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for any thing, they should not have stopped at the small notes, but ought to have prohibited all notes, of whatever amount; not seeing that a metallic currency must be very differently affected by a paper currency of the same, or nearly the same denomination, which could supply its place; and by a paper currency of a denomination so much higher as necessarily to require the assistance of the metal for the ordinary purposes of life. It was in vain, he averred, to endeavour to impart solidity to banks, or security to their customers, unless one measure were adopted a measure the non-adoption of which by ministers would leave upon them the responsibility of all the misery which might in future be produced by bank failures. This measure was, to compel every banker to make deposits, in the hands of parliamentary commissioners, equal to the amount of his issues. For the first year the deposit might be confined to the amount of his one and two pound notes; for the second, to the amount of his fivepound, along with the former; and, in the third, it should be extended to the whole amount of his notes in circulation. If, on presenting a note at a country banker's, he refused to pay it, the refusal ought to be certified by the nearest magistrate, and the commissioners should be authorized thereupon to sell a portion of the deposits in their hands, to discharge the claim. He, therefore, moved "That it be an instruction to the committee to provide for requiring from banks deposits (to be lodged in the Exchequer, or other proper office) equal in amount to the amount of promissory notes payable on demand, issued by them respectively."

It was difficult to see what con

nection a provision like this had with a bill, whose only object was to secure the gradual withdrawing of notes of a certain kind; the purpose of the latter was to restore a metallic circulation by a partial expulsion of paper; the purpose of the former was to secure the reign of paper, to the expulsion of the precious metals. But this was not the only objection to which the provision was obnoxious. Its effect would be, to deter prudent persons from engaging in the banking business, for the whole amount of their capital would be locked up, and unproductive; and, as the banks were to enjoy no particular privileges, it was scarcely reasonable to impose upon them so severe, and so injurious a restriction. The example of Scotland, even with an extensive issue of small notes, proved that such security was not necessary. The experience of 1822 proved that few men would be disposed to establish banks on such a principle; and the bill, by compelling bankers always to have a large portion of their capital in gold, and to watch the occasions when gold might be required from them, was a much better security than consigning their real capital to inactivity. Lastly, it would put an end to deposit banks, that is, to almost every bank in the kingdom. Existing deposits would be withdrawn, and no new deposits would be made, because the real wealth of the banker was, in case of misfortune, to be applied to the payment of the holders of the banker's notes, and the makers of deposits were to be thrown back exclusively upon the mere fragments of his fortune, whilst the holders of his notes were secured in full payment -a distinction between creditors, equally unjust and impolitic. Mr.

Hume found only eight members to join him, the motion being rejected by a majority of 120 to 9. An amendment to the effect that the Bank of England should make regular returns of the whole amount of their paper in circulation, and another, that the holders of country notes should have summary process of execution for their amount by the warrant of a magistrate, were equally unsuccessful; but a clause was added, providing, that from the 5th April, 1829, all notes under 20%. should be payable in specie at the places where they bore to have been issued. On the third reading, however, the extension of time in favour of the Bank of England, was again opposed; clauses, giving summary process on notes, and requiring from all bankers a monthly return to government of the whole amount of their issues, were again pressed, and again negatived; and, on the 7th of March, the bill passed, by a majority as large as that which had introduced it.

In the House of Lords, the opposition to the bill was less pertinacious than it had encountered in the House of Commons; and the grounds, on which it was attacked and defended in the former, were precisely those which had formed the topics of discussion in the latter. The earl of Carnarvon alone, who moved, on the second reading, that the bill should be read again that day six months (a motion which was negatived without a division) stated a new reason why an actual gold circulation ought to be kept as far from our doors as possible; viz. that a return to it would bring back the highwaymen of Bagshot and Hounslow. There was, he said, a much greater

temptation to commit robbery in the case of gold, than in the case of paper, because there were much greater facilities for escaping detection. It was easy to understand that there could not be so strong an inducement to crime, when the currency consisted in notes numbered, and signed with a known name, without which they had no value, as when it consisted of gold coin, which it was impossible to identify. This view of the noble lord was not original, for it had been enforced, with much humour, in certain celebrated letters which appeared about this time directed against the extension of the bill to Scotland. It was likewise worth considering, that the forgery of the small notes was a danger of the same kind, and one which had rendered necessary the sacrifice of, at least, as many lives to the law, as the more daring_depredations of former times. But, finally, the connection, as cause effect, between the disappearance of guineas, and the disappearance of highwaymen, was more whimsical than real. "I once," said lord Liverpool, "when I was a boy, suffered from a highwayman, and lost all the money I had upon me. It is, therefore, natural, that I should be as much alive to this danger as the noble earl: but still, with all my early associations, I cannot help thinking, that, if that danger must revive with a return to a metallic currency, it would have been felt during the last four or five years; for, during all that time, their lordships had been going about the metropolis and its vicinity, not with notes, but with sovereigns, in their pockets. The almost total extinction of highway robberies was to be attributed to the only thing which could either

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check or extinguish them, the es tablishment of a powerful and effective police." It might havé been added, that so far are the numbers and names on bank notes from being a terror to evil doers, that the most daring mail-coach robberies have been perpetrated, to get possession not of bags of sovereigns, but of bundles of bankers' notes.

While this measure for annihilating the existence of small notes in England was making its way through parliament, some difference of opinion sprung up in Ireland concerning the fitness of its application to that country; and Scotland rose, as one man, to resist its introduction into the northern part of the island. Ministers had declared, in both houses, from the very beginning of the discussions, that they did not intend, at the present time, to extend the proposed alteration to either of these portions of the empire; but they had likewise declared, that they 'could not see, on what principle different systems of currency should prevail on opposite banks of the Tweed, or how arrangements, which gave security in England, should not be equally beneficial in Scotland. This language evidently shewed, that the period could not be considered as far distant, when the small-notes of the currency of Scotland would likewise be attacked; and, as Scotland had never known any other currency than a paper currency, and had become wealthy and prosperous in its enjoyment during more than an hundred years, she arose with earnestness and vehemence in its defence. Seldom has any political measure called forth so strong and so universal an expression of public opinion. In every city, and in every county,

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public meetings were held to deprecate the destruction of the one pound, and guinea notes,; men of all parties threw aside their differences, and men of all ranks forgot their inequalities, to raise one unanimous outcry against the threatened introduction of gold at the expense of paper; and merchants, manufacturers, bankers, shop-keepers, and even artizans, joined heart and hand to resist the innovation. During the discussion on the bill regarding England, the tables of both houses of parliament were nightly loaded with petitions from public meetings, and from all the great commercial bodies of Scotland, setting forth the benefits which that country had so long derived from its banking system, the perfect security of the foundations on which it stood, and the evils which would inevitably result from every attempt to give it a new and an untried form.

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It was both prudent and becoming in parliament to pay respect to the anxiety and unanimity with which these opinions were pressed; especially when coming from those who best knew the real nature, and practical effects, of the system. The grounds, too, on which the united interests of Scotland took their stand, were evidently deserving of much consideration, and consisted of facts notorious to the whole empire. The unequalled progress, said they, which Scotland has made in every branch of industry, has been principally owing to her banking establishments as at present conducted. Previously to their institution, money was so extremely scarce, that the Scottish parliament made various enactments to encourage the importation, and restrain the exportation, of specie,

but made them in vain. In fact, the commencement of prosperity, and of commercial enterprise, in that country, had followed immediately on the erection of the Bank of Scotland in 1695, and had extended itself with the establishment of the royal bank in 1727. The increase of a circulating medium thus produced, had given so successful an impulse to the spirit and industry of the people, that the trade of Glasgow alone had doubled in fifteen years after the first establishment of banks there, and, in 1776, the trade of the whole of Scotland had more than quadrupled since the first erection of the Bank of Scotland, and the royal bank; and all this without any symptom of rottenness, without any of the ruinous results of over-trading or wild speculation, without any vicissitudes, except such as are inseparable from trade, or were the direct consequences of political events. This system, with an increasing number of banks, had continued down to the present day, extending the same benefits, and commanding the same confidence. That this confidence was deserved was sufficiently demonstrated by the fact, that, for more than a century, a bank-failure had been a rarity; that, amidst the convulsions which, at different periods, had shaken or thrown down the English banks, those of Scotland had stood firm; and that even during the late panic, when every morning brought intelligence of the insolvency of an English bank, not one of those establishments in Scotland had been doubted for a day, or for one moment exposed to a run. The ordinary traffic of the country had hitherto been conducted almost entirely through the medium of one-pound

notes and silver, and any innova tion on the practice would be hostile to the habits and inclinations of the people. The removal of small notes, and the obligation on the banks to provide gold, would, it was averred, materially diminish their ability to accommodate the public, particularly in times of pressure, when their aid was most required; and that the hardship of imposing on Scotland the necessity of maintaining a metallic currency would be increased by her distance from the capital, and the consequent_risk and cost of conveyance. They denied that the state or history of the currency of England furnished any analogy from which to argue to that of Scotland. The smallnote circulation of England was but of recent origin, and her regular currency had been gold; in Scotland, it had existed before the Union, and had continued, without interruption or mischief, down to the present time. In England, no private bank could consist of more than six partners, and the capital of such establishments was therefore limited; in Scotland the number was indefinite. In England, there was no check upon over-issuing; in Scotland, such an occurrence was prevented by the reciprocal exchange of the notes of all the banks twice a week, and by the immediate settlement of the balances either in cash, or shortdated drafts upon London.

These differences between the systems of the two countries, and the undeniable difference between the effects of the two systems, formed good reasons why parliament should pause, before extending to one part of the island the plan which had been adopted in the other. Accordingly, select

committees were appointed by both Houses, to inquire into the state of the circulation of small notes in Scotland and Ireland, and to report upon the expediency of altering the laws regarding it. The only opposition made to the appointment of these committees, in so far at least as they concerned Scotland, was, that they were unnecessary; that the system was confessedly so secure, and so nearly perfect, that inquiry was superfluous. A number of Scottish merchants, manufacturers, and bankers, were examined; and the reports of the committees, which were presented to both Houses towards the end of the session, justified the resistance which Scot

land had made.

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There could be no doubt, said the committees, on general principles, that it would be desirable to have the same system of currency established throughout the United Kingdom; but still there might be obstacles to such an uniformity of system, which would render it impracticable, or, at least, bring with them inconveniences more than sufficient to counterbalance its advantages. From 1766 to 1797, when no small notes were issuable in England, the currency of Scotland, for payments under 51., had consisted almost entirely of notes for 1l., and 17. 1s., and this difference in the currency of the two countries had not been known to produce inconvenience to either. It had been proved to the committees, that the Scottish banks, whether chartered, or jointstock companies, or private establishments, had, for more than a century, exhibited a stability which the committees believed to be un

See Public Documents, p. 64*

exampled in the history of banking had supported themselves from 1797 to 1812, without any protection like that which the restriction of cash payments had given to the Banks of England and Ireland and that, during the whole period of their establishment, there had not been more than two or three instances of bankruptcy.

As stability so well proved did not seem to justify any alteration, so the committees were apprehensive that a prohibition of small notes would be injurious to one branch of the Scottish system which it was of the utmost importance to preserve, viz. the giving of cash-credits. Any person, on applying to a bank, and finding proper securities, after a full inquiry into his character, and the nature of his business, was allowed to open a credit, and draw upon the bank for the whole of its amount, or such part of it as his daily transactions might require ; paying in again, to the credit of this account, such sums as his occasions might not require, and being charged, or receiving, interest, according as the daily balance was for or against him. The total amount of these cash credits was five millions, of which about one third had been actually advanced. The advantages arising from them to the banks consisted in the call thus produced for their paper, which generally came back twice a-week, and in the opportunity which they afforded for the profitable employment of part of their deposits; while the facility thus given to persons, who begin business with scarcely any capital but character, to employ profitably the minutest products of their industry, undoubtedly bestowed

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