prosperity of Ireland than this; and he hoped, if it was introduced next year, that their lordships would not hesitate to put it down. He owed a debt of gratitude to Scotland for the determined opposition which the people of that country evinced on the occasion. The noble marquis had said, on a former occasion, that the Scotch wished to establish a Cordon Sanitaire on the frontier. Now he, for his own part, would willingly assist in the work. The notes of the provincial banks were eight-pence in the pound above those of the bank of Ireland, in consequence of their being convertible into gold at the places where they were issued.
The Marquis of Lansdownsaid, he was not now prepared to discuss the question as to whether or not notes under the value of 5l. should circulate in Ireland or Scotland. That was a subject upon which, as having been referred to a committee, he was not disposed to offer any opinion. But after the admission which was made by the noble earl opposite, as to the expediency, upon principle, of the measure now before their lordships, he should consider himself liable to the charge of determined obstinacy, if he pressed it at present; particularly when he hoped at a future time to have the noble earl's valuable assistance in carrying it through. He looked upon the measure as essential to the establishment of a sound circulation in the country. If notes were not payable at the places where they were issued, a species of circulation of a vicious nature must be the consequence. He would ask their lordships whether they ought not to guard against this, by preparing bankers to provide themselves with sovereigns to meet the change which was to take place? Let their lordships only look at what must be the state of Ireland if this bill should not pass. The bank of Ireland was not obliged to pay in gold at the places where its branch notes were issued; and the state of her circulation might thus be exposed to the greatest danger. The bank of Ireland, with this exemption in its favour, might be able to extinguish all the provincial banks, and obtain a complete monopoly. Ireland, in fact, might thus be left without any circulating medium

561
except paper. Would any one say, that the provincial bank might not alter the form of its note in the same manner as the bank of Ireland had done? What was there to stop that establishment from making its notes payable in some remote part of Ireland, or even in England? If this were done, then the whole circulation of Ireland would consist of paper not convertible into gold. As the law now stood, be could not blame the persons who should take a step of this kind. The bank-notes might be so framed that the people of Ireland could not obtain payment for them without sending to Worcester. He was sure that the noble earl opposite must be aware that this was a state of things, the occurrence of which ought to be carefully guarded against. Until something was done to amend the law, the banking establishments, and the currency, in different parts of the united kingdom, would be left in a very anomalous state. While the bank of Ireland was relieved from paying in gold, the provincial bank was paying. The bank of England and country banks were to pay in gold, while the whole circulation of Scotland would continue to be paper, and the notes of that country might inundate the whole of the north of England. It was certainly to be expected, that the Scotch banks would be ready to communicate to the English counties some of that convenience winch arose to persons in trade from a paper circulation, and which would be very willingly accepted. This operation of the Scotch banks would seriously clash with the great object of the noble earl opposite. Hoping the noble earl would take into consideration whether some measure could not this session be adopted to correct the great inconvenience which had been pointed out in the circulation of Ireland, he would agree to the motion for postponing the committee on the bill to this day three months.
The Earl of Rosslynobserved, that, before the Bank Restriction act, in 1797, the Scotch circulation was the same as at present, and yet that the Bank notes had not driven away gold from the borders.
The Earl of Liverpoolreminded the noble earl that, previous to 1797, the country had not been deluged by paper. The case might be very different now, as after the English counties had been so long accustomed to a paper circulation, the introduction of the Scotch bank-notes would be more easy. He agreed, how-
562
ever, that there was no pressing danger at present, as the English paper circulation was to be permitted to continue for three years.
The Lord Chancellorconfessed that there would be a difficulty in legislating for the intermediate places between Yorkshire and the borders, as the notes being Scotch, it would be in their very nature to travel south [a laugh].
The amendment was agreed to.