Star. — London, England, 1826-02-11 00:00:00

issue of ridges updcr five pounds" to be a great evil ; adding, at fhe same-time, that smaller notes were by no means necessary for the purposes of our commerce, In ITV, the Act of the 17th Gt o. 111. was made pei retual, and I cite those Acts for the purpose of shewing l that those who preceded us, and who are som-tisieg referred to as models of wisdom, and now and then as the very reverse, considered the issue of - small notes to be so bad that they absolutely prohibited them. In 1 . 1.97, when the suspension cf cash payments occurred, i became necessary to give effect to that measure, by allowing the issue of one and two pound notes ; but', before that period their issue was illegal. In 1819,when the Bank Restriction Act was over and over again dis cussed, wl en Parliament and the whole country resolved to return to each payments, the House had a Committee sitting, composed of men of all panics, of men of very different opinions as to the principles on which our , currency should be established ; but still there was no dffeience uf opinion amongst them as to the necessity of resuming cash payments, and I defy any man to find out in the report made by that Committee, any one line going to establish the necessity or utility of small notes, fur the maintenance of our agriiulture or our com merce. .fhe Committee took the opposite course, and decided that the issue of small notes should be discon tinued in two years after the resumption of cash pay.' ments. The Parliament of that day, never intended that small notes should continue to be issued for years after the Bank had paid in cash. I repeat what I before, repeated the other night, my unfeigned regret, that, in Ib'22, that step was taken, by which the circulation of small notes was extended. Now as to the de posit to be made by country banks. I have heard that bankers say, they are indifferent as to the issue of small notes. although they object to the deposit.— Why, as to small notes, I am net going to introduce any new principle; in 1833 they should cease as a portion of our currency, and all I am doing is, to revert to th: system which was so strongly recommended in 1819. My Hon. Friend, the Member for Cricklade, says, the small notes are essential to the payment of rents; and if so, why then the law now existing must be changed, and my Hon. Friend must make the law for small notes perpetual. My Hoa. Friend is a landed proprietor, so am I; and, upon my honour, as such, I do believe, .we should be sure to lose by the system of whiclshe is so enamoured. Perhaps Gentlemen do not wish to make small notes perpetual, and only object to their being withdrawn, as being likely to cramp the circulatioa of the country, and, by so doing, to lower the pries of agriculture and commerce? I confess that any such apprehensions appear to me quite vi sionary; besides, we are not without some experience on this subject, for, in 1819, when it was necessary for the Bank to provide means for paying their notes in gold, the mode they adopted was, by contracting their issues to such an extent as produced the settlement of the exchanges, and brought in and enabled them to keep a sufficient supply of golds since 1819, there has been coined at the Mint no less a sum than 25.236,000 sovereigns. I shall now state to the House the periods at which this took place, with a view .to chew how great a proportion was coined in the three years imme diately after the year 1819. This appears from the following Accouut of the Quantity. of Gold received into his Majesty's Mint, and of Gold Monies coined in the mulct mentioned years : Gold imported into the Mint. s. 4. • . 3,762 16 1 . . 1,493,162 10 7 . . 10,619,013 13 9 4,426,446 14 5 617,197 1 9 4,690,516 IS 2 4,152,159 10 9 1119 1020 1021 len 1023 1024 102 S . . Gold Moo* coaled. .t. ad. 3,574 9 3 949,511 0 0 9,590,759 13 10 5,356,787 12 8 759,748 10 0 4,065,071 0 0 4,580,919 0 0 26,002,259 2 4 25,254,379 S So the House will perceive, that, in 1820, 21, and 2Z , the exchanges were set rig ht ; the gold got into the country, and fifteen millions of sovereigns were coined; I do not mean to say that there was not partial distress in 1819. and 1820. In some respects, I may say the same of 1822. but still any one looking to the various prices , of commodities in 1822, after the great effort made by the Bank to return to cash payments, must see that things we, e generally mended, although the citculation of the aunt: y had been necessarily reduced, to enable th Bank to meet the payment of their notes in gold. , The average circuluion in 1590 was . . 423,875,000 1621 and in 1821, notwithstanding the pressure which existed. it amounted to . . 18,000,000 the paper currency having In that year increased.— When the substitution of gold for one pound notes took place, did any man say to himself, di i am likely to be ruined?" Did all credit cease ? Did every one run to grasp at any remnant of his property which might have been entrusted to the hands of another ? Certainly not. They had been prressively advancing to prosperity; prices had attained a permanent level; confidence had increased; cchnliverce had been flourishing, and the slightest con. siderariin would convince those who directed their attention to the state of things before and atter the period he alluded to, that there was no foundation now for the danger apprehended by some in the substitution of gold for paper at the present moment'. But it may be said that this is an operation of such magnitude as ought not to be undertaken without great consideration, nor are we doing so; for the subject has had the sanction of Parliament for several years past, and now, in order to estimate the apprehensions which thiy be, entertained from withdrawing the circulation of small notes, I shall call the attention of the House to the gold circulation as it exists at this moment. In 18.19 we had no gold. In 1823 we have gold ; and every one must see how much easier it is to superinduce a smaller quantity on the stock we have than it was to lay the basis of a large gold circulation, such as took place in 1822. The gold coined since the year 1819, amounts to 2.5,25,0001. there was expo' ted since that period 7.269,000/. This appears by the following Ac cuunt of British Gold Coin extsortt d Or. Value. Average price of gold. 1819 tan atilt,9 l 7l/ ,tre 19 9 18'20 . 111711 17,344 3 17 101 1541 . NO. 11-2 . 147,553 57§,c05 1823 • 98.000 319,730 4 82 4 • 764;109 11,11014.121 1123 . 134,951 5,020,176 3 17 I 3 17 6 3 17 I 3 17 6 .0469,174 Of irlip 7469,1761. the cut Qf Looo,pooi. has compel back in the sold coin of the realm, and thence.the iota: hiss by eiportis about 6,000,()001. Thee deduct . fiorn. the 26,000,000% coined the 6,000,0001. exported, and it still leaves us a. balance of 19,000,0001. Some murs 'money may have gone out in the packets of individuals:l some may have_ also roe oat in' a. species of. trade, which ',have to , otwiabed to be dpwn, mean.rhe; trite kpowa by th e name of stSgeWnp That triad. purinapalty, if not wholly, managed by. gold, and no bt some..deduetions are to be nada of the continnak isiyments ander` that head. The exchanges are now more favourable to the country, and consequently to the importation of gold from all the other parts of the world. It appears, therefore, that we have most fully and completely laid the basis on which to begin, arid that wWch we have to look to is, to see if, at the end of three years time, we shall be able to withdraw the small paper currency entirely flora circulation? The neat thing which we have to look to is, to ascertain the quantity of gold necessary to supply the place of one and two pound notes which shall be so withdrawn. The House is aware that there is much difficulty in ascertaining, with any possible degree of accuracy, the amount of country bank paper in circulation ; but still some pro. table guess—some near approach, may be made to it. It appears that during the year ending the sth January, 1821, the number or one pound notes stamped was 1,683,001 In the year ending sth Jan. 1822 (the period at which the Wink of England determined upon withdrawing their one and two pound notes), the amount was 2,214,0004. In 1825, 1,888,C001. In 1824 there was a small increase, for they amounted to 1,969,0004. In the last year, 1825, they amounted to 2,501,0004 Now, I believe. tliikt if we are to estimate the amount of country pacer ' circulation, by trebling the amount stamped in any year (a scale by some supposed to be correct), we shall considerably overrate the actual amount. I believe the average of de three last years is about 2,300,0001. and three times the average of the three years, would give 6,000,000, or rather more; but although that sum may have been the amount of that -species of currency during a considerable portion of the year 1825, there is no doubt that there is not the same amount in circulation at the present moment. Because, when in the month of July last, a question arose in this House, respecting the right of any private banker to refuse paying his small notes in gold, which question arose out of the difficulty opposed by a banker in Bristol to that mode of paying his one pound notes ; that cir cumstance operated to a great extent on those who were in the habit of taking such notes, and also upon those who issued them. Subsequent to that occurrence, and in consequence of it, a great proportion of the gold which had lain in t he coffers of the Bank of England found its way into the country to enable those bankers who issued small noses, to provide against the menaced exigency, and to lessen the quantity of their small notes. Hence am I justified in believing that the amount of small notes now in circulation is less than at any period of the last year. From a calculation made by persons most competent to that task, it was found that the notes stamped for private bankers were not of necessity imme diately issued, but were held over to replace those which had become worn out; so that, in point of fact, although in 1825, it might have seemed that six millions, in small notes, were in circulation, yet, from the operation of the circumstances to which I have referred, the amount is not now, probably, more than four millions. The utmost effect, therefore, of the measure which I propose to submit to the House, would be to render it necessary to fill up, in the course of the next three years, the void created by the withdrawal of that amount of paper cur- 1 tency. The assertion of some Hon. Gentlemen, that it is impossible to fill up the vacaueywhich theproposed mein sure would cause, cannot be sustained, and the appal.. hensions founded on it, I will designate as most vi sionary and groundless. That some difficulties still exist, and that some danger still threatens, I will not deny— but surely, in an undertaking intended, and calculated to remove those difficnlties—to avert those dangers, and to prevent their recurrence, we are not to be deterred by imaginary contingent evils—(Cheers).— r It would be most pusillanimous, it would be must im politic, for Parliament to shut its eyes, and not to look those difficulties and dangers in the face, and to provide for them a remedy. In a time of war it may happen, from a variety of causes, that the principles of sound policy cannot in every instance be followed; but if, in a time of profound peace, we are not to make sound principles the basis of our conduct and of our measures s , our affairs must for ever remain a chaos; it will be ins possible for us ever to retrieve them from disorder, and to place them in a proper situation with reference to the dependence which all States have upon each other. Reference has been made to the increase of circulation of Bank of England paper, which, however, has arisen out of measures adopted by the Bank, and which were their own acts. It is undoubtedly true, that the issues. of the Bank in the years 1824 and 1825 were greater than in the preceding years. Here the Right Hon. Geo. tleman referred to, and read the following decunsent Amount of Bank Notes in circulation, including Bank Peet Mk at the undermentioned periods ' • 1820—February 15 . . X24,051,500' May 15 • • • 23,815,7 /0 August 15 24,451,470 November 15 . . 23,182,720 1821—February 15 . . 13.350,200' May 10 . . . 3,812,850, August 15 . . 21,241,170 i November 15 . . 18,641,870 I 922 Fe bruar y 15 . . 15,826,270' Atuy 15 . . • 17,230,410, August II 18,513,2501 November 15 . . • 17,601,820 1553—February 15 . . 17,509,620' May 15 . . . 18401,5801 August IS 19,895,8301 November 15 . . 00,365,140 1524—February 15 . . 20,357,100' May 15 . . . 19,961,910 August 15 . . 20.960,540, November 15 . . 21, t 114,430 1815—February ZS . . 91,301,931' May 15_ . . . 201046000 Avenges. 25,1175,942‘ 21,7'7 4 771 18,042,93/ 19,157,49 S 12,7‘1,015 A o=ust 15 • • 19;616,010 November 1; . . 17,980,630_ From these data, it would appear, that the average issues of the excheoges of the Bank had increased con siderably in the year 1824., and that of course that in crease must be attributed to the consequences which follow every greatincrease in the issue of paper by country bankers. The asserted proportion of issues of the Bank of England, and the country Banks, does not by any means exist ; for it appears that, instead of keep ing pace with each other, the reverse, is the case; and that, in fact, there is no intimate or direct connexion between the two species of circulatiag medium which has been ascribed to them. It does not. appear that the increased issue by the Bank was caused, as is believed ,by souse Honourable Members, by. advances made to 'Government, or by the payment .of t le half-pay, pen- Stens, and supesannuated alowances, or by pay. • g off the holders of the four per cents. The in. mused issue may rather be ace 'anted for by the d teiminatiun sf the Bank to advance money upon (landed security, for. in that waythe Bank had lent about 2,200,0094 the amount advanced by the Bask to Go vernment ceinot have increased the circulation beyond 200,0001: . or Soo,oo47consespently the increased circu lation of the Bank hid ;not been caused by advances to Governaient. In stating this it is .by no means my-in tention to shift from Government to the -Bank. the re sponsiblity of the increase that took place in the circu lation. I have not the most remote intention to shrink from the consequences of those measures of Govern. ment in which I have concurred, nor to screen his Majesty's Ministers from any blame they may appear to have merited; that would be the weakest point that could possibly be assumed. If it shall be found that the conduct of Government did contribute to produce the panic, it is the duty of the House to take,care that such a misfortune shall never occur again, and it is in the power of Govei nment and of the House, to insure that result. I call upon the House, n•rw to legislate on one subject, and I trust, therefore, that I. shall not be 'without support, because, on another question, some parties were to blame; if they were to blame, in Gores nanke let them have it, but do not suffer that circumstance to prevent the adoption of a measure, calculated to prevent the pos. sibli recurrence of a similar offence, or the unhappy consequences attendant upon it. (Cheers.) I have now gone at great length into the general subject, and shall therefore proceed to a particular portion of it, and state .in detail the mode by which Government hope to destroy, at once, the small note circulation, and the sources of those evils with which the country has recently been visited. To effect this object, two modes presen!ed themselves; one was, by declining that no small notes should continue in circulation after a given period : the other, that those notes should be allowed to run their course, and that no new ones should issue. It appeared to me that the best mode, as WAS thrown out the other night by my Right Hon. Friend near me (Mr. Huskisson) would be, to prevent the issue of any new notes, and that at the end of three years none of those which might then remain oat should be allowed to circulate any more. These are, therefore, in truth, the only points of detail which I feel neces sary to state; because, in fact, the Resclution which I shall now have the honour to read requires no farther explanation : " Risio.vio—That it is the opinion of this Committee, that all promissory notes, payable to bearer on demand, issued by licensed Bankers in England, or by the Governor and Company of the Bank of England, for a less sum than Five Pounds sterling, and dated ON or previously to, the sth February, 11126, shall continue to circulate until the sth February, 1829, and no longer." —This is my first Resolution, and contains all that can be said on the subject, for, in point of detail, 1 have not much more to state. It is, however, important that the House should know the views taken by his Majesty's Government of the remaining portions of the question. With respect to the application of this measure to other portions of the United Kingdom than England, the whole of the attention of Government would be directed to the extension of the measure to all parts of The Empire. The general law with respect to banking in Scotland, differs from that which existed there since .1779. In Sootland, no check upon the issue of Bank Notes under 51. in value was known until that date; but •in that year the law was altered, and it was enacted that no note under 20shillings in value should be issued. In 1785, that law also was repealed, and by the general law of Scotland, there is no restriction whatever on the issue of small notes; indeed, some have been circulated there for so small a sum as five shillings. In Ireland there is no restriction, yet in that country an objection had existed to paper currency. In the north of Ireland, in particular, the people felt an objection to a small note currency, and required that all rents should be paid in gold. In the year 1799, the Irish Parliament took a course directly the reverse of that which, in 1797, the Parliament of England had taken (after passing the Act for restraining payment in gold by the Bank), for while we repealed the law which prohibited the issue of small notes, the Parliament of Ireland passed'a law (in 1799) declaring that no notes under 51. should be allowed to circulate, and which had the effect of keeping in that country a greater quantity of gold currency than was in circulation in England at the same period. In the year 1806, that Act was repealed, since which date small notes have almost excluded gold from circu lation in Ireland. The difference betueen those two countries is this: In Scotland there is no exclusive pri vilege enjoyed by any body or individual. There are there three chartered companies, but without any ezclu sive privileges whatever secured to them. In the Act of 1822, the exclusive privilege previously enjoyed by the Bank of Ireland was waived in favour of all other Pinks not situated within fifty miles of the City of iblitz. The first question that arises, therefore, is.— " if you prohibit the circulation of small notes in Eng land alter a certain time, on what principle can it be said that a permanent difference from the usage in Ire land or Scotland, in the banking system, ought here to exist?" In reply, I shall say that I cannot, for my own part, see why England should be kept on an exclusive principle. i byno means say, however, that although the principle should be impartial in its operation , that the period fur its application to all parts of the United ILingdona should be the same. In Scotland and iulreland, a greater quantity of small note currency is in circula tion than in this country, and not, of course, so large a portion of gold, and therefore, the same principle ought not to be applied at the same period in all places. It is - not, however, my, intention to move on this occasion any exclusive measure, applicable either to Ireland or Scctland. I shall take the first possible opportunity to move for such an enactment, for, I repeat, I cannot clonceive on what principle it can be asserted that there . Ought to be a permanent difference. Now, Sir, to call the attention of the House to the second branch or point of this subject. By the second point, I mean the exclusive privilege of the Bank of Eng land, and to limit which I confess I do not anticipate any serious objection. When, in the year 1822, the Go vernor and Company of the Bank of Ireland consented to waive the exclusive privilege secured to them, it never entered the head of any Hon. Member of this House, that that measure was fraught with danger to the existence or interests of that Bank. Oa the contrary, it was felt and universally recognised as an Act calculated to give to it additional security; and when last year the measure was discussed in this /louse, the only difficulty I felt respecting it w is to prevent Hon. Members from caitying the principle too far—so far, indeed, as to curtail the remaining exclusive privilege of the Bank of Leland, which had, been secured to it by its Charter. 1 am at a loss. therefore, to conceive on what possible ground the application of the same irinciple to the Bank of England can be resisted. Tire system in Scotland has been long tired, and his proveu to be of a nature the most beneficial: I do not . mean to soy that the introduction of the system now proposed wilt absolutely prevent imprudent speculation, or an imprudent issue of notes; but I am decidedly df opinion, that it wilt give a stability and security which have been hitherto hnknown, and the want of which has been felt to be the great failing in the present system. It has been said that the measures new proposed will be useless, because in the great majerity of country banks now established, there • are no more than three or four partners, although by law they are entitled to have six. Bat there is no magic; in this num ber, for six may be too many, although in many instances they are too few, and this is the light in which we must consider the cautious system of Banking pursued in Scot ! lond. It is unreasonable to infer, therefore, that this' sysz. tem will be practically useless. I need only serer to Iry land, where, since the passing of the Act, the greater parf of Banking concerns are carried on upon this principle, (except, of course, the Bank of Ireland, which is a chat: tered body), sad where the partners are seventy, eighty, or more in number. Their affairs are ears ed on in an excellent manner, and, as I am informed, the Commercial Bank and othets have given pet feet satisfaction in the ars rangements they have made, and in any notes they have thought fit to issue. Upon this has been grounded the resolutions now proposed to the House. They are resolutions for laying the foundation of a ptinciple that Banks should be established, without going into details upon the subject. A Bill for this purpose it has been thought better to originate in the other House of Par liament, where it will be brought in. If this resolution . should not be agreed to here, and if the House will not persevere in it when agreed to, I shall feel very deep . regret. I have been asked, some few days since,. whether I had proposed to fit any time before which it would not be competent to parties wishing to establisli Banks of the nature designed, to loin) themselves into partnerships ? I certainly did not wish to tit' any period which might be productive of inconve nience to any existing establishments, but I much , doubt that any advantage can arise from postponement. I would, therefore, propose the ash of July, as the tittle before which none of the new establishments can begin to operate. This is as much as any persons now interested can in reason demand, and will be equally beneficial to those about to engage, for all pur poses of their future practical management. I ant of opinion that if the House shall refuse to entertain these propositions, or if bevies entertained them, they will not persevere steadily to the end, they will inflict the most serious injury on the country, and expose it to the certainty of having repeated those shocks which have already caused suck mischief. I conceive it to he the positive duty of Par liament not to blink this question, but to apply themselves to it boldly and heartily, and afford a real, decisive, and substantial remedy. Whatever fluctuation of opinion, whatever difference of sentiment, may have existed at different times and on different subjects in Parliament, 1 have every confidence that they still have sufficient steadiness to meet and correct, boldly and steadily, the evils of the present system ; evils width, if not put an end to, may lead to miseries much greater than any which have been yet experienced. It is also my opinion that the difficulties which lie in the way of the measures now proposed, are greatly overrated. I do sot mean to cast the slightest imputation, or at ail condemn any person engaged in banking under the present system—quite the reverse; but the system is bad; and giving the persons engaged in it the highest credit, I do not condemn them, but the law (hear, hear), and that I wish to have altered. That the country banks in general are conducted with credit and honour I willingly admit. and all those that are so carried on, and have a basis of solidity. cannot be injured by these measures, and the confidence reposed in them neither eau nor will be shaken. The Hon. Gentleman eluded by moving the Resolution. Mr. A. BARING begged to ask the Right Hon. Gentleman, the Chancellor of the Exchequer, if that was the only resolution he intended to submit The CH A NCELLOR ef the EXCHEQUER—" The only one on that subject." Mr. A. BARING said the Resolution then went only to say that the holders of one and two pound notes should not circulate them beyond three years. There was no resolution respecting the issue of new notes, as to whether they might not be issued imme diately, or from the commencement of the new system. On that point the resolution said'oothing. The Right Hon. Gentleman had complained of hostility 'lasting against bins on that side the House. The CHANCELLOR of the EXCHEQUER—`• Only hosti lity to the principle of the measure as to the expediency of with drawing one and two pound notes." Mr. A. BARING sail that the present was a question on which no party feeling could possibly exist : indeed. there never was a period when less existed ; but the Right Hon. Gentleman must expect to find difference of opinion, without reference to politics. It must be quite clear that the sensation created in the City by the paper of his Majesty's Ministers addressed to the Bank, was calculated to excite hostility, when that paper sated the distress of the country was past. They should go to the Royal Exchange to hear the real state of things. He (Mr. Baring) had every respect for the Right Hoe. Gentleman, but he must say chat his speech had strewn that he was ignorant of the distress of the country: the view he had taken of it, had only been skin deep. It had been an unfortunate circumstance that theoretical men had thought they could perfect a system by the study of books alone, and not look to the fact of expe rience; but it was impossible not to see that such a sub.- ject could not be attained by a straight road—not as the crow flies. Many years ago, when the bullion ques tion was brought before the House, it would be recol lected that he (Mr. Baring) onsosed the Bullion Report, and he recollected that the Right Hun. Secret ary . (Mr. Canning) and the Piesident of the Board of Trade con curred in it, and the House came to tiie resolution that on the first of the following January the issue of specie should take place. CMr. Secretary CANNINU: .1 do not concur] —lt was necessary to bear in mind the nature and cause of the present difficulties. He agreed in the main with the Right Hon , urable Gentleman in regard to these, although he, perhaps, had kept rather too much out of sight the conduct of Government its some of the transactions with the Bank. In speakintof " Country Banks and of the Bark of England, he wished ,to be understood as talking of systems, and not of men. . In speaking of the Directors of the B ink of England in particular, he should do violence to hints. It if he were to express anything but respect. He had spent most of his time in ication with them, arid felt the highest esteem for them as a body: but the ques tion was far too important to be blinked; cut of consi deration to any men. At the termination of the war, great facility existed for the acquisition of specie. - Eng land had the command of the consuroption cf alt Europe for her commodities. If it is Inferred, because. it was easy to get gold then, that it is easy to get it now, there could not be a greater !mistake. It was easy to . talk about contracting issues, but it must be remem bered that gold is not gut without giving value for it. The facility of obtaining gold is gene. The manu factures of the Continent, as well as those of America, have gradually improved; and, year after year, vte find ourselves a little and a little mare excluded.— To return to the immediate causes of the present dis tress, the Bank of England during the years INS and 1824 had become possessed of a large amouut ut specie. lhey had been during the war in the habit of giving to the proprietors of Bank Stock a dividend of ten per cent. as well as large bonuses in rapid ince ess.i on. In this .there had been nothing to blame. But if, as he sus- common