The Earl of Lauderdale
rose to bring forward the motion of which he had given notice, relative to the state of the Currency of the Country, &c; observing, that however important were the subjects of the Orders in Council and the East India Trade, yet in his mind they sunk to almost nothing in comparison with the consideration of the currency of the country, and the power given to the bank of England. It had heretofore been the prerogative of the crown to regulate the currency of the country, but now that prerogative was delegated to twenty-Four merchants, the directors of a banking company, who had the power of increasing or diminishing it at their pleasure a power, too, which was vested in men representing the body of proprietors of the bank of England, whose interests were at direct variance with those of the public. It was the interest of the Bank proprietors that the issue of Bank notes should be increased, because thereby their profits were increased, whilst it was the directly contrary interest of the public, that there should not be an excessive issue of Bank notes. It was true, that there appeared a trifling decrease of the amount of Bank notes, but if the amount of Silver Tokens issued by the Bank were taken into the account, it would appear that there was no decrease. It was not merely, however, the increase of bank of England notes that they had to consider, but the immense increase of notes throughout the country. The number of issuers of notes had, since 1797, been increased from 1250 to 1800, and the inconvenience resulting there from, was great beyond what their lordships bad probably any idea of. Many of these country banks were situated in obscure villages, their notes being only payable there. When the notes of one of these banks invaded the circulating district of another bank, and were taken there, they were sent back in amount, and a draft on London given for the differences. This was the regular course; but the fact was, that many banking houses in the country 1132 were obliged to employ agents at the post-towns, to obtain payment of the notes of other banks which they had taken, and those agents were sometimes three weeks before they could obtain payment. Even this, however, was not the extent of the evil—paper tokens were issued in the country for small sums, so low as half a crown. The noble earl produced two of these half crown tokens, issued at Worcester—one of yellow paper, and the other red; and another issued at Fakenham, in Norfolk. Such a debased circulation as this had, he contended, never been witnessed in any country, without being the forerunner of some great change or revolution. With respect to the notes of the bank of England, they had formerly been issued, either to purchase bullion for discount, or to accommodate government. It would not now be-contended that any were issued to purchase bullion. Let it then be considered what an enormous profit the Bank were making by the issue of their notes. Formerly they would not discount for any country bank who issued notes, but now every country banker, through his agent in town, might discount at the Bank, and thus be enabled to issue his own notes through the means of the discount obtained at the bank of England. Putting the case also of their discounting 1,000l. for a merchant, to enable him to pay duties at the customs, the notes passed into the hands of the receiver general of the customs, by whom they were deposited at the Bank; and thus the Bank had a profit of five per cent. on the money whilst deposited. It was, therefore, of essential importance that they should have information as to the slate of the deposit accounts at the Bank. The noble earl, after recapitulating the evils which arose from the system of paper currency, concluded by moving for a Committee of the whole House, to enquire into the state of the metallic and paper currency throughout the country, the transactions of the bank of England since 1797, and other matters connected with the subject.
§ Earl Bathurst
thought that all the requisite information upon this subject had already been laid before the House, and that it could be of no use to go into the enquiry proposed by the noble earl. As to the objection that the interest of the Bank proprietors and that of the public were at variance, he contended, that however it might be for the interest of the Bank proprietors for a short time to exceed the 1133 usual issue of Bank notes, yet that the evil of that excess would recoil upon them-selves, and that their well-understood interest in limiting the issue of Bank notes, was, in fact, the same as that of the public. As to the tokens issued by the Bank, he contended, that they could not be at all classed with Bank notes, they being merely issued for the purpose of small change.
The Marquis of Lansdowne
expressed his concurrence in the propriety of the proposed enquiry. He supported the argument of his noble friend, that the Bank proprietors had an interest distinct from that of the public; and argued, that, by the proposed Bill, the prerogative of the crown, to stamp the currency of the realm, and limit or extend its quantity, was placed in the hands of the Bank directors. When be saw a body of twenty-four men invested with such authority; when he fell that they must be divided between their duty to the public and to the individuals whom they represented, he thought the motion ought to be agreed to. He was not one of those who thought that the former sound system of cash circulation could be suddenly reverted to without risking a dangerous convulsion; but he did think that every means ought to be adopted that they might gradually return to that sound and healthful system, and in this view he supported the motion of his noble friend, in order that they might have before them the requisite information to guide their conduct, particularly under the new relations between government and the Bank, by which the latter had the power of regulating the circulation at their pleasure—the controul of government being necessarily weakened by the large unfunded debt which they were only enabled to keep outstanding by the aid of the Bank circulation.
§ Viscount Sidmouth
said, that whatever relation subsisted between the bank of England and the government at present, had existed since the year 1797; it was, therefore, rather singular, to introduce it now as a matter of novelty. The immense profits made by the proprietors of Bank stock had been frequently descanted upon. But on a fair examination of facts, it would be found, that, in 1799, they shared 7 per cent. interest and 10 per cent. bonus; but that, when the renewal of their charter took place in 1800, they commuted the bonus for a rise of 3 per cent interest, snaking in the whole 10 per cent which they still retained, being 7 per cent. less 1134 than the year preceding the renewal of their charter. He thought it unnecessary to go into an enquiry. It had been stated to their lordships, that Bank notes were intended to be made a legal tender; he denied that such a proposition was intended; it only went to give security against arrest, but did not apply to executions. If it was a measure to operate on any foreign warfare, he might, even in that instance, be of opinion that the Bill should be carried through the House, and that the country required it; for the least opposition to the measure might cause what their lordships, perhaps, might ever after regret.
The Earl of Rosslyn
was at a loss to know what there was in the charter of the bank of England to prevent them from paying their lawful debts. He agreed that the proposed Bill did not go the length of making Bank notes a legal tender; but it had this effect—when a creditor sued a, debtor, he might make his tender in Bank notes, which would be allowed by the court, and the creditor would be liable to the cost" of court. It ought to have been shewn by the noble lords, that the interest of the Bank and that of the public was the same; instead of which, they had proved them to be diametrically opposite. He would agree, that the Bank had a right to discount Exchequer bills; but the question was, whether the Bank had a right to go to such an extent as to cause a depreciation of bullion by issuing notes to their own advantage, without any new pledge to the public? They had been told of the watch government had over it: but instead of a guard, he would only call it a connivance, to answer their own purpose. Looking to Ireland, he thought it was in great danger, for the Bill would do away with all agreements which were made before this measure was contemplated. The noble lord on the woolsack was not ignorant, that, in Cumberland, the rent was paid in tithes, and wheat was, at this time, ten times the price it had been when the leases were granted. In Ireland, the landlord agreed for gold, and had a right to have his contract fulfilled; and were they to be frustrated by the Bank being subservient to the administration? It had been stated by the noble viscount, that in the year 1799, the Bank was richer than at any other period, on account of the proprietors having received a greater bonus. But he would ask his Majesty's ministers whether they would be willing to take the income 1135 tax of the Bank on the return they made that year? He was confident they would not; for the noble lord on the woolsack, instead of accepting of it for the minors to whom he was guardian, as lord chancellor, vested in the 3 per cents. Under every circumstance, he would give his decided vote for going into the enquiry.
§ The question was then put and negatived.