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London, England, 1826-06-01 00:00:00

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It will appear from:the evidence, that a practice prevails in Ire-
land of issuing notes for the payment of sums between one and two
pounds, for three guineas, and other fractional sums.
Your Committee see no public fulvantage arising out of this
practice, and they are of opinion that it ought to be discontinued,
as it tends to dispense with the necessity of silver coin, and practi-
cally to exclude it from circulation.
Your Committee hesitate, in the present imperfect state of their
information, to pronounce a decisive opinion upon the general
measures which it may be fitting to adopt with respect to the
Paper Currency of Ireland.
Although they are inclined to think that it would not he ad-
visable to take any immediate step for the purpose of preventing
the issue of small notes in Ireland, their impression undoubtedly
is, that a Metallic Currency ought, ultimately, to be the basis of
the circulation in that country.
It. will, probably, be deemed advisable to fix a definite, though
not an early period, at which the circulation in Ireland of all
notes, below five pounds shall cease ; and it is deserving of consi-
ftentiont whether measures might not be adopted in the interim
for the purpose of ensuring such a final result, by gradual, though
cautions, advances towards it.

LORDS' REPORT.
By the Lorda' Committee, appointed a Select Committee to in-
quire into the State of Circulation of Promissory Notes under
the value of 51. in Scotland and Ireland, and to report to the
House ; and to whom wore referred the several Petitions and the
avVvral Papers and Account* mawg to the Bunking System,

and the circulation of Promissory Notes in Ireland and Scot-
land, which have been presented to the House this Session,

REPORT.

That the Committee have proceeded to the consideration of the
subject referred to them by the House, and have collected from the
examination of witnesses, and of the accounts laid before them, the
information which will be found in the Minutes of Evidence, and
in the Appendix.
They do not think it necessary to enter into a detailed analysis
of this mass of information, because the result of it would not lead,
in their opinion, to the proposal to Parliament, during the present
Session, of any measure affecting the circulating medium either of
Scotland or of Ireland.
They entertain no doubt that, upon general principles, it would
be desirable that the same system of currency should prevail
throughout Great Britain and Ireland. At the same time they
are fully sensible, that to such an uniformity of system there may
be obstacles which may render the attempt to establish it at any
particular period, if not impracticable, yet liable to. inconveniences
which might more than counterbalance the ultimate advantage to
be derived from it.
With respect to Scotland, to which the Committee wish, in the
first place, to call the attention of the House, it is to be remarked
that during the period from 1766 to 1797, when no small notes
were by law issuable in England, the portion of the currency of
Scotland, in which payments under 51. were made, continued to
consist almost entirely of notes of 11. and 11. Is., and that no in-
convenience is known to have resulted from this difference in the
currency of the two countries. This circumstance, amongst
others, tends to prove that uniformity, however desirable, is not
indispensably necessary. It is also proved by the evidence, and
by the documents, that the Banks of Scotland, whether chartered
or Joint Stock Companies, or private establishments, have, for
more than a century, exhibited a stability which the Committee
believe to be unexampled in the history of banking ; that they
supported themselves, from 1797 to 1812, without any protection
front the restriction by which the Bank of England and that of
Irelatuk-7Sverelieved from cash payments; that there was little
demeitil for gold during the late embarrassments in the circulation ;
and that, in the whole period of their establishment, there are not
more than two or three instances of bankruptcy. As, during the
whole of this period, a large portion of their issues consisted, al-
most entirely of notes not exceeding 11. or 11. Is., there is the
strongest reason for concluding that, as far as respects the Banks
of Scotland, the issue of paper of that respect has been found com-
patible with the highest degree of solidity ; and that there is not
therefore; while they are conducted upon their present system,
sufficient ground for proposing any alteration, with the view of
adding to a solidity which has so long been sufficiently established.
This solidity appears to derive a great support from the con-
stant exchange of notes between the different banks, by which
they become checks upon each other, and by which any over-issue
is subject to immediate observation and correction.
There is also one part of their system, which is stated by all
the witnesses (and, in the opinion of the Committee, very justly
stated) to have had the best effects upon the people of Scotland,
and particularly upon the middling and poorer classes of society,
in producing and encouraging habits of frugality and industry.
The practice referred to, is that of cash credits. Any person who

applies to a Bank for a cash credit, is called upon to produce two
or snore competent securities, who are jointly bound, and after a
full inquiry into the character of the applicant, the nature of his
business, and the sufficiency of his securities, lie is allowed to open
a credit, and to draw upon the Bank for the whole of its amount,
or for such part as his daily transactions may require. To the
•credit of this account he pays in such sums as he may not have
occasion to use ; and interest is charged or credited upon the
daily balance, as the case may be. From the facility which these
cash credits give to all the small transactions of the country, and
from the opportunities which they affisrd t 6 persons, who begin
business with little or no capital, but their character, to employ
profitably the minutest products of their industry, it cannot be
doubted that the most important advantages are derived to the
whole community. The advantage to the Banks who give these
cash credits, arises from the call which they continually produce
for the issue of their paper, and from the opportunity which they
afford for the profitable employment of part of their• deposits.
The banks are indeed so sensible that, in order to make this part

of their business advantageous and secure, it is necessary that their
cash credits should (as they express it) be frequently operated
upon, that they refuse to continue them unless this implied con-
dition be fulfilled. The total amount of their cash credits is
stated by one witness to be five millions, of which the average
amount advanced by the banks may be one-third.
The manner in which the practice of deposits on receipt is con-
ducted, tenth, to produce the same desirable results. Sums to as
low an amount as 101. (and, in some instances, lower) aro taken
by the Banks from the depositor, who may claim them on de-
nand. ,He receives an interest, usually about one per cent. be-
Jew theAntirket rte. It is stated that these deposits are.
• brreat even , fen neauteu tor trom year to year, wet that the
depositors are in the habit of adding, at the end of each year, to
the interest then accrued, the amount of their yearly savings ; that
the auras thus gradually accumulated belong chiefly to the labour-
ing and industrious classes of the community, and that when such
accounts are closed, it is generally for the purpose of enabling the
depositors either to purchase a Louse or to engage in business.
It is contended by all the persons engaged in banking in Scot-
land, that the issue of one pound notes is essential to.the continu-
ance both of their cash credits and of the branch, banks established
in the poorest and most remote districts. Whether the disconti-
nuance of one pound notes would necessarily operate to the full
extent which they apprehend, in either of these respects, may,
perhaps, admit of doubt; but the apprehensions entertained on
this head by the persons most immediately concerned, might, for
a time at least, have nearly the same effect as the actual necessity,
and there is strong reason to believe, that if the prohibition of one
pound notes should not ultimately overturn the whole system, it
mast for a considerable time materially affect it.
The Directors of the Bank of England, who have been exa-
mined before the Committee, have given it as their opinion that a
circulation of notes of one pound in Scotland or in Ireland would
not produce any effects injurious to the metallic circulation of
England, provided such notes be respectively confined within the
boundary of their own country.
Notwithstanding the opinions which have been here detailed,
the Committee are, on the whole, so deeply impressed with the
importance of a metallic circulation below GI. in England, not
only for the benefit of England, but likewise for that of all the-
other parts of the empire, that if they were reduced to make an
option between the establishment of such a metallic circulation
in Scotland, or the abandonment of it in England, they would
recommend the prohibition of small notes in Scotland. But they
entertain a reasonable expectation that legislative measures may
be devised, which will be effectual in preventing the introduction
of Scotch paper into England ; and unless such measures should in
practice prove ineffectual, or unless some new circumstance should
arise to derange the operations of the existing system in Scotland
itself, or materially to affect the relations of trade and intercourse
between Scotland end England, they are not disposed to recom-
mend that the existing system of banking and currency in Scot-
land should he disturbed.
With respect to Ireland, the situation of that country, as to its
circulation, and as to its system of banking, is materially different
from that of Scotland. In Scotland there are three Banks, of
which the proprietors are protected by Act of Parliament or
Charter from personal responsibility beyond the amount of their
respective shares; and there are many other Banks, consisting of
a large end unlimited number of partners, personally responsible
to the whole extent of their property, of which the aggregate
amount is very considerable.. There are also branches or agencies
of most of the Banks very widely established throughout the
country.
In Ireland, the only Bank possessing the advantage of a limita-
tion of personal responsibility is the Bank of Ireland, which, till a
late alteration in the law, was the only establishment which was
permitted to have more than six partners. The circulating me-
dium censistsi indeed, in both countries, to a great extent, of
Netts, under five pounds ; but the system of Banking in Ireland,
instead of remaining unshaken for a long period, as that of Scot-
land, has experienced so many shocks, that its banking establish-
ments are now nearly confined to the Chartered Bank of Ireland and
its local agencies, the branches of the Provincial Bank whit!), is
eatablitned in London, one Joint Stock Company in Dublin and
another at Belfast, the latter of which has local agencies, and a
few private Banks in Dublin and Belfast. The issue of notes
under 51, has been at different periods permitted and prohibited in
Ireland ; there is therefore no prescription to plead
syfoster
Itnheiarst
con-
tinuance, and there is no experience of ally snafu
of cash credits in Scotland, which is stated to rest mainly upon
their issue. There is not at present in Ireland the same check
upon over-issues, which is derived in Scotland from the continual
exchanges of notes between the different Banks ; and the failures
of Private Banks have frequently spread the greatest distress over
Com-
mittee .of the House of Commons in 1804, to have existed in
Restric-
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the
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Ireland a considerable metallic circulation, of the existence of
which in Scotland the Committee are not informed.
Many of the reasons, therefore, upon which the Committee have
grounded their opinion against any present provision for a future
alteration in the currency of Scotland, do not apply to Ireland,
and the introduction of a larger proportion • of metallic currency
into the latter country appears liable to less difficulty than the ap-
plication of the woe principle to the former. There is, hove-