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ten professed as not to know that, as our exports were greater than our imports, so the payments to be made in bullion increased; and that this was the only way of procuring the precious metals. The real cause of the distress of the country-as had been stated by his honourable friend-was over-trading that was the immediate cause. Such was the mania for speculation, at the latter part of 1825, that even in the article of nutmegs, the price rose, in the space of one month, from 2s. 6d. to 12s. 6d. per lb. And this state of things was not included in the audacious, puffing, bedlamite schemes, with which the market had been inundated; but had its rise amongst those who were considered the sober, steady merchants and traders of the metropolis. And when, he would ask, did all this take place? At a period when the exchanges were against this country. Now, he would repeat,-that the natural effect of an unfavourable state of the exchanges was to encourage an increase of exports, while it checked imports in the country. Well, then, if, at such a period, money was so plentiful as to be hawked about, and offered at a depreciated rate of interest, would they not naturally conclude that there was something wrong in our currency? And if so, he would ask to what such a state of things, if unchecked, must come at last? As to the state of the currency, there had been, unfortunately, much difference of opinion upon it. But the Bank felt called upon to provide for its own safety, by narrowing its issues; and what was the result? The spirit of speculation was checked, and as a necessary result, those country banks which had been most rash and immoderate in aiding speculations by advances, were ruined. But the evil did not stop here; for the ruin of a few bad and unstable banks involved in difficulties many establishments of a similar nature, which were otherwise placed

upon the most stable footing. He would ask whether it was safe or convenient that the country banks should remain upon such a footing? His opinion, after watching carefully the course of events, was-that cash payments and the circulation of 1. and 21. notes could not permanently co-exist. He would put his proposition more simply. If there were in any country a paper currency of the same denomination as coin, the paper and the coin could not circulate together: the paper would drive out the coin. The majority of bankers relied, more or less, upon the Bank of England. Was it the duty of the Bank of England to provide gold upon all occasions, not for ordinary demands, but for any panic which might occur? Were they to provide gold for the adjustment of the foreign exchanges? It was impossible that the Bank could do this. Why was the Bank alone to be called on to ensure its solvency? And why should not country bankers be required to do the same?-One of the great evils which they were called upon to correct was, the excessive issue of paper; this had been productive of the greatest distress; it had caused the ruin of thousands of innocent individuals. He was surprised to hear his honourable friend (Mr Baring) assert, that if this measure were carried, it would involve the whole of the agricultural interests in distress equal to that which had prevailed before 1822. Need he tell his honourable friend, that there was a necessary connexion between those who consume and those who supply agricultural produce? What was it that created the revival of the agricultural interests in 1822? Principally the revival of the manufacturing interests, and the employment of thousands who had for a considerable time before been deprived of an opportunity of supporting themselves by their labour. If they wished to prove the value of a steady and unchangeable

currency, they had it in the history of France. That country had been twice invaded by a foreign army; her capital had been twice taken possession of, and she was obliged to pay large sums to foreign countries; but she had a steady metallic currency, and however such visitations might have affected the great, the body of the population remained unoppressed. He was far from being hostile to country banks; he thought, on the contrary, that they would be of great service to the country if placed under proper regulations. But they must be prevented from issuing paper as low as the highest denomination of the metallic currency of the country. They must not be permitted to issue these 17. notes. Such issues amounted in reality to assuming the powers of the prerogative. He now came to the point, whether this was a proper time for providing for the gradual withdrawing of those notes. Those notes were at present already greatly curtailed by the failure of one hundred country banks, and other causes. The country banks had, at this time, great stores of gold in their hands, drawn from the Bank of England, and Bank of England notes; and now, therefore, was the most convenient time for providing, by law, for the gradual extinction of the small-note circulation. If they postponed the commencement of this measure, could they be assured that they would ever begin at all? At present, too, whilst these country banks had only a small number of partners, they were naturally led by views of private interest, to neglect the just principles of banking. But when a bank consisted of, suppose two hundred partners, their business would be differently managed. They would be tied down by rules which would not admit of these ruinous speculations, and their affairs would be conducted on the genuine principles of banking. His honourable friend (Mr Baring) had re

commended the giving to England a metallic currency on a more extensive basis than could be obtained by the recall of the 17. and 21. notes. For himself, he was bound to confess that he entirely differed from his late friend, Mr Ricardo, as to the basis upon which the currency of the country ought to rest; and he believed that if that gentleman had been the sole director of the Bank of England, the country would, before this moment, have witnessed the stoppage of that establishment. While upon the subject, he might observe, that he should be glad to pursue, and would pursue, some further inquiry, into the best mode of improving the suggestion thrown out by the honourable member, (Mr Baring,) and introducing, in some shape or other, silver as a legal tender. There was very little more which he had to address to the House; but upon one point a few words should be said in his own justification. An honourable member had said, in rather sweeping terms, that for much of the late wild speculation which had been carrying on throughout the country, ministers were chiefly to blame. Now, the House would remember when it was that the great bulk of these speculations had commenced: it was in the spring of last year. In February last-in the very commencement of those speculations he had used this particular expression in speaking of them-" That the lottery was a safe adventure compared with the mass of those in which persons were engaging." Again, in the month of March, speaking of the speculations, he had distinctly declared his opinion that those who had engaged in them would find themselves disappointed. Unfortunately, those to whom this advice had been addressed had disregarded all warning. They had rushed on, in contempt of all caution, to their own undoing.

Mr Gordon begged to remind the House, that the right honourable gen

tleman (Mr Huskisson,) who now so fiercely attacked the 11. and 27. notes, had been, in 1822, a member of that very cabinet, which, when the members of that House were declaring that they could not pay their rent, their labourers, and their taxes, had proposed, as a remedy for the evil, that very measure which they now desired to abrogate.

Mr Canning then moved that the question should be adjourned, which was agreed to; and the House adjourned at half past twelve o'clock.

On Monday, February 13th, the order of the day for the committee on the Bank Charter and Promissory Notes Acts, having been moved, the question was put, that the Speaker do leave the chair, whereupon

Sir John Wrottesley rose to oppose the motion. He said, that all those who thought, as he did from the outset, that the project of ministers was impolitic, ought to take their stand against it at the earliest opportunity. Had the subject been left alone, the panic would have subsided, the energies of industry would have resumed their action, and the good sense of the people would have gradually and surely brought matters round to their proper footing. That the question would have been incidentally mentioned in the House he had no doubt, but then it should not have been mentioned by ministers-there was the mischief. Was it not cruel to turn the public eye, with the finger of official authority, towards country bankers, as the instigators of speculations which they had done all they could to prevent? What was the fact with respect to these speculations? They were begun and carried on where no local notes were in circulation. was in Manchester and Liverpool that the spirit of speculation first raged in the article of cotton, where there were no country banks at all. The next place was the Stock Exchange of Lon

It

was.

don. Alluding to the Bubble Act, and the different interpretations which had been put upon it, the honourable memher contended, that under these circumstances it was the duty of government to declare what the law really The effect of such a declaration would have been, if not to crush, at least to restrain, these wild speculations. The next subject to which he wished to call attention was, the proposed repeal of that part of the Bank Charter Act, which authorized, until 1833, the issuing of small notes. When would the Bank Charter expire ? In 1833. When would the small country notes cease to be legally issuable? In 1833 also. The privileges of the Bank of England, and the country banks being equally sanctioned by the faith of Parliament, how happened it that that faith was to be kept with the Bank, and not with the country bankers? He supposed it would be contended, that the country banks had forfeited their claim for equal justice; that they abused their power of circulating small notes, by the excess to which they had carried it. Well, then, let the same test be applied to the Bank of England. Could the Chancellor of the Exchequer deny, that what with the government, and what with the Bank, the paper-circulation of the country became at one time so depreciated, that the relative value of the guinea in gold and in paper, was as 27s. or 28s. to 21s.? But he denied the assertion, that the country banks had over-issued. The country notes in circulation in 1825 were double the amount of those of 1822. Be it so; and he could tell the reason why. Almost all the small notes were employed in carrying on the provision trade. Look to facts, and it would be found that the price of corn in 1825 greatly exceeded its price in 1822-in some places it was double; and the value of cattle more than doubled in the same period. This rise in the va

lue of commodities necessarily increased the amount of the notes which were to be paid for them. The great difficulties which must attend the contemplated change were, that the one-pound notes (except in Lancashire) formed the great medium of payment by which the ordinary transactions of life were carried on. He was satisfied that, were they withdrawn, a very different quantity of business would be transacted; and if the latter could not be transact=ed on the same scale, then what became of the labouring poor, who must be thrown out of employment? He had certainly heard a good deal of the imIprovement which was to arise in the banking system from this change. He did not believe a word of it. They might probably have branch banks from the Bank of England in Lancashire they might have them also in some of the manufacturing districts of Yorkshire; but in any of the other manu. facturing counties such establishments were not likely to appear.

Mr Alderman Thompson was inclined to think that the excess of bank paper had increased speculations, from the superabundance of money which they threw into the market. The country banks, too, readily accommodated the manufacturer, who gave a high price in his turn; and thus, at the close of 1825, the paper circulation had been carried to a forced and unnatural height. In this state a re-action occurred. Seventy bankers either failed at once, or their paper was thrown into a state of abeyance calculating their issues at 50,000Z. each, which was, he believed, much under the mark, 3,500,000l. of the circulating medium was withdrawn in the short space of three months. Assuming 20,000,000l. to be (as had been said) the whole circulation of the country, and add to the 3,500,000l. already withdrawn, the additional amount of the paper money which must have disappeared in consequence of the recent

VOL. XIX. PART. I.

shock, there would be a reduction of nearly 50 per cent within six months in the currency of the country. At all events, he thought himself safe in assuming that there were now 6,000,000%. of paper-currency less than the public possessed six months ago. How was the vacuum thus created proposed to be supplied by the Chancellor of the Exchequer? He said by gold: where was this gold to be obtained? There was no way of obtaining the precious metals but by the growth of the exports: what exports had they now to provide them? Their own manufactures were not in demand on the continent, neither were the foreign commodities which they possessed. Though prices had fallen 20 per cent, business was still in a state of great stagnation. How, then, was this measure to operate? They all knew, that by far the greater portion of the trade of the country was carried on through the medium of small notes, and the largest circulation of them was in the most active manufacturing districts. Entertaining these opinions, he must. oppose the present proposition, believing it to be one which, instead of having a beneficial tendency, was more likely to create a convulsion from one end of the country to the other. As to the idea of throwing open the Bank charter, in expectation of the establishment of joint stock companies, it was a mere delusion.

Mr Leycester differed from the two honourable members who had preceded him, upon, what he thought a mischievous anomaly, the prerogative of every man who thought proper to call himself a banker, and to issue papermoney. He thought that a mob at the mint was as bad as a mob at the helm of the state. As a friend to a sound currency, he rejoiced in the proposed measures; and the only thing he had to regret on the subject was, that they did not go far enough. Why should not the right honourable gentleman ex

D

tend the principle farther, and sweep away the 51. notes also? With respect to the enlargement of country banks, he did not think that it was likely to take place. Large numbers would not necessarily produce large capital. Six men might be as rich as twenty, and the very increase of number would increase the chance of insolvency; for there was a greater chance of having a black sheep found among twenty than among six. Against this he knew that the banks in Scotland would be quoted; but how was it known that the success of those banks might not be imputed to local causes, and those very different from a mere extension of partnerships? Might not the cause of it be found in the national character of the Scotch for prudence and sagacity in their commercial transactions? He had no reliance upon this part of the plan.

Mr T. Wilson said, that on the situation of the country, and the remedy most effectual for restoring a sound state of currency, he entirely concurred in the views of the honourable member for Taunton (Mr Baring.) One part of his speech, which he thought particularly deserving of attention, was that relating to a mixed currency.

Mr John Smith admitted that this question was one of considerable difficulties; but after having heard the speeches of some gentlemen on that and the former night, he must say that the difficulties which he had felt were removed, and he was now prepared to vote with government in support of the proposition before the House. The honourable gentleman, while he admitted that the small-note circulation had a most vivifying effect on trade and commerce, conceived that it had been most injurious to the working classes, who often had not the option of refusing small notes in payment; and proceeded to reprobate the correspondence between the government and the National

Bank as unjustly condemnatory of the country bankers.

Mr C. Grant supported the measure at considerable length. It had been said, he observed, that there was a tendency in every species of paper currency to displace gold, unless its progress should be arrested by some check; and the great problem was to provide some check. One honourable member seemed to think that the convertibility of paper into gold on demand, would afford it. In that opinion the honour able member concurred with many eminent men, including the members of the bullion committee. This, perhaps, was the general opinion. at that time, but it must be admitted that the science of political economy was still almost in its infancy, and further investigations were daily throwing some new light on the subject; and we were as yet in a state of experiment with respect to it, as compared with what we might be in the course of some future time.

Sir John Newport said, that the present system of banking was equally dangerous to bankers and their customers. It had been contended, that in the present state of our affairs, the commerce of the country could not be carried on without having recourse to this species of circulating medium; but even if it were, it would be much better that an extra portion of commerce should be sacrificed, than that the present pernicious system of banking should be suffered to continue. The present was as favourable an opportunity as could possibly occur for carrying this important and most desirable measure into execution.

Mr Alderman Heygate said, that the present question was, whether this was the proper time for interfering with the most delicate of all things-the currency of the country. Nothing lately had caused more astonishment in his mind, than the first sentence in