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Lord Stanhope's Bill on Coin and Bank Notes discussed in both Houses, and passed.
OTWITHSTANDING the confident assertions of ministers and their friends that no depreciation had taken place in bank notes, the fact of a diminution of their relative value to bullion became at length so glaring that it could no longer be denied, and its effects excited a general alarm. The trade of purchasing guineas for notes at a rate greatly beyond the nominal value of the latter was openly carried on, to an extent which threatened the abstraction of all the gold coin in the kingdom; and the difference of a money and a paper price was beginning to take place in commodities. In some parts of Ireland gold had been demanded by landlords from their tenants, instead of bank notes; and the fact of a similar demand made by a nobleman in England, became a matter of general conversation. The evils which in so many countries had arisen from a depreciated paper currency seemed to be impending over the British empire, and no remedy was as yet suggested by persons in power. In this emergency, Earl Stanhope, a person who, perhaps more than any other individual of his rank, has habitually acted according to his own ideas, and has formed plans for the public, independent of party
considerations, took up the subject, and on June 27th presented to the House of Lords a bill of which he had given previous notice. After some introductory observations, relative to the importance and the urgency of the matter, he said, that what he meant to propose was to make it illegal for any body to give more money for guineas, halfguineas, &c. than the value they lawfully bear; and to make it also illegal to take Bank of England notes at a value less than they purported to be equal to. He disavowed all private or personal views in the plan he had formed, and concluded with moving the reading of his bill.
The Earl of Liverpool, whilst he did justice to the intentions of the noble mover, was not willing to admit the necessity of his bill, as he thought that the example of the nobleman alluded to, as demanding gold from his tenants, was not likely to be imitated. Although, therefore, he would not oppose the bill in its present stage, he should move for its postponement at the second reading.
The Earl of Lauderdale disapproved of the grounds on which the noble Secretary of State objected to the bill, and shewed that the landholder might reasonably apprehend
apprehend the evils consequent upon the depreciation of the paper
After some other lords had spoken on the subject, and Lord Stanhope had made his reply, the bill was read, and ordered to be printed.
On July 2d, the order of the day standing for the second reading of the bill, Lord Stanhope rose, and expressed his satisfaction at seeing several lords who were not present at the former debate. He then repeated the late Sir G. Saville's definition of a circulating medium which he had before quoted with approbation-that it was only a common measure applied to different things, and he contended that other standards of measurement would answer the purpose as well as gold, and that book-entries, for example, might do it better. He affirmed that the law as it at present stood was quite contradictory; it authorized payments in gold, yet stopt the Bank from making them. His great object was to devise a mode of making payments which might enable parliament to establish a new species of legal tender. In his reasoning on this occasion he presumed the solvency of the Bank, and also the limitation of their issue of notes within a certain extent. He would then propose, first, that the Bank of England, (as in the case of that of Scotland) should have many branches in England, established in proper places: second, that books of entry should be prepared and kept at each of these places: third, that persons, holding notes of the Bank of England, should be entitled to an equal credit on those books: VOL. LIII.
fourth, that every such should be entitled to transfer such sums to any other place where such books were kept either on his own account, or on that of other persons: fifth, that as such entries were not liable to forgery, they should be made a legal tender. The foundation of his making use of the Bank of England was that bank notes of twenty shillings and pounds sterling should be on a par. He would maintain that they are so now. If he should go to a banker's with twenty-one pounds in notes, and twenty guineas, and should desire to make two book entries, two accounts would be opened for an equal sum. He proposed no new or violent schemes, but left the subject to the good sense which, especially about the metropolis, felt the importance of considering the note and the pound sterling at par. It had been said that his bill was not necessary, because nobody would follow the example of his noble friend (Lord King) in requiring gold from his tenants; but he rather chose to give people the protection of the law, than leave them to the understanding or caprice of other men. He then read extracts from several letters he had received; whence it appeared, that the difference between notes and specie was begiuning to be acted upon in various parts; and he inferred that the necessity might very speedily arise, and that too, when parlia ment would not be sitting. He gave a caution to the Secretary of State not to be too late with the remedy, and concluded with moving the second reading of the
Lord King immediately rose to vindicate himself with respect to the transaction which had been so much alluded to. He had thought it a duty he owed to himself to make a stand now in defence of his property from that constantly progressive depreciation of the currency which proceeded from the conduct of the Bank of England, and their being protected by the legislature from the necessity of paying their notes in specie. It had been asked, in a manner rather insulting, had any body ventured to refuse bank notes in payment? He was the person who did think it advisable in certain cases to refuse bank notes. The cases in which he had refused them at their nominal value were old contracts, and no other; and in so doing, he would contend that he had not only acted legally (for of that there was no question), but according to every principle of equity and justice. Could any thing be more equitable than that the payment should be made in currency of the same value as that in which the bargain was made? He had endeavoured to ascertain what that value was from comparing the price of gold at the time that the contract was made with its present price; and his demand had been either to be paid in lawful money of the realm, according to the contract, or in Portugal coin of the same weight, or in such a sum in notes as would purchase a quantity of gold equal in weight to that of the legal money covenanted; and he could not see where was the hardship, or oppression in this. All productions of the land had risen in price according to the depreciation of
the currency, and therefore the tenants on old contracts could not complain of suffering any loss from the demand. To explain the nature of the subject, he would suppose that what was usually reserved for rent was about a fourth of the produce of the land, and that for the sake of convenience this proportion was estimated at a money price. Was it equitable that the tenant should take advantage of all rises of price in consequence of depreciation of the currency upon all the shares he has, and that the landlord should have upon his share neither the rise of price, nor the legal money he bargained for? It had been asserted that bank notes were not depreciated, but that gold had risen in value; but this was not the case, for if a man had at present any article of real value to exchange against gold he might procure a greater quantity of gold for it than at any former period;and his lordship instanced in the price of wheat, of which twelve or fourteen quarters would now buy as much gold as eighteen quarters would in the period from 1786 to 1797, so that the farmer had been gaining considerably by the change of times. He declared, that regardless of the clamour that had been excited against him, he was determined to persevere in what he conceived to be not only legal, but just and equitable. He hoped he should hear no more declamations about black malignity of motive in the refusal of bank notes; and said he could not understand upon what principle, or by what rule, a man was called upon to answer in that House for his private conduct in
the management of his estate. His lordship then proceeded to consider the matter in a general view. He said, that when the act was passed to protect persons from arrest who should tender bank notes in payment of a debt, there was really no depreciation of these notes, and gold might be purchased by them without loss; whereas now the value of a pound note was no more than 16s. 7d. He made various observations on the danger and injustice of making a depreciated paper currency a legal tender, and attributed to that depreciation that dearness of the necessaries of life which was now pressing so hard upon many ranks of people. He had always resisted the continuance of the restriction act, and therefore was acting consistently. As to the bill of the noble lord, it appeared that be wished to assimilate his bank of credit to a bank of deposit. If bullion was to be deposited in the bank to represent the notes it issued, he had no objection to the plan; but then the bank would have no profit.
Earl Bathurst expressed his conviction that the intentions of the noble lord who spoke last, if carried into effect, would prove not only injurious to his own tenants, but pernicious to the country at large. He endeavoured to shew that the principles on which they were founded were in several respects mistaken; and that, if followed, they would introduce a perpetual fluctuation of rent. observed, on the general question, that there might exist other causes for the advance in price of com modities than depreciation of the currency, and that this advance
was far from universal, many articles being lower than formerly. He further remarked that the restriction on bank payments was no measure of this administration, nor had even the last ministry shown any intention of remov ing it.
Lord Holland declared his assent to the doctrines laid down by his noble friend, Lord King, and en tered into a defence of his conduct. He warned parliament against the consequences of attempting to force upon the nation a depreciated currency, and maintained that the bill in agitation was no remedy for the existing evil. Should the bill pass, he said, the country would in effect be in the hands of the bank directors; bank notes would run the same course with the assignats, and end like them.
The Earl of Rosse denied that bank notes were really depreciated. Depreciation of any thing, said he, can only be produced by too great abundance; but there was every reason to believe that the amount of Bank of England notes, now in circulation, did not exceed the mass of circulating_medium compounded of notes and gold, in 1798, and it could not be thought that a less quantity of currency was required for the mercantile concerns of the country now, than at that period. He wished the measure in question were extended to Ireland, in the north of which, tenants were completely at the mercy of their landlords, many of whom would only take notes at a discount; and where there were persons who would only receive notes at one value, and issue them at another. He conjured their lordships
lordships to adopt the measure, and without delay.
The Earl of Lauderdale, in reply to the observation of the last speaker, that the circulating medium had not increased since 1798, remarked, that he had not taken into account the increase of private banks, which had double since that time. He made various observations on the comparison between gold and paper currency, and thought the proposed bill would be inefficacious to remedy the evils complained of.
. Lord Redesdale said, that as the act, which in 1, 97, had laid the restriction on bank payments, had made paper the same as gold with respect to debts and public credit, whether the measure were right or wrong, it now became the duty of parliament to protect the people in what had been done.
Lord Grenville, after a spirited and indignant defence of the conduct of his noble relative (Lord King) referred to the circumstances attending the restriction bill, and said that for his own part he had opposed the suspension of cash payments to the end of the war, and recommended an immediate resumption of them. When in 1805 he had been called into office, and saw that an honourable peace could not be obtained, his opinion, and that of his colleagues, was that we should husband our resources so as to make them hold out to the latest period of the protraction of the war. The ministers, however, who succeeded, had rushed into a system of prodigality that threatened the ruin of the country, and this was one of the causes of the immense issue of paper, and its consequent depre
ciation. His lordship then made some remarks on the pernicious tendency of the proposed bill, which would go as near as possible to the making of bank notes a legal tender, a measure full of danger and injustice. In addition to depreciated paper they had caused the bank to issue a debased coin, and thus had adopted measures which the highest authorities had always stigmatised as the most prejudicial to a state.
The Earl of Liverpool said, that though he had at first thought that upon the whole it would be better to leave the law as it stood, yet when he attended to the principle of the measure under consideration, and particularly to the principles of those who opposed it, he began to feel that the remedy should be upheld. He noticed some of the arguments that had been used by the preceding speakers; and with respect to the assertion, that gold enough could be had if we were willing to pay the price for it, he observed that one of the most extensive and respectable merchants perhaps in the world, who was not much in the practice of supporting ministers, had asserted that if he wanted ten thousand pounds in gold he should not know whence to procure it. He defended the great exertions which the present ministry had made in the war, and concluded with saying, that considering the consequences which might follow from the example which had been pointed out, it would be unwise to reject the bill.
Earl Stanhope, in his concluding reply, acquainted the House that he had, after many years application, discovered an efiectual