Lords Sitting of 20 February 1826

CORN LAWS.
Lord Kingsaid, he had a petition to present from Brecon, in the name of the town; but whether it could be received as such, or only as the petition of the individuals who signed it, he did not know. It was a petition against what he called the landlords act—the job of jobs—the Corn laws. The noble earl opposite had expressed a hope that this subject, when it came to be discussed, would be considered dispassionately; and, for his part, he was very desirous to attend to the recommendation, when the day of discussion should come. The question was—when would that be? In the course of last session he had been given to understand, that the great dis-
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cussion was to take place in this; but now, when the appointed time had arrived, he was given to understand, that there could be no discussion until the next session. That was as much as to say, that the parliament being now on its last legs, or even on its death-bed, the noble earl was unwilling to disturb its last moments, by giving them this viaticum in articula mortis. Knowing how much the noble earl disliked popery, he could not help being surprised at finding that so great an abhorrer of the church of Rome should be guilty of popish practices. There was no doubt, however, that the noble earl had been dealing in auricular confessions, and had thus learned the sentiments of his landed friends; but, on the subject of the Corn laws, he had found their hearts obdurate, and that they were not in a fit state to receive absolution, or the viaticum. He allowed that the present parliament had done some good works; but it appeared at last to be found wanting in faith; and what were good works without faith? He, however, liked this parliament for the good it had done, as much as he detested the bread-taxing, and six-act parliament of 1815, which, thank God, was now dead and gone, and consigned to the execration of posterity.

BANK CHARTER BILL.
On the order of the day for the committal of this bill,
Lord Kingwished to say a few words before their lordships went into the committee. He had heard a great many bad measures defended in that House by good speeches, and a few good measures also supported by good speeches; but, whether the measures were originally good or bad, it often happened that they had the same result. When a good measure was brought forward, it was sure, some how or other, to be frittered away and defeated. A striking instance of this had just occurred. On Friday night last, when the noble earl had proved to demonstration the advantage of the measure he was submitting to the House—when he had clearly shown that it was impossible for one and two pound notes and sovereigns to circulate together, his whole plan was upset. At the very moment when he was in the heart of his demonstration, the noble lord's lieutenant in another announced that the ribbons of notes of the Bank of England should have a preference over coin. He was sorry to find all the noble earl's arguments

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thus overthown and contradicted by his own act. He never could have expected to see imbecility so completely stultify its own measure. He thought that the noble earl and the rest of the House had come to the understanding, that the country was to return to a circulation of specie: he imagined that this was a conclusion to which they had all come. It was allowed that the Bank of England had issued paper to excess, that the country banks also had issued paper to excess, and that there was an excess of paper currency all over the country. Now, however, he expected he should be told that the Bank of England was conducted on the best of all possible systems; that the country banks were managed in the most perfect manner; and that the best of all currencies was that which was formed of those miserable one and two pound notes which the other day, had been so much reprobated. He was afraid that a large portion of the landed interest thought it their interest to keep up the small-note circulation. They liked the high prices of one season without perhaps liking the low prices which followed. It was very delightful, certainly, to have the very good year of 1817, but it was followed by the bad year of 1819, and by the low prices of 1820, 1821, 1822. They might be pleased with the good high prices of 1824 and 1825, but they might be followed by the low prices of 1826. They preferred a machine which worked by jolts and jerks, to one that was even, smooth, and steady, in its motion. It had been declared, that the currency was to be regulated by a gold standard; and so it was; but it took long periods of vacillation—sometimes it was above the standard, sometimes below it; and it was always brought back by violence and disorder. A more dangerous and unsettled and insecure state for property, could hardly be conceived. Though the currency was to be conformable to the currency of the continent, it never was made so but by violent contractions at one time, and hasty extensions at another. There was one blast furnace in London, and eight hundred, for he believed there were so many country bankers, at different parts of the country, at one time all blowing till they had brought things to a white heat, and then lying idle, or not doing half the work they ought. The only cure for these irregularities was, to have an extensive metallic currency. He should like to see
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twenty or thirty millions of sovereigns in circulation. With a basis of that nature, we might have steadiness of price, and speculation could not thrive. The Bank circulation was confined to a few million sovereigns; and while it was so limited, it was impossible that the motion of the machine should not be irregular, and that it should not be perpetually liable to jerks, and jolts. He most willingly concurred in the proposition of the noble earl, that there ought not to be any one or two pound bank notes in circulation: but, the noble earl now abandoned his own preposition; in the language of a once celebrated parliamentary orator, "turned his back on himself," and was willing to allow the Bank of England one-pound notes to remain in circulation. He would willingly concur with the noble earl, should he even go further; and would agree to put down the five, and even the ten pound notes.
The Earl of Liverpoolobserved, that the noble lord, as well as others, had fallen into a mistake with respect to the proceeding which had taken place elsewhere. Nothing had been done or proposed relative to the currency, which was a departure from the principles on which the measure brought forward in another place, or the bill before that House, was founded. He entirely agreed with the noble lord in opinion, that a metallic currency and paper of the same denomination could not circulate together. But, if the noble lord had done him the honour to attend to what he had stated on Friday last, he would not have had occasion to refer to what passed in another place on the subject of the power intended to be given to the Bank. The noble lord would have found, that lie (lord L.) had made the very same proposition at the close of his speech. The object in bringing the measures now before parliament was to get rid altogether of the small notes: but, as that could not be safely done at once, it was thought adviseable to make the circulation of that description of currency finally determine at the expiration of three years from the present date. The principle on which the measures were grounded, was the entire extinction of the one and two pound notes; but it was thought desirable that this object should be accomplished gradually. With regard to the Bank of England, he wished their lordships to recollect, that that body had, by a law passed in 1822, the power of

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issuing one and two pound notes. But, notwithstanding the full possession of this power, no use had been made of it by the Bank until December last; and then it was not exercised, until after consulting with the government. It was then thought, in the state of embarrassment which existed, that an issue of small notes would be advantageous. The measure was resorted to as a mere temporary expedient, with a view to administer some relief to the commercial pressure which was experienced. He thought it right to say thus much on the subject of the late issue of small notes by the Bank of England, as it was plain that they had no wish to circulate such notes. Indeed, after what had passed between the government and the Bank, no proposition was more clear to him than that it was not only against the wish, but against the interest of that body, to circulate one and two pound notes, and that they had no disposition to extend their issues. Now, as to the ground of the measure to which the noble lord had alluded, and which had been announced on Friday night; it had been found that many of the country bankers, instead of being disposed to let their notes run out, had put an end to their circulation altogether. That, however, was far from being the intention of those who framed the bills before their lordships and the other House of parliament. In their view of the subject, it was necessary that the change in the circulation should be gradual. It became desirable, therefore, to meet the possible case of a deficiency of circulating medium, which the course taken by some country bankers might occasion, to give to the Bank of England the power of issuing small notes for a certain time. This was merely a measure of precaution, to which the Bank had no wish to resort, but which it was thought right to adopt for the convenience of the country. He thought it necessary that a clause should be introduced, giving the Bank the power described; but, when the bill should come before their lordships, he would have no objection to accompany it by any guards which might be considered proper. If the bill did not come up to that House in a satisfactory state, their lordships might amend it by a clause requiring the Bank to return weekly or monthly accounts of their issues. To this the Bank would have no objection; for he was sure they had no wish to extend their issues beyond what the convenience of the country might
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require. With respect to what the noble lord had said of the mischievous consequences of fluctuation, he perfectly concurred with him. The object of the measures before parliament was to prevent it as far as possible.
The Marquis of Lansdownbeing persuaded that the noble earl was sincere in the object he professed to have in view, felt it impossible for him to suppose that that noble earl could wish to delegate to any individual or body whatever, the power of defeating those measures which he had brought forward, for the avowed purpose of carrying his object into effect. He was willing to believe that it was not the wish of the Bank to abuse the power which might be given, and he was sure such could not be the wish of the noble earl; but, the noble earl could not fail to perceive, that if the clause he had described should pass, unguarded by any restrictions, he would be doing nothing less than giving to the Bank of England a power to defeat the whole of his measure. The noble earl had admitted the impossibility of looking forward to the circulation of small notes and specie, and that the only remedy for this evil was to provide for the influx of gold to such an extent as to supply the place of the small notes. Now, for gold to flow into the country while small notes circulated, was impossible. It would, therefore, be necessary to guard most carefully against the increase of these notes, if the measures now in progress were wished to be effectual. And here it was to be recollected, that their lordships had not the same means of ascertaining the quantity of small notes of the Bank of England in circulation as they had of the country banks, in consequence of the Bank of England not being under the necessity of going to the Stamp-office, but paying a composition instead of stamps. Supposing, then, the Bank were disposed to take advantage of the power about to be given, they would have time enough between this and October to deluge the country with paper sufficient to last during the whole of the three years in which the small notes were to be allowed to circulate. There would, in that case, be no gradual reduction of the small-note circulation: but, at the time when parliament was recognizing the principle, that the circulation of this-description of paper was an evil, it would be most inconsistent to delegate to any body an unqualified power to defeat the

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measures adopted in pursuance of that principle. The power suggested was one over which parliament could not too strictly watch. However, he was not prepared to say that it might not be so guarded, as to remove much of the objection which he had to it. That the noble earl contemplated the imposing of the necessary guards was what he was bound to suppose; and he trusted parliament would never agree to such a clause, unless it were so accompanied.
The Earl of Liverpoolrepeated, that the sole purpose for which the clause was proposed was, that means might be possessed of guarding against a possible danger. He agreed with the noble marquis, that the power given to the Bank should be accompanied by proper guards, and expressed is willingness, if the clause did not come up in a satisfactory shape, to concur in any amendment which their lordships might consider necessary.
The Earl of Roseberrydid not mean to enter into any discussion as to the original cause of the commercial difficulties, but would remark, that it appeared to him that the present distress was different from that which first occurred, which was confined to a rush on the banks. He thought that some of the measures of ministers had tended to aggravate the distress, but considered the present a good one, but did not approve of its intended extension to Scotland. If their lordships wished to place the banking system of England on a solid fooling, it should be their object to put an end to the pecuniary relations between the Bank of England and the government. He agreed with those who thought that the transactions of the Bank, with regard to the military pensions and the reduction of the interest of the debt, had contributed to the present difficulties; for the circumstance of the Bank becoming purchasers occasioned large issues of notes on inconvertible securities. It was said, that the Bank had the power of selling; but, as the sale of the annuities had been previously attempted by government without success, it was not very clear how the sale was to become so easy a matter to the Bank. With regard to the measure for calling in the small notes, he begged to be understood as limiting his approbation of it exclusively as it applied to England. Every reflecting person acquainted with the state of Scotland, attributed its rapid prosperity, next to the free institutions which, in common with the rest of
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the empire, it enjoyed, to the system of banking which had long been carried on in that country. He could not, therefore, hear, without alarm, any hint thrown out of an intention to interfere with the currency of Scotland. The noble earl recommended the repeal of the usury laws, the existence of which produced great embarrassment. If the interest of money were placed on a proper footing, it would find its way where it was wanted, and carry relief with it. He doubted whether it would be proper to extend the present measure to Ireland.
The Earl of Limericksaid, he was one of those who considered that a metallic currency would be most beneficial to the country, and that such a currency could never exist with a currency of paper; but, in Ireland things were very different to what they were in England. There they had no other circulation but the small notes of the Bank of Ireland and the provincial banks, and the withdrawal of them without a full supply of gold would be ruinous to the last degree. He hoped, therefore, that government would take especial care to provide an ample currency of coin, before they withdrew that of the one and two pound notes.
The Earl of Blesintonsaid, that the only danger to Ireland was the withdrawal of the small notes before a supply of gold had been sent to replace them. There had not been for a long time any gold in the south of Ireland, but in the north some gold had always been in circulation. In the south, notes for so low a sum as 3s. 6d. had been in circulation. Nothing, he thought, would suit Ireland better than the introduction of silver as a legal tender to a certain extent.
The Earl of Liverpoolassured their lordships, that when a proposition for extending the measure to Ireland should be brought forward it would be his endeavour to give all possible attention to the peculiar circumstances of that country. If Ireland was now recovering from difficulties, the noble lord, he doubted not, would allow that that favourable circumstance was greatly owing to the introduction of the system which it was the object of the bill to accomplish for this country; namely, that of allowing banks to be established by joint-stock companies. As to the paper circulation, its evils never would be cured until it was got rid of by law. It was a curious fact, that after the Bank Restriction act, and during the war,

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when not a guinea was to be seen in this country, rents were all paid in the north of Ireland with gold. This supported the view he had taken, namely, that gold and paper could not exist together; either from some law, or rather he believed from the practice of the people, they adhered to the gold circulation, and bank notes were nearly unknown.
The Earl of Lauderdalesaid, that one cause of that curious fact alluded to by the noble earl, was this, that the landlords of Ireland would only take their rents in gold, so that the tenants were compelled to pay them in that manner. This might have satisfied the noble earl; but, if he had gone further, he would have discovered a circumstance quite as curious as the fact itself; and that was, the mode in which these payments were managed. When rent-day approached, the sum of five hundred guineas was sent down from Dublin, and given to one set of tenants, in exchange for their notes; they then paid their rent in gold; which, as soon it was thus received, was handed to another set of tenants in exchange for their notes; this being repeated till all the tenants had paid their rents, it might be literally said that they all paid their rents in gold. The money was then returned to Dublin, from whence it came, there to remain till another-rent day should require it to make a second journey into the country.
The Earl of Blesintondenied this statement, which he characterised as a mere piece of ingenious humour.
The Earl of Limericksupported this denial, declaring, that to his certain knowledge, there was not at the time alluded to a single guinea in the south of Ireland.
The Earl of Roseberryasked whether it was the intention of ministers to submit to parliament any measure for the suppression of small notes in Scotland, and if so, what was the nature of that measure?
The Earl of Liverpoolanswered in the affirmative as to the first question; but as to the second, he was not prepared to say what would be the exact nature of the measure he should offer.
The Earl of Lauderdalerose, to state his conviction, that there was no man of any class, or of any party, who would for one moment hesitate to express his complete satisfaction with the state of the currency as it at present stood in Scotland; nay, who would not declare it to be
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his conviction, that that part of the kingdom owed the prosperity she was enjoying to the mode in which the circulation was there managed? He would venture to say, that there was no manufacturer of any description in that country who would not tell the noble earl, that the ruin of that branch of manufacture to which he belonged would inevitably follow, if the present circulation were meddled with. He conjured the noble earl and the House to ponder well before they adopted a measure calculated to overturn the prosperous condition of so important a portion of the kingdom.
The House having gone into a committee,
The Earl of Liverpoolsaid, it was now his duty to call their lordships' attention to a clause which, upon consideration, it was deemed adviseable to introduce on the subject of branch banks to be established by the Bank of England. It was his opinion, that the Bank had already the power of establishing branch banks in any part of the country which they thought proper. A doubt, however, existed in the mind of the highest authority, upon such a subject, that without some specific clause for the purpose, they would be prevented from giving effect to that power. They had the power to appoint agencies in the country; but then it was doubted whether this bill, in its present form, enabled the Bank to give them the authority of acting on their own discretion, and not as mere agents; for without that authority they could not answer the purpose contemplated in the formation of them. On the authority, therefore, of the opinion to which he had before alluded, namely, that without a specific clause for that purpose they could not exercise a discretional authority, a clause to that effect had been drawn up, which it was proposed to introduce into the bill, in order to enable the Bank to establish branches throughout the country, on such a footing as would render them beneficial to themselves and of important advantage to the country. If, however, it should not lead to the establishment of branch banks by the Bank of England, he trusted that they would have liberality enough to say, that although they themselves were not disposed to act upon this plan, they would not stand in the way of allowing the formation of other banks, on a principle calculated to afford the same advantages to the public. He

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was anxious that they should have the opportunity of trying the experiment; and should be sorry that there should be any thing in the state law that would operate as an obstruction to their so doing. With that view, he would propose the introduction of this clause, when the report should be brought up on Friday.
The Marquis of Lansdowndid not now mean to offer any objection to this clause. He would, however, suggest to their lordships the propriety of introducing a clause providing, in case the Bank of England should think proper to establish branches, that they should be bound to pay their notes in gold, in the same part of the country in which they had been issued. Great inconvenience had been experienced in Ireland in this respect, in consequence of the Bank of Ireland having attempted to refuse paying their notes in gold in the country where they had been issued by their branch banks, stating that they were only bound to pay them in Dublin. The point, however, he believed had been given up by the Bank; but then he had been given to understand, that they had attempted to evade that, by issuing Bank of Ireland notes dated from Dublin. He should hope that no such evasion would be attempted by the Bank in this country; and that it would be provided by the bill, that they should pay in gold in those places where branch banks would be established. He trusted the noble lord would see the importance of introducing such a provision; because, without it, whenever a panic occurred in any part of the country, a run would take place upon other banks, while none could be made upon the branch banks of the Bank of England, inasmuch as they could only be compelled to pay in gold in London.
Lord Ellenboroughwas of opinion, that this was the most important clause in the bill. He was disposed to give every fair facility to the establishment of branch banks; but he greatly feared, that without a very considerable enlargement of the capital of the Bank, branch banks could not be established with any benefit to the country. Under the present system, the branch banks would be counteracted by the country banks; and ignorant of the extent of their circulation, and unable to meet it, they would find it impossible to do that duty which the country would require at their hands. Now, he thought these branch banks ought to have a metallic capital, that would be capable of
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driving the paper of country banks out of circulation. The more he considered the subject, the more he was convinced, that the fluctuations attending the introduction of this measure would be very great, and he thought it ought not to be introduced unless it could at once be rendered effectual.
The bill was ordered to be recommitted to-morrow.