The Sun.
London, England, 1833-06-29 00:00:00

nieans of these, small payments might ha mails: That
might be a more effectual means of banishing gold from
circulation than issuing Si. notes. For example, people
having to pay one sovereign might give a 61. note and re-
ceive a Si., and thus get rid of the gold in circulation. He
believed that something of the kind occurred in Ireland,
where the issue of notes for 355. and 255., banished silver
from circulation. Another objection he had to the pro-
posed measure was, th it it would be a relaxation of the
currency. If the Noble Lord carried his motion, it would
be on the ground that it would have that effect. That
such would be the effect was not disclaimed, though it was
not avowed that such was the intention of making the Bank
of England paper a legal tender. The Noble Lord, however,
would find his proposition supported on the ground that ma-
king the note a legal tender would produce a depreciation,
and banish gold from the circulation. It was loosening the
screw of the currency. He did not know if such would really
be the effect, but if the effect should be that of substituting
paper for gold—if all credit should rest with the Bank of
England, and all the liabilities of the country bankers be
thrown on it—if, as he had before said, 500 avenues for
the issue of gold should he closed, and paper substituted for
it, that would be a most prejudicial effect. It might be
that the Noble Lord's measure would produce an opposite
effect. It was possible that country hankers would be unable
to contend against the advantages of joint stock banks ; but
he doubted if that would be beneficial. He conceived that
it was possible that its ultimate effect might be to drive
country bankers out of existence. There were instances
where trade was perfectly flee, in which a combination of
capitalists had driven, at some loss to themselves in the
first instance, a competition out of the market. Assuming
that country bankers, with undivided, unlimited responsi-
bility, were to be extinguished, he could not think that a
benefit. They were the best adapted to issue country
paper, provide.' security were taken. They had a more
intimate knowledge of the people in their neighbourhood
than could be obtained by any joint stock bank, or by the
agents of the Bank of England. They could, therefore,
deal out credit more liberally than the Bank of Eng-
land. Country hankers could issue paper cheaper
than joint stock banks. What objection, then, could
there be to such banks using their paper convertible
into gold ? He doubted, therefore, if they would gain
the object they had in view—of giving advan-
taees to the agricultural and commercial part of the coin-
munity by a measure which might destroy the country
bankers. Before the Noble Lord departed from the great
principle of making a man responsible for what he pro-
mised—before the Noble Lord exonerated him from dis-
charging his debt except by giving the paper promises of e
Company favoured by Government, the Noble Lord was
bound to make out a very strong case. The Noble Lord
proposed to go further than the Bank Restriction Act of
1797. That did not make Bank of Enalan i notes a legal
tender—it only relieved the issuer from the responsibility
of answering for the payment by summary process. The
parties were still responsible for the payment. The Noble
Lord proposed not only to protect the parties against BUM.
mary process, but even gave them their discharge on
tendering the paper of the Btnk of England. That
paper was to be legal payment also, not only for public
taxes, but for all deposits and all debts. To that arrange-
ment, considering it a departure from the principle of the
Act of 1819, he could not give his support.—(Hear.)
Lord ALTHORP said, the Right Hon. Gentleman
assumed that he proposed this plan in order to avoid poli-
tical panics. If, however, the Right Hon. Gentl-m in
recollected the evidence given before the Committee of
last session, he would recollect that all the witnesses,
without any exception, gave it as their opinion that it was
not possible by any means to guard against political
panics. That, therefore, was not his object. He did
not expect to guard against them. He never had sup-
posed it possible to guard against political panics. The
object he had in view in making the proposition was this
—all the persons who gave evidence as to the cause of
commercial panics agree in this : that at the very time
they take place, all the bankers who issued notes were
obliged to provide themselves with coin in proportion to
the demand likely to be made on them. To do that, the
country bankers took care not only to collect all the coin
possible in their own neighbourhood, but they made large
demands on the metropolis for coin. The consequence
was, that there was this internal drain on the Bank of
England for gold at the very moment that there was
also a large drain on it from abroad, in consequence
of the exchange being against us. There were thus two
drains to the Bank—the internal drain, and the drain
from abroad.—(Hear, hear.) It appeared, therefore, to
him, that it would be a great advantage if he could get
rid of one of those drains ; and for that reason be had
proposed this change. Tee Right Hon. Gentleman
seemed to think that the 500 banks now kept a reserve of
cash, but the evidence did not altogether bear out the sup-
position of the Right Hon. Baronet. It was given in
evidence before the Committee last year, that the country
bankers generally kept gold in proportion only to one-
twentieth of their liabilities.—(Hear, hear.) They
possessed all of their convertible securities, and whenever
they were pressed for cash, these securities were seat to
London, and coin required for them. He did not see,
therefore, that his plan would have the effect of
driving the coin out of circulation, though he
readily admitted, that, if one-pound notes vere
issued, they would drive the coin from circulatioa.—
(Hear, hear.) Experience had proved that paper and coin
of the same denomination could not circulate together;
but if the paper were of a higher denomination than
the coin, it did not supersede the use of it, and both might
circulate together. The Right Hon. Gentleman argued
as if the country hankers seldom got coin from London,
but he believed that the country hankers seldom collected
much coin from their own neighbourhood, but rather lrew
it in large sums at once from London. The Right Hun.
Gentleman s lid that the plait would be supported as tend-
ing to depreciation—he had not proposed it with that
view. He agreed with the Right Hon. Baronet that de-
preciation was most undesirable ; but he did not see, look-
ing at the state of the country—looking at the facility of
communication with every part of it—he did not see how
it was possible for a different value to exist for paper con-
vertible into gold, and gold, in any part of the country.
felt convinced that the facility of communication would
keep the convertible paper and the metallic currency
every where at the same value. Ile could not conceive it
possible that there should be any difference of value of
the-r, two articles in any part of the country. The Right
Hon. Gentleman said that it would entirely annihilate the
country hankers ; but he (Lord Alteorp) could not con-
ceive that such would be the effect. It would only make
the country bankers circulate the Bank of England notes,
lodging proper securities. II the B ink of England took
care that the amount of the secutities remained about the
same, there could be no great variation in the amount of the
issues. The effect would be the same as if the Bank dis-
counted the bills of other dealers.—( Hear, hear, hear.)
Certainly, it would give the Bank a more comolete
control over the circulation thin at present, should
any occasion arise, when, from the competition,
of banks or other circumstances, there might be an in-
crease of circulation. He was in hopes that the plan
would supply great additional accommodation, and at the
same time he believed that it would prevent fluctuations
and danger. It was known that at the time when the
exchange first became against us, the demand for accom-
mudation increased, which the country banks, little
affected by the rate of the exchanges, were ready to supply.
The consequence was, te ere was more paper got into cir-
culation when it ought to he diminished, and that great
fluctuations and great danger ensued. He concurred with
the Right Hon. Baronet in his opinions ef the Scotch
system, which did very well as long as they had the stores
of the Rink of England to apply to. That system owed
its safety to the bullion kept in the Batik of England.
He concurred with the Right Hon. Geri letnan, that if the
Scotch system were spread into England it would place
the country in great danger. The Noble Lord, in con-
clusion, said he hail been required, he thought, to explain,
and therefore lie had done so immediately after the Right
Hon. Batonet.—(Calls of " Question !" and "Divide.")
Mr. FORSTER had no objection to the first pat t of the
plan, but he had great objections to establishing local banks
with partners of limited responsibility. He had also great
objections to make to that pat t of the plan which went to
make Bank of England notes a 'egal tender.—(Question.)
Major HANDLEY professed himself hostile to the B •rik
of England, which lay like an incubus on the country ;
but, fur good or for evil, it was titne that this matter
should he set at rest. He should oppose some of the re-
solutions, but be should think it his duty to vote for now
considering the subj-ct.—(Question.)
Mr. BARING (who was met by cries of " Oh," and
" Divide") said, it was impessible to look at the question,
and tint regret the period of the session at which it was
brought on. It was now past ;Midsummer, and it was
brought forward for the first time. It was impossible to
see what wen, forward in that House, at least nobody
acquainted with the House, but must know that this
was a season when hardly any subject could be urged
which could fairly attract the attention of the House. One
half of their time they were counted out, and the other
half they attended ti; reluctantly, that it was almost
physically impossible that any important business
o
could be adequately discussed. There was the qtlestion of
the West Indies, and of voting twenty million..—(" Ques-
tion, nn, question"
the important as if some Hen. Member were willing to
show Mr.
Bating
question
th ttthere r e wasoi
the
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d
that the Bank Committee had ;not inquired into all the