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 CURRENCY AND BANKING 
 SYSTEM OF ENGLAND
 
 
 THE LIBRARY 
 
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 THE 
 
 CURRENCY AND BANKING SYSTEM 
 
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 ENGLAND 
 
 AND THE 
 
 SISTER KINGDOMS. 
 
 BY JAMES ROY. 
 
 EDINBURGH: 
 
 WILLIAM TAIT, 78, PRINCE'S STREET. 
 
 MDCCCXXXV.
 
 EDINBURGH } 
 PRINTED BY M. AITKEN, 1, BT JAMES'S SQUARE.
 
 
 Mil 
 
 CURRENCY AND BANKING SYSTEM 
 
 OF 
 
 ENGLAND, &c. 
 
 Commerce, and the diffusion of the enjoyments 
 of civilized life, are so dependent upon the exist- 
 ence of a circulating medium, at once sufficiently 
 extensive for the present wants of the community, 
 and of a nature which renders it capable of ex- 
 pansion, in accordance with any extension which 
 these wants may receive, that the means of crea- 
 ting and maintaining such a currency, must ever 
 take the first place with the financier and political 
 economist. 
 
 This position being admitted on all hands, it 
 appears extraordinary that so little progress has 
 been made amongst mankind in devising and regu- 
 lating what they acknowledge to be so essential 
 to the gratification of their wants. 
 
 The systems which have been hitherto acted 
 upon, have confessedly proved to be defective, and 
 liable to fluctuations which have had the most 
 
 1346966 A 2
 
 prejudicial effect upon transactions both public and 
 private. This confession the partisans of a specie 
 and of a paper circulation have each, in their turn, 
 been compelled to make. 
 
 The advocates for a metallic currency have been 
 surprised when they found circumstances drain, at 
 one time particular districts, and at others the 
 whole country, of the greater part of its specie,, 
 and leave the industrious unable to dispose of the 
 products of their industry, on the fair terms to be 
 met with in a market into which all the classes 
 of the community are enabled to enter, and forced 
 to dispose of them to a few monopolists, who have 
 gathered in their grasp the scanty remainder of 
 money ; while, on the other hand, their opponents, 
 who have for a time pointed with triumph to the 
 activity and enterprise called forth by a plentiful 
 circulation of paper, have been at once paralysed 
 by the convulsions which have assailed the com- 
 mercial and political world, in consequence of some 
 shock which the credit of their paper system had 
 received. 
 
 The first of these classes of reasoners appeals 
 to the certainty and security afforded by the ex- 
 change of actual value over that given by the 
 exchange of paper for the products of agriculture 
 or commerce ; but they forget that gold and silver 
 are of themselves mere marketable commodities, 
 fluctuating in value like any other, with the addi- 
 tional disadvantage, that they are more limited in 
 quantity, and less susceptible of receiving an inde- 
 finite increase, than are the products of the vege- 
 table and animal kingdoms, and of industry, the
 
 o 
 
 consumpt of which increases so rapidly with the 
 progress of wealth and of civilisation. It is this 
 limited quantity of the precious metals, in propor- 
 tion to the demand for them, that is their greatest 
 defect as a circulating medium ; and the stamping 
 of these metals as coins, and the attaching a species 
 of nominal arbitrary value to them, has had the 
 effect of blinding the great bulk of mankind to 
 the fact that these coins are themselves mere articles 
 of traffic, and has made them suppose that there 
 was some magical virtue or extrinsic value com- 
 municated by the stamping of the head of a sove- 
 reign, or the arms of a republic, upon a piece of 
 metal, which otherwise would have been judged 
 of by the weight of which it was possessed, and 
 the price which that weight bore in the market. 
 Influenced by this delusion, the many never con- 
 ceive that the rise or fall of markets, and the 
 scarcity or abundance of commodities, is much 
 more generally dependent upon the scarcity or 
 abundance of gold, than upon the supply which 
 is, or might be afforded, of the products of the 
 soil, or of industry. 
 
 On the other hand, a paper currency has as yet 
 been found to be attended with still greater and 
 more extensive evils. Such a curency has too 
 frequently turned out, not to be, as it ought, the 
 representative of property possessed by the parties 
 giving circulation to it, but to rest its claims to 
 acceptance on no better foundation than the specu- 
 lative character of persons who, having wrought 
 themselves into credit by the correctness of their 
 at first comparatively limited transactions, have
 
 6 
 
 used that credit for their own profit in an extended 
 circulation, until at last some inaccuracy on their 
 part, or some panic on the part of the public, has 
 given rise to a demand for the conversion of the 
 paper, and discovered how baseless had been the 
 credit on which it rested. 
 
 Founding upon, and influenced by the great and 
 easily apparent evils which have arisen from a 
 Paper Currency, constituted as it has hitherto been 
 in England, and as is before described, an attempt 
 has been made to remedy these evils, by circum- 
 scribing the amount of that currency. This attempt 
 is not judicious, nor can it be effectual to attain 
 the wished-for end. 
 
 There is not a sufficiency of the precious metals 
 to supply the wants of the British nation, nor can 
 such sufficiency be obtained. The last published 
 returns of the Bank of England, show that the 
 specie held by that body is not sufficient to meet 
 much more than half of the deposits made with it, 
 and that its whole circulation rests on the credit 
 of securities held by it. By noticing this fact, it is 
 not for a moment intended to cast a doubt upon 
 the stability of the Bank of England, or the credit 
 of its circulation — quite the contrary. Its assets 
 are believed to be more than sufficient to give 
 ample security for every demand upon it ; but it is 
 intended to deduce from this a foundation for the 
 question of, Is it not possible, and, if possible, is it 
 not proper, to place the whole banking system of 
 the empire on as secure a footing ? That such is 
 possible can easily be demonstrated ; as also, that 
 through this means the country may be put in pos-
 
 session of a safe circulating medium, capable of 
 expanding itself to meet the growing wants and 
 resources, at once of the mother country, and of 
 the most distant colonies — of regulating, turning, 
 and preserving the balance of exchanges in our 
 favour, and of uniting and consolidating the inte- 
 rests of various, and at present conflicting, classes 
 of society. 
 
 With a view to this demonstration, it is neces- 
 sary, at the outset, to consider the elements of 
 which the ivhole circulation of the country is com- 
 posed, and the effect produced by the different 
 parts upon each other. 
 
 That circulation is divided into three parts — 
 the metallic circulation — the circulation of bankers' 
 paper — and the circulation of bills of exchange. 
 
 The materials for the metallic part of this cir- 
 culation being exclusively foreign products, fall to 
 be procured at a great and constant expense ; 
 while, at same time, the fluctuating demand for 
 them in other countries causes frequent and exten- 
 sive exportations, which give rise either to a 
 diminution of the circulation, or to the support of 
 its quantity in the unsafe form of an increased 
 issue of the paper of unstable speculative country 
 bankers, and private bills of exchange. 
 
 When an actual diminution of the circulation 
 takes place to any considerable extent, then the 
 operations of commerce are cramped and narrowed, 
 and thrown exclusively into the hands of, or at 
 least rendered liable to, the absolute control of a 
 few large capitalists, whereby the prosperity and 
 comfort of every class of the community, with the
 
 8 
 
 exception of those few monopolists, is destroyed — 
 an evil which has caused the ruin of every com- 
 mercial state which has yet existed, and which 
 is at the present time largely felt in Britain. It 
 is an evil which always has taken its rise when 
 those states were enjoying a higher degree of 
 prosperity than any to which they had previously 
 attained, bcause it arises from the quantity of the 
 precious metals being insufficient for the purposes 
 of such an extended commerce, and the accumu- 
 lation of large fortunes by members of the mercan- 
 tile class, putting it in the power of those members 
 to monopolize and control this scanty and insuffi- 
 cient supply. This disease is rapidly progressing 
 in the commercial system of Britain, and will, if 
 not checked by an effectual cure, speedily reduce 
 that commerce from the proud and beneficial posi- 
 tion of exercising an active influence upon every 
 class of the community, and being a great means 
 of infusing into those classes who govern the coun- 
 try fresh energy and strength, by the addition of 
 recruits from the most industrious, vigorous, and 
 best informed of the classes beneath them, to acting 
 merely as the means of swelling the already over- 
 grown fortunes of a small body of monopolists, 
 and introducing the lethargic luxury of the few, 
 and the poverty, slavery, and mixed indolence 
 and turbulence of the many. Such is the course 
 Britain is running in the steps of her predecessors 
 in commercial greatness, and yet the community 
 is unconscious of the evil — every voice is raised 
 against any monopoly constituted by the law, but 
 every eye is shut to the greatest and most ruinous
 
 9 
 
 monopoly of all, permitted through the law's im- 
 perfection. In Britain, too, this state of things 
 has been hastened in its progress by the immense 
 accumulation of public debt, which has given rise 
 to a multiplication of money capital wholly un- 
 precedented. The large sums borrowed by the 
 Government were not subtracted from the national 
 stock ; but, on the contrary, being either directly 
 expended within the country, or finding their way 
 back to it, in consequence of the commercial posi- 
 tion which it held during the period of the French 
 Revolutionary War, which was that within which 
 the greater proportion of the public debt was con- 
 tracted, they were only transferred from one set 
 of hands to another, and thus tended while their 
 circulation lasted to increase the national wealth ; 
 but now when that circulation has ceased, the 
 existence of those sums in the double situation of 
 the property of the manufacturer and merchant, 
 and of the fundholder, has given to the monied 
 interest a preponderance to an extent that is inju- 
 rious to the general welfare. 
 
 If, on the other hand, the want of the metallic 
 circulation is partially and temporarily supplied 
 by an additional issue of country bankers' paper, 
 (who, by their present constitution, do not give 
 security to the public,) and of private bills of ex- 
 change, the stagnation is only postponed for a time, 
 and is eventually preceded by a convulsion, as the 
 circulation introduced is not based on real wealth. 
 
 The second branch of the circulation, being bank- 
 ers' paper, constituted in great part as it was and 
 still is in England, is perhaps the most exceptionable
 
 
 
 that could have been permitted to exist. The banks, 
 with the exception of the Bank of England, having 
 been, up to a very recent period, limited in the number 
 of their partners, and the laws as regarded landed 
 and various other descriptions of property, protecting 
 it from attachment for mercantile debts, the bank- 
 ers were in great part men of little capital, or 
 speculative men employing the credit which they 
 acquired as bankers, as much for the purpose of 
 facilitating commercial transactions of their own, as 
 those of other members of the community. This 
 limitation of the number of partners has indeed 
 been done away with, and the laws of landed pro- 
 perty so far altered as to make that description of 
 property belonging to registered bankers liable for 
 their banking debts ; but the law is still imperfect, 
 in particular as regards the purely private consti- 
 tution of mortgages, and in consequence of this, and 
 of the practice of giving forth a prospectus embra- 
 cing a large subscribed capital, on which frequent- 
 ly only a trilling per centage is paid up, the secu- 
 rity of the public has been but little augmented in 
 most instances, and the partners of banking houses 
 are still, almost exclusively, merchants and manu- 
 facturers, who become bankers chiefly with the 
 view of facilitating their own credits and discounts; 
 and thus it may often turn out that the bank has 
 not merely been trading upon no capital, but that 
 its partners have used their influence as such, to 
 procure for their own bills the paper of the bank 
 which they have pushed into circulation, deceiving 
 the public by the appearance of a banking capital, 
 whereas, in reality there only existed a combina-
 
 11 
 
 tion of merchants, circulating a mass of accommoda- 
 tion paper, for their own benefit, under the name 
 of bank notes. 
 
 The paper of the Bank of England certainly 
 stands on a very different footing from that of the 
 country bankers. The bank possesses an actually 
 secured capital, and its issues are liable to the sur- 
 veillance of Government ; but this branch of the 
 circulation also is liable to objections.. It is de- 
 ficient in quantity for the supply of the wants of 
 the country — the check afforded by the surveillance 
 of Government has often lost its efficiency in the 
 opinion of the public, in consequence of transactions 
 betwixt Government and the Bank ; and, in con- 
 sequence of the insufficient amount of the secured 
 circulation of the Bank, it is exposed to the effects 
 of runs or panics, arising out of the improper 
 and unstable constitution of the banking system 
 generally, as paper of all kinds soon partakes of 
 the discredit attachable to any large portion of it. 
 
 The third branch of the circulation, in the shape 
 of bills of exchange, was, in its original concep- 
 tion, and in its proper use, the greatest improve- 
 ment that ever was made in the commercial world. 
 By it, instead of commerce being limited to simple 
 barter, as in its first stage, or the merchant being 
 compelled to carry with him, at great risk and 
 cost, a supply of the precious metals, he was en- 
 abled to pay for the goods which he bought by 
 granting a bill for the amount payable at a place 
 where these metals were abundant, or where, by 
 other transactions, a credit was established upon 
 which he could make his present purchase.
 
 12 
 
 To inland bills the same observation applies, 
 with this difference, that instead of embracing a 
 variety of places in their action, they embrace a 
 variety of time, to enable the purchaser, by the 
 fair operations of his traffic, to discharge the 
 amount of his purchase. So far, therefore, as bills 
 of exchange are based upon the existence of ac- 
 tual property, they are highly beneficial; but when, 
 as is frequently the case, they are concocted with- 
 out value on either side, for the purpose of raising 
 a fund for speculative trading, they require the 
 strictest regulation, which cannot be afforded by 
 direct legislative enactment, but which can be 
 afforded by a proper regulation of the banking sys- 
 tem — by the separation of the characters of banker 
 and merchant, and thereby extending credit based 
 on property, and limiting that resting on specu- 
 lation. 
 
 All paper circulation ought to have the same 
 basis — the same construction as bills of exchange. 
 It ought to be the representative of actual value, 
 although that value may be in a different form 
 from gold or silver ; and it is in this different form 
 of value that the utility of a properly constituted 
 banking system, and paper currency resting upon 
 it, consists. But, with some few exceptions, in 
 what situation has the banking system, and the 
 great branch of the circulating medium arising out 
 of it, not merely in England, but in the world at 
 large, been left ? It has been left to rest, not upon 
 a credit established upon the possession of actual 
 property, but upon a credit raised by the manage- 
 ment of a few clever and active men, who, pos-
 
 13 
 
 sessed of a little capital, at first employed it in 
 giving discounts and accommodations to their 
 neighbours, and who, gradually taking the name 
 and stjde of bankers, induced individuals to deposit 
 their money with them, on which money they 
 trafficked as bankers, as merchants, or as any-thing 
 else they pleased, to an extent far beyond their 
 own capital, thus exhibiting the spectacle of men, 
 destitute of property, in the words of the late 
 Lord Liverpool, " usurping one of the greatest 
 prerogatives of the Crown," and circulating — not 
 deteriorated coin, bad as that is, but paper worth, 
 in many instances, little more than its intrinsic 
 value. 
 
 This evil is so generally admitted, that it is un- 
 necessary to pursue the delineation of it farther, 
 but the question of, How is it to be remedied ? is 
 what now remains for consideration. 
 
 To this question the answer is, by rendering 
 available and calling into action the fixed property 
 of the country, as the basis of a safe and extensive 
 circulating medium, at once metallic and paper. 
 
 As has been already observed, the merchant is 
 permitted to sell his goods, and take for them, 
 perishable as they are, a representative in the shape 
 of a bill of exchange, by the conversion or trans- 
 mission of which, from hand to hand, he has the 
 constant and active use of his capital, while that 
 capital itself is in fact locked up, and awaits the 
 fluctuations of markets for its realization ; but that 
 large, valuable, and easily secured portion of 
 national wealth, the landed property of England, 
 has hitherto been shut out from acquiring the cha-
 
 14 
 
 racter of a valuable — it may almost be said an in- 
 valuable — element of commerce, by becoming a part 
 of the active, as well as fixed capital of the coun- 
 try, by using itself for its own improvement, and 
 for the firm, steady, and extensive support of those 
 manufactures, and that commerce, which are so 
 essential to its prosperity. By this is meant, in 
 few words, that land, and every other kind of pro- 
 perty, should be subjected to the laws of commerce, 
 and by an alteration and simplification of the laws 
 regarding it, made capable of being cheaply and 
 easily rendered liable for all the debts of its pro- 
 prietor, although not existing in the shape of mort- 
 gage, or in any other manner capable at present 
 of effecting such descriptions of property ; and that 
 the capital of every Banking Company, issuing 
 notes, should be required to be publicly declared, 
 and to be fully paid up, either in money, land, 
 transfer of mortgage, stock in the public funds, or 
 otherwise. 
 
 Such an enactment would unquestionably have 
 the effect of founding the whole circulation of the 
 country on actual property, and giving to it abso- 
 lute security; for the objection that land — being not 
 immediately convertible in all circumstances — is not 
 a proper basis of circulation, will be obviated by 
 means to be afterwards stated, whereby it may be 
 made fully available for such a purpose. 
 
 The premises on which to build a system for a 
 safe and expansive circulation being thus laid 
 down, it remains to state the means by which such 
 may be established. These means are, 
 
 1. The rendering land, stock in the public
 
 15 
 
 funds, and all other property presently exempt 
 from or difficult of attachment for mercantile debts, 
 liable to such attachment by a cheap and easy pro- 
 cess, and the establishment of a public register of 
 the names of the partners of banking houses issuing 
 notes, with the amount of stock held by each 
 respectively, under a provision that such entry shall 
 enforce a liability for its amount against the pro- 
 perty of the party, equivalent to that afforded by 
 a completed mortgage ; and shall be transmissible 
 as a mortgage held by the bank, in the same man- 
 ner as is provided for in the 10th enactment in 
 regard to a general record of mortgages ; and 
 where such property is in the public funds, or in 
 any other situation presently transferable by 
 assignment, the entry in the public register should 
 be completed by intimation, or otherwise, in the 
 same way as is presently done in cases of assign- 
 ment. 
 
 2. The allowing the partners of banking com- 
 panies either to pay or contribute their share of 
 the capital stock in money, or by giving right of 
 mortgage over land, or other property or stock, in 
 the manner before provided for, the value where 
 such payment is not made in money, being ascer- 
 tained before courts or commissioners empowered 
 for this purpose ; and the security of the public that 
 the valuation shall be fairly made, should be en- 
 forced by rendering the whole property (as well 
 that not subscribed as bank capital, as that which 
 is) of each partner liable for the bank debts, which 
 would give to each of those partners a strong inte- 
 rest to see that the stock of his copartners was
 
 16 
 
 actually fully paid for ; the capital stock being 
 always paid up in full, and the amount publicly 
 declared at the time of the formation of the com- 
 pany, the distinction of subscribed and paid up 
 capital being abolished. 
 
 3. That on a transfer of stock being made, it 
 should be effected by simply altering the name in 
 the bank books and public register. 
 
 4. That one or more banks, in addition to the 
 Bank of England, (in order to place that body 
 under the control of competition with another 
 body, or bodies, of equal responsibility,) should be 
 established in London, with power to issue notes, 
 which should be a legal tender to any amount 
 every where, excepting at the banks themselves, 
 where gold and silver should alone be legal tenders. 
 
 5. That the notes, as well those of the metro- 
 politan banks as of the others, should bear a stamp 
 duty in proportion to their various amounts, 
 whereby the periodical issue of each banking 
 house would be ascertained, and the amount of 
 such issue should be certified by the Commissioners 
 of Stamps to the Treasury ; the notes being at 
 same time only reissuable within a certain limited 
 period from their date. 
 
 6. That each bank issuing notes should transmit 
 to the Treasury an annual balance-sheet, showing 
 their issues, liabilities, and assets, attested, upon 
 oath, by the manager and a quorum of the direc- 
 tors, after the same had been submitted to a full 
 meeting of the partners. 
 
 7. That these balances should be accessible to the 
 members of the Treasury Board, and to a standing 
 committee of each of the Houses of Parliament.
 
 17 
 
 8. That the parties to whom such balances were 
 so rendered accessible, should be bound to secrecy. 
 
 9. Joint Stock Banks, and all banking compa- 
 nies, and the partners of such banking companies 
 as are constituted on the footing of an ordinary 
 copartnership, issuing notes, should be prohibited 
 from being merchants, manufacturers, or traffickers 
 of any description. 
 
 10. A public register of mortgages should be 
 established, and, on the expiry of the time when 
 a mortgage can be called up, it should be in the 
 power of the mortgagee, in the event of the mort- 
 gager not paying the amount, to transfer the mort- 
 gage from hand to hand, as he could do stock in 
 the public funds, by indorsation, duly recorded in 
 the register, and without any other form of law. 
 
 Such are the provisions by which it appears 
 possible to effect the desirable end of establishing 
 a currency and banking system of the most secure 
 description, capable of expanding with the grow- 
 ing prosperity of the country, and of being in itself 
 a principal element in that prosperity, by imparting 
 an efficient active power to the fixed capital of the 
 nation. 
 
 It will now be proper to go over these different 
 provisions, and point out the effects which it is 
 expected each would produce. 
 
 The first enactment would throw into the scale 
 of active commerce some of the greatest and most 
 valuable portions of national wealth, which are 
 presently altogether or nearly shut out from it. 
 So far as regards land, this has long been the case 
 in Scotland, and is now the case in several of the 
 
 B
 
 18 
 
 
 continental states. In the first-mentioned country, 
 it is the true cause of the stability of its banking 
 system and paper currency, which has been erro- 
 neously ascribed in England to some mere superi- 
 ority of management in that system. The very 
 issuing of notes by bankers supposes the want of 
 an extensive active capital, (or, in other words, of 
 gold and silver,) but the possession of an ample 
 guarantee capital ; and such was the situation (as 
 regards the latter species of capital) in which the 
 laws of landed property placed Scotland. That 
 country, up to a very recent period, possessed 
 almost no active capital, and still possesses compara- 
 tively little, but her landholders, and other posses- 
 sors of her fixed capital, formed themselves into 
 banking companies ; and on the credit of their land, 
 the notes which they issued were readily received 
 by the people, and thus was that land actually 
 doubled in value for the public benefit, by being 
 converted into an active as well as a fixed capi- 
 tal ; thus was it made the instrument of its own 
 improvement, and of the introduction and support 
 of commerce and manufactures. The same system 
 still prevails in Scotland, where the characters of 
 banker and merchant are, and have been kept 
 distinct ; and the results of experience show how 
 secure that system has been in comparison to that 
 adopted in the southern part of the island. Even 
 this system, however, it is thought would be much 
 strengthened by some of the enactments at present 
 proposed, particularly by the provision for the easy 
 transmission of mortgages, which would afford 
 great additional facilities for the employment of
 
 19 
 
 bank capital and deposits on secure investments, 
 free from the risk of any sudden fluctuations. 
 
 The merit of the Scotch system is, that in con- 
 sequence of the laws of property it affords a much 
 superior security from the individual estates of the 
 partners, beyond the bank capital, to that which 
 the law of England does ; but in Scotland also the 
 evil distinction betwixt subscribed and paid up 
 capital has obtained in the constitution of some of 
 its banking establishments ; and it is at present 
 proposed that a large and apparently sufficient 
 capital should not only be subscribed, but actually 
 be fully paid up ; and as this cannot be done to the 
 extent required in money, it is proposed that it 
 should be done in land or other property, by the 
 simple means of proof of property, and public en- 
 rolment and register, provided for in the latter 
 part of this first enactment, and as regulated by 
 the second and third enactments. 
 
 To the allowing payment of stock by mortgage 
 of land, or other property, it may be objected that 
 such is not always immediately convertible, and 
 therefore does not afford the means of meeting such 
 demands as sudden runs or panics cause to be 
 made upon bankers. But do not such panics arise 
 from a doubt of the security of the bank; and would 
 they not be obviated or prevented by a knowledge 
 that that security was sufficient ? In addition to 
 this, is it not a fact that the capital stocks of, and 
 deposits with, the most established and secure 
 banks are, and must be invested in securities on 
 land and otherwise, the very trade of a banker 
 consisting in lending ? And if so, why should not 
 
 B 2
 
 20 
 
 the holders of such securities, or those capable of 
 granting them, be allowed at once to impute them 
 in payment of bank stock, (or, in other words, to 
 constitute them as part of it,) instead of being- 
 first compelled to pay for that stock in money, in 
 order that that very money may be invested in 
 similar securities ? 
 
 In so far as mortgages on land are concerned, 
 it is true they are only convertible at present after 
 tedious delays and at great expense, but this would 
 be fully and completely obviated by the enact- 
 ment No. 10, whereby they would become as 
 marketable, and as easily transmissible, as stock 
 in the public funds ; and, in consequence, besides 
 large advantages to other members of the com- 
 munity, the landholder would have the greatest 
 facility afforded to the raising of money, on the 
 easiest terms, for the improvement of his estate, 
 as the security of instantly realizing his capital, 
 which would be possessed by the mortgagee, would 
 stimulate whole classes, who are at present pre- 
 cluded from transacting in such securities, to engage 
 in them. 
 
 No doubt that very enactment is liable, and 
 might be expected to meet, from recent example, 
 violent opposition, as that opposition has been 
 offered to the attempt at establishing a public regis- 
 ter of mortgages in England ; but if, as is univer- 
 sally admitted, it is of the highest importance to 
 define the rights of property, and to prevent there- 
 by the prostitution of the law to the purposes of 
 spoliation, for which the sword was used in more 
 unlettered times, it is difficult to conceive on what
 
 21 
 
 the opponents of such a register can fairly rest 
 their arguments. The property in moveables is, 
 in the greater number of instances, held to be evi- 
 denced by possession, and, as the possession of real 
 property remains to the mortgager, and the know- 
 ledge and reputation of such possession is liable to 
 be much more extensively diffused than is that of 
 moveables, it is impossible but that the absence of 
 a publication of mortgages must be frequently pro- 
 ductive of the raising of false credits, seeing that 
 the possessor of an estate may not have a single 
 farthing's worth of property in it. The supporters 
 of the private constitution of mortgages cannot, 
 and need not attempt to gloss this over ; and it is 
 not a little surprising to have trivial objections of 
 imaginary inconveniences, and trifling expenses, 
 opposed to what positive justice and obvious com- 
 mercial utility require. But, to remove every ob- 
 jection, it might be made optional to the proprietor 
 of a property, or the parties to a mortgage, to make 
 it stand on a recorded title or not, with this proviso, 
 that a property or mortgage, which should once 
 be made to rest on a recorded title, should for ever 
 remain in that situation. Were this to be done, 
 there is not a doubt that within a very short 
 period of time, the security and efficiency of re- 
 corded titles would become so apparent, that 
 nearly the whole property in the country would 
 come to be held upon them. 
 
 The fourth enactment, in providing for the estab- 
 lishment of more banks of issue in London than 
 the Bank of England, is intended, by the mutual 
 exchanges which must take place amongst them.
 
 22 
 
 to establish that efficient mercantile check which 
 the necessity of supporting credit with a rival or 
 copartner, in a joint adventure, effects. This check 
 is the more necessary to be established within 
 London, as it is proposed to give to the notes of 
 its bankers the privilege of being a legal tender 
 in the provinces. The reason for giving them this 
 privilege is, that by thus establishing one great 
 centre of domestic exchange, the constant expense 
 and trouble of transmitting specie to the provinces 
 would be avoided, and the consequent accumula- 
 tion of the precious metals which this very cir- 
 cumstance, combined with the immense wealth of 
 the metropolis, and the position which it holds in 
 regard to foreign exchanges would cause, would 
 insure a sufficient supply for the purposes of ex- 
 changes, both foreign and domestic, as well as for 
 the general uses of commerce. 
 
 Should any objection, however, exist as to the 
 multiplying of banks of issue in London, although 
 it is thought that this would prevent the same 
 perfection of security in the banking system which 
 would arise out of their establishment, yet it 
 would not afford any sufficient objection against the 
 other parts of the system now proposed ; and if the 
 exclusive privilege of the Bank of England is to 
 be continued, the publication of its balances pre- 
 sently existing should also be continued. 
 
 The 5th, 6th, 7th, and 8th enactments, it is 
 thought, would provide a very efficient means of 
 obtaining accurate information, and of providing 
 measures of regulation and control in the hands 
 of Government, in addition to the mercantile check
 
 of competition, and consequent necessity on the 
 part of the bankers of preserving credit with each 
 other. The universal imposition of a stamp duty 
 upon bank notes, and the information which can 
 thereby be obtained from the Stamp-Office, com- 
 bined with the enforcement of the exhibition of 
 annual balances, first to the partners of the banks 
 themselves, and then to the Treasury and com- 
 mittees of Parliament, seem to afford as perfect a 
 security to the public as can well be given, particu- 
 larly when taken in connexion with the 9th 
 enactment, prohibiting the union of the characters 
 of banker and merchant. 
 
 These securities may be thought, at first sight, 
 by the advocates of free commerce to be infringe- 
 ments upon that freedom, and liable to objection ; 
 but it must be remembered that the trade of bank- 
 ing, or at least that part of it which consists in the 
 issuing of notes, is one of a very particular kind, 
 and that the Bank of England is already sub- 
 jected to a surveillance of a similar description. 
 While the ordinary bill of exchange has its fixed 
 and definite currency in point of time, at the ex- 
 piry of which the capital which it represents must 
 be produced for its extinction, the banker, for a 
 period, the only limit of which is the continuance 
 of his solvency and credit, continues to re-issue the 
 same or similar notes, and thus maintains not a 
 temporary, but a perpetual circulation of exchange, 
 based, in a great measure, upon a fixed guarantee 
 capital, not liable to be called upon, unless the 
 public doubt its sufficiency, or are dissatisfied with 
 its management. In such circumstances, where
 
 24 
 
 the public actually enter into a sort of joint ad- 
 venture with the banker, for their mutual benefit, 
 the management of which is solely entrusted to 
 him, it seems reasonable, and is necessary that they, 
 or rather those who hold the legislative and exe- 
 cutive powers of the state, should be furnished with 
 a knowledge of that management, in order that 
 they may see if it is conducted for the purposes of 
 their welfare. At same time the profits of the 
 banker would be so much increased, and his risks 
 so much diminished by the credit, and consequent 
 circulation of his notes, and the universal stability 
 of the system, that while the checks proposed, 
 combined with the necessity for the existence and 
 actual advance of a large capital, would drive the 
 speculative and unsubstantial of the class from the 
 field, there cannot be a doubt that their place 
 would be much more amply supplied by men of 
 real property. And this is not all. By the infor- 
 mation conveyed to the Treasury and the Parlia- 
 ment, and the explanations which these bodies 
 would have it in their power to obtain of the causes 
 and effects of every fluctuation, not merely amongst 
 the banking interest itself, but amongst every other 
 class of the community, as bankers must necessarily 
 be conversant with, and affected by all those fluc- 
 tuations, Government would be put in possession 
 of a more correct and extensive knowledge of the 
 situation of every class of the people, and of every 
 district of the empire, than could be obtained by 
 any other means. The importance of such a know- 
 ledge, for the purposes of legislation and adminis-
 
 25 
 
 tration, needs only to be mentioned to be under- 
 stood, and does not require to be commented upon. 
 
 Having now, it is thought, fully demonstrated 
 the practicability, importance, and means of estab- 
 lishing throughout Great Britain a currency, com- 
 bining all the advantages of gold and of paper, and 
 only limited in quantity by the wants of the com- 
 munity, it now requires, in the next place, to be 
 considered how this circulation is capable of being 
 extended to the colonies. 
 
 To do this by the ordinary institution of branch 
 banks would obviously be very unsafe and im- 
 proper, in consequence of the distance, and conse- 
 quent impossibility of applying to such branches 
 the efficient control either of the parent institution, 
 or of those public checks proposed to be esta- 
 blished; but it could be done by the establishment 
 of responsible agents, who should be entrusted 
 with certain amounts of the bank notes, and em- 
 powered to advance such notes upon security of 
 land and buildings, or deposit of goods, and upon 
 the discount or purchase of bills upon Europe ; 
 such notes so advanced to be payable by the 
 agent, on demand, by bills on London. By this 
 mode, as the notes would have the ample security 
 of British property, the colonies would be put in 
 possession of a safe medium of internal circula- 
 tion, expanding with their wants and the growth 
 of their commerce. The proprietor of the soil, after 
 he had expended the capital of which he was pos- 
 sessed on the improvement of one part of his 
 estate, could, on the security of that portion, 
 readily obtain the means of extending his culti-
 
 26 
 
 vation, without waiting the gradual rise of fresh 
 capital sufficient for the purpose, from the periodi- 
 cal profits arising from his previous expenditure 
 and industry ; and the merchant would have it 
 in his power to command advances upon his 
 goods and his bills for the purposes of internal 
 trade, while at same time he could procure for the 
 payments in notes which he would receive in the 
 course of that trade, bills upon London to meet 
 his payments in Europe or other places. 
 
 The mutual advantages derivable by the mother 
 country and the colonies, from the institution of 
 such a system, would be very great. The former 
 would derive at once the direct profit upon her 
 banking transactions, and the equally sure, though 
 more indirect one, arising from the rapid and 
 secure improvement of the colonies ; the latter 
 would be put in possession of the means of making 
 such secure and rapid advance in prosperity 
 through the existence of a safe and abundant 
 currency. 
 
 Such reciprocal benefits would materially tend 
 to strengthen and perpetuate union ; and if it 
 be objected to the detail of these benefits, that the 
 British bank notes would necessarily circulate at 
 a discount in consequence of not being jmyable 
 in specie, excepting at the distance of the mother 
 country, the answer is afforded by the general 
 high rate of interest in the colonies, compared to 
 that at which these notes could be issued, and by 
 the influence which their convertibility into 
 bankers' bills on London would give them in the 
 exchanges — two circumstances which would more
 
 97 
 
 than compensate for any nominal discount at 
 which they might occasionally pass current. 
 
 The question of the extension of the benefits of 
 the mother country to the colonies being thus 
 met, the influence which the proposed system of 
 currency would have upon foreign exchanges, 
 comes now to be noticed. 
 
 These exchanges, it is well known, resolve them- 
 selves simply into a matter of debit and credit 
 betwixt one place and another, which necessarily 
 arises from the one party requiring more of the 
 productions or possessions of the other, than are 
 wanted in return. In influencing this, on the 
 one side or the other, therefore, the importance of 
 the demand for the precious metals must be appa- 
 rent ; and, as the establishment of the proposed 
 system of currency and banking in Britain, would 
 lessen the necessity and consequent demand for 
 these metals there, and render that demand more 
 steady, and less liable to fluctuations, the turning 
 and preserving the balance of many exchanges in 
 our favour, which are, or maybe, at present placed 
 in the opposite position, would take place, and 
 thus insure to the country the possession of a larger 
 share of the profits of her industry and commerce. 
 This very circumstance of its tendency to lessen 
 the quantity of the precious metals in the country, 
 will cause many to think unfavourably of the pro- 
 posed system; but the answer is easy. These metals 
 are in themselves no more worth than land or ships; 
 they can but buy the one or the other. The internal 
 currency would be supplied, to the satisfaction of the
 
 28 
 
 public, without them, (for be it remembered they 
 would still be the sole standard of conversion of the 
 bank notes,) and it would be in consequence of this 
 want of demand for them, arising out of this satis- 
 faction, that their quantity would be diminished. In 
 short, the country would then be placed in a 
 situation to have all it wanted of them, which is 
 all that is required of any commodity, while at 
 present it cannot get enough to supply its wants. 
 
 As to the foreign trade of the country, it is 
 well known to those versant in the principles of 
 exchanges, that it is not so much possession, as the 
 right to possess, that is the soul of these operations, 
 and that gold at Hamburgh is more available for 
 the purposes of British commerce, if Hamburgh is in- 
 debted to England, than if it were lying at London. 
 
 On this subject the public are apt to be misled 
 by the exportations of bullion and of specie; fortius 
 arises much more frequently from the superior de- 
 mand for these things in other countries, caused 
 by some shock which credit has received there, (as 
 recently in the United States of America,) than 
 from any claim of debt which they have on the 
 country from which the exportation takes place, 
 and this branch of trade could be as easily and as 
 profitably managed by British merchants from 
 foreign as from home ports, and that too, without 
 creating a diminution in domestic circulation. 
 
 Even when the exchanges at particular places, 
 or even pretty generally, are against one country, 
 or that country requires to make large remittances 
 abroad, as in time of war, it is known to those ac-
 
 29 
 
 quainted with the management of circulations of 
 exchange amongst the commercial capitals of 
 Europe, how easily such difficulties can be ob- 
 viated. 
 
 After this it falls to be considered, how far the 
 system sought to be introduced is calculated to 
 unite and consolidate the interests of various, and 
 presently conflicting, classes of society. Its influ- 
 ence in this important point of view, could not 
 fail to be immense. The landholder and the 
 merchant have been sought to be dissevered, and 
 their interests to seem different and opposed to 
 each other ; but were they placed in the situation 
 of giving to each other not indirect, (which they 
 have always done, and must always do,) but di- 
 rect and immediate support and assistance — were 
 they brought to communicate to each other, on a 
 footing of undeniable common advantage, recipro- 
 cal profits — in short, were they constituted banker 
 and trader, what advantages must not be the 
 result ? Must not each acquire an intimate know- 
 ledge of the circumstances, wants, and wishes of 
 the other, and must not an identity of wishes (as 
 there is already an identity of interests) speedily 
 arise ? 
 
 To descend from the landholder and extensive 
 merchant, to the middle and lower classes of 
 society, who are more than all affected by an abun- 
 dant or scanty circulating medium, as the moment 
 that that medium becomes scarce they are borne 
 down by the great capitalists, who gather all with- 
 in their own stupendous grasp, and reduced from
 
 30 
 
 activity and industry, to torpid inactivity, despair, 
 and vice, what would be their situation under the 
 proposed change ? The monopoly of an insufficient 
 currency by the few large capitalists being broken 
 up, we would no longer hear the daily expression 
 of surprise, that although immense wealth was 
 undoubtedly in the country, yet the farmer, the 
 manufacturer, the tradesman, and the labourer, 
 could not earn their daily bread, or advance them* 
 selves by honest industry ; but, on the contrary, 
 we would see the ready support of wealth ex- 
 tended to industry, and industry raise itself to 
 wealth. Such has been the case in the onward 
 course of Britain, and such it may still be, unless 
 her people perversely resolve on their own ruin. 
 
 Finally, the introduction of a system wherein 
 land would be the chief element in the guarantee 
 capital of banks, would tend greatly to give per- 
 manency to the ascendency of British commerce. 
 Such a capital cannot be removed as others can. 
 It is fixed and permanent. In the use of it Bri- 
 tain cannot be rivalled by Holland, where land 
 bears so little proportion to the floating capital 
 of the country, and Dutch capital would not un- 
 frequently be introduced to raise the value of 
 British mortgages, and increase the stock of na- 
 tional wealth. 
 
 If Holland cannot rival Britain in this depart- 
 ment, as little can France, where the non-existence 
 of the law of primogeniture has destroyed the 
 class of great, and even of considerable land- 
 holders.
 
 31 
 
 If the introduction of a system of currency, the 
 basis of which should be land, would be beneficial 
 to England, a single glance at the present situa- 
 tion of Ireland with her deficient circulation, and 
 vast but unimproved natural resources, capable in 
 themselves of being at once the source and object 
 of improvement, must lead to a conviction of its 
 peculiar applicability to that country ; and should 
 it be opposed in both countries, through the influ- 
 ence of the monied interest, and of the banks of 
 England and of Ireland, the field presented to 
 Scotland is at once wide and beneficial. That 
 country already possesses the best constituted 
 banking system in existence; and by the introduc- 
 tion of a record of transfers, to which mortgages 
 could be transferred after they had been called 
 up, and thereafter pass from hand to hand by 
 indorsation, that system would be perfected, and 
 Scotland, from having been at one time the poorest 
 portion of the empire, might become the chief 
 banker of the whole, and diffuse wealth and pros- 
 perity not only over her own surface, even in the 
 remotest districts of her Highlands and Islands, 
 where agriculture still languishes for want of capi- 
 tal, but over the colonies also, from which latter 
 source, hertradeatoncewiththesecolonies, and with 
 foreign countries, could be increased to an immense 
 extent ; for, by the establishment of agents in Lon- 
 don, Amsterdam, Hamburgh, and the other great 
 commercial cities, she could, through the employ- 
 ment of her perfectly secured bank capital, act as 
 a centre of exchange with little less effect than 
 London itself.
 
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