BANK OF ENGLAND DEBT. (Hansard, 8 August 1834)

§ Mr. Thomas Attwood
said, that in his opinion, this Bill would provide the Bank of England with the means of playing with the national finances. He hoped that 1126 the noble Lord would keep his eyes upon the Directors, and not allow them to contract or extend the circulation for their own purposes, and against the interests of the public.

§ Lord Althorp
said, he did not believe that any ill effects would ensue from the payment of this portion of the debt, which was due to the Bank of England.

§ Mr. Hume
said, he had no such apprehensions as the hon. member for Birmingham; but his objection was, that this had been a private transaction, although there was an Act of Parliament to prevent a Chancellor of the Exchequer from borrowing privately. If the Chancellor of the Exchequer required three millions and a half to pay off a certain portion of the Bank debt, lie ought to have afforded a public opportunity to all parties. to come forward with their offers. He had seen it stated, that there had been a breach of confidence with regard to the annuities; he would only observe at present that if any one body, public or private, had had an opportunity of benefitting themselves to the full extent which the public at large ought to have benefitted, it was highly improper. In the next place, some explanation should be given respecting the terms of the annuities, as they had generally been considered a ruinous system beyond a certain point.

§ Lord Althorp
said, that his hon. friend laboured under a mistake. With respect to his making a bargain with the Bank, without going into the money-market and raising a loan, he had done so because the effect of going into the market and making a loan would have been to throw the money-market into confusion, and he believed he had made as good a bargain for the public as he should have done had he raised a loan, whilst he saved the market from a great injury. With regard to the annuities, he was not sorry that the hon. Gentleman had mentioned the subject, as he wished to give some explanation respecting them. There were two classes of annuities—life interests and annuities for terms of years. With regard to the former, they were not so disadvantageous to the public as had been generally supposed. It was, indeed suspected that certain annuities had been purchased upon lives at the older ages, and that the parties so purchasing hall gained an advantage over the Government. Inquiries had been made, and it was believed that this advantage had been 1127 taken on lives of, and above, eighty years. The Commissioners, in consequence of these inquiries, had determined to exercise the power which they had of refusing any annuities that were disadvantageous to the public, and accordingly they had refused them on ages above sixty-five, unless the party applying wished to insure his own life, where there could be no speculation. With regard to the annuities on younger lives, they were rather advantageous to the public. As to the second class of annuities, they were by no means disadvantageous; but where a very large amount of permanent debt was converted into annuities for a term of years, the annual charge on the public was raised to a very inconvenient amount. A short time ago the Commissioners finding that there was a danger of too large a sum being converted into terminable annuities for a short term of years, gave notice that in no one quarter should a larger sum than 500,000l. of capital stock be converted into annuities for a shorter date than would expire in the year 1860. With regard to the alleged breach of confidence, none had taken place, a public notice having been put up at the National Debt Office as usual; but the Bank of Ireland did convert 500,000l. at once into annuities for a term of ten years, which, in consequence of the arrangement he had referred to, absorbed the whole amount that would be converted during the quarter. That was the whole case. With regard o the system, he thought that so long as the pressure on the public was not very great, it was an advantageous mode of reducing the public debt. He would illustrate this by some Returns which he had procured in expectation that the hon. Gentleman (Mr. Hume) would allude to the subject. In the half-year ending 1833, the amount of interest paid on the permanent annuity amounted to 12,231,948l.; and in the half-year ending July 1834, to 12,186,361l.; whereby there was a saving of 45,777l., or 90,000l. a-year. The terminable annuities amounted, in the year ending 1833, to 1,600,741l.; and in the half-year ending July 1834, to 1,783,966l.; making an increase of 183,225l. in the half-year, and causing an increase of somewhere about 37,000l. a-year. With regard to the terminable annuities, the country might look forward to considerable relief. The following sums would fall in, in 1840, 1860, and 1867:— 1128

In 1840 £.200,000

1860 1,200,000

1867 590,000

To these sums might be added 800,000l., which must fall in, in a short time; and thus, nearly 3,000,000l. of annuities must, in a moderate space of time, accrue to the benefit of the public. He thought, after this statement, that the House would agree with him that the conversion of permanent into terminable annuities was the best plan, provided the annual burthen on the public was not increased to too great an amount.