§ House in a Committee of Ways and Means,
612§ The CHANCELLOR OF THE EXCHEQUERsaid: I am obliged to my hon. Friends for their kind consideration in postponing the Motions of which they had given notice, in order to enable me at once to make the statement I am about to do in Committee of Ways and Means; and in saying this, I should not be doing justice to my own feelings if I did not state how much I feel indebted to the kind indulgence of the whole House, when I made my financial statement last week. On that occasion I stated, that in order to meet the extraordinary demands which were made on the Treasury of the United Kingdom, in consequence of the existing distress in Ireland, I thought it advisable to have recourse to a loan of 8,000,000l.; and it has given me great satisfaction to find that the House generally concurred in the prudence of the course I then ventured to recommend. I have now to announce that I have entered into an arrangement for a loan of 8,000,000l.; and I am about to move resolutions confirmatory of the arrangement. It is quite true that on some former occasions it has been the practice to enter into loans before any announcement was made to the House. But that was by no means the uniform course; and, on several occasions, the Chancellor of the Exchequer has in his place in Parliament announced his intention of contracting a loan. It will be in the recollection of hon. Members that on the last occasion when a loan was contracted, a resolution was passed authorizing it, while, in point of fact, it was not contracted till three months after. In making the announcement of this loan, therefore, in the financial statement, I only followed a course for which there is ample precedent; and I thought it on the whole most respectful to the House, and most consistent with my duty, to take the course I did. At ten o'clock the next morning the announcement was made on the Stock Exchange; and I knew no possible disadvantage could arise from the statement I thought it but fair to make to the House on Monday last. The only question for me to consider was, what were the easiest terms on which I could raise the money. I consulted with every person I fairly could consult with on the subject, and I was informed almost unanimously that the easiest terms on which I could obtain the money would be to give a certain amount of 3 per cent Consols for every 100l. That was the announcement my noble Friend the First 613 Lord of the Treasury and I made on Thursday last to the gentlemen who did us the honour of waiting upon us—that Consols should be given, they paying so much money for every 100l. stock. This morning several parties attended at the Treasury, when two offers were made. The offers, in point of fact, were identical, and were the result of a previous arrangement. The offer made was 89l. 10s. for 100l. in stock. That, after the fullest consideration I could give to the matter, was the amount I could fairly expect to be given, and I determined to accept it as the best terms the present state of the money market could afford. I need only now state to the House what is the rate of interest; and this will be an answer to some observations which were made on a former occasion as to what I considered would be the probable charge. Of course, it was necessary for me to state what the rate would be; and 3½ per cent I thought the probable rate at which the loan would be raised. In point of fact, the interest which will fall on the country does not equal 3½ per cent. It is not easy to make a very precise calculation. On the occasion of the West India loan, a controversy was raised; for some time there was very considerable doubt what was the precise rate of interest paid for the West India loan. The loan contracted for this morning is for a much less sum than the West India loan; and although the price of Consols did happen to be precisely the same when the two loans were contracted, I naturally expected that when the loan was smaller in amount, I should succeed in obtaining it on more favourable terms. I believe that the interest payable on this loan will be, as near as may he, 3l. 7s. 6d. per cent. A calculation has been made in the Revenue-room of the Treasury that it would amount to 3l. 7s., deducting the interest due on the stock from last dividend day. The annual interest on the loan will be 268,156l. 8s. 6d., and adding to that the charge of management payable to the Bank, making it 270,800l., the interest will be within a small fraction of 3l. 7s. 6d. per cent. That may fairly be taken as the rate at which the loan has been raised. My right hon. Friend the Member for Portsmouth will, therefore, observe that this is 2s. 6d. less than 3½ per cent. I have in some particulars departed from the previous practice of contracting loans; not being in immediate want of money, I have allowed no discount, but I have adopted 614 the usual practice of giving stock, if required, for all instalments except the first, as they are paid. In some respects, this facilitated the contraction of the loan, without any loss whatever to the Government in point of money. I have nothing to add but to place these resolutions in your hands. The right hon. Gentleman read the following resolutions:—
1. That towards raising the supply granted to Her Majesty, the sum of 8,000,000l. be raised by Annuities.2. That every contributor to the said sum of 8,000,000l. shall, for every sum of 89l. 10s. contributed and paid, be entitled to the principal sum of 100l. in Annuities, after the rate of 3l. per centum, to commence from the 5th day of January, 1847, and to be added to and made one joint stock with the existing Three per centum Consolidated Annuities, and be payable and transferable at the Bank of England at the same time and in the same manner, and subject to the like redemption, as the said Annuities.That the several Annuities shall be charged on and paid out of the Consolidated Fund of the United Kingdom of Great Britain and Ireland.That every contributor shall, on the 5th day of March, 1847, make a deposit of 12l. per centum, in such sum as he or she shall choose to subscribe towards raising the said sum of 8,000,000l., with the chief cashier or cashiers of the Governor and Company of the Bank of England, as a security for making the future payments on or before the days or times hereinafter mentioned; that is to say—
"Payment of 12 per cent on or before Apr. 9 next. "Payment of 12 per cent on or before 7th of May. "Payment of 12 per cent on or before 11th June. "Payment of 12 per cent on or before 9th of July. "Payment of 12 per cent on or before 6th August. "Payment of 12 per cent on or before 3d Septem. "Payment of 16 per cent on or before 15th Oct. 100
§ In reply to a question from MR. HUME,
§ The CHANCELLOR OF THE EXCHEQUERsaid, the whole interest would not be paid till July. Supposing any person paid up the whole of his instalments before the 10th of July, he would be entitled to receive the half-year's dividend due in January, and the half-year's due in October. If the whole instalments were not 615 paid up till after July, he would not be entitled to any dividend till January.
§ MR. HUMEThen we were to pay interest from the 5th of January; so that this was an addition to the charge. He was surprised that the old mode of borrowing such sums should have been departed from on this occasion, and could not but express his regret at such departure. Upon a former occasion, he had been prepared to show, when the 15,000,000l. loan was contracted for, that the country sustained a loss of 2,600,000l., yet he could get no one to support him. In this case, we were to give 8,938,947l. for 8,000,000l., and to pay interest upon the former sum; and, though the money was not to be all had till July, we were to pay interest from January. He did not doubt that the stock would be at 3 or 4 per cent premium tomorrow. A loan of 8,000,000l. was a trifle for our money market, and the giving such terms was a mistake. He thought it would have been better to have made it an open loan. He had been informed that this morning, in the City, the loan had been at a premium of 1⅝ per cent. If the Government had advertised for 8,000,000l., and had left the terms open, they would have got the money at a lower rate. It was impossible, indeed, for any one to say what another operation might have produced; only, upon principle, he made these observations after communication with persons better informed upon the subject than he was; and he deeply regretted that the loan had been contracted for at so high a figure.
§ MR. W. WILLIAMScould not but express his sorrow that the Chancellor of the Exchequer had not pursued the beaten track which had been followed by all preceding Chancellors of the Exchequer for the last forty years, with the exception of the right hon. Gentleman the Member for the University of Cambridge. By this course, they had added to the national debt of the country 175,000,000l. By the mode of contracting for the loan adopted by the right hon. Gentleman, he had thrown away 2 per cent. He ought to have got 1l. sterling for 1l. stock. If the right hon. Gentleman had issued 4,000,000l. of Exchequer-bills, he might have increased their interest a halfpenny a day without exceeding the interest of 3 per cent, and they would still have borne a considerable premium. If he had issued 4,000,000l. Exchequer-bills, he would have had to borrow only a moderate sum besides, if 616 the calculations of the right hon. Gentleman as to the prosperity of our finances were well founded. He contended that we ought not to increase the principal of the national debt in time of peace. He regretted extremely that the right hon. Gentleman had not adopted a course which would have been creditable to himself and advantageous to the country.
§ Upon the Resolution being put from the Chair,
§ MR. HUMEasked why the money had not been borrowed at par? When the resolutions were reported, he should consider it his duty to put on record a dissent to the manner in which the loan had been effected.
§ The CHANCELLOR OF THE EXCHEQUERstated, that he had followed the course pursued by Chancellors of the Exchequer for many years past; and the mode which had been adopted for the purpose of obtaining the loan, was that which to Her Majesty's Government appeared the most advantageous. He had to state, that the two parties to whom he had referred as having made the offers for the loan, were Messrs. Rothschild and Messrs. Baring.
§ House resumed. Resolution agreed to.