HC Deb 15 February 1826 vol 14 cc416-23

The House having resolved itself into a committee of ways and means, Mr. Herries moved, "That the sum of 3,500,000l., a part of the sum now remaining in the Exchequer, to complete the aids granted for the service of the years 1823, 1824, and 1825, be applied to the service of the year 1826."

Mr. Hume

begged to ask, whether it was the intention of government to leave the Bank to make purchases of these Exchequer-bills, as they had hitherto done; and whether they were, at one time, by a great over-issue, and, at another, by restraining that issue, to put at hazard the property of Englishmen, whenever they thought fit? If men had been guilty of some of the mad speculations and improvident sacrifices attributed to them, let them take their fate; but let not: the innocent be confounded with the guilty. It would require strong proofs to satisfy the minds of the public, that the Bank of England had not, by purchasing immense quantities of Exchequer-bills at one time, and issuing them out in equally immense quantities at another, aggravated the late unfortunate panic. He had strong objections to a power remaining in the hands of any set of men to raise and sink the market at their pleasure, from five to ten per cent. Every country banker, too, should be compelled, four times in the year, to furnish an account of all his issues in the preceding quarter. Such a proceeding would, in some measure, be a check upon the over-issue which had been the subject of complaint. They ought also to know the amount of all the Exchequer-bills which had been purchased by the Bank of England, that they might discover, if possible, the reason why Exchequer-bills had been, at one time, at from 35s. to 50s. discount.

Mr. Maberly

thought there would be but little security to the holders of Exchequer-bills, until the public were made better acquainted with the nature of the Bank transactions with government, and with their dealing in those bills, than they were at present. There were instances in which the Bank had gone into the market and made purchases, so as to raise the value of those bills 20s. The Bank had a right to do so if they pleased, and they had also a right to withhold their proceedings from the public. But he trusted that the government and the Bank would see the necessity of relaxing on this point. They had of late acted in a most liberal manner; but they would deserve still more praise, if they consented to make their transactions more public than heretofore. This was necessary in consequence of their intimate connexion with government.

Mr. Irving

alluded to the purchase of Exchequer-bills by the Bank, and contended that the directors were justified in those purchases. If the circulating medium was not sufficient for the wants of the country, no injury was done by the purchase of those bills. If it was too much, why should not the Bank sell? The object of mercantile men was to procure discounts for short periods, and it was of little consequence to them whether those discounts were afforded them from an issue of Exchequer-bills, or a deposit of bullion. If the Bank had the means of purchasing Exchequer-bills, he saw no reason why they should be prevented. The events which had taken place had, in many parts of the country, left the people without any means of barter. If government would send down 3 or 400,000l. to be distributed by skilful clerks, on good security, in the various provinces, it would, in his judgment, restore the deficiencies in the circulation, and relieve that class of the community who most required assistance.

Mr. Bright

thought ministers should have directed more of their attention to the condition of the country in 1793. If they had compared it with the present, they would have seen that the two were nearly similar; they would also have seen that the remedy adopted by government at that period had had a considerable effect in relieving the distress. Why, then, should not they have recourse to the same means of averting the evil? If the issue of Exchequer-bills in 1793 had been productive of such beneficial effects, what was there to prevent a similar issue of them now from operating in the same way? The situation of the country was so peculiar, that it would afford an ample justification to government for deviating a little from any stern principle which they might have formed for the guidance of their proceedings on ordinary occasions. It was absolutely necessary that some plan should be devised for supplying the provinces with a circulating medium. If 300,000l. were dispersed in small sums, under the direction of skilful persons, through different parts of the country, it would, in his opinion, have a greater effect in relieving the present distress than any other measure which could be devised.

Mr. Pearse

said, it was the duty of the Bank to be cautious how they interfered with prices; and, as to Exchequer-bills, they ought not to deal in them, unless there was a necessity; but, when that necessity arose, it was unbecoming the hon. member for Aberdeen to make repeated attacks on the Bank. These were times when men ought rather to endeavour to remove impressions which affected public confidence than encourage them. An advance of money must come sooner or later from the government, and the sooner the better. He was sorry that ministers had not been prevailed upon to listen to the application that had been made to them; for he was sure that sooner or later the assistance applied for must be granted.

Mr. Hume

said, he had not blamed the Bank for what they had done. What he had complained of was, that the Bank had the power at will of raising the value of every man's property, by dealing in Exchequer-bills; and he had made the observation that the House might be able to ascertain the extent of the dealings of the Bank, and their effect on prices. It was no assertion of his, but a general opinion in the city, that, during the recent distress, the interference of the Bank in the money market had produced a very sensible effect; and, until the necessary infomation was laid before the House, he must abstain from giving praise where he was not sure it was due. Indeed, he feared there had been much irregularity in the dealings of the Bank. It had been very justly observed by the late director, Mr. Ricardo, that it was the duty of the Bank Directors to make the best bargain they could with the government for the proprietors. The evils caused by the fluctuation in the value of Exchequer-bills, should be ascribed to the government, and not to the Bank. If the government had no debt, there would be no need of Exchequer-bills. It was owing to this, that the right hon. gentleman, though he admitted the present disastrous situation of the country, did not dare to sanction the issuing of even 500,000l. worth of Exchequer-bills for the purpose of relieving it, lest the exchanges should be thereby turned against us. Had the sinking fund been applied in buying up Exchequer-bills, the evils which had arisen from the fluctuations in their value could never have occurred. What those evils must have been he would eave to hon. gentlemen to figure to them- selves, when he reminded them that these bills had, in the course of a very few days, been reduced from sixty-five shillings premium to four guineas discount. In his opinion, the resolution adopted by this House the other evening was calculated to increase the present distress, by causing a considerable portion of the circulating medium to be withdrawn.

Mr. Irving

said, he should wish to know, if Exchequer-bills were not issued, how the Bank of England were to give a sufficient supply of notes? Perhaps it would be answered, by discounting mercantile bills; but it was not at all times that these discounts were required. In December and January last there was a considerable portion of mercantile bills presented to the Bank to be discounted; but of late there had been so little trade, that, comparatively speaking, few discounts were wanted. In his opinion, the buying and selling of stock contributed much more to the fluctuations in the value of property than any traffic in Exchequer-bills. He considered that the best and most convenient issue of the Bank rested on Exchequer-bills. They afforded a much more regular and certain channel through which Bank issues might be supplied than any other. He was sorry that ministers had treated so lightly the application which had been made to them; for ultimately they would be compelled to have recourse to the measure suggested. The salvation of the country depended upon it. It had been urged, that the refusal was necessary to check further speculations. This, in the present situation of the country, was an objection too frivolous to require an answer.

Mr. Maberly

was of opinion, that if any plan was attempted for relieving the present distress which should cause the exchanges to turn against us, the distress would be very considerably aggravated. The government were placed in a very difficult situation. It must be recollected that they had already a debt of 30,000,000l. in an unfunded state. In his opinion, the Bank might accommodate the merchants by discounts at a longer date than usual, upon having goods deposited as a security. They might readily get a bill passed for enabling them to do this.

Mr. Hume

said, that when it was considered that the Bank had 18,000,000l. locked up in the hands of government, it could not be expected that they could afford that accommodation to the public which it would otherwise have been in their power to have afforded. Government having absorbed all their capital, the Bank had only their profits, wherewith they could grant discounts to the merchants. What was the amount of those profits was kept a mystery. No such secrecy prevailed in the affairs of any other public bank. There was no such mystery as to the affairs of the banks of France and America. The amount of the weekly discounts at the Bank should be known to the public. He did not mean to blame the Bank. If they were apprehensive that the exchanges were likely to be turned against this country by an extensive issue, under present circumstances, they had acted right in contracting their discounts.

Mr. C. Grant

said, he was astonished to hear an hon. member declare that the ministers had treated this momentous subject with levity. There was one consolation in the midst of all their difficulties, namely, that even the gentlemen who habitually opposed the government, had clone justice to the feelings of his right hon. friend the chancellor of the Exchequer; and he was persuaded that no man, who investigated the subject dispassionately, could doubt, that, if the government had acted erroneously, it at least proceeded from a strong desire to render that assistance which their feelings prompted them to render, but which their public station prevented them from carrying into execution. They were assailed on all sides by devices and projects for relieving the public distresses. The hon. member for Bristol had said, that the ministers ought not to adhere to principles; but he could assure that hon. member, that if ministers had hearkened to the various counsels offered them, there was nothing in principles or morals from which they must not depart, or a single principle of policy which they must not have subverted. With respect to the effect of issuing Exchequer-bills, it appeared to him to be of little importance to the public how the Bank notes found their way into the market, so that they secured an adequate circulating medium.

Mr. T. Wilson

was of opinion, that an issue of Exchequer-bills by government, would have proved more beneficial than any relief which could be granted by the Bank. It had been observed, that the Bank should be liberal in their discounts; but the parties to whom the Bank were in the habit of granting discounts, were not the persons who stood most in need of assistance. The persons wanting relief were those who dealt in goods. In his opinion, the issue of Exchequer-bills by government, instead of causing such bills to be at a discount, would have a directly contrary effect. It would tend materially to restore confidence, the loss of which had been one of the principal causes of the present distress; and it would tranquillize the minds of numerous individuals, who would not be afraid of parting with their money, when they knew that they could have assistance if they required it.

Mr. Hutchinson

was desirous that justice should be done to all parties, and particularly to the government, for their conduct in the recent transact ions. Though there might be a difference of opinion as to the merits of many of the measures proposed by government, he thought that there could be no difference of opinion upon this point—that ministers had evinced every anxiety to administer relief to the existing distress. He was of opinion, that from their past conduct the country might be confident that ministers would set their shoulders to the wheel to rescue the country from its present unfortunate situation. He thought, however, that the system of Government was too expensive, and that it was the duty of parliament to make them diminish it.

Sir F. Blake

commended the conduct of government. Their principles of free trade particularly entitled them to the thanks of the country, and he hoped they would not, by any complaints or representations, be induced to depart from them.

Mr. Herries

said, that one observation had fallen from an hon. friend of his, which he fell it necessary to notice. His hon. friend had stated, that the government had received lightly the representations of distress which had been made to it. Now, he was sure that no solicitations had ever been received with greater attention than those which had recently been made to government; and if the noble lord at the head of the Treasury, and the chancellor of the Exchequer had not complied with the requests made to them, it was not without giving to them a full and patient examination, nor without being convinced that they ought not, for public reasons, to be acceded to. His hon. friend had given it as his opinion, that the large purchase of Exchequer-bills, which had taken place that morning; would have produced a greater effect, if it had been a measure of the government, instead of a measure of the Bank. Now, the hon. member ought to have known, from what had fallen from his right hon. friend last night, that the measure was one which the Bank would never have felt itself justified in undertaking, if it had not been for the communication which his right hon. friend had made last night. He trusted, therefore, that his hon. friend would admit that the government had met his views in this respect.

The resolution was agreed to.