FUNDING OF EXCHEQUER BILLS. (Hansard, 22 August 1839)

The Chancellor of the Exchequer
, in moving the committal of the Exchequer Bills Funding Bill, felt called upon, in consequence of the question put to him last evening by the hon. Member for Kilkenny, and, irrespective of that question, from a sense of public duty, to state distinctly to the House what had been the result of the steps he had taken with respect to the funding of Exchequer bills. Undoubtedly, in adopting, for the first time, the course which he had adopted, that of inviting public competition, he felt that no common degree of responsibility attached to him. If the matter had failed, he felt that the whole blame would have been cast upon the Government, of which he was the responsible organ; and the failure would have been connected with the having adopted a new course. But he felt so satisfied that the principle upon which he was disposed to act was in itself right, and that it was expedient that the experiment should be tried, with the view of following it out upon any future occasion when the funding of Exchequer bills might be necessary, that he did not hesitate to take upon himself the responsibility of acting upon it. That responsibility would have been materially increased if the experiment had failed, because he had been forewarned by many Members of that House that it could not succeed The 491 result, however, showed that his own anticipations were correct; and when he concluded the short statement he had now to offer, he thought the House would agree with him, that the course he had pursued was in every respect the best that could be adopted. He wished, before he proceeded further, before he entered into any explanation, to disclaim on his own part, and on the part of the Government, any credit for the result of the experiment. If the matter rested merely with himself, or with the Government, he should leave the public to draw their own conclusions from the facts before them; hut as it was in vindication of a great and important principle in financial matters, he trusted the House would indulge him whilst he explained to them what the result of the experiment had been. He was anxious to do this, not for the purpose of proving that he was right and his opponents wrong, hut for the sake of showing that the principle which he had adopted was a sound and legitimate one. The House was aware, that the amount of Exchequer bills proposed to be funded was 4,000,000l. The House was also aware, that of that sum half a million was taken at once by the Bank of England. There then remained 3,500,000l. to he provided for. The subscriptions for that purpose were opened on the 19th of August, and on that day 694,000l. were subscribed for. The following day, the 20th, was a very gloomy and rainy day, and it not unfrequently happened that the state of the barometer and the appearances of the weather had a very material influence upon large pecuniary transactions in the city. On that gloomy day the subscriptions looked as gloomy as the weather—they fell with the mercury—the amount subscribed for was only 118,500l. The 21st of August was more cheering—a fresher spirit inspired the market—the amount subscribed for was 736,000l. And on this day, not being the close of the subscriptions, because they will still be open to-morrow, whether owing to the fineness of the weather, or to any other atmospheric cause, the amount subscribed for has been 1,672,500l.; showing a total already subscribed for, under the new principle, of 3,721,000l. of Exchequer bills, and leaving only a sum of 279,000l. to be subscribed for. He, therefore, now felt entirely warranted in congratulating the House, that, in adopting a sound and just principle, the success of the experiment had fully justified the risk run by the Government. He might also congratulate 492 the House upon the terms on which these subscriptions had been effected. It was not merely the saving of money; but when the House recollected that the transaction was undertaken at a period when the interest of money was very high—when the interest on the part of the Bank of England had been raised, and when money loans in the City had been raised to a most extraordinary, and, he, believed, most unprecedented height—when these circumstances were remembered, he thought the House would agree with him, that there never was an instance of any financial operation which brought to so severe a test the public credit of the country. Notwithstanding the disadvantages to which he had adverted, this funding of 4,000,000l. of Exchequer bills had been completed—for completed he considered it to be—at a rate of interest which might amount to about 31. 6s. per cent. He would venture to say, that there was scarcely a Gentleman whom he had the honour of addressing who would, a priori, have anticipated so favourable a result. That result was to be considered, not on economical grounds only, but as affording the best possible test of the unimpaired credit of the country. Before he sat down, he wished for a moment to advert to what he had previously remarked upon, the subject of the unfunded debt. He had stated, at an early period, what were his anticipations with respect to the whole of the unfunded debt. Those anticipations had been more than realized. Comparing the year 1836 with the year 1839, he found, that in that period no less a reduction would have been effected in the amount of the unfunded debt of the country than 9,650,000l. That reduction had been carried into effect almost imperceptibly, and without any inconvenient pressure upon the money-market, because he had the satisfaction of seeing that the price of Consols, though high, stood pretty nearly the same as it did before. He only prayed the House to compare this result with that which would have been inevitable, if he had acted upon the recommendation so strongly pressed upon him by some Members of the House—namely, to raise a money loan for 4,000,000l., for the purpose of applying the money to buying Exchequer bills. He was quite sure that the public would have been losers if that recommendation had been acted upon, and that the money-market would have been subjected to great inconvenience. In going into committee on the present occasion, his object would be to in 493 sert three clauses to carry into execution the three resolutions he had moved on a former evening.

§ Mr. Hume
wished to know, what would be the amount added to the permanent debt of the country by this operation; and what was the amount of Exchequer bills, issued for public works, now outstanding? He also washed to know, what amount of Exchequer bills the Chancellor of the Exchequer proposed to issue, in order to make good the deficiency of revenue in the present year?

The Chancellor of the Exchequer
said, if the hon. Gentleman would put his questions on paper, he should be prepared to state distinctly the information required. He (the Chancellor of the Exchequer) had now with him a statement, which would afford a considerable part of the information the hon. Gentleman sought to obtain; but he should prefer giving his answer in a complete manner. With regard to Exchequer bills issued on account of public works, he believed the amount of them now outstanding was about 400,000l., but he had not an exact return. As to the issues on account of the Public Works (Ireland) Bill, he had stated, that, at the commencement, the bills amounted to 328,000l.; but that amount, to the 5th of April, was reduced to 195,000l.; and he believed it had been further reduced since.