EXCHEQUER BILLS BILL. (Hansard, 13 February 1818)

§ Mr. Tierney
said he had a question to put to the chancellor of the exchequer, to which he felt it of great importance to obtain a definite answer. The right hon. gentleman had originally called for a grant of 39 millions by exchequer bills. He now was satisfied with a grant of thirty. What therefore he wished to know was, whether the sum of six millions to be paid to the Bank on the 5th of April next, was included in these 30 millions? In other words, would this grant meet the current expenses, and discharge the demand of the Bank?

The Chancellor of the Exchequer
entertained no doubt that the sum now voted would cover every charge that could arise during the period in question, not excepting those payments to the Bank which the gradual liquidation of its claims would render necessary, and which he had before stated would be made in money.

§ Mr. Tierney
did not think it of much importance whether the six millions was repaid in one sum, or in various sums; but the answer of the right hon. gentleman induced him to ask whether the repayment would take place on or before the time specified in the act, which was, he believed, the 5th of April next.

The Chancellor of the Exchequer
said, that no part of this sum would he due until the 5th of April. Then the repayment would commence, and, as he said, would, for mutual convenience, be gradual.

§ Mr. Tierney
said, he should suppose, that the convenience of the party to whom the money was to be paid, would be best consulted by liquidating the demand. But it was most important to the country that it should be repaid to the Bank at the time specified by law, because it went to afford to the Bank the facilities of meeting its engagements with the country, by paying its notes in cash. But what said the chancellor of the exchequer to night? That on the 5th of April the 420 payment of the six millions would take place?—No such thing—it would only commence. So that if the right hon. gentleman should think proper to pay the Bank a one-pound note, he would deem the enactment fulfilled. On a former evening he had congratulated himself on having at length pinned down the chancellor of the exchequer to something precise. But now they were wholly at sea again. Every thing definite that the right hon. gentleman had before stated relative to the payment of these six millions to the Bank, at the time specified, he had now knocked on the head. If there had been any arrangement between the right hon. gentleman and the Bank, in common candour why not state it? Then we should start fair. What he was now told satisfied him as to a rumour which he had that very day heard from persons conversant with these affairs, namely, that the repayment of these six millions to the Bank, as positively asserted by the chancellor of the exchequer, never was in contemplation. He was never able to comprehend what the right hon. gentleman was at. All persons who thought they understood the English language, fancied the other evening, that the right hon. gentleman said the Bank would be paid in money. Now, however, it appeared, that nothing of the kind was to take place. The best rule for hon. members would be, whenever they asked the right hon. gentleman a question, to wait a fortnight before they satisfied themselves that they completely apprehended his answer.

The Chancellor of the Exchequer
was persuaded that the right hon. gentleman was the only person in the House who understood him on a late occasion, in the way in which he had described. On that occasion the right hon. gentleman had asked him whether the six millions which would become due to the Bank on the 5th of April next, would be paid in exchequer bills or in money? His reply was, that it would be paid in money. But he had not said—indeed the question had not been asked him—that it would be so paid on any given day. His answer was simply to be understood in this sense—that government did not intend to renew the six millions in exchequer bills, but that at some period within the time specified by act of parliament, that sum would be paid to the Bank in money. He had not stated the precise time when it would be actually paid, but the want of the money could 421 in no way impede the resumption of cash payments by the Bank, abundant provision having been made in time with reference to that object.

§ Mr. Tierney
observed, that holding in his hand an act of parliament which said that the six millions was to be repaid to the Bank on the 5th of April next, he had asked the right hon. gentleman opposite whether it was his intention to repay it in exchequer bills or in money? The right hon. gentleman had replied, in money. He certainly did then understand that it was to be so repaid in money on the day specified in the act. Such was the obtuseness of his intellect, that when he knew that money became due on the 5th of April, and when the right hon. gentleman told him that it was to be paid in money, he was fool enough to believe that it would be paid on that day [a laugh].

§ Mr. Sharp
wished to ask, whether it was the intention of government to pay these six millions to the Bank of England before the expiration of the act authorizing the Bank to suspend their payments in cash?

The Chancellor of the Exchequer
said, he had already stated, that the repayment would take place in such proportions as occasion might require.

§ Mr. Grenfell
declared, that the impression on his mind, from what had fallen from the right hon. gentleman on a recent occasion, was, that this payment was to take place, in cash or in bank notes, on the 5th of April. But now the right hon. gentleman said, it was to be paid as it might be required by the Bank; though, but two minutes before, he had stated, that it would be paid before the end of the session. By the act of 1816, an option was given to government to prolong the payment to the Bank of this loan of six millions, for three years. Did the right hon. gentleman mean to state, that if the Bank did not require the money, or if he were not disposed to pay it, he should feel justified in delaying the payment so long as that period of three years? It was not, however, entirely for the purpose of putting this question that he had risen. He rose to express his hope, that the right hon. gentleman, in raising money, would adhere to the system which had been pursued, so advantageously for the public, in the mode of issuing exchequer bills during the last five months; namely, to issue them at the 422 rate of two-pence per diem per cent, which was about equal to three per cent, per annum. If from this were deducted the premium of one per cent borne by those bills since October, it would appear that money might be raised at present at so small a rate as two per cent. This was certainly a state of things extremely advantageous. Besides the positive saving (which if the same amount of exchequer bills were issued this year as the last, would come to 5 or 600,000l. there was another most important benefit, namely, the tendency to keep down the rate of interest of money in the country. Government being able to raise money at two per cent. must in time establish as low a rate of interest throughout the country. He was one of those who were of opinion that a low rate of interest must be highly advantageous to the community. It was in itself evidence of a state of prosperity. It stimulated national industry; it stimulated commerce; it stimulated agriculture. It afforded facilities to that great, respectable, and preponderating class, the landed interest, to raise money on the security of their estates at a moderate interest, for the improvement of their estates. During the latter periods of the late war, it was absolutely impossible for any gentleman of landed property to raise a shilling on that property at legal interest: and those who felt an imperious necessity to raise money on their estates, were compelled to do so, either by an infraction on the existing law, or by consenting to the most onerous and ruinous terms.—He wished to add a few words with respect to the discounts of the Bank of England. He had not the most remote disposition to interfere with the management of the Bank in this respect. He was far from thinking that that House had any right to interfere with the Bank respecting their rate of discount. At the same time, considering the privileges, immunities, and advantages, which the Bank derived from their connexion with government and the legislature, he hoped he should not be thought too assuming, when, as a member of that House, and with a view to the production of as low a rate of interest as possible, he suggested whether it might not be expedient and becoming in the Bank of England to reduce their rate of discount from five to four per cent. If, as a Bank proprietor, he were addressing the court of proprietors, he would recommend 423 such a measure, even on the ground of its advantage to the Bank itself, as there was little or nothing to do while the discount was maintained at 5 per cent, while, in all probability, there would be a great deal to do were the discount reduced to 4 per cent.

The Chancellor of the Exchequer
said, that the option of postponing the repayment of the six millions to the Bank for three years would not be accepted, but that they would be repaid in the course of the year. He agreed, in a great measure, with what had subsequently fallen from the hon. gentleman. It was undoubtedly very gratifying to government to be enabled to raise money on terms more advantageous than had ever before existed.