§ On the motion of Mr. Grenfell, the Petitions for retrenchment and economy presented from the county of Cornwall, and from the lord mayor, aldermen, and common council of the city of London, were entered as read.
§ Mr. Grenfell
rose and observed, that after the numerous petitions presented to 448 the House from every part of the country in favour of economy and retrenchment, he felt himself perfectly justified in endeavouring to direct the attention of the House to a source of financial improvements, namely, the contracts and engagements between the public and the bank of England. During the last session of parliament he had taken frequent opportunities of calling their attention to that important topic, and in consequence of the discussions arising thereon, considerable savings had been effected, and he trusted that the same principle might be still further pursued, without contracting the fair and equitable profits of that great, and he would call it, that valuable national establishment. For this purpose, it would be his duty to propose the appointment of a select committee, to enter into the whole of this important subject, for without a select committee, it would be impossible to investigate with sufficient accuracy, the intricate concerns of the several arrangements made between the government and the bank; and this it was competent for them to effect, without interfering, in the remotest degree, with the multifarious concerns of the finance committee. In undertaking to show the necessity of this measure, he proposed, first, to give a general review of some previous proceedings; and, in the next place, to state what further retrenchments this subject was capable of affording. When first he called the attention of the House to this consideration, he had exposed himself to an irritable, if not a hostile feeling, on the part of a very respectable set of men, the bank directors, for whom in their individual capacity, he entertained the highest possible respect. This feeling, however, could not prevent him from fulfilling his duty towards the public, and endeavouring to limit the exorbitant profits of those who have, for many years, been deriving gain from the public, far beyond what their services justified; not desiring, at the same time, as he before observed, to deprive them of a fair, equitable, and even liberal remuneration. He stated that, in the year 1797, just twenty years ago, when the restriction act was passed, the affairs of the bank were investigated by a committee of secrecy, which was the first occurrence of that nature that had taken place since the original grant of the charter, in the year 1694. It then appeared, that for near a century, the only profits derived to the bank pro- 449 prietors were dividends, sometimes as high as 9 per cent., at other times as low as 4½; making an average of 6¾ per cent.; but there was nothing like a bonus, or an increase of capital during that period. By the same investigation it also appeared, that there had accumulated in the hands of the bank a surplus of undivided profits to the amount of 3,800,000l. which, added to their fund of 11,600,000l. made a grand total in their hands of 15,400,000l. With this capital the bank started with the restriction act, and enormous profits were the consequence. The first consideration was the rate of management of the public debt, which was exorbitant in a degree, such as the history of no other banking or commercial establishment could present. The profits of the banks of Genoa, Amsterdam, or Hamburg, sunk into insignificance in comparison with those of the bank of England for the last twenty year. In proof of this he stated a fact within his own knowledge, and which, as being himself a bank proprietor, he was enabled to verify, namely, that the profits of the bank within the last twenty years, in addition to the usual dividend of seven per cent, amounted to the sum of 27 millions. He defied the chancellor of the exchequer, or any of the hon. bank directors then present, to dispute the accuracy of that statement.
In giving this exposition of the profits of the bank of England in their engagements with the public, he begged leave to state, once for all, that he did not mean to impute any censure to the bank that made these gains; he found fault only with the government that tolerated them. For, besides the natural desire of gain that belonged to man in every relation in life, the bank directors were bound by oath to exert themselves on every occasion to improve the property of their constituents; but he trusted that the ardour that animated the directors, and the success that attended their exertions in the discharge of their duty, would induce the House, in its turn, to consider the interests of the public. Much of these enormous profits were to be attributed to the influence which their command of money gave the bank directors over every chancellor of the exchequer in their pecuniary negociations; and when this was properly considered, he would naturally expect that the right hon. gentleman opposite would not make any opposition to his motion for a thorough investigation of 450 the bank affairs, as it would thereby render him in future less dependent on the directors. But, notwithstanding this, and that many of those who usually voted with the minister on such occasions were, he was convinced, desirous of terminating the present system, he still feared that the right hon. gentleman could not throw off the trammels which time or influence had imposed on him. It was impossible to deny that the bank had, on many occasions, afforded great accommodations to the public; but it should likewise be considered, that it was the public that had enabled the bank to grant the accommodation, by means of the restriction act. But even these very accommodations were sources of new profits, obtained by the influence exercised by the directors over the chancellor of the exchequer in all pecuniary arrangements. This influence had manifested itself in many instances; and no one could look at it without acknowledging that such a control over the concerns of government was in its nature unfit and anomalous, and in its consequences mischievous and dangerous. Statements to this effect had been frequently made in the House; but motions founded on them always encountered opposition, more remarkable for its taciturnity, and formidable by the votes of the six honourable bank directors, than for the arguments advanced on the question. It had been said, indeed, that the statements were exaggerated; but no proofs were ever advanced in support of the allegation; and when he, and his friends on the same side of the question, complained of the exorbitant charge of 300,000l. for management, the hon. directors said, that the bank indeed was extremely moderate, being satisfied with only 7d. in every 100l. But let it be considered, that this 7d. was levied annually, upon an amount of debt which he almost shuddered to mention—on no less than 800 millions of pounds sterling! The real question, however, for the consideration of the House was, whether the nature of the service, and the risk run by the bank, were such as enabled it to receive a yearly sum, which, in November last, amounted to 282,000l. This could be considered in a committee only, where he should be glad to encounter the hon. directors in fair discussion, and where, he trusted, he should be enabled to prove that the services of the bank would be liberally remunerated by half their present profits, or by about 150,000l. a year.
451 There was another source of immense profits to the bank, namely, the sums of public money that have accumulated, and were now lying in their hands. The amount of these within the last twenty years was seldom less than nine millions, and not unfrequently exceeded fifteen millions, the average being about 11 millions. This money, locked up from public use, caused a loss to the public of about 5 or 600,000l. annually, producing an equal profit to the bank. When this abuse bad, on a former occasion, been complained of, and an account was demanded of the sums of money so accumulated, what was the conduct of the bank directors? They prevented for a few days the production of the account; and an hon. bank director opposite had asserted, that the money was not serviceable to the bank; but notwithstanding this assertion, the gentlemen were very unwilling to part with it. They endeavoured then to excite alarm, and spoke of the danger likely to result to the public credit from such discussions; but he knew of no injury such discussions could create to the credit of government, but the proofs they afforded of what was well expressed on a former occasion, by an hon. and learned gentleman, whose absence from that House must be regretted by every one [Hear, hear!], who had called it "a profligate profusion on the part of government, and an inordinate rapacity on the part of the bank of England, without an example in the financial history of this or of any other country."
With respect to the opposition of the right hon. gentleman, it had hitherto been more famed for the votes which he had obtained than the arguments he had used. It was true indeed that every time he had brought forward any question with regard to the transactions between government and the bank, he had been, on a division of the House, successfully opposed by the right hon. gentleman. But it was unnecessary to state, that it was not by the mere vote of the day that similar questions of this or any other House of parliament were ultimately decided. Such questions were, when first proposed, frequently resisted and rejected, and yet afterwards, and that within a short period, acted on. There were many instances of this kind which he could easily bring to the recollection of the House. He would, on the present occasion, however, confine himself to stating in detail the savings and 452 retrenchments which had taken place since the discussions were begun, on the propositions submitted by him on the subject of the arrangements between the government and the bank, that is within the last two sessions, or within the last twenty months. The first proposition submitted by him to the House, in the session before last, was a motion for the production of accounts and papers, for the purpose of exhibiting the amount of the public deposits in the hands of the bank, and the terms of the existing contracts between government and the bank, under which the bank were paid for transacting the business of the public. Nothing could be more just, than that the House of Commons, in right of the public as one of the parties, should receive every information on this subject. One would have supposed, that a proposition so reasonable in itself, so well calculated to produce practical good, would have instantly have been acceded to by the right hon. gentleman, as the guardian and protector of the public purse. He resisted it, however, and the proposition was rejected. But what happened? Within one week after the rejection of the proposition, and when he had come to a determination again to submit it for the re-consideration of the House, did the right hon. gentleman come down to the House, and, contrary to the wishes of many of the directors of the bank—to his own credit—though he was sorry to add it was a solitary instance— gave his acquiescence; and thus the same measure was carried on the 26th, which had been rejected on the 19th of the same month. But how often was it not known to happen, that resistance on the part of his majesty's ministers was afterwards followed by concession. The right hon. gentleman, in the session before last, had submitted to the House an act imposing an additional duty to the existing stamp duties. The bank of England had, for their own accommodation, been allowed to issue paper without any stamp, and in lieu of the duties, they paid to the public a sum known by the name of the bank composition. From 1799 to 1815, this composition had been any thing but what it ought to have been, that is, a full and fair equivalent for the sums which they would have been obliged to pay the commissioners of stamps, as the duties for the paper in circulation. When his noble friend, the member for Lanarkshire (lord 453 A. Hamilton), first asked the right hon. gentleman what additional sum it was proposed that the bank should pay, he answered it would be proposed to make the bank pay such an addition to the existing composition, which was 42,000l. as would be found to correspond to—what?—The increase on the amount of their notes in circulation? No—but to the increase of the stamp duty—abandoning in this manner the principle laid down by Mr. Pitt in 1799, and following up that adopted by lord Sidmouth in 1804, and losing sight of the increase of the notes in circulation. A variety of discussions took place day after day on this subject. He had shown to the House, that according to calculations, for the accuracy of which he considered himself responsible the bank had put into their pocket, since the arrangement of lord Sidmouth in 1804, when Mr. Pitt's principle was abandoned, a sum of money to which the public were entitled, to the amount of 535,000l. The right hon. gentleman though, when first questioned by his noble friend, he had intimated his intention to adhere to the principle of the arrangement of 1804, afterwards, when obliged to give way, said, he had always intended to act in this business as he afterwards did. However, it was comparatively of little consequence how a beneficial result to the public was produced; it was enough that it was produced. In the first of the two years after a new arrangement the public received from the bank 87,500l., and in the second year 91,000l., being an increase of 41,000l. However, were he to state the advantage to the public by the new arrangement at 35,000l. only, it was an object in the present times of pressure of no inconsiderable importance.
The next subject to which he had called the attention of the House was the deposits of public money in the hands of the bank. They could not all but recollect the very taunting manner in which, in the session before last, what he said had been received, not by the directors of the bank only, but also by the chancellor of the exchequer, who had resisted his motion for the production of accounts, to see the amount of the balances. On that occasion a bank director, his hon. friend, the member for Taunton (Mr. Baring), whom he was happy to see below him, returned from his foreign mission, had then ridiculed the idea of the bank deriving any considerable advantage from the 454 balances of the public money in the hands of the bank; and when he moved for papers, for the purpose of showing the enormous amount of these balances, he was opposed by the right hon. gentleman. But what happened afterwards? The chancellor of the exchequer and the directors of the bank laid their heads together, and the bank agreed to advance government the sum of 6,000,000l. at one per cent, less than the ordinary interest, being a saving of 60,000l. on the 6,000,000l. However, this formed only a part of the advantages derived by the public. Instead of paying 4 per cent, on six millions, he thought as the bank were only lending to the public their own money the public ought to pay nothing for it. He therefore had moved an amendment to the proposition submitted to the House on that occasion. But hardly was this over, when the chancellor of the exchequer came forward with a new arrangement, by which other three millions were to be lent by the bank, at an interest of 3 per cent., equivalent to another saving of 60,000l. Another sum of 25,000l. had been obtained as interest on 500,000l. of unclaimed dividends. Thus there had been first obtained 60,000l., being 1 per cent, on the loan of 6 millions; then 60,000l., being 2 per cent, on 3 millions; and next 25,000l. interest on 500,000l. of unclaimed dividends, making together 145,0000l., to which, if they added 35,000l. for additional stamp duties obtained, they would arrive at the sum of 180,000l. which had been saved, it might be improper to say in consequence of these discussions, but certainly since these discussions had taken place. But whether this advantage was due to the discussions in that House, or to the vigilance of the right hon. gentleman, and the generosity and liberality of the bank directors, or an awakened sense of justice on the part of the bank, but which had been asleep for twenty years, he would leave to the House to determine.
Having thus shown the House that savings had been realized to the amount of 180,000l., he might be asked, perhaps, whether he was not yet satisfied, and to what objects a committee could apply itself, if the motion were to be carried Appreciating the value to the public of all savings, particularly at this moment of public pressure, he would answer to such question, that he could not be satisfied with what was done, until full and ample 455 justice should be done to the public. It remained for him, therefore, to point out the sources of further retrenchment which he had in contemplation, and the objects with which the committee would have to occupy itself, if the motion should be carried. The first great source remaining of farther economy was, to regulate the deposits of public money in the hands of the bank; and the House would judge how fur this was practicable. The balances on these deposits were pretty much the same now as they had been for the last ten years: he should call the present aggregate amount eleven millions. This produced a loss to the public of 550,000l. From this sum there would be to be deducted 150,000l., for the loan of three millions in 1808 without interest, which was advanced on the specific ground of the right of the public to participate in the profits the bank made of this money. Nothing since had passed precluding the public from making such arrangement with the bank as the legislature might deem advisable. If to the 60,000l. being the one per cent, on six millions, 60,000l. being two per cent, on three millions, making 120,000l., they added 150,000l. the whole would amount to 270,000l.; and, deducting this sum of 270,000l. from the 550,000l. being the interest on the 11 millions, the aggregate amount of balances, there would remain a sum of 280,000l., which sum the public were now losing on the deposits in the hands of the bank. This sum the bank received for no other than the insignificant service of acting as treasurers to the public. He did, therefore, confidently look to this as a source of very considerable saving to the public.
The next object to which the attention of the committee would be called was, the exorbitant and extravagant rate they were paying the bank for the management of the public money. On this subject he would not now enlarge. They would find the details much better given in some of the parliamentary papers which he should mention; 1st, The report of the finance committee of 1797. 2nd, the luminous and able report of the committee on public income and expenditure in 1807; and3d, the correspondence between the government and bank, which took place in consequence of that report. From the information which these papers gave them, they would see, that instead of paying 300,000l. to the bank, they ought to pay less than one half of this sum; and he confidently looked to 456 this quarter, therefore, as a source of future saving to the amount of 150,000l. per annum. These were the two great sources towards which he looked for further savings. But there were still some other sources of savings which, though small in themselves, on principle he thought they could not well overlook; and in this opinion he was the more confirmed, particularly as since he had had a seat in that House, he had very properly assisted in discussions on the subject of savings of thousands and a few hundred pounds a year; for instance, the discussion last year respecting the reduction of 1,000l. a year on the salary to the secretaries of the admiralty, and the discussion respecting the salary to the newly created vice treasurer of Ireland. Since the year 1722 the bank had received charges of management on 4 milions of South Sea debt, which they purchased from that company and added to their capital, and on which all management had ceased. But on this sum, on which there was no management, they received a greater rate of allowance than for the debt on which they had the trouble of transfers and paying dividends. The bank received, too, 800l. per million for every loan. This had amounted since the war to 4 or 5,000l. a year. The bank, not satisfied with 7d. in the 100l. for managing the debt, obtained 20d. in the hundred pounds in every loan for doing nothing. He hoped he should never live to see another loan; but as it was necessary to make provision for other times than the present, this was another subject which would come under the consideration of the committee. The last item was a charge made by the bank respecting which, if the bank chose to stand on their chartered rights, he knew they could not be driven off, this was a charge which had disgusted the late Mr. Perceval, and indeed the very name of it was disgusting—the bank had received 4,000l. a year ever since their origin, as an allowance for house expenses for coals, candles, &c. The bank, however, did not now like this title, but till late years the charge had always gone by this title. They now chose to call it "charges of management." But they were already paid for managing the affairs of the public. There was no other management but that of their own affairs. The charge of house expenses was as discreditable to the bank as it was unfair towards the public.
He had now gone through the whole items, and he had only in conclusion one 457 observation to make. In justice to himself, he wished to observe, that throughout these discussions he had been actuated by no feeling but what was of a public nature, and proper for a public man to entertain. He had been moved by an honest care for the interests of the public, by a conviction in his own mind, and a sincere, zealous, ardent, but blameless desire to contribute in his humble sphere, towards the correction of abuses in the expenditure, and the consequent alleviation of the burthens which at present pressed on every individual throughout the whole frame and structure of society. If, on any principle of public faith, the bank were entitled to hold the whole or any part of the sums they now obtained, or if they could show that they were entitled to a remuneration to the extent of what they at present received, in every view of the matter he called on the bank to come forward in support of the motion for a committee, where alone the subject could receive the proper investigation, the errors, be exposed, arid the charge of extravagant charges be rebutted. This course would have the effect of setting the subject at rest, and putting an end to the motions on this subject, which he should otherwise, while he had a seat in that House, never cease to bring. He concluded with moving, "That a select committee be appointed to inquire into the engagements now subsisting between the public and the Bank of England, and to consider the advantages derived by the bank from its transactions with the public, with a view to the adoption of such future arrangements as may be consistent with those principles of equity and good faith which ought to prevail in all transactions between the public and the Bank of England, and to report their opinion thereon to the House."
The Chancellor of the Exchequer
said, that the hon. gentleman had brought forward his motion with a good deal of dexterity, by making an appeal to the bank. He called on the directors of that establishment to adopt a manly line of conduct, and to bring under the closest inspection of the House, all the transactions which that concern was engaged in. Now, he conceived, the onus probandi rested on those who called for examination, to state the grounds on which it was necessary; instead of demanding of those, whose transactions were proposed to be made the subject of investigation, to advance rea- 458 sons for refusing their compliance. If the transactions between government and the bank had not been brought distinctly under the view of parliament; if they had not received as much consideration as could be afforded to any subject—then, certainly, he would allow that the arguments of the hon. gentleman carried great weight with them. But lie had himself stated the period when the engagements of the bank were fully considered, and when they received the approbation of parliament. They were completely entered into, in 1807, before the select committee of finance, by whom several useful suggestions were thrown out. Of these, Mr. Perceval had availed himself in the first instance, and he (the chancellor of the exchequer) had always thought himself bound to attend to them, whenever an opportunity occurred. If the hon. gentleman could show, that the engagements between government and the bank had on any occasion, assumed such a character as called for minute parliamentary inquiry—if a rate of advantage were allowed to the bank, which justice did not warrant—then he should have no objection to a motion of this kind. But he had never heard such a charge insinuated except by the hon. gentleman. He had argued, that the profits of the bank were progressively increasing. But it must appear to every person who considered the subject fairly, that the contrary was the case, and that the profits made by the bank in the transactions between them and the government, were absolutely decreasing, and that in a very rapid degree. This was very clear, when the relative value of money, in war and in peace was considered., In time of peace, when the interest of money was lowered, neither the bank nor any other great body could make so much profit by the employment of their capital, as in time of war. He here spoke of profits generally—those of 5 per cent, which the bank had made in some of their transactions with government—as well as those of lower amount. Now, if they were able, during a period of war, to make 5 per cent., the reduction of interest, consequent on peace, must alone have very materially lowered their profits. And it should also be recollected, that the system of discount had likewise undergone a very great alteration. The inference he would draw from these facts was, that the arrangement with the bank, which two years ago was thought 459 favourable by parliament, must now be considered more advantageous to the public than it was then. With respect to the employment of the balances held by the bank, for the service of the public, he had never heard a plan by which, without the concurrence of the bank, it could be carried into effect. During Mr. Perceval's administration a plan was devised for that purpose, but it was abandoned; and, after giving it his utmost consideration, it appeared to him to be impracticable, unless the bank themselves completely concurred in it. That plan having been thrown aside, Mr. Perceval thought the public ought to derive some benefit from the balances which were placed under the control of the bank, and, in consequence, an arrangement was made, the principle of which was still acted on, although some modification had been made in the details. By that arrangement a sum of money had been borrowed, part of it without interest, and the remainder at a very moderate rate. In the last year the bank lent 6,000,000l. to government, at 4l. per cent., and 3,000,000l. at an interest of 3l. per cent. Now, if the arrangement made by Mr. Perceval was calculated to benefit the public, he contended, considering the difference of the periods, that those arrangements which followed were still more advantageous; and he did not think it right to check or impede this system, at a time when less benefit could be derived from the public money, by the bank, than what it must have produced when the bargain was originally concluded. The present time was, he conceived, ill suited for such an inquiry as that, proposed. In the last session of parliament, it was determined that the bank should commence payments in cash on the 5th of July, 1818; and there was a clear understanding, that they should begin to make preparations for that purpose. It would be wrong to agree to an inquiry, which would go to lay open those arrangements which the bank had made preparatory to their resumption of cash payments. One of those arrangements they were acquainted with. It was a notice to pay a part of their paper, which had been issued at certain periods. The result of this experiment was very well known. It was found that no very great disposition prevailed to send in those notes, in order to obtain cash; and therefore great encouragement was held out to the bank to persevere in calling in notes of particular 460 dates. By this means, before the time arrived for a complete resumption of cash payments, it was hoped that there would be such an issue of specie, as would prevent any embarrassment at the bank, and would remove every fear that might be entertained of a deficiency of cash in the country. When the House saw this, he thought, that, instead of making inquiries into contracts, settled at present by act of parliament, they ought to await the completion of the preparations he had alluded to. They ought not to harass the bank to proceed to measures, which, he was sure, they were most anxious to adopt, and which the House had a right to call for, when the proper time arrived. He confessed, when, at the close of last session, considerable benefits were derived by the government from its transactions with the bank—when it was fixed that, on the 5th of July, 1818, they should resume their payments in specie—he did not think they would have been harassed by inquiries, which could have no other practical effect than to disturb existing regulations, and to render the bank less quick, and probably less able, to commence payment in cash, than they otherwise would be. If the hon. gentleman had adduced any arguments, novel in their nature, or which had not already been discussed in that House, he should have entered more into detail, though with some personal inconvenience. But as this was not the case, he conceived the general observations he had made were sufficient for the occasion.
§ Mr. P. Moore
said, that the right hon. gentleman had not overturned one of the statements made by his hon. friend, who had called for a committee, that he might have an opportunity of proving every fact he had laid before the House. The committee of 1807, was not formed by the ministry of that day, but originated with a noble friend of his, now a member of the other House. From the report of that committee much advantage had been derived; but it did not go one-tenth so far as it would have done, if the statements of his hon. friend had been in evidence before that committee. Any unprejudiced person, who heard his hon. friend bring forward his statement of facts that night, could have no doubt whatever that he would, if opportunity were given him, prove every one. The vast profit made by the bank at the expense of the country showed the propriety and neces- 461 sity of the inquiry into Which it would be the business of the committee to enter. This corporation, since the 23d of May last, had divided among themselves no less a sum than seven millions sterling. The restriction act, which enabled them to make such profits, was the only difficulty that now stood in the way of an advantageous arrangement for the country, which had increased its distresses, and would enable the corporation of the bank, while it lasted and was enforced, to gain 999,000l. out of every million of their capital.
supported the motion for a committee of inquiry, on the ground of the advantages which had already resulted from the consideration given by the House to the engagement between the bank and the government, and the discussions to which it led. In 1807 the finance committee entered into an examination which led to a loan of three millions from the bank to the county. During the two last sessions of parliament the attention of the House was repeatedly directed to this subject; the vigilance of the country was awakened; the transactions of the bank with the government became better understood; and the result was, new and great advantages gained by the public. Surely, this history of past results and proceedings offered fresh inducements to inquiry, and urged the House on in the course which had already been so advantageous. Nor was there any reason why we should stop short, or dread any evil in the appointment of a parliamentary inquiry. If the committee appointed to institute an examination into subsisting engagements and transactions should find that the bank was still indebted to the public, and was in justice bound to make farther contributions, a positive advantage would be gained; and if, on the contrary, the result of its inquiries should be, that the public had already participated sufficiently in the profits of this corporation, lie was sure no injustice would be done it in demanding more. There were several facts and considerations which convinced him that the former would be the case; that the profits of the bank, which were enormous, were reaped at the expense of the public; and that the bargain which it made with the nation, for transacting its business, was far from being the best. To show that the services of this corporation, in acting as the national bankers, were exceedingly overpaid, he must appeal to the 462 case of the United States of America, where the national bank, in consideration of the balances of public money in its hands, and the other advantages it enjoyed by the countenance of government, managed the public business for nothing. He might still farther, in proof of the doctrine he wished to establish, mention the fact, that the Globe Assurance Company offered to do the same for this country which the American national bank did for the United States. The saving that might accrue to the public from a change in the present arrangements between the government and the bank appeared to him very important; and the inquiry into its practicability and extent deserved, in his mind, precedence over most other questions of economy. Various points would come before the committee which was the object of the hon. gentleman's motion. The loans advanced by the bank as connected with the bank restriction act, and its termination in a short time, deserved serious consideration. In his opinion, if the bank went on as it was doing, no resumption of cash payments could be anticipated. This would appear evident upon the bare consideration of the time when the restriction act originated, and the circumstances that led to its adoption. In 1797, the bank having previously lent its capital of 11,700,000l. or in round numbers, twelve millions to government, and advanced 10 millions on account of malt duties, could not answer the demands made upon it for the payment of its notes, and was obliged to resort to the protection of the act alluded to. The bank of England was like every other corporation of the same nature; if it advanced its capital to government, and thus put beyond its control its means of answering all demands, it could not make good its engagements, and must be protected by government. The fact accordingly was, that it could not pay its notes in 1797; and whatever an act of parliament might do in removing the restriction then imposed, it could not do so now, nor be able at the termination of the act in July, 1818. It was as incapable to resume cash payments as ever, and from the same cause. They had advanced j their capital of twelve millions to government, they had advanced three millions in 1808, and nine millions last year, making in all twenty-four millions, or double the amount of their capital stock. Their capital was, indeed, increased three millions last session, and now amounted to§463 fifteen millions; but, out of a capital of fifteen millions, no corporation could lend twenty-four, and make good its engagements. The act was to cease at the end of the war. We were told that the peace, by opening an intercourse with the rest of Europe, would enable us to obtain bullion, would restore credit, equalize exchanges, and thus prepare the bank for paying its notes in specie. Peace had been established now for nearly two years, but we were no farther than ever in our progress towards this object. The fact was, that the bank could only continue its advances by the protection of the restriction act. If they continue to lend to government double their capital, they must issue more paper. The system of accommodation must be continued, and what had been ruinous to every nation must prove so to this. The paper would become government paper, and must depreciate in this as in other countries. While the war continued, no great injury might result from such a state of currency; but it could not be continued without absolute ruin in time of peace, with a free intercourse among our neighbours, and the competition of the world against us. With a depreciated currency, produced by the continuance of the restriction act, we must be under-navigated and undersold in all our manufactures, in all our commercial transactions, in all our commodities, in all our products, and in all branches of our industry. Thinking that this subject, as well as the profits of the bank, deserved inquiry, he would support the motion.
§ Mr. Huskisson
observed, that the latter part of the hon. gentleman's speech contained arguments which were directed to a different question than that now before the House, and should have been reserved till July, 1818, when the period fixed by parliament for the resumption of cash payments, the subject to which they related, would arrive. There was every reason to believe that the Bank would be able at that time to fulfil the hopes of the House and the country; and till the experiment were tried, there was no necessity for instituting an inquiry, especially after the mature deliberation which the subject had undergone last session. The two hon. gentlemen seemed to be at variance with each other in their statements, although both supported the same measure. The hon. gentleman who spoke last had stated that the bank had advanced 24 millions to government, while its capital was 464 only 15, and that consequently it could not make good its engagements; while the other hon. mover stated, that it had 11 millions in savings or surplus capital, thus making its capita exceed its loans. There was therefore no danger to be apprehended from its excessive advances. But these sums did not limit the means of the bank: it had private balances in its hands like other banking establishments. The whole amount of its capital was not known, and could not be known. The hon. member who brought forward the present motion, believed that it was very great, as also the amount of its surplus profits. The bank corporation had aright to use their profits as they pleased, and might make advances as they thought they could with safety. He rejoiced to see the period approaching in which cash payments would be resumed, and entertained the most sanguine hope, that it would not be delayed beyond the time contemplated by parliament. He rejoiced at this the more, as the interval between the withdrawing or absorbing of a great part of our excessive circulation, and the return to another state of currency, must be a time of severe pressure, not only in this country but all over Europe. The hon. member who spoke last gave as a reason for inquiry into the profits of the bank, with a view to a more equal participation in them by the public, the circumstance that the bank of the United States of America transacted the public business for nothing. He (Mr. H.) did not know what advantages the government of that country allowed the bank: but to make the comparison as it ought, the circumstances of both establishments should have been stated. It should have been mentioned, whether the bank of the United States allowed the public three millions without interest, and had paid large sums for repeated renewals of its charter. The hon. mover had enlarged on the great profits of the bank during the war, and considered its profits as losses to the public. He had forgotten, that other corporations and societies likewise made great profits. He had complained that these profits were made by the restriction act, and recommended a participation in these profits, because they had accrued from the interference of the legislature. He (Mr. H.), although he allowed these profits were great, thought that it would not be consistent with the dignity of the legislature to share in profits that resulted from a measure which 465 was enacted not for profit, but security. He objected to a committee of inquiry, because inquiry had already taken place, and none of the facts on which the present motion was grounded were pretended to be new. Almost every account and every fact was before the committee of 1807, which drew up the able report, embodying almost all the hon. member's observations. The House-money and other items were there contained. If, in consequence of the information then collected, and the perfect knowledge of all the grounds on which the public could claim a participation in bank profits, no better bargain was made in 1808, the circumstances were less favourable at present for making an increased demand than then; and this, accordingly, was not a period for revising subsisting engagements, with a view to alter them so as to obtain greater advantages. That they had made large profits he did not deny. At the time he formerly alluded to, government had pressed for a more considerable participation in these profits; but the bank resisted, and he was convinced that, if the demand had been persisted in, government must have adopted a new mode of managing the public business. The hon. mover was, he thought, doing no good by bringing forward such transactions as those into which he now called for inquiry, without laying a foundation for his motion in new circumstances. He had adduced nothing new; no reason for an additional advance that was not before known and considered. The subsisting bargain was made with every endeavour to gain the greatest advantages, and there was no hope of making any addition to them by the continued agitation of the question. If new profits could be stated, if new facts could be brought forward, he allowed that might be good ground for revising the subsisting agreements; but while no such things were mentioned, he saw no reason for renewed discussion, and no necessity for a committee. Specific motions might be brought forward embracing specific objects.
§ Mr. Manning
did not remember these subjects being brought forward on any occasion, when he was not anxious to give the most explicit answer in his power. He thought the hon. gentleman called for a committee without grounding his motion on any substantial reasons. One circumstance appeared to him rather extraordinary. He did not believe that the hon. gentleman was in the habit of attending 466 seditious meetings: he must therefore suppose that his pocket had been picked in his passage to the House, and that a document, which he had since read to the House, and which appeared word for word in the British Press, on the 11th of January, the very day on which he had given notice of his motion, had thus found its way into the papers. He contended that the savings which had been effected, were not to be ascribed to the exertions of that hon. member. All the arrangements which had been made, would have taken place if he had not made a single speech in that House. He understood that he had moved that two petitions should be entered as read, one from the county of Cornwall, and the other from the common council of London. There were passages in those petitions, thanking the hon. gentleman for his exertions, and he had seen many paragraphs in various papers, advising the insertion of similar acknowledgments in other petitions. He repeated, however, that none of the arrangements between the government and the bank, had been in the least influenced by the efforts of that hon. member.—With regard to the question of stamps, the transaction was nearly finished which placed them on their present footing, before the hon. gentleman opened his lips in parliament. With regard to the charges of management, the hon. gentleman would see, that there were no extravagant profits now, comparing those that were at present enjoyed with those formerly allowed. While the rate per million for management amounted to the highest sum, the national debt amounted to 650,000,000l. The rate had been reduced from 450l. per million to 300l. for all sums not exceeding 600,000,000l., and 240l. for all above: so that on a debt of 800,000,000l. the public paid little more than it did on a much less amount. The hon. gentleman, after going over other heads in which a saving to the public might be effected, said, he came to a charge the most disgusting of all, which was the charge for house-expenses. He (Mr. M.) had mentioned ten times in the House already, the origin of this charge, and shown that it had nothing to do with an allowance for house-expenses. He would now re-state what he had formerly so often stated. An act of parliament was passed in 1721, empowering the South Sea Company to dispose of 200,000l. of their dividends. The bank had bought 467 up 4 millions of the South Sea stock. In 1742 another act was passed, dividing 100,000l. of the interest into two portions of 96,000l. and 4,000l. The latter sum of 4,000l. got the name of house-expenses, for a reason he could not tell; but under whatever name it went, it belonged to the bank, as much as the hon. gentleman's real estate or any other property did to him, and could no more be touched by the House without interfering with private and acknowledged rights. With regard to the excessive issue of bank paper, complained of by an hon. gentleman, he might quote the opinion of a gentleman of great experience, the late sir F. Baring, to show how advantageous the bank accommodation had been to the country, and what a stimulus it had given to every branch of industry and prosperity. Having shown that the charges of management were lowered as much as they could be, and that the balances of the public money could not be otherwise employed, he concluded by opposing the appointment of a committee.
§ Lord A. Hamilton
supported the motion. The resolution of his hon. friend called for a committee, in order to effect great public savings. He had pointed out various items on which savings might be made, and not one of his statements had been proved erroneous. If it could be shown that the business now transacted by the bank could be executed for half the sum which was paid for it, was it not incumbent on the House to appoint a committee, by which so much money might be saved? The question, in truth, was one more directly affecting the government than the bank; and unless the chancellor of the exchequer was prepared at once to deny that any saving could be effected for the public, in the mode of arranging their accounts with the bank, it was impossible for him to meet this motion with a negative.
§ Mr. Grenfell
in reply, observed, that the main argument of the chancellor of the exchequer went to this, that the agreement made between government and the bank, in 1808, was final and conclusive, and that the hands of the House were tied up from making any further arrangement on the part of the public, as to the management of their accounts or balances. Mr. Grenfell said, he was not aware that the act of 1808 contained any provision of 468 so final or conclusive a nature; nor did he see what was to prevent that House, if a committee saw that exorbitant charges were drawn for the management of the public debt, from altering or reconsidering the subject, with a view to a more frugal and economical arrangement. The right hon. gentleman had also intimated, that nothing could be done in the matter without the previous consent of the bank directors. This, for aught he knew, might be the opinion in Downing-street, but he trusted that no such preposterous notion would be countenanced in that House, which ought to proceed in the consideration with or without the consent of one of the parties most interested in the result. A right hon. gentleman had alluded to what had fallen from an hon. gentleman near him, on the subject of the bank of America. Now he had lately read a copy of the charter of that bank, and he could tell the right hon. gentleman, that it contained a clause, by which, in consideration of the advances of public money, of which it had the benefit, the bank agreed to pay the dividends and manage the whole national debt for nothing; and further, that the bank of America paid, or agreed to pay, a certain stipulated remuneration for the renewal of its charter. An hon. bank director had said, that he had not given notice of his intention to the parties who were to be affected by the motion; now, the contrary was the fact, for he had communicated a distinct view of the nature of his motion to the governor of the bank a fortnight before the first day for which its discussion had been fixed. The hon. bank director was also very entertaining with his allusions to reforms and seditious meetings. What these had to do with the question before the House, he would leave all who heard him to determine. The hon. director could not, he supposed, have meant to insinuate that he was a party to such meetings, for no man regretted them more than he did, or was a greater enemy to those wild, ridiculous, and nonsensical ideas of reform that were preached about among the people, or was more ready to support the constitution. The hon. director had said, that the stamp duty arrangements of the bank had been matured before he (Mr. G.) had alluded to the topic in that House; it was, notwithstanding, very strange, that when the matter was first touched upon, the member for Surrey (Mr. Thornton) had given a very different explanation of the arrangement from 469 that which actually appeared to have been entered into by the bank, and had at the same time resisted that principle, from the adoption of which the public had since derived so much advantage. He (Mr. G.) had been also contradicted in the statement, that the bank derived a profit of 300,000l. from the management of the public debt. In fact he had not mentioned the precise sum of 300,000l.; but had generally stated that it was near such a sum, for up to last November it was calculated at exactly 282,000l. It was quite erroneous for the hon. director to state that the public derived an advantage amounting to 500,000l. from the different advances made by the bank for the public service, at a reduced rate of interest; for ever since the year 1746 they had been in the habit of making advances on these terms, in consequence of their exclusive privileges as public bankers, and they had continued to do the same for similar reasons since the renewal of the charter. From a review of all the objections that he had heard urged, he saw no reason to depart from his original intention, and would therefore call for the decision of the House upon the motion which he had the honour to submit.
§ Mr. Manning
, in explanation, begged merely to say, that he had no intention whatever to impute to the hon. gentleman the remotest connexion between his sentiments and those of certain persons out of doors. As to the statement which appeared in the British Press, of the 11th of January, he supposed it had dropped out of the hon. gentleman's pocket, and had thus found its way into publicity.
§ The House then divided:
|For the motion.||40|
|List of the Minority.|
|Bankes, H.||Jones, John|
|Babington, T.||Lamb, hon. W.|
|Blair, J. H.||Lockhart, J. I.|
|Browne, D.||Marryat, Jos.|
|Bennet, hon. H. G.||Mackintosh, sir J.|
|Brand, T.||Martin, Henry|
|Carter, John||Martin, John|
|Caulfield, hon. H.||Monck, sir C.|
|Dickenson, Wm.||Morland, J. B.|
|Duncannon, visc.||Moore, Peter|
|Folkestone, visc.||Newman, R. W.|
|Frankland, Robt.||Ossulston, lord|
|Guise, sir Wm,||Prittie, hon. F. A.|
|Halsey, Jos.||Ponsonby, rt. hon. G.|
|Jervoise, G. P.||Rashleigh, W.|
|Romilly, sir S.||Wilberforce, W.|
|Russell, lord W.||Webb, Ed.|
|Scudamore, R.||Wynn, C. W.|
|Smith, Wm.||Grenfell, Pascoe|
|Smyth, J. H.||Hamilton, lord A.|
|Tierney, rt. hon. G.|