THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
 332 
 
 V/8
 
 m 
 
 mm--
 
 A BETTER Y^'^' 
 
 TO THE 
 
 RIGHT HON. ROBERT PEEL, 
 
 ON 
 
 THE REPORT 
 
 OF THE 
 
 35anfe Committee, 
 
 SHOWING THE UNAVOIDABLE CONSEQUENCES 
 OF THE MEASURE 
 
 On iiie Issues of Comitry Bankers, 
 
 LONDON: 
 
 PRINTED FOR THE AUTHOR, 
 
 BY DAfiTON, HARVEY, AND DAttTON, 
 OKAC£CUURCU-aTR££T. 
 
 I8I9. 
 
 Price One ShUliiig'
 
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 A LETTER, &c, 
 
 7^0 the Right Honourable Robert Peel, 
 SIR. 
 
 As cliairman of the Bank Committee, 
 whose proceedings are now operating with an 
 alarming effect upon the concerns of every active 
 member of the community, I beg briefly to 
 submit to you a few observations on this most 
 interesting subject. I shall confine myself princi- 
 pally to such considerations as appear to have 
 had too little attention from the committee; but 
 which must receive the most mature deliberation, 
 previous to the passing of any definitive act, upon 
 the basis of the committee's report. 
 
 I assume that a larger amount of British 
 capital is now locked up in exports, and imports 
 than has ever before been experienced in our 
 commercial hist or}'. 
 
 B
 
 That such extensive losses must inevitably at- 
 tend this appropriation of capital, as will greatly 
 lessen its future power in reproducing activity 
 and wealth ; and that, so much of it as consists of 
 the imports of raw materials for our manufactures, 
 must, by expences consequent upon a state of stag- 
 nation, be annihilated, if the period of commercial 
 activity be greatly protracted. 
 
 Therefore, to secure any portion of this im- 
 mense capital, every effort of national industry 
 should be encouraged. 
 
 That the most direct means to diminish the 
 power of giving activity to the industry of the 
 people, is to lessen the available capital of the 
 country. 
 
 That this will be the immediate effect, to an 
 incalculable extent, of any legislative enactment 
 in accordance with the report of the Bank Com- 
 mittee. 
 
 In former periods of commercial pressure, when 
 any large portion of mercantile capital has been 
 locked up in a state of unproductiveness, various 
 aids have been extended, either in exchequer 
 bills, issues from the Bank or country bankers, 
 which have prevented tlie nation from feeling the 
 full effect and mischief of such a stagnation of 
 capital. 
 
 Tliese aids have uniformly been admitted ta 
 l\4ive had a most salutary effect; therefore, we
 
 5 
 
 must tiiist that the committee, in acting upon a 
 principle apparently so diametrically opposite to 
 that v\ hich has conducted us safely through former 
 dangers and difficulties, have in private, (though 
 not in the committee,) taken every means to 
 ascertain the effect of a contraction of tlie circu- 
 lating medium upon our shipping interest and 
 general commerce, our mining property, our agri- 
 culture, and our manufactures. 
 
 The very large portion of the population which 
 is engaged in the various pursuits connected with 
 these branches of national industry, comprises 
 almost every class and individual of the com- 
 munity that will be essentially affected or in- 
 jured by the measure; yet, with the exception 
 of jMr. Gladstone, scarcely one witness was 
 examined, whose habits of business led him to 
 a knowledge of the condition of the distant 
 and various parts of the nation: — not one, 
 whose practice was principally to buy of, sell to, 
 or exchange commodities with persons resident 
 in the interior of the kingdom. They were all 
 either bankers, money-agents, or merchants deal- 
 ing chiefly in foreign bills of exchange and bullion; 
 not one person from the pursuits of mining or of 
 agriculture, not one manufacturer. 
 
 Yet, if I be right in supposing tliat these arc 
 the persons who will immediately feci the inju- 
 li 3
 
 rious effects of the measure, we must conclude, 
 either that the members of the committee have 
 in private derived that information which would 
 have been better obtained in the committee ; or 
 that parliament is proceeding to legislate, without 
 having received evidence from all the best sources 
 of information. 
 
 Intelligent practical men, who are engaged in 
 maturing the productions from the land, and in 
 giving activity to the skill and industry of the 
 inhabitants, must be considered competent to fur- 
 nish the best evidence of the effect of Such a mea- 
 sure, upon the actual population resident in the 
 kingdom. 
 
 Regretting that the enquiries of the committee 
 have not been directed to these sources, from 
 whence the most valuable information would have 
 been derived, I shall proceed briefly to show what 
 will be the immediate operation if the measure re- 
 commended by the committee be passed into a 
 law; and also to point out, that the more remote 
 effects will be very different from those anticipated 
 by the framers of the report. 
 
 We are in a state in which almost the whole 
 of the capital that enterprising individuals have 
 been accustomed to employ, in giving effect to 
 the operations of commerce and manufactures, is 
 locked up. This capital, which has been engaged 
 in giving activity to the labourer, is, for the pre^
 
 sent, stagnant and useless. What then can keep 
 the lahourer in work, and save liiin from pauper- 
 ism? The diversion of capital from the more 
 fortunate branches of business. But is there any 
 department of national industry overcharged with 
 capital? Is not the contrary, without any ex- 
 ception, the case? Yet, at tliis particular junc- 
 ture, when, as I conceive, the creation of twenty 
 millions additional capital would be the best 
 means of keeping in employment the labour- 
 ing population, your committee says, in effect, 
 that, from the little a^ilable capital which 
 you have remaining, dlw^ millions , shall be 
 abstracted, to purchase a material which can have 
 no effect in l^ringing forth the productions of the 
 nation's lalsour and skill. — Gold being completely 
 unproductive, its introduction can only add ano- 
 ther burden to the imports, by which our ware- 
 houses have been recently loaded. So large a 
 portion of capital is already laid up in a use- 
 less state, one would suppose this could not be 
 the time for making purchases which will have 
 the effect of withdrawing, and that with alarming 
 precipitatioTf,*iift*f millions more, to remain, in a 
 similar manner, in a state of unproductiveness. 
 
 That such will be the immediate effect of a 
 law founded upon the present recommendation of 
 the committee, there cannot, I think, be the re- 
 motest doul)t. What its distant consequences may 
 be, I shall only glance at in the slightest manner.
 
 8 
 
 After a protracted enquiry, conducted with so 
 much solemnity, by men of the highest importance 
 in the state, all will bow to any legislative enact- 
 ment issuing from their recommendation, as the 
 final and irrevocable determination of the govern- 
 ment. The immediate effect of such a mea- 
 sure will, therefore, be as sudden and violent 
 a contraction of the circulating medium, as 
 would have flowed from the absolute certainty 
 of being obliged to resort to unconditional cash^ 
 payments, in July, 1820. Because the great 
 contraction of issue, will not, I imagine, be in 
 Bank of England notesiBbut in those of the coun- 
 try bankers. 
 
 That part of the business of country banking, 
 connected with the issue of notes, has latterly 
 been much less lucrative than it was formerly: 
 some country banks, have, consequently, during 
 the last three years, been discontinued by men of 
 property. And the measure recommended by the 
 committee will now have the effect to drive an 
 additional number of bankers to a determination, 
 either wholly to relinquish the issue, or what will 
 be the same in effect, greS6j*t.to curtail the 
 amount. I may therefore repeat, that I know 
 many of those country bankers wlio are rich, in- 
 dependent, and who are more guided by a pru- 
 dent than an enterprising spirit, will, on fore- 
 seeing that they may be rendered under obli-
 
 9 
 
 gations to the Bank of England, discontinue tlieir 
 issue of notes on demand: or, they will so con- 
 tract the amount, as to make them incapable of 
 rendering that assistance to the commercial esta- 
 blishments, and to the agricidtural undertakings 
 in their districts, which they have been accustom- 
 ed to give. 
 
 Permit me, Sir, for a moment, to entreat your 
 regard to the extreme vagueness and uncertainty 
 of the information relative to the amount of the 
 issue of country -bank paper. How the committee 
 can have estimated that amount so low as twenty 
 millions, oi* twenty-five millions, I am at a loss 
 to conceive; for this currency furnishes the al- 
 most exclusive circulation to four-fifths of the 
 population of Great Britain. London, and part 
 of Lancashire alone excepted, it is the only me- 
 dium in general use; therefore, I cannot estimate 
 it so low as sixty millions; because those four- 
 fifths consist, generally, of that description of peo- 
 ple whose transactions require them to have the 
 greatest amount of cash constantly at hand. 
 
 Contemplate, I must intreat you, what will be 
 the effect of a sudden and very extensive con- 
 traction of the circulating medium of the coun- 
 try, upon all the active classes of the people 
 engaged in agriculture and manufacture. Ruin 
 to the capitalist — want of employment to the 
 labourer. I cannot but appreliend. with the
 
 10 
 
 most painful feeling, that these great sources 
 of national wealth and power will become stag* 
 tiant and pestilential; for terms, descriptive of 
 one of the worst conditions of the earth's sur- 
 face, are not inapplicable to describe a state of 
 moral society, in which every man amongst the 
 unemployed labom'ers, partly from suffering, and 
 partly from other causes, will be ready to con- 
 taminate his neighbour with murmur and dis- 
 content, and perhaps, with disaffection. 
 
 This, I believe, will be the immediate effect 
 of the intended measure; at the same time, I 
 cannot be of opinion, that such an effect will be 
 permanent, or of long duration. Habits of en- 
 terprise and exertion fonn so decided a part of 
 the national character; so great is the elastic 
 power of the country, that though the period 
 of suffering and privation, produced by stagna- 
 tion, will be severe, and its effects most de- 
 plorable, it will not, regarding the subject in 
 an extended and national point of view, l^e of 
 long duration. 
 
 But in attempting to direct your observation to 
 the very powerful agency which will again be 
 brought into operation, to give effect to the re- 
 viving energies of commerce, manufactures, and 
 agriculture, I must crave your more particular 
 attention and indulgence; because I am not aware 
 that the subject has in any manner been regarded,
 
 11 
 
 in the same point of view, by any gentlemen who 
 were examined by the committee. 
 
 The system of country banking appears inade- 
 quately understood by many distinguished public 
 men, because their habits of life do not lead them 
 to a point favourable for regarding it in its prac- 
 tical operations. Consequently, the power and in- 
 fkience which country bankers exercise over the 
 great interests of the community, are, as I appre- 
 hend, exceedingly under-rated by both com* 
 mittees. 
 
 This branch of business is conducted, in many 
 parts of the kingdom, by men of great wealth, and 
 who unite with this, great influence of character. 
 
 In regard to their prudence, intelligence, and 
 honour, in discharging a public trust, the best 
 illustration is the fact, that though entrusted by 
 cii'cumstances with most extraordinary power, 
 that power has rarely (looking at the numbers) 
 been exercised in dangerous individual specula- 
 tions. Of late years, however, the minds of this 
 important class of men have been unusually agi- 
 tated with apprehension as to the issue of public 
 events upon their own property. Their business, 
 in its nature extensive, must of course be exten- 
 sively acted upon by every change which affects 
 the value of property. The late sudden transi- 
 tions in prices induced additional circumspection; 
 and, previous to the report pi the committee, a 
 very general determination to contract their busi- 
 c
 
 12 
 
 ness had been acted upon by country bankers. 
 The increased force which that report must give 
 to such a determination, 1 need not describe. 
 It will oblige all the cautious country-bankers 
 to cut down the amount of their circulation to 
 the lowest possible standard. The people, who 
 by this operation will be deprived of the means 
 of conducting their concerns, cannot now, as 
 heretofore, be immediately supplied by the other 
 country-bankers of a more active and enter- 
 prising character; because they too are smit- 
 ten with apprehension for the consequences of 
 the measure which wiU be enacted. This brings 
 us to the period of extreme suffering. The year 
 1816 may serve to give us some idea of the 
 effects; but, on the present occasion, I imagine 
 the cause will have more extensive results, be- 
 cause, to a train of circumstances somewhat simi- 
 lar, in producing contraction, will now be added 
 a measure deeply and permanently affecting all 
 banking concerns. When the cautious, the timid, 
 and independent, who were previously pursuing 
 their business with a feeling of indifference, shall 
 have been induced to withdraw their notes from 
 circulation, and the effect has been severely 
 felt, that will be the point of time when the more 
 pushing and enterprising banker will begin to ex- 
 tend his circulation of notes. The prudent bank- 
 ers, who still remain in business, have regulated 
 their concerns by a principle which will guard
 
 13 
 
 them against the possibility of trouble or risk in 
 meeting, under all circumstances, their engage- 
 ments. Nothing will tempt them to depart from 
 this line of conduct. 
 
 The consequence will be an amazing acces- 
 sion of influence and power to their more enter- 
 prising rivals, whose paper is intrinsically (though 
 perhaps the public may not so regard it) of a 
 character less stable and secure. 
 
 By issuing notes for their own emolument, 
 they may contrive to be regarded as the benefac- 
 tors of their country. 
 
 Circumstances will liave given extraordinary 
 advantages to this description of bankers. Great 
 suffering will have been endured; and the cause 
 of it will be so obvious, tliat much personal 
 feeling, I may say of gratitude, will, even with 
 men who have no direct interest at issue, be 
 turned in favour of bankers who thus extend 
 relief to the country, at some hazard to them- 
 selves. 
 
 And the chance of their operations being em- 
 Ijarrassed, by runs upon the Bank, will, in regard 
 to these issues of notes, be greatly diminished. 
 Magistrates, or men of influence, in the vicinity 
 of such banks, perceiving, clearly, what has oc- 
 casioned the suffering, and also the means of 
 relief, will promote the public sentiment in their 
 favour. So that the probability of runs will be 
 remote; and, if a run should occur, tlie same men
 
 14 
 
 of influence and character will exert themselve* 
 to prevent its extending; and they will, for a time, 
 succeed. 
 
 I have known the most determined and over- 
 whelming run, operating upon one of the 
 largest issues of country bank-notes in the king- 
 dom, stopped, and its renewal successfully pre-^ 
 vented, by the exertions of leading men of cha- 
 racter in the neighbourhood. 
 
 Country bank-notes form the principal medium 
 of circulation for the great mass of the people 
 of England ; ^nd more especially so for all whq 
 are engaged in bringing forth and manufacturing 
 her productions. London and Liverpool are great 
 commercial cities, because their positions are fa- 
 vourable, as points of union, for collecting and dis- 
 tributing the wealth of the country. It is not in 
 them that the valuable productions of the kingdom 
 are matured. Therefore, taking out London and 
 Liverpool, as not containing that class of the peo- 
 ple who are the most directly employed in fabri- 
 cating the nation's wealth; we shall then find that, 
 excepting only Manchester and a few miles sur- 
 rounding it, every part of the kingdom uses 
 country bank-paper as the medium of circulation. 
 
 One cannot reflect, without seriousness, of the 
 probability of this great portion of the currency 
 being left principally to the management of men, 
 whom additional power will probably render specu- 
 lative and miscalculating.
 
 15 
 
 The chief cause of tlie failures of the Lincoln- 
 shire bankers, a few years since, was, that they 
 were all alike pushing and speculative; and this is 
 the solution of the problem, why the disaster came 
 upon all of them at one and the same point of time. 
 
 This fact is a strong confirmation of my opinion^ 
 that the influence of the prudent bankers is the 
 greatest possible check upon the operations of the 
 more speculative : for, previous to these failures in 
 Lincolnshire, the speculative bankers were so nu- 
 merous and extensive in that district, that their, 
 influence completely predominated over their more 
 prudent competitors. Such bankers have not yet 
 an influence so great and exclusive in any other 
 part of the kingdom. 
 
 Therefore, though the extensive issue of the 
 notes of these bankers would afford great relief to 
 the country, it would be at the risk of producing, 
 at intervals, disastrous losses and extreme suffering. 
 
 That all the circumstances which combine to 
 give additional power to those bankers whom the, 
 public deem the most liberal and enterprising, 
 will act with increased force in the new state 
 of things, may be established by analogy, and 
 by facts taken from actual practice. I will, in 
 addition to the above, allude only to one. 
 
 The Scotch banks, during tlie whole period 
 of the greatest depreciation of paper relatively 
 with gold, never refused to pay their notes in 
 cash, when demanded. It is true, demands were
 
 1^ 
 
 rarely made upon them *, but this proves the whole 
 point. With the public sentiment powerfully 
 in their favour, even self-interest could not induce 
 persons to act in hostility to the banks. It being 
 obvious, that if any large demands for cash had 
 been made, the banks must have discontinued 
 issuing it. 
 
 The number of sharers in these banks, amongst 
 the inhabitants, and the opinions of the public 
 having been so long established in their favour, 
 tended to produce this effect in a greater degree 
 than could obtain with any private banking concern 
 in England. But an effect resembling this, will be 
 the necessary operation of the measure of the 
 committee; and those bankers who are most in- 
 clined to run the hazard of forcing their issues 
 for their own gain, and for the public accom- 
 modation, may, after this, do so with comparative 
 impunity. 
 
 If, therefore, the committee be of opinion, that 
 the measure they recommend will have a ten- 
 dency to improve the quality of the circulating 
 medium, in this respect, I conceive they will 
 be exceedingly mistaken. On the contrary, it 
 will liave a direct tendency to extend the 
 worst description of paper now in circulation; 
 and it will, in time, essentially deteriorate the 
 quaUty even of this particular issue of paper. 
 Because circumstances which now operate as 
 powerful checks upon the issuers, will be either-
 
 17 
 
 much weakened, or destroyed ; — the vigilance and 
 suspicions of the public; — the power, influence, 
 and example of their cautious rivals. 
 
 If the main object of tlie committee be to 
 regulate the quantity of the ciixulating medium 
 of the state, that, I apprehend, may be done 
 more effectually by other expedients, and the 
 country may have the advantage of a productive 
 capital of twenty or thirty millions, which must 
 otherwise be locked up in the precious metals. 
 
 My object being only to submit considerations 
 for delay, in coming to any final determination 
 on this momentous question, I have the power 
 merely to glance at, rather than reason upon the 
 subject. I am now writing on Friday the 21st,and 
 your resolutions must be decided on Monday the 
 24th. 
 
 In conclusion, however, permit me again to 
 bring before your consideration, 
 
 That this is a period of unprecedented com- 
 mercial pressure. 
 
 That the immediate effect of your resolutions 
 passing, will be to increase that pressure. 
 
 That the manner in which the committee has 
 conducted the enquiry, has furnished abundant in^ 
 formation on all the sulyects regarding bullion, 
 foreign exchanges, and the issues and aflairs of 
 the Bank of England ; but that tlie committee 
 has derived no precise information of the amount 
 of the circulation in country bank-notes.
 
 That that portion of the currency of the king- 
 dom is greater in amount than any other: — the 
 issue of country bank-notes far exceeding the 
 greatest issue of the Bank of England. That this 
 is also that essential part of our paper-currency 
 which forms nearly the exclusive circulation to the 
 inhabitants of every part of the kingdom, the metro- 
 polis and a part of Lancashire alone excepted. 
 
 Therefore, that it is most intimately united 
 \Adth the habits and prosperity of the great mass 
 of the people. 
 
 That a knowledge of the total amount of the 
 circulating medium of the kingdom, the separate 
 amount of its different portions, and the modes 
 in which it is introduced into circulation, is a 
 necessary preparative to any legislative enactment. 
 That by passing a bill merely to suspend the 
 period of restriction upon cash-payments, for two 
 or three years, in order that those important 
 branches of the subject which have had the least 
 attention in the committee might be thoroughly 
 investigated ; the public would feel assured, that, 
 if the measure should finally be determined upon, 
 it would then be adopted with a perfect know- 
 ledge of its practical operation and effects. 
 I have the honour to be. 
 Sir, 
 Yoin* most obedient, humble Servant, 
 
 H. B. 
 
 DartoQ, Harvey, and Co. Prioters, Graceeburcb-Street, London.
 
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