§ Mr. Grenfell
, prior to proceeding with the motion of which he had given notice, on the subject of the balance of public money in the hands of the Bank, moved, "that the second Report of the Committee on the Public Expenditure be entered as read;" which having been done, the hon. gentleman proceeded to observe, that the motion he was about to submit to the House was founded on the document which had just been entered as read, and on various papers which had been laid on the table of the House—having reference to certain transactions subsisting between the Bank of England and the Government. He was here desirous of stating, that it had never entered into his contemplation, to propose a measure that would operate on any contract now existing between Government and the Bank—and still less had it entered into his view of the subject, to bring forward a proposition that would go to rescind any of those agreements, made by the Bank of England, and sanctioned by the authority of an Act of Parliament, which would expire in the month of April next. Yet it was, he conceived, in some degree necessary that he should not let the present session pass away, without laying before the House, a combined practical view of the facts contained in the papers laid before them. He meant not to move any thing on those papers that would operate at present. What he had in view was, some ulterior proceedings with respect to those transactions, that would lead to an improvement of the existing system, in the ensuing session of Parliament. In order to effect this object, it appeared to him (and he was glad to find his own judgment on this point confirmed by the opinion of others) that the best mode would be, to submit to the consideration of the House a series of resolutions of fact, founded on the papers now on the table 759 —and in which would be embodied the practical result of the documents themselves. With this feeling he had drawn up a number of resolutions, which appeared to him to answer the contemplated purpose. Before he read those resolutions, he hoped the House would allow him to call its attention to a few facts, connected with the whole of this, as it appeared to him, very important subject. In the first place he would state, that, neither in the origin or progress of this proceeding, was he actuated by any improper feeling towards the Directors of the Bank of England—nor by any wish to abridge or curtail the fair and legitimate profits of that establishment. Amongst the directors there were many whom he had long been proud to call his friends—and there was not an individual in that body towards whom he did not look with respect. As to the establishment itself, no person appreciated more highly than he did, the great advantage which the country derived from it, and he hoped it would long continue to derive benefit from that great institution. But it appeared to him, that all the advantages which it was capable of bestowing, might be obtained without calling for those great pecuniary sacrifices from the public, which helped to support that wealthy corporation. He meant not to cast blame or censure on the directors of the Bank for what had passed. If censure were at all necessary, he conceived it ought rather to be directed against the right hon. gentleman opposite (the Chancellor of the Exchequer), and those who had filled the situation he now held for fifty years, for the facility with which they had lent themselves to the proceedings of the Bank of England, in the transactions to which he had adverted, than to the directors of that establishment. And, standing in that place, he could not help expressing a doubt, whether the House itself did not deserve blame and censure, rather than the Bank: for though he held that the Bank directors had duties to perform towards the public (particularly in the present state of the currency of the country), and were not to be considered merely as the protectors of the proprietors of Bank stock—yet, looking to the facilities that were given to them for the last fifty years, it could not be expected that they would shun profits, and refuse bargains, which were highly beneficial to the general body.
Having said thus much, he should now 760 endeavour, as shortly as possible, to state the view, which, as it appeared to him, it might be expedient for the House to take on the whole of this subject. In doing this, he would proceed on the arrangement to which he had adhered, when he first brought the question forward—confining his observations to two principal branches of the subject. One of these had reference to the deposits of public money in the hands of the Bank—the other respected the charges made for managing the national debt. When he first brought the subject of the deposits under the notice of the House, he founded his statement on the Report of the Committee of Public Expenditure—than which, a more able or luminous exposition of a subject of this nature, never emanated from any committee. On the authority of that Report, he stated, that the total amount of the deposits of public money, in the hands of the Bank, in 1807, was 11,000,000l.; and, having no reason to believe that any diminution had taken place in those balances, from 1807 to the period when be introduced his motion, he rated them at the same amount, namely, 11,000,000l. He contended then, as he did now, that those balances, which were unproductive to the public, were productive to the Bank, to the amount of the whole annual interest on the entire of those deposits—and which, of course, must be 550,000l. per annum. This he considered as the sum which the public paid to the Bank of England, for the limited and circumscribed service of acting as bankers to the nation. He was told, that he had greatly exaggerated the amount of the deposits, for the balances had been very much diminished, as would appear when the papers were produced. The papers were now produced; and what was the result? Why, he found that the balances were not diminished, but that they were increased. On an average, these balances amounted, in July, 1814, to 11,966,371l.; and he contended that he was entitled to consider the interest on that sum, making nearly 600,000l. as the price which the public paid to the Bank in that year, for acting as their bankers. The items of the different balances were as follow:—
1814— Unclaimed Dividends £ 640,000 Customs, Excise, and Stamps 507,000 Post-Master-General 31,000 Various deposits of Government 3,767,000
He thought he had said enough on this part of the subject, to satisfy the House that he was not guilty of any exaggeration, when, in April last, he took the amount at 11,000,000l. There were two points, respecting these deposits, on which he would make a few observations—First, how far those balances were productive of profit to the Bank; and next, how far it was practicable to make them profitable to the public. He would not detain the House long on these points; for, whatever difference of opinion might exist on other matters, he believed but one sentiment prevailed at present on the subject of the profit made from those balances, namely, that they were as beneficial to the Bank of England, as they would be to private bankers, if placed in their hands. Nay, they were more profitable—because deposits cannot be made available to private bankers to their whole extent. They must always have in their drawers a certain portion of unproductive capital to meet any demand that might be made on them. This was not the case with the Bank of England. They had no necessity to keep any balance in their coffers. If a demand were made on them, they had only to provide themselves with paper, pen, and ink, and they were at once able to meet it. Supposing, however, that there were persons who still contended that those balances were not productive to the Bank of England, they must admit this, that they were unproductive to the public; and if any means could be devised to make them beneficial to the country, they could not deny that it would be a very desirable object. The question, then, was, in what way they could be rendered profitable? He had no hesitation in saying, that various modes might be adopted for that purpose, which could be easily carried into effect, if the Bank of England gave its cordial co-operation, and which were practicable, even if the Bank endeavoured to resist them. In the first place, the Bank might advance to the public, without interest, such a proportion of those balances, as, in the judgment of 762 the House and the country, the public ought to avail themselves of—in the same way, precisely, as the Bank, at present, granted 3,000,000l. without interest. This was merely carrying the principle to a greater extent. There was another mode, similar to that by which the transactions of the London and country bankers were regulated. A certain sum of money was left in the hands of the London banker, the use of which was considered as a stationary reward for his transacting the business of the country banker. Every guinea, beyond that, was charged with interest. Why might not an arrangement of this sort be adopted in the transactions between the public and the Bank? Suppose a balance of 1,000,000l. was lodged with the Bank—it would, he conceived, be a full, liberal, and most munificent remuneration for carrying on the whole of those services; and, he was confident a private banker would transact the business for one-fifth of the interest of that sum, which would amount to 50,000l. per annum. How would such an arrangement apply at present? The total amount of balances lodged with the Bank was 11,966,000l. If, then, this arrangement took place, the Bank would advance to the public, without interest, in 1815, no less than 10,966,000l.—one million balance being left as a sufficient remuneration for the services of the Bank.—The next branch was, the charge for managing the public debt. On the 5th of July, 1792, the sum paid for that service was 99,000l.—on the 5th of April, 1815, it was 281,000l.—being an increase of 182,000l. Here, he conceived, there was a great ground for a reduction of charge.
American Commissioners, and other balances 479,000 Under the head of Exche-chequer Deposits (Exche-quer-bills and Bank-notes deposited in chests of the Tellers of the Exchequer as cash) 6,542,000 The whole making an aggregate of 11,966,000
There was one other topic on which he wished to touch—he meant the increase in the circulation of bank-notes. He did not wish to be strictly understood as desiring to suggest the propriety of any participation, by the public, in the profits derived by the Bank, under this head; but, if it were not expedient that the country should participate in that advantage, it at all events formed a strong claim on the liberality and generosity of the Bank. At the period when the restrictions were imposed, the amount of bank-notes in circulation, was from 10 to 11,000,000l.; in the last year, it was 30,000,000l.; and the average was 27,000,000l. Here, then, was an increase of 16,000,000l.—giving a profit of 800,000l. per annum. He concluded by reading the following Resolutions: 763
- 1. "That it appears that there was paid by the public to the Bank for managing the national debt, including the charge for contributions on Loans and Lotteries, in the year ending 5th July, 1792, the sum of 99,803l. 12s. 5d.; and that there was paid for the like service, in the year ending April 5, 1815, the sum of 281,568l. 6s. 11¼d. being an increase of 181,704l. 14s. 6¼d. In addition to which the Bank of England have charged at the rate of 1,250l. per million on the amount of property duty received at the Bank on profits arising from professions, trades, and offices.
- 2. "That the total amount of banknotes and bank post-bills in circulation in the years 1795 and 1796 (the latter being the year previous to the restriction on cash payments), and in the year 1814 was as follows: 1795, Feb. 1, 12,735,520l.; Aug. 1, 11,214,000l. 1796, Feb. 1, 10,784,740l.; Aug. 1, 9,856,110l. 1814, Feb. 1, 25,154,950l.; Aug. 1,28,802,450l.
- 3. "That at present, and during many years past, more particularly since the year 1806, considerable sums of public money, forming together an average stationary balance amounting to many millions, have been deposited with, or otherwise placed in the custody of the Bank of England, acting in this respect as the bankers of the public.
- 4. "That it appears from a Report, ordered to be printed August 10, 1807, from 'the Committee on the Public Expenditure of the United Kingdom,' that the aggregate amount of balances, and deposits of public money in the hands of the Bank of England, including banknotes, deposited in the Exchequer, made up in four different periods of the quarter, ending 5th Jan. 1807, fluctuated betwixt the sums of 11,461,200l. and 12,198,236l., including bank-notes deposited in the chests of the Exchequer; or, 8,178,536l. and 9,948,400l., excluding bank-notes deposited in the Exchequer.
- 5. "That the aggregate amount of such deposits, together with the exchequer-bills and bank-notes deposited in the chests of the four Tellers of the Exchequer, was, on an average, in the year 1814, 11,966,371l. including bank-notes deposited at the Exchequer, amounting to 642,264l.; or, 11,324,107l., excluding bank-notes deposited at the Exchequer.
- 6. "That it appears that this aggregate amount of deposits, together with such portions of the amount of bank-notes and
[764 bank post-bills, in circulation, as may have been invested by the Bank in securities bearing interest, was productive, during the same period, of interest and profit to the Bank of England.
- 7. "That the only participation hitherto enjoyed by the public, since the year 1806, in the profits thus made on such deposits by the Bank, has consisted in a loan of 3,000,000l. advanced to the public by the Bank, by the 40 Geo. 3, cap. 41, bearing 3 per cent. interest, which loan was discharged in December, 1814, and in another loan of 3,000,000l. advanced to the public by the Bank, by the 48 Geo. 3, cap. 3, free of any charge of interest, which loan became payable in December 1814; but has, by an Act of the present session of parliament, cap. 16, been continued to the 5th of April, 1816.
- 8. "That this House will take into early consideration the advantages derived by the Bank, as well from the management of the National Debt, as from the amount of balances of public money remaining in their hands, with the view to the adoption of such an arrangement, when the engagements now subsisting shall have expired, as may be consistent with what is due to the interests of the public, and to the rights, credit, and stability of the Bank of England."
§ The question being put on the first Resolution,
The Chancellor of the Exchequer
observed, that on a string of resolutions which, related to so many complicated transactions, it was impossible for the House immediately to decide, with satisfaction to themselves or justice to the parties; and he could take no other course than to move an adjournment of the debate to afford time for consideration. If the hon. mover had taken the same view of the question, it would have been the most convenient course that he should have abstained from any remarks on bringing them forward; but as the hon. mover had made some observations, he (the Chancellor of the Exchequer) should also think it necessary to say a few words. As a servant of the public, it was his duty, perhaps, to attempt to push to the utmost extent the statements of the hon. gentleman; but he had a duty to justice, which was superior to his official duties, and which obliged him to say, that hon. gentleman's statements were exaggerated, and his deductions erroneous. The hon. gentleman had taken the amount of the ba- 765 lance in the hands of the Bank just previous to the bargain concluded between Mr. Perceval and the Bank, with that now in their hands. The increase had been not quite a million, and the public continued to receive the remuneration which Mr. Perceval had stipulated for. When that agreement of the Bank with the public expired, it might be proper to consider how far that bargain had been beneficial; in the mean time, the Bank could not be censured as if it had imposed upon the public, as it paid the sum which had been stipulated for in 1808. It was said that the Bank could make more profit from the balance which remained in its hands than private bankers, because it need only have recourse to pen and ink. If the Bank so managed their affairs, public credit would be in a most dangerous state; neither would they be justified to Parliament and the Country if they increased their issues without regard to any thing but their own convenience. As to the terms on which private bankers would undertake the care of the public money, he was very ready to believe that there were many in London who would be glad to get eleven millions into their hands on any terms at all; but the question was, whether these bankers could afford such security to the public as to justify the repeal of twenty Acts, by which the public money was specially directed to be paid into the Bank of England. It was true that the charge of the Bank for the management of the public debt, had increased from about 100,000l. to 280,000l. since 1792; but the amount of the debt managed had increased in a still greater proportion, and the accounts had been multiplied to an extent not foreseen. The rate of allowance on the management of the debt had been lessened of late years, but that allowance might be revised upon due consideration; but in the mean time they could not complain that injustice had been done to the public. It was not any great distance of time since the present allowance had seemed reasonable to the House. The hon. gentleman had not taken the expense of the management of the debt at the time when the last arrangement had been made (1808), but had mounted to an earlier period, to compare the charge at that time with the charge of the present year; such a comparison was not, therefore, fair to the Bank. As to the increase of the issue of bank-notes, the Bank was answerable to Parliament if they abused the discretion 766 entrusted to them, and be should in a few days submit a motion to the House, the object of which was to make an arrangement, by which the public would obtain a benefit from the extent of this species of circulation. The extent of the Bank issues had been alike advantageous to the Bank and the Country, and afforded no ground to extort unfair terms from the Bank in any bargain made between that body and the public. As to the charge on the amount of the Property-tax paid into the Bank, it was so small that it was the last thing he should have thought would have been objected to; indeed, the whole of the management of that tax was extremely economical. He should move as an amendment, that the debate be adjourned to this day week: in the mean time any hon. gentleman might move for papers to elucidate the transactions to which the Resolutions referred.
did not rise to oppose the amendment of the right hon. gentleman, but to correct the mis-statements which he had urged against the motion of his hon. friend, who by no means insinuated a charge against the Bank for the terms on which they transacted the public business; but merely on the ground of an improvident bargain having been made on the part of the public. No imposition was imputed to the Bank; all that was wanted was a revision of the contract in future, and he concurred in the necessity of allowing intermediate time for that purpose. The plain object of his hon. friend's motion was to procure a fair bargain for the public; in doing this he by no means cast any reflection upon the Bank. With reference to the general Acts of Parliament, these were only binding for a certain time, and it was competent for Parliament to revise them at pleasure. The right hon. gentleman concluded by calling the serious attention of the House to the Resolutions, and hoping that they would be printed preparatory to any further discussion.
The Chancellor of the Exchequer
said, that he was very glad to hear that there was no intention of bringing any charge against the Bank.
§ Mr. Grenfell
, in explanation, said, that he was astonished that the Chancellor of the Exchequer should have conceived that there was any such intention. He had taken pains most explicitly to disclaim any such intention.
observed, that the hon. mover 767 had not explained to the House in what method the public money was to be disposed of, if not left in the hands of the Bank. His only alternative was to entrust it to private bankers.
§ Mr. Grenfell
explained, that he had only mentioned private bankers with a view to ascertain what was the proper remuneration to the Bank for the management of the public debt.
observed, that if private bankers were not resorted to, there was no alternative but to trust the money to the Bank.
§ Mr. Tierney
said, that according to the right hon. gentleman, the public were in the hands of the Bank, and it was lucky they did not exact still harder terms from the public. As to the entrusting the public money to private bankers, his hon. friend who made the motion had said nothing of the kind; he had merely mentioned private bankers to illustrate the subject. He would appeal to any banker in the House, whether the staple balance which his hon. friend had fixed on as a remuneration to the Bank was not ample, supposing the security sufficient. Would not the hon. baronet opposite (sir W. Curtis) be ready to jump at one-third of the sum? Notwithstanding the assertion of the right hon. gentleman who spoke last, it had been thought by some well-informed persons, that it was possible to set up an establishment in opposition to the Bank of England as its rival in the management of the money affairs of the public.—The right hon. gentleman expressed his surprise that the House had heard nothing upon, the subject from the Bank itself. There were the governor and two directors of the Bank in that House, and yet none of them spoke a word. But it seemed the resolution of these gentlemen never to open their lips, unless they could get something by it. They should not, however, leave a discussion of this nature to be managed on their part solely by the Chancellor of the Exchequer, for that was not dealing fairly either by that right hon. gentleman or by the House. But such conduct, combined with other circumstances, served to betray the existence of that clandestine system between the Bank and the Treasury which he had long suspected; for he could never get at the secret of how many exchequer-bills were purchased by the Bank. No; this fact was studiously concealed, and that concealment accounted 768 for the secret understanding which prevailed between the parties alluded to. But it was not the fault of the Chancellor of the Exchequer for the time being, that the Bank was not made duly answerable for the profit of the public balances remaining in his hands. For no Chancellor of the Exchequer could, under existing circumstances, safely dispute with the Bank, as the fact was, that the Treasury could not go on without the concurrence and aid of that body. Hence the Bank had the power to make as good a bargain for itself as it thought proper. The House had no doubt heard a great deal about liberality and fine feeling in the transactions of the Bank with regard to the pubic; but, without meaning any disrespect, he really could not calculate upon much fine feeling or liberality to the east of Temple-bar, especially upon money matters—[A laugh]. The object of his hon. friend's motion was to ascertain the emoluments derived by the Bank from its transactions with the public, in order to know what participation of profit the public was intitled to expect; and according to the last Resolution, it was the opinion of his hon. friend that a much better arrangement for the public might be made with the Bank, than that which at present existed. In this opinion he decidedly concurred. He did not require or expect that an improved arrangement could be obtained by the Chancellor of the Exchequer, or by any individual holding his office; for he could not well drive a bargain with a body upon whose will the Treasury was so dependent. But he put it to that House to consider, whether the public had not a fair claim to a due share of those enormous profits, which the Bank extracted from the exigencies of the country. No one could deny, that in consequence of the restriction of cash payments, the Bank derived a profit far beyond what could have been contemplated by the Bank proprietors, before that restriction took place. Those proprietors, then, should not be allowed to monopolize profits arising out of the distress of the empire. Some return was surely due to the public; but an adequate return could never be expected through the Chancellor of the Exchequer of the Treasury. If, however, that House took up the question, he had no doubt that the Bank would be obliged to make such return; and with that view he supported his hon. friend's proposition. But he should con- 769 sent to the proposed postponement of the discussion, in the hope that some resolutions would be brought forward on the other side, calculated to put the House in complete possession of the case. Those Resolutions, however, should not be left entirely to the Chancellor of the Exchequer, but should contain what the Bank had to state; and therefore he expected that although the Bank directors declined to speak, they would endeavour to write for the information of the House upon this question.
explained. He thought it might be proper to re-consider the bargain with the Bank, as the public were undoubtedly entitled to as good an arrangement as could be made for them.
§ Mr. Huskisson
defended the bargain made with the Bank by the late Mr. Perceval, in 1808. In that transaction Government had employed every possible argument in favour of the public, and it was not without considerable difficulty that they obtained from the Court of Directors a loan of three millions without interest. It was, however, now open to the House to re-consider the bargain.
§ Mr. Tierney
explained. He was now more fully convinced than ever, that no Chancellor of the Exchequer could do what he wished to do, till different arrangements were made. It now turned out that the bargain was such as might have been mended; and as Mr. Perceval had tried every argument without effect, it showed that Threadneedle-street was an overmatch for Downing-street.
§ Mr. Huskisson
explained. Government had only consented to such a bargain as they thought was fit between the public and the Bank.
said, that as it was intended to print the hon. gentleman's Resolutions, he should have abstained from making any remarks until a future day, but he thought the House might be misled by the Resolution that excluded the banknotes deposited at the Exchequer from the public balances in the two periods of 1807 and 1814, which were compared with each other, as the leaving out these bank-notes made a difference in the deposit of three millions beyond what it really was. He objected to the last Resolution, by which the House was called upon to pledge itself to take into consideration the arrangement between the Bank and the public, which had always heretofore been entrusted to the Executive 770 Government, and in matters of so much confidence and delicacy, could not be elsewhere so well placed. With respect to the allowance to the Bank for the management of the public debt, he said it was true that in 1792 the allowance was about 99,000l., and in 1814, 280,000l.: but did gentlemen consider the immense increase in the national debt; the risk and the difficulty of conducting it? The number of clerks was in the first period 380; and now above 1,000. He next adverted to the gratuitous services rendered by the Bank to the public:—for receiving the tax on trading profits, they charged nothing; 17,500,000l. 5 per cents, had been either paid off, or converted into other stock, without any charge for superintending this service; nearly one hundred millions of exchequer-bills had, in the last eight years, been funded, and no charge made for it by the Bank. Lastly, by the capital of the Bank, lent at 3 per cent. interest, three millions without interest, and other concessions, the public derived a benefit from that corporation of 490,000l. a year. He stated, that it was his anxious wish, and that of his brother directors, that what was fair and just between the public and the Bank should take effect; and he was confident the House might safely, as heretofore, leave the arrangement to them and Government, reserving to itself the undoubted right to sanction or disapprove the bargain when it should have been made. One principle, however, he must guard the House against, which was, the being supposed to connive at the restriction on cash payments longer than was absolutely necessary. If the Bank and the public were to participate in the profits on the supposed issue of an increased extent in consequence of the restriction, they would naturally and very fairly be supposed to have a concurrent interest in continuing it; and the best security for a wholesome limit to its duration would be taken away. He wished, and could with confidence say of the other directors of the Bank, that they were axious to maintain a limited issue of bank-notes, and to return to the payment of their notes in cash the moment it could be done with safely to the commercial and political interests of the state.
§ Mr. Grenfell
, in reply to the hon. director, stated, that he did not propose any inquiry with regard to the private affairs of the Bank: but as far as the public were concerned with that body, he 771 thought it the duty of the House to institute an inquiry, in order to secure to the public its due share of profits upon a course of dealing in which the Bank was a material gainer. He denied that his Resolutions contained any inaccuracy. As to exchequer-bills, he asked whether the Bank was not in the habit of depositing such bills at the Exchequer, in exchange for bank-notes, which bills bore interest not for the benefit of the public, but for that of the Bank? Also, whether the Bank was not in the habit of depositing special notes with the Tellers of the Exchequer, which notes could not be properly denominated Banknotes, and which were not therefore included in the account of the issues of the Bank? If he was rightly informed, the answer must be in the affirmative, and this system furnished an additional source of profit to the Bank, without any due return to the public. With regard to the number of clerks employed by the Bank, it could not be pretended that any great proportion of those clerks was engaged in the public service. One hundred of them, indeed, were employed in superintending the issue of 1l. and 2l. notes; and as to the collection of the Property-tax upon the dividends, it was simply nothing more than this, that where a stock-holder was entitled to a dividend of 100l. the Bank paid him only 90l., and how could the Bank pretend to demand any remuneration from the public for a thing which could not be said to occasion any trouble? But the case between the public and the Bank was shortly this, that the latter derived an increased profit of 80,000l. per annum from the restriction of cash payment, of which profit he maintained that the public was entitled to a fair participation, and to obtain that remuneration was the object of his propositions.
said, that the country owed a great obligation to the hon. member for bringing this question before the House, and added, that the Bank did not pay by any means a due commutation for stamp-duties; for it paid only 42,000l. a year on this score, while 160,000l. were paid by the private banks, although the latter did not issue half as many notes as the former. In order to ascertain the comparative issue of these notes, the hon. member gave notice of a motion on the subject.
§ Mr. Grenfell
hoped, the hon. gentleman would make a motion on that sub- 772 ject; if not, he pledged himself to make it. He believed, that up to last month, the amount of bank-notes in circulation was 27 millions.
After a few words from Mr. Mellish, the question was put, and carried, that the further debate on the Resolutions should be adjourned to that day se'nnight.