Sitting of 3 June 1828

SMALL. NOTE CURRENCY—CIRCULATION OF SCOTCH NOTES IN ENGLAND.
The Chancellor of the Exchequer, in rising to move for leave to bring in a bill "to restrain the Circulation of Scottish Banknotes in England," said, that when he first gave notice of his intention to submit such a measure to the consideration of the House, he had little reason to expect that it would be necessary for him to enter into any lengthened or detailed observations. He conceived that, after what had passed in parliament, no one would dispute the absolute necessity of withholding from Scotland the privilege of circulating notes in England, when parliament had already withdrawn such privilege from bankers resident in England. That principle appeared to be so manifest, that it seemed

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to him only necessary to read the act which had been passed on the subject, to put the House in possession of the objects of the law which he now proposed to submit to their consideration. He had imagined that it would have been only necessary for him to read to them the act which had been passed to prevent the circulation of small notes in this country, and to state the reasons for which that act had been passed, in order to satisfy the House that the law which he was about to introduce was calculated to answer effectually the objects which that act had in view. He had, however, been given to understand, that an hon. baronet proposed to avail himself of the present occasion to bring into discussion the whole question of the small-notes circulation of the country; and that he and others meant to take that course, with the professed intention of effecting the repeal of the act of 1826, which was passed to prevent the issue of small notes after the month of April, 1829, if the restriction of the circulation of Scotch notes in England were persisted in. Now, he felt it necessary to state the motives and circumstances which induced his majesty's government to follow up that course which was originally prescribed by parliament in 1819, was confirmed by the decision of 1826, and which he trusted that the good sense of the legislature, and the firmness of the government, would fully carry into effect in 1829.
Before he proceeded further, he could not avoid adverting to the accusation which had been some time since brought against his majesty's government, because they had not thought it necessary, at the commencement of the session, to state their intention of adhering to the law of 1826. They were told, that it was a duty which they ought to have performed to the House at the earliest possible day; that they ought, the moment parliament had met, to have stated their determination not to depart from the principle of the law of 1826. On that point he differed entirely from those who made the charge. He did not think that it was at all necessary for the government to state, at the opening of every session, what the system was, to which they proposed to adhere. Looking to the state of the public business in that House, he felt that it would be inexpedient to incumber and embarrass the legislature, by stating that the government did not mean to depart from this or from that
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principle; and, in his opinion, the government performed their duty properly if they stated, from time to time, as convenience suited, what alterations and amendments they meant to propose in the law. And if it were necessary to act thus in the ordinary march of legislation, it was still more necessary in a case of this kind, which involved so many interests, and embraced so many matters of the most delicate consideration, and excited so much apprehension and anxiety throughout the country, both with respect to the measures to be adopted on this subject, and the results which would probably flow from them. For these reasons he was induced to think that the government would not have acted discreetly in making any profession of their intentions; but he appealed to the House whether he had not, when called upon stated, plainly and distinctly, the course which the government intended to adopt. To that course he now declared they were determined to adhere, and he hoped that the expression of that determination would tend to calm the anxiety which had been created by the proceedings and statements of the few who had shown a disposition to change the law as it now existed. Upon the subject of the act which passed in 1826, the greatest delusion and exaggeration had got abroad. There never was a case in which the facts had been more misrepresented, or more imperfectly understood; and he thought he could not do better than commence what he had to say upon this subject by a plain statement of the facts, and of the law, upon which that House was now called to exercise its judgment.
It would appear, therefore, that the course which he had to adopt with reference to the facts and the law, called upon him, in the first instance, to endeavour to ascertain the exact amount of small-notes now in circulation; in the next place, to an inquiry into the precise object and operation of the law of 1826; and lastly, to ascertain what were the means which the country possessed of supplying, by a metallic currency, that paper currency which the law passed in 1826 bound them to withdraw from the circulation of the country. It had always appeared to him, that one great defect pervaded all the laws upon the subject of the small-note circulation: he alluded to the want of any regulation for obtaining such infor

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mation upon the subject of that circulation, as would render parliament aware of the quantity of notes which had been issued by the country bankers. He was satisfied that many of the evils which attended the small-note circulation arose out of the want of this information—a species of knowledge not only necessary to the government, but to the parties engaged in the business of bankers, and who circulated large quantities of notes in different parts of the country, without being aware of the extent of the issues made by others, and through which their own were materially affected. From this want of accurate information much of the evils which existed at one time in the country mainly proceeded. In making calculations upon the subject of the present amount of small notes in circulation, he had proceeded, however, in the absence of all positive information, upon data accessible to all, and upon such local information as the nature of the case allowed him to obtain. He hoped, therefore, the House would pardon him if he entered into a slight detail of the particular calculation by which he had arrived at a conclusion upon the subject of the probable number of small notes now in circulation. The law supposes, that each note brought into circulation continues in that circulation for a period of three years, at the end of which time they are not liable to be re-issued. If, therefore, a banknote continues in circulation no longer than these three years, by a reference to the number of stamps issued for the small notes, they would be able to obtain a tolerably accurate calculation. It was found, however, that a great number of these notes, from various causes, remained in circulation for a longer period than the three years the law assigned to them; and that, taking one with another, every small note might be said to remain in circulation for the period of four years. Upon that calculation; and taking the four years, 1822, 1823, 1824, and 1825, he found that the total number of stamps issued for small notes amounted to 9,700,000 l. Those, however, who were conversant with the business of a country banker, knew very well, that of the number of stamps thus issued for small notes, that is, notes under five pounds—a considerable proportion were not put into circulation but remained in the hands of the banker. From the best
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information afforded by those whose practical experience enabled them to form an accurate judgment upon the subject, it was supposed, that a fourth or a fifth part of all the notes stamped for the country bankers remained locked up in this manner, without being brought into circulation. He had preferred taking the fifth part on this occasion, because it was the most unfavourable to the opinion he had to maintain. Deducting, therefore, the amount of that fifth, thus kept out of circulation, which amounted to about 1,900,000 l. from the total amount stamped, which was 9,700,000 l., there appeared to have been in circulation, in January, 1826, about 7,800,000 l. of notes under the amount of five pounds; and that was, of course, the amount which they were supposed to have in circulation on the 5th of April, 1829, when the law of 1826 would come into operation. But from this total amount of 7,800,000 l. they must, in the first instance, deduct the amount of notes under 5l., the circulation of Scotland, which, in 1826, entered into the inquiry before a committee of that House, and which was something under 2,000,000 l. With respect to that part of the subject, the data were more accurate than any they had in England, because they were furnished confidentially by the several issuers of those notes, and were laid fairly before the chairman of the committee. But from the nominal amount of 2,000,000 l. circulating in Scotland at that period, they must deduct the proportion of those notes which, not being in circulation, were in the hands of bankers by whom notes were issued. The amount of those notes not in circulation, he reckoned at 400,000 l. There were also to be deducted the notes of certain banks which were unstamped, leaving a balance of 1,600,000 l. as the circulation of Scotland, and the sum to be deducted from 7,800,000 l., to which he had originally referred. The total number of notes, therefore, in circulation on the 1st of January, 1826, under the value of 5l. amounted to 6,200,000 l. They must remember, however, that this was the number of notes in circulation, or rather stamped, previously to the alarm which prevailed in 1825 and 1826. Now it appeared from the best account that he was able to obtain, that the number of notes discredited at that period, returned to the Stamp-office to be cancelled, with

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drawn from circulation, and worn out, amounted to 1,700,000 l.; audit seemed not unreasonable to suppose that by the operation of similar causes up to the period of 1829, notes to the amount of 1,300,000 l. might be calculated on as likely to be further withdrawn. He stated this last point not vaguely, but on good information, from which it appeared, that since the basis of the act of 1826 was laid, there had been a gradual withdrawal of the small note circulation; and that fact was borne out by another circumstance; namely, the corresponding augmentation of 5l. notes. The total of the sums to be deducted on account of notes withdrawn, &c, amounted to 5,650,000 l., which taken from the gross sum of 7,800,000 l., left a total issue of 2,150,000 l. as the amount of small notes outstanding at present.—If the House would allow him, he would now state the result of a calculation founded on another basis; by which, however, he had arrived at nearly the same result. He conceived he might fairly assume, that in April, 1829, there would be no notes in circulation of a date antecedent to January, 1825. He allowed more than four years for the circulation of all these notes, although it must be perceived, that as no new notes had been issued, those old notes must have been more generally in circulation, and were, therefore, more liable to be destroyed by constant wear. The total amount of notes which had been issued between January, 1825,and February, 1826,was3,292,081 l. Of these there appeared to have been destroyed to the amount of 592,000 l. by the failing of banks, by notes cancelled in the Stamp-office, 72,000 l.; and by the withdrawal of the sum of 216,000 l. of Scotch circulation, as it applied to Great Britain. These three items formed a reduction of 880,000 l., which taken from 3,292,081 l., left a balance of 2,412,080 l. in circulation; now, taking these two calculations, the one, 2,150,000 l., the other, 2,400,000 l. they could form a pretty accurate idea of the amount of small notes with which parliament would have to deal. If, therefore, in arguing this question, they took the whole amount at 2,500,000 l., he thought they would not underrate the proportion of small notes, that would be affected by the measure of 1826.
He came next to the provisions of the act of 1826; and it was of the utmost importance to draw the attention of the
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House to that subject; because he had observed, in the several petitions that had been presented, as well as in the various arguments that had been made use of in that House and elsewhere, the greatest ignorance, and no small degree of misrepresentation. It had been stated, that, on the 5th of April, 1829, every small note within the country was to become waste paper; and, if not paid off on the moment, the party holding the note had no redress, and could seek for payment no where. They had been told that the circulation, or negotiation, of such an instrument would bring the individual pursuing that course within the penalty of the law; and then the inconvenience which would be sustained, and the evil which must be experienced, from the withdrawal of all the small notes on a particular day, was forcibly dwelt on. Now nothing could be more contrary to the provisions of this act of parliament. The act stated, that a country banker should not, after the 5th of April, 1829, issue notes under the value of 5l.; but it provided that notes issued since February, 1826, might be circulated from hand to hand with the same facility as at the present moment. It only had the effect of gradually, he might say imperceptibly, cancelling these notes. The House must perceive how great a difference this mode of dealing with the small-note circulation made in the consideration of this question. He admitted that if, on a particular day, they were to withdraw the whole small-note circulation, however little it might affect the general circulation, still such a proceeding would produce great inconvenience. But when the law provided that those notes should remain in circulation so long as they endured, when the law only prevented the issue of them by the bankers into whose hands they might return, then the question bore a very different aspect.
The next point on which it was important that the House should be informed, was as to the means which the country possessed to substitute a metallic currency for that circulating medium which was about to be withdrawn. On this point he could only say, that, on an examination of the amount of gold which was available for that purpose, it was found that it far exceeded the quantity which could be calculated on as necessary to fill the place of the small notes now in circulation. No

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doubt whatever was entertained of the competence of these funds to supply the vacuum which would be occasioned by the withdrawal of the small notes. But as it might be said, that great difficulty would, perhaps, be experienced in the distribution of this money throughout the country, he was happy to state, that the amount of cash already withdrawn from the Bank of England, and furnished to the banking establishments throughout the country, was at the present moment such, that there could be no doubt whatever but that there was more than amply sufficient to meet demands from every quarter. In considering this question, they must bear in mind the amount of circulation with which they would have to deal. In no case could that amount be more than 2,400,000 l. The withdrawal of notes to; that amount would be slow and gradual in its operation, and the amount of gold now available was amply sufficient to meet the withdrawal of even a larger sum if necessary.
The question, then, came to this—whether it was or was not expedient to adhere to the provisions of the law of 1826? He willingly agreed with the hon. member for Callington (Mr. Attwood), that it was a question that ought to be decided on the pure ground of expediency. He admitted that to be the true ground; but when he talked of expediency, he begged to be understood as not contemplating that sort of expediency, which, for a little present ease, or immediate advantage, gave up some permanent good. The expediency to which he alluded was of a higher character. It looked to what had happened, and it consulted what was likely to come hereafter. It contemplated both the past and the future, and wisely provided for the general as well as for the particular interest of the country. On this principle of expediency he supported the present measure, which he had no doubt would operate well; because he was confident, if they were pleased to judge by the period which had passed, if they considered the danger, the apprehension, and the alarm which the country had been subjected to,—or, if they looked to the future, and in doing so called to mind the lamentable effects which the extension of a small-note circulation had produced formerly, he thought that, in either case, the general opinion would be, that the law of 1826 ought to be acted
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on. For his part, he was unable to understand how any of those gentlemen who supported the return to cash payments in 1819, and who then thought it advisable that the restrictions which had been imposed on payments in gold should be removed, could now advocate the indefinite continuance of a small-note circulation. It could not escape the observation of the House, that the small-note system was not introduced (although they now wished to represent that to be fact), as beneficial in itself. It was introduced to remedy an evil which then pressed on the country. It was the offspring of the Bank Restriction act. So long as those small notes continued in circulation, gold must disappear. They all knew that there was an. antipathy between the one-pound note and the sovereign. They would not exist together, for the note soon drove the sovereign out of circulation. To think of returning to cash payments with an unlimited circulation of small notes was the greatest folly imaginable. They must all recollect the evils by which the years 1825 and 1826 were visited, and they had the means of judging how much the apprehension and alarm of that day were aggravated by a great issue of small notes, which the act of 1826 was framed for the purpose of checking. He did not mean to say that the issue of small notes was the only cause of the distress which then prevailed, but it added greatly to it. He did not mean to say, that the small-note circulation had not, at one period, been of some advantage; neither did he mean to assert, that the general paper circulation might not hare been beneficial, situated as the country had been; but, was there any man, who, looking to general principles, and taking the result of experience and history, could doubt that a metallic circulation was essentially the interest of the country? He thought the House would be called upon that night to declare whether they would establish a great extent of small-note circulation or adhere to the law of 1826, without altering the period when it would come into operation. For his own part, he never could anticipate that a period would arrive so favourable as the present for making the experiment of a withdrawal of the: small notes. If the House of Commons would now turn round and yield, it would be impossible to know at what period the House would, be bold enough to enforce

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the withdrawal of small notes. The country was at present prepared for the system of country-banking as it was established in 1826; and he was convinced of the willingness of the country bankers to abide by that establishment. If the door were how opened for affording facilities for the increase of the circulation, the increase would naturally be proportionate to the restriction which had previously existed, and the evils that would arise from the permission of an unlimited issue of this kind were such as could not be easily calculated. It was not too much to apprehend that it would lead almost inevitably to the recurrence of that confusion and distress, that panic and alarm, from which the country had but lately recovered. Indeed, the recurrence to that system from which so much mischief had emanated, would but expose the government and legislature to the contempt and ridicule of the country.
He thought that those gentlemen who had talked so much about the great inconvenience which would result from the withdrawal of the small notes, had argued upon erroneous principles. He did not believe that it would affect the circulating medium of the country, as they supposed it would; that it would make a material alteration in the advances of the country bankers; that it would affect the improvements which were in progress in different parts of the country, or cause a diminution in rents and profits. He did not believe that these apprehensions were well founded, because, when he looked at the general circulation of the country, and saw how small a proportion the small notes bore to the whole, he was convinced that their withdrawal would not be productive of such great evils as those gentlemen supposed. To show how unimportant the proportion was, he would refer to the returns. From them it appeared, that the amount of notes of the value of 5l. and upwards, issued by the Bank of England, was 20,000,000 l.; the amount of similar notes issued by country bankers, was 13,000,000 l.; the amount of notes under 5l. issued by the country bankers, was 2,400,000 l. The amount of sovereigns in circulation was 22,000,000 l.; which, together, with 8,000,000 l. of silver, gave the total amount of circulation at 65,500,000 It appeared, then, that the amount of small notes bore only the proportion of 2,500,000 l. to a total of 65,500,000 l.;
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which he was justified in regarding as a very inconsiderable one. Let the House only consider how small the proportion was; namely, 3½ per cent on the whole amount. How small, then, must be the effect of that small-note circulation upon the general circulation of the country! And this, it was likely, would be rendered less by the increase of 600,000 l. in the issue of large notes, which was intended partly as a substitute for the diminished amount of the circulation of small notes. He admitted the force of the argument of the inconvenience that might arise from the withdrawal of small notes from certain districts in which labourers' wages were paid in one and two pound notes. It was contended, that in such districts the greatest distress would prevail; but it would be a great consolation for those who complained of this inconvenience to know that both in reference to periods anterior to the present, and still more in reference to the present, there were ample means of circulation to remedy any apprehended evils of this description. He would refer to four different periods, to show what had been the state of the circulation in those periods of four years each. From the year 1810 to 1814, there were then 4,000,000 of guineas in circulation; which, though considered to be in circulation, yet it was well known that a considerable portion of that number was hoarded up. These guineas were subsequently exchanged for sovereigns. Besides these 4,000,000 guineas, there were then 7,300,000 l. of one-pound notes issued by the bank of England; there were also 10,700,000 l. of one-pound notes issued by country banks, which, together with 7,000,000 l. of silver, including bank tokens, gave a total of small circulation of 29,000,000 l. Taking the second period from 1814 to 1818, the total amount of circulation was 29,200,000 l. The next period from 1818 to 1821, was 25,400,000 l. And taking, lastly, the present period, it would appear that there were 22,000,000 of sovereigns in circulation; which, together with 8,000,000 l. of silver, gave a total of 30,000,000 l. as the means of small circulation for the exigencies of the country. It would appear, then, that our means in this respect exceeded at the present period what they had been at any former one. If, then, our minor circulation now was greater than it had been at a time at which taxation had been at the

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highest rate, and at which the commerce of the country and its position were such as to require all possible facilities of circulation, there was not, in his opinion, any reasonable ground of apprehension, that the amount now at our command would be found insufficient for our present exigencies. If then, 30,000,000 l. of circulation of this description would meet every reasonable demand, on a fair comparison of the present period with anterior ones, he did not think there was much dread of our experiencing the evils which some persons anticipated, from the withdrawal of the one-pound notes from circulation.
It had been said, that an adherence to the law of 1826 would greatly diminish the power and the profits of the country bankers. He knew that the withdrawal of the notes would diminish the profits of those who issued them; but then the gentlemen who issued them had constantly declared, that the profit which they derived from the issue of small notes was very inconsiderable, when compared with the rest of their circulation.—An adherence to the law, therefore, would only diminish profits which the parties themselves had declared to be inconsiderable. As to its diminishing the power of the country banker, he would contend that the law would ultimately increase that power, because it increased his protection. The country banker would no longer be liable to the demands of those holding small notes; and if he was right in supposing that, in proportion as the banker was secure, in the same proportion he would be liberal, then he might very fairly say, that if the system were continued it would render the banker at once more able and more willing to make those advances which it was feared he would withhold. But he thought that the one-pound note circulation, which was so necessary in certain places, had been carried much too far. Let them look at Lancashire, for instance, where there was no issue of one-pound notes, and yet every gentleman acquainted with that part of the country must know to how great an extent manufactures were carried on there, and that there was there as great a disposition to make these cash payments as in any other part of the country.
From these considerations, he was induced, not only to press upon the House, the propriety of granting him the permis
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sion to bring in a bill which he should conclude by moving for, but also to resist the motion which the hon. baronet was about to make. He knew how captivating motions for inquiry were; and he knew, also, that the hon. baronet was dextrous enough to see, that by a proposition for inquiry he might have some chance of gaining an acquiescence in that which would not be granted to him if he were to move at once for the repeal of the act of 1826. At the same time, however, the hon. baronet was candid enough to admit, that those who should vote with him would be pledged to consider this question. If the hon. baronet should succeed, much harm would result therefrom, because it would give birth to an impression in the country, that the one-pound note circulation was to be made the general circulation of the country. He could not help thinking, that the creation of such an impression would be a great evil; and he trusted that the House would, by their decision that night, show that they meant to adhere to the law of 1826, and complete a system which, ever since the year 1819, they had, with a few variations, which the circumstances of the times rendered necessary, constantly adopted. He thought that in England, Scotch one-pound notes ought to be prohibited; and to effect that prohibition was the object of the bill. The circulation of such notes he meant to exclude by a fine. The right hon. gentleman then moved, for leave to bring in a bill to restrain the negotiation of Scotch and Irish notes, under a certain amount, in England.
Sir James Grahamsaid, that he always rose in that House with considerable embarrasment, and on this occasion he felt greater embarrassment than usual, when he recollected the magnitude and the difficulty of the subject with which he had to deal. The dry ness of the details, and the necessity of perpetual references to written documents, made him fear that he should not succeed in engaging their attention; but he would endeavour to deserve it by not wearying them unnecessarily either with the one or the other. The difficulties which must, at any time, attach to this subject, had been materially increased by the course which the right hon. gentleman had adopted; a course which, he must say, he thought rather unfair. The notice of the motion of the right hon. gentleman on the paper, was, for leave to

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bring in a bill to prevent the circulation of Scotch notes within the limits of England; but be would appeal to the House, whether any portion of the right hon. gentleman's speech related to such a bill, except that portion which fell from him just as he was sitting down. The whole of the right hon. gentleman's speech was rather a reply to a speech which he anticipated from him, than a speech upon the motion which the right hon. gentleman had given notice of; and it rather regarded the anomaly of a paper currency, which was the greater question, than the minor subject which was now before them.
Before he enforced the motion which he had to make, by those arguments which he hoped would be conclusive with the House, he would first apply himself to what had fallen from the right hon. gentleman. The right hon. gentleman had said, that they who voted for cash payments in 1819, must, if they were consistent, vote against his (sir J. Graham's) motion. Now, he had the honour of a seat in that House in 1819, and, moreover, he had voted in favour of the measure which was then brought forward. He did then yield to a doctrine, which experience and subsequent consideration had proved to him to be the most palpable folly that ever had been palmed upon that House as sound and wise policy. He was deceived by a very high authority; he meant the late Mr. Ricardo, who stated, that the whole difference of the standard value would be the difference between the value estimated by the Mint and the gold price—a difference of 5 per cent. Misled by this authority, he did, on that occasion, unhappily, vote in favour of the bill; and he was, therefore, perfectly ready to admit, that he was now liable to the charge of inconsistency. He thought that many of the right hon. gentleman's statements were founded in error; but they were of a very detailed nature, both as regarded the notes and the gross amount of the circulation, and he should not follow the right hon. gentleman through them. A committee, and not that House, was the proper place in which to prove their correctness; and before a committee he challenged the right hon. gentleman to produce them. He should not go into a committee, if it were granted, with his mind made up. With a bias he certainly should go, but he should be open to conviction; and if the right hon.
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gentleman could substantiate, in a committee, what he had that night said, he would agree with him.
The fact that they had 22,000,000 of sovereigns in circulation in this country at the present time, did certainly surprise him. That amount was much greater than he had thought it possibly could be. But the right hon. gentleman, though he might know that sovereigns to that amount had been issued, could not tell how many had gone abroad—how many had been melted down. The right hon. gentleman had no right to suppose that all that had been issued were in actual circulation. The right hon. gentleman had laid much stress upon the supposition, that the rush for the payment of the small-notes would not be simultaneous; but he could hardly tell why—for he thought that the right hon. gentleman would concede to him, that no country banker of ordinary prudence would be unprepared to pay in specie, on the 5th of April 1829, the demands that might be made upon him. If, therefore, all the claimants did not come, all the bankers must be prepared to receive them; and therefore, as to the contraction of the gross amount of money, it did not matter whether the run was by the customers of the country bankers en the country banks, or by the country bankers on the Bank of England; for in either case the contraction must come. As to what the right hon. gentleman had said with respect to Lancashire, he believed there were several banks in that part of the country. More than this, there was another species of currency, the most unsafe, unsound, and unstable. He meant that species of currency which was formed by small bills of Exchange at short dates, drawn by persons without capital on persons equally destitute of capital.
He should now apply himself to the particular measure before the House—the motion for leave to bring in a bill to prohibit the circulation of the one-pound notes of Scotland in England. First of all, he thought such a measure unnecessary; and he said so positively, because he was supported by testimony and authority which the right hon. gentleman. would not doubt. That testimony and authority would be found in a passage from the report of the committee of 1826. The passage was this—
"That while Scotland had a paper currency for the discharge, of all sums

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above 20 s., England had, at least for twenty years previously to the Bank restriction, a currency consisting of the precious metals, to the exclusion, by law, of notes below 5l. That those different systems co-existed, and that no proof can be adduced that the paper circulation of Scotland displaced or interfered in any material degree with the metallic currency of England."
He would contend, that these words proved the measure to be unnecessary; and besides this, it was evidently a premature, a theoretical, remedy, for an evil which was not yet in existence, and which, if past experience could be depended on, never would exist. Again, he thought that the measure was impolitic. The districts on which it would bear most heavily were those adjacent to Scotland. He was connected with one of those districts, from which he had presented a petition signed by people of all classes, who never agreed, probably, on any other subject of a political nature, but who now came forward as one man, and declared, that no greater inconvenience could befall them than the introduction of such a measure as that proposed by the right hon. gentleman. For seventy years they had possessed the advantage which it was now sought to deprive them of—the advantage of the Scotch currency. Seven-eighths of the rents of the estates which he possessed had been paid in the paper currency of Scotland, and no loss had been sustained, in that district, in consequence of failures of persons issuing this currency. This general diffusion of Scotch currency had also weakened the banks in the neighbourhood. They had no bankers like the Scotch bankers. They could find no twenty-five men who would associate themselves together as partners—all being responsible for the claims upon them. And yet, for a theoretical evil, they were asked to pass a measure which would produce these fatal consequences.
But the measure was also anomalous. The right hon. gentleman had said, that there was a natural antipathy between a one-pound note and a sovereign—that they would not circulate together; and yet his majesty's ministers had determined that, on the one side of a line which he could positively jump over, paper should circulate; and that, on the other, gold alone, to the exclusion of paper, should form the circulation. Now, was there any thing
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more anomalous than this ever proposed by any set of ministers? And here, again, he must refer to the report of the committee of 1826. In that report the following passages occurred:—
"That, coincident with the present system of currency, if not immediately owing to its effects, there has been a great and progressive increase in the manufactures, agriculture, commerce, population, and general wealth, of the country. Your committee are certainly not convinced that it is the suppression of one-pound notes that would affect the cash credits to the extent apprehended; but they are unwilling, without stronger proof of necessity, to run the risk of deranging, from any cause whatever, a system admirably calculated, in their opinion, to economize the use of capital, to excite and cherish a spirit of useful enterprise, and even to promote the moral habits of the people, by the direct inducements which it holds out, to the maintenance of a character for industry, integrity, and prudence."
Where was the panic, the distress, the danger, the alarm, of which the right hon. gentleman, had spoken? He would go on the words of the right hon. gentleman, and say, that it was right to inquire if the one-pound notes in England were not the foundation of the interests of small deposits to the poor man. This certainly was a subject well worthy the inquiry of that House; for, suppose it to be otherwise than he believed it to be, it could not be productive of two different results. For his position he had the authority of lord Liverpool and lord Goderich. In their Letter to the Bank of England, in 1826, they stated, "that though a recurrence to a geld circulation in the country, for the reasons already stated, might be productive of some good, it would by no means go to the root of the evil." And then they went on to argue to the point. Among other things they said, "the failures which have occurred in England, unaccompanied as they have been by the same occurrences in Scotland, tend to prove, that there must have been an unsolid and delusive system in one part of Great Britain, and a solid and substantial one in the other." Again—"In Scotland, there are not more than thirty banks, and these banks have stood firm amidst all the convulsions in the money-market in England, and amidst all the distresses to which the manufacturing and agricultural interests

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in Scotland, as well as in England, have occasionally been subject. The effect of the law at present is, to permit every description of banking, except that which is solid and secure." He contended, therefore, that he had absolutely the authority of the right hon. gentleman for asserting, that the vice was not in the currency, but in the system of banking; and if this was the case, why not, instead of destroying the currency, try if the system of banking—the system under which it was distributed—could not be amended? To him it seemed just as absurd to contend that the currency should be given up because the system of working it was objectionable, as it would be for the right hon. gentleman opposite, in consequence of the late Report of the Commissioners upon the State of the Supply of Water to the Metropolis, to bring in a bill preventing water altogether from being drawn from the Thames, instead of first ascertaining whether a better supply could be procured from any other quarter. He would very briefly, however, endeavour to trace the effect of the various resolutions and attempts which had been made to put down this small-note currency. At first it had been fixed that it should be concluded at the close of the war. The Bank of England accordingly, and the country banks, in the year 1815, had contracted their issues to prepare for the approaching change. What was the result? The price of wheat, which in 1813 had been 107 s., had rapidly dropped down to 64 s.; the bankruptcies had increased enormously; in 1814 they were only one thousand, and in 1816 they amounted to two thousand, three hundred; distress had pervaded the country from one extremity to the other; government eventually had relinquished the rigour of its principle, and postponed the payment of the one-pound notes to a more distant period; and the effect was, that prices got up again, and a season of prosperity ensued. This was the end, then, of the first speculation. He now came to the second—the resolution of the committee of 1819. Under this second project, the change was announced to take place in 1825. After that time no one-pound notes were to be current in Great Britain or Ireland. Again, the Bank of England and the country banks had contracted their discounts to meet the alteration, and again distress had appeared. In 1822, wheat had got down to 42 s.—lower,
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absolutely, than at any period since the Revolution. What had been the conduct of the minister of that day? The marquis of Londonderry, with a statesman-like courage and decision, had met the evil upon its real merits. He had not treated it as an effect of fluctuation of prices, of want of means of consumption, or of superabundant harvests. The noble marquis had said plainly and directly—"This is a question of currency. The currency of the country is too contracted for its wants, and our business is to apply a remedy." He had then forced an addition to the circulation of 4,000,000 l. upon Exchequer bills, in the shape of an advance from the Bank to the government, and had postponed the operation of the Small-note Repeal Bill from 1825 to 1833; and again, as before, in the year 1826, the price of wheat had risen to 68 s., and comparative prosperity had ensued, and it would be observed, that the marquis of Londonderry had postponed the operation of the Small-note bill to the year 1833. Why had he chosen that particular period? Why, because that was the year in which the Bank Charter terminated; and the noble marquis's opinion was, that it was right that the two questions of the Currency and the Charter should come on together, in order that no existing arrangements might prejudice the discussion of the general subject, or cramp those changes which the wisdom of parliament might deem necessary. Then he had the authority of the hon. member for Calling-ton (Mr. Baring), who had warned the House, in the year 1819, of the error into which it was falling, and who had not been: misled, as he (sir J. Graham) had, in; common with many other persons, been, by the fallacious argument of the late Mr. Ricardo, that the measure proposed would only enhance the value of money something less than 6 per cent; he had the authority of that hon. member's caution to the House in 1819, for stating, that the change must necessarily increase the value of money more than 25 per cent. He had even more than this: he had the hon. gentleman's declaration, made upon full consideration but a few nights back, that the change produced was actually 30 per cent. He fully agreed with the hon. gentleman as to this result: indeed, he was himself in possession of facts which placed it beyond doubt. He had been acquainted with a gentleman in the north

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of England, who died in 1812, leaving his landed property to be divided between two sons; the eldest son, who was a country banker, had the estate valued, and bought the share of his younger brother, so coming into possession of the whole property himself. The younger brother, as it happened, did not invest the produce of this sale, or his part, until some time after it took place; and, in the year 1823, he actually bought with the money which he had received for his half of his father's estate an estate immediately adjoining, which produced a rental nearly equal to the whole rental of his elder brother. This was by no means a singular case. Indeed it would be easy to multiply instances of the same description. He took it to be indisputable, that the value of money in any country must always rise or fall in an inverse ratio to the quantity of it. The quantity of commodities remaining the same, if there was an increase in the quantity of money prices must rise, and if the quantity decreased, a fall would as certainly be the consequence. Whether the quantity of money was decreased, or the supply of commodities increased in the country, the effect upon prices was the same. Therefore the House would perceive that it was just the same thing to the landed interest, whether the quantity of money in the country was contracted, or the ports thrown open to foreign importation. There could be no question about this fact; and, moreover, it was perfectly well understood and calculated upon, by those who had framed the corn resolutions of the present year. Those hon. gentlemen knew that, looking to the present standard of money, it was impossible that the average price of corn could keep much higher in the country than it had done prior to the commencement of the French war. This supposition would keep it fluctuating between 50 s. and 60 s.; between which prices the duty on importation was fixed lower than it had been by the resolutions of last year. It was true that the protection above 60 s. was something higher; but there was no chance that wheat would bear an average of 60 s.; and of that he believed the parties who framed the resolutions were perfectly aware.
He would now, however, come to a few particulars, by which he should be able to shew the House, that in practice it was the amount of money circulating in the country which regulated and controlled
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the price of grain. From 1810 to 1818, the amount of the currency in circulation by the country banks had been 21,000,000 l. During the greater part of those years, the ports had been virtually open to foreign importation, and the average price of wheat was 92 s. 4d. a quarter. From 1819 to 1827, the country-note currency was diminished to about 10,700,000 l., and, what was the price of wheat? Though in those years the ports had been hermetically sealed, the average maintained was only 57 s. 10 d. And the heavy affliction was this—a part of our public debt had been contracted during these fluctuations in the amount, and consequent value of the currency; and the result was, that where we had borrowed the price of eight or nine bushels of wheat, we were paying-back the price of twelve or thirteen. And he was glad to see the right, hon. member for Liverpool (Mr. Huskisson) in his place; because he wished to call upon the right hon. gentleman for an explanation of the striking discrepancies between the opinions which he had delivered in 1815, and those which he professed at present. He could not help remembering that in a speech made in answer to a proposition by his late noble friend the member for Lanarkshire, the right hon. gentleman had laid down principles which were at variance with the whole course of policy which he was now pursuing. For instance, in speaking of a return to the scale of prices, in corn and other commodities, which had existed before the war, the right hon. gentleman said,
"To think that things could return to what they were before the war, was one of the most dangerous errors that could be entertained. Our whole establishment, before the war, amounted only to 16,000,000 l.; our peace establishment now, must entail on us a burthen nearer 60 than 50,000,000 l. When gentlemen talked of the increased price of bread, was not every thing raised in proportion; and that, not in consequence of the high price of bread, but of the amount of taxation? It is impossible for the country to return to the prices before the war. It had been said, that the remedy was to lower rents; but the proportion of the gross produce of the land which now came to the landlord however represented in money, is now less than it was in 1792. Previous to the war, a farmer considered himself requited if he made three rents; now, it is necessary

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to make five rents, or he would not be able to go on; even if the whole rental of the country were remitted, it would be impossible to return to the prices before the war. He was not afraid to declare, that the people must not expect, be the law what it might, that with our burthens, the price of bread can ever be less than double what it was before the war."
Then it appeared clearly, according to this reference, that the right hon. gentleman had performed a miracle. He had done that which he had declared to be impossible; for he had not only contrived to reduce corn to the standard that it maintained before the war, but, in the year 1822, he had actually managed to bring it down to 43 s.—lower than it had ever been at any period since the Revolution. These miracles were produced by a very simple cabalistic process,—merely by the system of tampering with the currency; but from that system the landowner was the first who was sure to suffer. The value of money was heavily increased, while all contracts remained fixed to their nominal amount. The change bore down the amount of the landowner's receipt for his produce, while all the fixed charges and incumbrances on his property were increased. He was bound to pay in a currency 30 per cent, higher in value than that in which he had borrowed, and the consequence was, that he must retrench, abandon the hospitality and liberality of his ancestors, live like a niggard and a degraded man, and squeeze his tenants like an oppressor; or the monied man, in five years, walked in and took possession of his estate. The error was in the system, We had attempted a change that we could not bear, and we should be compelled to abandon it. The case was not a new one. The same course had been tried in France in the reign of Louis 14th. In that day, the value of the currency of France had become depreciated 27 per; cent. An attempt had been made to restore it to its former level; and the thing had been found impossible. The burden of the change was so great, that it was found impossible to bear it; and the result had been a continued reduction i of the standard of value. It was not upon the landowners alone that these changes, or attempted changes, pressed. The landowner felt the evil first; but all classes of the community came in, in due lime, for their equal share. The alteration was
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to be found in the diminished consumption of all those articles into which taxation entered materially. The use of malt-liquors, tobacco, all the exciseable articles, which were consumed by the poorer classes, had either actually decreased since the war, or had not gone on increasing at the same rate with the increase of population. This was the inevitable consequence of such a change in the value of money, as virtually increased the amount of taxation: the commodities, of which a large portion of the price consisted of government duty, became practically, so much dearer,—for the amount of duty levied was so much higher than it was before; and the consequence was, that their consumption was abated. The price of bread might be controlled or influenced by other circumstances, but no circumstance could cheapen those articles, the dearness of which arose out of an increased taxation; and the immediate effect of this state of things was materially to lower the comforts and the general condition of the labouring classes of the community. He challenged contradiction as to the operation of this fact. The country at this moment was in reality more heavily taxed than it had been during the severest periods of the war. This was shown in an instant. In 1813, the taxation of the country had been 81,400,000 l. This was in a currency, let it be observed, depreciated nearly 36 per cent. The present amount of taxation was 54,000,000 l. But let the depreciation of 36 per cent, be taken off the 81,400,000 l., and the residue was only 52,000,000 l. So that in money of equal value, the taxation of the present day was 2,000.000 l. more than that of the year 1813. Perhaps the House might suppose that he was here producing some slight theories of his own. Any such belief would be a complete error. For all that he had advanced, he had the authority of the highest names in the country. Indeed, there was one passage from Locke so directly bearing upon this theory and the general state of affairs at present, that he was sure he should stand excused if he referred to it. Mr. Locke said, speaking of the evils attendant upon a diminished or diminishing amount of currency—
"The exigencies and uses of money not lessening with its quantity, and it being in the same proportion to be employed and distributed still, so much as its quantity

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is lessened, so much must the share of every one who has a right to this money be the less, whether he be landholder for his goods, or labourer for his hire, or merchant for his brokerage. The landholder usually finds it first, because money failing and falling short, people have not so much money as formerly to lay out, and so less money is brought to market, by which the price of things must necessarily fall. The labourer feels it next, for when the landholder's rent falls, he must either bate the labourer's wages, or not employ, or not pay him. The merchant feels it last, and will be sure to leave our native commodities unbought on the hands of the farmer or manufacturer. People not perceiving the money to be gone, are apt to be jealous one of another; and each suspecting another's inequality of gain to rob him of his share, every one will be employing his skill and power the best he can, to retrieve it again, and to bring money into his pocket in the same plenty as formerly. But this is but scrambling among ourselves, and helps no more against our wants than the putting on a short coverlet will, amongst children that lie together, preserve them all from cold. Some will starve, unless the father of the family provide better, and enlarge the scanty covering. This pulling and contest is usually between the landed man and the merchant, with whom I join the monied man. The landed man finds himself aggrieved by the falling of his rents and the straitening of his fortune, while the monied man keeps up his gain, and the merchant thrives and grows rich by trade. These, he thinks, steal his income into their pockets, build their fortunes on his ruin, and engross more of the riches of the nation than comes to their share. He therefore endeavours by laws to keep up the value of land, which he suspects lessened by the other's excess of profit; but all in vain, the cause is mistaken, and the remedy too. It is not the monied man's gains that makes land fall, but the want of money, and lessening of our treasure, wasted by extravagant expenses and a mismanaged trade, which the land always is the first to feel."
He would put it to the sense of the House, whether these observations did not appear to be written especially for the existing condition of affairs. But it was not upon Locke alone that he rested for the support of the principles which he was
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advancing. The hon. member for Callington (Mr. Baring) when he had been examined before the bullion committee, and when, if his advice had been attended to, many of the evils which had since fallen on the country would have been avoided, had said,—"The reduction of paper would produce all those effects which arise from the reduction in the amount of money in any country,—an effect, which, I think, is well described in Mr. Hume's Essay on Money.' The consequences of the contraction or expansion of the amount of money in a country seem more felt during the progress of such contraction and expansion than from any positive amount of money at any one given period. It is not, in my opinion, of great importance what amount of money may exist in any country; but the question, whether it is on the increase or decrease, is one of great importance to every branch of its industry."
Now, what was the opinion of Hume, quoted by the hon. member for Callington upon this point? He was sorry to trouble the House so far; but he did believe that all the evils we endured arose from a contraction of the circulating medium; and if this cause could only be ascertained and agreed on, there were hopes that it might be got rid of. Hume's words were these:—"The good policy of the magistrates consists only in keeping' money, if possible, still increasing; because, by that means he keeps alive a spirit of industry in the nation, and increases the stock of labour, in which consists all real power and riches.
"A nation, whose money decreases, is actually weaker and more miserable than another nation which possesses no more money, but is on the increasing hand. The alterations in the quantity of money are not immediately attended with proportionable alterations in the price of commodities: there is always an interval before matters be adjusted to their new situation; and this interval is as pernicious to industry when money is diminishing, as it is advantageous when it is increasing. The workman has not the same employment from the manufacturer, though he pays the same price for every thing in the market. The farmer cannot dispose of his corn and cattle, though he must pay the same rent to his landlord. The poverty, beggary, and sloth, which must ensue, are easily foreseen. But, in every king

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dom, into which money flows with greater abundance than formerly, every thing takes a new face; the merchant becomes more enterprising, the manufacturer more diligent and skilful, and even the farmer follows the plough with more alacrity and attention."
This view showed, that a decrease in the quantity of money in any country was the first step in the high road of ruin to that country. But upon the question of the one-pound notes, it was not necessary for him to go so far for authorities; for, as to the effect to be expected from their reduction, he had the admission of the right hon. gentleman opposite (Mr. Peel). The admission had been given somewhat unguardedly, perhaps, but it was as complete as any admission could be, and a-mounted to a full exposition of the opinions of the right hon. gentleman. For when the hon. member for Kent had spoken, a few evenings since, upon the possible pressure of a repeal of the one-pound note system upon the scales of the corn duties,—anticipating, that that repeal would diminish the extent of protection to the land-owner,—the right hon. gentleman had replied directly "that the case was directly the reverse; that the calling in of the one-pound notes would increase the value of money, and consequently increase the amount of those duties out of which the protection was derived." Therefore, he thought all question as to the consciousness of the right hon. gentlemen opposite, of the effect of their measures must be at an end: here the necessary result, and the object, were directly avowed.
But it was not merely that the amount of our circulating medium would be diminished by the measure proposed, but that that diminution would be effected precisely in the way to produce the most mischief. Small money, it was well known, circulated faster than large. The amount of convenience lost by the suppression of the particular currency of the one-pound notes, doubled the loss that the absence of so much money inflicted upon the community. If the country bankers even were to continue to issue the same amount of money in five-pound notes, which they had been used to issue in notes of one-pound, still the benefit to the public would be incomparably lessened. The whole value of a currency lay in its convenience for circulation: the five-pound
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notes were not convenient for circulation: in fact, in place of the one-pound notes it was impossible they could be employed; they would not answer the purpose. Then it was well known that the five-pound notes could not stay out. The one-pound notes produced a far greater profit to the banker; and that profit enabled him to be more liberal, as well in his discounts as in his allowances to the parties who deposited cash with him. He now came, however, to the reasons assigned for the proposed suppression of the one-pound notes. The evils which were to be cured by the suppression of these notes, were two, the danger of panics, and the risk of over-issues Now, with respect to the over-issues, all the authorities upon the currency subject up to the year 1826—Mr. Horner, the bullion committee, the right hon. Secretary (Mr. Peel) and sir Francis Baring, all these authorities assumed it as a principle, that the law of convertibility, under a judicious system of banking arrangement, was a perfect security against the danger of over-issues. The 'opinion contrary to this doctrine, it would be recollected, was only the opinion of the cabinet. It had never been announced to the public in any way, but in the well-known letter of lord Liverpool to the Bank of England. The House of Commons had never yet pronounced any decision upon the subject; and certainly he did not ask too much, when he said that, before they did pronounce any opinion, they ought most cautiously to examine it. So much for the risk of over-issues: now for the second danger, that of panic: and on this point he would set out by asking one slight question. How happened it, since one-pound notes produced panics, that panics were unknown in Scotland? Scotland was full of small paper currency; and yet such a thing as a run upon a Scotch bank was unknown. For sixty years the one-pound notes had been issued, and yet, in no instance, had a panic ever been produced. But a more singular fact still than this was, that the most formidable panic that had ever been known in England, that of 1793, had occurred at a time when the country had a metallic currency. Professor Play fair's account of that panic was calculated to throw light upon the causes of such alarms in general, and on the means by which they might be avoided: and it would be seen, that the causes to which he ascribed the occurrence of

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panics, were by no means peculiarly such as should arise out of a system of paper currency;—
"One great evil" says the Professor, "to which the Bank has constantly been subjected, arises from the gold coin being of too much intrinsic value. It has frequently happened, owing to the variations that take place between the proportional prices of gold and silver, that a guinea has been of more value when melted down, or carried abroad, where it might pass at its bullion price, than here in England, where the value can never alter. On such occasions a demand for guineas has been made upon the Bank, where alone they could be procured in any quantity; such a demand for guineas has nothing to do with the credit of the Bank or of the country; it is a mere speculation to gain the difference between coined gold and the gold in the ingot. But though those runs on the bank had no connexion with its credit in the first instance, and did not arise from any want of confidence, yet the effect was, in appearance and in reality, the same. In 1793, in the months of March, April, and May, a demand for guineas arose in this manner:—They had been worth 27 livres in silver, or 22 s. 6d. at Paris. The Bank, alarmed at this demand, which would have drained all the guineas away, diminished the circulation of its notes. This was a speedy remedy for the company, but a terrible one for the commerce of the country. When the Bank of England diminished its discounts, all the banking-houses in London on which the country bankers draw, sent down orders not to go to the usual amount; the panic became general, and as a true or false alarm of fire arc the same in effect for the first instant, this country, in which wealth had a few months before been more abundant than ever, without any real misfortune, without any real diminution of its real property, was involved in the deepest distress. Above seventy private bankers stopped, and the total number of bankruptcies in the year amounted to one thousand three hundred. The evil was going on with rapid strides, when ministers very wisely stepped forward, and by creating 5,000,000 l. of Exchequer bills, the Bank was enabled to lend money to such merchants and manufacturers as had sufficient security to give. The good effects of this measure were, so soon felt, that only 3,500,000 l. of the money was
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ever demanded. Some that was demanded was not wanted, and a part of what was obtained was returned in a few weeks. This novel and successful experiment, which necessity suggested, saved many thousands of people in trade, restored credit, and government was repaid the whole with some little profit."
The minister who had adopted this wise measure was Mr. Pitt; but the fact of the alarm was the circumstance to which he wished to direct the attention of the House. Here was a panic, not produced by paper, but arising in the time of a metallic circulation;—proceeding, it appeared, too, from the quality of that very metallic circulation, and from a fault in it to which our present metallic medium was subject; namely, that it was too valuable to remain in the country, except by the deduction of a seignorage. And another fact too, rather curious, was, these one-pound notes were to be put down, as being the cause which led to panics: it was both in 1793 and in 1825 the one-pound notes had been resorted to, to check the panics; and they had accomplished that end, after other means had failed. In 1825, when the run had drained the very coffers of the Bank, on the fifth day recourse was had, (under advice) to a supply of old one-pound notes; the issue of those notes checked the rush for money, and a better state of things ensued. But, to go farther still than this, he believed it might be shown to demonstration, that so far from any risk of panic arising out of the continuance in circulation of the small notes, such a result was very likely to proceed from the execution of the measure which was to withdraw them, It mist be recollected, that the suppression of these notes must be prepared by the parties on whose responsibility they were issued. If he took the amount of the issues of the country hanks in one-pound notes at 8,000 l. each, it would amount to 4,800,000 l. To this were also to be added the amount of deposits for which they would have to provide gold. These, which he took at the average of 5,000 l. each bank, would not be less than 3,000,000 l., all of which the country banks would have to pay before April next. Here, then, was a diminution of the circulation to an amount exceeding 7,000,000 l. For the supply of this deficiency the country would have to depend upon the Bank of England; and thus the twenty-four gentlemen who managed that

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establishment would be the arbiters of the prosperity of the country, as far as it depended on a proper supply of the circulating medium; for if they did not re-issue the notes paid in, by a purchase of Exchequer bills, or on discounts, they had the power to contract the currency to that amount.
There were also certain contingencies to be taken into consideration. Suppose there should be a bad harvest. It was admitted that there was in the country not more than would afford a short supply. How was this to be made good but by a sudden importation of corn from abroad; and how could that be met but by a corresponding exportation of gold from this country? Here, then, would the want of a currency be felt; and what was certain on the one hand would be uncertain on the other; for the intended limitation of the small-paper currency would prevent the re-issue of the notes, and this would bring about such a difficulty as was felt in 1825: the only difference being, that the one case was a domestic demand for gold, the other would be a foreign, but the results would be the same. He had mentioned many circumstances which would show the necessity of inquiry,—not a blind inquiry into which he would go with his mind already made up, as the right hon. gentleman seemed, to suppose, but a careful investigation of all the probable effects of the great change which was about to be made in our currency. Common sense would dictate, that before they embarked in any important undertaking, they should examine what would be its probable effect, and what were their means of meeting the difficulties opposed to its operation. Another subject of the inquiry which he proposed, would be, what was the nature of the pressure on the country, and how they were to meet it? They would also have to consider, whether an increased issue might not be made by the government,—whether they might not adopt the plan practised at Hamburgh and Amsterdam, of issuing notes on metallic deposits?—whether the issues might not be under the superintendence of an officer of the Crown? Then would also arise the question of the contract with the Bank of England,—then the question of seignoragde, and whether they might not have finer gold without any seignorage upon it. In fact, there were seven or eight heads of inquiry, all of them important, and all
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requiring close investigation, before this measure was proceeded with. It might be said, that the present period of the session was too late for an investigation into these important topics; but the lateness of the period was no reason why a measure of this consequence should be adopted without inquiry; particularly as the result of the investigation, as far as it had gone with respect to Scotland and Ireland, showed clearly that the proposed measure was injurious. If, then, they found, as far as they had inquired, that the proposed system would be injurious to certain parts of the empire, why should they apply it without inquiry as to the remaining and most important part? He did not see why, at the end of the present session, they might not, if they had evidence to support them, suspend the operation of the act until the close of the next, before which they would have time to go into a more full investigation of the subject.
In what he had said, he begged not to be understood as being enamoured of a paper currency; but, was it not foolish in the extreme, because the paper system wanted regulation, to abolish it at once, and without inquiry, as to the probable results of its abolition? It would be just as foolish to dash a watch to pieces because it required regulation. The paper currency was one of the great wheels of our system, and if it worked on smoothly and without jerks, it was a most important one, for it was cheaper and better, and more easily managed. Paper, convertible into gold on demand, was, beyond a doubt, preferable to any other. It was more plastic, and could be more easily applied to all our purposes of commerce. He would go farther, and say of paper currency what was said in the Inferno of Dante, to be inscribed over the gates of hell, "who enters here leaves hope behind." They had commenced, and gone on with the paper system too far to recede. The debt had been, for the greater part, contracted in paper, and must, be paid in paper. It was impossible to think of taking any other course with effect. It was, he admitted, an evil to a certain extent; but, as had been well observed by Mr. Fox, "he took an unsound view of a question, who talked of an abstract remedy for an evil without a mixture of evil; but he talked rationally who, in considering a remedy, looked, not for a total absence of evil, but for that in which it existed in the lowest

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degree." He repeated, that, with such a debt as this country had, it was impossible to go on without a paper currency; under certain regulations he would admit; but certainly a small-paper currency—unless indeed they were prepared to take a bolder step, and enter upon a revision of the standard of value itself. He was unwilling to say anything in the way of intimidation to the House; but, in his view of the question, he could not avoid calling their attention to what had occurred in France, and what had been, in a great degree, the cause of the French revolution. Before that, the debt of France was so enormous that the excess of taxation had become intolerable to the people. In this state, Neckar advised the introduction of a paper currency, but it was powerfully resisted by Mirabeau. What was the result? Taxation went on; the debt increased until the weight could no longer be borne; the monarch was brought to the block, and the chief of the nobility were butchered or banished. Then the floodgates of a paper-currency were opened, and he who before was the strenuous opponent of paper, now paid the national debt with assignats, which were so multiplied that at last not a shadow of value remained. While upon this part of the subject he would read another extract from Hume, whose predictions on the subject of our currency had been verified, more than those of any other man. Speaking of the effect of an enormous debt he said,—
"Our popular government, perhaps, will render it difficult or dangerous for a minister to venture on so desperate an expedient as that of a voluntary bankruptcy; und though the House of Lords be altogether composed of proprietors of land, and the House of Commons chiefly, and consequently neither of them can be supposed to have great property in the funds, yet the connexions of the members may be so great with the proprietors as to render them more tenacious of public faith than prudence, policy, or even justice, strictly speaking, requires." And here followed a passage respecting our foreign relations, which he thought was worthy of particular attention,—"And perhaps, too, our foreign enemies may be so politic as to discover that our safety lies in despair, and may not therefore show the danger open and barefaced till it be inevitable. The balance of power in Europe, our forefathers and we, have deemed too unequal to be pre
1012
served without our attention and assistance; but our children, weary of the struggle and fettered by incumbrances, may sit down secure and see their neighbours oppressed and conquered till at last they themselves and their creditors lie both at the mercy of some foreign conqueror."
This prediction, he hoped, would never be realised; but the events to which it referred were worthy of being borne in mind. The hon. baronet then moved, as an amendment, "That all the words after the word 'that' be omitted from the original motion, and the following be substituted:—" a Select Committee be appointed, to inquire into the State of the Circulation of Promissory Notes under the value of five pound in England, and to report their observations and opinions thereupon to the House, with reference to the expediency of making any alteration in the laws now in force relating thereto."
Mr. Liddellsaid, that, after the very able speech of his hon. friend,—a speech of which he might say "nullum fere genus quod non tetigit, et nihil tetigit quod non ornavit." He would trespass on the attention of the House only for a very few moments. Upon the theories connected with this question there were, he was aware, strong conflicting opinions amongst very high authorities; and "who should decide when doctors disagreed?" In this equipoise of theory, he would prefer to resort to practice, and to practice of which they had already experienced the results. It was under these impressions, that he objected to the measure now proposed by the chancellor of the Exchequer, because he considered it partial, and founded on a very erroneous view of the great question to which it referred. In one point he did not concur with his hon. friend; for he thought that if government were prepared to carry their own determination into full effect, it would be necessary to have some law to confine the circulation of the small notes to Scotland; for without that measure they would, no doubt, circulate within the English border. But he had no doubt that the general measure for diminishing the small-note currency in England, would create great consternation in the country; and, feeling how he was circumstanced in a county bordering on Scotland, and being convinced of the advantages that would result from a continuance of that circulation, he felt bound to support the amend

1013
ment of the hon. baronet. He had followed the right hon. gentleman with the greatest attention throughout the whole of his speech, and certainly there were some parts of it which he had heard with comfort and satisfaction; those parts, namely, where he shewed that the amount of the currency was not likely to undergo any contraction from the meditated change, and that no difficulty would be felt in supplying the vacuum created by the notes withdrawn with a metallic circulation. This he had heard with pleasure; but still the House must be aware how much apprehension was felt in the country upon the subject. Petitions had been poured in from almost all the manufacturing districts, praying for a repeal of the act which was now to be enforced, and he wished to express his conviction, that it was not merely from the change in the course of next year that he apprehended difficulty, but that the very expectation of the measure had already produced evil, had pressed like a dead-weight upon the currency, and had had a most injurious effect upon prices, as well as impeded all those transactions in commerce, which contributed so materially to the benefit of society. Much had been said, in the course of the evening, upon the subject of taxation, and it was generally admitted, that high taxation could not be consistent with low prices—that we were unable to support the taxation of the paper standard, with the prices of the metallic standard. An hon. member, at an earlier period of the evening, had called upon government to reduce taxation by an effectual economy in our expenditure; but the nation had unhappily contracted a debt of 800 millions, of which the interest must be paid by taxation; and if our fleets and armies were reduced to their state before the war—if pensions and sinecures were abolished—and if his majesty's ministers served their country for nothing, we should still be burthened with a heavy taxation, and the more prices were lowered, the more oppressive would that taxation be experienced. He trusted that, under these circumstances, they should have the vote of that hon. member in support of the amendment; for there could not be a doubt that with such a debt we could not continue to pay the taxes, without the aid of a paper currency, be it regulated as it might. He was anxious to support the amendment, because he well knew the opinion which prevailed in the
1014
country on this important subject. He had great reliance on the respectability of the country bankers, and he thought it hard that the people—he now particularly alluded to the northern counties of England—should be deprived of their services, while they saw the privileges denied to them exercised by bankers on the other side of the border. Believing that a paper currency on a metallic basis was not only practicable but extremely useful, he cheerfully supported the amendment.
Mr. S. O' Briensaid, he considered a paper currency not only cheap but useful. It had been objected to the paper system, that it had given rise to the wildest speculations. That was true to a certain extent; but then it should also be considered, that it had given rise to the most useful enterprise, which had given employment to thousands, and had realized large fortunes to many honourable and industrious individuals. He could not see, if the public were secured by proper regulations, from the dangers to be apprehended from what was called over-trading, where the danger was of making the trial, or rather of continuing that which had been already made, and had been on the whole successful. As to the danger of over-issues, he thought it was only imaginary, as long as the Bank of England had the power of contracting its issues at pleasure. Besides, when we talked of the danger of the issue of small notes, he would ask, what security did their abolition afford against the insolvency of private bankers? There was none he contended, which they might not have at the present moment, and with a small-note currency. On the whole, he thought that a paper currency, founded on a metallic basis, was that which the country required, and without which we could not go on, with such a weight of debt as the country had to bear.
Mr. Frankland Lewissaid, that in his view of it, the whole tendency of the hon. baronet's speech resolved itself into a recommendation of a depreciated paper-currency. Then, he put it to the House, whether it would not be the more direct course for the hon. baronet to avow distinctly and at once what was his real object, and to bring it forward in a more tangible form. The hon. baronet had introduced a variety of extraneous topics, but no one who had attended to the course of his reasoning could fail to come to the conclusion, that the great end and aim of

1015
the speech was the introduction of a depreciated currency. He would ask any one who recollected the discussions of 1822, and the several debates in that House since then, whether they could consider such a position tenable? After the experience of the ever-to-be-lamented Bank restriction of 1797, it was a matter of regret that all we had experienced of the evils of a paper system were not sufficient to deter hon. members from a wish to have recourse again to that erroneous system, which, sooner or later, was certain to bring after it the most ruinous consequences. Could the House forget the sufferings which the country had endured from that system, and from which she was not yet wholly recovered? Could hon. members banish from their recollections, the kind of intoxication which prevailed in the country from the year 1797 to 1813, in adventures and enterprises of the wildest character? To what did these owe their origin but to the paper system? No doubt many of the evils to which he alluded were brought on in perfect ignorance, and without any bad intention on the part of those by whom they were heaped on the country. Many of these were themselves the greatest sufferers; but the injury to the country was not the less. The blindness with which they hurried on, affected thousands, in whose case most of the evils of a depreciated paper system were fully demonstrated; and yet, before the country was quite recovered from those effects, what was the remedy proposed by the hon. baronet? Why, a return to the same depreciated paper. Then, notwithstanding all the evils of 1797, we were to go back to the same system! It was said, that the debt was contracted in a depreciated paper currency; but though that was unavoidable under the circumstances in which the country was then placed, it was under a solemn pledge of parliament, that a sound currency should be restored within six months after the termination of the war. Now, did the hon. baronet imagine that it would be restored by his proposition? What had tended to restore it in 1816? Why, the breaking of many of the country banks. That had produced infinite mischief in the country; and when parliament determined to resort to a metallic currency, it only did that which the frailty of the machinery of the paper system was doing long before.—He admired the speech
1016
of the hon. baronet, and admitted its great ability, though he differed from most of the conclusions to which the hon. baronet had come. He had mixed up a variety of topics which did not belong to the subject, and, as the result of his arguments, advised the House not to tamper with the currency,—the very thing to which all his own arguments tended. He advised them, at the moment they had got a sound currency, which, if it could be effected at all, could not be so except by causes which would be ruinous in a paper system; at that moment he advised them to go to sea in search of six or seven different positions, a course, which instead of tending to settle men's minds, would only disturb that which every man must wish to see fixed and at rest. He contended that the hon. baronet had shown no cause which should induce the House to agree to his proposition. He had, no doubt, quoted very high authorities in support of his view of the case; and to those authorities he was disposed to bow, but not so to the inferences which the hon. baronet would wish to draw from their opinions. It needed not, however, any of those high authorities to convince him, that convertibility into gold was the proper foundation of a paper currency; but, admitting that, to a certain extent, that would operate as a security, it would not always guard against the excess of quantity in the issues. The remedy now proposed by the government was, like many others, nauseous and painful; but it was to put an end to an evil which had often convulsed the country to its centre, and against the recurrence of which we ought to guard.—The hon. baronet had quoted, to no good purpose, that there was no one-pound note circulation in 1793; but even with the five-pound note currency at that time there was no security in case of a sudden war.—The act which it was now wished to repeal was passed under the agonizing infliction of 1825, when the great amount of paper money in circulation beyond that required by the actual want of society induced speculation of every description. It was then found necessary to limit the power which was so capable of being abused. The thing to be desired was, to bring back the circulation to the state in which it stood previously to 1797, when small notes were never circulated to any great extent. To prevent the circulation of those notes was

1017
an act no less of humanity than policy, for it was the poorer classes who were the greatest sufferers on the occasion of a panic. By extending the quantity of gold in circulation, a remedy was provided to which application might constantly be made, without producing any of those shocks to which a currency composed principally of paper was always liable. Notwithstanding the restriction in 1797, it was not till 1803 or 1804, that the depreciation of money was felt, owing to the currency being full of gold. Under the system which it was the wish of the hon. baronet to continue in existence, the Bank of England was obliged to provide security, not only for its own circulation, but for that of the country bankers. What he meant was, that the responsibility of the country banks finally resolved itself into that of the Bank of England. From that responsibility it was desirable to relieve the Bank. It was not fair that they should be obliged to keep gold in their coffers, not only for their own security, but to guard against emergencies which might rush upon them, as in 1825. It was fortunate that the Bank of England had withdrawn its one-pound notes from circulation previously to 1825; for that circumstance enabled it to throw them out again, to the great relief of the country banks. The Bank acted wisely in re-issuing their one-pound notes in that conjuncture; though bethought it wrong that such a power, either for good or ill, should be vested in any body of men. It was important to remember, that the Bank of England had voluntarily withdrawn their one-pound notes from circulation to the extent of seven millions, without producing the slightest alarm or inconvenience. As far as experience went, therefore, it was against the hon. baronet? The hon. baronet had made a most overcharged statement of the dangers to be apprehended from carrying into full effect the measure now in progress. The currency was now at par; and could it be supposed, that the withdrawing the country bank one-pound notes from circulation would enhance the value of money to the extent represented by the hon. baronet? When the four millions of one-pound notes should be withdrawn from circulation, would not their place be instantly supplied by four millions of sovereigns? Could any man doubt that such would be the case? It was also quite certain, that when the one
1018
pound notes were withdrawn from circulation, the country banks would issue a larger quantity of five-pound notes which would keep up the amount of the currency to its present extent.—There appeared to exist a misapprehension as to the object of the act respecting one-pound notes, which it was desirable to correct. Some persons seemed to think, that the act provided that no one-pound notes should circulate after April 1829. Now, all that the act provided was, that none should be issued after that time, but left those then in circulation untouched. That was calculated to prevent any shock which might be experienced from suddenly stopping the circulation of one-pound notes. A more opportune moment than the present could not occur for carrying the law into effect. There never could be a period when four millions could be better spared from the circulation than now. He trusted that no one would be led away by the hope of deriving advantage from the depreciation of the currency. Let the legislature once enter upon that course, and they would not know where to stop. Every pretext would be seized hold of for effecting that object. A reference to the pages of our history would show, that the greatest disasters had invariably resulted from the depreciation of the currency by the government. The measure now in progress had been adopted after mature deliberation. He implored the House to maintain that measure, steadily and stedfastly, as the only means of affording the country security against the dangers which had resulted from fluctuations of the currency.
Mr. Maberlysaid, the right hon. gentleman proposed to bring in a bill, the effect of which would be, to prevent the circulation of Scotch notes in England; and that measure he wished to introduce, after a committee had sat to inquire into the subject of the circulation of Scotland, and had recommended parliament not to interfere with that circulation.—The business of the Scotch banks was carried on in the same manner as those of London.—Their exchanges were regularly made twice a week; and the consequence was, that there could be no over-issue of paper. If that system was changed, the poor would be deprived of the power of investment of small sums, while, as it at present stood, it was prevented from becoming injurious, by the frequent exchanges among

1019 the bankers. The circulation thus existing in Scotland was not confined to that country, but extended to the adjoining English counties; and if this circulation was changed, great distress would be brought upon Scotland and the districts in this country, where it was now the medium of payments; for in the northern parts the people depended on that circulating medium, and made their exchanges on Scotland with it three times a week. As the bill now proposed applied only to that part of England, he thought it was not a necessary measure, and he should, therefore, support the amendment.
Mr. Baringsaid, he should not take up much time in delivering his opinion on the subject,, although it was undoubtedly one of the greatest importance. The original motion had been confined to a certain point; but the hon. baronet near him had gone into the discussion of the larger subject. He did not regret that the debate had thus taken a larger range, nor that the House had of late had frequent discussions upon this great question. It was to be recollected, that the charter of the Bank of England would, in a few years, expire, and it was time for them to sharpen their wits upon the important subject of banking, in order that they might be able to see which was the best course to be pursued, whether the system that was now in use in Scotland, and whether it would be advisable to introduce that system into England when the Bank charter was done away with here. After all that had been so plainly and dogmatically laid down on the subject of the currency, it was clear that there were no great questions on which most persons, both within and without those walls, were so completely, as it were, learning their lessons, as upon the questions of the circulation and the banking system. Indeed, he felt it necessary himself to speak with a degree of diffidence on the subject, when it appeared that as yet hardly any principle had been established, notwithstanding the opinions which had been given to the world, under the sanction of some men of great name,—Mr. Horner, for instance, and the right hon. gentleman opposite, who was certainly no ordinary authority. Indeed, when it was recollected, that it had been settled by a vote of that House, during a period when they were experiencing all the pressure of a long war, that within, a few months, and that, too, when
1020
there were not perhaps more than 12,000 guineas in gold in the kingdom, the public should return to a metallic currency, and cash payments should be resumed in a country so extensively engaged in trade and commerce, the present generation could hardly be too modest in expressing its sentiment. After the opinions which the House had listened to from the late Vice-president of the Board of Trade, and the hon. member for Carlisle, the House would, perhaps, be inclined to consider jointly with himself that the question was one of no small difficulty. The proposition of the latter was not merely whether the circulation of the one-pound notes should be permitted in this district, but involved a much wider question. The deliberate depreciation of the currency by any public act was one which must always have the effect of startling most persons. It was revolting to a generous and honourable mind. It had been said by some, that it might be a question whether it might not be wise to let matters rest, rather than run the risk of disturbing them. His hon. friend, impressed with a sense of the dangerous tendency of a measure of that kind, had described a depreciation of the currency, as the worst act of the worst of tyrants; yet the House would recollect that this was precisely the act of the House of Commons. There was as much injustice in increasing the value of money by an act of that House, as in decreasing the quantity of money in the market. In this instance, the hon. member for Carlisle had not overstated his objection; and perhaps if that question were to be decided over again, the House might not come to exactly the same conclusion. Whatever were the difficulties of that period, we were now out of that situation. He could I not therefore consent, as circumstances I now stood, to vote in favour of the committee proposed by his hon. friend, if it were even limited in its inquiry to the subject matter of the present bill, much less if it were intended to embrace the subject of the depreciation of the currency generally within its inquiry. To such a course he confessed that, notwithstanding the able and eloquent address of his hon. friend, he felt a decided reluctance. He should now apply himself to the bill before the House. The legislature had, it would be in their recollection, passed a law to put an end to the circulation of one-pound notes in England finally next

1021
year; and now the right hon. gentleman opposite applied for leave to bring in a bill to prevent the Scotch bankers' small notes from having a concurrent circulation with Bank of England paper, in the northern counties of England. This evening came the motion of the hon. member for Carlisle, which brought forward the whole question. Whether the legislature had been right or wrong in stopping the circulation and putting an end to the system of small notes, he would not stop to inquire, further than to observe, that if they, in doing so, had done wrong, this, perhaps, was the best opportunity they had, or could have, to retrieve their error. If they continued that restriction, it was clear that something must be done to render it operative; for already these Scotch notes had invaded and entered Carlisle by storm, and would be soon found on to the Trent.
It was impossible to prevent such a consequence. The notes would be circulated by bankers in large towns, on account of the profit; and no doubt they would, by degrees, come creeping up from the northern parts of the country, and possess themselves of the capital. If they suffered the nuisance of one-pound notes—he called it a nuisance, because the House had, in fact, so described it in their resolution,—it would be a great injustice to say, that the English bankers should not be permitted to take part in it, but that the Scotch bankers should alone enjoy all the profits resulting from it. The hon. baronet had said "Wait until the Scotch notes had made this progress;" but that hon. baronet had shewn, by his own speech, and by reference to a petition from Carlisle, that that progress had already been made; for, in that petition, mention was made of the inconvenience the people of Carlisle would suffer if they were deprived of the advantages arising from the circulation of these notes. He ought to add, that the hon. baronet, and the hon. gentleman who had last spoken, had both mentioned the distress which Carlisle would suffer if deprived of this circulating medium; he thought that they were both mistaken in this respect, for the distress would fall upon the Scotch bankers, and not upon the people of Carlisle; for the former must furnish the money to take up the notes they had issued, if the circulation of those notes were put an end to. If the bankers who had issued those notes had
1022
been resident in Carlisle, certainly the inconvenience of the change would fall on that place, for they must furnish the money to take up the notes which had been in circulation; but if the present measure were carried, that expense and inconvenience would fall upon the Scotch bankers alone. He believed, however, that the difficulties of this change had been much exaggerated; especially as the notes in circulation amounted only to two millions, and from those that were actually in circulation, the right hon. gentleman said, that one tenth must be deducted for the amount of notes kept in the coffers of individuals, or in the hands of bankers;—and a reduction of 200,000 l. would be thus effected.—Nodoubtthe right hon. gentleman was right in this calculation; but he should have thought that two millions were too low an estimate, and should have placed it at least one million and a half higher. However that might be, there was no doubt that the change would operate at first to produce considerable distress in the local districts in which it occurred. In the immediate neighbourhood it would be a sinking of capital to that extent, and would so far be a loss to the banker, and through him to his customers, who must suffer from the want of accommodation consequent on such a change. But the banker was not called on to bear this change at once and unexpectedly: he had been years preparing for it, and by this time his preparations ought to be complete. It was, therefore, impossible to feel the alarm which some hon. members had spoken of as the consequence of a large sale of Exchequer bills for the purpose of obtaining the ready money, which they believed to be the necessary result of such a change, since that sale must take place in a market, in which the purchasers would be obliged to them for a sale of ten times the amount. There would, therefore, be no difficulty in realising the capital necessary to meet the change.—The question was, whether the notes now in circulation were actually wanted? If they were, the buying them up would be a waste of capital to that extent, and the country bankers ought to be allowed, not only to keep those notes in circulation, but to increase by six millions, the circulation of small notes, in order to replace those which had already been withdrawn. In saying this, he did not mean to undervalue the conveniences of a small-note circu-

1023
lation; but if such a circulation were persevered in, lie thought that the circulation of the notes of country bankers was more valuable than that of the branch banks of the Bank of England. The country banker gave accommodation and facilities for trading, to all the tradesmen who surrounded him: the object of the branch banks was, to send up all they obtained to the great gulph, there to be employed for the benefit of the Bank, of which they formed a part. He did not mean to deny that the branch banks afforded facilities to tradesmen; but the others were certainly more useful to persons of that description. He acknowledged that any thing which the House could safely do, it was their duty to attempt. It was their duty, as far as they could, to make money cheap; but they had a further duty to perform; for, while, on the one hand, every circumstance of interest, of policy, and of feeling, would induce them to make money cheap, on the other hand, it was necessary that they should preserve a steady and consistent course, and that their conduct should be strictly regulated by prudence. The moment they departed from the line which prudence required them to pursue, they were in danger of running into the opposite extreme. In 1825, for instance, the great mistake they had committed was that of encouraging an over-laxity, by which capital seemed to be increased to a most enormous extent. Keeping in mind the principle of adhering to the rules which prudence dictated, they might be safe; but they must cautiously avoid depreciating the circulation on the one hand, and cramping and strangling it on the other. He was anxious to keep out as much paper as possible; that was his first principle, limiting the amount of paper upon the principles he had already stated. His next principle was, that the paper of country banks was more useful than that of the branch banks.—The question, then, was, as to the security on which this paper was circulat-ted;—or, in other words, the convertibility of it into specie; for the moment they abandoned that convertibility, they abandoned that which gave security to the circulation. It was not the legal but the practical ability to meet all demands that constituted the real security of the circulating medium; as it had been truly stated, that no man could say what at all times was the proper amount of specie that the
1024
country required. That amount must be different in different circumstances, and all contractions of the currency altered the state of things. When the country was saturated with a metallic circulation, it could afford for any occasional demands which might arise more than if that metallic circulation was small. If there were 20,000,000 l. of gold in the country, and 10,000,000 l. of paper, or 10,000,000 l. of gold, and 20,000,000 l. of paper, the demand for one or two millions of specie would operate very differently in the one case, from what it would in the other; and experience had proved that, if they banished gold essentially from circulation, they would not have sufficient means to meet such a demand. It had been said, that, in the case of Scotland, this paper circulation was perfectly safe; and it had been observed, that while that was the case, the same circumstances which made it safe in Scotland could not make it unsafe in England. That argument, in one point, was unanswerable; but it did not furnish a reason why Scotland should be so far favoured as to enjoy a circulation which, though perfectly safe there, might, from the operation of other circumstances, be unsafe if introduced into this country. It was true that the paper circulation had existed longer in Scotland than here, and, on that account, the Scotch had some claim to say that we had begun an experiment in England where paper circulation was more recent, but that we ought not to carry it into that country. Still, however, there could be no doubt, that if a paper circulation was dangerous in England, there was as much danger in the Scotch paper, so far as it went, as in any paper that might be issued in any part of England. Suppose, for instance, the county of Kent had a paper circulation of its own: that paper might be beneficial to that county, and yet, at the same time, dangerous, if extended to the other parts of England. He thought there was no difference, in that respect, between Scotland and one of the counties of England. It was to be hoped that, as they had done in former times, they would now be able to maintain the circulation without the introduction of that paper currency which had been proved to be dangerous. It had been said, that, if they suppressed the circulation of Scotch paper in the north of England, they would diminish the accommodation, and facilities now

1025
enjoyed there from that circulation; and they had been recommended to allow a proper circulation in England, similar to that in Scotland, and under the same securities. He must, however, state, that those very Scotch banks, for which exemption had been claimed by way of preference, had as much pressed, in 1825, upon the Bank of England, as any of the country banks here. There was no doubt of their solidity, and they did not generally suffer from those occasional runs which affected banks in this country, which were often less able to bear such a misfortune. There were some who had felt much alarm—notwithstanding the advantages of a country circulation—lestparliamentshould permit, what they had properly called, a coining of money in any shape whatever in the country towns. There was something so monstrous in the proposition to allow this, and they had had so many instances of the misery which, in consequence of it, had fallen upon the small towns, that it was difficult to say whether the system carried with it such redeeming qualities, as to induce the government to tolerate it to any extent. That question was one of great importance; especially with respect to the termination of the Bank Charter; but it was still more important, when considered with a view to establish the banking system of the country on solid grounds. It had been said, that some were advocates for depreciation being effected openly; while others supported what would amount to depreciation, by favouring a standard silver currency. The right hon. gentleman who had made that remark, seemed to have alluded to him (Mr. Baring); and he might, therefore, be permitted to make a few observations on that subject. He had never wished to return to any standard of currency older than that of 1778. Before that period it was legal for any person to carry gold or silver to the Mint, for the purpose of having it coined: the consequence of which was, that the coin was debased, as soon as the price of gold and silver became such as to render it the interest of any man to convert the metal he possessed into coin. These prices had varied in such a manner as often to induce men to do this; and a law was passed which put an end to the practice, and threw the country upon the gold currency. From the time of William 3rd, up to that period, gold and silver had been the nominal circulating medium; but gold was
1026
the practical currency of the kingdom, because it was cheaper; and, as the Mint was open to any man, of course he chose to pay his debts in the cheapest manner, and therefore adopted the expedient of discharging them in gold. But, in the year 1778, a difference taking place in the price of these metals, the change he had already adverted to was the consequence, and silver would have become, from that circumstance, the practical currency of the kingdom, if the coining of that metal had not been stopped, upon the representations contained in a pamphlet written by the earl of Liverpool, the father of the present noble lord. If that coinage had been continued, it would have made a difference of 4 per cent, in the value of the currency. A pound of silver might be bought for 59 s. 6d., and might be coined into 62 s. By adopting a gold currency, the value of the circulating medium had been advanced: while, if it had remained as in 1778, it would have been depreciated to the extent he had already stated.—In his opinion, no injury would be done by the entire resumption of the system of cash-payments. There had been so great and so complete a derangement of the currency, through the introduction of different sorts of paper into the circulation, that it would, perhaps, be impracticable, possibly needless, to tie the Bank of England down to the old system. In order to form a just standard, the silver currency should be applied in a just proportion. A considerable relaxation would take place by adopting the standard in both metals. Considering how sensibly we as a nation felt the effects of the debt, we ought not to affect the coxcombry of having the neatest piece of coin in our pockets, but sacrifice convenience to the public good. Its size was the great objection made to the use of silver in a large proportion. There was a difficulty, certainly, in getting over this objection. One object, however, ought never to be lost sight of in regulating our circulating medium; namely, keeping out the paper. Through the instrumentality of the Bank of England the standard could be effectually regulated, by an adjustment of the precious metals in circulation. He sincerely hoped that ministers would turn their thoughts to the subject during the recess. He felt little disposed to go into the question, as it related to the right hon. gentleman's bill; much less was he disposed to agitate, on

1027
such an occasion, the general question, which at all times, and under all circumstances, ought to be approached with great circumspection.
Lord Howickthought, that the Restriction act, and also the act of 1819, was a piece of injustice; but he did not, therefore, think, that they should now do another act of injustice, which they would do if they retraced their steps, and again depreciated the currency. He should, however, vote for the amendment of his hon. friend, on the simple ground, that it was worthy of inquiry, as a paper was so much cheaper than a metallic currency, whether it could not also be made as safe as a metallic one. He thought it was no argument, because a paper currency had failed under a bad system of banking, perhaps the worst that ever existed, that it must necessarily fail under a system, with proper regulations, and with all those checks and safeguards which might be devised. No step should be taken which added unnecessarily to the burthens of the country. An inquiry could do no harm; and if it ended in suggesting proper checks, the country might be able again to have a paper currency, which was to be wished, on account of its cheapness. The chancellor of the Exchequer had stated, that at present, the gold currency amounted to 22,000,000 l., and he supposed that the annual expense of keeping that sum in circulation, was not less than 1,200,000 l. By keeping a metallic currency in circulation, therefore, a tax of 1,200,000 l. a year was levied on the people. If the result of the committee proposed by his hon. friend should be, that a paper currency might be substituted for a gold one with proper checks, the whole of this expense would be saved. This was, he thought, a sufficient ground for going into inquiry. He would at least suffer the country banknotes to be continued in circulation until the year 1833; at which period when the Bank charter came to be considered, the whole subject might be reviewed with advantage to the country.
Mr. Hudson Gurneysaid, he could not but consider the argument of the right hon. gentleman a most lame and impotent reply to the admirable speech of the hon. baronet (the member for Carlisle). At the same time, with the experience they had unfortunately had of the results of the inquiries of committees, he could by no means vote for the hon. baronet's amend-
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ment. It was to the miserable blunders of the committee of 1810, that most of the evils to which the country had since been exposed, must be traced: whilst, to the still more inconceivable blunders of the committee of 1819, all the mischiefs which had fallen upon us in later years, were mainly to be attributed. He had always been of opinion, that the stoppage of 1797 was occasioned by our having come to the point when the standard in gold of twenty-three years—and twenty-three years only,—under the increase of the debt, could no longer be maintained; and that the attempt to force things back to that standard was neither more nor less than madness. What ought now to be done, was a much more difficult question. He certainly did not wish to see the issue of one-pound notes again in the hands of private individuals. At the same time, he must express his astonishment at the statements of the chancellor of the Exchequer; and he confessed he could not but entertain strong doubts of the accuracy of his calculation, both as to the amount of the one-pound notes still in circulation, and as to that of the gold and silver now circulating in the country. The right hon. gentleman also in his view, greatly underrated the amount of coin, which would be rendered necessary, by calling in the one-pound notes, as he was convinced that a much greater proportion of sovereigns would be required than would go to the mere replacing the smaller paper. The hon. gentleman ended by recommending the subject to the most careful investigation by the government; though, under present circumstances, he could not vote for referring it to the inquiries of a committee of the House.
Sir M. W. Ridleysaid, he should not have risen, had it not been for a remark of the late Vice-president of the Board of Trade. He agreed with the Chancellor of the Exchequer, that the profit on one-pound notes was not of any consequence to the country bankers. But they had heard from the Vice-president of the Board of Trade, that the great pressure which was felt in the year 1825 was chiefly caused by the pressure of the country bankers on the Bank of England for gold. Now this was a statement which he felt himself called on to deny. The country bankers had done no more than any other men. They who held the paper of the

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Bank of England went to it, as they had a right to do, and demanded gold for it. He, for one, only required that the Bank of England should act towards him, as he acted towards his customers. In fact, it had not acted so well; for the Bank of England had at one time not a guinea to meet the demands on it. What was the consequence? Why, the country bankers assisted in circulating the one-pound notes of the Bank of England. They had acted in the most friendly manner towards the Bank of England. He spoke from personal experience: and he knew that for many days he had received, as a country banker, not a single guinea from the Bank of England—nothing but Bank of England notes. As long as the public were satisfied, it was of no consequence to the country banker whether he paid in notes or in gold. The only difrerence was in the difference of expense in the transport between paper and gold. It had been stated, as a charge against, the country bankers, that they had caused the failures of 1825, and had spread ruin over the country. A great number of individuals, it had been said, had suffered, and he admitted that they had; but, as far as the country bankers were concerned, the picture was overcharged. In 1825 and 1826 there were seven hundred and seventy country bankers, and of these sixty-three had stopped payment. Out of the sixty-three, twenty-three had subsequently resumed their payments, and had paid 20 s. in the pound; and of the remainder, thirty-one were making arrangements for the payment of their debts, and there was a great hope that every farthing would be paid. The country bankers who had failed in 1826, had paid, on an average, 17 s. 6d. in the pound. It was a little too hard, therefore, to throw all the odium of the convulsion of 1825 and 1826 on the country bankers. In fact, they had been made the scape-goats for the ministers; who had contributed, by their measures, to that convulsion. They had been supported by all the members from Scotland and Ireland in that House, when they brought in their bill in 1826; but, as soon as that was completed, these members besieged the ministers, compelled them to give way, and allow the small-note circulation to be continued in Scotland and Ireland. He pledged himself to prove, if they went into a committee, that there was not a single part of the Scotch system of banking, of any value, that had not been
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adopted in every well-regulated country bank in England. If the government had acted with candour to the country bankers, that fact would have been proved before; and the famous—he might call it by another name, but he would adopt the more courteous—the famous letter of the chancellor of the Exchequer to the Bank of England, in 1826, would never have been heard of. He had no objection to the bill, nor did he object to the permission of one-pound notes in Scotland; but he thought, as a country banker, though without suffering any improper bias to influence him, that it was wrong to confine the cheap system to Scotland, when the evils of a bad system might be guarded against as effectually in this country. It was not the use but the abuse of a paper currency that had led to the misfortunes of the commercial world; and it was rash and unstatesmanlike to abandon a course altogether, which was only injurious, because it was abused. For these reasons, he should vote for the committee.
Mr. Huskissonsaid, it had been long his lot to address the House on all the general subjects which the hon. baronet had touched upon with a rapid and lucid view; but he would not go into a discussion, on the present occasion, upon the depreciation of the currency, the conduct of the country banks, or the blunders, as an hon. member had described them, of the committees of 1810 and 1819. He regretted that he had not had the advantage that evening of hearing the speech of the chancellor of the Exchequer. It was, therefore, that he wished very shortly to state the grounds on which he should vote for the proposition of his right hon. friend, and most decidedly against the amendment. He agreed with the noble lord, in the general proposition, that provided no risk or inconvenience attended the proceeding, it was desirable to go into a committee on such subjects; for the more they were inquired into, the more should we increase the stock of our practical experience, the want of which had led to the errors we had committed, to the great detriment of the national prosperity. But he would ask, was there no risk in unset-ling the mind of the public, as to what was to be the future state of the currency? He had no hesitation in saying, that many questions must be brought under the consideration of such a committee, if it should be appointed, the discussion of which

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could not fail to alarm the country. They would have to inquire into the subject of the restriction. The hon. baronet seemed anxious to avoid a panic, and had stated the evils that arose from great fluctuations; but, with all his well-founded aversion to those calamities, he was going the direct road to another panic, and to other fluctuations, if his suggestions should be adopted by the House. The first consequence of undertaking such an inquiry would be, the awakening of a general expectation that they were about to restrain cash payments again; the next, that they were about to allow an unlimited issue of one-pound notes. Then would come the speculations and fluctuations which would naturally arise from such fruitful sources of extravagance and uncertainty; and thus would return the whole mass of those alarming evils, which every one concurred in deprecating. If they consented to repeal the bill of 1826, now that it was so near being carried into complete effect, they would invite back the whole host of afflictions under which the country had suffered. It was absurd to talk or a paper currency convertible into gold; for the moment they introduced paper they would banish coin, except such coin as was of lower denomination than the paper. It was impossible to retain either the present or any other amount of gold, except upon that condition; for if we returned to the issue of one-pound notes, we could not keep any coin in circulation, which was not less in value than the pound sterling. The noble lord had asked whether, in the present circumstances of the country, it would not be a great object to save the annual expense upon two and twenty millions of gold currency. In the first place, the expense was comparatively of no importance; and in the next place, the provision which the noble lord had recommended, of a paper circulation convertible into gold, was a fallacy, as he had already shown; for when the paper was let in, the gold would disappear, and in this way they would soon be saved the whole expense of a gold circulation. They might vote the money; they might coin it; but how could they retain it in the country? The hon. baronet, the member for Carlisle had talked of fluctuations as the greatest evil under which the country had suffered; but this, instead of being an argument for going into a committee, was the greatest objection to such a proceeding. If they
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allowed the country banks to go on increasing their own issues, and encouraging the spirit of speculation, which would be the consequence, the Bank of England would again be placed in the same situation as in the year 1825, and would then, perhaps, realize, in its fullest extent, the ruin which it had experienced but partially on the former occasion. He would say that it was impossible, consistently with the interest of the country, to allow the country banks a power of adding to their circulation as they pleased. Supposing a rise of price to take place in consequence of a deficient harvest, the value of money would then be lowered. The high price of commodities would encourage the speculator to deal in those articles under an expectation that the advance would continue; but then would come a glut, and then a fall, and then the fluctuations which precede a panic; and, finally, the panic itself. But, in the midst of all these changes, there was one commodity that would not rise, and that was the treasure deposited in the Bank of England; so that unless they took some strong measures, the effect of which was panic, they would not be able to check the spirit of speculation which the issue of country notes had encouraged. It was the want of a proper metallic currency that led to the difficulties of the year 1825; and therefore, as a measure of precaution, he would support the measure of 1826, instead of again unsettling the whole of the arrangements, which extended to all the country banks in England. He believed that, if the fact were ascertained, it would be found that, most of the country bankers would rather see the system carried into complete effect, than abandoned on the very eve of its completion. When they knew, as he hoped they would by the decision of that night, that the arrangements would be completed, not disturbed, they would adopt a more settled principle of accommodation and credit, and pursue that course which was most consistent with the interests of the country, instead of wandering into those vague and uncertain chimeras, which must result from a vacillating spirit in the policy which professed to regulate their proceedings.
Mr. Brightsuggested, that the debate should be adjourned.
Mr. Bankeswas desirous that the matter should go to a committee. If the chancellor of the Exchequer did not

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adopt the proposition, they might have an unlimited issue of small notes. He, however, considered the circulation of a certain portion of them necessary, and that, without inquiry, it would not be safe to adhere to the law of 1826.
After a short desultory conversation, it was proposed to adjourn the debate to Thursday. The Mouse divided; when there appeared, for the motion 82; against it 17:—majority 65.
The debate was accordingly adjourned to Thursday.