BILLS OF EXCHANGE. (Hansard, 31 July 1840)

§ Lord Wharncliffe
objected to this bill being passed without due inquiry being made as to the grounds on which the usury laws were to be done away with. He believed, that he should be able to produce before a committee of inquiry, some, most grievous cases of oppression upon tradesmen and small annuitants by 1165 parties under the protection of this law. All he asked was, that this bill should not be prolonged for a greater lime than was necessary to meet the bills now out.

§ Lord Ashburton
said, he had listened with some anxiety to hear from the noble Marquess opposite what possible inconvenience could result from the postponement of this bill for another Session. The noble Marquess was greatly mistaken, if he supposed, that the great mass of the business of this country was carried on upon bills of twelve months, or six months, or even of longer date than three months. The information which he had received, and upon which the Government had proceeded in framing this measure, had come from bankers and great money-lenders, who all had a distinct interest in making what were formerly considered usurious practices legal. The greatest mischief had resulted from lending money at a high rate of interest, and the conduct of the Bank of England in this respect had led to its own embarrassment, and driven it to within a hair's breadth of stopping payment, and to the discreditable necessity of borrowing money itself. This bill would not correct the evils with which the money market was infected; it would only enable rich money-lenders to profit by the necessities of their poorer neighbours. The real question which their Lordships had to consider at that moment was, whether the noble Marquess had proved that there was the slightest necessity for hurrying this bill through Parliament within a few days of its prorogation. He earnestly recommended their Lordships not to think of extending the measure to the period proposed without further inquiry.

§ Lord Monteagle
rejoiced to hear that his noble Friends were disposed to entertain, even next Session, an inquiry into the operation of the usury laws heretofore, and into the effects produced by the alterations which had been made in those laws. With respect to the remarks of the noble Lord upon the evidence of bankers and great money-lenders, he would ask, was not their evidence one of the elements upon which legislation in this matter should proceed? But it would be asked, will you not hear the other classes who have paid large sums of money for the accommodation they have received? No doubt they ought to be heard; and at the same time it would be as well to consider whether 1166 under the former state of the law, they could have got any such accommodation at all. To a certain extent the principle of the usury laws had been abolished; for as soon as the Legislature had sanctioned the lending of money, it destroyed the principle of usury. Persons were not now compelled to pay more than 5 or 6 per cent, for loans. [Lord Wharncliffe: 50 or 60 per cent.] Was it possible to conceive that such was the case? Why, if 50 or 60 per cent, could be made in any branch, the effect would be to make all the capital of the country flow into that traffic. He would refer their Lordships to the evidence which had been taken on this subject. In 1832 evidence was taken before the Bank Charter Committee, upon the expediency, usefulness, and probable benefits that might be derived from an alteration of the law. In 1838 further evidence was taken, and the governor of the Bank of England was asked, "What effects do you think were produced by the repeal of the usury laws in relation to bills of exchange during the late commercial crisis?" The answer was, "I think the effect was very good in general, as a general principle of law." He was asked, "Do you consider the extension of that law with regard to ninety-one days bills to bills of a longer date advantageous?" The reply was, "Certainly, because otherwise Indian bills would be excluded." Their Lordships would find that Mr. Jones Loyd had given to the public in a printed paper the result of his experience of the pressure on the money market during the years 1838 and 1839, in which he remarked, "It is difficult to say to what extremity the Bank' would not have been, reduced, if there had not been a partial repeal of the usury laws." He admitted, that this opinion was mere authority, but had he nothing beyond authority? Let their Lordships look to the three periods of commercial pressure in 1825, and again in 1837 and 1839. He contended, that on such occasions the danger to the commercial interests of the country must be materially lessened by allowing money, like everything else, to find its value in the market. Let their Lordships look at the number of banking houses which failed in 1825, and compare them with the failures in 1837 and 1839. He did not say, that these circumstances were conclusive on the subject, but they were at any rate deserving of their Lordships' 1167 attention. He sincerely trusted, that the question of the propriety of a total repeal of the usury laws, would be fully investigated by a committee of their Lordships' House. On a subject of so much importance to a commercial country like this, the Legislature ought to make up their minds, and he did not think, that the continuing of a bill like the present from year to year, was exactly the way in which the question should be treated. He rejoiced therefore at the prospect of there being a full inquiry into the subject, and of an opportunity being afforded for a calm consideration of the policy of continuing the present relaxation of the usury laws, or of abandoning it altogether.

§ The Marquess of Lansdowne,
had no doubt that the capital which had come into the market since the partial repeal of the usury laws would not have been left unemployed, even if those laws had not been relaxed, but it would have gone to other countries, and have been invested in illegal and fraudulent speculations. The great merit of the present bill was, that it put an end to the great mass of illegal and fraudulent transactions which formerly were carried on. He was quite ready to close with the proposition made by the noble baron opposite, that the question of the operation of the usury laws, one most important to the interests of the country, should be the subject of a grave and full inquiry before a committee, and he agreed that it would not be desirable to consider it in connexion with the affairs of the Bank and the future administration of that body. He was perfectly prepared, therefore, to omit the word "two" in the bill, and continue the present law for one year longer only, with the understanding that in the course of the next session their Lordships should go into a full inquiry on the subject.

§ Lord Wharncliffe
said, that if the noble Marquess would confine the operation of this bill to one year, and would undertake that there should be a full inquiry next session, that would quite answer his purpose.