§ MR. DISRAELISir, previous to Mr. Speaker leaving the chair, I am anxious to make inquiry respecting the course of business to be pursued by the Government this evening. The right hon. Gentleman the Chancellor of the Exchequer has given notice of his intention to move certain Resolutions to-night, on a most important subject of finance. Since I have come into the House, I have had a copy of those Resolutions put into my hand, through the courtesy of the Secretary of the Treasury, with alterations. I have been informed that those alterations are of no great importance. But, after a short examination, I observed one alteration which I deem of the greatest importance. I wish, therefore, to know what course Her Majesty's Government intend to take with reference to these Resolutions—whether the right hon. Gentleman will only confine himself to the making of his statement? If so, it will, of course, be unnecessary for me at the present moment to make any observations. I trust, however, that the Chancellor of the Exchequer, from the peculiar nature of the circumstances under which these Resolutions are brought forward, will not call upon the Committee to decide upon them by a vote, for they are not the Resolutions that have been for the last forty-eight hours in our hands.
The CHANCELLOR or THE EXCHEQUERSir, in my opinion, this is a question which must depend upon the feeling of the Committee itself after it has heard my statement. The opinion entertained by the right hon. Gentleman will, no doubt, have its due weight with the Committee. In my statement I propose to explain fully the nature of those alterations referred to, and the Committee will then be in a position to judge whether it would be convenient to come to a distinct vote to-night on the subject. I may add, that I have no desire to force a vote on the Resolutions to-night if it be the opinion of the Committee that such a course would be inconvenient.
§ MR. J. L. RICARDOsaid, he had heard with surprise that certain amended Resolutions were now in circulation, somehow or other. He wished to ask the right hon. Chancellor of the Exchequer when those amended Resolutions were published, 810 how they had been distributed, and where Members of the House of Commons could obtain them? This was a very important subject, and he thought the Members of that House ought at least to have those Resolutions in their hands before entering on the discussion.
§ The CHANCELLOR OF THE EXCHEQUERI believe that the Resolutions alluded to are to be had in the usual way, when alterations are made in papers after the publication of the Votes, namely, by application at the Vote Office.
§ Order for Committee read.
§ House in Committee; Mr. Bouverie in the Chair.
§ The CHANCELLOR OF THE EXCHEQUERIt is now my duty, Sir, to explain to the Committee, as well as I am able, the nature of the proposition which, on the part of Her Majesty's Government, I have to make to them in respect of the operations of the National Debt; and the course which I think most convenient for the Committee to take will be, that I should in the first instance state the plan which Her Majesty's Government recommends for adoption, and that I should then put together before I sit down such alterations as have been made in the draft Resolutions since they were first distributed. The Committee will then see both the plan as it is, and the alterations separate from the plan, and will so be able to judge whether it will be most for the general convenience to proceed with the discussion and take a vote to-night, or postpone the debate till another evening. I shall not commence this explanation of the intentions of the Government by dwelling in any degree upon the importance of the subject. I would rather, if I could, after viewing the amount of public interest which it has excited, endeavour to moderate such expectations as may have been formed in the public mind. I do not recommend the proposition that is now before the Committee as a proposition which can effect any sweeping or fundamental change; but I venture to recommend it to them as a proposition which is just and prudent in itself, and which will probably lay the foundation for more extended improvements in future. The Committee ought to understand that there is the broadest possible distinction between our position at the present time and the position in which former Finance Ministers have stood when they have produced extensive operations of this kind. Every one of those operations between the Peace and 811 the year 1844, when they were ably wound up under the auspices of my right hon. Friend the Member for the University of Cambridge (Mr. Goulburn), by a plan which was inferior in wisdom to none of them—every one of these operations have had an issue comparatively simple to deal with, and they have marked the successive steps by which you effected the great transition in respect to your debt from a state of prolonged war, when money could only be raised at high rates of interest, to a state of peace, commercial progress, and general stability of our institutions.
The case is now materially different. I will state very briefly the particulars of those operations, for the purpose of discountenancing the supposition that any analogous effects are to be expected at the present time. In 1822–1823 Lord Bexley proposed a commutation of a portion of the public debt. He operated on a capital of 152,000,000l., and effected an immediate saving of interest of 1,206,000l. In 1824–1825 the Earl of Ripon (then Mr. Robinson) operated on a capital of 77,000,000l., and effected an immediate saving of interest of 390,000l. In 1830–1831, my right hon. Friend the Member for the University of Cambridge operated on a capital of 153,000,000l., and effected an immediate saving of interest of 753,000l. In 1844–1845 he again dealt with the large capital of 248,000l., and effected an immediate saving of interest of 622,000l.; but which, in 1854–1855, will be doubled, making a total saving of interest of 1,244,000l. In respect to the amount of saving and the rate of interest, from which the descent is to be made, the case is widely different in these days from what it was during the periods referred to; for, to reduce from 5 per cent to 4 per cent, from 4 per cent to 3½ per cent, and from 3½ per cent to 3 per cent, was a very different thing from dealing with a debt of 3 per cent for the purpose of reduction. As far as the history of the world has yet gone, we have found 3 per cent to be pretty nearly the limit to which we could descend. The enormous mass of debt is again such as to preclude any extensive compulsory operations, not only under the circumstances of the present moment, but almost under any circumstances which it is possible to foresee, or rational to anticipate. The debt amounts to 500,000,000l., more than double what it has ever been attempted to approach for the purpose of reduction; and a circumstance, which may not be so gene- 812 rally within the knowledge of the Committee, but which is yet more fatal in its bearing on the position of the public debtor and the public creditor is this, that of those great Three per Cent Stocks, which I have stated in round numbers as amounting to 500,000,000l., the whole are secured by a provision requiring a Parliamentary notice of twelve months' duration before any measure of reduction or commutation can be applied. Now, I only ask the Committee to recollect how serious a matter it would be for any Government under the present circumstances, or under any which the most sanguine among us can anticipate, to sketch out a plan of operation affecting so vast a capital, involving the possibility of such enormous payments, removed from us by a period of twelve months, and including the chances of all those changes and vicissitudes which we have often seen the course of less than a single year bring about. Our present position, therefore, is entirely different from this. The expectations which were then reasonably entertained, it would not be reasonable to entertain now. The plans then proposed to the House were reduced to a single and simple issue. The stocks with which you had then to deal were subject to redemption by Parliament after an offer of repayment at short notice, and as many as declined that offer were required to accept other stocks tendered in lieu of those which they held. Therefore I lay it down in the first instance that a large operation of a compulsory character is totally out of the question. And the next inquiry is, shall we, notwithstanding the impossibility of such extended and comprehensive operations, come to the conclusion that a new state of circumstances has arrived in which it is incumbent on the part of the Government and of Parliament that they should make some effort to obtain for the public the fullest value that equity and justice will permit for the security which they give to their creditors, and a rigid observance of the perfect good faith with those creditors which it has ever been the study and the glory of this House to maintain? The opinion of Her Majesty's Government is, that, although we cannot now effect those which I may call the magnificent results achieved in former periods, yet the time has come when a beginning may be made, and when steps may be taken, which may be useful so far as they go, and which will lay the ground for future improvements.
There is another preliminary point on 813 which I venture to make a remark. You have, on approaching a subject of this kind, a choice of difficulties, and it was because I wished to put those difficulties clearly before the Committee that I did not answer at greater length the question put to me by the right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli). On the one hand, no man can admit more fully than I do the perfect title of Parliament, and of every Member of Parliament—and indeed it is their bounden duty and obligation—to maintain intact its control over the whole of those operations. If it is our duty to fence about with minute, stringent, and rigid forms the whole process of taxation, and to look closely and jealously into every proposition submitted to you by a Government for raising money from the people, it is still more your duty to see that you do not give a blind and unreasonable confidence to a Minister where the case is either the creation or the commutation of public debt. And the more this House takes on itself that function, the less becomes the responsibility of the Government—the less the burden incumbent on the Ministers generally, and less are the anxiety and liability to blame which can possibly attach to the individual who fills the office I now have the honour to hold. But, on the other hand, while I thus state and assert the prerogative of Parliament and its Members, it is likewise an undeniable fact that the Minister of Finance, whether competent or incompetent, is, under these circumstances, your agent to deal with the public creditor in respect to these operations; and consequently if the conferences between you and your agent, being carried on in a public manner, are too much prolonged by debates on points of detail, you may find, when you send him forth to execute your will, that you have materially weakened his position. Therefore I hope that the Committee will grant to the Government that degree of confidence which they may deem founded in justice, and that they will remember, when once a matter of this kind is broached, the importance of carrying it forward with resolution and promptitude; and that they will be guided by these considerations in balancing between the inconvenience of entrusting the discharge of weighty functions to those who fully admit their own insufficiency to bear them worthily, and the inconvenience which may be incurred, on the other hand, of doing damage to the public service by 814 too much discussion with respect to details, necessarily involving, by lapse of time, uncertainties and contingencies which might be fatal to the essence of the proposition.
I have been most anxious to make this application at a comparatively early period of the present Session, because, being aware that it is an operation of a kind that does not aim at very great results, and being undoubtedly of necessity a novel operation, and not analogous to those that have gone before, I am anxious that the operation should go forward, and should reach to some degree of effect, if it is to take effect, while Parliament is sitting, so that Parliament may have an opportunity of exercising a judgment upon it ere long, and so that the Government may, if satisfied with the working of the plan, come back to Parliament, if need be, for extended powers, before the Session shall run to its close. I come, then, to my plan, which consists of three portions. The first of these is certainly a minor portion of the scheme; and I will enter upon it first, in order to dispose of it and put it out of view. It is the liquidation of certain minor stocks which appear in the schedule of the National Debt, and the very existence of which is unknown to a great portion of the public, and perhaps to a great portion of the Members of this House. These minor stocks are chiefly connected with the South Sea Company. There is the debt due to the South Sea Company, amounting now to 3,622,784l.; the Old South Sea Annuities, amounting to 2,775,086l.; the New South Sea Annuities, amounting to 1,997,530l.; the South Sea Annuities of 1751, amounting to 460,580l.; and the Bank Annuities of 1720, amounting to 676,130l. The whole amount of those stocks is about 9,500,000l. sterling. It is proposed, with respect to them, that we should make what is called a compulsory operation; that is to say, that we shall offer certain alternatives to the holder of the stock, and at the same time inform him that if he should not accept one or the other, he would, at the expiration of a proper period, be paid off. I think the Committee will agree with me that, reference being bad to the amount and state of the revenue, to the state of public credit, and to the balances actually at the command of Parliament in the Exchequer, this will be a safe operation. Perhaps I shall be asked why I trouble these, which may be called almost patriarchal stocks, for they represent now the oldest form of the Na- 815 tional Debt? My reasons for adopting this course are of a very practical nature. In the first place, I think it useless to have different denominations of stock, which resemble each other in every essential particular—differing in name, but having all essential characteristics in common, and not one possessing an advantage over another. Another reason is to be found in the circumstance that these limited stocks give rise to a feebler course of market transactions than would occur if they were massed together, and placed in a more prominent position. These various denominations of stock of limited amount cause complexity in the details of the debt, without being productive of any good, and they likewise introduce complexity into the management of the debt; and, although I believe there is no sort of claim which could be brought against the highly respectable South Sea Company—which has effectually purged itself from the stain connected with its early history—yet the circumstance I have adverted to does import into the management of their affairs a certain degree of intricacy without any adequate purpose; and it would undoubtedly simplify these transactions to reduce all the stocks connected with them under a single denomination.
I think the Committee will agree with me that the time has come for a different arrangement. It will also effect a real economy. I frankly own that I think, with respect to this portion of the public debt, we shall obtain only a moderate reduction, but still a reduction, in the rate of interest. If on this 9,500,000l. we effect but a reduction of a ¼ per cent in the interest, yet that will represent a permanent annual saving to the country of something like 25,000l.; and, besides that, we are perfectly prepared to meet the views of those who may wish to be paid in cash; and if the holders of this stock shall desire to have cash, and will make a call for it, that call will not be inconvenient, but on the contrary it will enable us to employ in a profitable manner a portion of the balances, larger than are required, now unemployed. The Committee will perceive that by this process we shall displace a portion of debt bearing interest by cash now lying idle and bringing no profit. I stated the saving anticipated from a summary commutation of these stocks at 25,000l. a year; but the gain to the public would be much more considerable, if a portion of the cash lying 816 unemployed in the Exchequer should be applied to paying off the dissentients. It is unnecessary now to do more than merely refer to the means of paying off the holders of the stock, whether by cash in the Exchequer, or by the sale of Exchequer bonds —to which I will refer more particularly hereafter—and which may be disposed of in exactly the same way as is annually provided for in the Appropriation Act with respect to Exchequer bills; and, lastly, to the stock which we intend to offer the holders of the present stocks the alternative of taking. There is only one other point in connexion with this part of the subject to which I feel it necessary to allude. It did not appear to us quite clear that some of these stocks came within the provision of the Act of Parliament, which requires twelve months' notice to be given of an intention to reduce the rate of interest; but, considering their limited amount, and the comparatively defenceless position of their holders, we have given them the benefit of the doubt, and ranked them all in the same category. There is, however, one of these stocks certainly excepted from the rule which requires twelve months' notice of an intended reduction of interest, for it is precisely defined by law that six months' notice shall be sufficient, and I think, also, that the notice must be signed in the handwriting of the Sovereign, and exhibited publicly on the Royal Exchange.
I have now disposed of one portion of this scheme, and I come now to the second and third. The second of these portions relates to the issue of Exchequer bonds, and the third relates to a voluntary commutation dependent entirely on the option of the holders of the great Three per Cent Stocks, namely, the Three per Cent Consols and the Three per Cent Reduced, making together a capital of very nearly 500,000,000l. But I now refer to both those plans, because both have in view one and the same ultimate object, and that object is to lay the foundation of a permanent form of irredeemable public debt—irredeemable, I mean, at the option of the holders—bearing an interest of 2½ per cent. The manner in which we propose attaining this end will appear as I proceed. In the meantime, I wish to impress on the Committee that this is the ultimate aim, and will prove to be the key of the provisions in the Resolutions I am about to propose. I know there are some persons who think that this reduction of 3 per cent stock to 2½ per cent stock is a 817 very simple matter, which may be delayed for one or two years, but which is certain, in the course of things, to be effected at last. The persons who hold this opinion are of more sanguine temperament than I am. It is a matter of great uncertainty, and if we wish to attain the object, we ought on no account to omit the employment of all rational means to that end. Trust not to the continuance of a state of circumstances favourable to a further reduction of the interest on money. That may come, it is true; but the present generation is misled by succeeding a generation in whose time money was much dearer than it is now, and, in consequence, it does not extend its view as far as it ought. Knowing that our fathers borrowed money for the public at 5l. 10s., and even 6l. per cent, we conclude that, as regards this particular we are sliding down an inclined plane. It is, however, an important and curious fact—and one which ought to be borne in mind—that there was a time when public credit was even higher than it stands at the present moment. In the month of June, 1739–114 years ago—the Three per Cents, which are now just at par, reached the price of 107. I recall that fact to the recollection of the Committee, in order that it may appreciate the real difficulty that attends an operation like that which I contemplate.
The Exchequer bonds which we propose should be issued on the part of the Government, will possess certain leading characteristics, which I will state in the fewest possible words, in order that the matter may be clearly understood. In the first place, they will be transferable by simple delivery, without cost or expense of any kind. In the second place, they will bear interest, first at the rate of 2l. 15s. per cent, and subsequently at the rate of 2l. 10s. per cent. I propose that the time for which these bonds shall bear interest at 2l. 15s. shall be thus dealt with:—A limit shall be fixed by Parliament beyond which that rate of interest shall not be allowed to extend, and a discretion shall be given to the Commissioners of the Treasury to reduce that limit before the arrival of the actual period for issuing the bonds, so that the public shall have the advantage of the latest information and of the freshest views of the Government when it shall be called upon to act in the ease. It would manifestly be disadvantageous to the public interests to tie up the hands of the Government when a 818 considerable period must elapse before the scheme can come into operation. It is my intention to propose that the bonds shall bear interest at the rate of 2l. 15s. up to the 1st of September, 1864, and then 2l. 10s. up to the 1st of September, 1894—a period of forty years. After the year 1894 they shall be subject to redemption, but whether by the State or by the holders is a point to which I shall presently more particularly advert. My present proposal is, that the question as to at whose option the bonds shall be redeemable shall not be decided by a vote of the Committee to-night, but shall be confided to the discretion of Her Majesty's Government. I propose, also, that these Exchequer bonds to be issued shall not exceed, under any authority to be conveyed by these Resolutions, a sum of 30,000,0001. in amount.
There are many other minor questions, which are, however, of considerable importance, with respect to these bonds, and which bear materially upon the value and popularity of these securities. Among them I may mention the form in which the bonds are to be drawn, the mode in which the interest is to be paid—which will probably be by coupons attached to the bonds—the places at which the interest is to be paid—that is to say, whether at the Bank of England, or at the Bank of Ireland, or, also, at the branch banks—the mode of securing these bonds against the possibility of forgery, and the means to be adopted for replacing them when lost. Many of these arrangements are of an executory description; they will require a great deal of careful consideration; and it is not necessary now to detain the Committee by any details respecting them. We propose that these Exchequer bonds when issued may be used in various modes; and I am sure the Committee will forgive me for stating in as plain language as possible the propositions contained in the Resolutions, for the wit of man has not yet devised a mode of framing Resolutions of the kind so as to satisfy the jealous but just demands of Parliament for information in cases of this sort, and at the same time to frame a pleasant, and what is called a readable, document. I propose that these Exchequer bonds shall be capable of being disposed of in four different modes. The first is, that they shall be exchangeable against Exchequer bills. There may be hon. Members who may say, "Why not leave the Exchequer 819 bills alone? Surely you ought to be satisfied with the conditions under which you now hold so large a sum as nearly 18,000,000l., at a rate of interest not rising above the very moderate figure of 1½ per cent." My reply is, I am perfectly satisfied with the present position of Exchequer bills. But the condition of Exchequer bills is like a summer sky—it may be varied, or even reversed, under the influence of circumstances, in a very brief period. The funding of Exchequer bills, when you have an opportunity for doing it, is a wise operation, and I do not say that it would be unwise, under certain circumstances, if we were to use these Exchequer bonds at the rate of 2½ per cent, for the purpose of funding Exchequer bills bearing interest at only 1½ per cent. When you can get your quantity of Exchequer bills very low, then their position becomes secure; but when you have got it low, you are enabled thereby to strengthen greatly the position of the Government against any possible vicissitudes, and the Government are enabled to go into the market as borrowers, in a case of emergency, with an amount of advantage which they could not possibly obtain if the rate of Exchequer bills was not low.
Now, with respect to this particular proposition, which is not actually that we should fund Exchequer bills, but that we should exchange Exchequer bonds against Exchequer bills, I will just state to the Committee the rates at which previous fundings of Exchequer bills have been effected. In the year 1826 there was a funding of Exchequer bills, and the rate at which they were commuted was 100l. of Exchequer bills for 107l. in the Four per Cents, representing a rate of interest of nearly 4l. 6s. 8d. per cent; in 1829, 100l. in Exchequer bills were commuted for l0ll. 10s. in the Four per Cents, thus representing a rate of interest of 41.ls. 2d. per cent; in 1839, 100l. Exchequer bills were commuted at the rate of 109l. and 110l. in the Three per Cents, representing a rate of interest equal to 3l. 6s. per cent; and in 1841, Exchequer bills were again funded upon the condition of being exchanged at the rate of 100l. for 112l. 2s. of Three per Cents, the interest being equivalent to 3l. 7s. 3d. per cent. Thus the Committee will see, whenever you have had occasion to fund Exchequer bills, the best terms upon which you have succeeded in doing so have been at the rate of 3l. 6s. per cent, and they have been funded at 820 rates even as high as 4l. 6s. 8d., and that rate of interest not representing, as in the case of Exchequer bills, a temporary bargain, which in a few months might be modified by the Government, but representing the contracting of a new public debt, as permanent as any other portion of the public debt of the country. These facts form, we think, a justification of the request of Her Majesty's Government, that we may be trusted, within the limits laid down in these Resolutions, to exchange Exchequer bonds against Exchequer bills, for the purpose of funding at the rate of 2l. 10s. per cent, thus effecting a saving of more than 1 per cent upon the rate at which Exchequer bills have heretofore been funded.
The next purpose for which we propose Exchequer bonds shall be applicable is, that they shall be exchanged against the "stocks" which, by these Resolutions, it is proposed to commute. We propose, also, that Exchequer bonds may be sold by the Government, and the proceeds of their sale applied to the purchase of "stock," for the purpose of cancelling it, or to the purchase of Exchequer bills. These bonds are likewise intended to meet the particular case with respect to the small portion of the public debt which we give absolute notice to redeem. The proceeds of the sale of these bonds would also be an appropriate means of meeting the claims of those persons who may wish to be paid in cash, supposing the balances in the Exchequer shall happen to be insufficient to meet the demands which might be made upon it. This subject has been one of careful and anxious consideration, and one of the great difficulties besetting questions of this nature is, that they of necessity involve the arriving at conclusions upon questions of great importance with very imperfect information. Public feeling, after all, and the opinion of the commercial classes, are the tests by which ultimately a measure of this kind can alone be tried. What will be the state of public feeling at a given time with respect to a measure of this nature, is a matter upon which the best judgments, even under the most certain and stable circumstances, will greatly differ. I cannot blame myself for not having taken all the means in my power, compatible with the strict and absolute secrecy which these measures require, to ascertain what, in the judgment of the wisest and most experienced persons, will be the estimate of this plan upon the 821 money market. At the same time, it was matter of extreme difficulty to arrive at such certain data as would have justified the Government in absolutely fixing upon terms of the proposition, from which there should be no subsequent alteration.
I will now, however, state the grounds upon which we think that these Exchequer bonds will be popular current securities. In the first instance, the very easy transfer of these securities entirely without cost. It is very difficult for us to say what may be the precise effect of that easy and rapid transfer without cost, because we have no precedent to guide us among the various descriptions of the present public securities of the country. We have, however, a partial means of forming a judgment on the subject, from the fact that there are many foreign securities current in this country, and which are transferable from hand to hand without cost. I by no means wish to compare those foreign securities with those which we now propose to create. I hope that, without any undue pride, Englishmen may so far lift up their heads as to flatter themselves that the instruments by which they secure their claims upon any public security in this country, do, at any rate, hold a very high rank—perhaps it would not be too much to say the highest rank—among documents of a similar character in the other countries of the world. It does happen, however, that there are sometimes foreign securities current in this country, bearing the same rates of interest, and analogous to those we propose creating, but differing in this one respect, namely, that in the one case they require a formal legal process in order to their transfer, while in the other the transfer is effected by merely passing from hand to hand. I believe that I am correct—and shall be borne out by the opinion of many of the best-informed men—in saying that this power of easy and inexpensive transfer from hand to hand adds as much as several pounds per cent to the value of the securities which enjoy that advantage. We propose, then, that these bonds shall possess this advantage, and they will also be of a permanent character, so far as fixing a long term during which no change can take place in respect to them. I do not mean to insist that this provision will give so great an addition to the value of the security as others may imagine; but, at the same time, I may remind the Committee that a guarantee of this nature has, in other cases, been found 822 to exercise an important influence on the marketable value of securities.
My right hon. Friend the Member for the University of Cambridge, when he provided that the 3¼ per cents should be reduced, after October, 1854, to 3 per cent, likewise provided that they should have a further settled currency of twenty years at the rate of 3 per cent, within which term they should not be subject to further reduction. It is perfectly possible to give an answer to the question—"What is the value, under present circumstances of money and credit, of a guarantee by Parliament not to reduce the rate of interest upon a particular security below 3 per cent within twenty-one years from the present time?" It will be recollected that this, after all, is only a guarantee not to reduce below 3 per cent; but the Committee has the means of testing exactly at the present moment the precise value of that guarantee. The present price of the right hon. Gentleman's (Mr. Goulburn's) 3¼ per cents—which will become 3 per cents after October, 1854, but will not be liable to further reduction for twenty years—as appears from the official records of yesterday's sales, is 103l. 5s., the dividend having just been paid, so that that does not enter into the calculation. This particular stock has, however, three dividends yet to receive at the present rate of 3¼ per cent. It will receive one dividend next October, a second next April, and the third in October, 1854. As the excess of dividend which will be received upon each of these occasions is just 2s. 6d. for each, I must deduct that sum in order to compare the case of this guaranteed with the unguaranteed stock. Deducting, therefore, the 7s. 6d. due to the augmented dividend, it will leave as the price of the guaranteed 3 per cent Stock, 102l. 17s. 6d. That is the exact price, according to the official sale list of yesterday of your 3 per cent Stock, guaranteed against any further reduction for twenty-one years. This being so, let us now see what is the price of the 3 per cents not fortified by any such guarantee—that is to say, the Consols, which, being the larger stock, bear the highest price, and afford the best standard of comparison. From the same official record, I find that the selling price of Consols was 100l. 12s. 6d.; but as the dividend upon this stock is payable in July, one half of the dividend, that is, 15s., must be deducted from the apparent 823 price in order to ascertain the real price. The actual present price, therefore, of the 3 per cent unguaranteed Stock, is 99l. 17s. 6d., that is, 100l. 12s. 6d., minus the 15s. which has accrued as part of the dividend. The price of the 3 per cents guaranteed for twenty-one years is 102l. 17s. 6d. The value, therefore, of your guarantee not to reduce the interest below 3 per cent for twenty-one years, in the market at the present time, as tested by the daily transactions, is no less than 3 per cent. Now I want, if possible, to get hold of that value for the public. Let us guarantee some of this stock which has now no guarantee, and let us appropriate for the benefit of the public the increased value which will thereby be obtained.
Another of the uses to which the Exchequer bonds may be usefully applied, will, no doubt, be that of obtaining temporary loans upon their deposit, without any expense, and affording ample security to the lender. This is a circumstance which will also tend, no doubt, to increase the value of these bonds. There is another point, which I confess I look upon as one of considerable importance in connexion with this subject. If we go back for a certain number of years, we find ourselves in a period when dealings in public securities were almost entirely confined to the metropolis. Indeed, with reference, not only to public securities, but to stock generally, it could hardly be said that there was a stock market out of London. The immense progress of enterprise, the formation of a multitude of joint-stock companies of different descriptions—many of them of a high class—investments in railways to the extent of 200,000,000l. or 300,000,000l., giving rise to transactions every year of immense magnitude, and various other circumstances connected with the commercial condition of the country, have, however, led to the establishment of regular stock markets in the provinces. Liverpool, Manchester, Leeds, Glasgow, Edinburgh, Birmingham, and other towns, have stock markets, where a very large amount of business is transacted; but at the present moment, considered properly as "stock," the public securities are almost entirely excluded from the provincial markets. I do not mean to say that nobody in the provinces holds public securities; but public securities for purposes of investment are generally obtained through the medium of I London correspondents. There are, how- 824 ever, no dealings in the public securities in the provincial stock markets. That I believe to be a matter of fact. I believe that with regard to public securities there are no dealings whatever in the provincial markets, or they are so absolutely insignificant that you may take them as equivalent to none. I own that Her Majesty's Government, and I myself, as a member of that Government, are most anxious to bring the public securities, if it can properly be done, into the provincial markets. When you enlarge the circle of demand, you increase the value of a commodity, just as when with a fixed number of buyers you increase a commodity you reduce its value; and when, with a fixed amount of a commodity you increase the sphere of the market and the number of buyers, you augment and enhance the value of that commodity. Let us endeavour, if we can, to give that element of value to our stock.
Some persons may perhaps ask why we do not propose to alter the present mode of transfer of public securities by personal appearance at the Bank, and the inscription of a signature in the books, to the same simple manner in which ordinary securities are transferred. My reply is, that I do not see my way clear to such a measure. The present mode of transfer—for London, I mean, which is the centre of monetary transactions, not only of England, but of the world—is as near as possible to perfection; it is the most rapid, the cheapest, the most secure, and the most satisfactory, which has ever been devised. There may be a mode by which, without breaking up that system which works so well in London, the provinces may be provided with a mode of dealing with these securities. I confess, however, that I am not as yet aware of that plan, and it would certainly be a very serious matter to sacrifice the immense advantages which the great central market enjoys for the purpose of benefiting the minor markets. No doubt we shall achieve a great good if we can, by the means now proposed, get the public securities into the provincial markets. The advantages derived would be that you will give an increased value to the securities, and you will introduce a further element of steadiness into the market; for when you deal in one market only you are liable to the influence of combinations; and a multitude of markets in different parts of the country would render it more difficult to bring combinations to bear upon the state of the 825 stock market, and things would pursue their natural and proper course, independent of natural and artificial appliances. Another recommendation which securities of this kind will possess will be that they will form most eligible investments for foreigners who may wish to be in possession of public securities, and to have the documents which constitute their right to the property in their own possession.
These are the principal considerations which have induced Her Majesty's Government to ask the Committee to give their permission to issue this description of stock. There are, however, two points of considerable difficulty connected with this subject, to which I ought not to omit to refer. The first question which may be asked is, "Are these securities which you call 'Exchequer bonds' to be merely very long dated Exchequer bills, which at a certain period the public, whether it will or no, and irrespective of circumstances, may be called upon to repay? or are they to be securities guaranteed on the part of Parliament against any reduction or interference for a certain period, but with respect to which, after that period, Parliament, and Parliament alone, shall enjoy the power of redemption, to use, or not to use, as it thinks fit?" Now, Her Majesty's Government felt the difficulty of coming to any conclusion in the absence of that direct information which they could only receive from the full expression of public opinion, and the discussions which are elicited in the public journals and elsewhere, when a plan of this kind is proposed. 'We felt the difficulty of coining to an absolute decision on these questions in the dark. We had to choose two courses, both of which were attended with considerable difficulties, and by the adoption of either of which we might have sacrificed a very considerable part of the objects which we had in view. If, for example, we had said, "These securities shall be securities absolutely irredeemable at the will of the holder"—if we had determined to invite the House of Commons to vote such a proposition to-night, we might have run the risk of discrediting those securities at the first moment they were born into the world, and of thus seeing the whole plan abortive. If, on the other hand, in order to ensure the working of the plan, we had declared expressly in the Resolutions before the Committee that these securities were to be redeemable at the option of the holders, we might have 826 been told, as in point of fact we have already been told, that the securities are so satisfactory in their character, that, as permanent, irredeemable securities, there may be many persons found who would be willing to hold them.
It appeared to Her Majesty's Government, therefore, that the wiser course was to ask Parliament to entrust them with a discretion in the matter, and using the time, information, and discussion which will be elicited between the present time and the period when the Act is passed and the securities might be issued, and be permitted to act for the best, as the circumstances may seem to them to require. It is quite plain that to get out these securities at the rate of interest proposed—2½ per cent—it would be well worth while to make them redeemable at the option of the holder after a certain number of years. At the same time it is by no means certain that, even by succeeding up to that time, we should still succeed in the principal object which we have in view, and that is, bringing before the public eye, and enabling the public freely to deal with, public securities bearing 2½ per cent interest, while the Exchequer bonds to be issued would in fact be long-dated Exchequer bills, and not permanent securities. The Committee will see that we propose to ask for power to sell the "bonds" in open market, and to apply the produce of their sale to the redemption of stock or the cancelling of Exchequer bills. The Committee, will, no doubt, be jealous of bestowing such power upon the Government. They may suppose that the Government will throw them away; or give them away, or that they will be so stiff and rigid in their dealings that when the full value is offered for them, it will not be taken. It appears to me, upon the whole, that while those who have to act for the State may fail in the discharge of their duty, yet upon the other hand the objection would be very great to the Committee now fixing absolutely the terms upon which these bonds should be issued.
I think it is quite plain that we are your agents in the matter, and that you would considerably damage our position on your behalf, and prevent us from taking the full advantage of circumstances up to the latest moment, if you were to insert in the Resolutions the precise terms upon which any or all of these Exchequer bonds must be sold. The Government have therefore considered, for these and other reasons, that the best way of meeting the reasonable 827 desire of Parliament, to be completely master of all these transactions, would be this —to ask you to confer upon the Government a discretion which would be ample, and would enable them to deal freely with the securities about to be created, but at the same time to limit the amount of the securities which should be issuable under these Resolutions in such a way that you need not much fear to commit to us the free and unhampered power of dealing with them. On that account I have proposed that the amount to be issued shall not exceed the sum of 30,000,000l. Another limitation which is proposed is, that the power to issue Exchequer bonds will absolutely cease and determine on the 5th of April, 1854. It is not that I by any means assume either that 30,000,000l. will be the utmost limit to which Parliament will go, or that no bonds will be issued after the day named. The object of the limitation in both cases is, that we shall have the power to try the experiment, as your agents, to a limited extent; but to come back to you for increased powers if we find occasion to go beyond the extent named in the Resolutions.
It may be asked, what is the nature of those bonds, and would they alone constitute a sufficiently broad basis for the operations which we are proposing to Parliament? To this I must say I think not. I have said much in commendation of instruments of this character as a form of public security. But I think it is obvious—and it has been broadly remarked in many of those intelligent discussions on the subject which have already appeared since the Resolutions were printed—that these bonds would not be securities of the most desirable description for all the parties who are at present holders of public stock. I look upon these bonds as being in a manner commercial and trading securities, which will suit the purposes of the classes engaged in commerce generally, including, of course, those who are dealers in public stock.
But there are very large classes of holders of stock, who are in different circumstances, to whom it would be no advantage to have the power of transferring stock cheaply and rapidly, inasmuch as they do not wish to transfer it, to whom it would be no recommendation to have the interest payable in the manner proposed, and with whom the present mode of proceeding is perfectly satisfactory. These classes consist of the permanent holders of public stocks—of those who hold them as perma- 828 nent property, and those who hold them in the capacity of trustees, or under private settlements. Her Majesty's Government, therefore, do not propose to found their operations upon the issue of Exchequer bonds alone, because it is obviously desirable, if it can be done without mischievous consequences, not only to improve the condition of the public debtor, but to make these improvements fall over all classes of the public creditors. Therefore, in order to meet the probable views and wants of the public creditors belonging to that class to which I have already alluded, namely, the permanent creditor, we propose that there should be a means of voluntary conversion of, in the strictest sense of the word, the "Great Three per Cents." I mean a voluntary conversion in the strictest sense, for no other conversion can be thought of now. In approaching this great phalanx of the 3 per cents, defended as it is by its amount, its rate of interest, and the necessity for a twelvemonths' notice, we must deal with it, as a prudent general would when approaching a fortification of the first class, and our steps must be directed by the utmost caution.
We propose to give terms which have been described in many quarters as too liberal to the fundholder. I am convinced that it would be an error to give terms too liberal to the fundholder, but, when we are told that we might get very much better terms than those we are now offering, I must say that, much as I may respect the estimate made by those who entertain this opinion, I should respect it much more if, instead of being an estimate, it was an account of transactions which had actually taken place, and if we had the money in our pockets for the public service. It is our duty to proceed with due caution as respects the fundholder, and to offer him what may fairly be called liberal terms; but we should take care that we do not commit Parliament by any measure that would carry with it the obligation of the public faith to results that are objectionable or dangerous. The proposal of the Government is, that any person who now is or may be holder of the Three per Cent Consols, or of the Three per Cent Reduced, and who shall between the time of the passing of this Act and the 10th of October, 1853, signify his desire to commute any or all of his share in the stock, may have the option of exchanging each 100l. of such stock, into any one of three forms. The first of these will be the Exchequer bonds at par, 829 upon the advantages of which I have already dilated at some length; secondly, into a New 3½ per cent Stock, to be created for the purpose, upon these conditions, that 100l. of Perpetual Annuities, now bearing 3 per cent interest, may be exchanged for 82l.10s. of this New 3½ per cent Stock, giving to the present holder of stock an income of 2l. 17s. 9d. per cent, instead of 3l. per cent. The reduction in this case is certainly not a large one; but the impression appears to be that even this reduction will not be very readily submitted to. For my own part, however, I have not the least fear of seeing it very extensively adopted. The advantages of this commutation are not to be limited to the rate of interest; it will be fortified with a guarantee of no less than forty years—a long period, no doubt, but small in the history of national debts —at the expiration of which period, instead of being a 3 per cent Stock, it will be one of 3l. 10s., redeemable at par by Parliament. Although I am by no means bold enough to assert that under no circumstances would you be able to effect this redemption, yet I am strongly of opinion that in no very long time, having effected a considerable reduction in the capital of the debt, with a smaller amount of revenue, it would be practicable to effect still further reductions in this portion of the debt.
We also propose that it shall be open to the parties, in lieu of the option to take Exchequer bonds, or of the power to take the New 3½ per cent Stock at the rate of 82l. 10s. against each 100l. Three per Cent Stock—that it shall be open to the holders of such stock to take, for each 100l., 110 of the New 2½ per cent. Some objections are, I know, entertained to this particular feature of the plan, upon which I venture to request the attention of the Committee. I will state, as impartially and as fairly as I can, the reasons why it appears to me extremely desirable that this feature should be retained in the plan. I may state that Her Majesty's Government purpose effecttively to limit the extent to which this option can be acted upon, and probably that was the point to which the right hon. Gentleman (Mr. Disraeli) referred, when he said, that an important change had been made in the Resolutions. The objection urged against this portion of the proposal is, that, in order to reduce the annual charge, we are going to increase the capital of the debt. Now let us care 830 fully weigh this objection, for, in my opinion, it is an objection to which considerable force attaches. But it is not true that we are going to increase the capital of the debt for posterity, in order to reduce the present annual charge. The proposition submitted is not one to reduce the interest to 2¾ per cent for forty years, in order that, at the end of that period, the right to demand 3 per cent might arise on the part of the holders of the stock, on the increased capital. It is proposed to secure for ever, and absolutely to posterity, a reduction ¼ of a per cent upon the annual charge. This will place posterity under no disadvantage whatever, relatively to the circumstances under which we now place ourselves, because we shall tie up our own hands against redeeming at all, and leave posterity the option of redeeming upon certain terms. But it is said—and I wish to call the attention of the Committee to what amounts to an arithmetical error—that we are going to add to the capital of the debt at the end of forty years as much as we are going to save in the interest in forty years. If that were true, it would not be conclusive against it, because there would still be a permanent saving after the expiration of the forty years upon the annual charge of the debt. But it is not true that the addition to the capital is equal to the saving in the reduction of the annual charge, for if any person will take the slightest trouble to ealculate, he will find that the present value of the sum of 10l. in 1894 is far below the present value of an annuity of 5s. a year for forty years. If, then, you balance the alternatives properly, the one against the other, the presumption is, that the increase of the debt by 10 per cent by the creation of the 2½ per cent Stock will be more than redeemed by the immediate diminution in the capital of the debt by the creation of the New 3½ per cent Stock. If you are skilful in the operation, you offer to the stockholder two alternatives, as nearly as possible alike—as nearly alike, in fact, as two peas. If you give the 2½ per cent Stock such a rate of interest as will enable him to determine which of the two stocks he will take—if you do that, the presumption is you will have as much 2½ per cent Stock taken as the 3½ per Cent. [An Hon. MEMBER: No, no!] Then the hon. Gentleman does not cast the balance rightly. Does the hon. Gentleman mean to say that 831 the more notion of a nominal increase in the capital of the debt would give the capitalist a right to demand higher than a fair price, according to the annual interest for his capital? The annual interest he has a right to demand. But this is a balance between two alternatives. I do not deny that the stockholder looks to the capital as well as to the annual interest; but he also looks to the annual interest as well as to the capital; and therefore I say it is your duty to balance the two, one against the other, in such a way that there shall be no great commercial advantage attending one as compared with the other. If you do that, then, I say, the presumption is that the stocks may not be unequally taken. [An Hon. MEMBER here made some observation which was not audible in the gallery.] The hon. Gentleman refers probably to a former operation, when the 4 per cents were converted into 3½ per cents. The terms then offered included an alternative somewhat of this kind. The persons holding 4 per cent Annuities were offered two alternatives. One was 70l. stock at 5 per cent, which would have yielded interest at the rate of 3l. 10s. per cent; and the other, if I mistake not, was stock at par, at 3l. 10s. per cent. But everybody chose the 3l. 10s. stock at par, to the 5 per cent Stock at 701.; that is, everybody chose 100l. at 3l. 10s. per cent, rather than 70l. at 5 per cent, because there was no difference in the rate of annual interest. If, while the 5l. per cent yielded only 3l. 10s., the other yielded 3l. 15s., of course they chose the higher rate. But that is not the case here. The man who chooses the 2½ per cent Stock under our plan will choose an annuity of 2l. 15s. for a limited period, while the man who chooses the 3 per cent Stock will choose an annuity of 2l. 17s. 9d.
But I beg the Committee to recollect that this operation is quite distinct from those of the loans made during the war. I have looked back, like other persons, upon the period when those loans were made, with regret, and I have groaned inwardly at their consequences, under which we are now suffering. The practice of borrowing at 3 per cent during the war, when the natural rate of interest was 5l. and 5l. 10s., placed us in this predicament: it secured to us a temporary advantage—utterly insignificant; it lowered the rate of interest at the moment a few shillings per cent, but 832 it entailed upon us a permanent amount of debt, which, I think it is clear, if a wiser system had been pursued, we might have reduced before this time, in capital and in the annual charge, by something like from 100,000,000l. to 200,000,000l. I do not mean to blame those who conducted these operations. They were placed in circumstances of difficulty that we cannot now appreciate; but certainly the system entailed an exceedingly heavy charge upon posterity, for it left to posterity a debt almost irredeemable for the sake of a very small temporary advantage. But, surely, those operations are not to be compared with a case of this kind, the whole basis of which is an advantage to the present period and to posterity also. I am not going to sacrifice the interests of posterity; on the contrary, I am promoting the advantage of posterity by the course I am proposing to the Committee. It may, perhaps, be said, "You might do that by taking another course." Certainly, that is a question open to discussion and to argument. Still the fact is, that by this proposal the Committee will secure to posterity an absolute reduction upon the annual charge of the debt which it now pays.
But I wish the Committee to understand —and I urge this as a plea on behalf of my proposition—that I freely assent to the general doctrine that it is not desirable to increase the nominal capital of the debt. All I ask you is this: that you will—I do not say indulgently, for it is not a matter of indulgence, but that you will—fairly and candidly look at the case as it stands, and consider the great object of public policy that we have in view. The Government may be right or it may be wrong in any proposal of this kind—and I will state by and by more distinctly how the proposal will be guarded—but the proposal unquestionably rests upon a broad ground. I have said that the great object which Her Majesty's Government had in view was to establish, if it be possible, an irredeemable public debt, which will bear a respectable price in the market, and bearing an interest of not more than 2½ per cent. It is for that purpose we propose to include these among the various forms of the conversionable 3 per Cent Stock. Perhaps you will tell me, "You may secure that by means of Exchequer bonds." I should be delighted to do that; I trust we may; but we may find that we cannot bring these bonds into credit and character, unless we give a 833 power of redemption to the holders. That may be very well; but any operation of that kind, involving redemption at a particular time, when you might be in difficulty or in war, must necessarily be a limited operation, and it does not lay the ground for that which we want to see—namely, the creation of a Two and a Half per Cent irredeemable public stock. Give us this public stock, and then I say we shall have made solid ground where now is only morass; then we may tread where we could not before; and then we shall have a fixed point down to which we can work; and we shall have something by which to direct our operations in future with certainty, where now all is comparatively speculation and suspense. If, I will add, the Committee think it is a great public object to establish firmly this Two and a Half per Cent Stock in such a manner as shall make it an ordinary subject of commercial dealing, then I do hope they will not exclude this part of my proposition.
Now I come to a point to which I am most anxious to call the attention of the Committee. It has been pointed out to us that as the Resolutions stood at first printed, it would have been open to all the holders of Three per Cent Stock to effect their conversion into this Two and a Half per Cent Stock. Though that was not a probable, it was at least a supposable, case that such would be the effect. If 500,000,000l. of Three per Cent Stock were to be reduced into Two and a Half per Cent Stock, a reduction in the annual charge would be effected which would be most gratifying to me. It would relieve the finances of the country to a very great extent—to the amount, I think, of about 1,500,000l. a year. That would be a most gratifying circumstance; but I certainly was not sanguine enough to anticipate it. But it was also pointed out that this Resolution would entail an increase upon the nominal capital of the debt to the extent of 50,000,000l. Sir, I at once defer to that objection; I do not think any such increase ought to be allowed. It is not necessary for the purpose we have in view, which is to lay the foundation of a Two and a Half per Cent Stock. For great and essential purposes I ask you to allow me to create this stock; but it is not necessary we should allow it to be created to such an extent as it was felt it might be by the terms included in the Resolutions.
Here I must make an apology to the Committee. The draft of this plan was 834 framed with a somewhat different effect; but in drawing out the Resolutions—a most difficult operation, even if done by the most skilful persons, in order to conform to the rules of this House, and secure the object we have in view—I must admit the Resolutions took a form which, though I did not perceive so clearly as I do now, left them open to the just objection that they might go to the whole capital of the Three per Cent debt, and thus entail much difficulty. But it is understood I admit at once that that ought not to be the case, and I propose to meet the difficulty by an alteration that has been introduced into the reprint of the Resolutions. If the Committee will have the kindness to turn to the reprint of the Resolutions they will find that the amount to which this Two and a Half per Cent Stock may be created under the authority of the Act to be founded upon the Resolutions, is limited to 30,000,000l. Some additions to that amount may take place from the compulsory commutation of the South Sea Company's Stock. It is not necessary, however, to go into that now. All I now feel it necessary to say is, that by the 10th of these Resolutions, as it now stands, the utmost possible creation of this new Two and a Half per Cent Stock is 30,000,000l.
§ MR. J. L. RICARDOHow is the stock to be apportioned?
§ The CHANCELLOR OF THE EXCHEQUERBy priority. It is all to be done by entries in the books at the Bank. When entries shall have been made in the books at the Bank, including the names of the parties exercising an option in favour of the Two and a Half per Cent Stock to the amount of 30,000,000l., then the power will cease. Thus the apportionment will be by priority, and it will be effected, I think, without any difficulty. The effect of the change will be, that the utmost nominal addition that can take place to the capital of the national debt under the powers which I ask you thus to confer, will be something more than 3,000,000l. What, then, I would put to the Committee is, that a nominal addition to the capital of the debt, compared with the present annual saving, is a very small price to pay for the attainment of such an object—for the object which the Government have in view, namely, the laying of the foundation of an irredeemable and permanent Two and a Half per Cent Stock. I know no other way in which we can with certainty attain the same object. If we could obtain it by 835 the issue of Exchequer bonds, certainly I should prefer it; but seeing we cannot make sure of it in that manner. I venture to hope the proposal will have not only the candid, but, I will venture to say, the favourable consideration of the Committee.
I have thus, at a length very much greater than I anticipated, gone through the details of this proposition. I have endeavoured to keep close to the subject. I thank the Committee for its kindness. I know that upon a question of this nature the attempt to be concise might have led me into obscurity, and have made that which professed to be an explanation utterly unintelligible. But I have now come to the end of this explanation, and all I have to say more may be comprised in a very few sentences. With regard to the discretion which I ask you to confide to the Government, that discretion may be limited at any stage in the progress of the Bill that will be founded upon the Resolutions. Perhaps it would be objectionable to introduce new powers to the Government in the progress of the Bill; but a limitation of their powers it would not be objectionable to consider at any of its stages.
There is likewise another subject, which though isolated, I may refer to here. It is one of great importance. It is the subject of the large amount of stock now held by the Accountant General in Chancery, and the Accountant General in Bankruptcy. I do not purpose by these Resolutions that the Accountant General in Chancery, or the Accountant General in Bankruptcy, shall have the power of exercising the option of commutation, excepting as to the limited amount of minor stock which we are going to redeem. As to the great stocks it is not proposed to give them the power of exercising the option. The main reason for this I will state. There is great reason to suppose—I will not say it is an absolute conclusion on the part of Her Majesty's Government—but there is great reason to suppose that more extensive changes may be introduced into the law with regard to this very large amount of money in their hands. The system, at present, appears to be of a most defective character. No doubt, as far as regards the good faith upon which that large property is held, it is unassailable; but in its nature it is fluctuating capital with a fixed interest. Now, the interest of the trust funds which are in Chancery is of comparatively inferior consideration; but the integrity of the capital is a matter of very great importance. It 836 is extremely hard that the property of parties who are debarred by legal difficulties from its enjoyment should be subject to changes—great and vital changes perhaps —from circumstances entirely independent of their wills; and I have great hope that it may be in the power of Government, but I cannot venture to commit them to the subject, to produce a measure that will place the great amount of these trust funds upon a basis more satisfactory to the persons on whose behoof and for whose ultimate benefit it is held. For these reasons I do not propose to give the power of commutation of the great stocks now held by these two officers, the Accountant General of the Court of Chancery and the Accountant General of the Court of Bankruptcy. I have now only just to mention what are the alterations that have been introduced into the Resolutions—
§ The CHANCELLOR OF THE EXCHEQUERMy hon. Friend the Member for Montrose has just asked me a most important question. He has asked me what will be the amount of the annual saving? I am sorry to say that I do not know what the precise saving will be. I have not ventured to put this plan to the Committee as a scheme involving a saving; but if it succeeds, the amount of saving will be considerable. It cannot be but that there must be some amount of saving. I would rather not make a calculation of the amount, seeing that it does not depend upon circumstances that we can control, and which are beyond our knowledge. If you take 30,000,000l. of Exchequer bonds and put them out at 2½ per cent, the saving upon them, as compared with the same amount at 3 per cent, would be, for the first ten years, 75,000l., and after the first ten years 150,000l. That would be the amount upon these bonds; but I by no means absolutely limit my issue to this 30,000,000l. What I wish to secure upon the framework of this plan is, that when Government shall come back to Parliament and render an account of the success of this operation, it shall be in your power to say whether it shall be extended or not. Now, the changes in the Resolutions are these. The third Resolution, as it stands now, is a new Resolution, but the object of it is not to make any substantive change. It is only to make sure that the Resolution shall convey to Parliament the powers I have endeavoured to describe in the course 837 of my explanations, and with regard to which a doubt had been raised whether the language of the second Resolution, if it stood alone, was sufficient to convey those powers. The eighth Resolution, again, is a new Resolution; but this Resolution, I believe I may say, is, in the strictest sense, merely a formal Resolution. It is likewise to prevent legal doubts, and it implies no substantive alteration whatever. The most important change in the Resolutions is that which the right hon. Gentleman opposite (Mr. Disraeli) with great rapidity discovered. It is contained in the tenth Resolution. The Committee will see that the effect of it is simply this, that it limits the commutation which may be made of the Consolidated Three per Cent Annuities and Reduced Three per Cent Annuities into 2½ per cent stock to the sum of 30,000,000l. as a maximum. It leaves it, however, entirely free to go on with the Three and a Half per Cents. I wish the Committee to understand that. So far as concerns the Government, I do not know any objection to limit the creation of the Three and a Half per Cent Stock; but there is certainly no danger attending its creation. There is no fear of too much; it is only of too little. We do not, therefore, propose to attach any limit upon that; but we do propose to fix this limit upon the possible creation of the Two and a Half per Cent Stock in the Resolutions. This is the only change affecting the general structure of the plan that has been made in what I may call the second edition of the Resolutions; and there is no other change whatever of any important character. The Committee will now be in a condition to judge whether the change is of that character that would make it desirable for them to take further time for its consideration, or whether they would choose to proceed with the Resolutions at the present moment. I, for my part, have, as well as I could, discharged the duty which was incumbent upon me. In conclusion, I have only to thank the Committee for the great attention and patience with which they have listened to me, and to add that I shall be most happy, if I have failed in any point to make clear the intentions of the Government, to answer any questions which any hon. Member may wish to put to me.
MR. HUMEsaid, he thought the experiment of the right hon. Gentleman was one very fit to be tried. He certainly was alarmed at the first proposition, lest it 838 should have led to a failure; and he never liked to see a failure on a financial question. He thought the right hon. Gentleman had made so explicit and clear a statement, that no man, however little his attention had been directed to questions of finance, could have failed to accompany and comprehend him. The statement had been a better, simpler, and more intelligible statement than fell on ordinary occasions from a Chancellor of the Exchequer. He believed there was a large class of persons in this country who did not so much consider the immediate amount of interest, as they did the trouble attending buying in and selling out, and depositing and keeping the different amounts. He believed this experiment, if carried out, would meet the public convenience to a very great extent. And if the right hon. Gentleman could contrive, as was done in France, to make the dividends on stock payable in whatever place the holders resided, without trouble or risk, that would be a still greater convenience. It might undoubtedly affect the London bankers and the agents here; but it would give to the community at large an immense facility, and would afford the greatest satisfaction and advantage. Seeing that Birmingham, Sheffield, Manchester, Glasgow, and other large towns, had become places of great wealth, it was most desirable to create Stock Exchanges there. We had now the advantage of the electric telegraph in communicating prices, and it would be of great importance to the holders of property in all those towns to create a market there. He thought the parties might, by a very easy arrangement, have the option of receiving their interest where they resided. On that ground, he had no objection to make. He had always opposed an increase of the capital of the national debt, and he was glad to hear from the right hon. Gentleman that there was to be no repetition of that. On the whole, therefore, he was disposed to think that the scheme laid before the Committee was likely to open a door to extensive good—it was taking a step in the right way. It would be an immense convenience to the public, and in that light it would be more valuable than even the saving of money. He would only make one further observation, namely, that as the right hon. Gentleman by this scheme would diminish the incomes of a great number of people, he hoped he would now turn his attention to a diminution of taxation to as great an extent as possible. 839 The interest of the Exchequer ought not alone to be considered; they should likewise pay regard to the relative price of articles of consumption. The 18th of April was approaching, and he hoped on that day he should be enabled also to congratulate the right hon. Gentleman on his Budget as he did on the present occasion.
§ MR. W. WILLIAMSsaid, the proposition of the Chancellor of the Exchequer had certainly the merit of novelty; but his objection to the scheme of the right hon. Gentleman was, that it would add to the capital of the debt. He was, however, glad to find that the right hon. Gentleman was not going to increase it by 50,000,000l. as the original Resolution led them to expect, and that it was now to be only 3,000,000l. To add 50,000,000l. to the debt would be tantamount to a declaration that there was no intention of ever paying off the principal. It would be the next step to repudiation. From the commencement of the American war in 1775, to the termination of the French war in 1816, an addition of 589,000,000l. was made to the debt in Consols. But how much was received in sterling money? Only 417,000,000l. Consequently, by abandoning the sound principle of getting 100l. sterling for 100l. Consols, the country was saddled with a permanent debt of 171,000,000l. more than it ought to be. If they increased the debt, posterity would accuse them of injustice, in having burdened the country permanently, for the sake of a temporary advantage. His opinion was, that the right hon. Gentleman commenced to deal with the debt too soon. The late Chancellor of the Exchequer had a much better opportunity of taking such a step, for he could have got money at less interest. He was quite convinced that if the right hon. Gentleman had delayed his present financial scheme for twelve months, he might have performed the operation with greater advantage than at present. He found no fault with any portion of the scheme, except that which made an addition to the capital of the debt. When the right hon. Gentleman the Member for Cambridge University (Mr. Goulburn) made a proposition of a similar kind, he did so in a wise and open manner; and a similar course ought to be adopted on all occasions of reducing the debt. As the right hon. Gentleman was only adding to the debt to a small amount, he would not offer any objection; but if it 840 were not for the alteration made in the Resolution that day, he should have given the Resolutions every opposition.
§ MR. HENLEYsaid, there were only two points in the proposition which demanded observation. To the compulsory part of the plan he entertained no great objection, nor did he see any great objection to the creation of a new species of security in the form and under the name of Exchequer Bonds, except on one or two minor grounds. He certainly, however, did not realise to the same extent some of the advantages contemplated by the right hon. Gentleman. In the first place, the right hon. Gentleman seemed to anticipate great public advantages from the creation of new stock markets in various parts of the country—one of which was, that it would have the effect of preventing the combination of monied men from acting on the prices of the public securities. He could not conceive there would be any great difference in the price of public securities in any town, because information of the prices of such securities in the London market could be conveyed in five minutes by the electric telegraph from one part of the kingdom to another. This would shut out the notion of any difference of price in different parts of the country. There would be a common price, and that was all. There would certainly be some convenience in securities which passed easily from hand to hand; and the facility with which they might be pledged for loans or for other purposes would no doubt also afford considerable convenience. The right hon. Gentleman, however, did not inform the Committee what was the amount of Exchequer Bonds to be issued.
§ The CHANCELLOR OF THE EXCHEQUERThe amount will be 30,000,000l.
§ MR. HENLEYThe right hon. Gentleman did not tell the Committee whether the bonds were to be 500l. or 1,000l. bonds.
§ MR. HENLEYBonds of 100l. and upwards would to a certain extent very much increase the convenience which, he admitted, such securities would afford to the public. There was one part, however, that had reference to the bonds, which, in his opinion, did not hold out any peculiar kind of favour. The right hon. Gentleman, though he took the limit of 30,000,000l., yet evidently, if his proposal was success- 841 ful, contemplated at some subsequent period a further issue of these securities. It was not usual for that House to entrust a Minister with the power of acting on the money market by means of the issue of an unlimited number of securities, and that, too, without the control of Parliament, except in a certain degree. He knew it would be said that the issue was to be limited, and not to go beyond a certain extend; but he contended that it was unusual to give a Minister the power of acting upon the money market, free from the control of Parliament. He should be sorry to give any decided opinion on that head; but, as the right hon. Gentleman had said this was only to be a beginning, and that, if successful, he meant to go on with his project, he thought that alone formed a strong reason why the right hon. Gentleman ought not to ask the Committee to come at once to a conclusion. This was the commencemont of a very large scheme; and if in following years it was to be followed out, though he did not believe that the Minister of the day would make an improper use of the circumstance, still it was right the public mind should be freed from the suspicion that any Minister had the power of taking advantage in any way of the circumstance. This was a large portion of the subject, and it formed a valid reason for asking the Committee not to pledge itself at once to the Resolutions. There was another point; and that was, that the Resolutions came before them now in a different shape to what they did at first. The right hon. Gentleman, in the fullest sense, admitted the inconvenience, nay, the wrong, that would be done by adding to the capital of the national debt. The right hon. Gentleman spoke in even stronger language than he could use about the wrong in so doing. That conviction seemed to have sprung up within the last twenty-four or twenty-eight hours, because, unquestionably, these formal Resolutions did not indicate anything which would lead a human being to suppose that the right hon. Gentleman had any such indisposition to add to the capital of the national debt. The right hon. Gentleman objected to do evil to the extent of 50,000,000l., but not to the extent of 30,000,000l., and for what reason? Why, that he might have the pleasure of founding a Two and a Half per Cent Stock. The right hon. Gentleman admitted it would be an aggravated sin to add 50,000,000l. to the debt; but he said, "Let me have a little one—only a 842 little one—let me have a Two and a Half per Cent Stock, and then I shall have performed a great national feat." Now, what was the use of creating 30,000,000l. of stock at 2½ per cent, if only done on the ground that it was objectionable to add to it? The right hon. Gentleman admitted it was objectionable to add to the capital of the national debt. Could they go on with the Two and a Half per Cent Stock without adding to the capital of the national debt? If not, what was the use of making a commencement in that direction at all? For, if this step was a good one, then it would be a bad bargain to commute the whole of the national debt on any other terms. Then there was another part of the right hon. Gentleman's statement which he must notice. It was quite unusual to give the offer to a portion of the public creditors to come in and compromise. Why were some creditors allowed to apply, and why were others shut out? This was, in his judgment, a very important question. The right hon. Gentleman seemed to think a Three and a Half per Cent Stock moonshine. He was no judge of such matters; but from what had fallen from parties who appeared to well understand the subject, he believed that the Three and a Half plan was not likely to find much favour, and few would be found ready to give up 17l. 10s. of their capital on the terms offered. But it was not a usual thing to hold out to the public creditors that they must run a race in a small degree to become entitled to this commutation. He doubted the justice as well as the wisdom of the proposal. He thought all parties ought to be entitled to come in on the conditions stated. But there was also another question which presented itself. On what plea of justice did the right hon. Gentleman shut out one person from the commutation and admit others? Suppose a child was a ward of Chancery, and its property was in the hands of trustees, why should A. and B., the trustees, be shut out from the advantages of the right hon. Gentleman's scheme of commutation merely because the parents of that child had chosen to make it a ward in Chancery? The right hon. Gentleman appeared to him to have some scheme in the clouds for dealing with the money in the Court of Chancery. The Committee ought to consider that the right hon. Gentleman was going to lay hands upon the large fund in the Court of Chancery. There had been longings of this kind on the part of other 843 Chancellors of the Exchequer, but they had never yet been gratified; and, therefore, when the Committee saw that parties were shut out from advantages they had a right to share in common, he could not help thinking they would agree with him that these particular stockholders did not get justice. This formed another reason why the right hon. Gentleman ought to refrain from asking the Committee to agree to his Resolutions that night. With regard to the general scheme—whether the money was in the hands of Government, or whether it was to be obtained in some way to buy up the stock—were matters which lay entirely with Government. What the effect would be on the other securities of the country; how the Exchequer-bill market would be affected by the new Exchequer bonds, were all questions which required considerable consideration, and without the advantage and test of actual experience it would be difficult to say what would be the result. But there had been changes in the original scheme, and material alterations; and, therefore, it would be only fair on the part of the Government—indeed, Government would be unjust to itself if it asked the Committee to come to a decision on the Resolutions with the objections on the face of them which he had pointed out. It was not likely that any inconvenience could arise from a delay of a few hours, and he hoped, therefore, the right hon. Gentleman would not now press the Committee for a decision.
MR. ELLICEsaid, that as he took a different view from the right hon. Gentleman who had just spoken, with respect to the advantages and disadvantages of delay in the passing of the present Resolutions, he ventured to offer one or two words to the Committee respecting them. In the first place, the right hon. Gentleman seemed to have forgotten that the proposed operation exceeded by far in amount any that had ever been attempted by any financial Minister in this country—at least, if the whole operation were carried into effect, for the Resolutions which had been submitted to the Committee by the right hon. Gentleman the Chancellor of the Exchequer that evening, would lay the foundation of a scheme which might hereafter be greatly extended. For that reason, therefore, he thought that the scheme should not only be viewed with great indulgence by the Committee, but that every facility should voluntarily be given to carry out the object of the right hon. Gentleman. 844 He confessed that he could not have supported that part of the scheme which would have made a heavy addition to the capital of the public debt, if any such intention had ever been really entertained; for, although he did not know the original intention of the right hon. Gentleman, he could hardly suppose that he would have contemplated making so large an addition as 40,000,000l. or 50,000,000l. to the debt of the country. But that part of the scheme, he was glad to find, had been entirely modified. The right hon. Gentleman (Mr. Henley) had seemed to complain that it was intended to deal with only a part of the debt. He (Mr. Ellice) knew not by what measure the right hon. Gentleman would propose to deal with the whole. He did not think it could have entered into the contemplation of any Member of that House that the Chancellor of the Exchequer would have proposed at once to commute so large a principal sum as 500,000,000l. of debt into a 2½ per cent stock, or to offer at once to pay it off. In his opinion the only course which could have been pursued was that which had been adopted by his right hon. Friend the Chancellor of the Exchequer. Hr. (Mr. Ellice) had always thought it desirable for this country to create a Two and a Half per Cent Stock, as had been done in Holland, which should find favour with the public, and afford the means of ultimately reducing the interest on the whole debt to that sum. The right hon. Gentleman (Mr. Henley) had objected that too much was left to the discretion of the Government. Why, how otherwise could such a plan be carried out? So far from throwing objections in the way of a scheme which, on the whole, was likely to be of so much benefit to the country, he should have expected that, without reference to the side of the House on which he sat, the right hon. Gentleman would have given it every facility in his power. The right hon. Gentleman had also objected that advantages were to be given to certain classes of stockholders. But so far as his (Mr. Ellice's) experience went, whenever an offer had been made to fund Exchequer bills the practice had always been to give the persons first subscribing an advantage; and the same inducement must be now given, unless they were prepared to deal with the whole debt. With respect to the suggestions which the right hon. Gentleman had thrown out regarding funds in the Court of Chancery, he begged to say, that for the last thirty 845 years—ever since the Peace, indeed—he had been astonished that in this country, where so much attention was paid to the interests of property, no proposal had been made to place the funds in the Court of Chancery on a more reasonable footing. The best method of explanation is by illustration. He remembered the late Duke of Queensberry's executors being called upon by the Court of Chancery, shortly after the duke's death, to invest a large sum in the funds in consequence of suits having been raised by the various heirs of the entailed estates, arising out of the fact of the duke having taken fines on the leases of his estates. The money was invested in the year of the last great loan (1814), and amounted to something like 1,000,000l.—or 1,200,000l. The result was, that the residuary legatee received from 300,000l. to 500,000 by a sudden rise in the funds from 52 to 53, the sum at which the stock was bought, to 96 or 97, the sum at which it was sold. That proved, therefore, a very lucky transaction. But suppose he (Mr. Ellice) were to be called upon to-morrow to invest a large sum for an infant at 100. How did he know that before that infant reached his majority, there might not be the converse of the transaction to which he had just referred; and that he might be obliged to sell out at 53 the funds which he had invested at 100? Such an occurrence was quite possible. We had now been for forty years at peace, and he hoped we should be so much longer; but we might suddenly find ourselves involved in war; and that was one reason which justified his right hon. Friend the Chancellor of the Exchequer in making a great experiment to obtain for the public what he proposed by the present measure. But to revert to the Court of Chancery. That Court would allow you to deal in no other way with infants' property but to invest it in the funds. Was it right that such property should be constantly exposed to the risks to which he had referred, and that no attempt should ever be made to remedy the evil? He, for one, therefore tendered his right hon. Friend his thanks for having been the first to grapple with the subject. He entreated the Committee to give every possible facility to the present scheme. He sincerely hoped it might succeed. It was, of course, a great experiment. His right hon. Friend did not seek to place it upon any other ground. He (Mr. Ellice) could not understand why, if hon. Members were prepared to give sufficient confidence to the 846 Government to enable them to go on with the measure, they should withhold their assent from the Resolutions on the present occasion. What good would there be in postponing their decision upon this question? It would only keep the public mind in a state of excitement. They ought either to give every facility to the Government to go through with the scheme, or at once to reject it. The public ought not, upon a subject of this importance, to be kept in doubt and uncertainty. He, therefore, entreated the Committee to go on with an experiment to which everybody in that House wished success, and which was of such great interest to the public.
MR. ALDERMAN THOMPSONsaid, he was quite ready to acquiesce in the recommendation which had just been made to them to give the question before them a fair, candid, and impartial consideration. He admitted that the subject was one of immense magnitude as regarded the public interests; during the whole period that he had sat in that House, upwards of thirty years, he had never before heard from a Minister of the Crown so bold a proposition with regard to the national debt. While, however, they were anxious to give facilities to the Government, some time ought to be allowed for consideration. The right hon. Gentleman must recollect that the first edition of the Resolutions was delivered only on the previous day, and that the second edition had only reached his hands since the House met. Surely there should be some time given to consider matters of such grave importance. He had long thought that the South Sea Debt ought to be dealt with; for, although it was a comparatively small charge, and was in the hands of most honourable men, yet it occasioned an additional charge to the country, for which he thought there was not sufficient justification. A very pertinent question was put to the right hon. Chancellor of the Exchequer, in the course of his speech, by an hon. Member, namely, what saving the alteration would be to the public? To that question the right hon. Gentleman did not give a very satisfactory answer, though it appeared to him a most important element. He also concurred in the remark of the hon. Member for Lambeth (Mr. W. Williams) that this did not appear the best time for introducing such a measure. Money was now in very active demand, and was at least a quarter per cent dearer than it was five or six months ago. Moreover, it ought to be borne in mind, 847 that during the next few years there would be several important reductions. The question was, whether this kind of operation might not be undertaken at a more favourable period, when the scheme might be more easily carried out, and when the saving to the public would be larger. From the little consideration which he had been able to give to the subject, be must say it appeared to him that the right hon. Gentleman's propositions contained principles which would act in opposition to each other. The right hon. Gentleman took credit for having effected a great saving to the country by the reduction of the interest on Exchequer bills. Now he would ask any Gentleman connected with the monetary interest whether it would be possible, if the measure were carried, for 18,000,000l. in Exchequer bills, bearing 1½ per cent interest, to float and circulate along with bonds bearing 2½ per cent. He believed that one would clash with the other—the one was utterly inconsistent with the other. He admitted that to a certain extent Exchequer bills would still be taken, because they were the most convenient securities that individuals could hold for a temporary and particular object; but if the right hon. Gentleman thought that he could keep up his Exchequer bills at 1l. 10s. per cent, and Exchequer bonds at 2l. 10s. per cent, he would he disappointed; and to the extent that the right hon. Gentleman had to pay 1 per cent more upon Exchequer bonds, because they were preferred to Exchequer bills, would there be a loss to the country. Again, the right hon. Gentleman proposed to create a Three and a Half per Cent stock, and to give for 100l. Consols 82l. 10s. As this arrangement was to continue for forty years, there would, he admitted, at the expiration of that period, be a reduction of 17l. 10s. per cent in the capital of the debt. Then came the question of the Two and a Half per Cents, redeemable at 110. The right hon. Gentleman called upon them to look at the price which the Three and a Quarter per Cents bore in comparison with the Three per Cents. Why did they bear such a price? Because they were guaranteed up to 1874; because, too, there was a general opinion that the increasing prosperity of the country and the great influx of gold were likely to reduce the value of money, and that the time was not far distant when the Three per Cents might easily be reduced to Two and a Half. One other remark with 848 regard to the Exchequer bonds. He admitted that they would be a great convenience to the commercial world, but he did not think there would be that very great demand for them which the right hon. Gentleman seemed to anticipate. It was true that the Three per Cent debt amounted to 500,000,000l.; but no one knew better than the right hon. Gentleman that a very large proportion of these funds were held in trust, and could not, therefore, be converted into Exchequer bonds. Investments in the bonds would be only for temporary purposes; whenever a man left funded property for the benefit of those who should survive him, they might depend upon it that, if he were prudent, he would not be willing that Consols should be converted into Exchequer bonds. These bonds were to pass, as he understood, from hand to hand, without indorsement and without stamp, and there would be the greatest difficulty if they were lost or stolen. On the other hand, in the case of ordinary stock, the only risk was that of forgery. There was another point connected with these bonds, one upon which he certainly felt considerable alarm; he referred to the conditions upon which they were to be issued. He was not disposed to grant to any Government the power of issuing bonds with such conditions as to their redemption as they themselves might think fit to adopt. His own opinion was that they must be made redeemable at some fixed and positive period. That was done in the case of all the foreign bonds to which the right hon. Gentleman had alluded. He spoke only of what was within his own knowledge; but certainly none of those bonds ever passed through his hands without his finding a day positively fixed for the payment of them by the issuers, whether the borrowing Government were republican or monarchical. This great change must be regarded in all its bearings. As regarded the question of the bonds, he could not help adding that the foreign Governments enabled the holder to exchange from one class of securities to another; and he hoped the right hon. Gentleman would include that among his conditions. He was quite unprepared to enter that evening at any great length into the important question under consideration; and he certainly thought the consideration of it should be postponed, at least, until the following Monday.
MR. J. B. SMITHsaid, he must confess that he felt very great alarm on receiving 849 the first edition of the Resolutionsthe—the second he had not yet seen—an alarm which arose from a consciousness that the propositions made to the fundholders were such as would ensure their acceptance. The right hon. Gentleman offered a bonus of 10 per cent upon a debt of 500,000,000l. For a saving of about 1,200,000l. per annum, it was proposed to add 50,000,000l. to the national debt. This was opposed to the principle upon which Parliament had for years acted. So long ago as 1810, and more recently at the close of the war, in consequence of the anxiety of Parliament to reduce the national debt, Acts were passed to enable the Government to grant annuities for lives and for terms of years. It appeared from a return, that up to 1851 stock to the amount of 47,000,000l. was purchased with the monies received for these annuities. The country was at this moment paying about 2,000,000l. per annum upon the sum which the Exchequer had so received; and if the country required to be relieved to the extent of 1,200,000l. a year, the Chancellor of the Exchequer had nothing to do but to stop the granting of annuities. He confessed that a proposition to add to the national debt in one moment a sum which it had taken forty years to extinguish, had filled him with alarm. He was glad, however, to see that the right hon. Gentleman the Chancellor of the Exchequer had so far modified his plan that he now asked for only 30,000,000l. But he still adhered to the bonus of 10 per cent; and the effect of his proposition was that they were asked to add 3,000,000l. to the national debt for the purpose of establishing a Two and a Half per Cent Stock. He thought that before consenting to this proposal, the Committee should inquire whether the right hon. Gentleman intended to follow it up by the creation of a larger amount of stock than 30,000,000l. If not, then where was the use of passing the Resolution? It appeared to him that it would be better to take our chance of a more favourable opportunity of reducing the interest on the national debt. He was very much disposed to agree with the hon. Alderman opposite (Mr. Alderman Thompson) in thinking there was great doubt whether Exchequer bonds at the rate of 2½ per cent, and Exchequer bills at 1½ per cent, would circulate together. For these reasons he thought it very desirable that they should not come to a decision on so important a question that night. A little time was certainly necessary to consider it; and in the mean- 850 time he would ask the right hon. Chancellor of the Exchequer whether the time had not arrived for making some more extensive attempt at reducing the capital of the national debt? That was a subject worthy the consideration of a Chancellor of the Exchequer, and therefore he invited the right hon. Gentleman to consider whether he might not some day propose a Committee to inquire into the practicability of the project. At all events, he trusted that the present Motion would not be pressed until the Committee had a fuller opportunity of considering the details.
§ SIR FITZROY KELLYsaid, he did not rise to oppose the Resolutions, but to submit to the right hon. Gentleman the Chancellor of the Exchequer whether the Government could, with propriety, call upon the Committee, consistently with its duty to the public, to proceed to a decision on this important question to-night. These Resolutions originally proposed to deal certainly and immediately with, at least, 10,000,000l., and possibly might have affected little less than 500,000,000l. of our national debt. Since Members had entered the House that evening, no less a change had been made in the Resolutions than to limit their operation to 30,000,000l. of the national debt instead of 500,000,000l. The change that was proposed must be considered not only with reference to its effect on the national debt, and on the interests of the country, but also in relation to its effect on the option given to the fund-holders as to the mode in which they would accept the conversion. Let the Committee consider what was the proposition of the right hon. Gentleman with regard to the option given to the fund-holders. Unless he had quite misapprehended the language of the Resolutions, the apparent option of the acceptance of 3½ per cent stock on Exchequer bonds was absolutely nugatory, and neither more nor less than a pure and mere delusion. He thought he could satisfy the Committee that the real question was, not whether any man in his senses would accept the first, second, or third proposal, but, whether he would be better content to keep his 100l. in his pocket or in the present funds, or to exchange it against the 2½ per cent stock according to the second proposal. For when he contrasted the second proposal with the other modes of conversion proposed, it was quite impossible for any man who understood the proposition to hesitate for a moment as to which he would accept. 851 To put forth these proposals as if they were really equivalents—as if they were all as like each other—to use the language of the right hon. Gentleman, as peas—was a pure delusion. He agreed with the right hon. Gentleman opposite (Mr. Ellice) that the best way of making himself understood would be by a plain illustration. Suppose he were a holder of 100l. South Sea Stock, which he wished to convert under this Resolution. He should consider which of the three proposals it was his interest to accept. He would for a moment pass by the first proposal, as to the 3½ per cent stock. He agreed that if it were possible for the Government to convert any considerable portion of the national debt into 3½ per cent stock upon such terms as were here stated, an incalculable benefit would be conferred upon the financial interests of the State. But it was a mockery to suppose that any fundholder, or person having 100l. to dispose of, would dream of accepting the first proposal, if he could accept the second. He would therefore take the second proposal in the first instance. If, with 100l. to dispose of, what would be his situation if, instead of investing it in the Three per Cents, as they now existed, he should accept any of the three proposals? For that 100l. he would receive 110l. stock with 2½ per cent interest, with a guarantee for forty years; but at the end of that period, his stock would be redeemable by the Government at par, which would be 110l. [The CHANCELLOR of the EXCHEQUER: No, no!] Then he had mistaken the Resolution. But the words were, "For every 100l. of the said capital stocks of annuities, the sum of 100l. in a new stock of Two and a Half per Cent Annuities," &c. Was he not, from the moment he should make such a purchase, entitled to 110l.? [The CHANCELLOR of the EXCHEQUER: Of stock.] Would he not be in that case the creditor of the Government to the amount of 110l.? Were he the holder of 100l. in the Three per Cent Consols, would not the Government be his debtor to that amount; and if he held 110l. in a Two and a Half per Cent, would not the Government be his debtor to the amount of 110l.? Where was the difference between the two cases except in the rate of interest? He could not understand the difference between his purchasing for 100l. stock to the amount of 1001. in the Three per Cent Consols, or to the amount of 110l. in the Two and a Half per Cent 852 Stock which was about to be created. The Government was indebted to him in the amount of 100l. in the first case, and of 110l. in the second case, subject to the payment of interest in one case of 3l., and in the other case of 2l. 10s. per cent per annum. If they looked forward to the time, as they might do, without taking a visionary view of the probabilities of the future, when, forty years hence—looking to the effect of the influx of gold and of other events upon the monetary transactions of the country—it might be the interest of the Government to pay off the Two and a Half per Cent Stock by the capital of 110l., the situation of the person who had invested his 1001. under the second proposal would be this—he would be the possessor of 110l. stock, with a guaranteed interest of 2l. 10s. per cent per annum for forty years, at the end of which time he would still possess his 110l. stock. If there were any inaccuracy in the language he had used, the contrast he was about to make would be the same, for he should apply the same principles and the same language to the other proposals contained in the Resolutions. The next proposal was for his 100l. to accept an Exchequer bond for 100l.—that is to say, stock represented by an Exchequer bond at 2¾ per cent, or 2l. 15s. per annum for ten years. He should, therefore, receive for his 100l. stock to the amount of 100l., in the shape of a Treasury bond, bearing interest at 2l. 15s. per annum for ten years; but for the remaining thirty out of the forty years, at 2l. 10s. per annum; and at the end of that time he should be the holder of a debt from the Government to the amount of only 100l. Did the right hon Gentleman say that any man in the City of London would hesitate which of these proposals to accept? or that it was anything but a delusion to tell people that an option was held out to them? What man in his senses would pause between investing 100l. to receive 2l. 15s. per annum for forty years, and then to remain a creditor of the Government for 110l., or to receive 2l. 15s. per annum for ten years, 2l. 10s. per annum for thirty years, and then receive only 100l. But if it were a delusion to suppose that there was an option between the two proposals he had alluded to, he had no language strong enough to express the contrast which existed between the second and the third or last proposal. He would take a person in the same situation as in the previous instances, coming 853 forward with 100l. What was the last proposal? It was, that with the 100l. he was to purchase 82l. 10s. of the 3½ per cent stock, and, consequently, he was to be credited for 3½ per cent on 82l. 10s. for forty years. What was the plain English of this financial operation? It was, that he parted with 100l., and instead of receiving, under the second proposal, 2l. 15s. per annum for forty years, he received 2l. 17s. 9d. per annum for forty years; but, at the end of that time, when it was competent to the Government to pay off this part of the debt, he was a stockholder to the amount of 82l. 10s., only. Let the Committee contrast the situation of a man exercising his option under proposal No. 2, with that of a man who exercised it under proposal No. 3. The latter would have received 2l. 15s. per annum for forty years, the first would have received 2l. 17s. 9d. for forty years; but at the end of that time, the second would be entitled to stock to the extent of 110l., the first to the extent of only 82l. 10s., making a difference of 27l. 10s. Was this imaginary or nominal capital only? Would the Government, in 1894, more than in 1853, allow a debt to remain at 3½ per cent interest for a single day? The consequence would be, that at the expiration of forty years, unless some great change had taken place in the situation of the country, the Government would pay off that portion of the debt which consisted of 82l. 10s. stock to the one holder at the present time of 100l., while the other holder would receive 110l. The first would therefore be a loser of 27l. 10s., with the compensation of having received for forty years 2s. 9d. per annum more than the other person. The contrast amounted arithmetically to this —Was 2s. 9d. per annum for forty years sufficient purchase money for 27l. 10s.? If it were, there was an equivalent, and the proposals, to use the right hon. Gentleman's words—were "as like as two peas;" but if not—if 2s. 9d. per annum, even in perpetuity, would not produce more than 5l. or 6l., it was a sacrifice of at least 27l. 10s. on the one side. This was a subject on which members of his profession rarely presumed to address the House; but this appeared to him to be not so much a matter of financial policy, as a mere simple question of arithmetic. He put it to the Committee whether he had not fairly represented the nature of the three proposals, and whether he had used too strong 854 a term in saying that it was a delusion to hold out these Resolutions as giving an option of three equivalents, or anything approaching to equivalents, and whether any person who was the holder of South Sea or other stock would not resolve to keep his 100l. in his pocket, or invest it in the stock which now existed, or else unhesitatingly to accept the second and reject the other two proposals. This brought him to the last appeal he had to make to the right hon. Gentleman. Looking to the change which had been made in the Resolutions, involving no less than 400,000,000l. or 500,000,000l., of the capital of the national debt, since they had assembled that evening, was it fair to the Committee or to the country to press for a decision upon them? If anything could render this question yet more important and alarming, it was, that the Government, by these Resolutions, were asking the sanction of the Committee to that which was admitted to be an entirely new operation, unparalleled and unexampled in its extent; and he must submit it to the consideration of the Government, that if ever there were a time when they should propose such financial measures as these with caution and deliberation, it was when they were not in a settled or permanent financial condition, but when this and every other country was in a state of transition, arising from the unprecedented condition of the monetary world, in consequence of the influx of gold. Under such circumstances the Government ought not to ask them to tie up the hands of the State and of Parliament for so long a period as forty years, upon the mere speculations of a Minister of the Crown.
§ MR. J. WILSONsaid, there were but one or two points in the hon. and learned Gentleman's speech which required observation. The hon. and learned Member had commenced his remarks by following the example of a right. hon. Member on that (the Ministerial) side in illustrating his opinion by an arithmetical problem. He (Mr. Wilson) proposed to follow the same course. The hon. and learned Gentleman said—and arithmetically he would appear to be perfectly correct—that if a man wanted to invest 100l. on Government security, he could not conceive how that man would accept an Exchequer bond bearing interest at 2l. 15s. per cent, in preference to the 1101. stock, seeing that the security was the same in both cases. He thought he could show the hon. and learned Gen- 855 tleman the fallacy that lurked in this view, apparently so arithmetically and mathematically correct. The hon. and learned Gentleman should remember that within the last month, with Consols at par, Government issued securities, Exchequer bills, not at 2l. 15s., but at 1s. 10s. per cent, and yet there were numbers of people found to accept them. The hon. and learned Member had completely overlooked the most important feature in the question—namely, the character of the security which was issued. Was it the same thing to have a security never redeemable except at the option of Government, and tied up by a great number of restrictions with regard to its negotiable character, as to have a security that might go from hand to hand, and which was similar in character to an Exchequer bill? Such a security had, he submitted, an extraneous value far above that of one which was hedged round with various restrictions in its passage from hand to hand. The hon. and learned Gentleman had therefore overlooked what had escaped no other speaker—an advantage which was appreciated in proportion to the extent in which persons understood the subject. The hon. and learned Gentleman had overlooked the convenience which these bonds would be to bankers, assurance offices, or other parties having temporary investments to make, and whose only present means of making such investments was an Exchequer bill. Of so great a value was that convenience when stated in pounds, shillings, and pence, that, as he said before, the Government had been enabled, at a time when the Bank of England was raising its rate of interest, and Consols were falling, and below par, to convert 9,000,000l. of Exchequer bills bearing 2½ per cent, into Exchequer bills bearing only 1½ per cent, interest. And if the argument of the hon. and learned Gentleman were worth anything, it would demonstrate that de Government had obtained an advantage in that transaction equivalent to one-half of the whole interest paid. Therefore, with regard to this special class of securities, he had no doubt that to the limited amount his right hon. Friend the Chancellor of the Exchequer proposed to issue them, namely, 30,000,000, they would be absorbed, and quickly absorbed, and become a favourite security with the country on account of the great facilities they offered for the purposes of temporary investment, namely, the ease with which they might be transferred from hand to hand, with the coupons represent- 856 ing the interest attached, which, as they became due, might be cut off the bond and paid into any bank, and remain a check on London for the amount; and, in a country like this, where enormous sums were from time to time seeking temporary investment, it was difficult to contemplate accurately the enormous advantage this arrangement would confer on the monied interests. And, with regard to the rate of interest, an hon. Gentleman whom he saw opposite, who knew something of the money market, must be aware that enormous sums were constantly being invested on call in Lombard-street at 1½ and even as low as at 1 per cent. There was a large amount of money always seeking the means of temporary investment; and if, in dealing with the public securities, his right hon. Friend the Chancellor of the Exchequer could offer to the public advantages and facilities for such investments, and at the same time benefit the country by reducing the annual charge, it was his duty to do so. If, as the hon. and learned Gentleman opposite contended, his right hon. Friend the Chancellor of the Exchequer was wrong as to his expectations in regard to these Exchequer bonds, then he (Mr. Wilson) must say that the whole of England must have been struck stark staring mad when they accepted, within the last six weeks, Exchequer bills at 1½ per cent. Then as to the rate of interest upon the new stock to be created, the only fault, as he understood, that practical men in the City found with the proposition was, that considering the enormous advantages attending this particular description of stock, too great an interest was given, and that instead of offering 2½ and 2¾ per cent, they would have been justified in offering less. There was another part of the hon. and learned Gentleman's (Sir F. Kelly's) speech in which he also fell into a fallacy—that was, in contrasting the two classes of securities into which it was proposed to convert the existing stock, namely, those bearing 3½ per cent, and convertible at 82l. 10s. for the 100l., and those bearing 2½ per cent, and convertible at 110l. for the 1000l. The fallacy into which the hon. and learned Gentleman appeared to fall in this respect (and it was the common one) was, that he appeared to treat the whole amount of the national debt as so much positive debt due from the nation to the fundholders, redeemable at the nominal amount; but the hon. and learned Gentleman must surely be aware that the holders of stock had no claim 857 upon the Government for any specific sum of money as capital; the only claim they had was for a specific annuity. And this it was that made all the difference in the argument. If the holders of this stock had the right at the end of the forty years to demand repayment of the nominal amount of debentures, the hon. and learned Gentleman's argument would be correct; but the fact was, that the amount of interest to be paid thereafter, and the value of the stock, would depend upon the fluctuations which might take place in the money market in the meantime, and the value of money at that period. But the hon. and learned Gentleman turned round and said, I will apply your principle of redemption as to the 82l. 10s. or Three and a Half per Cent Stock, to the 110l. or Two and a Half per Cent Stock, and if I am wrong as to the 110l., then the same objection applies to the 82l. 10s. But that was not the case, for while the Government had always the option of paying off after the forty years, the creditor had not the option of demanding payment. The Government would doubtless avail themselves of that option in regard to the 82l. 10s. stock, but not in regard to the 110l. stock, so that the two cases were not parallel. The hon. and learned Gentleman had in the one ease to which he had drawn attention—that of the Exchequer Bonds— made no allowance for the remarkable facilities which the one class of security to which he had adverted, offered to the nominal interest in carrying out commercial transactions, as compared with permanent annuities; and, in the other, he had fallen into the ordinary mistake of considering the national debt as so much money owing, to be repaid on demand, whereas it was simply a claim for a certain annuity, and at the end of the forty years it was no more a positive debt of 110l. than it was now.
§ SIR FITZROY KELLYIt cannot be paid off for less.
§ MR. J. WILSONNo doubt it could not be paid off for less; but they would never be bound to pay it off, or to pay more than 2l. 15s. per annum for each present 100l. An observation had been made by another hon. Gentleman (Mr. Ald. Thompson) as to the objection to increasing the capital of the debt. In that observation he (Mr. Wilson) entirely concurred. He thought there was nothing to be more lamented—that nothing placed the management of the public debt and of the 858 finances of the country in a worse light, than the improvident mode in which a great part of that debt was contracted in the course of the last century. In point of principle, therefore, he entirely concurred in the observation as to the undesirableness of increasing the nominal amount of the capital of the debt; but he must call the attention of the hon. Gentleman to this point. The whole amount with which it was proposed to deal in this way was 30,000,0001., therefore the highest nominal amount of the increase would be but 3,000,0001.
§ Mr. J. WILSONTaking it for granted that the whole of the South Sea Stock was taken up in these bonds, it would certainly be 40,000,000l., but that would not be the case. Now, the holders of this stock, instead of receiving three per cent, as at present, would in future receive only 2l. 15s.—that was a quarter per cent per annum saved to the country on the whole 30,000,000l.—a saving equal at once to 75,000l. a year. If that was funded—if instead of taking advantage of the annual saving, they funded the amount for the whole period, this 75,000l. a year would be exactly equivalent to the nominal addition which at the end of the forty years would be made to the capital—namely, 3,000,000l., and that without taking interest upon the amount so funded into account at all. And if they took credit for compound interest, which they had a right to do, they would have a further sum for the benefit of posterity of between 300,000l. and 400,000l.; so that taking it according to the view of the hon. and learned Gentleman, that the repayment of the nominal capital might be demanded, they would be that amount the better by the transaction. That demand, however, could not be made; the liability being confined to the annuity of 2l. 15s. for each present 100l. of stock; and he had put forward this calculation merely by way of illustration. He thought he had sufficiently answered the objections to which he had addressed himself, and he would not pursue the subject further on the present occasion, considering, after the full explanation of his right hon. Friend the Chancellor of the Exchequer, it was unnecessary for him to do so.
§ MR. SPOONERsaid, the argument of the hon. Gentleman who had just sat down 859 amounted to this—that at the end of forty years the finances of the country would be exactly in the same condition as they were now. Then he said that his (Mr. Spooner's) hon. and learned Friend (Sir F. Kelly) had been guilty of a fallacy in his argument. He (Mr. Spooner) could not see that there was any fallacy in the case. His hon. and learned Friend argued that of two schemes, one was so clearly preferable to the other that no man in his senses would hesitate which to accept. Now see what those propositions were. A man setting out with 100l. bought an annuity of 2l. 15s. a year, of which he could not be deprived except by the Government paying him 110l. in cash. Another man setting out with 100l. bought an annuity of 2l. 17s. 9d. of which he could be deprived by the Government paying him 82l. 10s. in cash. Now that was the proposition of his hon. and learned Friend. He was sure the hon. Gentleman (Mr. J. Wilson) had not answered him, and he believed the proposition was so self-apparent that it was impossible for any one to answer him. But he rose especially with a view to a question which had been put to the right hon. Chancellor of the Exchequer, but which he had not answered, and he wished now to ask would the right hon. Gentleman be kind enough to state what would be the immediate effect of his proposition? Would there be an annual saving to the public, or would there not; and, if there would, to what amount? The right hon. Gentleman proposed to float 30,000,000l. of Exchequer bonds, bearing interest at the rate of two and a half per cent. But it must not be forgotten that there were at present in the market 17,000,000l. of Exchequer bills, bearing interest at the rate of only one and a half per cent. Did any one suppose that these two kinds of securities would work together? And if they would not, then the right hon. Gentleman must deduct from the reduction to be gained from the Exchequer bonds the additional interest that must be paid upon the Exchequer bills. The Chancellor of the Exchequer said he could not tell what the amount of saving would be, because that must depend upon the extent to which the public would act upon it. Now that was very true; but supposing that the whole 30,000,000l. of Exchequer bonds were issued, taking up at the same time, as he must do, the 17,000,000l. of Exchequer bills, what would the saving be so far as concerned the country? That was a point 860 upon which he (Mr. Spooner) wished to have some more definite statement of the views of the right hon. Gentleman than he had given them that evening. Now with regard to the alterations. The Chancellor of the Exchequer had told them that the alterations were chiefly in the third and eighth Resolutions. But he had not explained to them what those alterations were; and hon. Members had not the papers before them to compare the original with the amended Resolutions. They had had but a short time to consider the original Resolutions; and when they had considered them they were told that was not the plan that the Government intended to adopt. Under these circumstances, he trusted that the right hon. Gentleman would allow the propositions to be well understood before the House was committed to the principle. He agreed that delays were dangerous, and that if alterations were to be made they ought to be made as speedily as possible; but still little would be gained by committing the House of Commons to a plan which they did not fully understand. He hoped, therefore, that the Chancellor of the Exchequer would not press the Resolutions to a division tonight. He could say for himself that he was not prepared to reject the propositions; there was much in them of which he approved, but if he were now called upon to say ay or no, he must say no, because he would not commit himself to a principle which seemed to him to have been imperfectly explained.
§ MR. JOHN MACGREGORsaid, he had not intended to address the Committee on the present occasion, but he had heard tonight opinions expressed which were so much at variance with the opinions of the country, that he trusted he would be allowed, as the representative of a great commercial community, to make a few observations. What was intended by his right hon. Friend the Chancellor of the Exchequers? He intended, in the first place, to do away with the South Sea Stock, which had been considered at all times to be pernicious. He dealt with that stock in a way which would be satisfactory to the monied interest, satisfactory to the country, and advantageous to the taxpayer. He proposed, in the next place, to issue Exchequer bonds to the amount of 30,000,0001. Now, that would be of advantage not only to the taxpayer, but it would be of the utmost benefit to all commercial negotiations and investments. 861 The advantages would be felt, not in England only, but they would extend to every country in Europe. With regard to the Two and a Half per Cents, the object of his right hon. Friend was to create a Two and a Half per Cent Fund, and, in doing so, it was proposed to give 110l. for every 1001. invested. Now, he admitted at once that he would have preferred the creation of a Two and Three Quarter per Cent Stock at 100l., which would have added nothing to the debt. But, at the same time, he thought that a great deal had been said with very little foundation with respect to this addition to the national debt. The real question before them was, could they reduce the amount of the interest that was annually payable; for the matter must be regarded as an annuity. But taking the scheme as a whole, the addition of 3,000,000l. or 4,000,000l. to the debt was a matter of no consequence; and he believed that the sooner they consented to these Resolutions, the sooner would they put the country out of suspense, and the greater satisfaction would they give to all parties. The statement of his right hon. Friend the Chancellor of the Exchequer had been so clear and so satisfactory that he, for one, wished for no further explanation.
§ MR. WILKINSONsaid, he thought that the question was one that did require some little further delay. He was quite satisfied that if the original Resolution bad been continued, leaving the Two and a Half per Cent Stock unlimited, the whole 500,000,000l. of debt would have been converted into this description of stock, and not a sixpence would have been invested in any of the others. That proposition seemed to him to be plain and undeniable. For what was the difference between the 2l. 15s. of the Two and a Half per Cent Stock on 110l., and the 2l. 17s. 9d. on the Three and a Half per Cent Stock on 82l. 10s.? MacCulloch's tables informed them that the value of 2s. 9d. a year for forty years was 91. 6s. 4d. Now, add that sum at the end of forty years to the 82l. 10s., it would amount to 91l. 16s. 4d., which was a loss of 18l. 3s. 8d. on the Three and a Half per Cent Stock, as compared with the Two and a Half per Cent Stock. With regard to the Exchequer Bonds, he was not so sanguine as some parties appeared to be. It was very true that they possessed great advantages in being able to pass from hand to hand; but then there was the disadvantage, which 862 amounted almost to a full compensation, of their being liable to be lost or stolen. In one respect, however, he thought that the hon. Gentleman opposite (Mr. Spooner) was in error when he said that the Exchequer bonds would destroy the circulation of the Exchequer bills. The two securities would not at all interfere with each other, because Exchequer bills were sought after, not only for their advantage in being passed from hand to hand, but also because they were at all times redeemable at par. But, if he understood the right hon. Gentleman the Chancellor of the Exchequer aright, the Exchequer bonds would be irredeemable for forty years, and would be subject to every fluctuation of discount during that period. Still he thought that the amount of benefit to be derived from this proposition had been exaggerated, and though he was willing to award his full meed of praise to the right hon. Gentleman, he thought that some delay in adopting the Resolutions would be advisable.
§ MR. LAINGsaid, he hoped the right hon. Gentleman the Chancellor of the Exchequer would not accede to the request for delay, for if be consulted public opinion in the City, he would find that it was unequivocally in favour of his plan. The propositions had now been under discussion for three days, and the Amendment which had been announced that evening, putting a limit upon the creation of Two and a Half per Cent Stock, removed the only difficulty which presented itself to his mind, and which had in other respects commanded his warm approbation. At the same time, he thought the objection was overstated when it was said that it would increase the national debt. As it had been already truly stated, the national debt was not to be considered in the light of a capital sum to be paid, but rather in the light of an annuity. If they stood still and did nothing, posterity would be charged with the payment of an annuity at 3 per cent; if they adopted this proposition, posterity would only be called upon to pay an annuity of 2¾ per cent. The objection on his mind was, that if they adopted the proposition without limitation, there might be a difficulty at the end of forty years in reducing the Two and a Half per Cent Stock into a still lower rate of interest, while there could be little or no difficulty at the end of forty years in reducing the Three and a Half per Cent Stock. Now, he might perhaps be considered too sanguine, but he certainly 863 did estimate the possibility of converting the whole 500,000,000 of national debt into Two and a Half per Cent Stock, as more likely to occur than the right hon. Chancellor of the Exchequer appeared to do; and therefore if the original proposal had been allowed to stand, he thought the risk of not being able to convert it at the end of forty years into a lower description of stock would have been too dearly purchased; but when the conversion of stock was limited to 30,000,000l. or 40,000,000l. it became quite a different question. In his judgment the advantage of having a Two and a Half per Cent Stock in the market would be as a test to gauge the extent of public credit, and to see how far they could approach to it in the conversion of the whole of their Three per Cent Stock; and in that respect the advantage, he thought, would be incalculable. As he thought it was possible, with the present influx of Australian gold, that great changes would yet take place in the public securities, he should be sorry to see a large amount of the national debt locked up for the next forty years to come, and he therefore hoped the right hon. Gentleman would adopt some limitation not only with regard to the Two and a Half per Cent Stock, but also with regard to the Three and a Half per Cents. Because, if they took the extreme supposition, that the whole 500,000,000l. was converted into the new stock, they would only save 2s. 3d. per cent on the whole, which would only amount to a saving of 500,000l. a year, and for that suns they would be precluded from meddling with the debt for the next forty years. Now, he confessed that its view of the further changes which might ensue, this would be a bad bargain. But that would be met if the right hon. Gentleman would adopt, as it appeared he had no objection to do, the plan of limiting the amount of the Three and a Half as well as the Two and a Half per Cent Stock. As regarded the doubts which the hon, and learned Gentleman opposite (Sir. F. Kelly) had raised, of any one accepting the Exchequer bonds, he thought those doubts could only have come from a learned Gentleman; for any one acquainted with the subject knew to a positive certainty that these bonds would be purchased; and the best proof of that was that the day before yesterday, when the rumour in the City was that these bonds were to be issued at 2½ per cent, the general impression among men of business was 864 that these bonds would float; and now that a higher rate of interest was offered, there could be no doubt that a large amount of them would be taken. There was great force in what the right hon. Chancellor of the Exchequer had stated with respect to enlarging the market for stock in the provinces; and he hoped that the market would be enlarged to a still greater extent, by making these coupons payable at Paris and other capitals on the Continent. He would not go farther into the question, but he hoped these Resolutions would be carried without further delay.
§ The Question was then put, that the first Resolution be agreed to.
§ MR. DISRAELISir, I shall be glad to hear from the right hon. the Chancellor of the Excheqner—I will not say in pursuance of his pledge, but following what I understood to be his intention in the early part of the evening—that we are not to proceed farther than this Resolution to-night.
§ LORD JOHN RUSSELLI do not think, Sir, it would be convenient for the public service if we do not adopt the whole of the Resolutions this evening, It is most important, when the question has once been proposed, that the Committee should so decide upon the Resolutions as at least to say whether or not they will permit the Bill to be brought in. That is the proposition now before us—whether my right hon. Friend the Chancellor of the Exchequer, having fully and clearly stated his propositions, should be permitted to bring in a Bill, so that the House may have all the details of the plan laid before them. Such being the case, I think it would he very disadvantageous if we were to postpone to another evening the discussion of this subject. If it had been intended that a postponement should take place, I think hon. Gentlemen who have faults to find, or objections to state, would have said, We do not intend to discuss the plan to-night, we only ask for explanations. But the contrary course has been pursued. Hon. Gentlemen who have felt objections to the plan have stated them in the strongest possible manner; they have gone into everything that could be said against the plan; and some, I must say, with a great deal of bitterness—bitterness that is not usually shown on a question of finance. That being the case, I think it would be disadvantageous to postpone the discussion after all the objections have been stated,
§ MR. DISRAELISir, the bitterness of which the noble Lord complains must have taken place during the short time I was at dinner. The noble Lord has not told us, however, on which side of the House the bitterness was displayed, for the scheme has been opposed by bon. Members on both sides; and I must, therefore, assume, for the sake of argument, that it did not occur among my hon. Friends on this side of the House. I do not wish to enter into any lengthened discussion on this subject; but I confess I thought it was understood between the right hon. the Chancellor of the Exchequer and myself, that no discussion would take place to-night. I know that was the general feeling of the Committee, and that accounts for the present thin state of the House. Considering that it was only yesterday that the original Resolutions were circulated, and considering that it was only at the moment we entered the House that we were informed of an important alteration in the Resolutions, I think it showed no bitterness of feeling on the part of any individual in appealing to the Government to afford a fair time for their consideration and discussion. If all that we are to be called upon to agree to is, that the Chancellor of the Exchequer should be allowed to bring in his Bill, that will remove much of the objection that is felt on this side of the House. But if the House of Commons is now to be solemnly called upon to give its assent to these Resolutions, I shall feel it my duty to call for a division of the Committee, in order to show the comparatively small number of Members present at that moment. But I am willing to take the word of the noble Lord, that the only expression of opinion we are now called upon for is, that the Chancellor of the Exchequer may be allowed to bring in his Bill. To that course I have no objection. I observed that the right hon. Gentleman opposite (Mr. Ellice) told us that the business of the House of Commons was to facilitate the progress of Government business. That may be an exceedingly agreeable doctrine for the occupants of the Treasury bench; but I beg hon. Gentlemen to remember that in being amiable, and avoiding display of bitterness, they must not lose the opportunity of discussing subjects of the very highest importance—subjects on which, according to the hon. Gentleman opposite (Mr. Laing) there cannot be the slightest mistake among men of business—subjects on which men of busi- 866 ness can have no two opinions. According to the hon. Gentleman's account, men of business object to the increase of the pecuniary debt of the country, while the hon. Gentleman the Secretary of the Treasury (Mr. J. Wilson) has shown, by a most ingenious argument, that there will not be by the amended Resolution any increase to the permanent debt, but a diminution, and that if the Resolution had remained as it was originally framed—a Resolution that alarmed all men of business by its operation in adding 50,000,000l. to the debt of the country—according to the Secretary of the Treasury, there would have been no increase at all, but a proportionate diminution. The hon. Gentleman (Mr. Laing) had one objection to the original scheme, that it increased the permanent debt of the country. But the Secretary of the Treasury tells us that neither in its original nor in its mitigated form would it have increased the permanent debt of the country—
§ MR. LAINGWhat I said was, that it would have increased the difficulty of a further conversion of the stock into a lower rate of interest.
§ MR. DISRAELIThe hon. Gentleman, as I understood him, said, he objected to the proposition when it first appeared, on the ground that it increased the permanent debt of the country. I am reminding him, for his consolation, and for the consolation of men of business, that this was a mistake on the part of men of business; for that, according to the hon. Secretary of the Treasury, the effect would rather have been to diminish the debt. All I wish is, after the expression of the opinion of the noble Lord, that we should arrive at some clear conception of what it is that we are to obtain by this scheme. Already considerable changes have been made in the proposition framed by the right hon. Gentleman the Chancellor of the Exchequer. We have had the proposition described by eminent Members of this House—all of whom support it—in very different terms. According to the right hon. Gentleman the Member for Coventry (Mr. Ellice), we have tonight to discuss one of the most important—I believe he said one of the most giganti—financial, propositions that was ever brought forward. In another part of his speech this colossal scheme figured as the creation of the Two and a Half per Cent Stock. Now, Sir, there can be no doubt that there was at one time a very general impression in the City, that the Chancellor 867 of the Exchequer was going to pay off the national debt. The Resolutions and the discussions to-night have thrown considerable light upon that proposition; but if the Chancellor of the Exchequer had brought forward a Resolution to pay off the national debt, it could not have been described in language more glowing than that which was used by the right hon. Member for Coventry. Now, I think that to-night, before we separate, we ought to have a clear conception of what the Government propose to do, and what the proposition, if carried out, would effect. I have here a note which I made on the first proposition of the Government—for any calculation I could make must necessarily have been upon the first Resolutions of the Government, as I did not see the amended series till I entered the House this evening. This great financial proposition, to be tested fairly, must be viewed in all its completeness. I omit all allusion to the plan so far as relates to the conversion of the South Sea Annuities. I go to the possible effect of the Resolution upon the whole 500,000,000l. of Three per Cent Consols and Reduced Three per Cents. The first proposition was, that the holder of 1001. Three per Cent Stock should receive 82l. 10s. in a new stock, at the rate of 3½ per cent guaranteed to be continued to be paid at that rate for forty years—that is, until the 5th of January, 1894. Now, I will not contrast the comparative advantage of this and the next proposition, or enter upon the question whether they have a correlative value. This has been touched upon with great lucidity by my hon. and learned Friend (Sir F. Kelly). I will only show the effect of the proposal of the Government, so that the Committee may clearly know whether they will gain a proportionate advantage in the step that they are asked to take. What would be the debtor and creditor account to the country, if that financial proposition were completely carried out, and the whole sum of 500,000,000l. converted into that description of stock? If the whole 500,000,000l. were converted, the result would be, that whereas at present the fundholders receive 15,000,000l. a year, if the conversion took place they would then receive 14,437,500l. a year; so that the country would gain 562,5001. a year. But what would be the effect of the second proposition, if it were carried out completely? The second proposition, as I need not remind the Committee, proposes that the holder of 100l. Three per Cent Stock 868 should receive 110l. Two and a Half Stock, guaranteed to be continued at the same rate also for forty years. Now, what would be the effect if the 500,000,000l. were converted according to this second proposition of the Government? The fundholders, instead of receiving, as now, 15,000,0001., would receive 13,750,000l., and the profit accruing to the country would be, not 562,500l., but 1,250,000l. a year. According to this proposition, then, the country would gain 1,250,000l., but it would be saddled with an addition to the debt of 50,000,000l. Now, let us see what would be the effect in the diminution of the national burdens if the third proposition were to come into complete effect. Because I maintain, that in order fairly to test these plans, they ought to be tested by supposing that they were fully carried into effect. Now, this would be the effect of the third proposition: The holder of 100l. would receive a 100l. Exchequer bond, at the rate of 2l. 15s. per cent, up to 1864, and then 2l. 10s. per cent up to 1894. According to this proposition the country would gain 1,250,000l. up to 1864, and 2,500,000l. from that period up to 1894. But then the country would be bound to repay, at the end of 1894, the whole of the 500,000,000l. These were the three propositions, viewed with reference to their action on the public debt, which, after all, whatever we may say, is the real purpose of all these movements, and a most laudable purpose it is. But after the admissions that have been made, the alterations that have been introduced to our notice, and the explanations that have been given us, does this question any longer possess those features of magnitude and interest which it did when we awoke this morning? Now, let me see how the character of these three propositions has been changed. The first operation I will take is the last mentioned—the operation of Exchequer bonds. These were limited in amount in the original Resolutions to 30,000,000l., a sum which certainly could not pay off the 500,000,000l. But the right hon. Gentleman the Chancellor of the Exchequer very candidly informed us, that though he had limited himself to 30,000,000l. in the amount of these bonds, he should not hesitate in coming—indeed he seemed to anticipate coming—to Parliament to develop the scheme if he found it successful; and of course he contemplated that he could act successfully by the issue of his Exchequer bonds. But 869 has the discussion of this evening supported that idea? Have the speeches even of his own supportors sanctioned it? On the contrary, all that has been said on both sides with respect to these Exchequer bonds—and on both sides of the House said with great sense and propriety—has gone to show that an Exchequer bond may be an efficient instrument in finance, a valuable one, and one that commercial men greatly appreciate and use, but that it is, nevertheless, an instrument limited in its use. I come now to the second proposition, the proposition which so astonished and alarmed the country, and find by the address which has been delivered to us with so much effect to-night, that you are not to act on the 500,000,000l. by the second proposition. The right hon. Chancellor of the Exchequer has altered his Resolutions, and is bound now to a maximum. By the second proposition, which according to the hon. Gentleman who last addressed you, was to have so greatly increased the public debt, and according to the Secretary to the Treasury would greatly diminish it, there is now no chance of any great dealing with the public burdens. The new stock was to be limited to 30,000,000l. And this 30,000,000l. was to produce those extraordinary effects which the right hon. Member for Coventry (Mr. Ellice) described with so glowing an imagination when he was prompted to pronounce these Resolutions as embodying the most important financial propositions ever made. It, therefore, was neither the second nor the third proposition, then, that dealt largely with the debt of the country. Then there remained the first proposition, the power and influence of which was not to be diminished. It was to exercise its great moral influence on the public burdens, and its singular effects were to justify the descriptions so vividly given by the right hon. Member for Coventry. But then, unfortunately, the first proposition was the only proposition that everybody decried. The only proposition you have not limited in operation, is the very proposition that, on all sides, is admitted can have no effect at all on the public burdens. This is probably the reason why the noble Lord would not consent to a little more time to discuss the subjects hereafter, because he wished the country to understand that it was not, after all, a question of any importance, Then what are we going to do? What 870 is all this pother about? Why has all this been gone into before the Budget? A week before the Budget, Resolutions of the utmost importance are produced—heralded by rumours of great interest and magnitude. The funds rose on those rumours; they say now that it was a mistake, but still the fact cannot be disputed. These Resolutions, when the Committee met to deliberate on them, were changed—changed to such a degree, that it seems impossible that by passing them as they now stand we can fulfil what must have been the original object of them, namely, to deal powerfully and practically with the public debt. What other object can they have in view? The right hon. Member for Coventry says the great object of this unexampled feat of finance by the present Chancellor of the Exchequer is to create a Two and a Half per Cent Fund. Every age has its great object which it wishes to achieve. This is a financial age, and its object is at all costs, and by whatever means, to create a Two and a Half per Cent Fund. What say the Government? They put two specific propositions before us to create funds: one to create a Three and a Half per Cent, and the other to create a Two and a Half per Cent Fund, that great object of modern finance. They first commence the discussion by saying that there is nothing to discuss, and they then say, "We will not have the Two and a Half per Cent Fund; concentrate all your thoughts and energies on the Three and a Half." If by any chance, under the Resolutions now placed on the table you do operate largely on the public debt, you must do so by the Three and a Half per Cent, and not by the Two and a Half per Cent—that magical amount of interest—though we have been told to-night that to establish a Two and a Half per Cent Fund is a feat which alone would render a Minister of Finance celebrated. But if your only object is to create a Two and a Half per Cent Fund, that might have been done by simpler means, by means which other Ministers have had recourse to before without exciting the whole country with the idea that the public burdens were to be greatly reduced, and that new machinery was to be introduced by which the whole debt was to be diminished. But you are going to have a Two and a Half per Cent Fund to a limited extent by the second Resolution, and for this you are increasing the 871 public debt of the country to the amount of 4,000,000l. It certainly would have been cheaper to have funded a portion of Exchequer bills for that purpose. But it is not financial relief that is wanted. What you seem to want is a model, a sort of normal financial farm. You want to have a stock, no matter how, which only pays 2½ per cent. That seems to be the object you now have in these Resolutions, and it is an object that it is not impossible you may obtain. But I think it of importance, though these Resolutions may pass without division to-night, that in acceding to them, it should be understood we are only assenting to the Minister of Finance's bringing in a Bill on that subject, and not in any way sanctioning his propositions. It is important that the country, after all the excitement that has occurred, should have a clear insight into this question. It is possible that the propositions before us may be recognised as sensible propositions; but they do not profess much, and I think they will do less than they profess. It is only fair that the country should know what we are about. The Chancellor of the Exchequer and his Colleagues are of opinion that it is of the greatest importance that a stock should be in existence of Two and a Half per Cent. They may be right; but I must say that a more complicated and ingenious machinery to produce so slight a result appears to me never to have been combined by the most subtle casuists. I know there is a chapter in St. Thomas Aquinas, dedicated to the discussion as to how many angels can dance at the same time on the point of a needle; and I must say that I recognise in these Resolutions something of that master mind. I trust that we shall arrive at some conclusion, but I should be sorry that Her Majesty's subjects were again to go to their slumbers under the idea that the national debt was going to be paid off.
§ CAPTAIN LAFFANsaid, he thought that the propositions as they then stood would operate very unequally, and he would endeavour to produce an illustration of that view of the matter. He would suppose that A and B had each at present 1001. in the funds. If A were to convert that sum into the proposed new Three and a Half per Cent Stock, he would receive 2l. 17s. 9d. annually, during a period of forty years, and at the end of that period he would receive 82l. 10s. in money. If B, on the other hand, were to convert his 872 100l. into the proposed new Two and a Half per Cent Stock, he would receive 2l. 15s. annually, during a period of forty years, and at the end of that period he would have a claim against the Government to the amount of 110l. Now, if A should, during the forty years, save the 2s. 9d. which he would annually receive above the sum received by B, he would still find that at the end of forty years he would possess a sum of only 98s. 10s., while B, who had been enjoying the same income, would find himself entitled to a sum of 110l. It was manifest that an arrangement which could produce such a result would operate very unequally.
§ The CHANCELLOR OF THE EXCHEQUERsaid, he thought that the hon. and gallant Member who had just addressed the Committee, as well as the hon. and learned Gentleman the Member for East Suffolk (Sir F. Kelly), and some other hon. Members, had overlooked the real nature of the national debt. They treated the debt as if it were a sum which certain creditors had a right to recover from the nation. But no such right existed. The nation bad entered into no engagement except an engagement to pay its creditors certain perpetual annuities, or to redeem these annuities on certain terms if it should think fit. That was a totally different thing from being bound to pay off the capital which it had received. The hon. and gallant Gentleman had compared the cases of A and B. According to his computation, A would be liable to be paid off at the end of forty years with a sum of 98l. 10s., whereas B would be entitled to a sum of 110l. His (the Chancellor of the Exchequer's) answer to that argument was, that B would not receive the 110l., unless it should be the interest of the State to give it to him; and the 98l. 10s. of A might be worth more than the 2l. 15s. per annum, which was the only sum that B would have a right to claim.
§ CAPTAIN LAFFANsaid, he could not help thinking that the value of either claim would depend very much on the amount of the sum which would be necessary for its liquidation. It was clear to him that the claim of B which could not be paid off without a sum of 110l., would be of no more value than the claim of A, which could be paid off with 98l. 10s.
§ MR. MALINSsaid, it was quite true that the liability of the nation was to pay a perpetual annuity of about 30,000,000l., but England could only get out of debt 873 by reclaiming this 30,000,000l.; this 30,000,000l. could only so be got rid of. When, therefore, the right hon. Gentleman the Chancellor of the Exchequer stated that England at this moment was not under an obligation to pay more than a perpetual annuity, and not indebted in any capital sum of money, though strictly and legally speaking he was right, practically his statement was most errroneous.
§
The first Resolution was then read:—
1. That the Capital Trading Stock of the Corporation of the Governor and Company of Merchants of Great Britain (trading to the South Seas and other parts of America, and for encouraging the Fishery), which is called and known by the name of South Sea Stock: The Capital Stocks of the 3l. per Centum Annuities, called and known by the name of the Old South Sea Annuities and by the name of the New South Sea Annuities: The Capital Stock of the 3l. per Centum Annuities (created by an Act passed in the twelfth year of King George the First, intituled An Act for granting to His Majesty the sum of 1,000,000l., to be raised by way of Lottery'), called and known by the name of the Bank Annuities, 1726: and the Capital Stock of the 3l. per Centum Annuities (created by an Act passed in the twenty-fourth year of King George the Second, intituled 'An Act for granting to His Majesty the sum of 2,100,000l., to be raised by Annuities and a Lottery, and charged on the Sinking Fund, redeemable by Parliament') called and known by the name of the 31. per Centum Annuities, 1751, shall be paid off and redeemed.
§ Resolution agreed to.
§
The second Resolution was then read as follows:—
2. That every person, body politic and corporate, who now is, or hereafter may be, interested in the Capital Stocks of any of the said 31. per Centum Annuities, who shall, in manner hereinafter directed, give notice at any time on or before Friday, the 3rd day of June, 1853, of his assent to receive other Government Securities in lieu and in place of the said Capital Stocks of the said Annuities, instead of being paid in money, shall, at the option of the said parties, receive for every 100l. thereof, 82l. 10s. in a new Stock of Three and a Half per Centum Annuities, which said Annuities shall be paid at the rate of 3l. 10s. per centum per annum until the 5th day of January, 1894, from and after which day the said Annuities shall be subject to redemption by Parliament; or for every 100l. of the said Capital Stocks of Annuities the sum of 110l. in a New Stock of Two and a Half per Centum Annuities, which said Annuities shall be paid at the rate of 2l. 10s. per centum per annum until the 5th day of January, 1894, from and after which day the said Annuities shall be subject to redemption by Parliament; or for every sum of 100l. of the Capital Stocks of the said 3l. per Centum Annuities, an Exchequer Bond for the like amount, payable to bearer, and carrying interest at the rate of 2l. 15s. per Centum per annum, payable half-yearly on the 1st day of March and the 1st day of September in every year, until the 1st day of September in a year to be named in such bond, and not later
874
than 1 September, 1864, inclusive, and thenceforth 21. 10s. per centum per annum, payable half-yearly in like manner, until and including the 1st of September, 1894, and thereafter to be subjeet to redemption at par, at the option of the holder, or at the option of the Commissioners of Her Majesty's Treasury, as shall be named in such bond.
§ MR. DISRAELIsaid, he thought it right, before this Resolution was agreed to, to warn the Committee that, from the alterations made in the Resolutions, from the admissions made by the right hon. Chancellor of the Exchequer, and from various other statements, this was, in fact, the important Resolution. He wished the Committee to bear this in mind; and he protested against the supposition that, by allowing the Resolution to pass, he, for one, assented to it. If the Committee agreed to the conversion of the whole of 500,000,000l., under the second Resolution, he must remind the Committee that the profit to the country would but little exceed 550,000l. a year; and they should well consider, whether for such an object as reducing the interest of the debt by 500,000l. sterling, they would do right to fix the rate of interest at 2½ per cent for more than forty years. That was a most important point, which the Committee appeared to be disposing of in almost a formal manner, but it was a point to which they must give deliberate attention. The interest guaranteed was higher than he, for one, thought would prevail during the next forty years. It was an enormous responsibility to undertake to make such an arrangement, and he trusted the Committee, when they came to discuss the subject on a future occasion, would think it their duty most carefully to consider whether they would assent to it.
§
Resolution agreed to; together with the four subsequent Resolutions, as follows:—
3. That the Commissioners of Her Majesty's Treasury be authorised and empowered to fix the number of years during which the interest of 2l. 15s. per Centum shall be payable on such Bond, subject to the limitation of the foregoing Resolution; and likewise to determine whether such Bond, after the 1st of September, 1894, shall be redeemable at their option only, or shall also be redeemable at the option of the holder; and that the said Commissioners shall give notice in the London Gazette of what they shall determine in these respects as soon as may be after the passing of any Act in pursuance of these Resolutions.
4. That the dividends and interest payable on such New 3l. 10s. per Centum Annuities, on such New 2l. 10s. per Centum Annuities, and on such Exchequer Bonds, shall be charged and
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chargeable upon the Consolidated Fund of the United Kingdom of Great Britain and Ireland.
5. That the dividends now payable by law on 5 July and 5 January in every year on the said Capital Trading Stock and on the said Capital Stock of New South Sea Annuities, Annuities 1726, and Annuities 1751, shall continue payable until the 5 January, 1854, inclusive, and no longer.
That the dividends now payable by law on 10 October and 5 April in every year on the said Capital Stock of Old South Sea Annuities shall continue payable until 5 April, 1854, inclusive, and no longer.
6. That if the Corporation of the Governor and Company of Merchants of Great Britain trading to the South Seas and other parts of America, and for encouraging the Fishery, shall at any time on or before Friday, the 3rd day of June, signify to the Commissioners of Her Majesty's Treasury their assent to commute and exchange the said Capital Trading Stock, or any part thereof, into any one or more of the said New 3l. 10s. per Centum Annuities, New 2l. 10s. per Centum Annuities, or Exchequer Bonds, the said Corporation shall be permitted to make such commutation and exchange upon the same terms, and subject to the like conditions, as are granted to the person or persons, bodies politic or corporate, interested in, or entitled to, the Capital Stook of 3l. per Centum Annuities, now proposed to be paid off and redeemed.
§
The 7th Resolution was then read by the Clerk, as follows:—
7. That all and every person or persons, bodies politic or corporate, possessed of any part of the said 3l. per Centum Annuities, and who shall desire to signify his, her, or their assent to receive the said New 31. 10s. per Centum Annuities, New 2l. 10s. per Centum Annuities, or Exchequer Bonds in lieu thereof, shall, on or before the 3rd day of June, 1853, but within the usual hours of transacting business at the Bank of England, or at the South Sea House, by themselves or some agent or agents for that purpose duly authorised, signify to the Governor and Company of the Bank of England, or to the Governor and Company of Merchants of Great Britain trading to the South Seas, as the case maybe, such assent in writing under his, her, or their hand or hands, or the hand or hands of his, her, or their agent or agents, together with the amount of his, her, or their respective share or shares in the said 3l. per Centum Annuities, and which said assent shall be entered in a book or books to be opened and kept by the said Governor and Company of the Bank of England and by the said Governor and Company of Merchants of Great Britain trading to the South Seas for that purpose; and in case of any transfer of such share or shares of such Annuities, or any part or parts thereof, after such assent, the part or parts of such Annuities so transferred shall be entered in the said book or books separately from the said 3l. per Centum Annuities, in respect of which no such assent shall be signified; and every such person or persons so assenting, or his, her, or their assigns, or the executors or administrators of such assigns, under any such transfer, shall be entitled for every 100l. Capital Stock of the said 3l. per Centum Annuities to 82l. 10s. of the Capital Stock of New 3l. 10s. per Centum Annuities, or to 110l.
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of the Capital Stock of the New 2l. 10s. per Centum Annuities, or to an Exchequer Bond of 100l., bearing interest as aforesaid: Provided always, that if any person or persons holding any such 3l. per Centum Annuities, shall not be within the limits of the United Kingdom, at any time between the 8th day of April and the 3rd day of June, 1853, both inclusive, but shall be in any other part of Europe, it shall be lawful for such person or persons to signify such assent at any time before the 30th day of July, 1853; and if any such person or persons shall not at any time between the 8th day of April, 1853, and the 30th day of July, 1853, he within any part of Europe, it shall be lawful for him, her, or them to signify such assent at any time before the 1st day of February, 1854, such person or persons proving to the satisfaction of the Governor or Deputy Governor of the Bank of England, or to the Governor of the South Sea Company, his, her, or their absence from the United Kingdom, or out of Europe, as above specified, and that his, her, or their share or shares of such 3l. per Centum Annuities stood in his, her, or their name or names respectively, or in the name or names of any one or more trustee or trustees, on his, her, or their behalf, in the books of the Governor and Company of the Bank of England, or Governor and Company of Merchant Traders to the South Seas on the 3rd day of June, 1853: Provided also, That such person or persons so absent from the United Kingdom, or out of Europe, shall signify such his, her, or their assent, within ten days after his, her, or their return to the United Kingdom.
§ MR. WILKINSONsaid, he wished to know what the amount of South Sea Stock was, and whether the holders did not receive 3½ per cent upon it?
§ The CHANCELLOR OF THE EXCHEQUERsaid, that, as regarded the management of the South Sea debt, he did not take credit for any saving whatever. On the contrary, as nothing was paid at present for the management of the debt, it was possible there might be an increased expense of perhaps 200l. a year under that head. The hon. Gentleman had asked whether there was not a large amount of South Sea stock at 3½ per cent. He believed the state of the case was this—the South Sea Company had assigned to them a sum of 600,000l. in 3 per cent Consols, in compensation for certain privileges of exclusive trade which they gave up. They were holders of 3 per cent stock, just like other holders of the same security, and their practice was, he believed, to take the dividends on that sum of 600,000l. and to distribute them regularly among their own members. The practical effect of this was, as the hon. Gentleman said, that the South Sea Stock holder did receive 3½ per cent, the Company adding ½ per cent.
§
Resolution agreed to; together with the following remaining Resolutions:—
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8. That provision shall be made for paying off such proprietor or proprietors of any of the said Capital Trading Stock or Capital Stocks of Annuities before mentioned, as shall not signify his assent to accept and receive New 3l.10s. per Centum Annuities, or New 2l. 10s. per Centum Annuities, or Exchequer Bonds, in lieu thereof.
9. That every person or persons, body politic or corporate, who now is, or hereafter may be, interested in or entitled to any part of the Capital Stock of the Consolidated 3l. per Centum Annuities, or of the Capital Stock of the Reduced 3l. per Centum Annuities, payable at the Bank of England, or at the Bank of Ireland, and who shall at any time after the passing of an Act in pursuance of these Resolutions, and before the 10th day of October, 1853, signify to the Governor and Company of the Bank of England, or to the Governor and Company of the Bank of Ireland, by an entry to be made in books to be opened for such purpose, his desire to commute and exchange any or all of the said Annuities to which he may be entitled, into any one or more of the said. New 3l. 10s. per Centum Annuities, New 2l. 10s. per Centum Annuities, or Exchequer Bonds, shall be permitted to make such commutation and exchange upon the same terms and subject to the like conditions as are granted to the person or persons, bodies politic or corporate, interested in or entitled to the Capital Stocks of 3l. per Centum Annuities proposed to be paid off and redeemed as aforesaid.
10. That nothing herein contained shall extend to authorise the commutation of the said Consolidated 3l. per Centum Annuities, or the said Reduced 3l. per Centum Annuities, into the said New 2l. 10s. per Centum Annuities, after the amount entered for commutation into such New 2l. 10s. per Centum Annuities in the said books of the Bank of England, and Bank of Ireland, shall have reached the sum of Thirty Millions; and that the power of commutation of the said 3l. per Centum Stocks shall thereafter be limited to the two other options hereinbefore given: that is to say, the option of exchange for 3l. 10s. per Centum Annuities, and the option of exchange for Exchequer Bonds.
11. That the Commissioners of Her Majesty's Treasury be authorised and empowered to issue at any time between the 5th of April, 1853, and the 5th of April, 1854, Exchequer Bonds, payable to bearer, upon the like terms and conditions as hereinbefore described, and after public notice in the London Gazette, from time to time to sell such Exchequer Bonds, or any part thereof, and to apply the proceeds in redeeming any part of the Capital Trading Stock or Capital Stock of Annuities now proposed to be paid off and redeemed, or in purchasing and cancelling any Exchequer Bills, or in exchanging such bonds for Exchequer Bills upon such terms as the said Commissioners shall think proper, or in purchasing and cancelling any of the Consolidated 3l. per Centum Annuities, or Reduced 3l. per Centum Annuities, payable at the Bank of England or at the Bank of Ireland, as the case may be.
12. That the interest on such Exchequer Bonds shall be charged and chargeable on the said Consolidated Fund.
13. That no amount of such Exchequer Bonds shall be issued exceeding in the whole the sum of Thirty Millions.
14. That it shall be lawful for the Accoun-
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tant General of the Courts of Chancery in England and Ireland respectively, and for the Accountant in Bankruptcy in England, at any time before the 3rd day of June, 1853, to signify to the Governor and Company of the Bank of England, or to the Corporation of the Governor and Company of the Merchants of Great Britain trading to the South Seas and other parts of America, and for encouraging the Fishery, on behalf of any suitor or suitors, or others interested in any such 3l. per Centum Annuities hereinbefore referred to as are proposed to be paid off and redeemed, standing in the names of such Accountants General and Accountant respectively, their assent to accept and receive shares in the said New 3l. 10s. per Centum Annuities, or New 2l. 10s. per Centum Annuities, or Exchequer Bonds, in lieu of all such 3l. per Centum Annuities standing in their names respectively; and the said Accountants General and Accountant respectively shall be fully indemnified against all actions, suits, and proceedings for and in respect of any action, matter, or thing done by them respectively in pursuance thereof.
15. That all executors, administrators, guardians, and trustees interested in or entitled to any part of the Capital Stock of the Old South Sea 3l. per Centum Annuities, of the New South Sea 3l. per Centum Annuities, of the 3l. per Centum Annuities created by the Act 12th George the First, of the 3l. per Centum Annuities created by the Act 24th George the Second, of the Consolidated 3l. per Centum Bank Annuities, and of the Reduced 3l. per Centum Bank Annuities, whether payable at the Bank of England or at the Bank of Ireland, as the case may be, who shall signify their desire to convert the Annuities to which they may be respectively interested into any of the New 3l. 10s. per Centum Annuities, New 2l. 10s. per Centum Annuities, or Exchequer Bonds, shall be indemnified.
§ The CHANCELLOR OF THE EXCHEQUERgave notice that he would, on Monday next, bring forward certain Resolutions of form which would constitute the notice to parties.
§ The House resumed.