HC Deb 13 February 1843 vol 66 cc420-47
The Chancellor of the Exchequer

proceeded to say, that he rose in pursuance of the notice he had given at the close of the last Session of Parliament, that he should take the earliest opportunity of submitting to the House the views of the Government with respect to the mode in which it would be proper to deal with the holders of those Exchequer bills which had been so extensively forged and circulated among the public. When he had first an opportunity of addressing the House upon the subject, which was now nearly twelve months since, he had taken the liberty of expressing his belief of the necessity of great caution in giving any opinion upon that subject. He would not conceal from the House that he then felt great difficulty as to compensating the holders of those bills. But, at the same time, deeming that it was a case of considerable importance, both as regarded the public, and as regarded individual sufferers, he had then proposed a course in which the House had readily acquiesced— that of referring the whole matter to commissioners of ability, intelligence, and experience, with a view of having laid before the House, the facts by which their judgment might be guided. He confessed, that the objections which he had formerly stated to the propriety of compensating those individuals, had been greatly affected by the report which was now lying on the Table of the House, and to which, long as it might be, he trusted that hon. Members had thought it their duty to pay particular attention. He hoped it was not necessary for him to enter upon that occasion into the details of the manner in which the fraud had been concocted, or of the extent to which it had succeeded. That subject had already been amply discussed, and he believed every one was acquainted with the circumstances to which he adverted, and with the names of the individuals connected with them. He should, therefore, without entering into details, content himself with stating to the House the course which he thought it his duty to propose to the House as the result of a mature consideration of the report to which he alluded. He did not think it would be advisable to refer to a committee of the House the task of deciding on the course to be pursued, independently of other objections to such a course. The effect of such a reference could only be to interpose still further delay in the settlement of a question which it was desirable to have immediately adjusted. He had, therefore, thought it better at once to submit to the House the view which he was disposed to take of the question, and to leave it to the House to say whether that were a correct view under all the circumstances. It appeared from the report on the Table of the House, that the commissioners had divided the holders of the bills into four several classes. Perhaps, however, it would be desirable, before he stated the mode in which the division was made, to state what were the points which the commissioners were particularly to inquire into. They were directed to ascertain what they could find concerning the manner of issue, circulation, deposit, and possession of those documents, in what manner the holders of them had received the same, whether by purchase, and openly in the market or otherwise, and if so, at what rate of purchase, or whether by loan, and if so, at what rate of interest those loans were made, and whether such loans were renewed, and if so, how often, and for what time; and also whether the owners or holders of such documents received the same in the usual course of business; and whether they employed any, and what means of inquiry into the genuineness of such documents, and all other matters and things, whereby, in the opinion of the said commissioners, the truth might be better known touching the premises. Those were the questions into which the commissioners were directed to make inquiry. The commissioners had divided the holders of the bills into four several classes, the first comprising all, with the exception of particular cases, which on special grounds they excepted. This first class included the great bulk of the owners — more than the half of them, holding bills to the amount of 187,000l. With respect to the holders of this large proportion of the whole sum, the commissioners reported that they found the parties to have become respectively the holders of the bills with which they were connected in the usual course of business, without knowledge or suspicion that they were other than genuine, or improperly obtained by any person whatever, and under circumstances which would warrant no inference of their having acted with want of proper caution. Taking the statement and reasoning of the report, therefore, he thought that there was not a moral or legal obligation on the House to make compensation, but that, on making fair allowance for the circumstances of the case, the parties who had acted in the ordinary course of busi- ness, without any knowledge or suspicion of fraud, and under the circumstances pointed out by the commissioners, were entitled to the consideration of Parliament. In the second class there were, however, certain parties excepted, the amount of whose securities was limited to 49,000l., and with respect to them, the commissioners suggested some doubt as to whether there was not a less degree of caution than persons might have been expected with due regard to propriety to exercise; but they said, if that question was left to their (the commissioners') judgment, they should decide that there was not sufficient ground for such an imputation upon any of them. In that conclusion, he (the Chancellor of the Exchequer) must declare that, on a consideration of the merits of the whole case, he himself felt bound to concur, and he should consider the second class fully warranted in their claim to the consideration of Parliament, on the footing he had already laid down with regard to the first class. In the third class, a still further exception was made by the commissioners, on the question of want of caution. That class was confined, as far as the consideration of the House was concerned, to two banking houses only, for it appeared with reference to one party, Mr. Levy, connected with the case of Messrs. Morgan, from whom he had derived the forged Exchequer bills, that he had received from them also other securities which covered the loss he would otherwise have sustained. Therefore he did not view this as a case in which the House could be called upon to compensate or give the same consideration as in the other classes. The third class related entirely to the cases of two bankers at the West end of the town, Ransom and Co., and Price and Co., the one holders of securities to the amount of 21,000l., the other to the amount of 26,000l. The commissioners did not undertake to negative their claims in comparison with those of the others, but they stated, with the accuracy which pervaded the whole of their report, that there were some shades of difference in that case, to which they thought it right to call the attention of the House. The House would excuse him if he stated why he considered that those two Houses could not be properly excepted from the consideration which applied to the other cases. The House should bear in mind, what appeared clearly from the evidence, that there was a difference, in point of facility, of lending on Exchequer bills, between those bankers who lived at the west end of the town, and those who conducted business in the city. It was manifest from the evidence, that, in cases in which loans on Exchequer bills had been required from the city bankers on the security of clients of undoubted respectability, they had been refused; while it was equally certain that, in other cases, in which bankers in the other quarter of the town, the west end, were concerned, loans on Exchequer bills, under exactly similar circumstances to those in which they had been refused in the city, had been negotiated. Such was the difference in practice at the two extremities of the town. With respect to the cases of the Messrs. Ransom and Co., the House would permit him briefly to relate how it stood. The main criminal— he knew not if he should call him so—but at all events the party most implicated in that affair, was an individual of the name of Solari. It appeared that that person was introduced to the firm by an individual who had been their broker for twenty years, in whom they had every reason to place confidence, nor was there any circumstance in connection with him which gave ground for suspicion that he was other than an upright and honest dealer. The transactions which occurred between them arose in the ordinary course of business; the person opened an account with the banking-house, drew money from the bank in regular course, and did not commence the system of advances on Exchequer bills, until he had been a sufficiently long time engaged with them, during which he had conducted himself in a manner to inspire them with confidence in him. Nor were their transactions confined to Exchequer bills. At one time he had left a box of Napoleons in his bankers' hands, as security for three thousand pounds; money also had been left by him with them to a large amount, and there was everything to induce a belief on the part of the bankers that he was acting properly as a customer of the bank, and one in whom confidence might be placed. Those persons had also evinced prudence in their subsequent transactions. At the time of Solari's death his widow professed to take up the business which he had himself carried on, and employed as agent Rapallo, the great actor in the fraud. What was the course then taken by the banking-house? They immediately required in re-payment of the balance, from one-third to one-half of the amount of the Exchequer bills, on which their property had been lent. Under these circumstances he thought no man could impute to that House such a degree of negligence and want of caution, as, in the view he had been disposed to take of the case they were now considering, could alone justify them in making an exception to the general rule. Next came the case of Price and Co., where he admitted there was more doubt, because there were not the same circumstances which were found in the other case. At the same time, considering that the evidence showed it was no uncommon thing for bankers to adopt this system in lending money, particularly at the west end of the town, he did not think that in this case there was sufficient ground for excepting them from the general rule, and affixing as it were, a stigma upon them, as having acted imporperly in the matter. There was nothing in the evidence to show that they had proceeded with that extreme degree of negligence which would justify the adoption of such a course. Therefore he should propose, as to those classes which he had enumerated, that the House should undertake to compensate the parties who were the sufferers. With respect to the fourth class, he thought the matter stood in a totally different point of view, and as he should propose to follow an entirely different course, he would state to the House the reason why he made that distinction. It must be obvious to the House, that if Rapallo and Solari had been left to their own individual exertions throughout the transaction, it would have been impossible that they alone could ever have carried on the fraud to the extent to which it was actually committed. It appeared from the evidence, that from their own resources, out of the enormous mass of bills in their hands, they only succeeded in inducing two bankers to advance them money on the bills they had, and their situation in life and position in society was such that, unless they had been assisted by the instrumentality of some persons well known on the Stock Exchange, through whom the details of their transactions might be managed, he believed it would have been altogether impossible for them to have given effect to the fraud they contemplated, and which they for so long a time carried on. He did not mean to express any opinion as to the guilt or innocence of those parties who were the instruments by whom their objects were effected. Every individual must form his own judgment on those points, according to the view he took of the evidence; but he was of opinion that there were circumstances indicating that extreme and gross want of caution, to put it in the very mildest terms, which must prevent the parties of whom he was now speaking according to the judgment he had formed, from sharing in the compensation that would be awarded to others. In the first place, he begged the House to remember what was the amount of the transactions in which the Messrs. Morgan, Mariner, and De Berckem were engaged with Solari and Rapallo, men who were little known, either to the public, or to individual stock-brokers, and scarcely in a situation in life to command any extent of confidence or credit. It appeared from the evidence that in the course of the time during which this business was going on, Rapallo and Solari placed in the hands of Mr. Morgan no less an amount of Exchequer-bills than 420,000l., and in those of Mr. Mariner no less than 465,000l. That was the joint amount placed in their hands by the two men Rapallo and Solari; and what took place in the last year, when Rapallo was the only party concerned? In that year this person placed in the hands of Mr. Morgan no less a sum than 161,000l. in Exchequer-bills, and in the hands of Messrs. Mariner and De Berckem a sum not inferior in amount. He said there was something in the very amount of the sum placed by this individual in the hands of his brokers which ought to have excited their suspicion, if it did not do so; and which, if it did excite suspicion, disqualified the parties from receiving compensation. In the case of Solari, it might be said that he was a leading-man, who dealt largely both in the foreign funds and on the English Stock Exchange, that he was agent for M. Thiers, of Paris, and for public bodies at Madrid, as well as for a club at the west-end of the town. But when Solari died, and his widow embarked in the business, what pretence was there for saying that she or her agent still represented the interests of all those millionaires, and that their dealings were conducted by an individual of whom nothing was known, except that he presented amounts of Exchequer bills greater than were deposited by any other person, and under circumstances calculated to excite suspicion? But the amount, alone, was not the only suspicious circumstance. It must be observed, that not one of these Exchequer bills, out of 900,000l. which passed through the hands of these two persons, was authorised to be sold for the benefit of the parties; and when by chance one bill was sold, efforts were made, and expenses incurred, for the purpose of recovering it, in order that none of these securities might be allowed to get into the market. Under these circumstances, it did appear to him that the cases comprehended in the 4th class were not those to which compensation ought to be awarded. On looking through the evidence many minor circumstances appeared which cast on every one of the cases still further suspicion, and confirmed to a certainty the opinion that they had used no caution whatever in the course they had pursued. Reviewing, then, the magnitude of the transactions, their peculiar nature, the circumstances which must from time to time have excited suspicion, and the other minor matters to which he had referred, he thought the committee would be of opinion that those parties were not entitled to compensation. The general result, therefore, would be, that of 377,000l. of forged Exchequer bills which were found to be in circulation, and which were the subjects of investigation by the commissioners, there would be an amount on the whole of 262,000l. for which the public might, he thought, justly be called upon to make compensation. He was aware that this was a very heavy amount to call upon the public to defray. He was quite sensible of this, and no man was more unwilling than he was to make a call on the public funds to so large an extent, but he also could not be insensible to the necessity of doing what, on a fair consideration of the case, seemed to be expedient. When the subject first came before the House, so strongly had he felt the importance of not readily acquiescing in the demands then made, that he expressed himself in the most cold and guarded terms, in order that he might not excite undue expectations. It was the result of a calm and careful consideration of the evidence which had been laid before Par- liament that he was induced to recommend to the House a measure that he regarded as necessary, while it was burthensome to the public. It was to be looked upon as being, not so much a question of justice, as one of policy. The parties, he fully admitted, had no legal right whatever beyond that which the holders of any other forged instrument possessed. They had no power of enforcing against the Crown the compensation which he thought it right to call upon Parliament to grant; but, while he stated as broadly as possible the absence of legal right, and of a power of enforcement, he must, at the same time, beg the House to consider that there were some peculiar circumstances which distinguished the present from cases of ordinary occurrence. It must never be forgotten, without imputing blame to any of the parties, for that intention was the furthest possible from the views he entertained in the case, that this forgery was committed in the very Government office itself—that the individual who forged them was an officer high in the particular department to which he belonged; that he was in possession of the engraving of which genuine Exchequer bills bore the impress, and of the seal, which he had the power of affixing to the documents; that he was the individual who placed the written numbers on the Exchequer bills which were issued from the office, and that the only part which was absolutely forged was the signature of the Comptroller-General, and that a signature which, by the law as it then stood, was not required to be made by the Comptroller-general himself, but was allowed under the act then in force to be affixed by his deputy. These bills, therefore, came before the public in every respect in such a state of complete similarity to genuine bills, that whatever mark was looked at— the paper, the seal, the number, or anything but the signature— it was impossible to distinguish a real from a forged Exchequer-bill. It was almost impossible that anyone of these instruments should have awakened, as far as their external appearance was concerned, (he suspicion of those to whom they were offered. Another circumstance, also, was to be stated in vindication of the innocent parties. The only mode by which they could, in case of suspicion, have detected the fraud, would have been by applying for a verification of the bills in the office; but the verifier himself being the forger, that remedy was taken from the party. It was under these circumstances, therefore, that he considered these forgeries to stand on a footing different from others, and as being rather to be looked at in the light of bills ready made, which had been obtained from the office, than bills really forged, and issued as forged documents. He spoke in the presence of learned Gentlemen who could set him right if he were wrong; but he believed he was correct in saying, that if the bills had been obtained from the office and sold—if they had come into the possession of individuals who held them without any imputation of negligence against the holders, or even with a strong imputation of negligence, so long as there was not mala fides implied, there would be no power of recovering the value of them from the holders. In this case he had thought it but fair to pay to the holders, under the circumstances he had stated, the consideration he had proposed. He had not gone into particular cases— if there were peculiar circumstances attaching to such cases, they could be examined and discussed at a future opportunity. He had contented himself with submitting to the House what he believed to be a fair solution of a very difficult question. It would be for them to decide how far the it-feelings, after a consideration of the evidence, might coincide with his own. He could only say for himself, that he could not tax himself with any want of diligent attention to the facts, or with any desire not to keep the public burthen less; but he had been overborne by the considerations he had staled, and he felt himself bound to propose the compensation of the innocent holders to the extent he had mentioned. The right hon. Gentleman concluded by moving—, That her Majesty be enabled to direct Exchequer Bills to an amount not exceeding 262,000l., to be issued, under certain regulations, for the relief of the holders of certain forged Exchequer-bills.

Mr. Williams

admitted the fairness of the right hon. Gentleman's statement; but he must declare that he was not at all satisfied with the evidence adduced before the commission, which he did not think of a sufficiently searching character to enable the House to proceed to grant an immense sum of the public money. Nothing had been said by the right hon. Gentleman as to recovering any property of parties to the fraud that might be accessible.

The Chancellor of the Exchequer

begged pardon for interrupting the hon. Gentleman. He proposed by the bill to give power to the Crown to take measures for pursuing any property that might be available, in order to its recovery. He did not mean that it should be supposed that there would be any considerable amount available at the present moment, but he thought it quite right and proper, in asking a grant of this sort from the House, that the public should be in a capacity to assert its claim to any property which belonged to those who were the originators of the fraud, to which access could be procured.

House resumed.

Mr. Williams

said this explanation certainly rendered the transaction better in point of principle, but he feared it would not work much benefit for the public in point of practice. What expectations could be had as to realizing anything from property which had been allowed to remain a year and a half in the parties' hands? He was of opinion that the inquiries of the commissioners on this, as on other points, had been most defective. When Rapallo was asked what benefit Beaumont Smith derived from the bills, the reply was that he received whatever he required. Yet that answer was not followed up by an inquiry, what was the probable amount of that which he received? And when the same statement had been made by Rapallo as to Mrs. Solari, there had been a similarly unaccountable neglect of any further inquiry by the commissioners as to any means of ascertaining the probable amount of money received by her. Yet, had these things been ascertained, the result would have been most important. Mr. Bush, the solicitor engaged in the affair, had visited Rapallo in Newgate, and had stated that he had received most important disclosures, of which he had made a memorandum, which he was ready to show the commissioners; yet he had never been asked for them. Rapallo had not even been asked whether he knew by whom the forgeries had been committed, or what had become of the 40,000l. he received just before the discovery of the fraud. Certainly, he said that at that time the money had been applied in getting the forged bills as far as possible out of the hands of their possessors. It would have been most important had this been traced, Yet the commissioners asked no questions thereupon, nor upon various other equally important points, as, who had advised Rapallo to endeavour to get the box from the bankers? As the hon. and learned Member for Worcester was paying great attention to the discussion, he would appeal to him whether it was not a very improper leading question which the com missioners put to Rapallo. You have stated, as to the property received through Mr. Morgan, that it was lost by you in speculation; does that statement equally apply to the property received through other parties? Of course the reply was affirmative. Surely these things reflected no great credit upon the acuteness of the commissioners. Now, further, he had been given to understand that the Chancellor of the Exchequer had received information that Mrs. Solari had considerable amounts of property in the names of other parties; surely this statement ought to have been inquired into; and, with facts so imperfectly ascertained and so negligently inquired into, 260,000l. were about to be paid away out of the public purse. The Chancellor of the Exchequer should recollect that (although certainly the condition of the suffering holders deserved great consideration) he would be laying down a precedent which he might depend upon it he would be called upon to repeat: for it was clear that Smith had not been acquainted with the means of avoiding the possibility of detection. The mere counter foiling (which consisted in cutting off the bill from the margin, and judging by the subsequent correspondence of the edges) afforded no satisfactory test; yet it seemed to have been the only one employed, easy as it was to be evaded. How did an Exchequer-bill differ from a bill of exchange or a check as to the means of ascertaining its genuineness? Both bills and checks were, it was well known, commonly filled up from printed forms; and the signature was of course in each case looked to to test their authenticity. Why had this not been equally regarded in this case? The Chancellor of the Exchequer had admitted great negligence as to the fourth class of claimants; but he alleged that there had been culpable negligence in many other cases; for it appeared, from the evidence of one of the parties, the gentleman who had first discovered the fraud, that his suspicions had been exeited by circumstances equally open to the observations of others; and his remark was striking: — The like could never have been in the possession of such a party as the young man who offered them (respectable though he was), except through something wrong. Had others been equally cautious there could not have been so much mischief; and it was observable that, though bills were offered to bankers, they never were accepted by them. Monied men were accustomed to exercise great suspicion on such matters; it was their only protection, and he could not conceive how the parties in this case could have been justified in the singular neglect they had shewn. So with respect to the conduct of the Government officials in the Comptroller's department. The only ground of justification the Chancellor of the Exchequer could urge for his proposition was the unpardonable negligence of the officials. One circumstance showed this very strikingly—that some of the forged bills sent from the Bank to be examined had been passed at the Exchequer as genuine. What had Lord Monteagle and his Assistant-comptroller stated? That the forgeries were many of them not even clumsy imitations of his Lordship's signature. What an idea it gave of the manner of carrying on business at the Exchequer-office, to find that such clumsy forgeries had been so carelessly passed! Sir J. Newport, when he was at the office, had taken some securities for the public. He had made it a rule never to sign the same issue of bills at the same time as his Assistant-comptroller, whereas Lord Monteagle, it appeared, had been in the habit of signing the issues indiscriminately with his assistant; and it seemed, further, that bills had been signed in other places than the office, or even the private residence of the Comptroller; eye the commissioners had not asked where these other places had been. It certainly seemed grossly irregular that such a mode of transacting public business should have been followed, and with a most careless system of registering merely from memory. Was that a system of which the public could approve? He was sure the right hon. Gentleman could not and would not defend it. Then, where was the security of the public? It appeared that an Act of Parliament was passed, the 38th Geo. 3d., directing that certain proceedings should take place with regard to the examination of cancelled Exchequer-bills and the counterfoils, as the only security for preventing frauds. Sir John Newport made out certain orders in accordance with the act, and the practice in his office was continued for some time; but on the Paymaster of Exchequer-bills receiving an order from the Lords of the Treasury describing the course they were to observe as to the comparison of Exchequer-bills with the counterfoils, after being cancelled, that Act of Parliament was unnoticed, and the paymasters considered themselves bound by the order from the Treasury. The consequence was, that no comparison took place for many years, and the astonishment to him was, that when there was so much inducement in every way to commit these frauds, they were not committed much sooner and to a much greater extent. What was the statement in the report with regard to Beaumont Smith? It said that, Although the Act of Parliment directed that the bills should be compared with their counterfoils, as the only means to discover fraud, yet that the instructions from the Treasury to the Paymasters, by which they considered themselves bound to act, did not point out or allude to the necessity of conforming to the directions of the act. The practice of comparing the bills with the counterfoils had therefore been discontinued for many years: there was no check on the senior clerk (Beaumont Smith), the forger of these bills; he had the sole direction of the quantity to be made and printed, the custody of the moulds, the plates and paper (printed and un printed), of the press, seals, and counterfoils, as well as the entire preparation of the hills. Everything was in his hands without any check or control. He should have been very glad if the right hon. Gentleman had informed the House what was the course now pursued in that office, and what check he had introduced against the recurrence of these frauds. He was quite sure the right hon. Gentleman would find it impossible to make any check effectual if he came forward, as upon this occasion, and paid the money for the forged Exchequer-bills. He would assure the right hon. Gentleman that he could lake no other course for the security of the public than to fund these Exchequer-bills; to place the unfunded debt amongst the permanent debt of the country. There was no gain by that unfunded debt, and although the advantage of Exchequer-bills to the public was immense, over-stock in Consols or any of the public funds, because the holders of them were always secure of the principal, whereas in stock the proprietors were liable to a loss from the depreciation of the market; yet, notwithstanding that, the Chancellor of the Exchequer was paying upwards of 3 per cent, on Exchequer-bills, whereas, at the market price of interest he might get his own acceptances discounted for any amount he might put his name to at 2 per cent. He should like to know why it was that the public were paying one-third more for interest than an individual of good credit upon Exchequer-bills at the present moment. It was within a mere shade— a mere fraction of the interest paid upon 3 per cent. Consols, and he found that whenever the price of money in the market advanced, Chancellors of the Exchequer were always ready to give an advance of interest upon Exchequer-bills; but when money became cheap he saw no such hurry in reducing that interest. At that moment the premium on Exchequer-bills was more than one year's interest upon them. He did hope, then, that the Chancellor of the Exchequer would take this step; that he would take these Exchequer-bills out of the market, and if by economy he could not pay oft* some of them, his best course was to fund them, for otherwise he would be called upon again to pay forgeries infinitely more complete and more deceptive than those now in question. He was, however, quite willing to admit that the holders of these bills, under the circumstances in which they were placed, were deserving of great consideration, although there were circumstances of very great negligence on their part in not making sufficient inquiry and observation of the facts attending the reception of them.

Colonel Sibihorp

should not have trespassed on the time of the House had he not in a former Session of Parliament taken some part in the discussions upon this subject. He had never, as he stated at that time, held any Exchequer-bills, he never issued any, and he should take very good care hereafter how he bought any. Though he had not done that, and therefore there was no selfish motive on his part, yet he had heard with considerable satisfaction what had fallen from his right hon. Friend the Chancellor of the Exchequer. He thought that when they looked at the whole transaction, and investigated the report then in the hands of hon. Members, no other step could have been adopted with common justice to the public, and after reading the evidence he would go so far as to say, that it was not only the policy of the Government, but it was in his humble opinion the legal right of the parties holding these bills, that they should be paid. He agreed, too, with his right hon. Friend in the distinction he had made of the three classes of bills. But it Was to be regretted —he did not blame the present Government only, he included in it the late Government—that our finances were in such a lamentable situation as to render necessary so large an issue of Exchequer-bills. There was another point to which he thought it his duty to call the attention of the House, and that was, that in his opinion the noble Lord Who held at the time, and still held, the situation of Comptroller-general of the Exchequer, in common justice to the country, and from the consideration that was due to the people's pockets, should make good a part of this deficiency; and that, although the noble Lord held his office by letters patent, an humble address should be presented to her Majesty asking for the removal of that noble Lord from his office. It was a responsible office, in which no man ought to be placed without he attended to the duties of it, and yet in the evidence it was stated that the noble Lord signed bills, not only at his office, but at his private residence—sometimes in the morning, sometimes at night: he wished that the noble Lord's hand had been as steady when he signed bills in the evening as when he sighed bills in the morning; but, occasionally too, he signed bills in the House of Lords, and sent them to his own private residence in a common box by a common messenger. Think of documents of such vast importance to the property of the public being placed in such a position! So responsible an officer as the Comptroller-general of the Exchequer ought, as was the case in military service, to be made responsible for any neglect of duty, and therefore it was incumbent on the Government to recommend to her Majesty that the noble Lord should be removed from his office.

Mr. Hume

wished to ask a question of the Chancellor of the Exchequer, because he had stated that he had acted upon the report which had been laid before the House. His hon. Friend the Member for Coventry had said, that some parts of the evidence had excited much surprise in the public mind. Why did not the commissioners follow up certain questions which would have undoubtedly brought forward great disclosures? He wished to ask the Chancellor of the Exchequer, as the organ of the Government in that House, whether they had any other information beyond that which was embodied in that report, and which ought to be laid before the House. They employed Mr. Bush and other legal officers to obtain information from Rapallo; they examined Beaumont Smith, and obtained important information from him. It was stated in the declarations of Smith in open court, as reported at the time, that he was not the party who had benefited, but that there were other and higher persons who had profitted by the fraud. He wished to know whether the Government was willing to lay all the information which had been acquired by their law officers from the several parties, previous to the com mission of inquiry on the Table of the House. The public had been surprised at the manner in which the business had been conducted, and great suspicion existed on this subject. Rapallo was allowed to go away without any further inquiry whatever, as far as the public were acquainted. He must say, that great negligence appeared to have existed in that department; but if he had been asked the question, whether it were possible that forgery could be carried on in a public department, and in so wholesale a manner for five or six years, he should have at once declared that it Was utterly impossible. He had always thought that those departments were so regulated that some check or other would have been sufficient to prevent any such forgery. But as it had occurred, the House ought to have the fullest information respecting the fraud. With regard to the claims before the House, he could not agree to the distinction drawn by the Chancellor of the Exchequer. The forged Exchequer bill was a document composed, if he might say so, entirely of materials which, being issued by the proper Exchequer officers in due form, every-body, looked to as genuine—he found the paper belonging to the Government prepared in a public office; it was printed in a particular form that had continued for ages; it was issued by a public officer, ostensibly the proper person to do that duty; a seal was attached to it; every formality was given, and importance attached to it as a national document; and, he found that the signature might be attached to it by anybody. If that were the case, of what value was the signature, as defining the value of that document? The seal in reality gate the validity to the document, and to that purchaser had always looked? He therefore could not understand why a distinction as to the compensation should be drawn because a little more or a little less caution had been observed by the parties who had purchased them. He thought, therefore, that there must be something behind, something secret, which they did not find in the report which had led to that decision. Before, then, the Chancellor of the Exchequer, or any other individual, should be allowed to draw a line, and say that this and not that document should be paid, the Government ought to supply all the information they possessed on the subject. He was distinctly of opinion, that every person who had bond fide paid for the bills, ought to be compensated, as the fault had been originally in the Exchequer office, over which the purchasers had no control. It was rather discreditable to the commissioners not to have followed up certain questions which must have brought forward great disclosures, which we ought to know before we paid the bills; and the reason of his (Mr. Hume) putting the question to the Chancellor of the Exchequer he had stated was, to satisfy the public whether there was or not any individual higher than Beaumont Smith who had contrived at this fraud. His opinion Of the honesty of public men in this country was too high to allow him to suppose that they could be led away from their public duty by money, or any such cause; but to satisfy the public, he would therefore again ask the Chancellor of the Exchequer whether he had any further information on this subject which he could lay before the House?

Mr. Roebuck

wished to ask the Chancellor of the Exchequer a question respecting the Comptroller of the Exchequer. It appeared that the Comptroller was appointed by the 4th and 5th of William 4th, and was appointed by letters patent, and there were these words in the Act of Parliament respecting his attendance at the office,— And the letters patent shall continue in orce during good behaviour, subject to his removal there from by his Majesty, his heirs and successors, upon an address of the two Houses of Parliament, and subject to the abolition of the office by the authority of Parliament. And then came the words to which he wished to draw the attention of the House: And the duties, powers, and authority, by this Act imposed on or vested in the Comptroller, shall and may, in the event of illness, or of occasional and necessary absence of the said Comptroller from the office, be executed by such assistant. Now the question he wished to ask of the Chancellor of the Exchequer was this, it had gone out, he had heard from abroad, he could not say whether correctly or not, that the Comptroller in this case was absent very nearly six months, and he wished to know whether or not a large portion of these forgeries took place during the absence of the Comptroller, and whether it were or not an occasional absence, and which could hot be included in the words "occasional and necessary absence?" Because he knew that the word "and" was very carefully inserted in another place. It originally stood "Or," but the word "and" was put in its place to make it imperative on the Comptroller to be constantly in attendance; that he should not be absent except on account of illness or that occasional relaxation which was necessary for public men. He did not know whether the information he had received from abroad was correct or not, but he wished to ask whether the absence of the Comptroller were not an absence of many months, and whether it were not during that period that a large portion of the forgeries took place?

The Chancellor of the Exchequer

The hon. and learned Gentleman has asked me a question which is a combination of a question of fact with a question of law. As I understand the question of the hon. and learned Gentleman, it is whether the law does not require that—[Mr. "Roebuck: I ask not for the law, but for the fact.] The question is, whether the bills issued and found to be forged were signed during the absence of the Comptroller from London or during his presence.

Mr. Roebuck:

I must have made myself very badly understood by the right hon. Gentleman. The question I put to him was this,—whether or not the forgeries which took place did not take place during the absence of the Comptroller, which absence extended to some months?

The Chancellor of the Exchequer:

That question it is impossible for me to answer. When the forgeries took place I cannot possibly tell. When Beaumont Smith thought fit to attach the signature to those documents is perfectly unknown to me. I presume that it was generally done about the time of issuing Exchequer-bills, but as to that I have no evidence whatever.

Mr. Williams:

The fact is stated in the evidence that they were exchanged at the usual period of exchanging Exchequer-bills.

The Chancellor of the Exchequer:

That is admitted: but the time when the forgery was committed is quite another thing. The right hon. Gentleman then proceeded to say, that the hon. Member for Montrose seemed to think that there was some great mystery on the part of the Government with regard to this subject— that they were anxious for concealment. He could only say that no such wish for concealment existed, and with regard to the admission of Rapallo as evidence, that was done on the advice of those who conducted the case.

Mr. Roebuck

asked, if the right hon. Gentleman was aware whether or not the Comptroller of the Exchequer had been absent at any time for some months together?

The Chancellor of the Exchequer

said, he really was unable to answer the hon. and learned Member as to that point. During the time the Comptroller had held his office he had had that reasonable leave of absence which every man in a public office did take during the summer months, but as to the practice existing before the appointment of the present Comptroller, he could not at all speak. At the same time he expressed no opinion at all as to whether the inference of the hon. and learned Gentlemen were correct or not.

Mr. James

desired to know whether the Government had taken proper precautions for the prevention of the recurrence of such a calamity to the public? Surely, something ought to be done, and, for his own part, he agreed with the hon. Member for Coventry, that the best means of putting an end to the evil would be to fund the Exchequer-bills altogether.

The Chancellor of the Exchequer

would offer a few remarks in the way of reply to thevarious points that had been raised by different Members in the course of the discussion. He thought that the hon. Member for Coventry (Mr. Williams) had gone into matters which had no direct reference to the question before the House. The hon. Member for Coventry thought it would be better that the issuing of Exchequer bills should be altogether abolished. He (the Chancellor of the Exchequer) thought that that was a question that had better be discussed separately upon its own merits, than incidentally in the course of a debate such as the present. The hon. Member would, therefore, forgive him, (the Chancellor of the Exchequer) if he forbore from entering upon it on that occasion. The hon. Member for Coventry also asked in common with the hon. Member for Cumberland (Mr. James), what precaution the Government had taken to prevent the recurrence of similar misfortunes in this department for the future? Both of these hon. Members were in the House in the last Session of Parliament; and he should have thought that they would not so soon have forgotten, that, immediately upon the report of the commissioners being laid upon the table, a bill was introduced into Parliament, making new regulations to govern the issue of Exchequer bills. In that act (the 5th and 6th Victoria, cap. 66) the hon. Member would find all the precautions laid down. The hon. Member for Coventry inquired whether the Government were aware of any property belonging to Mrs. Solari in connexion with these frauds. His answer was, that they were not; but with regard to Rapallo, information was conveyed to the Government that he had property invested in the names of other parties, upon which they caused due inquiry to be made. The result of those inquires was, that the information so given was not confirmed. If the hon. Member for Coventry was not satisfied with the report that the commissioners had made, he (the Chancellor of the Exchequer) could not hope that anything that he could offer would content him. Upon the present occasion he the (Chancellor of the Exchequer) did not feel that it was necessary for him to go again into the discussion of the conduct of the Comptroller-general, or of the other officers of the Exchequer, upon which full discussion took place in the last Session of Parliament. He (the Chancellor of the Exchequer) had then stated his feelings and opinions upon the subject. Those opinions and feelings he did not now deem it necessary to repeat. He did not attempt to conceal that, from the habitual confidence reposed in the individual who committed the fraud—from the long prevalence of the opinion that no forgery could be made in Exchequer bills—there had been for many years a laxity in the conduct of the business in that department which it was most desirable to correct. For that purpose a bill, founded upon the report of the commissioners, was last year introduced, to correct the errors which seemed to prevail. The regulations imposed by that bill were strictly enforced, and would continue to be strictly enforced; and, under these regulations, it was impossible that a fraud of a similar character could ever again take place.

Sir James Duke

was anxious to make a single observation, and in making it he begged to be understood as throwing no imputation upon the class of gentlemen to whom the observation would apply. But he thought that the practice of official gentlemen associating themselves with mercantile speculations, which frequently exposed them to great loss, was much to be deprecated. Taking into account the general habits and education of these gentlemen, he was sure that the Government would only be doing them a kindness by laying down some rule to prevent such a practice. He was aware that Government could not prevent individuals from embarking their money in any speculation that they thought proper; but he thought that steps might be taken to prevent them from becoming directors, and openly associating themselves in a public capacity with joint-stock speculations, which commonly led to great loss and great embarrassment. He was induced to make this observation, and to throw out this suggestion to the Government, from the circumstance of Mr. Smith, the party in this instance convicted of the fraud, having stated to him in New gate, that his association with speculations of that nature was the first step towards his defalcation and appropriation of the public money.

Mr. F. T. Baring

would not detain the House by offering more than two or three words upon the course which the right hon. Gentleman proposed to pursue. Turning for a moment to the question which had been put by the hon. and learned Gentleman below him (Mr. Roebuck), he would beg to refer that hon. and learned Gentleman to some papers which would very probably answer his inquiry. In the course of last year certain papers were moved for, at the suggestion of Lord Monteagle himself, and which would show that upon the occasion of all the great exchanges which took place in the months of March and June, 1841, Lord Mont eagle was, in every instance, present in his office. As the right hon. Gentleman (the Chancellor of the Exchequer) had justly observed, it was impossible to say when the forgery took place; but, upon all the occasions when the bills were exchanged, Lord Monteagle was present. This appeared from the return before the House; and as the point had been questioned, he thought it necessary, in justice and fairness to his noble Friend, thus to remind the House of the fact. The simple question now before the House was, whether or not compensation should be granted to any of the parties who had suffered from the forgery of Exchequer Bills. The right hon. Gentleman (the Chancellor of the Exchequer) commenced with something of an apology for not having again referred the case to a committee of that House. So far from thinking that any apology was necessary for the course which the right hon. Gentleman had adopted, of coming forward at once with a proposition emanating from the Government itself, and founded upon the evidence which had already been laid before the House and the country, he thought that the step taken by the right hon. Gentleman was, by far the fairest and the best. The House of Commons, valuable as it was as the representative of the general interests of the empire, was not a proper body to discuss the claims of private individuals. Upon the whole question, looking into all the circumstances connected with it (however much he might feel the weight of certain arguments which had been introduced), he did not see how it would have been possible for any government to oppose the claim of the parties who had suffered from these frauds. He was bound! to state as the right hon. Gentleman had stated, that the report of the commission had materially altered his opinion upon the subject; and that he did not think it would have been possible to have allowed all the parties to have suffered under the loss which they had sustained. He agreed with the right hon. Gentleman as to the justice of satisfying some of the claims; and upon the whole he concurred in the line which the right hon. Gentleman had drawn as to those to whom compensation should be given and those to whom compenation should be refused.

Colonel Sibthorp

maintained, in spite of what had just fallen from the right hon. Gentleman opposite (Mr. F. Baring), that it was manifest, upon the face of the report laid before Parliament, that one-third of the gross amount of the Exchequer Bills issued at the time that the frauds were in the course of execution, were signed by Lord Monteagle during non-attendance at his office.

Mr. F. Baring

had addressed his observation to the questions of the hon. and learned Gentleman (Mr. Roebuck), as to whether Lord Monteagle was in attendance or not—not the question of whether he was actually in his office or not.

Mr. Turner

expressed his approbation of the course which the right hon. Gentleman (the Chancellor of the Exchequer) proposed to take.

Mr. Escott

did not dispute the propriety and the justice of compensating the innocent holders of Exchequer Bills, who had been exposed to loss by the culpability of others. But there was one point upon which this question was still placed before the House and the country in a very unsatisfactory light; and that unsatisfactory point was this—that the whole transaction was involved in mist and obscurity, so that no one knew whether to trust or to condemn a great public officer of the Crown. The House, in fact, was about to vote this large sura of money, without knowing who the really guilty parties were. It was right, however, that the innocent holders should be compensated, and he should, therefore, support the motion of the Chancellor of the Exchequer.

Sir Thomas Wilde

did not know very distinctly to whom the observation of the hon. Gentleman, who had just spoken, applied; but he did know that there was nothing whatever in the case to which such an observation could be justly applicable. Where charges were made or implied against a public officer, he thought that it would be more just (although in this instance he was sure the hon. Gentleman did not intend anything unjust) to make those charges the subject of a separate and specific motion, rather than to introduce them incidentally upon an occasion like the present, when it was im- possible that they could be properly discussed or rightly determined upon. The question of, whether the noble Lord, the Comptroller of the Exchequer, was present or not at his office, at particular periods, however important as a separate question, had nothing to do with the question now under the consideration of the House. The course that had been taken upon the bills in question (as had appeared from all the reports) seemed to have been this — that Smith possessed himself of certain spare sheets—surplus sheets of paper, provided for the purpose of Exchequer bills—that he kept those spare sheets by him, that as he was pressed and importuned by Rapallo and Solari, he filled them up, and that from time to time, as their necessities required, he put the office seal to them, and so completed the genuineness of their appearance. It further appeared that the larger portion of the bills were issued just antecedent to the exchange of bills at the Exchequer-office, and that the object for which they were issued was to enable Rapallo and Solari to redeem the bills which they had previously issued, and so prevent the presentment of the forged bills at the Exchequer. The time, therefore, at which the forgeries were committed could not be specified; they were obviously committed at various periods, according to the necessities of the parties, to enable them to meet the payments which their speculations entailed upon them. It had been said that Smith had asserted that some high persons had participated in the benefits accruing from the fraud. The hon. Gentleman who had alluded to that rumour would find it very difficult to find such a statement made any where upon any thing like authority. He did not think that it existed any where. He retained a pretty accurate recollection of all that had occurred at the trial, and any such statement was entirely absent from his memory. In fact, he was convinced that no such statement had ever been made, or ever intended to be made. The parties implicated were Solari, Rapallo, and Smith. No imputation had been cast upon any one else. "Whether those persons who were placed in the fourth class were auxiliary to the delinquents, or had assisted in the frauds, he could not venture to give an opinion. But with respect to any other persons, high or low, being implicated, there was nothing in the report to connect them with any part of the transaction. It was said that the precedent that the House was now setting was very important. He agreed that it was so; but it was one that he thought it most honourable to the House to make. It was this:—that if through the want of prudent and effectual regulations in any public department a security, apparently genuine in all its parts, and the genuineness or un genuneness of which the public had no means whatever of testing, were put into circulation and received as a bond, fide security for its full value, the public represented by the department by whose inefficiency or want of prudence an opportunity had been afforded for the perpetration of a fraud, would answer for the inefficiency of the regulations of the department, or for the misconduct of their officer, and make good the loss where, upon the faith of what to all appearance was a genuine public security, men had been induced to part with their money. It was alike essential to rich and poor— to every class of the community—that there should be the greatest facility in the circulation, and the greatest reliance upon the good faith and value of public securities. Every part of the country must equally benefit by that. The evidence upon the present occasion was distinct and clear upon this point— that there was no mode of examination, no process of investigation by which the parties who took the fraudulent bills could have been aware that they were not genuine. This was emphatically stated by the commissioners in their report. The public, it would be remembered, had been referred to certain tests by which to decide upon the authenticity of the Exchequer bills. It was said that they were drawn upon a particular kind of paper, having a particular water-mark manufactured for this express purpose. That there was a particular form of plate prepared for the express purpose of impressing them, and that the seal of office, which he maintained constituted the acceptance by the Government of an Exchequer bill, was attached to them. These were the tests to which the public had been referred, and no other could be suggested; because as the Deputy-Comptroller had the power of signing, not his own name, but that of his principal, and as the deputy might be exchanged from time to time, and no public intimation be given of the change, it was impossible that the public could form any notion of the genuineness or want of genuineness of the document from the hand-writing of the signature. Indeed, the evidence was distinct from the beginning to the end of the investigation, that men in the habit of dealing in these securities never looked to the signature, but only to the general character of the document, and most especially to the seal of office, upon which they had invariably been in the habit of relying. The bills upon which the frauds had been committed were genuine as related to every one of those tests upon which the public relied. They were drawn upon the Government paper, were impressed with the Government plate, and bore the Exchequer seal. If then a public security had gone forth having every test of genuineness, upon what principle of honesty or common sense could it be said that individuals who had parted with their money upon the faith of their genuineness should be compelled to sustain the loss when it was ascertained that they were spurious? As regarded the parties to whom compensation was to be given the Chancellor of the Exchequer had, as he (Sir T. Wilde) apprehended, drawn the true line. The right hon. Gentleman granted indemnity to the bond, fide holders, and withheld it from those who had not yet proved that their holding was bond fide. The only just rule was this—that these bills, as regarded the public, ought to be treated as genuine bills, but stolen. The public had been robbed of them. What, then, ought to be the title of those who hold them to recover? Why, that they had received negotiable bills, bond fide for their full value, without notice. That would give a clear right to recover. This was the line that the Chancellor of the Exchequer had taken, and he would venture to say, notwithstanding the division of the first three classes, that there was not, from the beginning to the end of those three classes, one single instance in which, if submitted to the decision of any jury of merchants or tradesmen, the holder would not be pronounced a bond fide holder without notice. But if it were right to treat these bills as genuine, and that all those who proved themselves to be bond fide holders should be paid—if that were the rule upon which the Government acted, then he must say, that some justice was due to the fourth class. Ought they to be excluded as persons who were not bond fide holders without some means of legal investigation to ascertain whether they were bond fide holders or not? The commissioners had made an extended inquiry, and the conclusion to which they had come, after exercising their best judgment, was one with which he (Sir T. Wilde) found no fault. They had so dealt with the case as to leave the Chancellor of the Exchequer no alternative than that which he had taken; but it did not follow that those persons who had been excepted were to be for ever excluded. The commissioners had not afforded the parties an opportunity of being heard; the parties had not even had the opportunity of hearing what had been said against them, and which had induced the commissioners to come to the conclusion at which they had arrived. This did not appear to be just. Upon the present occasion he apprehended nothing could be done for them; but he did say that these men, and, indeed, that every man who had received any of these Exchequer Bills ought to be allowed to show that he was a bond fide holder. Seeing the extent of the claim they had, and which might involve their ruin, and seeing that that ruin would be the consequence of their taking Exchequer Bills, which carried the public credit with it, they certainly ought to have an opportunity of going before a jury of merchants to say whether they were bond fide holders or not. If they were bond fide holders, they had a most righteous claim upon the credit, integrity, and honour of the country, to be paid; if they were not bond fide holders, every body would feel that it was but just that they should suffer,

Mr. Hume

asked whether it were the intention of the Government to allow interest to those parties whose claims were to be admitted?—eighteen months interest would be due to them.

The Chancellor of the Exchequer

said that it was the intention of the Government to issue 262,000l. as a compensation to the holders of Exchequer Bills which had been forged, and to allow interest from the period at which they were signed.

Resolution agreed to.—House resumed.