Sitting of 12 July 1811

CIRCULATING MEDIUM.
Earl Stanhopesaid he felt it his duty to bring forward some further propositions respecting this important subject. What he had proposed already, what their lordships had clone in consequence, and what, he trusted, the House of Commons would do before the close of the session, was by no means sufficient for the attainment of the object he had in view. This would be found so, The Bill which he had proposed, he, from the beginning, had expressed his wish to be understood so, was only an incipient, an introductory measure, and something farther was essentially necessary to follow upon it. In effect, if he might be allowed to speak figuratively, what he had proposed was no more than a palliative remedy—a plaister for the wound; nay, a plaister merely calculated to keep the wasps and flies from the wound until the next session of parliament. What he proposed now, was a number of propositions, which he wished the House would order to be printed, in order that they might be generally known and considered, not only by their lordships but by the public at large. This he meant as the foundation of a general and comprehensive system, for securing an efficient and never-failing circulating medium to the country, which was so necessary under its present circumstances, when, from various causes, it was impracticable to use what were technically called the precious metals, as such. Under the present system, it would be in the highest degree unjust to render the Bank notes a legal tender. He meant generally, as individuals might easily be placed in circumstances, with reference to the possibility of a fictitious or forged note being passed upon him, that whether they refused or accepted the tendered note, they might be equally losers. With respect to the public creditors, they might safely be rendered a legal tender, because their payments coming directly from the Bank, there was no fear of forgery. But the system which he proposed to substitute, and which it would be found ere long necessary to adopt, or something like it, was such as would do away all apprehensions of the kind. The system, as recommended by his Resolutions, was, to constitute branches from the Bank of England, in the different counties, so that they might pervade the whole—that books of

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credit should be opened at various certain place, where notes to any amount, or for very small sums, should be received from individuals, at their pleasure, and an equivalent credit given to them in the Bank Books so distributed, for the money lodged—that the power of transfer should be allowed from county to county, or from place to place. This was a system which would preclude the necessity of regarding gold, silver or even copper, as the fixed and invariable circulating medium—a system, which recent and long continued experience had proved to be utterly impracticable, on account of their fluctuation in price and occasional scarcity. It would fender forgeries impossible, and put it out of the power of invasions, insurrections, or domestic violence from producing any fatal or dangerous effect. In this view, it was proposed, that triplicates should be made of the entries of credit; one for account of the individual party; a second for the general Bank in London; and a third for conservation in the Tower. Under such a system, it would not be necessary to limit the issues of the Bank, as suggested by his friend, a noble marquis then absent, to their present amount. They might be allowed a much larger circulation. All this proceeded on the conviction of their solvency, which they would be afforded frequent opportunities of proving. And for the farther satisfaction of parliament and the country, the government and company should be required to lay before both Houses, at an early period in each session, an exact account of the numbers in circulation. Under such a system, a plan might be adopted to prevent forgeries as to the notes themselves. A practice, which the present wretched engravings of those instruments only tended to encourage: and which the directors seemed to adopt from a principle of mistaken economy. The noble earl then read his Resolutions as follow:
1. "That an internal circulating medium, which shall be a legal measure of the relative value of different commodities and things, is essential for transacting the private affairs of individuals, and the public concerns of the state, and for enabling debtors to make to each of their respective creditors a legal tender in satisfaction of his or her just demands, without any unjust loss to any debtor on that account.
2. "That it is most highly expedient that such internal circulating medium and
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legal measure of the relative value of different commodities and things, be so contrived as not to be unsteady, fluctuating, and variable; but to be fixed and invariable, so far as the nature of things can possibly admit.
3. "That two or more circulating mediums, which, under any given circumstances whatsoever, can vary considerably in their relative value when compared to each other, cannot, under such given circumstances, exist together, so as to form together a fixed, invariable, and proper circulating medium, and a proper legal measure of the relative value of different commodities and things.
4. "That it is, therefore, highly expedient, that whenever (for the sake of more convenience) different internal circulating mediums shall be by law either established or allowed, some one only of them be made the permanent legal standard measure of the relative value of different commodities and things.
5. "That it is therefore expedient that such permanent legal standard measure as aforesaid be so contrived as to be divisible into such parts as may bear to each other any requirable proportion, in order not only that all round sums, but likewise that all fractional sums whatsoever, may be paid and satisfied by means thereof.
6. "That is it moreover expedient that such permanent legal standard measure, and circulating medium as aforesaid, be so contrived as to be easily, rapidly, and safely transferable, without expense, from, any one person to any other person, and from any one part of the country to another, either for the use and benefit of the same individual, or of any other individual, free from any depreciation, defalcation, or discount, and free from any loss by forgery, or by wear and tear, and also free from any danger of loss that might arise from housebreakers, highway robbers, mobs, insurrections, or even from foreign invasion in any particular district, and likewise free from any loss that might arise from the accidental or intentional destruction of any dwelling-house, banking-house, or other building, by fire or otherwise; and, moreover, free from any loss of interest on any quantity, however considerable, of circulating medium, which shall or may hereafter exist, and be transferable in any of the various ways above-mentioned, and (above all things) free from being affected by the course of all or any of the foreign exchanges.

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7. "That neither gold nor silver ever did possess, or ever can possess, the various important and requisite qualities which are above particularly specified; and that, not only each of those precious metals (technically so called), but likewise every one of the other articles of merchandize, by means of which British debts to foreign nations can be discharged, is (from the irremediable fluctuability of their value, arising from the necessary fluctuability of the course of foreign exchanges) an improper and an unfit legal standard to serve as a fixed, invariable, and permanent measure of the relative value of different commodities and things within the country itself, which is the grand and essential end and object of an internal circulating medium, whether the same be imperiously wanted for the use of individuals within this realm, in order for them to purchase from each other, either the objects of luxury, or even the necessaries of life, or whether such internal circulating medium be required for the indispensible services of the state.
8. "That the want of gold in circulation, in this country at present, prevent bankers and other persons, who may have large payments to make, from making, in any such case, any legal tender to the amount of the sum of money so due and payable, and in discharge thereof; and that the same is a grievance of such an immense magnitude, that it requires a wise, speedy, radical, and efficacious remedy, which shall completely prevent the possibility of this nation being ever again deprived of its proper internal circulating medium either from the circumstances of the balance of payments, in respect to foreign countries, being at any time against us, which must ever of necessity tend to cause our gold to be exported, in order to adjust such balance, or from the circumstance of any temporary alarm which may always cause our gold to be hoarded; or from any other circumstance or combination of circumstances; and that parliament should take into its most serious consideration this important subject, and should adopt such measures as shall effectually prevent the return of so intolerable an evil.
9. "That it would be an act of the most manifest injustice, and an act likewise highly impolitic and rash, if parliament were to make, by law, either bank notes or any other paper circulating medium, a general legal tender, on. account of this
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obvious circumstance, viz. that the person to whom such a tender may be made, may not be certain that such note or other paper circulating medium, is not forged.
10. "That for the various weighty reasons aforesaid, it is highly expedient, that a permanent mode of making payments be established, by means of which mode, legal tenders, even to the largest amount, may be made, without gold, as gold ought never again to be relied upon for that legal and necessary purpose, on account of the impossibility of procuring gold at all times in sufficient quantity; and by means of which same mode, legal lenders for fractional sums may be made, without either silver or copper, and by means of which same mode also, legal tenders may be made in all countries, without tendering in payment either Bank notes, or any other kind of circulating paper whatever.
11. "That, in order to satisfy the public respecting the solvency of the Bank of England, and to prevent all future apprehensions upon that important subject, it is expedient, that the governor and company of the Bank of England be by law-compelled to lay before both Houses of Parliament in the first week of every session of Parliament, a full, clear, luminous, and satisfactory account of the state of their affairs, and that a maximum be always fixed by law with respect to the number and value of the notes, which may be issued by the said governor and company, and which may at any one time be out in circulation.
12. "That it is expedient, that the Bank of England shall establish various branches throughout the whole country, and in many parts of the metropolis, and shall cause books to be opened in each of those places; and that persons possessed of Bank notes shall be entitled, upon depositing such notes, to have a credit in the Bank book at the place where such deposit is made, equal to the value in pounds sterling, which is specified in such notes to be payable to the bearer on demand; and that every person, having such credit so entered to his account in any one place as aforesaid, shall be entitled to transfer the whole of such sum so accredited, or any part thereof, either to his own account or to that of any other person at any place where any such book is opened.
13. "That, for the perfect security of all persons who shall at any time become possessed of any such credit as aforesaid, it is expedient that triplicate correspond-

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ing entries be made, the first of which shall be on the Bank hook at such place, the second of which shall be delivered to the person who shall have brought the Bank notes as a certificate of the proper entry having been made, and the third of which shall be forthwith transmitted to the original Bank of England in London, in order to be by them filed and daily transmitted to the Tower of London, for safe custody, after such last mentioned triplicate shall have been duly recorded in the books at the Bank of England itself, and that every transfer be made in like manner.
14. "That, as under proper regulations in detail, such book entries and such book transfers cannot ever be forged, it would be highly expedient that the law should authorise legal tenders to be made, by tendering such a book transfer as aforesaid of the sum due in such form and manner as shall hereafter be prescribed by law."
The Earl of Lauderdalestrongly objected to their lordships adopting any proceeding whatever, in the present instance, with regard to the propositions of his noble friend. He should rather think what his noble friend meant was, that what he now said should be regarded as a species of notice of his intention to submit such propositions on some future day, than as expressive of his desire to obtain a vote of the House on topics of such extent, importance, and magnitude, without any previous notice being given, in the present circumstances of the session, or in an attendance so extremely thin as the present. For his part, he could not agree in acceding to any propositions which involved the supposition of the insolvency of the Bank of England. This was a consideration which he, and those with whom he acted, in all the discussions which had taken place on the subject, had never called in question, however they might differ in sentiment as to the restrictions upon the Bank. Neither could he accede to any proposition for the legislalure giving its sanction to a principle which militated against that of the precious metals being the preferable circulating medium. These were points of weighty importance, not to be lightly agitated, and still less lightly decided upon. What struck him as the most advisable way of proceeding at present was, to move to adjourn the debate to a future day, he should suggest Tuesday.
Earl Stanhope, in explanation, deprecated the idea of any thing being advanced in the Resolutions which went to infer a want of solvency on the part of the Bank; on the contrary, the whole of his proposed system went upon the principle that the Bank was amply solvent, and the effect of what he proposed would be to augment and establish its solidity; and the more to evince that such was his conviction, he was ready to strike out those words from the Resolution which possibly gave rise to the idea. He requested his noble friend to recollect he had offered no motion upon. the subject, tending to imply the sanction of the House. He trusted, that whenever this important subject should come to be discussed, it would be considered more in the spirit of a deliberative than a debating assembly. As to the proposed mode he had no objection; and moved, accordingly, that the Lords be summoned for Tuesday next.—The debate arising on the above was then ordered to be adjourned till Tuesday, and their lordships to be summoned for that day.