HC Deb 17 April 1826 vol 15 cc281-4

The House having resolved itself into a committee of ways and means,

The Chancellor of the Exchequer

said, that he rose to propose certain resolutions respecting the funding of Exchequer-bills, a measure which had been adopted by his majesty's ministers for the purpose of relieving the Bank from a portion of the advances which had been made to government, and of diminishing the amount of Exchequer-bills already in the market. In pursuance of that plan, government had, in the course of last week, sent a proposal to the Bank, stating the nature of the measure, and explaining that it was intended to fund Exchequer bills, by creating a new stock, which should yield four per cent., fixing the amount of stock at 107l. for each subscription of 100l. in Exchequer-bills, or 100l. 10s.cash; and it was further proposed, in order to make the proposition more acceptable to the parties who might purchase, that the four per cents should not be redeemable in a less period than seven years. In consequence of this measure, books were opened at the Bank on Wednesday last, and it was fixed that the interest should commence on the 5th of April current, and that the first payment should be made on the 10th of October next. The result would yield a bonus of two per cent. The total amount proposed to be subcribed for was 8,000,000l. He was happy to state that the measure had been most successful: 8,000,000l., or near 9,000,000l., had been purchased, and he had no doubt, that if the transaction had not been closed, a still greater amount would have been subscribed for. All that remained now was, to state the charges which would be created by this funding of Exchequer-bills. The addition thus made to the funded debt would be 8,560,000l., the interest on which would amount to the annual sum of 342,400l. The addition of the sinking fund would be 5,600l., not upon the stock created, as the only sinking fund necessary would be one per cent upon the funding and capital created, making a total of 350,368l., including 2,568l. for the expense of management. The difference in the charge on the operation would be 77,000l. This deficiency he meant to supply by no new tax, but to charge on the consolidated fund; so that it would make no increase to the public burthens. It was not necessary for him to go further into explanation, as it was not probable that the House would be disinclined to confirm a bargain which was so fair for the parties and the country. The right hon. gentleman concluded by moving the several resolutions.

Mr. Irving

asked, whether any arrangement had been made for including in the payments to be made to the Bank the sums they had disbursed in the purchase of Exchequer bills in the early part of the year?

The Chancellor of the Exchequer

replied, that undoubtedly the Bank would be paid off at the most convenient time, and the present arrangement would enable the government to do so; but the payments would be made at such times and under such circumstances as the state of the currency and the demands of the Bank would render it most desirable to the government and useful to the country.

Mr. Maberly

begged to ask, how the; right hon. gentleman proposed to pay off the new debt, and what was the amount of the new sinking fund which he proposed to create?

The Chancellor of the Exchequer

replied, that, by an act of parliament, the sinking fund was to go on increasing at compound interest until it amounted to one per cent, on the whole amount of the debt. The whole debt, funded and unfunded, was already provided for by the regular sinking fund; so that the sinking fund to be raised was only upon the sum which formed the difference between the original amount of Exchequer bills as it stood under the name of unfunded debt, and the new stock now about to be created, forming a sum of about 560,000l.

Sir. J. Wrottesley

asked, if there was any precise time in which the right hon. gentleman proposed to himself the payment of the Exchequer bills?

The Chancellor of the Exchequer

replied, that it was undoubtedly his object to have the means of paying them off as soon as possible; but, as he had already stated he was not under an obligation to pay them off at any particular time, but was at liberty to watch the market, so as to take advantage of such opportunities as occurred most beneficial to the public interests; as it was impossible, therefore, to mention any precise time—all he could say was, that it would be done as soon as convenient, although he thought it would be very imprudent to take any sudden measures which would affect the circulation.

Sir J. Wrottesley

asked, what was to become of the surplus which would thus remain in the hands of government, provided it were not found necessary to make the repayment of the greater part to the Bank?

The Chancellor of the Exchequer

replied, that the effect of that would be, to render a smaller issue of Exchequer-bills by the government necessary, than might otherwise be required.

Sir F. Ommaney

wished to know, whether a preference in the subscription for the new stock was not given to those who offered money rather than to those who went with Exchequer-bills?

The Chancellor of the Exchequer

was not aware that he had said any thing about a preference being given to any party. The conditions on which the new stock was to be issued were known to the public on Wednesday last. But he had no objection to lay before the House an account of the nature of the subscriptions for the stock, distinguishing the amount in Exchequer-bills from that in cash.

The resolutions were then agreed to.