§ The House having resolved itself into a committee on the Exchequer Consolidation Acts,
The Chancellor of the Exchequer
said, that he did not anticipate any objection to the arrangement he was about to propose, and he hoped, at that late hour, no detailed discussion would take place. The committee was well aware, that by the practice of the exchequer, the revenue received for the purposes of the consolidated fund accumulated till the end of the quarter, and those sums had not been made applicable to the public service, but the Bank had had the advantage of the interest on them. The accumulations of the sums thus received for the consolidated fund, which were not applicable at present, unless to the payment of the interest of the public debt, the sinking fund, and the civil list, he proposed to apply to the public service, till required for their original purpose. It was evident that large sums of money came daily into the exchequer, and were at present inapplicable to any public service until the close of the quarter The interest on these sums had been lost to the public, and had proved a source of emolument only to the Bank of England. The simple proposal, therefore which he had to submit to the House was, that the public should have the benefit, instead of the Bank, of those accumulations. The sum to be thus applied, however, he should propose to be limited to a definite amount, namely, 6,000,00l., which was nearly as large a sum as was usually accumulated from one quarter's end to the other. He should further propose, 925 that at the time these sums were taken from the exchequer, exchequer bills should be replaced as a security, which bills should be realised at the close of the quarter. It would be recollected by the committee, that a negotiation between the Bank and Mr. Perceval took place in 1808, and it would be found, by a referrence to the report of a committee of the House, that Mr. Perceval then entertained a similar idea to that which he was now about to submit. It appeared that at that time he proposed to render the growing produce of the consolidated fund applicable to the public service, making provision for its re-instatement at the close of the quarter. The extent to which Mr. Perceval intended to carry the application was 5,000,000l., but this plan was subsequently given up, and the minister thought the more convenient mode would be to accept from the Bank the sum of three millions, without interest, in lieu of the advantages the public would have otherwise derived from the appropriation of these accumulated sums to the public service. In Ireland, a practice similar to the one proposed had been acted upon. The agreement which Mr. Perceval had entered into with the Bank had expired on the 5th April 1815; and it was afterwards, by different acts of parliament continued to the 5th April 1818. At the time when Mr. Perceval made his arrangement, the balances in the hands of the Bank were far more considerable than they were at j present. At that period those balances amounted to between 11,000,000l. and 12,000,000l. Since that time this amount had greatly decreased in consequence of the peace. A very large sum had also been taken from these balances by the new arrangement with regard to the payment of the sinking fund under the consolidation acts, by which the sums applicable to the redemption of the debt, in-stead of being paid in large masses, were issued gradually, without leaving any large balances unemployed in the hands of the Bank. The remaining balances had been reduced as low as could be allowed with safety; and, upon a reference to the accounts upon the table it world be seen that there were seldom in the hands of the Bank balances for more than ten days of what the public service required. He was sure the committee would agree with him, that it would be scarcely prudent to reduce the balances in the hands of the Bank below the pre- 926 sent amount; but the reduction of these balances was a subject to which the treasury would pay its vigilant attention. Upon the expiration of the agreement made by Mr. Perceval, by which the Bank agreed to advance the sum of 3.000,000l., much discussion had taken place, and it had been his duty to inquire whether the Bank would consent to the proposed arrangement. He had now the satisfaction of stating to the committee, that the Bank had expressed its willingness to assist in carrying this plan into execution. In the measure he should propose, he should also introduce a clause limiting, for a certain time, the application of the sum of 6,000,000l., so taken out of the exchequer, to the public service, and applying it to the liquidation of debts due to the Bank from government. It was necessary to observe, that the arrangements would be subject to any arrear of debt due to the Bank, outstanding from the preceding quarter. It would be recollected that there was an arrear of the consolidated fund amounting to upwards of 3,000,000l. outstanding from 5th Jan. last to the liquidation of which debt a portion of this sum of 6,000,000l. would be applied. This, then, was the substance of the plan he had to propose. He himself felt convinced of the benefit the public would derive from such an arrangement; but he was aware that others might be of a different opinion; and with a view to satisfy all parties, he should introduce a clause for limiting the continuance of the measure to the 5th July, 1820. He concluded with moving, "That it is the opinion of this Committee that it is expedient the growing produce of the Consolidated Fund in Great Britain be made applicable in each quarter, to an amount not exceeding six millions on the whole at any time, to such services as shall be voted by parliament, until the same be required for the services for which it is appropriated."
§ Mr. Maberly
complained, that the 9th of March had arrived before any thing had been done to explain and settle the finances of the year. The six millions mentioned by the right hon. gentleman as being partly intended to cover arrears, were now sunk to 2,700,000l. which would not be sufficient by 300,000l. to repay the three millions due to the Bank. The current expenditure of the country was twenty millions, and the amount of the unfunded debt forty-eight millions. 927 If the former were divided by twelve, the monthly expenditure would be found to Amount to about 1,700,000l. To meet this, there was a total in regular taxes of not more than 7,000,000l. If the monthly 1,700,000l. were multiplied by three, the expenditure of the quarter would appear to be 5,100,000l. and only 4,000,000l. of ways and Means to cover it, leaving a deficiency of 1,100,000l. on the April quarter. He had made these statements to show that the country might be deprived of money altogether for the ensuing quarter: for the exchequer bills might then be paid in on account of the revenue. If it were said that they would not, then the right hon. gentleman must raise the interest on them, for they were already at a considerable discount, and would of course be paid in if it continued to increase. Where, in that case, should we find funds to meet the expenditure from April to July, and the other quarters? With a deficiency in our revenue nearly equal to the sinking fund, what would be our situation but a state of bankruptcy, if war or a rumour of war should arise—if the ferment in France did not subside, and a new revolution took place in that country.
The Chancellor of the Exchequer
gave the hon. gentleman credit for not having intentionally misstated any thing in his speech, but he certainly had mistaken several points. The hon. gentleman, in the first place, had said that the produce of the revenue would be exhausted by the 5th of April; but the hon. gentleman must have forgotten entirely, that a great part of the expenditure of the quarter had been provided for from the produce of the past year. In every year there were sums of money remaining from the supplies of the previous year. This had been the case in 1818, and it was the case. in the present year. The current revenue of last year had not been required to be issued for the public service till March, the supplies voted in the preceding year answering the expenditure till that time. With respect to the amount of the unfunded debt, the hon. gentleman was right in stating it at about 48,000,000l., but he had omitted one thing of great importance, namely, that 16,000,000l. had been paid off last year—a sum so large, that if we could then bear it along with the present amount complained of, we might be relieved from any apprehension of being overwhelmed With, unfunded debt. The hon. gentleman║928 had expressed a suspicion that from the discount at which Exchequer bills now were, they would be paid into the revenue. This he (the chancellor of the exchequer) did not strongly apprehend. They were now at no greater discount than 2s., and when formerly at a discount of 20s., they were not paid in. Now, with regard to his plan for meeting the demands of the public service, he must defer any explanation till he came to give the financial statement of the year. That would not be done till the report of the secret committee on the Bank affairs was laid on the table. Till then he would preserve the same silence as to his ulterior intentions which he had hitherto maintained. The financial statement, under the name of the Budget, had seldom been brought forward before the Easter holydays. How soon he should present it to the House this year he could not now say; but neither in the time when it would be ready, nor in the plans which it would contain, would he entangle himself by any pledges which might prejudice the public interest.
§ Mr. Tierney
thought the statement of the hon. gentleman had been by no means answered. The right hon. gentleman had told them, that the current year only began in March, and that the sum requisite before that time would be found from some other quarter; but if this was the case, a sum of money equal to six weeks expenditure, more than any gentleman in the House was aware of, had been granted in the last session. As to the probability that Exchequer bills would be at a discount, the fluctuations in the price of public securities were so great, that it was impossible to say what might be their value at any future time, however near. Exchequer bills had been at 20s. discount; they were now down to 2s, probably on account of this speech, which it was known the chancellor of the exchequer was to make. Whether the speech, now it was more fully understood, would produce a similar effect, he did not know; but if he were a holder of Exchequer bills, he should be more disposed to sell than to buy. It was manifest, that at the commencement of April, if the bills were at the same discount and likely to go lower, the holders would dispose of them to those who had to make payments to the revenue, as there would be a gain of 2s. on every 100l. Was the chancellor of the exchequer content to let the finances of the country rest on the speculation, whether 929 there might or might not be a discount on Exchequer bills? Not only wars, or rumours of wars, but those reports which were every day current, might produce the effect he had described; and then, where the chancellor of the exchequer was to get money he did not know! Not from the Bank to be sure; for if the right hon. gentleman was so delicate that he would not bring forward his financial arrangements while the inquiry concerning cash payments was in progress, the Bank itself would not be so indecent as to anticipate the report of that committee, by advancing money which it might be necessary for it to keep. The chancellor of the exchequer, by his present course of proceeding, though he must have perfectly made up his mind as to what was to be done, had left it open to speculators to raise or lower the price of the funds as they thought fit. He left the exposure of his financial scheme till after the report of the committee: when that time would be, the chancellor of the exchequer might know, but he (Mr. T.) had not the most distant guess. According to present appearances, from the length of the examinations, he thought it not probable that the report could be made till after Easter; and, if read with the attention necessary to enable them to discuss it, the House could not decide upon it till the middle of May. After the 3,300,000l. of arrears had been paid out of the 6,000,000l. which the chancellor of the exchequer had spoken of, what was to become of the 2,700,000l. which remained? Was it to repay the loan from the Bank? [the chancellor of the exchequer assented]. If this was the case, the whole that the public would save was the interest on this sum; which was so far desirable. But was this any thing to encourage any man as a financial re- source? Beyond the amount of the interest saved, there was not the fraction of a farthing to get the chancellor of the exchequer out of his financial difficulties. At this very time a sum of 13 or 14 millions was to be borrowed, if the sinking fund was to go on. That is, while we were boasting that we had a sinking fund of 18 or 14 millions, we were obliged to borrow nearly the same sum. This was not to be imputed as a fault to the chancellor of the exchequer; but his fault was, that he did not put the country in a way to see its real situation. By the adoption of repeated and varying shifts, and by holding out fallacious promises, he enabled 930 the wary to prey upon the unwary; and if his study had been to play into the hands of the stock-jobbers, he could Mot have conducted himself otherwise. So manifestly true was this, that no man but the right hon. gentleman, whose character he acknowledged to be clear from any possible imputation, could have conducted himself thus without incurring suspicion. He had been constantly buoying up the House with the hope of prosperous days, which the House was to arrive at without effort. He had boasted that he would pay oft" the 5 per cents, and had made every exertion to lower the interest of money, for no other purpose that he could divine, but to make flourishing speeches about the state of public credit. Why did he not now give a general view of the budget which he would hereafter have to propose? Why, but for the purpose of delusion, did he keep from the House the view of difficulties which sooner or later they must meet? The main question was, what was to be done with the 48 millions of unfunded debt? That question the chancellor of the exchequer might answer now, but he reserved himself for a grand display. He might, however, depend upon it, that no grand display would he make this year. He, or the system of finance adopted by the ministers of whom he was the mouthpiece, began to be thoroughly understood. In the mean time, the most ridiculous rumours were permitted to affect the price of the public securities. There were even men who got their living by supposed examinations in the secret committee. He had no doubt a man might turn a penny by saying what the evidence was which was received by the committee on this or that morning. He should now trouble the chancellor of the exchequer no further. It was in vain to press him to state what was the situation of the country, and what the remedy he had to apply. He (Mr. T.) however, wished not to be supposed to hold out a hope of any secret remedy. There was no remedy but in severe measures. But those measures the House should be informed of at once.
§ Mr. Huskisson
said, that with respect to the plan now under consideration, the right hon. gentleman had made it a reproach to ministers, that they had not sooner made the Bank balances available for the purposes of the government. It was right to adopt that plan at present; but he denied that any advantage would 931 have accrued from having adopted it sooner, as the plan formerly resorted to was as good as this of applying the 6,000,000l. to the use of government. That, however, was a question which would afterwards come under discussion. Both plans had been before the House, and it had then been thought better to take the three millions, than the floating benefit of the Bank exchanges. The right hon. gentleman had said, that he, as a member of the committee, felt the difficulty of bringing forward matters connected with the inquiry of the committee. For the same reason, it would be impossible for his right hon. friend at present to bring forward any plan of supply, without exposing himself to questions respecting the arrangements of the committee, which it would be improper to answer. Without knowing what was to be the result of the committee above stairs, it was, indeed, impossible to enter into any plan of supply for the year. Whatever that report might be, he hoped they would be able to discharge their duty by providing for their peace establishment, and for the support of the public credit. They wished to make such efforts, not on partial statements, but on a relative view of the expenditure, the revenue, the funded debt, and the state of the public credit: and he trusted the result of their exertions would be the diminution of that debt, and the confirmation of that credit. He hoped the committee would use the utmost diligence in preparing their report, and that when it came before the House, they would be enabled to do their duty to the country, and to make good the promise which they had given, and in which the right hon. gentleman had joined, that they would not hesitate to make the necessary sacrifices, in order to support the public credit.
§ Mr. Tierney
—The right hon. gentleman forgets one species of severity to which I alluded, I mean the severity of retrenchment. The absence of that severity presses hard on the people, who are to pay, but is never thought of by those who are in the habit of receiving.
§ Mr. Grenfell
was glad, that these balances would now be available for the public service. For the last four years, there were generally 6,000,000l. in hand, and those balances consisted at present of about 7,000,000l. The argument of the right hon. gentleman (Mr. Huskisson) was a strange one. He contended thus— 932 "formerly the public had the use of 3,000,000l. without interest, they will now have 6,000,000l., but yet they gain nothing by it." He did not understand this arithmetic. If he took the matter rightly, the country was in future to have the use of 6,000,000l. of these balances: if so, he would ask, must they not be 3,000,000l. better off than they were when, they had the loan of 3,000,000l.?
The Chancellor of the Exchequer
said, that when, some years ago, the hon. gentleman adverted to a plan of this kind, he did not oppose the principle, but merely stated, that it could not be carried into effect, without breaking faith with the Bank. He believed the new system would be advantageous in a very material degree; and certainly the Bank were making considerable sacrifices. The country stood in a much better situation than in Mr. Perceval's time. They were now about to take six millions for seven; whereas, in the former period, Mr. Perceval took 5,000,000l. as a compensation for twelve millions. At the same time, it must be observed, that the saving of interest would not be so large now, as when the Bank advanced 3,000,000l. free of interest. Six millions, it was true, would be accumulated in the Exchequer, at the end of each quarter; but they could not reckon as if the interest on that entire sum was saved from the commencement of the quarter. It was, in fact, a gradually increasing fund, and not a fund formed on the moment.
§ Mr. Grenfell
—The average balance is 7,000,000l., and I understand we are to have the use of six of them. Is this so? Are we to have six or only three millions?
The Chancellor of the Exchequer
—The six millions which we are to take from the Exchequer are not forthcoming at the beginning of the quarter. It is an accruing, a growing fund. We take the money as fast as it comes in; but we cannot, at the commencement of a quarter, say, that we save the interest on 6,000,000l. As we have small sums coming in from time to time, to form the 6,000,000l. It is only for a very short period that we can say we save the interest on that entire sum.
§ Mr. Protheroe
hoped the secret committee would let the country know its real situation. His right hon. friend had talked of severe measures. If such were necessary; if there were any unsound parts in our financial system, the chancellor of the exchequer ought to let the 933 country know the fact, that they might be prepared for the worst.
§ The resolution was agreed to.