The Sun.
London, England, 1828-06-17 00:00:00

much paper as possible, and as much gold gold as
might be necessary for transaction abroad. If this
view were correct, he put it to the House whether
it were right to reduce the paper currency. If the
object of the Bill were to prevent panic, it would
not be found to answer. What the country wanted
was, simply a good system of banking. The dif-
ference.alone between an incompetent system and a
guarded and secure one, was more than enough to
account for all those evils and mischiefs which it was
now sought to charge upon the scheme of paper
circulation'generally. The history of the United
StateS of America formed a singular illustration of
the truth of thiJ principle. The Hon. Member here
entered at some length into. the nature of Banking
in the United States, and- showed its great superi-
ority to the English system. In France again,
he went on to observe where the banking affairs
of the country were seen and understood by every
body, alarms were comparatively if not entirely
unknown. The effect of any Bill which was
to cripple or restrain the circulation of paper in
Scotland, must necessarily be to produce effects
the most detrimental to that kingdom. At pre-
sent there was 20,000,000/. of capital lodged in
the different banking houses by different individuals,
the greater part of which consisted of small deposits
.of from 201. to 301. each, for which the owners re-
ceived interest. Here was all the benefit of the
saving bank system secured to the industrious, and
the use of 20,000,000/. of money to the pnblic. If
the money so invested were not placed in the banks,
what would be the result ? It would be hoarded in
small sums by the proprietors : these last would lose
the benefit arising from lending it, and the country
at large the enormous advantage of its employment
and distribution. And this result would be inevitable
from any restriction of the paper system in Scotland;
for it was perfectly well known that if the bankers
ceased to issue their notes, they could no longer allow
the same rate of int erest to their depositing customers.
In eonclusion,he desired to have it recollected, that he
was. no thick•and-thin advocate of a paper system.
But because he believed that it was a paper system
founded upon a safe and regulated basis that the
country wanted, he should oppose the going. into a
Committee, and should move that the motion be
further considered that day three months.
Lord HO WICK, in seconding the amendment,
should not trouble the House by going into the
general question of Scotch or English paper currency.
He was content to oppose the present Bill simply
upon the ground of the excessive mischief which it
must produce in the north, when the same money
which was current on one side of a given line, would
now be forbidden to be received on the other.

Mr. Alderman THOMPSON believed that the
Right Hon. Chancellor of the Exchequer, in looking
at the question generally, had estimated the small
note currency of the kingdom far too low. The
Right Hon. Gentleman put the whole amount
under two millions and a half. But there were 668
bankers in England; more than 500 were issuers of
1/. notes; and supposing each to have only
10,0001. out in such notes (which was a very
moderate calculation) here was an amount
made out, without going any farther, of 5,000,000/.
Then the effect of the policy now pursued must
necessarily be to withdraw this whole sum from the
circulation of the country ; and certainly he did net
believe that such a course could fail to be attended
with considerable mischief. The amount of our
circulating medium was already too small for the
purposes of commerce. In 1795, the circulation had
been,—gold and Bank of England notes about
45,000,000; country bank paper about 7,000,000/.,
—altogether about .52,000,0001. The amount of
the public taxes at that time had been 16,000,000/.,
so that it took three years' taxes to call in the whole
circulation of the country.. But how was the fact
now ? The amount of the currency was 65,000,000/.,
and the annual amount of • the taxes exceeded
60,000,000/., so that the whole currency of the
country must be paid and received as taxes in the
course of a single year. For himself, he was unable
to see any security in a. metallic currency, which the
couutrymight not just as well have derived from a well
regulated paper system; and he regretted that the
committee proposed by the Hon. Member for Car-
lisle (Sir J. Graham), bad not been granted. He
was convinced that the country needed a more ex-
tended scale of currency than gold, of itself, could
afford. The distresses of 1821, 1822, and 18?6,
had only proceeded from a contraction in the cir-
culation, and he .folly expected that the measures
now pending would be attended with a similar effect.

-Mr. H. GURNEY said that the Bill before the
House certainly granted 'one very valuable boon
to Scotland. For, if he read its provisions rightly,
they amounted to this=that if any Englishman in
any way came into possession of a Scotch 11. note,
he must incur a 201. penalty to get the value of it.
The words of the Bill were precisely against " ne-
gotiating or transferring ;" so that a man in such a
case would have no choice but to go to Edinburgh
to receive his note in person.
Mr. A. BARING said, that if this Bill were not
passed it would be merely taking away the right of
issue from one set of men to give it to another set.
Establishments would at once be formed in Scot-
land to issue notes for circulation in England. In
short, he had no hesitation in saying, that he was
acquainted with an extremely opulent and respect-
able person, who, if the Bill were not passed, would
take that course immediately. In fact the whole
thing was obvious. He was not personally acquainted
with Scotland, but from those whO were, he under-
stood.the difficulties which would arise on the Scot-
tish borderfrom the propoSed system. What would
be good payment in one country would not be so
considered in another. It was no doubt an anomaly
which would occasion some disiress and inconve-
nience, but when they had the anomaly of having a
IL note circulation in one country and not in the
other, they must expect such inconvenience where-.
ever they drew the line, and it was clear the line
must be drawn somewhere. In looking at the ques-
tion, whether they should return to the small note
circulation, he die. not wish to be understood as un-
dervaluing the difficulties which the abolition of that
circulation would create. He was of opinion at the
time of the panic'that the too hasty removal of the
small-note circulation must create difficulties. But
then we had only n choice ordifficulties, for it was
clear we had no. seeurisy in Paper currency; for if
it was general, we could not have 'Much dependence
on a metallic foundation, when its necessary t effect
would •he to . displace the metallic currency. The
question then, -at. last, came, 'to 'be one-of piesint
convenience against permanent security. 'That the
loss of the small paper -currency • Would, -be a
sacs ifiee lie bad 'admitted, -but it 'was one which
we were called upon to make for the 'gene-
.ral security of the country. -They hid • been
told of ..the, horrors of an inconvertible
paper, currency; Irk-when that paper was circulated
to an immense amount, it would so drive out the
gold. that we should not have any from one end Of,
the country to the other.
,If in this state S. sudden
demand for foreign corn should arise, so as to render
it necessary to send gold out of the country for it,
what then should we do with the mass of rags in
Circulation ? Would they be of any use in settling
our foreign accounts ? .Undoubtedly not., We should
find, that the only paper on.which we could rely was
that founded -on a. metallic basis. - He' would 'admit,
that if a circulation, of 13,000,0004 of paper money
were put into 'the fire, it would, on the principle on
which some Hon. Members went upon, be a loss of
so much capital, and if-Hon. Gentlemen could per-
.suade the House that that capital was the safest, he
would be ready to admit that it was the cheapest;
but leaving the question 'of cheapness, and looking to
that of safety, he would .wish for the return to the
metallic currency,: not undervaluing the advantages
of the paper system: It, must, however,'" be. recol-
lected, that to have that system we should go' hick.
What had fallen from the Hen. Bank Director would
tempt himto say 'a few words .on the' subject of a
silver standartl.and that temptation was increased by
what bad fallen from another Hon. Member, as to
the opinion he (Mr. Baring) had given before the
Lords on this subject; but he would not enter into

the detail of that question at present. He trusted,
however, though the Bank had given an opinion un-
favourable to his, they would not object to have the
evidence relating to it laid before the House, that
Hon. Members might see what the merits of the case
were, for opinions could be explained much better
than in a cursory speech, in which he a'lWays found
that he could explain himself but imperfectly. It
was the more necessary that the fullest evidence
should be laid before the House; as in a couple of
years hence we should have the whole question of
the renewal of the Bank Charter brought before the
House. He would not say more on the subject of a
silver standard at present, than that one great object
of a silver circulation would be that of laying the
broadest basis for our paper currency. We were the
only country which had not this circulation as the
standard, and hence arose the difficulties which we had
to encounter when the Bank found it necessary to give
a turn to the screw and limit the cireulation, the in-
convenience was severely felt by the public, which
often ended in a panic. 'I his would not be the case
if we adopted that which was the standard of all
other countries. It was on this account that he
would wish to have the evidence laid before the
House. The Hon. Bank Director had told them,
that if they watched the exchange,;, they would
know when they (the Bank) meant to turn the
screw, but he (Mr. Baring) would contend that
they could not in the present state of the metallic
standard ever limit the circulation without inconve-
nience to the country. He took the case Of the
Bank of France as an illustration, for there, where
silver was the standard, gold came in its aid, and no
difficulties were experienced by a temporary limita-
tion. The same might be observed of Holland,
where they were pretty acute in matters relating to
currency. But it was said, that where silver and
gold were circulating together, there would be va-
riations from the value of one rising above the other.
To this he answered, that there was nothing in that
variance which could practically prevent their cir-
culation together, and for proof of this he would re.
fer to practice, which was better than a thousand
theories. In France, the thing was proved to be
practicable, and was now going on. There might, he
admitted, be some difference in the nature of the
value of the standard, from the variations between
one currency and the other; but what were they
compared to the difference in the value which arose
from the variations occasioned by the sudden limi-
tations of the Bank issues, when we rested on one
standard only ? We had seen that by the turn of the
screw, tousv the familiar term to which:he had before
referred, that a difference was occasioned in the value
of money, varying from 15 to 20 and 25 per cent.
This was found to take place in the changes be;-
tween paper and gold. We saw when gold was
wanted, that parties were sending out their silver to
all parts of Europe to procure gold, and that when
it was procured to the amount required, it was not
without difficulty, and some loss. But he was going
out of the question before the House. To return to
that, he would repeat, that if they rejected the pre-
sent measure, they must go back to a repeal of what
they had already enacted respecting the small note
currency. That course he supposed they were not
prepared to take, but if they were not, on what
principle could it be contended that the small note
circulation, being restricted in England but permit-
ted in Scotland, the Scotch bankers should be al-
lowed the advantage of it in this as well as their
own ? Unless Hon. Members were prepared to
assert this, or to insist on going back to unlimited
paper issues, he could not see on what ground they
could oppose the Speaker's leaving the Chair.
Sir HENRY PARNELL said, that his Hon.
Friend (Mr. Baring) and the Right lion. Secre-
tary (Mr. Peel) had made up their minds, that the
best currency they could have was a large metallic
circulation in the country. This was the fallacy on
which they went. But what was it that constituted
the security of the bank paper? Its solvency, and
not the amount of the precious metals in circulation.
Instead, therefore, of resting on the amount of the
metallic currency, they should devise measures to
ensure the solvency of the banks, and that would
answer every purpose. The course they took was
the opposite, and the worst. They destroyed them
at once. This he contended would tend to bring
about all the evils which the country felt 30 years ago.
The Right Hon. Gentleman (Mr. Peel) had talked of
improving the banking system before the expiration
of the Bank charter. He (Sir, H. Parnell) would
be glad to know what measures the Right Ho-
riourable Gentleman contemplated for this purpose.
As to what had fallen from his Hon. Friend (Mr.
Baring) respecting a silver standard; he must own
he was rather surprised at it, and still at MS reference
to France as an illustration of the advantage of that
standard. He (Sir IL Parnell) had lately been in
that country, and had obtained' some information on
this subject, and it was his opinion that the attempt
had completely failed, and the effect of the attempt
to run the two currencies together was, that the
gold was driven out. As to the minor depreciations,
he was surprised that his Hon. Friend could have
dwelt upon them. He had said that unless we
could have large quantities of gold, we:should in cer-
tain cases, such as a demand for foreign corn, be ex-
posed to great panics. Nov the truth was, the great
secret of the security of our currency was in the sol-
vency of the bankers, and until that was provided for
our currency could not he said to be on any fixed or
firm foundation. This was the truth laid down so.
ably by Adam Smith, but greatly erroneous notions
had been spread by more modern writers on the
subject.
Mr. BANKES observed that it was said that the
notes of the Scotch banks would find their way to
the south. He would admit that fact, and that one
reason why he thought the proposed measure objec-
tionable, for he considered the circulation of the
south would he too much limited, and if the Scotch
notes should be received here, it would be so much
the better. What cause was there for this distur-
bance of the currency ? Were the exchanges against
us, or was the gold going out of the country ? No
such thing. There never was a period when our cur-
rency was in a more prosperous state. Was this, then
a time when it should be • disturbed ? He con-
tended that the attempt was absurd. , It might be
asked whether he would renew an unlimited circu-
lation of one-pound notes ? He answered no,---he
Would leave things as they were. If a man brought
-his one-pound note, he
.should get another in ex-
change for it from the banker by whom it was
• issued, but he would not increase the issues. If the
amount of gold in the country should be sufficient to
extirpate the 'paper, let it do so of itself, but let not
the thing be done- with violence. The Hon. Mem-
ber then went' bn `to contend,' that the measures
adopted in 1826 were unwise; Afici that the sudden
contraction Of the circulation had been productive of
Much Mischief. The Hon. MeMberfnext contended
that the 'continuance of the present amount of onc-
'pound notes in circulation would not be injurious to
the country; that, on the contrary, the removal of
that amount of circulation would be highly injurious.
Mr.-PEEL observed, that of -all the arguments
which he had heard on this Subject.,, that just deli-
vered by his Hon. Friend (Mr. Bankes) was, he
said, without disrespect to him,' the most ridiculous.
(Hear.)—He admitted that oar currency was never
more prosperous than at present, and he urged that
as a reason for continuing the paper currency, by a
gradual departure from which he must have seen
that the prosperity to which he adverted was pro-
, duced.—(Hear.)—The arguments used by other
Hon. Members might bo dangerous but this was
perfectly absurd.—(Hear.)-=He. (Me,:-Peel), after
the able speech of the Honourable Member for
Callington (Mr. Baring), did not feel it nem-
sary to' go' into any detail as to this. question.—
He 'entirely concurred with that * Honourable
Member in the general view he took of this subject.
,He saw nothing in the .state of Scotland to.prevent
their coming to a state of circulation similar 'to that
in England, Lie considered it most expedient to
establish first the currency of 'England on 'the secure
basis of a' metallic circulation before they endea-•
vowed to apply the same • principle to Scotland,
where it had never been introduced. It must not,

however, be supposed that he intended to tie him-
self up for ever from extending the same system to
Scotland in the event of its being found not incon-
si§tent with the general feeling and interests of that
country.—(Hear.)—An Hon. Baronet (Sir Henry
Parnell) thought that the present system of banking
was susceptible of material improvement, and had
called upon him to declare his opinion on that point.
He (Mr. Peel) did not hesitate to declare, that in
his opinion it would be a material improvement to
allow more than six persons to form a copartnership.
He thought that nothing would tend more to place
banking in England on a secure footing than to adopt
with respect to it the same principle whiche' prevailed
in Scotland, namely;to allow any number of partners
to form a company. The Hon. Baronet, however,
was aware that the charter of the Bank of England
would, for the present, prevent the adoption of that
principle. The question of the resumption of a gold
currency was, however, quite independent of any im-
provement of the system of banking. No improve-
ment of that nature would be sufficient without the re-
sumption of a gold currency. The Hon. Bart. and the
Hon. Member on his right both held, that provided
banks were solvent, it mattered not what quantity of
notes they issued. That position he must strenuously
oppose. The principle was rotten at its basis.—
(Hear.)—The security which the Hon. Member
proposed, was in principle nothing more than a land
tax. He wished to allow banking companies to•issue
notes ou the security of freehold property. That
would not be sufficient security, for under it there
might be a constant depreciation of the currency,
creating a correspondent fluctuation in property, and
the only check would be a panic, which it was the
tendency of an unstable banking system to produce.
The Hon. Member for London (Mr. Alderman
Thompson) had offered a proposition of rather a
startling nature—namely, that no persons should be
allowed to take out licences for conducting the busi-
ness of banking, unless they had received- a certi-
ficate from the Board of Trade. Much was said
about interfering with the free agency of commercial
men; but he really thought it was a less violent act
of interference to adopt a measure contravening the
issue of all notes below the value of 51. than to
resort to the plan of the MOIL Member for London.
The Hon. Member for Aberdeen looked at the
question with the eye of a metaphysician, which em-
braced only abstract principles. The Hon. Member
" If you trust bankers with- the power of
issuing 51. notes, why not allow them to issue 41.
or 1/. notes ?" He would reply, that it was neces-
sary to place a limit somewhere. If bankers were
allowed to issue 1/. notes, it might then be asked,
why they were not permitted to issue notes for 195.,
or even for ss. or Is. ? Would the Hen. Member
advise a return to the system of what was called
silver notes, the inevitable consequence of which
would be to banish silver as gold had been banished.
A subject of great importance had been alluded to
in the course of the discussion—he meant the ques-
tion of. the practicability of introducing a silver
jointly with a gold standard. He did not think that
question was to he disposed of quite so easily as the
Hon. Member for London seemed to imagine. The
proposition; however, ought not to be rejected with-
out serious consideration. On the present. occasion
it would be premature for him, especially in his situ-
ation, to express a decided opinion on the point ; but
he could not avoid saying that he considered any
measure which tended to disturb the present cur-
rency was objectionable. (Hear, hear.) He would
not longerdetain the House after having so fully ex-
pressed his sentiments on a former night. He
would only declare his opinion that the resumption
of a gold currency -could be effected at the present
moment by adhering to the Act Which the House
had passed with less pressure on the country than
at any future period. If now that the paper circu-
lation was reduced to a sum not exceeding 3,500,0001.
in the face of all the' considerations which recom-
mended an
,adherence to the original resolution of
the House, they should now depart from that de-
cision, he would despair of ever seeing the resump-
tion of a gold currency in this country.
, Mr. P. THOMSON was of opinion that the best
des'ription of currency was that of paper founded on
a secure system of banking.
Mr. MANNING said, that although he objected
to many parts of the measure of 1819 at the time it
was enacted, he thought that now, us most of the
inconveniences resulting from it had already been en-
dured, it ought to be adhered to. He likewise
thought it impossible that a more favourable period
could arise for carrying it into execution than the
present.—(Hear.)
Mr. WHITMORE believed that unless the Bill
before the House passed, much mischief would be
caused in England by the circulation of Scotch notes.

He could not overlook the fact that all those who op-
posed the Bill were the advocates of a paper cur-
rency.--(Hear.)

Lord EBRINGTON professed his belief that the
legislature, by requiring securities of the country
bankers, would obtain all the advantages without
running the risk of any of the,dangers to be appre-
hended from an over-issue of paper.
Mr. PEEL observed, that in a question of such
magnitude, and which had occupied the minds of
so many able men, it was not at all likely that
Government would proceed lightly to propose any
material alteration to the House at present. Noth-
ing was further from the intention of his Majesty's
Ministers.

Mr. MAXWELL thought the Right Hon. den-
Oman had fixed his standard rather defectively, for
whilst the restriction of the currency tended to
lower the general price of things, it left the amount
of taxation on each and all the same.

The House then divided, when there appeared for
leaving the chair,
Ayes, 115 Noes, 24 Majority, 91.
On our re-admission to the gallery, we found the
House in Committee on the Bill.

The CHANCELLOR of the EXCHEQUER
observed, that the amendments he had to propose
were merely verbal. The principal object of these
amendments would be, to facilitate the execution of
the law on this subject, by granting directly a power
to the Magistrates to enforce its observance, instead
of referring from this Bill to a preceding Bill, which
ullimately referred to the Stamp Act.
. Mr. 11; GURNEY thought "the Bill might ope-
rate as a hardship on persons—such, for instance,
aJ drovers coming from Scotland, with the paper cur-
.reney only of the country in their pockets—who,
on arriving in England, would find no means of pay-
ing their way but by Scotch bank notes, which
were liable to heavy penalty, according to the Bill
nor before the Committee.
The CHANCELLOR of the EXCHEQUER
observed, that this Bill was expressly framed to pre-
vent an influx of notes from Scotland. Parties from
that country were, generally, not so simple as to
bring a depreciated currency into England, more
particularly when aware the attempt was liable to a
heavy penalty. The same observations would apply
to persons coming from Ireland.
The ATTORNEY-GENERAL said, that no
further hardships could be in such a case anticipat-
ed, than that the holder of Scotch simll notes would
be obliged to remit them to Scotland.
Mr. KEITH DOUGLAS believed the provi-
sions of the Bill would in some cases fall with seve-
rity on drovers and cattle-dealers, in their intercourse
with this country.
. The CHANCELLOR of the EXCHEQUER
observed, that were they to suffer, as his Hon.
Friend would be disposed to do, persons coming
from Scotland or Ireland to disburse even their
travelling charges in these small notes, the House
might as well spare themselves the trouble of pass-
ing this Bill.
Sir WROTTESLEY considered the pro-
posed measure was attended with a punishment too
highly penal.
The CHANCELLOR of the EXCHEQUER,
after reading the. Bill, observed, that the penalty
might be commuted to any sum not less than 51., ac-
cording to circumstances.

Afffr an observation from Mr. BARING, which
was inaudible.

Mr. BENS TT objected to the Bill. If it were