§ House in a Committee of Supply.
§ The Chancellor of the Exchequermoved as a resolution, "That a sum of 2,000,000l. be granted in aid of her Majesty for the service of the current year."
§ Mr. Herriessaid, he wished to lake that opportunity of calling the attention of the committee to an irregularity which had oc-cured in the financial accounts of the last year. The committee would recollect that the budget was not brought forward until a late period of the session, and not until after much remonstrance, inquiry, and entreaty. It was not brought forward until the 16th of July, and that was a much la- 1274 ter period than usual, for making the financial statement. It would also be in the recollection of the committee, that in about a month after the budget, to the surprise of all persons acquainted with such matters it being supposed that with the budget the financial statement of the year closed, a very considerable financial operation was announced by the then Chancellor of the Exchequer—an operation for the funding of no less than four millions of Exchequer bills. He at the time observed that this was far from a convenient course to pursue, and the more especially as no circumstance had occured between the budget and the new operation to justify so sudden a change on the part of the Government. If, he said, the Chancellor of the Exchequer had been aware of any particular circumstance which made such a proceeding necessary he ought to have stated it at the time he made his financial statement. But he only adverted to this for the purpose of pointing out an irregularity in the public accounts, which had been the consequence of this unusual mode of proceeding. The irregularity of which he particularly required an explanation was this:—The House was aware that it was the practice of the Treasury, or, rather the Chancellor of the Exchequer for the time being, to make provision in each year in the Committee of Supply for the amount of Exchequer Bills outstanding and intended to be carried on; and then to take a vote in ways and means for a like amount of new Exchequer Bills to be created, in order to discharge them. The amount so taken in supply and ways and means last year was 24,000,000l.: but the late Chancellor of the Exchequer had proposed 25,000,000l. of Exchequer-bills, the odd million being found necessary to cover a deficiency to that amount in the income of the year, and these were included in the Appropriation Bill. After this came the plan of funding the 4,000,000l. of Exchequer bills, which, as it appeared to him, in the absence of any precise explanation of the subject, by cancelling 4,000,000l. of the 24,000,000l. so previously provided for, rendered the vote in ways and means by so much larger than it ought to have been. There was, in fact, a double provision made for these 4,000,000l. of Exchequer Bills outstanding; and he was at a loss to know how it would be made to appear correctly in the public accounts of the year. He thought this matter required explanation, and he hoped to hear it explained by the right hon. Gentleman. For aught he yet 1275 knew, the vote then before the Committee might be a part of the sum to which he had referred. But he waited for the right hon. Gentleman's explanation.
§ The Chancellor of the Exchequersaid, he had better state at once to the Committee, that he had not been aware of the point to which the right hon. Gentleman referred, not having looked sufficiently into the matter. The arrangement alluded to was one which had been made by his noble Friend who had preceded him in office, and under such circumstances, he thought it would be more satisfactory if he were to defer his explanations to some Supply night after he had made the necessary and proper inquiries on the subject.
§ Mr. Humewished to ask whether, during the last year, a considerable amount of Exchequer bills, the deposits of the savings' banks had not been funded? He understood that from this source, three millions had been added to the funded debt of the country without the knowledge of Parliament, and therefore he should be glad to know if any such operation as he had described, had taken place during the last year.
§ The Chancellor of the Exchequersaid there had, but that he was not prepared to state the exact amount.
§ Mr. Humecould not help thinking, that such a proceeding was most irregular, and the House would fail in their duty, if they did not appoint a committee of inquiry on the subject. He called the attention of the House to a similar matter three years ago, and then stated, that no instance had ever before occurred, of a Chancellor of the Exchequer adding to the funded debt without the knowledge of Parliament. He believed, however, that the bill which authorised this proceeding, was brought in by the right hon. Gentleman the Member for Harwich, and he was, therefore, glad to find that the right hon. Gentleman now disapproved of it. He certainly should reserve to himself the consideration as to how far he would be justified on some future occasion, in moving for a committee of inquiry on this subject.
§ Mr. Herriessaid, that the bill referred to by the hon. Member for Kilkenny, was passed while his right hon. Friend the Member for Cambridge University, held the office of Chancellor of the Exchequer. He entirely agreed with the hon. Member in thinking, that Parliament ought very narrowly to watch the operation of that 1276 measure. In reference also to what had fallen from the hon. Member on the subject of savings' banks, he must say that he looked with some alarm on the increase of that species of stock, which was payable on the demand of the holders, and not at the option of the Government. Should it ever occur, though he was far from thinking it probable, that there arose a panic among those classes who were in the habit of making use of the savings' banks, so that they made a sudden call for their deposits, the financial difficulty of the period, should there exist any, would be very materially increased by the circumstance of so large an amount of the public debt being liable to be suddenly called for from the Government. When the question came on for general discussion, he would also have to complain that the Treasury had been backward in making the transfer from unfunded to funded debt, at periods when such transfers might have been made with more benefit to the public than at others.
§ The Chancellor of the Exchequersaid, the right hon. Gentleman had undoubtedly raised a point of great difficulty, and one upon which it was anything but agreeable to him at that moment to enter. It appeared to him, that difficulty was likely to arise from their dealing with the money of the savings' banks. He was not precisely aware of the effect which had been produced by the conversion of Exchequer bills into stock, but he believed it had occasioned a considerable diminution in the amount of Exchequer bills. No doubt the facilities given to savings' banks, originated in the best motives, but, then, it was quite true, as had been stated, that great inconvenience was likely to arise from having such large sums demandable. The consequences of the operations alluded to, were a diminution of the unfunded debt, and from a document which he held in his hand, he could state the result of the last two years. At the beginning of 1839, the amount of the unfunded debt was 29,974,000l., and in January, 1840, it was only 20,688,000l., so that there had been a reduction of nine millions of Exchequer bills, or one million in three. As, however, he would have other opportunities of entering more at large into this subject, he would reserve what further he had to say, for some supply night.
§ Mr. Humesaid, he was pleased to hear the observations of the right hon. Gentle- 1277 man the Member for Harwich, in relation to the amount of deposits of the savings' banks, which had been so improperly dealt with. He had brought forward a resolution on this subject, but although he had shown its magnitude and importance, and stated how far it would operate to affect the public credit, with one or two exceptions, he could obtain support from neither side of the House. The public credit ought not to be subject to such risks as it was exposed to during the last twelve months. It was scarcely possible to say for a month together, that the country was solvent, and this was, he thought, a state of things which no Chancellor of the Exchequer should permit. He hoped, however, before the end of the present Session, they would see things in a different state.
§ Mr. Warburtonwished to suggest, whether joint-stock banks, giving a moderate rate of interest on deposits, would not work better than the savings' banks. If such banks were established on principles of undoubted security, they would supersede the necessity of savings' banks, and save the Government trouble, while they held out to the public, nearly equal advantages to the savings' banks.
§ Resolution agreed to. The House resumed.