§ The Chancellor of the Exchequer moved the order of the day for going into a Committee of Supply. On the question, that the Speaker do leave the chair,
rose to address the House. He began by observing that, though he had heard a great deal lately of the mischief arising from overtrading, he had not heard it stated that the right hon. gentleman opposite had taken any pact, in producing, any of the inconve- 1260 nience under which the country was at present labouring. Now it was his opinion, that the government, and especially that part of it over which the right hon. gentleman presided, had, in concert with the Bank of England, added greatly to the previously existing causes of distress. He felt it to be his duty to point out where the great error in their conduct lay, and to show by what means they had aggravated the calamity under which the country had been recently suffering. The statement which he had to make he should divide into two parts. The first would relate to the mismanagement of the unfunded debt, and the latter to the misarrangement and mismanagement of the funded debt; both of which had, in his opinion, added greatly to the inconvenience of the country. He was now called upon to allude particularly to the manner in which the government had managed the issue of Exchequer-bills. He should suppose, from the ready eagerness with which certain hon. gentlemen came down on an evening to vote away 30 or 40,000,000l. of Exchequer-bills, that they did not know what the nature of those securities was. He was therefore induced, as he should found a strong case upon them, to enter into a description of this species of security. Exchequer-bills were bills issued for a debt previously contracted, which was usually denominated the unfunded debt. They were not payable on demand, though they were almost equally pressing and dangerous—they were rather bills on the government, payable at sight. He had a paper in his hand, which had been recently printed, showing exactly at what periods these bills at sight became bills payable on demand. And he ought here to inform the House, that when they were payable on demand, they became receivable as payment for the revenue, and that government, when it was obliged to pay them off, paid them off either in money or revenue receipts. Hence it was that when government advertised that it was ready to pay off Exchequer-bills, the time was always found to be near that in which the revenue became due. Though he should have some difficulty in stating what portion of Exchequer-bills had been paid into the Exchequer on account of the revenue, he could now show what quantity of bills they had due on particular days, without having one shilling in their coffers to meet them. On the 6th of April, 1825, there 1261 were 6,258,00l.; on the 6th July in the same year, 30,000,000l. of these promissory notes, payable at sight, due and receivable as money by the revenue. On the 11th of October, there were 20,160,000l.; and on the 6th of January, 7,400,000l. of these dangerous promissory notes in existence. This would be sufficient to show the danger which might arise from a too copious use of these securities. He expected to hear from the right hon. gentleman opposite, that this was the ordinary mode of getting money for the government. True, it might have been so; but then there was a wide difference between the time when the restrictions on the Bank were in existence and the present time, when the issues of the Bank were payable in gold. In looking at the debt thus created by the government, he was able to show how dangerous it was, not by putting an imaginary case, but by putting a case as it really had happened. In December last, Exchequer-bills were at 80s. discount. The government saw a depreciation of its paper arising out of its over-issue. No one could doubt that this paper, like any other paper, could be over-issued; for the proof of over-issue was discount, as the proof of the contrary extreme was premium. When, however, the Exchequer-bills were at a discount of 80s. the Bank very good-naturedly stepped in, and raised them to par. It was, moreover, at the pleasure of government to raise, whenever it might see occasion to do so, the interest upon this species of security. Notwithstanding ail these advantages, they were not able to keep them from depreciation, and on the 14th of February they were again at a discount of 20s. Then the Bank stepped in again, and again the Exchequer-bills were raised to par. Could, it then, be doubted by any man who was acquainted with, or who would take the least trouble to understand the subject, that this species of paper was a most dangerous one to be afloat in the market r It appeared that the Bank had advanced 5,500,000l. towards the payment of the January dividends; and if they had not done so, it was impossible to say what inconvenience the country might not have felt from the immense amount of Exchequer-bills which were then abroad. The returns showed that in July last, the whole amount of those bills was 30,000,000l., that between July and October there were issued 20,000,000l. and between October and January, 1262 7,000,000l. All these sums might have been forced upon the government instead of money in payment of the revenue; and but for the measure he had alluded to on the part of the Bank, in taking up what was called the deficiency bills, that event must have happened. Where was the government to get money to pay the dividends but for the assistance of the Bank? And how was the Bank to give that assistance but by an extensive issue of notes? Then, said ministers, "If you will give us this, of which we are in present need, and if the exchange should take such a turn as to bring a demand for gold, we will give you another restriction act." Had he not a right, then, to call that a dangerous species of paper which produced consequences like these? He should be told, perhaps, that it was useful, because it was easily negotiable. That very facility increased the danger, and in proportion to the ease with which government adapted it to their own purposes, made it unadvisable for the public interests.—But, let the House suppose the country to be placed in circumstances of difficulty. Suppose the Russian army should march (and there was a greater probability that it would than that it would not), how would the government be able to clear the market of this paper, which then would become a positive and sensible inconvenience? What would become of the 24,000,000l. of paper issued by the Bank? If the exchanges which were always hung, as it were, upon a pivot, should turn round and be against this country, by what means could they be restored? The House had been told in one of the triumphant speeches of the right hon. gentleman, that this was the best and cheapest mode of carrying on the public business. This he wholly denied. When he had suggested to the right hon. gentleman, that a gradual diminution should be effected in the amount of Exchequer-bills, and that this species of unfunded debt should be discharged by means of a tax, he had been laughed at; but he was nevertheless sure that it would have been beneficial to the country, and he was sure that many opportunities had occurred of adopting that measure. There was an opportunity when the funds had been raised from 80 to 90. The ministers told the House that there had been a saving of 300,000l. a-year in the interest on the stock which had been reduced; but they forgot to state, as he 1263 as he contended was the fact, that between 6,000,000l. and 7,000,000l. of capital had been lost to the country. It appeared to him, that instead of appropriating the sinking fund to the discharge of the funded debt of the country, on which it had no operation whatever, it would be better to use it for the relief of the unfunded debt. Upon this part of the finances he thought the conduct of the right hon. gentleman had not been such as was likely to prove beneficial to the country. The right hon. gentleman, in a flourishing speech, had said, that it was not expedient to carry this debt beyond certain limits. Perhaps he would say, that they were those limits which he meant, and if he did he (Mr. Maberly) would call upon the Bank of England to prove that this unfunded debt had been increased to a most dangerous amount. For these reasons, he should submit to the House certain resolutions on this subject, which he would now read; but before they were put, he should touch upon another branch of the subject, in which also he believed there had been considerable neglect.—The hon. member then read the following resolutions:—
"That it appears, by returns to the House, that on the 6th of January, 1826, the amount of Exchequer-bills outstanding and unpaid was, 37,502,017l. 9s. 7d. that on or about the 20th of December they were at a discount of 80s. and that it therefore became necessary to raise the interest previously granted on them, in order to prevent their being paid into the Exchequer as revenue, or a part of them being demanded in cash. And that, notwithstanding this advance of the rate of interest on Exchequer-bills, it became necessary to relieve the market by reducing the quantity on sale, which was effected by means of a large portion of them being absorbed in purchases made by the Bank, which brought them to about par at the end of the month.
"That on the 14th of February they were again at or about 21s. per cent discount, when the Bank came once more in the market, and brought them to par.
"That the Bank, from various circumstances, might not have been able thus to relieve the market without endangering its credit yet, had not relief been afforded, bills paid in as revenue might have left the Exchequer without any means of paying the dividends, provided the Bank could not advance the whole amount of them.
1264 "That the Bank, in order to pay the January dividends, having already advanced 5,548,817l. 9s. 7d. it is highly improbable that it could at such a moment make a further advance of 3,128,183l. (the additional sum necessary) without placing itself in a most hazardous situation; and it appears therefore that although the prompt relief in the purchase of Exchequer-bills given by the Bank did at the moment avert these calamitous consequences; still the danger of having such a large unfunded debt becomes strikingly obvious, by the Bank being obliged a few days since to come into the market a second time to prevent a further depreciation of them.
"That, notwithstanding the low rate of interest which has been paid on Exchequer-bills, it has been both inexpedient and dangerous to leave so large an amount of debt unfunded; not only for the reasons stated in the foregoing resolution, but because it might have been funded on most advantageous terms, and at a saving of some millions to the country, whilst by leaving it unfunded until a period of political difficulty arrives, it cannot fail seriously to affect public credit, and to impair the energies of the country; and that it appears therefore to this House, that it is highly expedient to reduce the unfunded debt within more reasonable limits."
These were the resolutions which lie thought it expedient to propose in this, part of his speech. But he considered it proper to state that, in his opinion, considerable error and mismanagement had prevailed upon another most important subject; namely, in respect of the general public debt. It was well known to every hon. gentleman who heard him, that there had been, some time ago, introduced into that House a measure of considerable notoriety respecting what was since known as "the dead weight." This had been, upon parliament, Heaven knew! a dead weight ever since; and so long as the arrangement in question existed was likely to prove so. It had, from the first moment of its being proposed for their adoption, involved them all in considerable difficulty; and, if it were not removed, it could not fail to involve them still more. In 1822, a noble lord, now no more, had come down to the House and had declared, that it was impossible the country could be saved unless it possessed a clear sinking fund of 5,000,000l. [hear.] 1265 He was stating these things with a view of showing how completely the country had been imposed upon. That plan for transferring the dead-weight was adopted by the vote of a large majority of the House. No sooner had the noble lord he was speaking of retired home, after car-Tying this measure, than he began to perceive—probably from its not having been greeted with all the cheers he had expected—that his financial schemes did not seem to be well relished by his hon. friends on the same side of the House; for they had anticipated a reduction in the malt tax of 2,000,000l. This dead-weight measure, which the noble lord assured the House was perfectly correct and expedient, was, in fact, a grant by government, or the public rather, of an annuity of 2,800,000l. for a term of 45 years. This loan, therefore, imposed a total debt upon the country of no less than 75,000,000l. [hear]. He was perfectly accurate in stating it at this amount; for, by returns which he held in his hand, the value of this annuity, now that it had a term of 41¼ years, to run was, according to the estimate of the most experienced accountants,74,632,000l. The loan, therefore, which government, by reason of granting such annuity, might be said to have taken up, was undoubtedly the largest that had ever been raised in this country. In fourteen days after propounding and procuring the sanction of parliament to this plan, the government came down and said, that nothing could possibly save the country but a clear sinking fund of 5,000,000l. But inasmuch as only a fortnight before, the noble lord had held out precisely the same doctrine with regard to the deadweight scheme, the government, in effect, by this latter proposal, violated their own recorded principles, and deserted their Own plans. Great opposition was manifested to this measure, and, if he remembered rightly, the House divided upon it no less than twelve several times. Even in the very last stage of the measure, they Went to a division upon it. His late lamented friend, the hon. member for Port-arlington (Mr. Ricardo), strenuously argued against it; and every time it was proposed to be agitated, made a point of remaining in the House on purpose to oppose it. That gentleman, indeed, always predicted the very serious evils that must arise from it. It might be affirmed as to this dead weight, that the Bank did not 1266 advance the whole of the money necessary for its purchase. But the Bank certainly came forward, and did buy up an enormous amount. They purchased this deadweight annuity up to the year 1828, and to the amount of 13,000,000l. having already advanced other 8,000,000l. upon other accounts. The whole measure was, in every respect, one of the most dangerous which had ever been resorted to; and not the less so, as to the connection of the Bank with it. The Bank might now say, probably, "what fools we were not to sell this amount when we could have parted with it." But he doubted much whether the Bank could ever re-sell any considerable portion of their purchase without, at all events, considerably alarming the country. Their advances had been enormous, and it would have had an injurious effect for them to have come into the money market, with a view of endeavouring to replace the capital they had, in this particular instance, expended. At no former period of that company's history, had they ever been under such immense advances upon security, without convertibility. For the question was not as to the amount of the securities it might hold, on these accounts, but as to their greater or less degree of convertibility. He much doubted whether the Bank ever could convert its share of this annuity. But, was this the only weight which now pressed upon that concern? By no means. They had advanced about 5,500,000l. upon deficiency-bills. It was admitted, moreover, in a recent speech of the right hon. gentleman opposite, that they had made advances upon Exchequer-bills to the extent of 7,000,000l. It was well known that they had also issued about 3,000,000l. to payoff the dissentients, under the operation of converting the fives into four per cents; and latterly they had issued 2,000,000/. more in order to keep the market price of Exchequer-bills at par. Taking one matter with another, the Bank had advanced altogether about 25,000,000l.; from which, deducting about five millions and a half for the deficiency bills, there would be a total of 20,000,000l., in round numbers, advanced by the Bank to the government. Still, it would seem, that they had not had enough of advances; for, upon another scheme—that of loans upon mortgages—they had lent 1,400,000l. Now, from such extensive engagements, he would defy the Bank to disengage itself, without en- 1267 taking upon the country the most ruinous consequences. There was but one way in which it could be disenthralled, at all; and that was for the right hon. gentleman opposite to issue Exchequer-hills very largely. What would any hon. gentleman venture to predict of the effects on public credit that must follow upon the Bank beginning to unlade themselves either of their share of the dead weight, or of those other securities which he had mentioned? Those securities were not convertible within any such period of time as would be necessary to save the credit of the Bank, were it under a necessity of converting them. It was now altogether, it might be objected, a dangerous and inconvenient time to attempt any thing like Such a conversion. But the way to disengage the Bank from this unfortunate bargain would be at once to annihilate the act of parliament which had granted, in the first instance, these most extraordinary, inconvenient, and dangerous means of raising money.
He now proceeded to advert to another topic of singular moment; he meant the account which had been rendered to parliament of the public debt of this country. The results given by that account were very different from those which really existed. The capital of that debt, he would undertake to say, was absolutely above 100,000,000l. more than the sum at which the government of the country had put it down. He by no means imputed this error in their statement, enormous as it was, to any improper motive, or to design on their part. After passing over in detail the various items of debt arising out of the 5, 4, 3½, and 3 per cents.—the account omitted altogether the debt due- on the life annuities and the long annuities. On this very large proportion of the public debt, they had forgotten to put any value whatever; and, more especially, no account whatever was Liken of that absurd and ruinous charge (a charge to which it was difficult for him to assign, with any degree of temper, a distinctive name) the dead-weight annuity. Now, by the government's own accountants the valuation of those charges had been elsewhere, made; and the total amount, as upon these items, was nearly 101,000,000l.; and. that amount, therefore, was to be taken in addition to the total sum of the national, debt, as this had been officially held out to the country up to the present bour.—If this were so—if he was correct 1268 (and correct he contended that he was); in this statement—the interest of that debt must of course have been returned in the same erroneous way—and it was so returned. By a paper, which would be in the hands of every hon. member in a very few days, it would appear that the national debt, on the 5th of January 1819, was 832,000,000l. The debt as it now stood, notwithstanding our boasted sinking fund of 5,000,000l., and all the amount of our yearly taxation, was immoderately increased. For what was this total enlarged to in January 1826? As compared with what it was in 1819, it appeared, upon a return signed by Mr. Finlayson, the actuary at the National-Debt Office, and by M r. Hyam, that there was an increase of 61,646,636l.; the life annuities being valued upon the same principles in both years, 1819 and 1826, Then, how stood the charge upon this statement? Why, at a sum of 31,395l. more at present than it was in 1819, seven years only having elapsed since that period. Thus the House would perceive we had an enlarged debt, and an enlarged interest—nearly 62,090,000l. more of capital, and upwards of 31,000l. more of charge, being the amount of the increase since January, 1819; and all this, notwithstanding government considered they had saved the country between 1,500,000l. and 1,600,000l. by the reduction of the five per cents to four per cents. Still he would ask, in spite of this last-named benefit, how came our condition to be no better? Had the right hon. gentleman afforded the country any intimation that such was the state of its debt? No: this statement had been kept altogether in the back ground. Figures proved facts; but hitherto these figures had not come to light. Let him not be told that this was not an accumulating debt; for that would be but to repeat what had been already too successfully done: it would be to throw dust in the eyes of all the country. And, certainly the right hon. gentleman, in the discharge of those duties with which, these statements were connected, did appear to have been completely blinded by a deplorable, fatuity. Year after year the country had been told that it would get out of debt. But when the paper, he had; alluded to should have been printed, every hon. member who would be at the pains of judging for himself, would perceive, that the measures of the government had retarded, almost beyond calculation, the 1269 period at which, by any possibility, that anticipation could be realized. The Bank had been again recently called upon for a very considerable advance—and that advance to be made on a species of security Which they could not, at pleasure, turn into money. Really, he was obliged to declare, that although hitherto the country bankers had been exceedingly blamed on all hands for their over-issues, the fact was, that his majesty's government had had more notes or bills out, than, if they had been suddenly called upon, they could by possibility have met; and that at one period, the Bank itself had had more notes out than, upon an emergency, it could have met. He did not mean to say that the Bank had a general over-issue of paper; but that abstractedly, and with reference to the premises he had stated, they had had such an over-issue. There even now remained a very large proportion of this dead-weight, as it was called, to sell. He should like to ask the right hon. gentleman, whom he proposed, in his own mind, as a purchaser for that remaining portion?—He had already filled the hands of the Bank of England. While he mentioned this fact, he thought he saw a smile upon the face of his hon. friend opposite, the Bank director, which seemed to say, that in truth the Bank had got enough of it. Would the right hon. gentleman proffer it to the South-Sea company? Whether or no the public would be disposed to buy it off his hands, it was perhaps not difficult to anticipate. Certain it was, that the hon. gentlemen who surrounded the chancellor of the Exchequer were never very strenuous in support 6f the original proposition. He had no wish to embarrass the right hon. gentleman; but he really would advise him to say to parliament, "We will do this act away altogether, we will come to our senses;—and for myself, I declare, that so long as I may have the honour of being a member of the government, never will I propose such another scheme as this, the mischiefs and danger of which I have seen so clearly." He did therefore strenuously advise him to get rid of the dead weight, by annihilating the act under which the arrangement for its transfer was effected; and further, to clear himself by funding Exchequer-bills. By that means alone could he meet the difficulties to which he was otherwise liable; for, in that ease, come what might, he would find himself free to act; and surely it was the 1270 worst policy which any government could adopt, to allow its hands to be fettered in money matters of this nature, at the moment when perfect freedom of action might be most necessary. There would be no disgrace in the right hon. gentleman's abandoning such a measure as the dead weight. The only disgrace, after this night, would consist in his adhering to it. In regard to that measure, he repeated his conviction, that the right hon. gentleman never had the cordial support of many of his colleagues; and it was to be recollected that no former chancellor of the Exchequer had ever enjoyed the support of more able, more active, more intelligent, or more popular colleagues; or colleagues of more extensive practical information upon all matters connected with the political interests of the country. He did therefore hope and trust, that when the right hon. gentleman should come down to the House next Monday, he would declare to parliament that he would have no more to do with this measure, but would re-model it, and throw the charge accruing upon it on the sinking fund, or some other source of income. Such injurious arrangements, at once so dangerous and so inconvenient to the, country, the right hon. gentleman should certainly take the earliest opportunity of recalling and abolishing. If the country should not be exposed to any new necessity for such a course of proceeding, there could he no danger in adopting it; but if it should be, in how much better a situation would she not be placed by reason of having adopted it? Connected with these concluding observations, he begged to submit the second part of his resolutions:
"That, although, by a vote of this House, five millions were declared necessary as a sinking fund to uphold public credit, by diminishing the national debt, yet, in the course of a very few days after that declaration, the House came to the determination of granting an annuity of 2,800,000l. for 45 years, thereby increasing the public debt many millions (by return to the House, March 1826, 74,632,051l.), and at the same time violating the very principle which it had declared to be the only one by which public credit could be supported.
"That part of the said annuity, amounting to 585,740l. for 44 years, was sold to the Bank of England for 13,089,424l, payable by instalments, the last of which falls due in July, 1828, and part, amount- 1271 ing to 2,214,200l. still remains unsold, to the value of nearly 50,000,000l.; and that, under present circumstances, it will be inexpedient to sell the remaining part of the said annuity, and that it will be expedient to repeal so much of the act granting the said annuity as relates to the part unsold, and to charge the amount necessary to defray the naval and military pensions from July, 1828, on the consolidated or sinking fund.
"That the capital of the funded unredeemed debt of the United Kingdom stood in the finance accounts, on the 5th of January, 1825, at 781,123,222l. 15s. 6d., whereas, the real capital debt of the country approaches to nearly 900,000,000l. inasmuch as the capital of the terminable annuities is not included in the above sum."
rose, and expressed his intention of detaining the House but for a short time in answering the observations of the hon. member for Abingdon. The hon. member had confined his speech to two points. In the first, he took a retrospective view of the conduct of government with respect to the unfunded debt; and in the other, he had alluded, with no small condemnation, to the manner in which the government had managed the funded debt. The hon. member had accused the government of confusion in making up the accounts of the funded debt. The confusion existed only in the ideas of the honourable member; and greater confusion than prevailed there he had never known. The hon. member, some time ago, had called for a paper, to show the state of the funded debt, which the House ordered to be produced. The hon. member had directed, that in that paper an estimate should be made of the total value of the annuity of 2,800,000l. set apart for providing for the charge of the military half-pay. This estimate was set down under last year's head alone, and the consequence was, that in that year, as compared with former years, there appeared an enormous difference in the amount of the funded debt. Upon this mistake, created by the hon. member himself, he had raised an argument as erroneous as its basis. The hon. member had charged the government with not having effected the reduction of the national debt. He begged to call the attention of the House to this subject. The bullion committee of 1819 recommended, that the unfunded debt should 1272 be reduced to the extent of 10,000,000l.; and he was able to show, that government had not only complied with that recommendation, but gone beyond it. From the time of the report of the bullion committee up to the present moment, government had discharged upwards of 13,000,000l. of the unfunded debt. In order to make the subject perfectly intelligible, it was necessary to explain the nature of the unfunded debt. It was divided into two parts. One part, consisting of Exchequer bills, was called the unprovided debt; and the other part, existing merely by anticipation of the funds by which at a limited period it was to be discharged, was called the provided debt. When he spoke of the reduction of the unfunded debt, it would be understood that he alluded only to that part of it which was unprovided. To the unprovided debt, no addition had been made since the date of the report of the bullion committee; on the contrary, it had been made the subject of gradual reduction. On the 5th of January 1819, the unprovided debt stood at 19,480,000l.; on the 5th of January 1826, it stood at 6,139,000l. The chief reduction in the amount of this debt took place in the first three years after the recommendation of the bullion committee. In 1820, 1821, and 1822, it was reduced 10,000,000l., and in 1823, and 1824, it was reduced 3,000,000l., making a total reduction of 13,000,000l. Now, he asked the House, whether this perseverance in the gradual reduction of the amount of debt exhibited any inattention on the part of government to this important subject? The question raised by the hon. member was this—whether it would have been wiser for ministers to have funded the Exchequer-bills, or raised money to pay them off, or to have adopted those measures which had relieved the country from a portion of taxation, and enabled us to enter upon a more liberal system of commercial policy? It was impossible that government could have adopted both plans. If they had funded the Exchequer-bills, they would thereby have been prevented from pursuing the other advantageous measures to which he had alluded. They could not row two ways at once. Was there any thing in the state of the country which should have induced ministers to resort to the expedient of funding Exchequer-bills? The hon. member had indulged in some talk about government being overwhelmed 1273 with Exchequer-bills, in consequence of their coining in as revenue. Now, what was the fact during the few last years Exchequer-bills had been at a premium? So great had been the demand for them, that an opportunity presented itself, which government would have been to blame to let pass, of reducing the interest on them. It was true that these securities had recently suffered a depreciation of value; but it was impossible that government could have anticipated the late convulsion. No person could be accused of a want of foresight in not providing against such a contingency. Ministers would, he was sure, have been censured for imprudence, if, instead of reducing the taxes, they had funded Exchequer-bills, at a period when the state of the market presented no inconsiderable difficulties to such a measure. The whole amount of unfunded debt at present out-standing in the hands of the Bank and the public might be called 30,500,000l. On the 5th of January, 1819, it was about 44,000,000l. For the sake of argument he would suppose that the whole of that sum had been funded in any year since 1817, to see the way in which that proceeding would have operated on the public interests. If that amount then, had been funded in 1818, the country would have incurred a burthen of 5,042,000l.; in 1819, the burthen on the country would have been 5,155,000l.; in 1820, the burthen would have been 5,302,000l.; in 1821, the burthen would have been 4,126,000l.; in 1822, 2,692,000l.; in 1823,2,469,000l.; in 1824, 1,017,000l.; and in 1825, about half the last sum. Independently of any other considerations, the expense to which the country would have been put by the proceeding formed a reason for not resorting to the funding of the debt. With respect to all that the hon. member had said about the choakage or embarrassment of the Bank, owing to their transactions with government, he was sure it was completely fallacious. As a proof of this, he might mention, that when very lately the Bank found it necessary to make advances to the merchants, they did so unhesitatingly, and to a very considerable extent. He might take that opportunity of stating, that the Bank always, as far as came under his observation, employed its powers for the advantages of the public. He was convinced that on all occasions they were actuated by the most anxious regard for the welfare of the public. He 1274 had now stated all that seemed to be necessary in reply to the speech of the hon. member. The chancellor of the Exchequer would, in a few days, lay before the House a statement of his financial projects for the year, and he thought it would be extremely wrong for the House to pass a resolution three days previous to that statement, pledging itself to certain financial operations which could not be carried into execution for two years. For that reason, he must oppose the prospective resolution; and to adopt the retrospective one, would be to place on the Journals a censure on the conduct of ministers to which he could not consent.
said, he fully concurred in what had fallen from the hon. gentleman, that it would not be proper to enter into any discussion upon the present occasion, which could have the effect of anticipating the statement of the chancellor of the Exchequer. For that statement the public were waiting with the utmost anxiety. The trade, the credit, and the circulation of the country, would depend, in a great measure, upon the disclosures of the right hon. gentleman, and he would regret if he should be drawn into it prematurely. The question they had now to consider Was the unfunded debt. He fully agreed with the hon. gentleman, that it would be acting in rather an unusual way to place upon the Journals the long resolution proposed by the hon. member for Abingdon, until the House had first heard what the chancellor of the Exchequer meant to bring forward. He felt very anxious to know what were the intentions of the right hon. gentleman with respect to the unfunded debt; but as he would in all probability explain his views relative to it on Monday, it would be inconvenient to press him into it at present. If the House should be of opinion that the plans of the right hon. gentleman were such as ought not to be adopted, then would be the time for his hon. friend to come forward with his resolutions. With respect to the amount of unfunded debt, it might be too much or too little, at any particular time, according to circumstances. At one time, forty millions might circulate without inconvenience; while, at another time, it would be considerably too much. The propriety or impropriety, therefore, of any particular amount depended entirely upon circumstances. He differed entirely however from the hon. gentleman opposite 1275 upon some part of the subject It appeared to him, (hat it would have been prudent and proper to have funded part of it when the funds were at 95, particularly that part for the re-payment of which the public might be called upon at any time. The capital of 14,000,000l. due to the Bank, he should have thought it right to fund, thereby making it a permanent three per cent debt, and getting rid of the liability of being called upon to pay it in money, when it might be extremely inconvenient to do so and when, to meet the demand, government might be under the necessity of funding at 65, an operation that must be attended with considerable loss. This was the more to be desired, inasmuch as the Bank charter would expire in a few years, when it would be necessary, either to pay this debt to the Bank, or to extend that charter. He did not mean, however, to deny that the government could pay it off at any time, with eat much difficulty. Independent of the debt to the Bank, he should be disposed to fund a large proportion of the unfunded debt. Had this been done when the funds were at 90 or 95, it would have been attended with considerable advantage. He could not clearly understand the reasoning of his hon. friend opposite. He did not see how if could have made a difference of 5,000,000l., or any thing like it, to the public if an unfunded debt of 30,000,000l. had, at any period since 1819, been converted into a funded debt. Taking the interest of the debt so funded at 3 or 3½ per cent, it could not make that difference. Though there might have been some trifling loss of interest, it would still have been an advantage to fund even at 93. Indeed, when stook fell to 75 it was easy to perceive that there Would be great loss and inconvenience in funding. Favourable opportunities had occurred for funding all that part of the debt, to the immediate payment of which government was liable; and he thought they ought not to have been neglected. It might have been attended with some trifling loss; but a saving of one or two millions was nothing in comparison to the important consideration of placing the country in what he would call a sound state. That was the first great point to be considered; and the next, by a proper system of economy to raise it to a moral proud, and commanding station—His hon. friend opposite seemed to have mistaken what had fallen from him upon a former occa- 1276 sion in reference to tire Bank. When he alluded to the choaked state of that establishment, in consequence, of its dealings with government and of other circumstances he was comparing its present situation with what it was in 1793 and in 1797, when the Bank restriction took place. He then called the attention of the House to the embarrassments of the Bank at both these periods; and as his object was, to compare them with the present, he was justified in taking into consideration the deficiency-bills. They were a fair item to bring into the account; and, after all that had been said, the whole difference between him and his honourable friend opposite, consisted in the deficiency-bills. As to the money advanced on mortgages, though the circumstance was denied, the impression still on his mind was that the measure was pressed on the Bank by government. What he was desirous, in a former debate, to press upon the attention of the House was, the inconvenience arising from the great amount of securities in the hands of the Bank that were not immediately convertible. The capital of such an establishment should always consist of securities easily convertible. Another point to which he had then alluded was, the advances made to dissentients, at the time the four per cents were reduced. The amount thus advanced would, no doubt; disappear in the course of no very long time, but that could not lessen the difficulties of the immediate pressure. After all the arguments that had been used by the hon. gentleman opposite, he had yet heard no version of the case which appeared to him to exculpate government from the charge of having brought the Bank into circumstances of difficulty. The hon. gentleman said, they were in no difficulty; that they were able and willing to come forward to assist the public. They did, it Was true, come forward in the middle: of December; but then it should be recollected, that they had been screwing up their circulation from the October previous, up to the 3rd of December. The fact was, that the whole history of the late calamity was written in figures as clearly as it could be written, and was as intelligible as any thing could be, td those who reflected oft. the circumstances; The story of the Bank was this. During the bubble period they had in circulation twenty-one millions of paper. This continued up to August in the same year, and the exchanges were 1277 favourable. They then brought down their issues to 17,400,000l., at which it wag in December. He would put it to the House, whether the Bank was not pressing, by this operation, upon all the banks in the country, for the purpose of relieving itself from the mass of choak with which it was embarrassed, in consequence of its dealings with government. Did the Bank then exhibit no symptoms of difficulty? They did, and the symptoms must have been perfectly apparent to any person at all acquainted with their usual course of proceeding. Immediately after, they raised their issues from 17,400,000l. to 26,000,000l. This was nothing less than sporting with the whole property of the country, for the difference of amount in the issues was, in fact, the barometer by which the value of all that property was regulated; and to this they were driven, in consequence of having their resources choaked up by government. He would not pretend to say to whom the blame was to be exclusively attributed, but the Bank and the government must divide it between them. The hon. gentleman opposite denied that the Bank had manifested any symptom of difficulty or distress. They were, however, selling Exchequer-bills; which was well known by every person acquainted with the subject, to be a most marked symptom of distress. But, said his hon. friend, they might sell Exchequer-bills; yes, certainly they might, but it was not the practice. They never did sell them. The custom was, to keep the Exchequer-bills by them, and while he was in the direction there was no instance of their having been sold. When anything of the kind was done, the inference immediately drawn from it by every person acquainted with the usual mode of doing business was, that the Bank was in difficulties. The circumstance of course, when it became known, excited great alarm. In fact, they had only a choice of difficulties. If they attempted to bring what was called the dead-weight into the market, it would have increased the alarm; and in that principally consisted the absurdity of this most extraordinary measure. The advances from the Bank at; present, in consequence of this utterly useless and incomprehensible sort of arrangement was, 8,000,000l. and it would run up to 13,000,000l. if suffered to continue. If he might venture to suggest any step to the chancellor of the Exche- 1278 quer, it would be to stop it where it was, and this might be done without inconvenience, as the price of stocks was now, nearly the same as when the arrangement, was first entered into. This would be taking off from the Bank a stock which it would be extremely difficult and inconvenient at any time for them to sell. When the government sold stock, the notes passed from one individual to another; but when the sale of stock was? made by the Bank, the notes which came in were stopped and withdrawn from circulation, and an injury was thereby created. This was well known; and when the Bank sold, individuals gave a lower price for the stock. The deadweight was the most perplexed, unintelligible operation he had ever heard of. The accounts connected with it were inexplicable; and when 5,000,000l. more were added to it, the thing would be still more perplexing. Even one of the ministers of the Crown had confessed, that he did not comprehend it: and he was right. He defied any person, however conversant with the intricacies of accounts, to unravel it. He could not perceive any beneficial effect produced by it. The half-pay and pensions, in place of being diminished, were rather on the increase. It would be much better at once to recognize them as part of the public expenditure of the country, and thus get rid of so much intricate and foolish calculation.
The Chancellor of the Exchequer
said, he did not feel it necessary to detain the House by making a long reply. As the subject was to be discussed on Monday, discussion now would tend to confuse the matter, as much as the papers moved? for by the hon. member for Abingdon would confound the question to which they related. He had one or two remarks to make on the statement of the hon. member for Taunton, respecting the reduction of the unfunded debt, to satisfy the House that no blame was imputable to government, He conceived that he was not called upon to go into a review of the financial operations of the last tea years, and to inquire whether the government ought, at any given period, to have funded Exchequer-bills, and reduced the amount of the unfunded debt. He would; say, however, that great efforts were made for that object. If the hon. gentleman had gone as far back as the year 1816, he would have found that on the 5th of 1279 January of that year, the unfunded debt amounted td 61,000,000l.; and that on the 5th of January 1826, it amounted only to 31,000,000l., having been reduced nearly one half. The hon. gentleman might say that this was not a sufficient reduction; but it afforded some proof, at least, that the government had not been inattentive to the reduction of this debt. But the hon. gentleman, in alluding to the facilities of funding in the last three years, had not made a very fair representation. When the hon. gentleman stated, that the government had been guilty of great negligence in not funding in the year 1823, when the price of the funds was so favourable to such an operation, he entirely forgot what the value of stocks was in that year. The three per cents were not then, as the hon. gentleman imagined, at 90. In January 1823 they had not exceeded 75, and in April in the same year, they were at 74. It would have been, therefore, a most impolitic measure to have attempted to fund any part of the Exchequer-bills then. Then came the year 1824, when, as the hon. gentleman said, nothing was done. Now, in the first place, it was necessary to recollect, that the unfunded debt at that time fetched a very considerable premium in the market; and that being the case, it was not so easy a matter, as the hon. gentleman well knew, to fund Exchequer-bills. It was not to be expected that the holders of Exchequer-bills, who had a premium of 60s. or 80s. per cent, would give up that advantage, unless upon very liberal terms being held out to them. To fund Exchequer-bills, under such circumstances, would be impolitic in the extreme. The hon. member for Aberdeen would not have acceded to so improvident a plan. His economical spirit would have been roused in all its usual vigour, and he would have lashed the administration with more severity than on any former occasion. In the year 1824, it would have been most inconsistent in him to have been funding Exchequer-bills when he was preparing to reduce the 4 per cents. That measure might have been unwise and improper; but it would have been a manifest inconsistency to do any act which would lower the funds, when the measure itself was grounded on the actual state of the funds. The subject of the deficiency-bills, to which allusion had been made, was, perhaps, not well understood by the House. 1280 The nature of those bills was this:—There was a certain portion of the current expenses of the country payable at the end of every quarter. These payments were charged on the consolidated fund, the guarantee of the public creditor, and composed of the aggregate of almost all the taxes. These taxes were paid into the Exchequer from day to day, and greatly exceeded the amount of the charge. The total amount was about 45,000,000l.; the charge was about 35,000,000l. The difference between the charge and the total amount was applicable to the payment of the annual supplies. But only a proportion of it was applied each quarter; and the greater part of the charge did not accrue till the end of the quarter. If no use was made of the money, it was formerly paid into the Bank; but of late years it had been deemed advisable, that the public should have the benefit of the employment of their own money. Hence there was a diminution, at the end of every quarter, of the amount of money applicable to the payment of dividends then accruing; and this called for an advance from the Bank to the amount of the difference. This advance was made on the credit of Exchequer-bills; and such was the history of the deficiency-bills. But in 1823, the receipts of the revenue had so increased, that there was scarcely any necessity for these deficiency-bills, for all demands upon the Exchequer were promptly met. In 1824, it appeared that it would be desirable to apply 4,000,000l. of the growing produce of the revenue to the reduction of the permanent unfunded debt. This measure, when proposed to the House, was approved; the hon. members for Aberdeen and for Abingdon, joining in that approval. Then, in October 1824, one million had been appropriated to this object; in March 1825, another million; in June 1825, another million, besides 3,000,000l. paid to the public creditor; so that, since October 1824, the debt had been reduced 6,000,000l. But for these payments made to the public, the deficiency-bills on the 5th January 1826, would have been almost nothing. So that the hon. member for Abingdon was not justified in charging ministers with neglect and incapacity, in relation to this matter. If he thought the financial concerns of the country had been mismanaged, he (the chancellor. of the Exchequer) was surprised that he did not bring the subject to the test, by laying 1281 the question fairly before the House. If the hon. member brought these sweeping charges forward, if they were well founded, he (the chancellor of the Exchequer) was perfectly unfit to retain his Situation; and if the House should come to that conclusion, he should not be so very much distressed as some hon. gentlemen appeared to think. He was not go delighted with the duties of office as to feel any very vehement uneasiness at being relieved from them; but he did wish the charges of utter incapacity to be brought forward fairly and directly, and not in the shape of an amendment to a motion with which such a fact had nothing to do. Certainly, it was competent to the hon. gentleman to take the course which he had taken; but, as the resolution proposed involved such a direct censure upon his conduct, as, if carried, to make it impossible for him to discharge his duties with comfort to himself or advantage to the country, he did wish that the hon. gentleman, if he thought the censure merited, had conveyed it in a less roundabout way. As it was, he should be extremely mortified if the House disposed of the question upon the point of form; and would much rather at once go into the merits. If the House should be of opinion, that his incapacity was obvious, he could no longer be fit to be a finance minister. If such was the opinion of the House, hon. members were bound in duty to declare it; and he should endeavour to submit thereto, with he might be able.
§ Mr. Hume
said, that the observations of the right hon. gentleman had not at all met the statements of his hon. friend, the member for Abingdon. His hon. friend's accounts had been characterized as confused and fallacious; but none of the fallacy or confusion had as yet been proved. Now, if a man, calculating the full extent of all he owed in the world in the year 1819, found it amount to 20,000l., and, after applying a sinking fund for six years of liquidate it, found it then amount to 22,000l. the inference would be, that he had lost 2,000l. by his liquidating operation. Then, what would be true as to the debts of an individual, must be equally true as regarded the debts of a nation. And let the House observe the course of calculation which had been taken by his hon. friend. On the 5th of January 1819, the whole debt of the country, as valued by the public accountant, amounted, in 1282 present money, to 832,136,445l. That sum, in currency, would have cleared the kingdom from the principal of all debt; and the yearly amount of interest paid was 29,144,361l. Now, how was our situation when our sinking fund had been seven years at work—in 1826? Why, we had had an increase of revenue over expenditure to the extent of 19,000,000l. This was exclusive of a sum of 500,000l. received from the East India Company, and another sum from Austria of more than 2,000,000l.; and yet the value of the whole amount of our debt was now 893,783,282l., being an increase, as regarded principal, of 61,646,837l.; and the interest which we paid was 29,176,000l. being an advance of about 31,000l. a year over the former period. Well, then, where was our surplus of revenue, 19,000,000l.? Where was the money that had been borrowed? It was all lost. These were the advantages of the sinking fund! In the year 1819, when our taxes had been increased 3,000,000l. to support that common delusion, the country had been told that, upon calculation, if it were maintained and held sacred, it would, in ten years, reduce 70,000,000l. of the debt; instead of this, its operation during seven years had been to add to the debt considerably. The right hon. gentleman spoke of fallacy and confusion; but it was the fallacious system upon which this fund proceeded—the buying with the right hand, and selling with the left.—that threw the whole accounts of the country into a state in which it was almost impossible to comprehend them. In the year 1822 a loan had been contracted for with the Bank of 13,000,000l., in which we had given 100l. 3 per cent stock, for every 73l. 5s. in money that we received. What followed? The commissioners of the sinking fund carried this 73l. 5s. into the market, and bought stock, paying 90l, 95l., and even 100l. for that which we had sold for the 73l. 5s. Here was a loss of no less than 15 per cent, upon the average, upon the sum paid up, which was 8,000,000l. The whole system was one which called for change in the manner of making up the accounts of it. In the year 3817, our taxes had been 57,000,000l. and our expenditure 58,000,000l.; but, from that time down to the present, the excess of income had been regular. In the seven years, our aggregate surplus had been 19,000,000l. He asked again, what had 1283 become of it? It was lost—muddled away—it had disappeared. The only real source of a sinking fund—the only legitimate source—was surplus revenue. Within the last seven years, our surplus of revenue had been 19,000,000l.; and the commissioners of the sinking fund had bought and sold, and transferred and re-transferred, stock within that time, to the amount of 117,000,000l. He now came to the manner in which the unfunded debt of the country was managed, which was just as satisfactory as the rest of the affair. The right hon. gentlemen opposite said much of the mischief which the issues of the Bank paper had done to the country. How came it that they said nothing of their own excessive issues of Exchequer-bills, which had done ten times more towards deranging the money market, and producing the causes which had led to the late distress? In 1817, they had had 49,000,000l. of Exchequer-bills out. In 1818, they had issued 12,000,000l. more. In 1819, the amount of outstanding Exchequer-bills was 48,000,000l., the rest having been paid off in the interim. It was true, that since the repeal of Mr. Peel's bill, the amount had been gradually decreasing; but from 1817 to 1819, the government had been borrowing twelve millions when there was no necessity for it. It had been decreasing since that period; but he still contended, that it would have been of advantage to have funded the floating debt in 1825. He had urged it then, and he urged it now. If that course were not approved of, could they not be paid off with the sinking fund? Having concurred so far with his hon. friend, he should observe, that it would perhaps have been better for him to have brought some specific charge, than have proceeded in the manner he had done. He should, however, second him, if his hon. friend intended to press his motion.
§ The amendment was then put, and negatived.