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for any thing, they should not have nection a provision like this had stopped at the small notes, but with a bill
, whose only object was ought to have prohibited all notes, to secure the gradual withdrawing of whatever amount; not seeing of notes of a certain kind; the purthat a metallic currency must be pose of the latter was to restore a very differently affected by a paper metallic circulation by a partial excurrency of the same, or nearly pulsion of paper ; the purpose of the same denomination, which the former was to secure the reign could supply its place; and by a of paper, to the expulsion of the paper currency of a denomination precious metals. But this was not so much higher as necessarily to the only objection to which the require the assistance of the metal provision was obnoxious. Its effect for the ordinary purposes of life. would be, to deter prudent persons It was in vain, he averred, to en- from engaging in the banking deavour to impart solidity to banks, business, for the whole amount of or security to their customers, un their capital would be locked up, less one measure were adopted and unproductive; and, as the banks
measure the non-adoption of were to enjoy no particular priviwhich by ministers would leave leges, it was scarcely reasonable to upon them the responsibility of all impose upon them so severe, and the misery which might in future so injurious a restriction. The exbe produced by bank failures. ample of Scotland, even with an This measure was, to compel every extensive issue of small notes, banker to make deposits, in the proved that such security was not hands of parliamentary commis- necessary. The experience of 1822 sioners, equal to the amount of his proved that few men would be disissues. Forthe first year the deposit posed to establish banks on such might be confined to the amount of a principle; and the bill, by compelhis
one and two pound notes; for the ling bankers always to have a large second, to the amount of his five- portion of their capital in gold, and pound, along with the former; and, to watch the occasions when gold in the third, it should be extended might be required from them, was to the whole amount of his notes a much better security than conin circulation. If, on presenting signing their real capital to inaca note at a country banker's, he tivity. Lastly, it would put an refused to pay it, the refusal ought end to deposit banks, that is, to alto be certified by the nearest ma- most every bank in the kingdom. gistrate, and the commissioners Existing deposits would be withshould be authorized thereupon to drawn, and no new deposits would sell a portion of the deposits in be made, because the real wealth their hands, to discharge the claim. of the banker was, in case of misHe, therefore, moved « That it be fortune, to be applied to the payan instruction to the committee to ment of the holders of the banker's provide for requiring from banks notes, and the makers of deposits deposits (to be lodged in the Ex- were to be thrown back exclusively chequer, or other proper office) upon the mere fragments of his equal in amount to the amount fortune, whilst the holders of his of promissory notes payable on de- notes were secured in full payment mand, issued by them respectively.” “a distinction between creditors,
It was difficult to see what con- equally unjust and impolitic. Mr.
Hume found only eight mem- temptation to commit robbery in bers to join him, the motion being the case of gold, than in the case rejected by a majority of 120 to 9. of paper, because there were much
An amendment to the effect that greater facilities for escaping dethe Bank of England should make tection. It was easy to understand regular returns of the whole amount that there could not be so strong of their paper in circulation, and an inducement to crime, when the another, that the holders of country currency consisted in potes numnotes should have summary pro- bered, and signed with a known cess of execution for their amount name, without which they had no by the warrant of a magistrate, value, as when it consisted of gold were equally unsuccessful; but coin, which it was impossible to a clause was added, providing, that identify. This view of the noble from the 5th April
, 1829, all notes lord was not original, for it had under 201. should be payable in been enforced, with much humour, specie at the places where they in certain celebrated letters which bore to have been issued. On the appeared about this time directed third reading, however, the exten- against the extension of the bill to sion of time in favour of the Bank Scotland. It was likewise worth of England, was again opposed; considering, that the forgery of the clauses, giving summary process on small notes was a danger of the notes, and requiring from all same kind, and one which had renbankers a monthly return to go dered necessary the sacrifice of, at vernment of the whole amount of least, as many lives to the law, their issues, were again pressed, as the more daring depredations and again negatived; and, on the of former times. But, finally, 7th of March, the bill passed, by the connection,
and a majority as large as that which effect, between the disappearance had introduced it.
of guineas, and the disappearIn the House of Lords, the ance of highwaymen, was more opposition to the bill was less whimsical than real. SI once,” pertinacious than it had said lord Liverpool, “ when I was a countered in the House of Com- boy, suffered from a highwayman, mons; and the grounds, on which and lost all the money I had upon it was attacked and defended in me. It is, therefore, natural, that the former, were precisely those I should be as much alive to this which had formed the topics of danger as the noble earl: but still, discussion in the latter. The earl with all my early associations, I of Carnarvon alone, who moved, cannot help thinking, that, if that on the second reading, that the danger must revive with a return bill should be read again that day to a metallic currency, it would six months (a motion which was have been felt during the last four negatived without a division) or five years; for, during all that stated a new reason why an actual time, their lordships had been going gold circulation ought to be kept about the metropolis and its vicias far from our doors as possible; nity, not with notes, but with soviz that a return to it would vereigns, in their pockets. The albring back the highwaymen of most total extinction of highway Bagshot and Hounslow. There robberies was to be attributed to was, he said, a much greater the only thing which could either
check or extinguish them, the es public meetings were held to detablishment of a powerful and ef- precate the destruction of the one fective police.” It might have pound, and guinea notes, ; men of been added, that so far are the all parties threw aside their differnumbers and names on bank notes ences, and men of all ranks forgot from being a terror to evil doers, their inequalities, to raise one that the most daring mail-coach unanimous outcry against the robberies have been perpetrated, threatened introduction of gold at to get possession not of bags of the
and mersovereigns, but of bundles of chants, manufacturers, bankers, bankers' notes.
shop-keepers, and even artizans, While this measure for annihi- joined heart and hand to resist the lating the existence of small notes innovation. During the discussion in England was making its way on the bill regarding England, the through parliament, some difference tables of both houses of parliament of opinion sprung up in Ireland were nightly loaded with petitions concerning the fitness of its appli- from public meetings, and from all cation to that country; and Scotland the great commercial bodies of rose, as one man, to resist its in- Scotland, setting forth the benefits troduction into the northern part which that country had so long of the island. Ministers had de- derived from its banking system, clared, in both houses, from the the perfect security of the foundavery beginning of the discussions, tions on which it stood, and the that they did not intend, at the evils which would inevitably a present time, to extend the pro- sult from every attempt to give it posed alteration to either of these a new and an untried form. portions of the empire ; but they It was both prudent and becomhad likewise declared, that they ing in parliament to pay respect could not see, on what principle to the anxiety and unanimity with different systems of currency should which these opinions were exprevail on opposite banks of the pressed; especially when coming Tweed, or how arrangements, which from those who best knew the real gave security in England, should nature, and practical effects, of the not be equally beneficial in Scot- system. The grounds, too, on land. This language evidently which the united interests of Scotshewed, that the period could not be land took their stand, were eviconsidered as far distant, when the dently deserving of much consismall-notes of the currency of Scot- deration, and consisted of facts land would likewise be attacked; notorious to the whole empire. and, as Scotland had never known The unequalled progress, said they, any other currency than a paper which Scotland has made in every currency, and had become wealthy branch of industry, has been prinand prosperous in its enjoyment cipally owing to her banking esduring more than an hundred years, tablishments as at present conshe arose with earnestness and ve ducted. Previously to their inhemence in its defence. Seldom has stitution, money was so extremely any political measure called forth scarce, that the Scottish parliament so strong and so universal an ex made various enactments to enpression of public opinion. In courage the importation, and reevery city, and in every county, strain the exportation, of specie,
but made them in vain. In fact, notes and silver, and any innovathe commencement of prosperity, tion on the practice would be and of commercial enterprise, in hostile to the habits and inclinathat country, had followed imme- tions of the people. The removal diately on the erection of the Bank of small notes, and the obligation of Scotland in 1695, and had ex on the banks to provide gold, tended itself with the establishment would, it was averred, materially of the royal bank in 1727. The diminish their ability to accominerease of a circulating medium modate the public, particularly in thus produced, had given so suc- times of pressure, when their aid cessful an impulse to the spirit and was most required ; and that the industry of the people, that the hardship of imposing on Scotland trade of Glasgow alone had doubled the necessity of maintaining a in fifteen years after the first metallic currency would be inestablishment of banks there, and, creased by her distance from the in 1776, the trade of the whole of capital, and the consequent_risk Scotland had more than quadrupled and cost of conveyance. They since the first erection of the Bank denied that the state or history of of Scotland, and the royal bank; the currency of England furnished and all this without any symptom any analogy from which to argue of rottenness, without any of the to that of Scotland. The smallruinous results of over-trading or note circulation of England was wild speculation, without any vicis- but of recent origin, and her resitudes, except such as are insepar- gular currency had been gold ; in able from trade, or were the direct Scotland, it had existed before the consequences of political events. Union, and had continued, without This system, with an increasing interruption or mischief, down to number of banks, had continued the present time. In England, down to the present day, extend no private bank could consist of ing the same benefits, and com more than six partners, and the manding the
confidence. capital of such establishments was That this confidence was deserved therefore limited; in Scotland the was sufficiently demonstrated by number was indefinite. In Engthe fact, that, for more than a land, there was
no check upon century, a bank-failure had been over-issuing; in Scotland, such an a rarity ; that, amidst the convuls occurrence was prevented by the sions which, at different periods, reciprocal exchange of the notes had shaken or thrown down the of all the banks twice a week, and English banks, those of Scotland by the immediate settlement of the had stood firm ; and that even balances either in cash, or shortduring the late panic, when every dated drafts upon London. morning brought intelligence of These differences between the the insolvency of an English systems of the two countries, and bank, not one of those establish- the undeniable difference between ments in Scotland had been doubted the effects of the two systems, for a day, or for one moment ex formed good reasons why parliaposed to a The ordinary ment should pause, before extendtraffic of the country had hitherto ing to one part of the island the been conducted almost entirely plan which had been adopted in through the medium of one-pound the other, Accordingly, select
committees were appointed by both exampled in the history of bankHouses, to inquire into the state ing - had supported themselves of the circulation of small notes from 1797 to 1812, without any in Scotland and Ireland, and to protection like that which the rereport upon the expediency of striction of cash payments had altering the laws regarding it. The given to the Banks of England and only opposition made to the ap- Ireland--and that, during the pointment of these committees, in whole period of their establishso far at least as they concerned ment, there had not been more Scotland, was, that they were un- than two or three instances of necessary; that the system was bankruptcy. confessedly so secure, and so nearly As stability so well proved did perfect, that inquiry was super- not seem to justify any alteration, fluous. A number of Scottish so the committees were apprehenmerchants, manufacturers, and sive that a prohibition of small bankers, were examined ; and the notes would be injurious to one reports of the committees, which branch of the Scottish system were presented to both Houses to- which it was of the utmost imwards the end of the session, * portance to preserve, viz. the give justified the resistance which Scot- ing of cash-credits. Any person, land had made.
on applying to a bank, and finding There could be no doubt, said proper securities, after a full inthe committees, on general prin- quiry into his character, and the ciples, that it would be desirable nature of his business, was allowed to have the same system of cur- to open a credit, and draw upon rency established throughout the the bank for the whole of its United Kingdom ; but still there amount, or such part of it as his might be obstacles to such an uni- daily transactions might require ; formity of system, which would paying in again, to the credit of render it impracticable, or, at least, this account, such sums as his ocbring with them inconveniences casions might not require, and more than sufficient to counter- being charged, or receiving, inbalance its advantages. From terest, according as the daily 1766 to 1797, when no small notes balance was for or against him. were issuable in England, the The total amount of these cash currency of Scotland, for payments credits was five millions, of which under 51., had consisted almost about one third had been actually
ntirely of notes for 1l., and il. 18., advanced. The advantages arising and this difference in the currency from them to the banks consisted of the two countries had not been in the call thus produced for their known to produce inconvenience paper, which generally came back to either. It had been proved to twice a-week, and in the opporthe committees, that the Scottish tunity which they afforded for banks, whether chartered, or joint- the profitable employment of part stock companies, or private estab- of their deposits; while the facility lishments, had, for more than a thus given to persons, who begin century, exhibited a stability which business with scarcely any capital the committees believed to be un- but character, to employ profitably
the minutest products of their * See Public Documents, p. 64* industry, undoubtedly bestowed