FUNDING EXCHEQUER BILLS. (Hansard, 14 February 1812)

The Chancellor of the Exchequer
said, he had given notice yesterday of his intention to move in the committee a Resolution for funding Exchequer Bills in the Navy 5 per cents. It was not, he conceived, necessary to enter into any detailed view, and he should therefore proceed to state the terms to the House. The first proposition was, that for every 100l; of Exchequer bills dated between the 1st of March, 1811, and the 14th of February, 1812, funded in the Navy 5 per cents. the person so funding them, should receive 108l. in the 5 per cents. the interest on the bills to be paid up to the 9th of March, inclusive. The calculaton was taken on the 7th of February, the day on which he first sent the notice to the city, at which period the 5 per cents. were at 94, which would give the acceptor 101l. 10s. 3d. for every 100l. funded, besides a bonus of the interest, up to the 9th of March, of 7s. 8d. on each 100l. making, on the whole, 1l. 17s. 11d. per cent. bonus. The 5 per cents. were consequently depressed in some measure since the proposition had been originally made. They were this day reduced to 93⅛th, at which price the bonus experienced by the funding would be 17s. 7d. instead of 1l. 17s. 11d. which, however, he thought sufficient profit to induce the holders of Exchequer Bills to the amount of fourteen millions to fund. The state of the fund, as he had already observed, was not so favourable as at the time when the offer was made, but there were various contingent benefits to which the House might look on the following year, especially in the event of peace. It was his intention likewise to propose, that the amount of Exchequer Bills to be so funded should not exceed 14,000,000l. He hoped, notwithstanding the present depression, that no considerable disappointment would take place, and that if not the entire, a considerable proportion of that amount would be funded in the 5 per cents. He had reserved to himself, in case of failure, the power of creating 5 per cents. to meet the deficiency by the loan to be raised for the service of the present year. The right hon. gentleman concluded with moving the following Resolutions: 805

"That every person interested in or entitled unto any Exchequer Bill or Bills, dated between the 1st of March 1811 and the 14th of Feb. 1812, who shall carry the same to the office of the Paymasters of Exchequer Bills between the 22d and 29th of Feb. 1812, both inclusive, (unless a sum amounting to 14 millions sterling, principal money of the said Bills, shall be sooner subscribed), shall be paid the interest that shall become due thereon, respectively, to the 9th of March 1812, inclusive, and shall have, in exchange for such Bill or Bills, a certificate or certificates to the governor and company of the Bank of England, expressing the principal sum contained in such Bill or Bills, which certificate or certificates shall entitle such person or persons, for every 100l. principal money contained therein, to 108l. capital stock in annuities, after the rate of 5l. per cent. per ann., to be added to and made one joint stock with the 5l. per cent. annuities, created by acts made in the 24th, 25th, 34th, 35th, 36th, 37th, 48th, 49th, 50th, and 51st years of his present Majesty, and the interest to commence from the 5th of January 1812, which said annuities are to be redeemable at the same time, and in like manner, as the said annuities already established are now redeemable by parliament, and to be charged upon and made payable out of the consolidated fund of Great Britain.

"That the amount of Exchequer Bills which may be so exchanged shall not exceed, in the whole, the principal sum of 14 millions sterling."

§ Sir T. Turton
said, he was quite at a loss to suppose how the right hon. gentleman could expect to add the sum of 14 million to a fund which must have experienced a great depression. He approved of the principle of dividing as much as possible the sums to be raised among the different funds. If the right hon. gentleman's object could be accomplished, he saw no objection to it, but he must put out of his calculation entirely, any advantages likely to result from a state of peace: to that state, however desirable, they must look with little hope, after the declaration of an eloquent statesman, that "war was now the element in which we must live and move." The consequence of the present proposition, he believed, would be, that the stock would become a heavy stock. But after all, he would ask, what a loan were they to expect this year? For this was but the commencement, the 806 prelude to the grand drama to which we were still to look.

Mr. Baring
admitted the prima facie policy of funding in a stock, of which the capital subscribed in the case of the stock being paid off, was not subject to any extraordinary variation. It was obvious, that the immediate difference in the two modes of funding was considerable. He was of opinion, however, that the market would not be able to meet so large an accession; and he believed that the previous knowledge of the right hon. gentleman's intention to fund in the 5 per cents. had contributed to their depression,

§ Mr. H. Smith
, from all he could learn, did not think the right hon. gentleman would be able to fund the Exchequer Bills this year to the amount proposed, and therefore he thought it better not to attempt it. He was also apprehensive that the system might be carried too far.

The Chancellor of the Exchequer
said, there was hardly an argument resorted to by the hon. baronet, on the present occasion, which he did not urge against the proposition of the former year. He appeared to think that there was some difference between the notices of both years to the city, but he would state that, in point of fact, there was none. It was true, there was a greater depreciation in the present, but the excess proposed above the former did not amount to more than 2,000,000l. The hon. baronet might say that he did not succeed in his proposition last year. It was true he did not obtain the entire sum immediately, but he made up the deficiency only by enlarging the time. The hon. gentleman who spoke next, gave reason to suppose that the calculation had varied since the valuation was made; but he believed, that since the offer went into the city, no diminution had taken place in the value of Exchequer Bills. The other hon. gentleman feared that the principle might be carried too far. He allowed that it might; but the question was, whether it was so in this instance? It would be found, that if the 5 per cents. were depressed, the 3 per cents. were depressed also, and that the 5 per cents. had kept up their relative value, notwithstanding the operation of the sinking fund on the 3 per cents. which never operated on the 5 per cents. The fair and competent way to compare them, he thought, was to take them at a period before the present measure was in contemplation, in which case they would find that his statement 807 was correct, and that the present comparative state of those funds afforded no ground for assuming that the measure was carried to an extreme. His impression was, that it was doing material service to the general state of the fund, to divide the loan into different parts and different periods. It was giving encouragement to those who funded Exchequer Bills, and encreasing the credit of those Bills themselves. It was natural to wish that the field should be extended as much as possible, and in that view he was sure the House and the country agreed. He was confident that this plan held forth greater advantage to the holder of Exchequer Bills than he could obtain by disposing of them in any other way. He had never stated positively that the whole would be obtained, but he hoped it would, and if not, at least he expected that it would be realized to a great extent.