not mistaken, connected with such estab-| lishments-that they did not care a farthing for the power to issue one and two pound notes-that they were not of the slightest importance to them; and one hon. gentleman (Mr. H. Gurney) had even protested, that he was anxious to get rid of them—that he wished with all his heart there were no such things in circulation-that they were a positive nuisance -but that if the power to issue them was vested in every petty firm which might think proper to take upon itself the name of a bank, establishments of credit and respectability were obliged to send them forth, from the competition which was necessary for their protection. If, then, they were neither a source of profit, nor an object of necessity; and if they had a direct tendency to increase the circulating medium beyond the point it would be likely to reach without them, by the mode in which they operated upon the currency, affecting the exchanges, and rendering the Bank of England, and the country banks themselves, unable to meet their payments upon any sudden demand, or any extraordinary alarm, he thought they were still further to be deprecated, as directly controverting the tenor of the act of 1819; an act which no man could deny was passed, if ever any act in that House was, with the unanimous approbation of all the parties of which it was composed—an act which had been solemnly resolved upon, as the only measure which could enable the country to meet any future danger, by placing the circulating medium upon a permanent and stable footing. That those notes did counteract the tendency of that act was not to be disputed; still less was it to be insinuated by any man, that that act was not the result of the deliberate conviction of almost every individual of every party in that House. And if so, where was the new principle-where was the innovation-where was the departure from former practice-where was the new and untried theory which some gentlemen had accused ministers of wishing to press upon the House? Was it not merely carrying into more rapid practice the very system under which the country had flourished for ages? If they were to be met in that manner-if they were to be accused of new theories or visionary attempts-he would say, that it was the hon. gentlemen opposed to them who were the theorists. They were the speculative men who were opposed to that system, which, he declared to God, he considered of such absolute necessity for the well-being of the country, that he could not contemplate any derangement of it without the plea of the most overpowering necessity-a plea which should even then be received with the greatest caution. Let the House look how the state of things, in a country like this, and in such circumstances as they had lately witnessed, might be affected by the issue of these one pound notes from provincial banking establishments. Who, in the first place, were the persons among whom these notes were generally circulated? Why, the poorer classes of the communitythose to whom the possession of a one pound note was comparative wealth. And when, from the scanty earnings of hard labour and persevering economy, they had amassed three or four pounds in that kind of money, in what could they lay by these savings of industry but in country bank notes? They had been told, and told truly, that the only circulating medium of whole districts were composed of these notes. In them, therefore, must the poor man trust for the relief against the evil hour-in them must he deposit his hopes. He must take paper; and what was the consequence? When, from over-speculation, or over-issues, or any other causes, an alarm or panic arose, who was the person first to press forward and secure his property? Why, the poor man. He hears of distrust-he hears of failures: and, was it not natural that he who had invested his little all-to him of an importance of which it would not be easy to form a conception-should be the first to press forward for the payment of his demandsthe first to guard against consequences which would to him be absolute ruin. That very anxiety on the part of the poor man necessarily commenced a run on the banker. Example was contagious. Then came the holder of the five or ten pound notes. He says to himself, "what is the meaning of this? there must be something wrong here; there must be something rotten; I must take care of myself while I may." He follows the torrent; he increases the difficulty; he adds to the distrust; and thus they might trace the progress of a great portion of the late disastrous events. The man who did not entertain the least doubt of the solidity of his banker-who was not agitated by the busy speculations of the day, became influenced by the contagion of example; and, though his superior information and | This took place in the year 1775. In more extended knowledge might prevent him from being the first to feel the distrust of credit, yet in the end he became unable to resist the temptation of grasping at that which further forbearance might endanger. It did appear, therefore, that the power of issuing these notes was one great source of the insecurity of country bankers. Men placed in such situations, and liable to such influences, could not be said to hold their credit upon such permanent foundations as those who were not subjected to them. The absence of such a description of paper would add to their solidity; and though it might, in a slight degree, diminish their profits, it would save them from the consequences of such evils as they at present deplored. For it was not even in such relations, extensive as they might be, that the evil terminated -it was felt, in its re-action, by men of whose wealth and resources it was impossible to doubt by men who fancied themselves beyond the reach of any thing short of a total convulsion of society. They, it was true, were not immediately dependant upon the effect of the issue of small notes; they were only to be affected by securities of a different description; but every man must know-indeed, it had been before every man's eyes-that the exposure of the small banks to chances such as he had described, eventually endangered the existence of banking establishments, who fancied themselves placed beyond the reach of the utmost violence of the storm, from whatever quarter it might be directed. He repeated, that the security of these, the security of all, required some remedy to be applied to the present circulation of one and two pound notes. the year 1777, the legislature, not satisfied with what it had done two years before, and still asserting the public detriment which had arisen from the circulation of these small notes, always complaining of it as an evil, prohibited the issue of any bank-notes under 5.; and this proposition was justified upon the ground, that the prevailing practice of issuing these notes tended to much inconvenience and embarrassment, and was not necessary for conducting the commercial concerns of the country. The act of 1777 was, however, temporary in its duration; but the same feeling of its necessity continuing, it was prolonged from time to time, until, in the year 1787, it was made perpetual. This constant feeling of the legislature was at least a pretty good proof, that those who had preceded them in conductting the affairs of the country, though called by some the wisest of their generation, and by others regarded as imbecile and absurd, were yet consistent in their notion, that the suppression of these small notes was essential for securing a useful circulating medium for the country. When the Bank Restriction act of 1797 was passed, it was then quite clear, that unless the prohibition was withdrawn from the circulation of the smaller notes, the country would be altogether deprived of the means of carrying on its business. It was however clearly intended, that the suspension of the old law, which suppressed the small notes, should be always commensurate with the duration of the Bank Restriction act; and in the year 1819, when the Bank Restriction act was under discussion, were not then the strongest opinions pronounced, were not the united declarations of the parliament and of Was he, then, proposing any thing new? the whole country proclaimed, that as Would any man say, that the restriction soon as possible cash payments should of the paper issue was not necessary to be restored on the ancient basis? They the support of public credit? that it was would also bear in mind, that the comnot necessary to the welfare of our com- mittee which had last sat upon the submerce, the prosperity of our manu-ject, composed as it was of men of diffacturers, the security of our speculations? Quite the contrary. Every man had confessed its propriety. What was the general law of the land? He knew quite well that sixty or seventy years ago the law of the land prohibited altogether the issue of these small notes. Not long after the reformation of the currency, which took place, he believed, in the year 1773, an act was passed to restrain the issue of notes under 20s. nominal value. ferent political opinions, entertaining adverse notions also upon the principles on which the currency ought to be governed-they would bear in mind, that in the very report, framed by men such as he had described, not one word could be shown, nor in the evidence on which it was founded, could syllable be found, to establish the enunciation of an opinion, that the circulation of these small notes was a thing so necessary as it was now templated was, to revert earlier than the year 1833 to the system which was sanctioned and enacted in the year 1819, as the future basis on which the currency was to rest. Those, then, who were prepared to argue, that the circulation of these small notes' was essential to the country, as the hon. member for Cricklade (Mr. Gordon) had done, and that the rents of the landed proprietors could not be paid without them, were driven to this position-if their arguments were right, they were bound not to stop with opposing his proposition, but to call for an eternal continuance of the circulation of these small calling for a change? Not, as he had said before, the government, but those who, contrary to the repeatedly established principle, demanded a perpetual duration of a different sort of currency. He confessed he was quite astonished at what had fallen from his hon. friend, when he talked of the connexion between rents and these notes: he wondered what new light had broken in upon him: he was quite surprised to learn whence the flash came, for no ray to form it had sparkled in any of their previous discussions. His firm belief was, that, so far from the continuance of this species of circulation assisting in the maintenance of the country gentleman's rent-roll, it would bring ruin upon it if unfortunately it was perpetuated. asserted to be, for the agricultural interests of the country, for its commerce, or essential in any way for its real transactions. Not one word had escaped that committee to sanction the opinion, that the suspension of the old law ought to be made perpetual. He could not, therefore, have dreamt, that any gentleman would have taken the ground of opposition which was taken by some, to his proposition. It came upon him quite new and unexpected. When his right hon. friend (Mr. Peel) had brought in his bill, than which there never was a more important measure under discussion, or one which had been more ably considered in all its details-notes. Then who would be the parties even then the parliament, in making provisions for the resumption of cash payments two years afterwards, namely, in 1825, never dreamt of the possibility of allowing the circulation of these notes for a series of years after the Bank were al. lowed, or compelled, to pay their notes in cash. With respect to the subsequent act of parliament, in 1822, which allowed the circulation of this class of small notes, he now confessed, as he had indeed admitted the other night, that he had always felt regret, and still did regret, at the step taken on that occasion by parliament, which had the effect of circulating these small notes for a greater length of time. But, notwithstanding that act, he would repeat that it was always understood in the different communications that had taken place between the government and the country bankers, and more particularly in those which had occurred on the subject of their making deposits, that though they the bankers objected throughout most positively, and in the strongest manner, to the deposit of stock, they dwelt with comparative indifference upon the value to themselves of the issue of these one and two pound notes. In fact, the great scope of their objection was to the plan of their being compelled to make the deposit to which he alluded, but absolutely nothing of stress was laid upon the privilege of the issue of small notes. So far as they were concerned, then, they could not now turn round and affect to set a prominent value upon that which they had, on all former occasions, treated so lightly. As the law now stood, these notes might be issued till the year 1833. Was he proposing any new principle in his mode of dealing with the last act of parliament? He must deny that he was; for all he conVOL. XIV. It was very possible, however, that the argument to which he alluded might not be pushed to its extremity by all the gentlemen who were opposed to his plan, but that other opponents would be found, who would say, "You ought not to press this plan of yours, on account of the great difficulty that must attend its executionon account of the manner in which it must practically cramp your circulation, lower the price of produce, and produce embarrassments, which must affect your agriculture, and your commerce, and paralyze the industry of the people." Now, he would reply, that these apprehensions, alarming as they sounded, were, nevertheless, of the most visionary kind. Indeed, the experience which could be quoted against it was decisive of the argument; for in the year 1819, it became indispensably necessary for the Bank of England to take immediate measures to meet the operation of the then approaching law, which provided, within a short period, for the payment of their notes in N cash on demand. The only obvious mode which they could take was, as speedily as possible, to contract their issues, so as to bring the foreign exchanges, which were running against this country, round to a more favourable point, thus to lower the price of gold, and then to bring it into the market, and keep it there. He would state how the measures of the Bank were brought into action. It appeared that since the year 1819, there was coined at the Mint a sum not less than 25,236,000 sovereigns, and he would give the periods when this coinage took place; from which it would be seen, that a very large proportion of it was in the three years that immediately succeeded the passing of the act of 1819, which compelled the Bank to take necessary steps to resume cash payments. In the year 1820, there was coined at the Mint, 949,516; in 1821, 9,520,758; in 1822, 5,356,787. So that in three years, the Bank had succeeded, in the first place, in righting the foreign exchanges, in the next, in reducing the price of gold, and in the third year, in having coined fifteen millions of sovereigns. This was the process which was conducted by the Bank. He did not mean to say that it was throughout unattended with distress. In the year 1819, considerable distress certainly prevailed, and also in 1820; again in 1821; but still, upon turning to the prices of commodities, which indicated more activity in trade, and greater capacity in the people to purchase, they would find that, in 1822, notwithstanding this mighty operation respecting the currency, things had greatly mended; and this was apparent, while the paper of the country banks and of the Bank of England had become greatly diminished-the latter necessarily, for otherwise they could not have carried their contemplated measures into effect. This diminution was apparent from the following returns of the Bank circulation within the period he had mentioned. In the year 1820, the Bank paper circulation was 23,875,000l.; in 1821, 21,759,000l.; and in 1822, 18,000,000., when the pressuré was less than in the two preceding years, notwithstanding this reduction of the circulating medium. No doubt the paper withdrawn by the Bank was, in some degree, supplied by the gold, for which it had been exchanged; but after that substitution, did things fall down, and was every man looking at his neighbour and asking, "What is your con dition, how long can you bear up against this depression? How long can I myself endure its operation?" No such want of confidence prevailed-no such interrogatories were interchanged. On the contrary, every thing went on smoothly and advantageously-a clear proof, in his mind, that the formidable danger apprehended by some, from the substitution of gold for the one and two pound notes, was most exaggerated, and that by far too much importance was attached to the operation of that process. Still it might be said, that however practical might be the convertibility of this paper circulation into specie, it was an operation of such magnitude, as could not be carried into effect, without a great pressure upon the existing interests and demands of the country. Now, to a certain degree he was quite ready to admit that these apprehensions were not groundless. Some interests must always suffer in these important arrangements; but to estimate the nature of the operation, they must look a little at the actual state of the gold at present in circulation; and how far they were in a condition to substitute the necessary quantity of gold for the country Bank paper to be withdrawn. In making this calculation, they must always consider, that the present case was not like that of 1819, in which the basis of the metallic circulation had to be laid. And that consideration naturally suggested the lesser difficulty which must attend the enlargement of a basis already formed, as compared with the work of its original formation. It was one thing to lay the foundation, and another to raise a superstructure upon a basis already formed. The quantity of gold in the country could not be less than 17,000,000l. upon any reasonable calculation. The gold coined at the Mint amounted, in the manner he had mentioned, to 25,236,000l. There had been, within the same period, exported of British gold, 7,269,000l.: what part of that sum consisted of coin it was difficult to say, as no returns of that nature were presented at the Customs. However, it was a notorious fact, that within the last half year the foreign exchanges had become favourable, and a proportion of the gold so exported, not in ingots, but in the real gold coin of the realm, had come back to the amount of 1,000,000l. sterling: so that, subtracting this 1,000,000l. so returned from the 7,000,000l. exported, the total loss upon the export of gold | overrate it. The fairest way, as it seemed might be taken at 6,000,000l. Deduct this from the 25,000,000l. and 19,000,000l. would remain for the uses of the country. But, as it was possible, that some coin, of which no accurate returns could be made, must have gone abroad in the pockets of individuals, and also in the payments of specie in carrying on a trade which he and his right hon. friend near him (Mr. Huskisson) were so anxious to put down, if he estimated these at 2,000,000l., it would still leave no less than 17,000,000l. of gold available for the country at the present moment. The exchanges were now so favourable as to prevent any of this stock in specie from going out; and it was, in point of fact, profitable to import gold into England. Taking this general estimate into view, the committee would see, that they had a pretty large basis to superinduce their more enlarged structure upon. They had a solid ground to work on; and if they then turned to the state of their paper currency, they would see with tolerable accuracy, the nature of what they would be required to perform. What, then, had they to look to as far as related to their paper currency, and contemplating the amount of gold, which, in the course of three years (the time to which he meant to restrict the circulation of the one and two pound notes), it might be necessary to employ to fill up the vacuum which must arise from the withdrawal of the small Bank notes from the national circulation. There was some difficulty in ascertaining with any positive accuracy the amount of country bank paper now in circulation, but they could approximate to a conjecture or estimate on which they could safely act. And here he spoke not of the general aggregate paper circulation of the country, but merely of that of the notes of smaller denomination. Estimating, then, from the Stamp-office the number of these notes which were stamped from the years 1820 to 1825 inclusive, and this while the Bank of England was withdrawing its small paper currency, he found that in January, 1821, the amount was 1,683,000l. in January, 1822, 2,214,000l.; in January, 1823, 1,888,000l. ; in January, 1824, 1,969,000l.; in January, 1825, 2,501,000l.; and up to the 5th of January, 1826, 3,172,000/. He believed that if they estimated the amount of the country bank paper in circulation by trebling the amount stamped in one year, they would greatly to him, would be, to take the average amount stamped in any three years, and calculate the circulation at treble that amount. Taking, then, the amount of three years, he would call the average 2,300,000l., or estimate the small note circulation for 1825 at six millions; but, although he was willing to admit that that might have been the amount of the small note currency during the greater portion of that year, there could at the present moment be no doubt that the amount had been recently considerably reduced, particularly from the events which had occurred during the latter half of the year, beginning indeed so early as last July, when, owing to the interposition of some difficulty by a Bristol banker, in the payment of a one pound note in specie, a considerable sensation of uneasiness on one side was created, and of caution on the other he meant that prudential caution, on the part of solid and solvent bankers, who foresaw, that in such a state of things, it was desirable to control their issues judiciously, and who evinced an unwillingness to go beyond the amount which a provident view of their affairs would warrant, and in fact, made silent arrangements for the gradually withdrawing the small notes which they had issued. When great apprehension became afterwards more general, though not in contemplation of any intention of the government to alter the law, but because these notes were found to have been issued by country bankers to a greater amount than they ought to have been, the consequence was a re-action, before which some bankers failed, and the convulsion of public credit in its turn affected the confidence of the solid and solvent bankers. These latter bankers, therefore, immediately controlled, as well as they could, their issues. Referring again to what had taken place in the committee of 1819, they should remember, that the solvent bankers were in the habit of cautiously guarding their issues of 17. and 21. notes; for it appeared, that they were in the practice of having a great number of the newly stamped ones by them, and not putting them into circulation, until the old ones were called in, for which they were to be substituted. Supposing that in 1825, 6,000,000l. was the total amount of these notes in circulation, the number now must be greatly less, and could not be estimated at much more than 4,000,0007. |