HC Deb 04 September 1835 vol 30 cc1381-91

 £ s. d. Also 13s. 7d. of Long Annuities, terminable in 1860, equal in cash to 16l. 14s.3d. for 1l. 11 7 1 And three month's interest on Reduced—viz.,from the 5th of April to the 5th of July on 25l. 0 3 9 Add a discount for prompt payment of the 90l. remaining instalments 1 19 9 =13 10 7 £86 9 5
After payment of the deposits, leaving in money, as the price of every l00l of Consols, which is equal to a rate of interest of 31. 9s. 5d. per cent, or 3l. 9s. 4 67–100d. 2d. Which appears by the following statement of the amount of stock, and the price of such stock, given for every 100l. cash, viz:—
 For 75l. Consols, at 86l. 9s. 5d. £64 17 0¾ For 25l. Reduced, at 87l. 4s. 5d. 21 16 1¼ For 13s.7d. of Long Annuity, at 16l. 14s. 4d. per 1l. 11 7 1 And discount for prompt payment 1 19 9 £100 0 0
3d. That the following charges on the Consolidated Fund have been incurred for the said loan of 15 millions of money, as will appear on the books of the Bank of England, viz:—
 £ For 11,250,000l. of Consols, payable from the 5th of April, at 3 per cent. 337,500 For 3,750,000l. of Reduced, payable from the 5th of July, at ditto 112,500 Making a perpetual charge of 450,000 And 101,875l. of Long Annuities, payable from the 5th of April, 1835, to January, 1860 101,875 yearly.
 £ s d To borrow in a Three-and-a-half per cent, stock at the price of 97l., reduced by discount to 95l. 1s. 7d., is to pay interest at the rate of 3 13 8 The present Loan is contracted for at the rate of interest of 3 9 5 Showing a greater rate of interest of 0 4 3
paid on the 3½ per Cent. Loan, which difference of 4s. 3d. in the rate of interest is an annuity, and an annuity of 4s. 3d. interest, being reckoned at 3½ per cent., will increase in 15 years to a sum of 41. 2s.; which sum again, interest being reckoned at 3 per cent., is equivalent to a perpetual annuity of 2s. 5½.; and therefore supposing the 3½ per Cents, to be reduced to 3 per Cents, after 15 years, the amount will stand thus:—
 The rate of interest at which the present loan is contracted for is £3 9 5 The rate of interest on a 3½ per cent. Stock, reduced to a 3 per cent Stock, is, at the end of 15 years, £3 0 0 Add the perpetual annuity arising from the loss of 4l. 2s., being the accumulation of the excess of interest of 4s. 3d. paid during 15 years 0 2 5½ 3 2 5½ Showing a difference of £0 6 11½
per cent, payable, for ever alter, on the whole 15,000,000l., as at present contracted for, more than would have been payable if the loan had been raised as a 3½ per cent. Loan, as stated in resolution 7. 10th. That the difference of 6s. 11½d. per cent, upon 15,000,000l. constitutes a permanent annuity of 52,187l. 10s.; but this annuity, though permanent, after it has once begun, is a reversion, the payment of which commences at the end of 15 years, and the present value, of which, interest being reckoned at Three-and-a-half per Cent, during 15 years, and at Three per Cent, for ever after, is 1,038,341l. 12s. 11th. That, besides the above loss to the public of 1,038,341l. 12s. arising from the difference of charge for the annuity, there will he an additional loss to the public of 1,570,563l. by the increase of capital of the national debt, as shown in the 8th resolution. 12th. From these facts it appears, that if the Chancellor of the Exchequer had raised the 15,000,000l. in a three-and-a-half per cent stock at 97l., reducible in 15 years to a three per cent, stock, this would have been equivalent to a net price of 92l. 9s. 1d. for 100l. consols, instead of the net price of 86l. 9s. 5d. which he receives by the present contract; being a loss of 5l. 19s. 8d. per cent, commencing from the present time; and exclusive also of the increased amount of the capital of the debt. On the first Resolution being read,

could assure his right hon. Friend they were his own, that he wrote them with his own hand, but that the calculations were made by another person.

could then only say, that he had employed Mr. Finlayson to test every one of the hon. Member's calculations; that therefore he had as good authority as he could possibly require, and from which he could assert that his hon. Friend's propositions were altogether inaccurate. The effect of a loan in the 3½ per cents, would be as follows:

 If the loan had been contracted in the New 3½ per Cents. without bonus, stock would have been £15,541,857 Annual charge 543,963 Present charge 507,022 Saving £36,941
 or about 1,000,000l. So that there would have been an excess annually of 36,941l., or nearly so, upon 1,000,000l., and that was the economy which his hon. Friend wished him to have adopted; and his only set-off against that was his anticipation that at the end of fifteen years the 3½ per Cents, might be reduced. He was as anxious as his hon. Friend to reduce them, but he should consider it an odd way of going to work with a view to effect that, to increase them. If the loan had been in one stock, and that Consols, the capital would have been £17,346,890 0 Charge 520,406 14 Present Charge 507,022 0 Saving 13,384 14
or 446,157l. stock. If, without any bonus, the loan had been raised in Consols, at the average price of the last six years, the charge for l4,701,875l.money would be,—
 Stock £16,989,910 Dividend 509,697 Present charge 507,022 Saving 2,675
 £. s. d. 3½ per Cents., payable in April and October 3 14 0¼ 3 per Cent. Reduced 3 9 11¾ New 3½ per Cents. 3 14 0 Consols 3 9 4 French 3 per Cents. 4 3 7¼ French 5 per Cents. 5 1 0 Prussian 5 per Cents. 5 0 4¼ Russian 5 per Cents. 5 0 1

The Amendment being put,

said he had listened with the greatest attention to every thing which had been stated by the Chancellor of the Exchequer, and he must say, that connected as he had been with different transactions of this nature, he never in his life heard a clearer statement, or one which would prove more satisfactory to the public. The right hon. Gentleman had completely and entirely answered the extraordinary and most delusive calculations and predictions of the hon. Member for Middlesex. With respect to the loan itself, speaking his own convictions, and knowing, as he did, the sentiments of those who well understood the subject in the city, he was bound to declare that it was an excellent bargain for the public; and he did hope that the exposure of his absurdities on the present occasion, administered by the Chancellor of the Exchequer, would render the hon. Member for Middlesex more cautious and accurate in his calculations for the future.

recommended his hon. Friend to withdraw his Resolutions for the present, on the understanding that the counter-calculations of Mr. Finlayson should also be submitted to public inspection. Granting the principle of borrowing in stock of a low denomination, the Chancellor of the Exchequer had made very good terms; but he very much questioned the propriety of such a procedure. In spite of all that had been said against the old principle of negotiating loans of this nature, 5–6ths had been contracted on the exploded system, and only 1–6th on a good principle. He also objected to so much stock having been created before it was known what precise sum would be required owing to the probability of litigated claims.

was perfectly ready to submit the whole of the documents to Mr. Finlayson, and afterwards to lay them and the results on the Table of the House. Having had to provide for all that might fairly be required in the way of compensation, he had not felt himself at liberty to diminish the amount of the loan. The surplus was directed by the Act to be invested in the 3 per cents, in the name of the Accountant-General of the Court of Chancery, to await the result of contested claims.

said, that but for the explicit statement of the hon. Member for Middlesex, that the Resolutions had been drawn up by himself personally, he should have been inclined to attribute them to some of the professional parties, who, from the result, were naturally disappointed in the circumstances attending this loan. All he could say was, when he submitted the printed Resolutions to some gentlemen in the city, they stated at once that they knew of their existence, and the object of them, at least a month ago. The Resolutions themselves were full of the most egregious blunders, assuming a price (97l.) at the present day which never could have been given, and contemplating a state of things fifteen years hence, which no Chancellor of the Exchequer had a right to calculate upon. In his view, the loan had been contracted most advantageously for the public.

denid altogether the statement of the hon. Member for Lancaster, respecting the alleged communication of his plan to various persons in the city, in the course of the last month; so far from there being the least foundation for any such statement, he could positively declare, that until two days after he had given notice, he never mentioned the subject in any quarter. The hon. Member defended the accuracy of his own calculations, and contended that the right hon. Gentleman, the Chancellor of the Exchequer, had met his statements and reasonings on general, and not on particular grounds, of which he thought he had some reason to complain.

Amendment agreed to.