SCOTCH BANKING. (Hansard, 26 February 1847)

The EARL of EGLINTOUN

rose to move for correspondence relative to the Joint Stock Banks in Scotland and Ireland Bill, and in particular, that relating to the North British Bank. Many of their Lordships might not be aware that under the old system of banking, Scotland had trebled her wealth within a short period. In 1845, however, important restrictions had been introduced—restrictions preventing the establishment of Joint Stock Banks of issue for ever after; and in order to know why it had been interfered with, he was anxious to see the correspondence which had taken place between Her Majesty's Government and the bankers of Scotland, relative to the progress of the Bill of last year. At that time they had been much alarmed for the safety of their one-pound notes; but they had been so pleased at finding them left untouched, that they did not carry on their opposition to the other portions of the plan with the vigour which they ought to have done, and a measure was carried which infringed on the system so long and so advantageously in use. By the Act for regulating Joint Stock Banks in England and Ireland, the paper circulation of Scotland was restricted to what had been the average of the three years previous to 1845; above that amount any issue must be based upon gold. He must confess that he did not think a case had been at all made out for meddling with the Scotch currency; however, as the mischief had been done, they tried to make the best of it. Had there been any failures of banks—had there been any distrust shown, or any disapprobation expressed as 521 to the old system, by the people of Scotland, then probably some interference might have been justified; but the case was wholly otherwise. The paper circulation in Scotland did not exceed three millions, and the people had perfect confidence in it. There was, therefore, no reason whatever for meddling with the system. But in 1845 a fresh Bill had been brought in. Stirring events followed, and it was believed that that Bill had been abandoned. However, their old enemy suddenly and unexpectedly reappeared under the auspices of a new Ministry, and was passed through the House of Commons with that rapidity which characterized the progress of measures introduced at the fag-end of a Session. He had then lost all those who had acted with him in opposition before, and he stood alone, with the exception of the assistance he received from the noble Earl opposite (Earl Radnor), who had always been consistent in his opposition to any interference with the Scottish banking system. Upon the Bill reaching their Lordships, he had urged the propriety of delay; but upon the day appointed for the second reading, two gentlemen, Messrs. Tennant and Drew, directors of the North British Bank, waited upon him, and stated that the committee of bankers in Scotland were not only willing to withdraw their opposition to the Bill, but that they were most anxious that it should pass. Under those circumstances he refrained from inflicting a speech upon their Lordships, and the Bill passed without that opposition with which he had threatened it; but no sooner had his reasons for so acting appeared before the public, than he received a letter from Mr. Anderson, the respected manager of the Union Bank, denying that the deputation had ever agreed to anything of the kind. Other information soon came to light. At a meeting of the North British Bank, it was stated that the arrangements which the bank had made with the late Government, had been confirmed by their successors, and that the establishment could still preserve its character of a bank of issue. He was, therefore, forced to believe that while Her Majesty's Government were proceeding publicly with their negotiations with the Scotch bankers generally, they were privately treating with the gentlemen who had made the erroneous statement. What those private arrangements were, could as yet be only a matter of conjecture, and therefore it was that he wished to see the correspondence for which he intended 522 to move. He thought such a course derogatory to any Government; and his opposition had been withdrawn upon a statement which turned out to be a gross misrepresentation. The evil effects of the interference had already been felt; and considering the misrepresentation to which he had referred—considering also the time at which the Bill was passed—he thought the people of Scotland had a right to have a reconsideration of the whole subject, and it was with that view that he moved— That an humble Address be presented to Her Majesty, for the Correspondence of the Scotch Bankers with the late and present Governments, relative to the Bill for regulating Joint Stock Banks in Scotland and Ireland, which was passed last Session, and in particular the Correspondence of any of the Directors of the North British Bank; also, for the Terms or Conditions of an Agreement or Arrangement said to have been entered into in favour of that Bank.

§ The EARL of CLARENDON

was sorry that he could not agree to the Motion of his noble Friend, not because there was any objection to the production of such a correspondence, but because it did not exist. He had applied to his right hon. Friend the Chancellor of the Exchequer upon the subject, and, after a search, he had informed him that he could find no trace of any correspondence of the Scottish bankers either with the late or the present Government. He had reason to believe that there had been various oral communications on the subject, but no record of them had been kept. His right hon. Friend remembered, that when the Bill was before the House, he had received several letters from persons interested in the subject referring to former communications; but when the Bill, then under discussion, became law, he conceived that these documents had lost their interest, and he therefore destroyed them. He could not follow his noble Friend through the details of the matter; but he must beg leave to differ with him as to the manner in which the Bill had been brought forward and carried through Parliament. If he remembered rightly, the Bill affecting Scotch banks was introduced in 1845, and then it was frankly avowed that some arrangement was about to be made with the North British Bank. The then Chancellor of the Exchequer was told that that bank was then in an inchoate state; that from some reason or other they had not then been able to commence business. There was no secret made of the matter; no secret arrangement was made with that bank by the late Government; all that was 523 done in respect of it was done openly and avowedly. From some cause the Bill was postponed; but notice was given, that it would be reintroduced in 1846; and it was at the same time announced, that it would be made retrospective, and take effect from the day contemplated in 1845. The Bill was accordingly introduced early in the Session of 1846, and read a first, and, he believed, a second time; but from the great pressure of business in that Session, its further progress was postponed. His right hon. Friend the Chancellor of the Exchequer, on entering office, considering the Bill one of a most useful nature, and likely to benefit the people of Scotland, proceeded with it, but not in a manner that was obnoxious to the charges brought against it by his noble Friend. Notice was given that the Bill was to be proceeded with; and a deputation of bankers, not consisting only of Messrs. Tennant and Drew, but of representatives also of the joint-stock banks, came up from Scotland, and had several interviews with the Chancellor of the Exchequer. His noble Friend seemed to accuse Messrs. Tennant and Drew of making some misrepresentation to him. [The Earl of EGLINTOUN: Hear, hear!] If they were wrong in their statements, most undoubtedly his right hon. Friend the Chancellor of the Exchequer shared in the error; for he laboured under the same impression as they did in making the statement. A legal point had been raised, and the deputation had promised to attend at the office of his right hon. Friend to meet the Lord Advocate to consider it; but when the day arrived, the deputation had gone home, and his right hon. Friend received a letter from Mr. Anderson, dated Liverpool, in which he stated that the deputation left the whole matter in the hands of the Government: under these circumstances the Bill had passed without opposition. He was sorry to hear that evil effects had followed from the measure. He could assure his noble Friend that no complaints had yet reached the Government from Scotland.