HC Deb 28 April 1814 vol 27 cc578-82
Mr. Grenfell

, pursuant to notice relative to this subject, began by expressing his regret that what he had to say on a topic of such great importance had not fallen to the task of a more competent person, as it was known to be one on which a considerable difference of opinion existed. He begged the House distinctly to understand, that his sole reason for noticing the subject was, that it might receive not only their most attentive consideration, but that of the public at large. The clause to which he should particularly allude, was that introduced in the original Bill of 1786, by the late Mr. Fox, and which was acknowledged by the late Mr. Pitt to have been a masterpiece of the ability of its great and enlightened author. The subject, however, was so familiar, that any details on the nature of the clause were perfectly unnecessary; yet it might be expected that he should enter somewhat at length, into the mode and practice of carrying the Act into execution. The Act of the 26th of the King laid the foundation of the Sinking Fund; a measure not only the most clear and regular in its operation, but the most powerful, of any that was ever devised in support of the finance of this country. Nothing, therefore, could be farther from his intention, than to offer any opposition to the measure itself, or its progressive routine; but if the ideas he should suggest were duly considered and adopted, he was convinced that fresh vigour might be given to the excellent system. The hon. gentleman here gave an outline of the nature of the Act, and observed, that the uniform and uninterrupted operations of the commissioners had had the effect of accumulating hundreds of millions in their hands. The mode they adopted was this: they had employed agents and brokers to lay out certain sums of money, at regular periods, in the 3 per cents. At the passing of the Act in 1786, they applied their quarterly sums either to the paying off redeemable annuities, which might be above par, or to the purchase of otters below par, at the market price. But the clause to which he alluded, was framed in the contemplation that a period would arrive when another and more advantageous mode might be adopted of laying out the money. It authorised the commissioners to advance this money by way of loan to any persons with whom such contracts of government might be made. This great financial machine, if it might so be called, was thus calculated to produce vast and absolute savings to the country. Yet the whole of the money had hitherto been applied to the purchase of stock for the extinction of the national debt; and it only remained to enquire which of the two modes would be most beneficial to the nation; that of continuing to purchase stock, or advancing the sums thus at command towards any future loan? He would briefly state the arguments which he had heard on both sides of the subject. The amount of the Sinking Fund to be applied in the present year for the purchase of stock is 12,000,000l. The loan may probably be 22,000,000l. He would merely take it at the amount of the loan of last year, at which time the amount of the Sinking Fund might be estimated at 45,000,000l. He wished only for an assumed average. Now it must be admitted, that to throw into the market 22 millions of stock, as was the case in November last, and then to employ agents to go and buy 12 millions, must keep up the price of the funds more effectually than if these twelve millions were withheld from the market. If government want 22 millions, and their own commissioners have 12 millions to lay out, would it not be better to take this latter sum on their own account, than to let it go into the market? Certainly the present mode was a very circuitous way of going to work; and it appeared to him, that not only ministers, but persons who had never gone into the stock-market at all, were more likely to form an unprejudiced and distinct opinion on this subject, than the most practical stock-brokers among them all. The price of the article which we call stock must depend upon the proportion of the supply in the market, and the leaving of an excess of public debt for a time; but withholding the 12 millions of the Sinking Fund, would operate as an advantage, rather than otherwise, by the effect it would have on the prices of the funds. To place the subject in a clear view, suppose a gentleman of 12,000l. a year wants to raise 10,000l. he goes among the money-lenders to raise it. They tell him "you must go into the market and buy 22,000l.; but get a person to take 12,000l. of the amount, and then you obtain your wants, and hand back the rest" The hon. gentleman pursued his illustrations, by citing cases of commercial bartering, and drew the inference, that the knowledge of the times when purchases were to be made on behalf of the Consolidated Fund, must naturally have the effect of raising the stocks at those periods. By way of contrast, he urged, that after a loan had been contracted for, the effect produced by the sale of omnium, in depressing the funds, was exactly in the inverse proportion as they were raised by the purchases of the commissioners. As fast as these commissioners pour their 12 millions into the public reservoir, the loan contractors take it out and carry it to the Exchequer; but by the mode which the clause in question gives them the power to adopt, they could carry it there at once. He could but very imperfectly state the arguments he had heard against this mode. He had been asked what were the arguments in favour of changing the system? Why, the profit that would arise from its operation. Were gentlemen aware what this profit would have been upon the last loan? He might say that the average premium of 20 per cent. upon the last loan is less than what would have arisen by the alteration in question, as the loan itself might have been reduced from 22 to 10 millions. The hon. gentleman concluded with, saying, that he need not trouble the House any farther on a subject so self-evident. His object was only to invite them to give it all due consideration: he should therefore merely move for papers which would tend to throw additional light on the topic. The hon. member concluded by moving, That there be laid before the House an account of the money expended by the Commissioners for the reduction of the National Debt, in the quarter ending the 5th of April inst. together with the amount of the capital stock bearing interest; as well as accounts of the average price paid for every 100l. of the said capital, &c.

The Chancellor of the Exchequer

said, that the observations which he was prepared to offer, were much abridged by the manner in which the subject had been treated by the hon. gentleman. The returns of the amount of the National Debt at the close of each year would have been very nearly the same, if the course recommended by the hon. member had been taken, as they had been under the present system. By this he meant, that the excess of the loan raised in each year over the sums appropriated to the extinction of the National Debt, would have been the same. In this respect, then, there would be neither an advantage nor a disadvantage in adopting the suggestions of the hon. gentleman; but the question which they had to consider was merely this:—whether, in the course of years, it might be expected to produce a better effect on the monkey-market? It might be impossible to show that the present system was superior to that of which the hon. gentleman was the advocate. He did not know any way in which they could positively decide the question; but he held the advantages which resulted from a gradual and constant application of a sum of money to the purchase of stock, to be superior to those offered by the plan of the hon. gent. If, for instance, the sum of 100,000l. were thus expended on every quarter-day, the effect produced at the end of the year would be more considerable than that to be looked for from a sum, equal to the whole amount of such purchases, being so disposed of at once in the market. There might be occasions on which it would be proper to have recourse to the plan of his hon. friend: when it appeared that there was any unfair advantage attempted to be taken by a combination of those disposed to bid for the loan, then it might be right for the minister to avail himself of that alternative which was afforded him by the law. There were other circumstances in which it might be his duty to do so. When a great rise of the funds was anticipated, for instance, or when the loan was so small that the commissioners could advance the whole of it, in these cases it might appear that he ought to go to them; but he could not admit that it ought to be his uniform practice. He begged to reserve to himself the free liberty of taking that course which according to circumstances should appear the best. He, however, admitted that the subject well deserved, the most attentive consideration, and thought the hon. gentleman entitled to the thanks of the House for bringing it forward.

Mr. S. Thornton

could not approve of the course recommended by the hon. gentleman. As a friend to the Sinking Fund, he was unwilling that any material deviations from the present system should be countenanced. That had enabled us to bear up, while our National Debt was augmented from 261 millions to 900 millions; and but for that, we should long ago have been at the mercy of our enemies. He gave every credit to the hon. gentleman for the clear and lucid manner in which he had brought the subject forward, but differed from him in his conclusions. The hon. gentleman, in noticing the agitation of the funds, observed, it was a very extraordinary circumstance, but the funds were seven per cent. lower now than they were before Buonaparte's abdication was known.

The Chancellor of the Exchequer

in explanation of this circumstance observed, that the depression of the funds was caused by the expectation of a loan, the amount of which had been considerably exaggerated.

Mr. Martin

spoke in support of the present system.

Mr. Grenfell

, in reply, said he had been misunderstood. His plan, instead of injuring the Sinking Fund, would add to the means of the commissioners for extinguishing the National Debt. He had asked one of the contractors for the last loan if 12,000,000l. of the 22,000,000l. had been taken from the commissioners for paying off the National Debt, whether he would have been disposed to bid for the remaining 10,000,000l. The answer of the gentleman had been (and he was authorised to state it), I would not only have bid for it, but I would have given a higher price for it, had the loan been but 10,000,000l. instead of 22,000,000l.

The motion was agreed to.