CURRENCY AND BANK NOTES (AMENDMENT) BILL. (Hansard, 28 August 1914)

THE MARQUESS OF CREWE

My Lords, it will be as well if I explain quite briefly what the object and purpose of this Bill is. The first power given by it is to enable the Treasury to call in, when 552 it desires, the currency notes which were distributed to the banks, as the House is aware, a short time ago. Those notes were somewhat hastily prepared, and those of us who have handled them will all agree that they are not securities of a very attractive kind so far as their outward appearance is concerned, and they possess, from the haste with which they were prepared, the grave defect of being easily liable to forgery. It is therefore desirable that, so soon as can be conveniently done and without causing any dislocation of the use of these £1 and 10s. notes, they should be called in and replaced by something not merely more sightly but also more generally serviceable. I ought, perhaps, to add that this action which is being taken is without any prejudice to the question which, like all currency questions, is one of great complexity and difficulty, as to whether £1 notes are to become in future part of our currency system, and, if so, whether they should be issued as Government currency notes such as these, or whether a system of £1 notes, if adopted at all, should become part of the Bank of England issue. Those are all questions for the future, with which it is quite impossible to deal at this moment. The operation of this particular Bill is limited to what I have stated.

But there is a further provision in the Bill which I ought to explain. When the notes were advanced to various banks on the previous occasion to an amount not exceeding ten per cent. of their total cash holding and their deposits, the actual notes were issued to them. That is a rather cumbrous arrangement, and an unnecessary one except so far as the notes are required for re-issue. It is proposed, therefore, to substitute for that system a system of certificates, which will be furnished to each bank on the same lines and in proportion to the securities which it is able to lodge, and will therefore relieve us from the necessity of handing the actual paper to them and them of the need of safeguarding it. These are the only two provisions of the Bill, and I hope that your Lordships will agree to pass it through all its stages to-day.