The Stourbridge Observer, Cradley Heath, Halesowen & District Chronicle.
Stourbridge, West Midlands, England, 1875-03-20 00:00:00

THE SCOTCH AND ENGLISH BANKS.

Mr. Goschen moved the second reading of the Bankers'
Act Amendment Bill, which proposed to restrict bankers
who issued bank notes in England or Scotland from having
other establishments or banking houses in any of the other
parts of Great Britain than that in which they were issued.
The right hon, gentleman stated that after the notice given
by the Chancellor of the Exchequer, he should not enter
into any elaborate statement with regard to the Bill, but he
contended that the Scotch bankers had under the present
system a monopoly, and a monopoly that had maintained itself
since 1.849. The Scotch banks, when they established them-
selves here, had the advantage of the introduction of their
own system here, and could bring their own one-pound
notes with them, but English banks were deprived of that
advantage when they went to Scotland. The use of these
small notes was already spreading south, and in Cumber-
land they were now frequently paid to the tradesmen
by their customers, while the English bankers who re-
ceived them from the latter lost by the commission
they had to pay to the Scotch banks to change them.
Referring to the amendment of which the Chancellor of the
Exchequer had given notice, namely, to refer the Bill when
read a second time to a select committee, he said he had no
alternative but to accept it, but he thought that the Go-
vernment should pass a Suspensory Bill leaving matters in
status quo until the Select Committee could report. In all
probability, two years might elapse before any action could
be taken by Parliament, considering the largeness of the
question.
Mr. S. Cave said the amendment of which the Chancellor
of the Exchequer had given notice Was not intended to be
hostile to the Bill. The Government had had the question
under consideration for a considerable time, and they felt
that in dealing with interests of such magnitude and of such
a complicated character they ought not to legislate without
previous inquiry. One branch of the inquiry would be to as-
certain whether the Scotch banks were within the law. It was
generally supposed that they were acting legally in doing what
they had been doing, but still the matter was one which was
not entirely certain. In bringing their notes across the border
and establishing a Scotch circulation, the Scotch banks were
certainly very near committing a breach of the law. Free
trade in banking and free trade in issuo were very different
things, and must be kept entirely distinct. The parer issue
of the country, like the coinage, ought to be in the hands
of the Government. He moved, on behalf of the Chancellor
of the Exchequer, that the Bill be referred to a Select Com-
mittee.
Dr. Playfair said he would not oppose the amendment, but
he strongly objected to the provisions of the Bill.
Mr. Gladstone agreed with the opinion that had been ex-
pressed that it was hardly consistent to propose legislation
against the privileges of the Scotch bankers who came to
establish branches in London, while they closed their eyes
to the fact that a similar privilege was enjoyed by the banks
of Ireland. He conceded that the late Sir Robert
Peel was in favour of free trade in banking, but
he did not disguise from himself that the effect of the ex-
istence of artificial privilege of issue must modify
the application of the privilege of freedom of banking. The
law in this respect was Jo an inequitable state, and this jus-
tified the right hon. member for the city of London in raising
the question, though, as he understood, it was not proposed
to press the measure against the inquiry suggested by the
Government. The point of the Bill was a narrow one,
and the real question which the Bill and the debate must
suggest to the House was whether it was desirable that
they should at length endeavour to deal with this ques-
tion of issue. He himself adhered to the principle of the
Act of 1841, and approved the principle that issue was the
title and business of the State. Issuing banks were in the
strictest sense subsidised by the State, but the secret of the
great success of the banks of So:Aland was duo not so much
to the privilege they possessed as to the manner in which
they had pushed banking facilities to every part of the
country. Ile wished to point out to the House and the
Government that there was an opportunity for legislation
on a larger subject of issue and for the settlement of
these claims. A question of this kind could never be
settled if party considerations were allowed to interfere
with it. (Hear, hear.) He knew the feelings of the
Chancellor of the Exchequer upon this subject, as they had
been stated in the House, and he could only say that if a
bill upon the subject were introduced into the House it
would receive all possible support of the Opposition. If the
inquiry now proposed were granted, care must be taken that
the status quo must be maintained while it was going on,
for the House would be censured for loss of foresight if such
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After remarks from several other hon. members, the Chan-
cellor of the Exchequer said that those who had heard the
debate must admit that the question was a large one, and
involved many issues. After the discussion he thought
there were several main points for consideration. First, was
there a case • if so, in what direction were they to look for
a remedy. hen, did they need an inquiry, and if so,
what should be the form of the reference ; and
lastly, should they Pass, a Suspensory Bill. With
regard to the first point, although it had been said
that the case had not been made out, and that the same
arguments applied to the Irish banks, he considered that
enough had been said to show that irregularities did exist,
and the necessity for the consideration of the question by a
select committee, Assuming this the question then arose
how the Government were to interfere. He had first to look
at the public interests, and he had considered that whatever
step they took they might be laying the ground for important

measures to dome hereafter, and he should therefore be
most careful in anything he proposed. The solution
proposed by Mr. Goschen was one that he could not accept
—(hear, hear)—as it went in the direction of restriction.
They must rather act upon an extension of the principles of
the Act of 1844, which were, that although issue was the
right of the State, and that it ought properly to be
exercised by the State, still it was right to allow com-
petition among banks as much as possible. Grant-
ing that restrictions existed, the question arose, could
they do away with them consistently with the cur-
rency, and if not, ought they in any way, in order to
get rid of them, make any change with regard to the
principle on which they had allowed the currency to
remain in the hands of private issue. Those were questions
which he did not think the Government should take up
without preparing the public mind, and seeing how far it
would be desirable to go. It appeared to him clear that
the time was not favourable for them to commerce any
legislation on the subject, though at the same time the Go-
vernment felt that the responsibility of proposing any legis-
lation must rest ultimately upon the Government of the day.
What he wished the House to do was to assist the Govern-
ment by means of a committee to investigate the question
and to ascertain the facts about which there appeared some
doubt, so that the subject might be fairly discussed before
any measure was brought forward in the House. The com-
mittee should see in what position the Scotch banks really
were, and whether they obtained the advantage they were
alleged to receive. The right hon. gentleman concluded by
moving—" That a select committee be appointed to consider
the expediency of maintaining or imposing restrictions upon
issuing bankers, so long as they shall continue to be such, in
respect of their Walking business.
Eventually the second reading of the Bill was negatived,
and the amendment of the Chancellor of the Exchequer
adopted.