WAYS AND MEANS. (Hansard, 12 May 1837)

§ The Chancellor of the Exchequer
proposed, that a sum not exceeding 11,000,000l. be granted to his Majesty, for the repayment of Exchequer Bills, out of the supplies for the service of the year 1837.

Mr. Goulburn
did not wish to get into a discussion on the financial subject at that late hour, and if his right hon. Friend felt any objection to his making a few observations, and asking a question, he would postpone doing so if an opportunity was afforded him within a few days to bring forward the subject at an early hour. In the first place, then, with respect to the present motion he wished to allude to the hour at which it was brought forward. This was the first time for a long series of years that this vote was postponed until such a late period. He did not mean to say that any inconvenience had occurred in consequence of the postponement of this motion, but still some explanation was called for in consequence of the peculiar nature of the case. When Exchequer Bills were voted it was always accompanied by an express understanding by Parliament to the holders of them that they should be paid out of the first supplies moved in Parliament. By this means they had a great security of having them paid off, out of the first supplies in the ensuing year, therefore a practice had always hitherto prevailed of voting them at the earliest period of the Session. The next subject to which he wished to call the attention of his right hon. Friend respected the amount of Exchequer Bills that had been paid off out of the Sinking Fund. A paper had been laid on the table and printed, respecting the payments out of the Sinking Fund. It appeared that between the 5th of January and the 22nd of April, the amount of Exchequer Bills paid off out of the Sinking Fund was 1,470,000l. On referring to the 853 finance accounts laid before Parliament for the year, it appeared that the whole sum applicable to the redemption of the debt, between the 5th of January and the 5th of April was only 680,000l. Now, out of this sum it would appear as if there had been redeemed Exchequer Bills amounting to upwards of 1,400,000l. But the latest date of the redemption was the 22nd of April, and not the 5th of April as was usual; and it might be supposed that the sum of 700,000l. was paid off between these two dates. He did not think that the whole of this sum was applicable for this purpose between January and April. Indeed, the right hon. Gentleman could not have applied the whole of this amount to the redemption of the debt, unless by sacrificing the principle always acted upon in the administration of the Sinking Fund, for the whole sum must be equally divided into the several weeks of the quarter, and applied equally. This was done that the Government should not create any fluctuation in the market, or any supposition of creating a fluctuation. It would appear, however, that in the short space of seventeen days 700,000l. had been applied to this purpose more than ought to have been. As the account stood he did not understand it.

§ The Chancellor of the Exchequer
stated, that if he had had an opportunity of rising at an earlier period of the night, he would have gone at greater length into an explanation of the state of the unfunded debt. If there was anything imperfect in what he was going to say, he trusted that his right hon. Friend would consent to his postponing his explanation till a future opportunity, when he would go at greater length into the subject. The first point that had been referred to by his right hon. Friend was, that it was more usual to take the vote for Exchequer Bills at an earlier period of the Session, but he did not do so, from two motives; the first was, that there had been an alteration of the commencement of the financial year, and he, therefore, considered that no inconvenience could result from the postponement of the vote. But there was another motive which was still more important. In the course of the last Session the right hon. Gentleman called the attention of the House, and his attention to the nature and state of the unfunded debt. He admitted the peculiar necessity of directing great attention to this subject, 854 and he thanked his right hon. Friend at the time, for his suggestion; but his serious attention had been turned to this subject for some time before. He felt at the time that he had not increased the amount of the unfunded debt, but rather that he had diminished it, with the exception of an issue of Exchequer Bills, for public works, or rather an advance of money for the erection of workhouses. He had considered the question more especially as regarded the currency, and had felt that the amount of Exchequer Bills was much more in point of prudence than it was justifiable to recommend should be, on this ground, therefore, he commenced the application of the Sinking Fund at an early period to the unfunded debt. The right hon. Gentleman was aware that there was a large amount of Exchequer Bills held by the Commissioners of the Sinking Fund, which could be redeemed at par. This he thought should be acted on, and that they should be charged with stock. He would take the liberty of stating to the House, in a very few words, the amount of Exchequer Bills at present and the same date last year. Last year, the whole amount of the unfunded debt was 29,700,000l. The amount outstanding of various descriptions of Exchequer Bills was 28,976,600l. The sum of 130,000l. was due for the paying off Exchequer Bills of 1835, arid in the course of the last six months there was an addition of about 600,000l. for public works in England, and for West-India relief. The total amount outstanding was 29,614,750l. The present vote which he proposed to take would make the amount for the ensuing year 24,623,300l. There had been reduced, therefore, of the unfunded debt, within the last fifteen months, a sum not less than 4,994,450l. This was a very great reduction; but the circumstances of the case, as he had no doubt he should be able to show on a future occasion, fully justified it. This had been effected by the following means, taking round numbers; 1,757,000l. of Exchequer Bills had been cancelled by the application of the Sinking Fund; 2,040,000l. of Exchequer Bills by an exchange to that amount with the Commissioners of the Sinking Fund for that amount of Three per cents, at the market price of stock; and this was done in conformity with the Act of 1828. 1,163,000l. had been paid for out of the money granted for ways and means, and 855 130,000l. to which he had before adverted—thus making a total of 4,994,450l. This, then, was the amount to which the unfunded debt was reduced since last year. He hoped, and indeed he felt satisfied, that his right hon. Friend agreed with him in thinking that the reduction of the unfunded debt was satisfactory under the present state of things. This amount of reduction had been effected in that portion of the financial engagements of the country most open to fluctuation, and he was sure that what had been done could not but be acceptable to the House, and to the holders of that description of the public securities. But he might be told that a deficiency might be apprehended. The course, however, which he should take would be, to follow the example of the right hon. Baronet, the Member for Tamworth, while he held the office of Chancellor of the Exchequer—namely, that on the amount of Exchequer Bills being laid on the table in March, 1835, he took a vote to make good any such deficiency as the actual amount applied for the redemption of Exchequer Bills between the 1st and the 22nd of April, which was another point to which he believed his right hon. Friend adverted. He would give a short explanation. The whole of the 1,400,000l. was not expended in the interval alluded to, but the amount expended for a long period, was carried to account during the interval alluded to. They could not take this amount from the Sinking Fund and expend it at once, because the application was strictly limited in the way in which he had described. The amount applied from the Sinking Fund was exactly the amount that could be applied from week to week. There might appear to be a larger amount, but the sums were expended week by week to avoid any fluctuation in the market, and no more was applied to the outstanding debt, than the state of the Sinking Fund would allow. No doubt his right hon. Friend would be led to form an adverse conclusion from the paper before him; but the operation of reducing the amount of Exchequer Bills had been effected nearly in the manner which he had stated. No more nor less had been applied from the Sinking Fund than would be allowed by the Act of Parliament. He admitted that he had given a very imperfect answer to his right hon. Friend, but he should be happy to give him a more detailed, and 856 satisfactory answer when there was a fuller House.

Mr. Goulburn
said, it was evident that an error had occurred in making out the account. It was stated distinctly that 1,400,000l. had been paid out of the Sinking Fund, whereas it appeared, that in fact, only 800,000l. had been paid out and that 600,000l. remained to be paid in the course of the ensuing quarter.

§ The Chancellor of the Exchequer
admitted that there must have been some error in the adding up of the account, and pledged himself to investigate the whole of the matter on the following day.

Mr. Goulburn
felt quite satisfied with that assurance.