The following is the report of the Select Committee of the House of Commons, made in 1826, respecting the abolition in Ireland of notes under £5:-
"With respect to the circulation of Ireland, the inquiries of your Committee have been less extensive than those which they have instituted with respect to Scotland.
"The first law in Ireland which restrained the negotiation of promissory notes, was an Act passed in the Irish Parliament in the year 1799.
"The preamble recites that various notes, bills of exchange, and drafts for money, have been for some time past circulated in lieu of cash, to the great prejudice of trade and public credit; and that many of such notes are made payable under certain terms, with which the poorer classes of manufacturers and others cannot comply, unless by submitting to great extortion and abuse. It adds, that the issue of such notes has very much tended to increase the pernicious crime of forgery; and the Act proceeds to apply to notes between the value of £5 and 20s. similar restrictions to those which had been applied to such notes issued in England by the Act which passed in the year 1777. It permits, however, during the suspension of cash payments by the Bank of Ireland, the issue of bank-post bills, bills of exchange, and drafts under certain regulations, for any sums not less than three guineas. This Act did not extend to the Bank of Ireland.
"In 1805, this and some other Acts which had passed in the interim relating to the issue of small notes, were repealed; and notes under 20s., which had been previously admitted under certain regulations by the Act of 1799, were declared void.
"There is at present no law in force imposing any limitation to the period for which notes for a sum not less than 20s. may be issued in Ireland.
"A tolerably correct estimate of the amount of promissory notes, above and below £5, circulating in Ireland, may be formed from the subjoined returns made by the Bank of Ireland, and by other banks at present established in that country.
"Bank of Ireland notes.-An account of the average amount of the Bank of Ireland notes of £5 and upwards (including bank-post bills) for the years 1820,1821, 1822, 1823, 1824, and 1825 :-
"Notes and post-bills of £5 and upwards ......
"An account of the average amount of the Bank of Ireland notes under the value of £5 (including bank-post bills) for the years 1820, 1821, 1822, 1823, 1824, and 1825 :-
"Notes and post-bills under the value of £5 ......
"It appears from the evidence that a practice prevails in Ireland of issuing notes for the payment of sums between one and two pounds, for three guineas, and other fractional sums.
"Your Committee see no public advantage arising out of this practice, and they are of opinion that it ought to be discontinued, as it tends to dispense with the silver coin, and practically to exclude it from circulation.1
"Your Committee hesitate, in the present imperfect state of their information, to pronounce a decisive opinion upon the general measures which it may be fitting to adopt with respect to the paper currency of Ireland.
"Although they are inclined to think that it would not be advisable to take any immediate step for the purpose of preventing the issue of small notes in Ireland, their impression undoubtedly is, that a metallic currency ought ultimately to be the basis of the circulation in that country.
"It will probably be deemed advisable to fix a definite, though not an early period, at which the circulation in Ireland of all notes below £5 shall cease; and it is deserving of consideration, whether measures might not be adopted in the interim for the purpose of insuring such a final result by gradual, though cautious, advances towards it."
The following is a summary of the evidence given before the Committees of the two Houses of Parliament, as to the effect of abolishing the small note circulation in Ireland :-
1. Small currency is necessary to carry on the commercial transactions of the country.
John Acheson Smyth, Esq., Agent for the Belfast Bank at Londonderry.
"In Lancashire, I believe all the raw materials are bought in large parcels, and by bills. In Ireland, the raw material is all bought in small parcels, and all in small notes. In Lancashire, there is only cash wanted to pay the workmen, but we want it both to pay the workmen and to buy the raw material. The provision and grain that we send to England are also bought in small notes, and we are reimbursed by drawing bills for our shipments." l
1 The Act 8 & 9 Vict. c. 37 (1845) prohibits under penalties the issue of notes for fractional parts of a pound.
Pierce Mahony, Esq., Solicitor to the Provincial Bank of Ireland.
"If the banks were prevented issuing notes under the amount of .£5, would any inconveniences arise in conducting the trade of the south of Ireland?-The trade of Ireland generally, and especially in the south of Ireland, would be greatly inconvenienced, and the growth of manufactures would be decidedly checked, if not destroyed, by such a measure. From the great subdivision of land in Ireland, and particularly in the south and west (where the population is almost exclusively agricultural), the produce is disposed of in small portions, scarcely ever representing £5, and almost universally under that amount. I am of opinion that the withdrawal of all notes under that amount would have the effect of curtailing the accommodation the banks now afford to the public to a ruinous extent, and that the trade of the country under such circumstances would not afford profitable employment for banking capital to any extent; and, therefore, I should anticipate the withdrawal of such establishments, except, perhaps, at Cork and Belfast. In the south and west of Ireland, from the nature of the provision and corn trade, the chief demand for notes or for gold commences in October, and continues until March, when that trade is nearly over for the season. From March until October the butter trade is almost the only one in the south and west of Ireland; and as that trade would not employ all the capital that is required in the winter season, the effect would be, if sovereigns were substituted for small notes, that the extra supply required for the corn, beef, and pork trade, must remain idle in the banker's chest, or be remitted at great risk and expense for employment elsewhere during the summer and autumn.