§ The House having resolved itself into a Committee of Ways and Means,
The Chancellor of the Exchequer
said, he had already informed the House that it was not his intention to propose, at this early period of the session, the grant of any other sums than the taxes which the House had been in the habit of granting from year to year, for a great length of time back, and a grant of Exchequer Bills to replace other Exchequer Bills now outstanding. The House would recollect, that in a committee of supply, they had lately voted 24 millions to make good exchequer bills issued last session, and outstanding and unprovided for; nine millions to make good other exchequer bills, also issued last session, and outstanding and unprovided for: and six millions to pay off the loan of the Bank to the government in 1816. He should now, however, merely propose the grant of the land and malt tax, and an issue of 30 millions to replace the above 24 millions of outstanding exchequer bills, and to pay off the loan from the Bank in 1816, of six millions. It would not be necessary to trouble them with any other vote till a later period of the session, when all the different services would be before the House. He concluded with moving resolutions to the above effect.
§ Mr. Tierney
said, it was desirable to know whether the 30 millions would be enough to cover the expenses of the public service, so that no farther application for money would be required before Easter. With respect to the amount for exchequer-bills, it was for services voted, and for other purposes. Bills outstanding and unprovided for were to be paid off; but if such bills came in, he wished to know whether they would absorb the sum proposed. Would the grant, when added to the land and malt be found sufficient for the purpose?
The Chancellor of the Exchequer
understood the question of the right hon. gen- 206 tleman, but it was difficult and scarcely possible to give a precise answer. He could not exactly state what amount of exchequer bills might come in. They were liable to be paid off in four months.
§ Mr. Tierney
wished to know whether it was intended to pay off the loan from the Bank in money, or with exchequer bills? The Bank would be precisely as they were now if they took exchequer bills. There was not any difference as to what the public derived from the Bank. The public gained merely by the difference between four per cent interest and the rate of interest on the exchequer bills. He was happy to see an hon. gentleman connected with the Bank in his place. He wished to inform him and the House, that from that day forward his object would be, to endeavour to ascertain what particular steps the Bank was taking to enable it to resume payments in cash. He was to presume this fact, that for any thing the Bank knew, cash payments might be resumed at the time specified in the act of parliament. Now, it appeared that no step had been taken for this purpose, but one, a very material one no doubt—the preparing themselves with gold. But if this was brought about by increased issues, then he denied that any preparation at all was made. He observed a smile upon the countenance of a number of gentlemen, some of them not very remarkable for their attention to, or knowledge of, financial subjects. The smile of these gentlemen seemed to say —What better preparation can you have than gold? He would tell them a much better—a reduction of the issues. This was the only thing that would look like sincerity on the part of the Bank. With respect to the payment of the Bank loan, if it was in exchequer bills, the only change would be a reduction of interest. Of this reduction he was still glad; but nothing would be done to enable the Bank to resume its payments, if it took payment in exchequer bills. He [wished to ask, whether any arrangement had been come to with the Bank, as to the mode of payment? He had a high opinion of the honour and character of the Bank. The first effect of the payment in money would be the Bank's not reissuing the notes paid in. But if the payment was to be in exchequer bills, the Bank could not draw in its issues. IF the debt to the Bank were paid, it would always be in the power of the Bank to 207 curtail their issues by not renewing discounts; but the moment they took exchequer bills, they could have no control over the re-issue of bank-notes, because it was a rule with the Bank never to sell exchequer bills. When in the possession of the Bank they were merely good to show what their debts and what their assets were; for, as he had said, it was a rule with the Bank, when exchequer bills once came into their possession, never to sell them again. Indeed it might be doubted whether they had a right to sell; for they were prohibited from "dealing in government securities." Unless he found that proper measures were taken, he should move for papers, from week to week, to see what were the issues of the Bank—simply with a view to ascertain, whether they were taking those steps which afforded the only security to the country for their returning to the wholesome state of things—of paying in cash, without which, all their finance committee reports would not be one whit more serviceable to them than the Arabian Nights Entertainments, or the story of Aladdin's Lamp. It was his sincere belief, that the Bank really desired to return to cash payments; but, on the other hand, he knew there was a powerful body, who cared nothing for the interests of the country—who wished merely the continuance of such a state of things as might be most favourable for their speculations—to whom nothing was so beneficial as the leaving every thing in a state of continued fluctuation. He called, however, on every man who was not a gambler or a speculator, to consider the consequences of a continuance of the present system, and to see, in the third year of peace, how the Bank might resume cash payments. It ought to be the object of the greatest anxiety and vigilance to see that the Bank trod in the steps likely to lead to cash payments. He begged pardon of the House, but this was one of the most important subjects to which its attention could be turned. Were we to be the only country in Europe to which the stigma attached?—for it was a great stigma on a country to remain in that state with respect to our currency in which we now were. He implored them not to consider this as a party question, or as having been taken up by him in a party spirit. Feeling so anxiously as he did on this subject, he was desirous that the attention of the House 208 should be called to it as early as possible.
The Chancellor of the Exchequer
observed, that he had no objection to reply most explicitly to the question of the right hon. gentleman, and he was ready to admit that the House and the public were entitled to the fullest information which it was in his power and consistent with his duty to afford. With regard to the immediate subject of the right hon. gentleman's inquiry, he had not the smallest hesitation in declaring, that it was the intention of his majesty's ministers that the repayment to the Bank of the loan of six millions should be made in money, and not in exchequer bills [Hear, hear!]. Upon the other more-general subject which had been adverted to, although not now before the House, he was desirous of making one or two observations. If it should become necessary to propose to parliament the postponement of the resumption of cash payments, it would not be from any purpose of consulting the convenience of government, but would be submitted on grounds perfectly distinct. He could not agree that it was desirable at the present moment to reduce the issues of the notes of the Bank of England; and he considered the repayment of the six millions in money as expedient, not to enable the Bank to lessen their paper in that proportion, which appeared to be the view of the right hon. gentleman, but to enable them to extend accommodation to trade, and to support the commercial interests of the country. It was upon this consideration that he should probably feel it his duty to propose some arrangement for the final repayment of this loan. Much had been already saved by the arrangement made originally, and the present rate of interest would cause a saving to the country of not less than one million out of the six millions composing the loan. The right hon. gentleman, he believed, had done no more than justice to the Bank, in expressing his conviction that they were sincerely desirous of resuming their ordinary course of payments; but the interests of the public, and the security of commerce, might, in a particular state of things, form a very reasonable ground for the interference of parliament, to delay the period at which that resumption should take place. The subject was not, however, now under consideration, and he should not, therefore, enter into any argument upon the different points involved in it 209 with respect to which questions might be raised, but he begged leave to re-state, that whether the resumption of payments in cash on the part of the Bank of England should commence in the present year or be delayed till the ensuing, the measures of government would be equally directed to forward and encourage it.
§ Mr. Tierney
thought the right hon. gentleman's explanation perfectly satisfactory as far as related to the repayment of the six millions in money to the Bank because it would enable the Bank to do what in his opinion they ought to do—reduce the amount of their issues; but he had witnessed, with great dismay, the sort of levity with which the right hon. gentleman treated the very serious question whether the Bank was to return to its regular payments this year or the next. He was glad to hear that it was not the convenience of government which it was intended to consult; but that the understood ground upon which the House might expect, that some measure for extending the time at which the currency was to be restored to its proper state, would be proposed, was, that great loans were to be advanced by individuals in this country to foreign powers. The nature of these loans was no secret to any body: and could the right hon. gentleman entertain a doubt that the money of which they consisted was at the present moment going out of the country, or that the contractors were not already availing themselves of the high price of stocks, in order to make large remittances at the most favourable rate? Without mentioning names, he might allude, by way of example, to a certain individual, with whom he had no doubt the right hon. gentleman was extremely well acquainted, and who would scarcely suffer the present opportunity to pass by him unobserved. He apprehended that this course of things would continue to go on, and that before the five months which still remained previous to the expiration of the present restriction had elapsed, the whole amount of the loans might be transferred. In that case, to postpone the resumption would be to provide against a danger that no longer existed. The right hon. gentleman shook his head; it was possible that the right hon. gentleman might be right, and that he himself might be deceived; but to take an instance which was notorious—the loan of three millions to Prussia—were he one of the lenders, he should be 210 strongly inclined to take advantage of the present state of the funds. What he understood from the declarations of the chancellor of the exchequer was, that nothing existed in the internal or external situation of political affairs which created any obstacle to the restoration of the old circulating medium. The whole question therefore became narrowed to this point, (for it was evident that there was no ground. for the appointment of a committee to inquire whether the Bank was or was not prepared to pay)—could a foreign loan operate of itself unfavourably on the price of gold in this country? He was satisfied that it could not, and his conviction was the stronger from looking at the operation of the two great loans to Austria in 1795 and 1798, which loans produced no such effect. What he desired to see was, the Bank liberal in their accommodation, but still cautious in their issue of paper: he desired to see the gold coinage again in circulation: and if in three months after that event, the Mint price of gold was not equal to its market price, he would pledge himself never again to trouble the House on this subject—a circumstance which he had no doubt would give them infinite satisfaction. [a laugh]
§ Mr. F. Lewis
said, he must avow himself to be extremely anxious to see the circulating medium of the country replaced as soon as possible on its only secure basis. The facts which had come with in his own knowledge had convinced him, that if there was any difficulty or inconvenience in resuming our ancient and natural currency, those difficulties would be enhanced, and not diminished, by any additional delay. In the discussion of this subject, he feared the operation of the country banks was not in general sufficiently attended to. It was not easy to discover the causes which regulated the extent of their issues. It would, however, be found, upon inquiry, that in as short a period as two years and a half twenty-five millions of country bank notes had been withdrawn from circulation. He would leave it to the House to judge of the effect which this must have produced upon individual credit, and upon all the transactions arising out of the internal commerce of the country. He called upon every member of the House to inquire in his own district and neighbourhood, and he would venture to say, that the result of that inquiry would correspond with his own, and would show that the paper so suddenly withdrawn 211 was now re-issuing with no less rapidity. Could it be doubted for a moment, that these transitions must have a most material influence upon the prices of all commodities, or that it was not of vast importance for the House to pause and deliberate well, before they adopted any measure which might favour the continuance of these fluctuations? He believed it impossible to point out any reason why the whole, or a much larger amount of country paper, would not be thrown into circulation, unless the Bank of England exercised its control over every other, by issuing no paper which was not immediately convertible into gold. The interest of commerce, no doubt, required an adequate circulation of paper, but the misfortune was, that as the circulation increased the depreciation of paper followed, and such must be the consequence while the restriction upon the Bank continued. Should this restriction continue for two years longer, he could not allow himself to describe the distress which was but too likely to ensue. He knew that, on the other hand, the issue of paper was necessary for the purposes of commercial accommodation and to facilitate the transfer of property: but, on the other hand, such an issue as that which he deprecated threatened to shake every other description of property it) the country, both landed and funded. To obviate such a menacing evil, he intreated the House and his majesty's ministers to consider seriously the necessity of removing the restriction upon cash payments by the Bank.
said, he did not rise with a view to press the discussion of a question which could not, indeed, be fairly or fully entered into until his right hon. friend should bring forward the measure which would naturally raise that discussion. But in reference to some observations which had fallen from the right hon. gentleman, he thought it proper to assure the right hon. gentleman, as well as the House, that it was the anxious wish of his majesty's ministers that the Bank should resume its payments in cash, and that the country should return to its ordinary and wholesome circulation. But looking to the subject in the view taken by the right hon. gentleman himself, he would ask, whether it could be the wish of that right hon. gentleman, or of any of those who thought with him, to place the Bank, by a premature removal of the restriction, in such a predicament as might 212 suggest the necessity of again renewing that restriction, or of urging the Bank to withhold that degree of accommodation which was essential to the commercial interests of the country? Now, in case a foreign loan of such a magnitude should be contracted as would threaten the exportation of a considerable quantity of bullion, would not parliament owe it to the country to continue, or if discontinued, to renew the restriction, as a matter of paramount necessity? It was to be apprehended, that foreign loans of this nature might be contracted, over which the counsels of the country could have no control—with which, indeed, it would be highly improper in those counsels at all to interfere. He did not mean a loan of three or four millions to this or that particular power, but loans of such an extent as could not yet be ascertained, and therefore ministers were not yet prepared to open the case to parliament. That there was nothing in the internal situation or the foreign relations of the country to prevent the Bank from resuming its payments in cash, he was quite ready to admit. There was, indeed, nothing in our foreign relations which threatened, in the slightest degree, the disturbance of our pacific connexion; but yet it was material to provide, that the financial measures of foreign states should not be allowed to embarrass this country, by placing the Bank in such a situation as might compel it to refuse the usual facilities to our different commercial transactions. He denied that government in any degree inter posed to promote loans to foreign states. It was for the contractors for those loans to act according to their own discretion, but he hoped that the people of this country would deliberate with caution upon the investment of their capital in foreign funds. He did not mean that the discretion of individuals in the disposition of their property should in any degree be controlled, but it would be well for capitalists to consider what they were about. There was, no doubt, at present, a great temptation to British capitalists; for it was known, that while money could be had in this country on exchequer bills, at so low a rate of interest as two per cent, at least four times that rate of interest might be had in foreign states. It was to be apprehended, therefore, that capital, which naturally sought the most productive employment, would be transferred to a considerable amount; and it was for 213 parliament to guard against the consequences of that transfer upon the treasures of the Bank. From such transfer, indeed, should the apprehended loans take place, the exchange would rise against this country, and, in consequence, the transportation of the precious metals would naturally take place. Under such circumstances then, he put it to the House, whether it would be wise to remove the restriction upon the issue of cash by the Bank? But he would assure the right hon. gentleman and the House, that his majesty's ministers had no disposition to continue that restriction, unless a strong case were made out. He was ready to go along with the right hon. gentleman in deprecating the consequences of the increased issue of paper by the provincial banks; but, on the other hand, it was to be considered whether the Bank should be reduced to the necessity of starving the circulation of the country, or limiting that degree of accommodation which was essential to every branch of our commercial industry. Ministers would, in his view, be highly culpable, if they sought the triumph of clinging to a principle, without considering the case to which that principle was to be applied. They were, as they ought to be, highly solicitous for the removal of the restriction upon the Bank, but it was their duty to consider the circumstances under which that removal should take place. The noble lord concluded with assuring the House, that ministers were not at all disposed to continue the restriction upon the Bank, on any ground or principle of expediency from year to year, and that they would not propose or accede to the continuance of that restriction unless a' distinct and special case was made out to justify the measure.
§ Mr. Hammersley
expressed a hope that ministers would not be found to have any intention of giving any encouragement to the proposed loans to foreign states, or to the investment of British capital in foreign funds. He was sorry to understand that such encouragement was inferred from certain provisions in the treaties of 1814 and 1815, as he himself had calculated at the time those treaties were concluded; he meant with regard to the reimbursement of British subjects who had lost the property they had vested in the French funds. A distinct declaration from the noble lords upon this subject, would be of considerable utility, especially if minis- 214 ters had not the intention to which he had alluded. If it should be declared, that the provisions in the treaties to which he had referred, were owing to special circumstances, not likely again to occur, and that the case was not to form a precedent upon future treaties, great good would be done. It was extremely desirable, indeed, to remove the delusion which prevailed on this point, for too many persons were at present disposed to conclude from the treaties alluded to, that the faith of government was pledged to procure the restoration of any property they might invest in foreign funds, and especially in the funds of that country with which we had been lately at war.
said, that he had no difficulty in stating that the debts alluded to in the treaties of 1814 and 15, stood upon particular grounds, and that therefore they formed the subject of a special provision in those treaties. By the treaty with France in 1787, it was covenanted, that in the event of war, every British subject should be allowed one year for the removal of his property from that country, and it was in direct violation of this treaty that the debts alluded to were contracted. Therefore it was pledged by the treaty of Amiens, that those debts should be paid by the French government. The treaties, then, of 1814 and 15, only provided for that which originated with the treaty of 1787, and was sanctioned by the treaty of Amiens. Those claims were indeed of such a nature, that if provision were not made to secure their liquidation, the government which concluded the treaty of 1787, would be exposed to the charge of having entrapped British subjects to invest their property in France. But this formed a special case, and afforded no encouragement to British subjects to vest their property in foreign funds. He was ready, then, to go along with the hon. gentleman, that those who should make such investments had no claim whatever upon the British government, and that in the event of any war, or on the conclusion of any peace, no such transactions would be entitled to the consideration of the British government. It would, indeed, be an extraordinary principle to admit that the government of any nation should have its faith pledged, or its operations regulated, by the spontaneous transactions of individuals.
§ Mr. Hammersley
expressed himself perfectly satisfied by the declaration of the 215 noble lord, which would, he had no doubt, serve to dissipate a great deal of mischievous delusion.
§ The Resolutions were then agreed to.