the Bank, when asked what he considered to be the criterion (independently of the exportation of the precious metals) of an excess in the issue of paper currency, replied, "a state of trade in which money is hawked about every-where, and many persons are induced to undertake uncertain and imprudent speculations." He would ask whether, independently of the exportation of the precious metals which was actually taking place in 1824 to South America, a more accurate description could be given of the state of trade and speculation in England at that period, than was to be found in the words which he had just quoted. Money was then hawked about every-where, and the most imprudent speculations were going on. He had a right, therefore, to say, that it was deeply to be lamented that the Bank did not at an earlier period adopt measures for narrowing their paper-currency, and diminishing their discounts. His object was, to obtain an account of the amount of issues of small notes from the Bank during the last two years, in order to show the effect which those issues had produced upon prices. He was inclined to hope much from the abandonment of part of the Bank's privilege. With respect to the measure which would require country bankers to give security, it appeared to him to be attended with so much difficulty in its application, that he doubted whether it could be carried into effect. He thought that much more good would be effected by giving publicity to the transactions of public banks than by requiring securities. This would operate as a check upon improper conduct, whilst it would leave them in full possession of their funds, which would, in a great degree, be tied up under the proposed system of securities. He hoped, therefore, that the noble earl would abandon that part of his plan. He ventured to suggest, that it would be expedient, that wherever countrybank notes should be issued, there they should be made payable. Such a provision would remedy the inconvenience which had been found to result from country banks establishing branch banks in different towns, which issued notes payable only at the fountain head, or original bank. He had now stated the observations which occurred to him with respect to the measures which it was the intention of ministers to propose. Many persons, he was aware, were of opinion that the effect of those measures would be to bring back the currency to the state in which it was placed by Mr. Peel's bill, and that it would, in that event, be impossible for us, with the existing load of taxation, to fulfil our pecuniary obligations. These same persons approved of the artificial paper currency, because they considered that it enabled them to fulfil those obligations which otherwise they could not do. He was unwilling to admit the possibility of the country being incapable of fulfilling all its engagements. If he could entertain such an opinion, he would say, in God's name declare the fact, and adopt a system of policy applicable to the situation in which we were placed. Proceed upon fixed principles, but abandon a system which caused perpetual revolutions, creating at one moment a state of artificial prosperity, and at another plunging the interests of the country into a state of unnatural depression-a system which scattered ruin through every part of the community, depriving every man of the means of knowing the value of the currency, and making him liable to have the produce of years of industry almost valueless. He hoped and believed that the measures to be proposed by ministers would have the effect of putting an end to a system which produced such calamitous effects, and of placing the banking establishments of the country on a solid foundation. The intended measures would not, he understood, apply to Scotland or Ireland, but he trusted to see, at a future period, some measures founded on similar principles applied to those parts of the country. The noble marquis concluded with moving for, "1. An account of the number of Bank of England notes in circulation on the 15th of February, May, August, and November in each year, from 1819 to 1825, distinguishing the notes for 5l. and under; and a like account of notes of the banks of Scotland and Ireland. 2. An account of all the notes issued by country bankers in England, Scotland, and Ireland, from 1819, up to the latest period. 3. An account of the number of bankrupts in England, Scotland, and Ireland, from 1819 to the latest periods at which the return could be made, distinguishing those who were bankers. 4. Copies of all charters granted to banking establishments during the same period." The Earl of Liverpool said, he did not feel it necessary to trouble their lordships with more than a few words on the present occasion; first, because it would be his duty at a very early period to submit to the consideration of the House one of the measures of which he gave notice on the first day of the session; and secondly, because, having listened with the utmost attention to what had fallen from the noble marquis, there was hardly a sentence which he had uttered, with which he was not disposed entirely to agree. So long as the Bank of England continued under restriction, parliament had a right to call, from time to time, for the accounts of the Bank, in order that they might be fully acquainted with the proceedings of that body; but the restriction having expired, and the Bank being under no control, he did not conceive that parliament was entitled to call for information from them as a matter of course. The information which the noble marquis sought for might, however, be obtained, though perhaps not so completely, from the Stamp-office. But though he did not consider the motion a matter of course, yet, connected as it was with a great legislative measure about to be submitted to parliament, with the concurrence (with respect to one of its branches) of the Bank itself, he thought their lordships had a claim to any information which might enable them to form a correct judgment on the subject; and he thought it would be most ungracious on the part of the Bank to throw any unnecessary obstruction in the way. He was happy to say, however, that the Bank directors entertained no such disposition. They thought that, under the special circumstances of the case, parliament ought to have the information which was sought for. The noble marquis had alluded to a transaction with respect to which he felt that a considerable degree of responsibility attached to his majesty's government. He alluded to the stopping for the present of the stamping of any one or two pound country-bank notes. The measure was not adopted, until notice had been given to parliament of the intention of government to effect such an object by legislative enactment; and it was only resolved upon in order to prevent the views of parliament from being defeated whilst the bill was in progress. The proceeding was not adopted upon light grounds. Government had positive information that there existed an intention of doing that which would have thrown considerable obstacles in the way of the measures which it was the object of ministers to recommend to parliament. If he were asked, why he had not adopted the course of applying to parliament for a short bill to sanction the proceedings which had been adopted, he would reply, that that step could not have been taken without the greatest partiality and injustice. The bankers near the metropolis would have got their notes stamped whilst the bill was passing, an advantage of which the bankers at a more distant part of the country could not avail themselves. Under these circumstances, it was considered advisable to adopt the measure without any previous application to parliament. It was done to prevent the desirable object which government had in view from being defeated. The Earl of Lauderdale denied that the issues of small notes had the effect of driving the metallic currency out of the country. The present distress, in his opinion, was not occasioned by the currency so much as by the spirit of extravagant speculation which lately prevailed throughout the country. The withdrawing of nineteen millions, which was the amount supposed to be withdrawn from the circulation of the country, was the true cause of the calamity. That these speculations had been indulged in was no fault of his. He had done all that lay in his power to warn the public from entering into these rash and hazardous enterprises; as had also the noble and learned lord, whom he regretted not to see now on the wool-sack. As to the Scotch banks, they were certainly found by experience to be established on principles of perfect security; but he was apprehensive, if the intelligent persons who introduced the system of Scotch banking were brought up to the bar of this House and examined, that they would admit that the Scotch system was, in many respects, incompatible with the commercial transactions of this country, and unfit to be introduced into England. The Earl of Carnarvon said, he approved highly of the plan of extending the number of partners in banking establishments, and agreed also in the propriety of each of the partners of such establishments being made liable, in the whole amount of his property, for the concerns of the Bank. This would create a class of merchant bankers who would have an interest in attending to the affairs of the Bank, and would operate as a check against over-issues. Accompanied with these measures, he would be glad to see the country return to silver as the stand ard of the currency, such as silver was at the old Mint-price. This would, in his opinion, place the currency on the most satisfactory footing. As to the proposed measure of withdrawing the one and two pound notes from circulation, it was, in his opinion, by no means calculated to remove the evils by which the country was afflicted. The adoption of this measure would operate injuriously to the farmer, and to the humble class of agriculturists and dealers, who principally carried on their business by means of the one and two pound notes. Great injury would be done generally to the community by withdrawing so large a sum as six or seven millions from the circulation of the country. This inevitable evil would follow from it, that it would contract the circulation of the country at a time when it required an extension. Whatever might have been the evil consequences of over-issues, the distress under which the country laboured must be augmented to an incalculable degree, unless parliament went to the root of the evil. That the withdrawing the one and two pound notes from circulation, and the substitution of a metallic currency, did not go to the root of the evil appeared from the letter of the first lord of the Treasury, and the chancellor of the Exchequer, to the Bank directors. It was there stated, that, "though a recurrence to a gold circulation in the country, for the reasons already stated, might be productive of some good, it would, by no means, go to the root of the evil." Here then, upon the acknowledgment of these gentlemen, the withdrawing of the one and two pound notes would not be an effectual remedy for the distresses. The letter proceeded thus: -"We have abundant proof of the truth of this position, in the events which took place in the spring of 1793, when a convulsion occurred in the money transactions and circulation of the country, more extensive than that which we have recently experienced. At that period nearly a hundred country banks were obliged to stop payment, and parliament was induced to grant an issue of Exchequer bills to relieve the distress. Yet, in the year 1793, there were no one or two pound notes in circulation in England, either by country banks or by the Bank of England." As draw so large a sum from circulation. At the period of the South-Sea scheme, there were no one or two pound notes, yet then there was distress. In 1793 was there not distress? And at various other periods, was not distress as great and even greater, than at present? As, then, these evils existed when small notes were not in existence, he was unwilling to give his assent to the abolition of the small notes, without some further information. For his part he did not see the great evil of a paper-currency. At the time of the Bank restriction in 1797, the business of the country was chiefly transacted in paper, and during the subsequent progress of the war, down to the resumption of cash payments, a paper currency was maintained, without our experiencing such distress as we did at present. To prevent over-issues, means should be devised to prevent a greater circulation of paper than there was metal in the country to meet it; and if this were done, he saw no objection to the circulation of notes whether of great or small amount. to extravagant speculations, at present, there was no very buoyant spirit of that kind afloat. The calamity now complained of was, not that there was too much gold, or too many notes, but that there was neither one nor the other, and the currency of the country was at a stand. An objection had been made to small notes, that by extending our circulation, they had a tendency to diminish the interest of money. Now, even if that were the case, it did not weigh as an objection with him; for in all states in prosperity, and where there was much money and much commerce, money was held at a low rate of interest; whereas, the interest of money was always high where there was little money, In all the proposed alterations of the currency, we should never omit to bear in mind that enormous weight upon the country-the national debt. When it was considered that the interest of that debt was to be paid, the effect of withdrawing six or seven millions from circulation must be most injurious. The effect of such a contraction of the currency must be, that the chancellor of the Exchequer would next year be obliged to state that the revenue of the country was As the distress pre-not sufficient to discharge the interest on vailed, therefore, when one and two the national debt, and the expenses of the pound notes were not in circulation, the establishment. We were now in the tenth House ought to pause before it gave its year of peace, and there was no likelihood assent to a measure which would with- of our being able to do more, during the Mr. Hume said, he had no objection. Mr. Maberly thought the account objectionable, as an intrusion upon the affairs of individuals. If the principle was once established, that any member might move for an inquiry into the private concerns of parties, it was difficult to see where the operation of that principle might stop. How could that House entertain cognizance of the debts which had been proved. He hoped the Chancellor of the Exchequer would not accede to such an improper motion. Mr. Grenfell wished Scotland to be included, because he was persuaded that a return to the motion, as regarded Scotland, would be nil. probable period we might continue at peace, than supply and relieve our immediate exigencies. The currency of the country had gone through every variety of fluctuation-it had been over and over again tried in the crucible-paper was converted into gold, and gold again into paper, and still a new change was found necessary. In Scotland, an approved system of Banking had been brought to the test of experience. This was admitted in the letter of the noble earl opposite. "In Scotland there are not more than thirty banks; and these banks have stood firm amidst all the convulsions in the money-market in England, and amidst all the distresses to which the manufacturing and agricultural interests in Scotland, as Mr. John Smith said, that when an inwell as in England, have occasionally trusion upon the private affairs of inbeen subject." And it was not a little ex-dividuals was spoken of, it ought to be traordinary, that whilst ministers were inducing the people of England to abandon a system which sanctioned a small note circulation, they admitted the efficacy of such a system in Scotland. He would wish to see banking establishments of equal solidity in this country. He was persuaded that in returning to a metallic currency, every relation between landlord and tenant, and between man and man, would undergo a considerable change. When their lordships assembled next year, he should be happy to find that the government had funds sufficient to meet the yearly expenditure. In order to embrace the whole of the question, he would move for a return of all the notes issued by the Bank of England and the country banks since the year 1790. The said motions were agreed to. HOUSE OF COMMONS. Thursday, February 9. COUNTRY BANKS THAT HAVE BECOME BANKRUPTS.] Mr. Hume moved for a return, "of the number of Country Banks issuing notes that have become bankrupts since January 1816, up to the present time; stating the place where the banks were established, the number of partners in each bank, the amount of debts proved against each, and the amount per cent of dividends paid or declared upon each, as far as the same can be complied with." The House would then have before it, a statement of the extent to which the public banking had suffered by the country system. Mr. Grenfell wished the account to extend to Scotland. VOL. XIV. recollected of the country bankers, that they had in fact been dealing in that which was the money of the country. Theirs was quite a different case from that of merchants or ordinary traders; and he was therefore disposed to support the motion. He had not until that morning read the correspondence between the Treasury and the Bank; but, in reading it he had been much struck with a paragraph which stated, that the country banks, all of them, without exception, had for some time fostered, supported, and encouraged, a rash spirit of speculation. Now, in the name and on behalf of very many country bankers who claim to be considered men of honour, prudence, and integrity, he called on the chancellor of the Exchequer, to state the grounds upon which he had made that sweeping accusation. At the same time, it would, perhaps, be convenient to the right hon. gentleman to prove to parliament the sound policy of directing public odium against the country banks at this particular crisis. The Chancellor of the Exchequer saw no objection whatever to the motion. He thought it quite reasonable that the House should be in possession of any facts relative to the number of country banks which had failed. Such a return could do no mischief to parties who might have failed and were in business again. With regard to the terms in which the country bankers were spoken of in the correspondence between the government and the bank, he could have no objection to give every explanation to those who might fancy themselves injured thereby. Most certainly, it never had been the inL tention of ministers to convey the slightest imputation against individuals. Their argument went merely to the general system of country banking. And it was difficult to think that any member could have listened to the account given a few nights since by the hon. member for Taunton, of the course which a country banker was compelled to pursue in order to carry on his business profitably, without seeing that the system was calculated to produce the effects adverted to in the correspondence. In truth, an allusion to the system of country banking generally, and not to individuals, was all that ministers had contemplated; and that was the only interpretation which they imagined could be put upon the words in question; but even if the charge had been made against individuals, he could not look at it in the same light with the hon. member for Midhurst. Every man who possessed, and traded with, considerable capital, was, more or less, an encourager of speculation; and to say so, was neither an impeachment of his honour or his integrity. Mr. Calcraft was happy to hear the explanation given by the right hon. gentleman; but, without that explanation, he certainly should not have understood the expressions, "rash speculations, aided, fostered, and abetted, by the country banks, as exactly placing the country bankers upon that advantageous ground which it seemed they really occupied in the right hon. gentleman's opinion. For himself, however, he denied the fact that it was by the issues of the country banks that the rash spirit of speculation, as it was called, which had existed in the country, and the enterprises to which that spirit had led, had been supported. Seventeen millions of paper could not have been issued by any country banks for purposes of speculation, and that speculation principally carried on in London. For, as fast as a country note made its appearance in London, it was instantly converted into a bank of England note, or into gold, or the banker was discredited. Those speculations, which, joined to the conduct of government, had done so much to disorder the country, never could have been carried on by country bank notes. To the motion he saw no objection. As far, however, as disclosure went, it would do the country bankers no harm, but good. It was well for ministers to talk of country paper! The right hon. gentleman had more accommodation paper in the market than all the country banks put together. No circumstance had more contributed to do mischief than the immense amount afloat of exchequer bills. Government, deal as it would with the system of the country banks, would do little good until the issue of exchequer-bills was limited. He could not place much confidence in any set of men who could speak on the 13th of January of the distresses of the country as being over. Sir J. Wrottesley said, that during the last year, the country bankers had been almost the only class of persons who had not speculated. They had been rather the victims of the speculations of others, than speculators themselves. Mr. Hudson Gurney thought, that though it would be perfectly easy to obtain a return of the number of failures of country bankers, it would be extremely difficult to learn the amount of the dividend they had respectively paid. The object of the hon. gentleman appeared to be, to show the advantages of the Scotch system of banking, as compared with that obtaining in England; both with regard to its general security, and as not being obnoxious to the objections of encouraging undue adventure. But, if such were the hon. gentleman's view, Mr. Gurney said, he must entirely differ with him. There was nothing he should more deprecate than the introduction of the Scotch system into this country, as he was convinced, that its direct tendency would be to the increase of the number of bankruptcies, though not, perhaps, leading to the breakage of so many banks. The Scotch system was one which went, much more than that of England, towards facilitating speculations of every kind; but, it was the customer there who broke, and the banker who swept his securities. Much had been said, and said very idly, of the degree in which the paper of the country bankers had aided in the delusions and frauds which had been practised on the public; but, in fact, the country banker is, of all mankind, the most interested in preventing speculation. The speculator is his natural enemy. If he gains, the profit is not the banker's; and, if he becomes insolvent, the banker is sure to lose. At the same time, there is an evil in the existing system, for which it seems difficult to find an adequate remedy. The banker allows an interest to the customer; consequently, he must |