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check or extinguish them, the establishment of a powerful and effective police." It might have been added, that so far arc the numbers and names on bank notes from: being a terror to evil doers, that "the most daring mail-coach robberies have been perpetrated, to get possession not of bags of sovereigns, but of bundles of bankers' notes.
While this measure for annihilating the existence of small notes in England was making its way through parliament, some difference of opinion sprung up in Ireland concerning the fitness of its application to that country; and Scotland rose, as one man, to resist its introduction into the northern part of the island. Ministers had declared, in both houses, from the very beginning of the discussions, that they did not intend, at the present time, to extend the proposed alteration to either of these portions of the empire; but they had likewise declared, that they could not see, on what principle different systems of currency should prevail on opposite banks of the Tweed, or how arrangements, which gave security in England, should not be equally beneficial in Scotland. This language evidently shewed, that the period could not be considered as far distant, when the small-notes of the currency of Scotland would likewise be attacked; and, as Scotland had never known any other currency than a paper currency, and had become wealthy and prosperous in its enjoyment duringmore than an hundred years, she arose with earnestness and vehemence in its defence. Seldom has any political measure called forth $0 strong and so universal an expression of public opinion. In every city, and in every county,
public meetings were held to deprecate the destruction of the one pound, and guinea notes,; men of all parties threw aside their differences, and men of all ranks forgot their inequalities, to raise one unanimous outcry against the threatened introduction of gold at the expense of paper; and merchants, manufacturers, bankers, shop-keepers, and even artizans, joined heart and hand to resist the innovation. During the discussion on the bill regarding England, the tables of both houses of parliament were nightly loaded with petitions from public meetings, and from all the great commercial bodies of Scotland, setting forth the benefits which that country had so long derived from its banking system, the perfect security of the foundations on which it stood, and the evils which would inevitably result from every attempt to give it a new and an untried form.
It was both prudent and becoming in parliament to pay respect to the anxiety and unanimity with which these opinions were expressed; especially when coming from those who best knew the real nature, and practical effects, of the system. The grounds, too, on which the united interests of Scotland took their stand, were evidently deserving of much consideration, and consisted of facts notorious to the whole empire. The unequalled progress, said they, which Scotland has made in every branch of industry, has been principally owing to her "banking establishments as at present conducted. Previously to their institution, money was so extremely scarce, that the Scottish parliament made various enactments to encourage the importation, and restrain the exportation, of specie, but made them in vain. In fact, the commencement of prosperity, and of commercial enterprise, in that country, had followed immediately on the erection of the Bank of Scotland in 1695, and had extended itself with the establishment of the royal bank in 1727- The increase of a circulating medium thus produced, had given so successful an impulse to the spirit and industry of the people, that the trade of Glasgow alone had doubled in fifteen years after the first establishment of banks there, and, in 1776, the trade of the whole of Scotland had more than quadrupled since the first erection of the Bank of Scotland, and the royal bank; and all this without any symptom of rottenness, without any of the ruinous results of over-trading or wild speculation, without any vicissitudes, except such as are inseparable from trade, or were the direct consequences of political events. This system, with an increasing number of banks, had continued down to the present day, extending the same benefits, and commanding the same confidence. That this confidence was deserved was sufficiently demonstrated by the fact, that, for more than a century, a bank-failure had been a rarity; that, amidst the convulsions which, at different periods, had shaken or thrown down the English banks, those of Scotland had stood firm; and that even during the late panic, when every morning brought intelligence of the insolvency of an English bank, not one of those establishments in Scotland had been doubted for a day, or for one moment exposed to a run. The ordinary traffic of the country had hitherto been conducted almost entirely through the medium of one-pound
notes and silver, and any innovation on the practice would be hostile to the habits and inclinations of the people. The removal of small notes, and the obligation on the banks to provide gold, would, it was averred, materially diminish their ability to accommodate the public, particularly in times of pressure, when their aid was most required; and that the hardship of imposing on Scotland the necessity of maintaining a metallic currency would be increased by her distance from the capital, and the consequent risk and cost of conveyance. They denied that the state or history of the currency of England furnished any analogy from which to argue to that of Scotland. The smallnote circulation of England was but of recent origin, and her regular currency had been gold; in Scotland, it had existed before the Union, and had continued, without interruption or mischief, down to the present time. In England, no private bank could consist of more than six partners, and the capital of such establishments was therefore limited; in Scotland the number was indefinite. In England, there was no check upon over-issuing; in Scotland, such an occurrence was prevented by the reciprocal exchange of the notes of all the banks twice a week, and by the immediate settlement of the balances either in cash, or shortdated drafts upon London.
These differences between the systems of the two countries, and the undeniable difference between the effects of the two systems, formed good reasons why parliament should pause, before extending to one part of the island the plan which had been adopted in the other. Accordingly, select committees were appointed by both Houses, to inquire into the state of the circulation of small notes in Scotland and Ireland, and to report upon the expediency of altering the laws regarding it. The only opposition made to the appointment of these committees, in so far at least as they concerned Scotland, was, that they were unnecessary; that the system was confessedly so secure, and so nearly perfect, that inquiry was superfluous. A number of Scottish merchants, manufacturers, and bankers, were examined; and the reports of the committees, which were presented to both Houses towards the end of the session, * justified the resistance which Scotland had made.
There could be no doubt, said the committees, on general principles, that it would be desirable to have the same system of currency established throughout the United Kingdom; but still there might be obstacles to such an uniformity of system, which would render it impracticable, or, at least, bring with them inconveniences more than sufficient to counterbalance its advantages. From 1766 to 1797, when no small notes were issuable in England, the currency of Scotland, for payments under 51., had consisted almost entirely of notes for 1/., and 1/. Is., and this difference in the currency of the two countries had not been known to produce inconvenience to either. It had been proved to the committees, that the Scottish banks, whether chartered, or jointstock companies, or private establishments, had, for more than a century, exhibited a stability which the committees believed to be un
* See Public Documents, p. 64*
exampled in the history of banking— had supported themselves from 1797 to 1812, without any protection like that which the restriction of cash payments had given to the Banks of England and Ireland—and that, during the whole period of their establishment, there had not been more than two or three instances of bankruptcy.
As stability so well proved did not seem to justify any alteration, so the committees were apprehensive that a prohibition of small notes would be injurious to one branch of the Scottish system which it was of the utmost importance to preserve, viz. the giving of cash-credits. Any person, on applying to a bank, and finding proper securities, after a full inquiry into his character, and the nature of his business, was allowed to open a credit, and draw upon the bank for the whole of its amount, or such part of it as his daily transactions might require; paying in again, to the credit of this account, such sums as his occasions might not require, and being charged, or receiving, interest, according as the daily balance was for or against him. The total amount of these cash credits was five millions, of which about one third had been actually advanced. The advantages arising from them to the banks consisted in the call thus produced for their paper, which generally came back twice a-week, and in the opportunity which they afforded for the profitable employment of part of their deposits; while the facility thus given to persons, who begin business with scarcely any capital but character, to employ profitably the minutest products of their industry, undoubtedly bestowed
most important advantages upon the whole community. All the witnesses had agreed, that, if the circulation of small notes were prohibited, the Scottish banks would be compelled to put a stop to these cash-credits, and likewise to abandon their branch-banks in remote districts of the country, which would thus be left without a circulating medium. At the same time, the directors of the Bank of England had given it as their opinion, that the continued circulation of small notes in Scotland and Ireland would have no injurious effect on the metallic circulation of England, provided these notes were confined within the boundaries of their respective countries. The committees, therefore, recommended, that the paper money of these parts of the empire should not be meddled with. Some members, however, of the House of Commons, being apprehensive that a metallic currency in England could not exist with a small-paper circulation in Scotland, sir M. W. Ridley moved a resolution, that the House, in the course of next session (though it was well known that parliament was about to be dissolved), would institute an inquiry as to how far the interests of England and Scotland were likely to be affected by the existence of different systems of currency in the two countries, and to ascertain whether any, or what, means ought to be adopted, to assimilate the currency in both. The motion was negatived without a division; and thus Scotland was left, for the present, in possession of that system of currency, under which her commerce, her manufactures, and her agriculture, had so long flourished. While the fate of the small
notes of Scotland was still undecided, public attention was extraordinarily excited by a series of letters directed against the dreaded alteration, which appeared in an Edinburgh weekly newspaper. The style in which they were written made the first impression, and it was fixed deep by the name of the author, as soon as they were known (and they were soon known) to be the productions of sir Walter Scott. If they did not display great profoundness in political economy, the opinions which they contained were put forth with what appeared to most people invincible sound sense; but, in reality, they deserved attention principally as pieces of composition. Hastily thrown together, and therefore, marked sometimes by a homeliness of expression excellently suited to its purpose, the richness and aptness of illustration, the adaptation to national prejudice, the dramatic variety, the dry and pithy jokes of Malachi Malagrowther (for under this name did the author write) produced in Scotland a sort of similitude to the period of the Drapers Letters in Ireland; and, in the opinion of his countrymen, placed the civic garland on the head of the author of Waverly, beside the laurel wreath which he had so long worn. He discovered, or thought he discovered, in the conduct of England towards Scotland for some years back, a design to contemn and affront the latter, for the sake of establishing a chimerical system of uniformity; and one proof of it he found in the removal of her separate Board of Customs, to consolidate it with that of England. He talked, too, very merrily, of the danger of sending chests of gold through Highland glens, and the probability of its creating a new race of Rob Roys—just as lord Carnarvon, after him, predicted in the House of Peers, the formation of bands of highwaymen round London from the same cause. But the greatest honour paid to these epistles was, the notice taken of them even in parliament, as dangerous productions. The jokes of sir Walter Scott were actually treated by some members as incentives to rebellion; and senators gravely averred, in the House of Commons, that, not many years ago, they would have subjected him to condign punishment. Nay, even the chancellor of the Exchequer, thought himself bound to notice them, and, when opening the budget on the 33th of March, struck at Malachi Malagrowther, in a rather eloquent and imposing passage, whose periods, more as a compliment to the man, than from respect to the subject, were perhaps better turned than the dignity of the matter required. "According," said the chancellor of the Exchequer, "according to a celebrated production which has appeared in the northern part of the kingdom, the destruction of the independent Boards of Customs and Excise in Scotland, and their consolidation with the central Board, are considered by every true Scot to be derogatory to the national dignity, offensive to the national pride, and subversive of the national rights. When Antony makes his beautiful speech over the dead body of Caesar, and exclaims, ' O, what a fall was there, my countrymen/ the appeal was not more passionate or energetic, than the appeal made in the letters to which I allude, against the author of that woeful tragedy which terminated in the extinction
of two miserable and insignificant fiscal departments! When I first heard of this extraordinary production, I was really apprehensive that I had been countenancing some undefined wrong against Scotland. When I met my noble friend at the head of the Admiralty, or any of his honourable colleagues at that board, I hardly dared to look them in the face. At last it occurred to me, that I had Scottish blood, and good old Scottish blood, too, in my veins; and that my conscience had never charged me with any attempt to diminish the honour which I experienced from my connection with that ancient country, and its ancient nobility. When, too, I recollected all the signal triumphs of Scotland in the various intellectual pursuits of the human race j when I remembered the originality and genius of her poets, the eloquence and accuracy of her historians, the elaborate lucubrations, and profound reasonings of her philosophers : when, in addition to these, her brilliant excursions over the. regions of fancy, of history, and of science, I adverted to the noble efforts which she had made, in the field and on the ocean, in maintaining the glory and independence of the empire; when I recollected the names of Abercromby, of Moore, of Lynedoch, and of Hopetoun, and that, only two years ago, I successfully proposed to this House, to do tardy justice to the name of Duncan; when I dwelt in imagination upon all these things, I could not for a moment continue to believe, that the honour of Scotland was tarnished by the transference of a paltry Board of Customs or Excise from Edinburgh to London. I had always thought that that honour