PREFACE.

THE manuscript of this pamphlet was communicated to the Chancellor of the Exchequer in February, 1817.-On the 9th of April, 1818, the Right Honorable Gentleman brought a bill into the House of Commons, for carrying the plan suggested into effect. It is not surprising that a host of country bankers, several of whom have since failed, should have posted up to London, and used their utmost exertions to prevent the passing of an act which would establish a test of their solvency, and perhaps a little diminish their profits. The arguments or supplications of these gentlemen, it is to be supposed, prevailed, so far as to induce Mr. Vansittart to postpone the measure. Accordingly on the 30th of April, he moved "that the order for the first reading of the Bill, for the better regulation in the Circulation of Country Banker's Notes, be discharged;" adding, "that it was proper at the same time to say, the plan was only abandoned for the present, from a belief that some modifications were necessary, and in the apprehension that the discussions to which it might give rise, would not be brought to a close during the session."

The necessity of adopting some such mode of security for the public, against the fraudulent issues of paper by persons, of no solidity, has been abundantly confirmed by the many ruinous failures that have taken place in England since the bill was withdrawn; and volumes of arguments could not more strongly manifest the propriety of again bringing the measure before Parliament, than the circumstance of its having been stated to the Honorable House, that the deficiency of six hundred thousand pounds in the Irish revenue, had been principally occasioned by the general distress in which the failures of innumerable country bankers had involved the population!

SKETCH, &c.

Ir is generally allowed that the distress and inconvenience to which the community at large, more particularly the land-owners, their tenants, and the manufacturers, have been subjected for some time past, are not to be attributed to a deficiency of wealth or capital in the kingdom, but to a great and sudden reduction in the quantity of currency by which that property was represented and circulated.

This reduction of the circulating medium has been occasioned in a very great degree by the failure of several banks in nearly every county, and the consequent discredit thrown upon every similar establishment in the kingdom.

There is hardly a letter in the agricultural report which does not allude to the real distress and ruin occasioned by these failures, or the consequent want of money and credit, among all descriptions of persons, not excepting those of known property.

Money cannot now be raised on the very best of security, at solid country banks, because, under the present depreciation of such paper, the notes which might be issued on loan, payable at a distant period, would, in all probability, be returned upon the banker the next day, to be exchanged for those of the Bank of England.

As long as a tolerable confidence existed in the country bank paper, the landholder, the farmer, the manufacturer, and indeed the dealer of every description, could increase his capital and extend his operations in business, by means of the credit willingly afforded at the banks in his vicinity, and thereby derive every advantage which the Bank of England gives to merchants and wholesale traders in London. The effects of the failures have therefore been the same to them as (if I may be allowed an example from what must be

considered as nearly an impossibility) that of the Bank of England would be to the London merchant. By such a calamity he would not only lose the amount of the Company's notes he might possess, but be called upon for the immediate payment of sums advanced to him on the discount of bills; and by being thus suddenly deprived of a resource which had enabled him to employ the whole of his capital in commerce, he would be obliged to sell whatever he could bring to market, at perhaps less than half its value, if even, under the distress, involving his neighbour as well as himself, a purchaser could be found on any terms.

The particular similarity between the Provincial Banks and the Bank of England, distinguished from the London Bankers, arises from their respectively issuing their notes by discounting bills, or on loans, at legal interest, by which they gain five per cent., while their real property is, or ought to be, if they possess any, vested in Government or other positive securities, and yielding as much more interest.-Provincial Banks and the Bank of England being, then, nearly upon the same plan, similar circumstances in their conduct will have similar effects upon their respective customers, and in their neighbourhood.

Money cannot now be got in London on mortgage at legal interest: gross usury in the way of annuities, which a few years ago would have consigned the names of the parties to infamy, is now practised by some of the most opulent, and soi-disant respectable companies in London. What then would be the consequence should the Bank of England cease to discount bills?— Could the business of London, accustomed to this accommodation, by which it has been so long supported, encouraged and increased, be carried on at all? Could any trade afford the usurious interest required, and enormous charges for deeds and commission? Bad as such a state of things would be, it could not be comparatively worse than is exhibited in many parts of the kingdom at this instant.

The cause of the very high rate of interest is evidently the immense National Debt, which has absorbed most of the disposable capital of the kingdom, not employed in trade. Satisfied as the public creditor is with the security of the nation, and five per cent. interest, it is not to be expected that he would sell out his property vested in the stocks, to lend it on any personal, or even landed security, on legal interest; where, however secure his principal, the payment of his interest could not be so exact; to which must

The following nota bene to an Insurance-Office advertisement appeared in the Observer of Feb. 23:

"Redeemable annuities on one or more lives, secured on real or funded property, are purchased by the Company on the most eligible terms."

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be added another most material consideration, the great probability of eventually increasing his capital by a rise in the Public Funds. If, then, pecuniary accommodation is not to be procured on mortgage at legal interest in London, the great Money Mart, where the National Bank, and Bankers in general, are in good credit, it is not astonishing that the shock occasioned by the failure and discredit of the Provincial Banks, should have thrown-so many parts of the country, under existing circumstances, into such a seemingly irretrievable state of distress, for want of a sufficiency of secure currency, so amply possessed by the metropolis.

It is not to be denied that much and severe distress has shown itself in London: but may not this, in a great measure, be attributed to the destruction of trade and credit in the country?

No arguments were necessary to prove, that the country has suffered to excess, from the deteriorated and worthless paper currency with which an unprincipled set of men, calling themselves Bankers, had overwhelmed it. But, previously to submitting a Plan, by the adoption of which, I presume to think that every town, and even village in the kingdom, might, in respect to pecuniary accommodation and secure circulating medium, be placed on as good a footing as the metropolis,-it seemed necessary to show, by the foregoing observations, that the former are now totally deprived of such advantages.

PLAN.

1 would propose that facilities should be given for any person possessing stock in the Government funds, to transfer the same, or any part thereof, in trust, to some authorised public functionary or functionaries, as security for any promissory notes he might choose to issue.

2

Thus suppose an office for the registration and management of such transfers be established, under the controul of the Accomptant-General of the Court of Chancery. A B possessing 10,000l. five per cent. stock, transfers the same to the said Accomptant General, in trust as a security for 10,000l. in notes,

'See note A.

2 The Court of Chancery is offered as an example, because it is already in the habit of holding immense sums in trust. Several other public departments might answer the purpose as well, or even the Bank of England itself.

which he means to issue payable to bearer on demand. On this transfer being made, and A B paying adequate ad valorem fees towards the support of such an establishment, the AccomptantGeneral will be authorised to deliver to him printed notes of the following, or any other form that legal advisers might better approve, to the amount of 10,000l., in such several sums as A B might wish that amount to be divided.

£Ten

(Date)

I promise to pay CD or bearer, on demand, the sum of ten pounds, as security for which I assign ten pounds five per cent. annuities, transferred for that purpose to the Accomptant General of the Court of Chancery. (Signed)

A. B.

I certify that A B has transferred to the Accomptant-General of the Court of Chancery, ten pounds five per cent. annuities, as security for the payment of this note, which will be transferred to the bearer in default of payment. (Signed)

P. G.

These notes' would, I conceive, possess all the solidity which those of the Bank of England do (the security of Government and that of the drawer ;) and they might be issued in discounting bills, or by way of loan in any part of the kingdom, with as much facility and benefit to the Public, as Bank of England notes are in London.

They would, in some degree, have an advantage over the Bank of England notes for country circulation, inasmuch as their genuineness might be ascertained in that part of the country where they originate and are most likely to be kept in circulation, by reference to the drawer, as well as at the office in London where the security for them is lodged. The want of some such criterion in different parts of the country has been the cause of the insecure country notes being preferred to those of the Bank, which it was feared might be forged.

Private persons might lend such notes on security as well as bankers, or use them in payments to great advantage. Thus, suppose a person's dividend to amount to one thousand pounds, which he usually keeps by him for his current expenses, by immediately returning the dividend into stock, and taking up secured notes for the amount, he economises his property greatly by its being made to yield him an interest till the time he has occasion to expend it. And if, at the period of the ensuing dividend be

They would be equal in value to gold; for gold coin of the same nominal value could produce no greater income than 5 per cent.