SOUTH SEA AND OTHER ANNUITIES COMMUTATION BILL.

HC Deb 22 April 1853 vol 126 cc304-69

Order for Committee read.

Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."

SIR FITZROY KELLY

said, it had been his intention to have moved an instruction to the Committee, or to have submitted some other form of amendment under which it would have been competent for him to call the attention of the House to the very important principles involved in this measure, and especially to the great and important objection that it provided for a large increase to the capital amount of the national debt, and also guaranteed. payment for a period of forty years of the unreasonable and extravagant sum of 2l. 15 s. per annum, as the income or dividend on the stock proposed to be created. But having understood that some technical or formal objection might arise to that course, and feeling also that he could, consistently with due regard to the forms of the House, call attention to the whole subject in Committee, it was not his intention to oppose the Motion for the Speaker leaving the chair. But when the second clause came under the consideration of the Committee, he should then enter upon the entire subject embraced by the Bill, and state his objections to it.

House in Committee; Mr. Bouverie in the Chair.

Clause 1 agreed to.

Clause 2.

SIR FITZROY KELLY

said, he would now solicit the attention of the Committee whilst he offered some observations, not merely upon the principle of the Bill, but upon its provisions. The principle of the measure was unexampled in the extent and importance of the interests involved in it, and as a scheme of finance it was unequalled in its magnitude and consequences, involving as it did principles immediately affecting a sum amounting to not less than 100,000,000l. sterling, and ultimately it might apply to 500,000,000l., if not to the entire amount of the capital of the national debt. If after the great and brilliant effort of oratory and reasoning with which the House was at once delighted and instructed last Monday, while he, at least, could say he was yet under the wand of the enchanter, he (Sir F. Kelly) now ventured to advance into the wide field of finance which had been opened by the right hon. Gentleman, and upon the very threshold to express his entire dissent from the main principle of the scheme of this Bill, he could assure the Committee that it was not without much diffidence and no slight feeling of apprehension that he did so. But he felt it his duty to call attention to the subject, for the scheme was one of a very peculiar character, full of intricacies and difficulties. To the clear and enlightened mind of the right hon. Gentleman, to an intellect which, like his, rejoiced in complicated subtleties, such a task as he had undertaken might be easy and pleasant; but it must be his (Sir F. Kelly's) duty, with no other aid than a common and ordinary understanding, to endeavour to attract attention to the ex- act character of the details of this financial scheme—a scheme which he was bound to say appeared to him replete with perplexities, and abounding from beginning to end with contingencies and uncertainties. He should therefore endeavour to put the Committee in possession, so far as he could, of the provisions of the Bill; and the means by which the Government sought to attain the objects which they had in view—objects, he would admit, excellent in themselves and in nowise objectionable, but which, he would venture to assert, were wholly unattainable by the Bill under consideration. The Bill provided, in the first place, for the extinction and redemption of certain South Sea and other minor stocks or annuities of the value or amount of about 10,000,000 sterling. To this he could have no objection. It was no doubt expedient that these minor stocks should be merged in the larger stock composing the national debt. That object, however, might be attained with the greatest facility, looking at the present state of the money market, by giving the requisite notice and at once paying off the holders, raising 10,000,000l. for the purpose, in any way that might be deemed expedient. But the right hon. Gentleman evidently conceived that the time had arrived when certain great and important objects, which might have occurred to the minds of other Ministers when in office, but which had never been submitted to Parliament in any distinct or tangible form, might now be accomplished. These objects were three in number. The first in magnitude and importance was to effect a large and substantial reduction in the capital amount of the debt; secondly, the creation of a permanent 2½ per cent stock; and, thirdly, the creation and issue, for the benefit of the mercantile community, and of the public in general, of Treasury or Exchequer bonds, transferable by delivery from hand to hand. If it were clear from the provisions of the Bill that any one of these three great objects could be successfully accomplished, or even a preparation made, or a foundation laid, or the first step taken, consistently with good faith to the national creditor, and the duty which every Minister Owed to the State, of securing a fair and not disadvantageous bargain for the country—if they or any one of them could be accomplished or even commenced without violating the great constitutional principle that the amount of the national debt ought not to be increased, unless imperative necessity called for it—the Bill would have received his sincere and cordial support. But after bestowing careful and minute attention upon the scheme, its intricacies, complications, and uncertainties, he had arrived at a strong and conscientious conviction, which he hoped to be successful in impressing upon the Committee, that, as a whole, it was inconsistent, impracticable, mischievous, and unjust—unjust, he meant, because it was unnecessary. To make a large and substantial addition to the capital of the national debt, and to make it under circumstances which led to a reasonable apprehension that the addition would by-and-by be multiplied twenty and even fifty-fold, was surely objectionable; and therefore he felt called upon to oppose the principle of the Bill, unless the right hon. Gentleman consented so far to modify it as to strike out what he should hereafter call alternative No. 2 from the second clause, in order to avoid any increase to the amount of the national debt, and also for the payment of 2l. 15 s. per cent upon the capital created for a period of forty years. He would now proceed to state, not in legal language, but in language intelligible to all, what the scheme of the right hon. Gentleman was, and the three alternatives or bargains which it proposed to the holders of the 10,000,000l. South Sea and other stock. As originally proposed, the scheme might have embraced 500,000,000l., but as now proposed it would be limited under the Bill to 100,000,000l. He would suppose the owner of 100l. South Sea Stock to come under the operation of the Bill, and to be about to consider in what position he would be placed towards the Government. He might receive 100l.; that was, he might be paid off at par if he thought proper. Considering that all these were 3 per cent stocks, and that all the 3 per cent stocks of the company were substantially at par, this appeared to be the most obvious as well as the easiest mode of settling with the holder. But the right hon. Gentleman proposed to submit to the option, not only of the holders of the 10,000,000l. of minor stocks, but of the holders of the 90,000,000l. of 3 per cent Consols and Reduced Stocks, and it might be to the holders of the whole 500,000,000l., one or the other of these alternatives. It was important, therefore, to consider these alternatives separately as well as by comparison. But before proceeding further he must ob- serve that the right hon. Gentleman had stated—and stated necessarily, otherwise his scheme would at once be suicidal—that his three propositions were equivalents. This, indeed, was the essence of the proposal. So that any one holding South Sea Stock or 3 per cents would find himself in this position, that he might accept either No. 1, No. 2, or No. 3 of the alternatives, according to his interest or his inclination. Now, a great objection he felt was, that whereas these three were represented as equivalents, they were not equivalents, or anything approaching to equivalents; for it would be found on practical experiment, if the Bill were passed, when it was too late to apply a remedy, that the difference between the one and the other, especially between No. 2 and No. 3, was so great that the people would wonder how the House of Commons could possibly have entertained the scheme. Another objection he felt was, that the Government, having the power of accomplishing the three great objects to which he had adverted, instead of proceeding to invite information as to what ought to be the real terms of the bargain, and taking the steps which any Ministry attempting such an operation ought to have taken, had acted exclusively upon their own judgment. Other Ministries had invited tenders to ascertain how the country would take that which they upon the part of the State offered to grant. But instead of applying such a test to the question of what ought to be the terms of this great bargain, the right hon. Gentleman—whose ability and genius he was the last to question or undervalue—had assumed to himself the faculty of all knowledge. The right hon. Gentleman, in framing this bargain, had left himself no option and no opportunity of making better terms; but he had assumed, as if by intuition, that he possessed the required information, and he had drawn his three propositions upon data or principles of his own, in—as he (Sir F. Kelly) presumed to think—entire ignorance as to what would be the extent, if he had invited tenders, to which the monied interest would have accepted the terms. Every holder of 100l. South Sea Stock or other stock had then the means of converting it into 100l. sterling; and the question was which of the three other alternatives he would accept. The first was this—that for his 100l. he should accept a 3½ per cent stock, of which the capital should be 82l. 10 s.; that was to say, he might receive 82l. 10 s. capital stock for this 100l. sterling at a dividend of 2l. 17 s. 9 d., guaranteed for a period of forty years. What this alternative might be in connexion with the others, the time had yet not arrived for him to consider. What it was, standing by itself, if proposed by itself, would be a fair subject for consideration. It was one which, even if the Bill had been confined to it, would leave the most experienced and sagacious among them some difficulty in determining. It might well be considered a most important question whether 30,000,000l. of stock should be created by payments of 100l., guaranteeing 2l. 17 s. 9 d. for forty years. But it was neither for him nor for the Committee to say whether it was probable any one of these proposals would be accepted. If they should not, if they were so disadvantageous to the public creditor that no one could be found to accept the best of them, then the Bill would fall to the ground a dead letter, the 10,000,000l. of stock must be paid off, and some other means be found of raising it, and no great harm would be done. But he was not dealing with that case. It must be assumed, in order to deal with the effect of the Bill, that the right hon. Gentleman was right in holding that at least some one of the three alternatives would be accepted by the public creditor. Upon that assumption, looking at the present price of stocks, with the 3 per cents at par, the scheme was just with regard to the 3 per cents, and no more. Looking, however, at the state of the money market, the condition of the country as regarded the precious metals, the state of Europe and the world—all these being practical considerations and elements in the calculations bearing upon the Bill—he did not pretend to say whether any one of the three alternatives, when thrown open to the market, would be accepted. Perhaps one and perhaps another might be accepted, if each stood alone; but he entertained a profound belief that no two would, to any substantial amount, be accepted. The alternative No. 2 was to receive for the same sum of 100l. sterling, 2l. 15 s. per annum guaranteed for forty years upon a capital of 110l., as a consideration of the 100l. The third alternative was to receive 2l. 15 s. per annum for a period which was left in uncertainty—which was to depend upon the pleasure of the Government, ranging from one to ten years, and for the remaining thirty years to have a guaranteed dividend of 2l. 10 s. per annum only, and that upon a capital of 100l. He would for the present pass over No. 1, which might or might not present to the fundholder a bargain he might deem satisfactory; but he could not do so without saying, whatever might be the result of the Bill, that the country was deeply indebted to the right hon. Gentleman for having, by this proposal, for the first time, submitted to Parliament a scheme for effecting a large and substantial reduction of the national debt without any addition to the national burdens. Although he would not pretend to guess, and it would be rash in any man to say, whether this proposal presented an acceptable bargain or not to the stockholder, he could not pass from it without observing that it would undoubtedly effect a national saving of which it was almost impossible to speak in terms of exaggeration, for should the first alternative be accepted by not only the holders of the 10,000,000l. of South Sea and other stock, but by the holders of the 500,000,000l. of 3 per cent stock, a saving to the country of nearly 90,000,000l. sterling in the capital amount of the national debt would be effected, and would be effected without the increase, on the contrary with a diminution, of the annual expenditure of the country. If the holders of the whole 500,000,000l. of stock would be content, and at once come forward and accept this first alternative, which, as regarded the State, would, perhaps, be a fair, and just, and reasonable bargain, he conceived no measure which any Finance Minister in any country ever effected would approach in magnitude and importance, and in the great and extensive benefit to the country, which would result from such an operation. And why? Because they would then have a reduction in the national expenditure of somewhere about from 700,000l. to 900,000l. per annum, and an immediate reduction in the capital of the national debt, as he had already said, of upwards of 90,000,000l. sterling. It might be true that the guarantee of 2l. 17 s. 9 d. for forty years was for too long a period. It might happen that in five or ten years a reduction of ¼ or ½per cent on the interest of capital might make a difference of millions on these great sums. But however that might be, he rejoiced to think, on the high authority of the right hon. Gentleman, that this bargain was likely to be accepted to a large amount. He would pass from that to No. 2 and No. 3, upon which he felt it his duty to make some observations. No. 2, as he had stated, began by adding 10 per cent to the amount of capital of so much of the national debt as was brought within its operation—a sum which, applied to 10,000,000l. of South Sea Stock, and 30,000,000l. of 3 per cents, to which the Bill was now limited, would give at once an addition to the capital of the national debt of no less than 4,000,000l. sterling. If he stood alone upon that objection, he said it was unanswerable and insuperable. A war, or any other great national exigency, might compel the country to submit to an increase of the national debt, and justify them in agreeing to that increase; but he ventured to deny that the smallest increase ought to be made unless in a case of imperative necessity, in which the honour or the safety of the country was concerned; and he should show, from the statements and admissions of the right hon. Gentleman himself, that this—not to use the word wanton—was a perfectly useless and unnecessary sacrifice of 3,000,000l. or 4,000,000l., or whatever sum would ultimately be added to the capital of the debt. The argument put forward with all the eloquence of the right hon. Gentleman and of the hon. Secretary to the Treasury, was, that this sacrifice of 3,000,000l., 4,000,000l., or even 50,000,000l., if applied to the whole debt, was well made to secure the inestimable advantage of a 2½ per cent stock. Unless the right hon. Gentleman himself was greatly in error, he might obtain that advantage without the sacrifice—without the guarantee of 2l. 15 s. per cent, on cheaper and better terms, and yet leave the debt at its present amount. It was also said that the addition of 10 per cent to the national debt was really not an evil; and, on a former evening, he was severely taken to task for having treated, or rather having been thought to have treated, the nominal amount of the national debt as so much money in the possession of the stockholder. He had never supposed anything of the sort. He would not for a moment assert that the possessor of 110l. stock was the possessor of 110l. sterling. They all knew that 110l. stock was worth just as much and no more as it would produce by sale in the market, and undoubtedly the holder of that stock was not possessed of 110l. of money. It was argued that it was immaterial to add 10 per cent to the capital, because it was a mere nominal sum, and the debtor could not call on the State to pay it off. Of course the same argument would go to make it immaterial whether the debt was 500,000,000l. or 1,000,000,000l. But he said, in the present times, with the present prospects of the country as to the value of money, and as to the rate of interest, to add to any stock in existence or to be created 10 per cent, while the interest was to be 2½ per cent, was to do great injustice to the State and to the people which Members of that House represented. Who could say that the time would not arrive when it would be to the interest of the State to pay off even a 2½ per cent stock? Now this Bill dealt with a period of forty years; and he must remind the House that forty years ago the 3 per cent stock was at 60. Since 1813 the price of 3 per cent stock had increased from 60 to 100, and the rate of interest had been diminished from 5 to 3 per cent. In the forty years now completed, the interest of money in the funds had fallen two per cent. Looking then to the increasing commerce and prosperity of this country—to the vast amount of capital at their disposal—at the great influx of capital from foreign States, where the same confidence as to political affairs did not exist, was it extravagant or unreasonable to suppose, trusted as this country was to an indefinite amount by the whole civilised world, that in the next forty years the interest on the money in the funds might fall from 3 to 2 per cent? Whenever that fall took place, and the time came to pay off the debt, the right hon. Member would find that it was not altogether immaterial whether the debt was 100,000,000l. or 110,000,000l., since on every 100l. they would have to pay 10l. more than if this operation had never been sanctioned by Parliament. But it was not merely on the increase of the national debt, it was not on the improvidence of the bargain by which the right hon. Gentleman bound the country for the long period of forty years, but by the comparison which he should institute between No. 2 and No. 3 that he rested his great objection to the provisions of this Bill. It was said these were equivalents. Let them take the case, and suppose a gentleman being a holder of 3 per cent stock to convert 100l. into No. 2, and another 100l. into No. 3. First, how would be stand as to No. 3? He paid 100l. or 100l. 3 per cent stock, which was now the same thing; he received a guarantee for from one to ten years, of 2l. 15 s. per year. He must be permitted to observe that there was great perplexity in this matter; that a clear idea of what Government proposed was not to be collected from what had been stated. By a clause in the Bill there was a guarantee—not a fixed guarantee, but an uncertain, shifting guarantee, at the option of the Minister. No period was fixed to which the guarantee was to extend. The Committee were called upon to sanction a bargain entered into by the State without knowing what were the terms, and whether Government were to give a guarantee of one or ten years. He begged to ask, if the right hon. Gentleman possessed the evidence and the basis for the calculation—and if ha did not possess them, he was at a loss to know how the calculations could be made at all—how it was he was unable to tell the Committee whether the guarantee was to be for one, for five, or for ten years. He (Sir F. Kelly), and better calculators than himself, might be inclined to think the commutation exceedingly beneficial if the guarantee was for one or two years, but very disadvantageous indeed if it extended to so large a period as ten years. Turning again to the comparison. What would the gentleman receive upon his 100l. in No. 3, even with the utmost extent of guarantee which the Government was authorised to give? He would receive for his 100l. 2l. 15 s. a year for ten years, and 2l. 10 s. a year, and no more, for the remaining thirty years, and now—and until he was paid off, he was going to say for ever, his capital would be 100l. and 100l. only. But what would be receive for his 100l. in No. 2l? He would bring forward 100l only, as in the other case, but he would receive from the Government a guarantee of 2l 15 s. per cent, on a capital of 110l Substantially speaking, he would receive only 2l. 10 s. for forty years on No. 3, as contrasted with 2l. 15 s. for forty years on No. 2l In one he would have a capital of 100l., in the other he would have a capital of 110l. All he could say was, that if these propositions were identical, if these two bargains were precisely equivalent and the same, he should henceforth have no faith in arithmetic, or in the organs of his own understanding. He hoped the right hon. Gentleman would meet these objections with that fairness, openness, and candour, which belonged to his character, and explicitly inform the Committee upon what principle he could call these two contracts equivalent, one giving 100l. capital, and 2l. 10 s. interest for forty years, and the other giving 110l. capital, and 2l. 15 s. interest for forty years. He would now proceed to examine the effect of the bonds which were, as asserted, to equalise the two bargains—a subject with which he admitted that commercial men were more familiar than he was. They were told that the issue of transferable bonds—bonds created for the first time—transferable from hand to hand—would be so extensively circulated, and prove so valuable to the mercantile community, that they would make up to the stockholders the entire difference of the advantages or the disadvantages between one and the other bargain; that, in fact, the superior value of transferable bonds would equalise the difference of the two bargains, and make 2l. 10 s. equal to 2l. 15 s. interest, and make 100l. equal to 110l. capital. The question he was about to ask was this: would these bonds, to pay 2l. 10 s. interest for forty years, be so valuable to the commercial community that they would be accepted as willingly as the offer of 2l. 15 s. interest, and 110l. stock? If this were so, then he asked the right hon. Gentleman why he did not stop at No. 3? In no case could injustice be done to the stockholder, for the acceptance of the propositions was optional, not compulsory. Why should the right hon. Gentleman offer 2 i. 15 s. and 110l. stock, when he could get the same thing done for 2l. 10 s. and 100l. stock? If this could be done as far as 30,000,000l. were concerned, why should the operation be limited to 30,000,000l.? Why should the State be asked to pay 2l. 15 s. and 110l. when, as the right hon. Gentleman stated, he could effect the same bargain for 2l. 10 s. and 100l.? If these two bargains were applied to the whole body of 3 per cent stockholders in the kingdom, by No. 3, the State would acknowledge a debt of 500,000,000l., which, whenever the rate of interest permitted, could be paid off with that amount of sterling money, and the interest during the forty years would be 13,750,000l., whereas by No. 2 the State would acknowledge a debt of 550,000,000l. and the interest during the forty years would be 15,000,000l. So that in the one case they would add to the debt 50,000,000l. whilst in the other they would not add to it at all; and in the one, as compared with the other, would save in interest in forty years, 1,250,000l. He believed, therefore, he had not used too strong a phrase when he said it was a perfect delusion to hold out these two proposals as equivalent and identical, or that the bonds would create that equivalent. Let the Committee look a little further, to see what these bonds really were. To his utter astonishment, he had almost said consternation, the right hon. Gentleman told the House the other night that these bonds would be so much more valuable than the registered stock as to countervail the difference of bargain between No. 2 and No. 3? Did the right hon. Gentleman remember what he was saying, or the import of his words? Did he mean the House to assume that the preference for transferable bonds over registered stock was worth ¼ per cent on the interest, and 10 per cent on the capital? Did the hon. Member reflect on the value of ¼ per cent per annum when applied on the whole capital debt? Again, he would ask why, if one stock was so much preferred, did the right hon. Gentleman withhold the bonds from the public? The Government had to pay a large sum annually to the Bank of England for the management of registered stock; but with these bonds no management would be necessary, and therefore it could not be on the ground of expense. What he said on a former evening he ventured to repeat now, that there was no real, substantial difference in the value of transferable bonds and registered stock. It was true in this country he was speaking without experience. Financial Ministers of this country had never yet thought fit to issue transferable bonds of the nature of these Exchequer bonds, and it would be a problem difficult to solve, and a question not very easy to answer, why they had not issued such bonds, but for one consideration. Perhaps the right hon. Gentleman would find in this scheme that his Exchequer bills would disappear from the market, and appear before him in a form not very pleasant to his eyes. He might find that, instead of having 17,000,000l. or 18,000,000l. of unfunded debt, at 1½ per cent interest, it would be superseded by Exchequer bonds at 2¾ per cent for a certain number of years, and 2½ per cent afterwards. That might be the reason why bonds of this nature had not been issued in this country. But he was at a loss to imagine how the hon. Secretary to the Treasury could state that these bonds would be worth 10l. per cent more than registered stock, and that the two descriptions would run parallel with each other in the market. True, they had no practical experience, but they could move by the light of experience derived from other channels. In France and in Holland and in other commercial countries of Europe, bonds to the amount of millions and millions transferable exactly as these Exchequer bonds, were issued by the Government, and were in circulation in those countries and elsewhere. If the Government wished to know whether Exchequer bonds would be higher in the market than registered stock, the question could be answered by reference to places where Exchequer bonds or similar securities existed. If any one wanted to invest 10,000l. in Paris, or Amsterdam, or Hamburgh, the broker would ask whether he desired certificates to bearer, or to be registered as the stockholder, and he would find both descriptions at the same price, convertible one into the other. If he wanted to buy French rentes or Dutch bonds at a distance, no doubt they would be ¼ or½ per cent higher for the convenience of transfer; but no substantial difference existed, and it was a perfect fallacy to suppose that these Exchequer bonds would be worth more, except by a mere inappreciable trifle, than the same amount of registered stock, provided they were both issued upon the same conditions. Then how stood this question between the propositions No. 2 and No. 3? The Government brought forward this scheme, and alleged to the public that they might accept 100l stock in No. 3, or 110l stock in No. 2, and that they were equivalent; and they told the House—and he presumed the right hon. Gentleman would tell the Committee—that they considered these two stocks precisely identical and of the same value, and that 30,000,000l. of No. 3 would be as likely to be taken as 30,000,000l. of No. 2. If that were so, he could only say that the stockholders of this country were in the singular position of knowing no difference between 100l. and 110l. stock, and between 2l. 10 s. and 2l. 15 s. interest. Then what would be the result? The consequence would be, not as the right hon. Gentleman facetiously observed, that limbs would be broken in the rush for No. 3, but not until No. 2 was exhausted would No. 3 be accepted, and then only in case the demand for transferable bonds should be large enough to induce the fundholder to submit to what would be a great sacrifice as compared with the advantages obtained under No. 2. Even supposing both stocks were wholly taken up, that would not lessen the gross injustice inflicted on the holders of No, 3. He was quite aware of the great importance of the object in view—the creation of a 2½ per cent stock—but he also felt that it was of far greater importance that, unless upon some great national necessity, the capital of the debt should not be increased. He therefore urged upon the Government to at once discard from this clause the proposal or alternative. If they could procure the stockholders to accept a large and substantial amount of stock under No. 1, he would not stop to consider whether the guarantee was of too much money or too long a time (though he believed three or five years hence the Government would probably obtain better terms), because he was of opinion that a great national benefit would be effected, and the amount of the national debt pro tanto would be reduced. With regard to Exchequer bonds he felt, in common with the right hon. Gentleman, the great benefit they would confer on the commercial community; but he would suggest for the right hon. Gentleman's consideration whether by issuing so large an amount he would not drive the whole of his Exchequer bills out of the market. He objected to the Bill, in so far as, if passed into law, it would enable the stockholders to exchange their stock against alternative No. 2; and he called upon the Government to do justice to the public by refusing to complete such a disadvantageous and extravagant bargain, and by trying first what might be done to induce the holders of stock to accept the transferable bonds. By that means they would avoid the necessity of increasing the capital of the national debt, would have time to acquire a larger amount of experience than they at present possessed, and would lay the foundation of a 2½ per cent stock, an object which they deemed of such great national importance. He should conclude by moving that the portion of the clause embodying alternative No. 2 be expunged from the Bill.

Amendment proposed, to leave out from the word "Parliament," in line 22, to the word "Parliament," in line 30.

MR. SPOONER

said, that every stockholder now of 100l. stock would be entitled to receive in hard cash 100l; and what he objected to now was, that at that moment they were going to give to the stockholders, in addition to the 3l per cent which they received, a guarantee of forty years, and in the interim the nation would pay 2 s. 3 d. per cent more than it ought to pay. He objected that the hands of the right hon. the Chancellor of the Exchequer should be tied up for so long a period as forty years, and he desired to know how it was that that period had been taken? If the time for redemption had been fixed at a shorter term, it would be much better, and he therefore should propose to the Committee, that twenty years be inserted in the place of forty years.

The CHANCELLOR OF THE EXCHEQUER

said, if he thought that the proposed guarantee was too favourable to the public creditor, he would at once accede to the Amendment of the hon. and learned Gentleman (Sir F. Kelly); but this was a question of calm, careful, deliberate opinion, and after endeavouring to form the best judgment he could upon it, he was convinced that the guarantee proposed in the Bill was that which the Committee should adopt. The hon. and learned Gentleman opposite appeared to think that no harm would be done by omitting one of the alternatives offered to the holders of stock. He (the Chancellor of the Exchequer) was of an entirely contrary opinion. His view was, that the dignity of Parliament would be lowered by such a proceeding, and that the wisdom of Parliament and of the Government would be exhibited in a somewhat ludicrous and humiliating light, if they came out with offers altogether unequal to the just expectations of the stockholders. An hon. Gentleman (Mr. Laing) near him had given notice of a Motion to limit the amount of stock convertible into the proposed 3½ per cents. He could understand the meaning and object of that Motion, because if their knowledge was limited, it was right they should limit the range of their experiment. All along he had found great difficulty when dealing with this subject, in consequence of the ignorance of the measure which prevailed. The opinions of hon. Gentlemen in that House were all well enough; but those opinions would not help him when he went to the stock market and endeavoured to transact business there. It was, no doubt, very satisfactory to know the opinion of any hon. Member of that House with reference to a subject of such vast importance as the present; but that opinion was as light as a feather in the stock market, and would not, he was afraid, assist him much in his financial operations. But it was important to bear in mind what his proposal really was. They were now about to pay to the holders of 50,000,000l of 3 per cent stock, either perpetual annuities of 3l per cent per annum, or 100l in hard cash, and that 100l not taken piecemeal, but at once, after the expiry of twelve months' notice. They were under such conditions at present, that, unless they could amend them, it was perfectly hopeless and impossible to attempt an opperation upon the capital of the debt. There was no man in his senses who would say, either in the present, or in a more favourable, or indeed in any conceivable, state, that at the end of twelve months' notice they would be prepared to pay up the whole of 500,000,000l of debt. It was, therefore, he came to that House and said, "Let us feel our way gradually—let us proceed upon the principle of varying the terms and conditions on which the public debt is held—let us endeavour to improve them likewise, both as to the rate of interest immediately available, and the plan of subsequent redemption." By adopting that course, they would not subject them, selves to the necessity of paying an enormous sum upon twelve months' notice, but would secure terms which, while perfectly fair to the holders of stock, would relieve the public in part from a heavy annual burden. That was a great object of policy. The terms they offered must be liberal, and he believed it would be far better to offer too much than too little. If they offered too much, their experiment was but limited, and when they came to repeat or extend it, they could contract their terms, and take advantage of the experience they had acquired. On the other hand, if they went into the market and offered too little, he had no hesitation in saying that there would be a reaction highly unfavourable to the scheme. What was the purpose of the alternative before the Committee? It was this—that they should say to the holder of 100l. of stock, "If you will submit to an annual loss of 2 s. 3 d. upon your dividend, and likewise to the acceptance of 82l 10 s. of capital stock in 3½ per cents, instead of your 100l., we will give you a guarantee for a period of forty years." What did the public gain? It gained an immediate remission of about ⅛th per cent upon the interest, and the chance of the redemption of the capital after forty years, at a reduction of 17l 10 s. per cent. He was far from saying that the public gained a certainty of redemption at the end of forty years for 82l 10 s. He thought, judging from experience, that in no long time after the period mentioned, an opportunity for redemption would occur; but he would not say it would occur exactly at the end of forty years. At all events, however, the public gained ⅛th per cent upon the interest, and after forty years the power of redemption, whenever the financial state of the country would enable them to exercise it. He thought that these were very considerable advantages indeed, and for his own part he would not consider it an improvident transaction if the House of Commons were disposed to act upon the whole public debt upon such terms at the present moment; and undoubtedly he should regard the Minister as fortunate who should be the instrument of effecting such an operation. At the same time he did not object to limit the operation for the present, because it would still be in his power to come back to Parliament and ask leave to extend it. He hoped he had now laid the question clearly before the Committee, and he confidently submitted that no case had been made out for diminishing the guarantee proposed in the Bill. If the stock so guaranteed should be taken up by a portion of the present holders of stock, that would not be considered as pledging that House to offer the same guarantee to the rest of the stockholders. The House in that case would as a matter of course improve the terms offered—improve them, he meant, as regarded the interests of the public—but in the meantime, in order that the scheme might be favourably received and established, it was necessary that a good guarantee should be given.

MR. SPOONER

said, he wished to know if the present discussion was limited to the South Sea and other minor stocks, or if it applied to the whole of the 3 per cent stock?

The CHANCELLOR OF THE EXCHEQUER

said, that the clause before the Committee had reference solely to the minor stocks.

MR. SPOONER

said, that under these circumstances he would not press his Amendment, for, while he strongly objected to tying up the hands of the Finance Minister for so long a period as forty years, still he did not think the minor stocks of sufficient importance to justify his intervention at that stage of the discussion.

SIR FITZROY KELLY

said, he agreed with the last speaker that it was unnecessary to offer any objection to that part of the Bill which related to the South Sea and minor stocks; but he thought it right to state, for the information of the right hon. Chancellor of the Exchequer, that he should raise the very same question when they came to consider the guarantee for forty years to the 30,000,000l of stock. He coincided in the opinion expressed by the right hon. Gentleman opposite, that it would be better to offer too much than too little; still, he thought the terms proposed were too liberal, and when the proper time arrived he would submit a Motion to the House upon the subject.

The CHANCELLOR OF THE EXCHEQUER

said, they were now dealing with the clause which related exclusively to the South Sea and other minor stocks; but it appeared from the statement of the hon. and learned Gentleman opposite, that while he would not object to the 40 years' guarantee in regard to those stocks, he intended to raise the question when the Committee came to consider the more important portions of the scheme. He only desired to point out to the hon. and learned Gentleman that it would be better to discuss the point in connexion with the question he had himself raised with respect to the 2½ percent stock. The course hitherto pursued had been in strict accordance with established and constitutional usage. Although the Resolutions of the House had no effect in point of law, yet, with regard to the commutation and redemption of stock, the course of proceeding had always been that the Resolutions of the House were acted upon by the parties whose duty it would be, under the Act of Parliament, to give the requisite notice of the redemption. Accordingly, acting strictly upon that principle, Mr. Speaker had communicated to the holders of stock the Resolutions at which the House had arrived. Now the Resolutions ran in these terms—that the holders of minor stock should give notice within a given period of their intention to claim such and such stock in lieu of what they now hold. Their right, therefore, to give such notice had certainly been in existence for a considerable number of days, and although he was not in a condition to say whether any such persons had given such notice, or whether they had even formed an intention to do so, yet he felt himself some doubts and scruples about any interference at all with the terms upon which the House had declared its intention to deal with those minor stocks.

SIR FITZROY KELLY

said, he was much astonished at what had just fallen from the right hon. Gentleman. He had understood that some proceeding had been allowed to take place in that House with regard to the notice given to the holders of South Sea and other stocks, and he had asked whether the assent to the giving of that notice implied any assent or sanction to any one of the three alternatives embraced in the Resolutions. He then understood the Chancellor of the Exchequer to answer very satisfactorily that the only notice the House was called upon to sanction was the notice under the Act of Parliament that the stock would be redeemed. Now, if that notice had gone further, and if it had tended to raise expectations on the part of the stockholders that any one of these three alternatives would be open to them, he must say he thought it was very unwise to introduce such an intimation into the notice until one or more of the alternatives had received the direct sanction of the House. With regard to the 10,000,000l of South Sea Stock, he was perfectly content with the alternative No. 1, and the guarantee for forty years, but he could not consent to alternative No. 2, which involved, even as to these 10,000,000l., an increase of the national debt.

MR. HUME

said, that it was a somewhat serious matter if the assent which had been given to the Resolutions by the House was to bear the interpretation now put upon it by the right hon. Gentleman the Chancellor of the Exchequer. For his own part, he would have objected to the passing of the Resolution the other night if he had not understood that it was a mere matter of form. This was certainly the first time he had ever heard that Resolutions which were laid upon the table bound the House to any course of proceeding. With respect to the general question, he strongly objected to increasing the capital of the national debt, though the plan now proposed might be safely tried, he thought, as an experiment. He had no objection to a reasonable amount of security being given, and unquestionably there was much truth in the remark of the right hon. Chancellor of the Exchequer that, in order to secure the establishment of the stock, it was necessary to offer superior terms.

The CHANCELLOR OF THE EXCHEQUER

said, that both the hon. and learned Gentleman (Sir F. Kelly) and the hon. Member for Montrose (Mr. Hume) had entirely misapprehended him. He never intended to convey the idea that the House had pledged itself to pass the three alternatives embraced in the Bill. What he did say was that legal notice had been given by an officer of that House to the holders of the minor stocks, that certain Resolutions had been adopted by the Committee and reported to the House, so that the parties in question might have time to form their judgments on the subject. That did not bind the House to anything.

MR. SPOONER

said, he would withdraw his Amendment.

The CHANCELLOR OF THE EXCHEQUER

I regret, Sir, to find, after the very kind manner in which the hon. and learned Gentleman (Sir F. Kelly) has referred to me, and after the favourable terms in which he has spoken of the Bill, that his objections to the scheme are of such a broad and sweeping character. I was at a loss for some time to understand to what part of the plan his objections applied. At one time it appeared as if his objections were limited to the question of the 2½ per cent stock; while at others he described the whole scheme as being impracticable, inexpedient, and unjust. I am bound to say that I think the objections of the hon. and learned Gentleman do really go to the root of the Bill. I think his remarks have been dictated by certain commercial and politico-economical views, which undoubtedly are at variance with mine. The hon. and learned Gentleman appears to think it is perfectly safe to assume, and to act upon it as a practical principle, that we are going to create a great revolution in the value of money. He refers to a state of things forty years ago, when he says the value of money was 5 per cent, whereas it is only now 3 per cent. He infers, therefore, that the value of money will continue to fall, as heretofore, as if the process had been in steady and continuous working from time immemorial. But what is the use of going back only forty years? If you go back at all, you should go a little further. Go back more than 100 years, when, as I stated on a recent occasion in this House, the value of money was less than 3 per cent, and when 3 per cent stock sold in the London market for 106l and 107l Well, that is a most vital fact, and if circumstances had not changed with us, I think the Bill before the House would be a very unwise one. But circumstances have changed, and the fact that the value of money stood at such a rate forty years ago should not deter us from proceeding with the measure now upon the table.

The hon. and learned Gentleman spoke in very vivid and glowing terms of the growing wealth and prosperity of the country. I was surprised and delighted to hear these expressions from the lips of the hon. and learned Gentleman, for I have been under the impression, for some considerable time past, that the hon. and learned Gentleman entertained very different views of the state and prospects of the country, and that he occasionally indulged in such prophecies as only the most melancholy imaginations could conceive with regard to the results of our present mode of commercial legislation, under the influence of which he says England is not only careering along the road to ruin, but has nearly reached the goal. I am glad the hon. and learned Gentleman has seen cause to change his views, though I am afraid he is likely to fall into the other extreme, for he looks not only for the increasing prosperity of the country but likewise for a considerable, continuous, and permanent decline in the value of money. He proposes to legislate upon that consideration, and finds fault with us for giving a forty years' guarantee, by which he thinks we shall cheat ourselves out of a great deal we should otherwise have. I need not say that these are not the views upon which the construction of this Bill has been based. We acknowledge that there is a tendency to depreciation in the value of money, and we seek to avail ourselves of that tendency; but we do not go the length of the hon. and learned Gentleman in his prognostications of the continued fall in the value of money until it reaches a point much below what it is at present; and we think that schemes of a speculative and illusory nature would be injurious to the country and unworthy of Parliament. The hon. and learned Gentleman spoke for some time in a manner which I could not follow; but I presume his remarks were pointed to the improvement which would be made in the scheme by the omission of one of the alternatives. Now, I think if Parliament were to send me into the money market with a maimed and impracticable scheme in my hand, it would be one of the most unwise things it could possibly do, discreditable to itself, injurious to the public, and destructive of the proposed plan. The discredit to myself I should regard as nothing; but to put the public in such a position before its creditors, I could not but regard as a most unfortunate circumstance. Whatever the Committee decides upon, I do trust it will define to itself clearly the object it proposes by this Bill. If it does not approve of that object, let it reject the Bill altogether; but if it does approve of it, then I hope it will not stint us of the means necessary to the attainment of the object in view. Again, the hon. and learned Gentleman has expressed his dissent from the entire principle of the Bill, and has spoken of the ruinous and extravagant rate of interest, 2l 15 s., which we are about to guarantee; and he has likewise referred to the expediency of not increasing the capital of the national debt. These are points upon which I will trouble the Committee with a few remarks farther on; in the meantime I will notice another observation which has fallen from the hon. and learned Gentleman, who insisted that the scope of this measure is to be extended hereafter, and that, if possible, it is to be applied to the whole of the 500,000,000l of debt. Now, here the hon. and learned Gentleman entirely misconceives my position. He says that because I ask you to give me power to operate to the extent of 30,000,000l. of the 3 per cent stock, that I may be enabled to ensure the establishment of a 2¾ per cent stock, it therefore follows that when that stock shall have been exhausted, I shall come and request you to authorise me upon the same terms to create more stock. Now, that is an entire misapprehension of the object of this Bill. The object of the Bill so far as regards the 2½ per cents is entirely different. It is to give terms to secure the establishment of the stock, but having established the stock, you may then improve the terms; and so far from asking power to create more stock upon the same terms, I should say, without being able to anticipate the precise course events will take, that it would not be proper to give the same guarantee. The stock once established, you will have standing ground upon which to take up your position in order to extend and increase your financial operations, and you will be in circumstances to create additional stock upon terms more favourable to the public as well as more favourable to the creditor.

The hon. and learned Gentleman has occupied a considerable length of time by frequently reiterating, but not thereby materially strengthening, the assertion that the three proposals, or options, offered to the public creditor are not equivalents, and he accuses me of having said they were equivalents. Now, the hon. and learned Gentleman ought to know perfectly well that when we speak of equivalents in this matter, we do not mean equivalents simply and solely according to arithmetical calculation. Considerations of convenience enter into price; considerations of security enter into price; and we can put into figures the value of a forty years' guarantee, and the value of the power of transferring public securities by an easy and inexpensive mode. When I stated that these things are equivalents, I meant to speak with the submission and the hesitation which every man ought to entertain with regard to his own judgment; but the hon. and learned Gentleman speaks positively on the point, and says there is a very large difference in actual money in favour of the 2½per cent, and against the 3½ per cent. Proceeding by arithmetic alone, no doubt he was right; but I, of course, consulted actuaries on the point on which the hon. and learned Gentleman is so decided, and the answers I received showed a different opinion to that of the hon. and learned Gentleman. I asked, for example, what was the value of 110l. new 2½ per cent stock, irredeemable for forty years; and the answer was 91l. 13 s. 4 d. I also asked what was the value of 82l. 10 s. in the new 3½ per cents, irredeemable for the same period; and the answer was 96l, 5 s., the 3½ per cent stock being estimated by the actuary at 4l 11 s. 8 d.—in hard money at the present moment—more than the 2½ per cent stock. This 3½ per cent stock, which is supposed to be so absurdly inferior in value that it cannot, according to the hon. and learned Gentleman, be for a moment put in competition with the 2½, is estimated more highly by the actuary of whom I speak. In considering these equivalents, there are, it should be remembered, a great variety of elements which we ought to take into consideration. Some of these elements are certain, some uncertain, and we can only be guided in regard to them by the light of experience. The hon. and learned Gentleman is not satisfied to treat this question, as most people of experience in money matters treat it, as a matter of great difficulty, about which all prospective opinions should be pronounced with great hesitation. He says that this is demonstrated, and that that is demonstrated; and tells us that it is perfectly monstrous, if you can secure the circulation of bonds at 2l 10 s. for forty years, you should give the holder of stock 2l 15 s. and then 110l The hon. and learned Gentleman said, "Why not stop at these bonds—you may immortalise yourself by issuing 500,000,000l. of Exchequer bonds?" That is the proposition he demonstrated to himself so clearly. I am repeating the words of the hon. and learned Gentleman, who said, "These Exchequer bonds are capable of being floated, or they are not; if they are not, why found expectations upon them? if they are, why not convert the whole of the 3 per cents into them?"—

SIR FITZROY KELLY

explained that he had only recommended trying them as far as they could.

The CHANCELLOR OF THE EXCHEQUER

The hon. and learned Gentleman never intimated that there was the slightest difference between the practicability of issuing 20,000,000l. of them, and the practicability of issuing 500,000,000l. Now, there is a difference, and though they may be useful up to a certain point, and obtain a given price up to that point, we have to ascertain that point and that price by experience. I have, for that reason, only asked your authority to issue them to a limited amount, for to take unlimited power would be to discredit them in the first instance, and would look as if we intended to flood the market. When, however, you have ascertained the wants of the commercial community, you can conduct your future operations accordingly. But the hon. and learned Gentleman goes further, and says it is perfect folly and absurdity to suppose there is any difference in the value of 50 s. annuity proceeding from registered stock, and Exchequer bonds bearing 50 s. interest. He says there is no appreciable difference; the prices of those two things—50 s. secured on Exchequer bonds and 50 s. on registered stock—would be identical. There again I think he forms his conclusions with a degree of positiveness which would have surprised me if he had dedicated his life to these questions, instead of devoting it to the engrossing labours of his honourable profession, of which he is so deservedly distinguished a member, and in which he has justly acquired so much eminence. It appears to me, on the contrary, that though we cannot at the present moment tell what the value of these funds will be, it is reasonable to suppose that there will be a very considerable value attaching to these Exchequer bonds, from their convenience, over and above what registered stock would have to a certain class of holders. The hon. and learned Gentleman complains, also, that it is not definitely fixed in the Bill on what terms these bonds are to be issued. It appears to me that it would not have been right to fix that. Our duty is to issue, on the best terms that we can; and it was impossible for me to have formed a rational computation beforehand. If I had endeavoured to compute the terms on which they were to be issued, I should have put them too high or too low; the only course was to ask, within reasonable limits, for a discretion when the time came, because we shall then be in a position of fuller knowledge, and shall enjoy fuller means of judgment, than it is possible that we can at the present moment. The hon. and learned Gentleman says it is an object of great importance to create a 2½ per cent stock, but that an object of still greater importance is not to increase the capital of the debt. I am not so sanguine as to hope, by any wholesale and permanent reduction in the value of money, to reduce the debt; but I would readily go this length—that it is most desirable we should introduce into our financial system a stock bearing a rate of interest which, in case the value of money should be subject to favourable alterations, would form a basis for extended operations. I beg the Committee to perceive that they could not make sure of a 2½ per cent stock by means of Exchequer bonds; if we could have done so I never would have troubled you with a 2½ per cent stock, but would have been perfectly satisfied. But the hon. and learned Gentleman must remember that the question of all was whether the bonds should, or should not, be at the expiration of forty-nine years redeemable or not at the option of the holder. If you could get out the bonds irredeemable, then the experiment would have substantially and completely succeeded. Then you would have a substantial basis for the 2½ per cent stock. You would then have standing ground from which to work more extended operations. But it is impossible for any man to say at this moment whether he can do that or not, and I would not advise you to give up the chance of doing it. What I recommend is, do not trust to that chance. This is the reason why Government proposed this 2½ per cent stock, and not at all because they highly estimated the increased nominal capital of the debt. And to this question, the increase of the capital debt, I will now address myself.

It has been always a matter of regret to me that this House has shown apparently an almost complete indifference on the subject of increasing the capital of the debt; but I propose to it at present a moderate increase of the capital debt, and ask the Committee to give the Government power to increase the capital to a very limited extent. This is not because I think it an indifferent matter, but because I and my Colleagues thought the price worth paying for the attainment of a great object of public policy. Our proposal will not merely bring about a reduction of the rate of charges, but an object of public policy will be gained by the establishment of such stock. Let us see, then, whether the House of Commons is prepared to lay down the principle that under no circumstances will it consent to increase the capital of the debt. Will the House of Commons bind itself to borrow always at the current rate of interest, and under no circumstances to increase the capital of the debt? If the House of Commons be ready to adopt that principle, and to adhere to it with firmness, I must confess I think, notwithstanding the temporary inconvenience, the House would have adopted a very wise and patriotic determination, and I should be most unwilling to make any proposal which would stand in the way of such a resolution. The hon. and learned Gentleman has said there is a great constitutional principle involved in our not increasing the capital of the debt; that it is a great constitutional principle not to increase the capital of the debt by borrowing at a rate of interest lower than the current rate of interest. Where did the hon. and learned Gentleman find this great constitutional principle? I must confess myself astonished at the facility with which hon. Gentlemen on convenient occasions (it did not require the ingenuity of the hon. and learned Gentleman to do it) manufacture particular opinions, and declare their maintenance involved great constitutional principles. I think the question of increasing the capital of the national debt is one which involves the exercise of prudence and discretion; but to say it involves a great constitutional principle is, in my opinion, putting it on very novel and much too high grounds. What have you been doing for the last twenty years, and what has the hon. and learned Gentleman been doing? for during a portion of that time he has sat in this House, has heard questions involving this great constitutional principle decided, and large financial operations per- formed, without once raising his voice against them, though they caused an increase in the capital of the debt. Here is a list of operations since the Peace, in every one of which there was a systematic and habitual increase of the capital of the debt. In April, 1826, they funded 8,000,000l. of Exchequer bills, 4 per cent, at 100l., adding 560,000l. to the capital of the debt. In 1829 they funded 3,000,000l. of Exchequer bills, at 101l. 10 s., adding 45,000l. to the capital of the debt. In August, 1839, they funded 4,900,000l. Exchequer bills, at 109l. and a fraction, and added 490,000l. to the capital of the debt. In 1841, they funded 5,000,000l. Exchequer hills, adding 605,000l. to the capital of the debt. In 1832–3 they converted no less than 150,000,000l. of 5 per cent stock, adding a capital to the debt of 7,500,000l. So late as 1847, in the presence of nearly every man now in the House, 8,000,000l. of money were borrowed, and 720,000l. was added to the capital of the debt. In 1848, 2,000,000l. of stock was created, adding 140,000l. more to the debt. So that on the whole there has been within the last few years no less than 10,060,000l. added to the capital of the debt; and this addition, too, be it remembered, was not to secure a great object of policy, but simply with a view to the reduction of annual charges. So far, therefore, from addition to the capital of the debt being regarded as a perfect monstrosity, it has taken place quietly as a matter of course, and certainly without exciting serious opposition, though the object then in view was only a small and limited saving in the annual charge. For my own part, no alternative has been shown to me which would gain the object of establishihg a 2½ per cent stock, except the creation of a 2½ per cent stock at a premium. Suppose, instead of my coming down to the House with the scheme I have developed, I had asked the House to authorise me to go into the market and offer 2½ per cent stock for what it would fetch, it would in that case have been quite open to the House to object to a plan which would have had the effect of increasing the capital of the debt.

SIR FITZROY KELLY

Not if there was a guarantee.

The CHANCELLOR OF THE EXCHEQUER

If I had asked the House to authorise me to into the market and sell 100l. 2½ per cent stock for what it would bring, my opinion was that such a step would increase the capital of the debt a great deal more than would this proposition, for I should not be able to get 100l. for it, and must have sold it for its market value. The value in the market would not come so near 100l. as 100l. was near to 110l., so that that would increase it, not merely by 10 per cent, but by considerably more. One plausible proposition was, that instead of offering to the holder of 3 per cents his option of conversion into 3½ or 2½ per cents, let the Government offer him 50l. of the one and 50l. of the other for his 100l. 3 per cents, and then there would be no increase in the capital of the debt, but rather a small diminution; and, moreover, there would be a 2½ per cent stock, if the operation succeeded. I am, however, afraid that it would not succeed, and therefore I have submitted my scheme with the view of offering different advantages which might suit different parties. In point of fact we must take it either in meal or in malt. If you think it an object of policy to establish a 2½ per cent stock, you must be prepared to pay the price for it—an equivalent price. There is no way to create a 2½ per cent stock but that which I propose, namely, stating plainly, "We give you an amount of stock over and above 100l.—we give you a premium on the stock over and above 100l." Either we must do that, or else take the 2½ per cent stock into the market and sell it for what it will bring—a plan which, as I have already said, would increase the nominal capital of the debt more than I propose. This is the plan, and that the alternative. Proceeding on the assumption—an assumption borne out by those who are conversant in these matters—that 2½ per cent stock brought into the market would not sell for ten-eleventh parts of 100l., it is quite clear that if it sold for any less, it would add, in so far, to the capital of the debt. I know but one way in which both these objects can be obtained: first, the creation of a 2½ per cent stock; and, secondly, the prevention of any increase to the capital of the debt. I might say that inasmuch as South Sea and other minor stocks might be converted into 2½ per cent stocks, if it were only the question of amount, I had no objection to reduce the whole sum of 2½ per cents to 20,000,000l., instead of 30,000,000l. The main question, as I have stated, is, whether the Committee will, on any consideration, agree to the augmentation of this nominal capital of the debt. In my opinion there is only one way to deal with it. We must elect between abandoning altogether the 2½ per cent stock, and the adoption of this mode of proceeding, to devote to the purpose of the reduction of the debt the annual saving made by the establishment of a 2½ per cent stock. If the Committee chooses to determine that that annual saving shall be so devoted, it will be in its power entirely to prevent any increase, real or nominal, to the capital of the debt. Under the proposed plan the 2½ per cent stock will be dealt with in the market according to the dividend paid upon it; the holder of the stock will have nothing to do with its redemption, it will stand there as 2½ per cent stock. You will provide that in respect of every 3l. now payable by the Bank to the holders of Consols, that sum shall be commuted to 2l. 15 s.; the other 5 s. will be payable to the Commissioners for the Reduction of the National Debt, and these 5 s. will be applied to the purchase and cancelling of stock, thus completely but gradually extinguishing the nominal capital you now propose to add. Another plan has been proposed, namely, that instead of offering 2½ per cent stock at once, we shall offer stock which for ten years shall be 3 per cent; for ten years more 2¾, and for ten years more 2½; but this operation extended over a period of thirty years will not attain the object I have in view in the establishment of a 2½ per cent stock. If I adopt that plan, I must surrender my policy. Now, if the Committee create a 2½ per cent stock, at the rate of 110l. for every 100l. Consols, to an extent of 30,000,000l., and 5,000,000l. more of minor stocks are converted, that will give us a total of 35,000,000l. of 3 per cent stock commuted to 2½. The addition to the capital of the debt as it stands on paper would be 3,500,000l.; the saving in the annual charge would be 87,500l.; the annual application of 87,500l. to the purchase of Consols throughout the whole period of forty-one years, supposing you take one year with another, good and bad times, as they came, and 3 per cents always at par, would cancel each year 87,500l. of Consols. The interest of the Consols so cancelled would be 2,625l. In the first year then you would save on the new stock created 87,500l.; you would buy Consols with it, and the cancelling of the Consols would effect a saving of 2,625l. The same amount would be saved the next year and the next, the succession rising gradually by forty-one equal steps to the full annual saving of 87,500l., which it will be seen amounts to 3,587,500l., the sum wanted. In other words, stock to the amount of 3,587,500l. would be cancelled. By this plan, though the saving at first will be insignificant, yet it would grow rapidly with the amount of stock cancelled, until it reached the full amount; and at the end of the term there will not be a farthing of nominal capital added to the debt. Thus, by making a sacrifice of the full benefit of the annual saving, and postponing it for this purpose, you will prevent the slightest increase at the expiration of the prescribed period to the nominal capital of the debt. If any plan could be suggested which would carry out the policy we have in view in a manner more entirely free from exception than this, I should be most happy. But no such plan has been suggested. All the plans which have been suggested to me are liable to one fatal objection or other. Either they are plans which nobody could act upon, or they are plans which would not secure the creation of the 2½ per cent stock which I aim at, or plans that would postpone the creation of that stock. If the Committee concur with me in thinking that it is important to create a 2½ per cent stock, I venture respectfully to submit this mode of proceeding, by which you will ensure the creation of that stock. You will by that mode ensure its creation immediately. The operation of the reductions you provide for will not complicate that stock, but will be entirely a separate matter. Your substantial objects will all be gained if the enjoyment of the annual saving shall be postponed. But the policy will be established, and the capital of the debt will not be increased by one farthing. That is a plan which I hope will remove the objections of the hon. and learned Gentleman. If there is any further explanation which I can give, and if I have not succeeded in explaining the matter fully, I shall be happy to do so. My desire is, that the Committee should act in the matter with its eyes open. I can only say that it will be a great satisfaction to me—not a reluctant concession wrung from me—but it will be a great satisfaction to me if the House of Commons is prepared for the future to lay down the principle that it will not consent to any augmentation of the public debt. No one will adopt that principle with greater eagerness than myself. You will never find on my part a disposition to flinch from it. And I now give a test of my sincerity, by tendering a plan which, although its first effect will be to put on paper, cer- tainly, a nominal increase of the debt, will entirely remove that increase at the expiration of the period already mentioned.

MR. T. BARING

said, that under any circumstances he must express his objection to the adoption of a plan which involved the probability or possibility of an increase of the nominal amount of the national debt. He did not think the present circumstances of the country justified such an increase. In his opinion, unless there was a strong ground for increasing the debt, it ought not to be attempted. The right hon. Gentleman the Chancellor of the Exchequer had referred to several cases in which the national debt had been increased—at one time for the funding of Exchequer bills, at another time, shortly after the Peace, to relieve by conversion the charge upon the debt, and subsequently to raise loans for the relief of the West Indians and the relief of Ireland. He did not deny that strong cases might not render it necessary to add to the national debt—such, for instance, as the case of the slave-holding colonies, and the necessity of an advance to relieve the people of Ireland from starvation. He believed that it might be necessary at times considerably to increase the debt in order to relieve the country from certain burdens. Nay more, after any great effort of the country—after a war which involved this country in great cost for national purposes—the country might think it desirable by a commutation or increase of the debt to relieve the taxpayers of the present day. But the present circumstances of the country did not come within any one of those cases. Nay, the right hon. Chancellor of the Exchequer had told the Committee that there was no similarity between the operation which he now proposed, and any of the cases to which he had referred. Was the country in such a state of distress as to require a relief of this description? Hon. Gentlemen opposite declared that the country had never been in such a state of prosperity—that its burdens had never been so light—that it had never been better able to meet its engagements. Was there any reason, then, for adding to the principal of the debt, and casting an additional burden on posterity to relieve the country at the present moment? He agreed with the right hon. Gentleman that it was a legitimate desire to diminish the burden of the debt, if it could be done in a proper manner, by the reduction of the interest of that debt. He was not so sanguine as some Gentlemen seemed to be, that we were approaching the time when there would be a permanent and continued reduction of the current rate of interest; and the whole question turned on that. If the right hon. Gentleman was not convinced that we were in the road of the permanent reduction of interest, he could not be right in proposing a measure involving that reduction. There were two points which must have suggested themselves to the Chancellor of the Exchequer: first, was this the proper moment to reduce the interest? and, secondly, was the mode proposed by him the right one to effect the object which he had in view? With respect to the first point—as to the suitableness of the time selected for the operation—he should differ from the right hon. Gentleman the Chancellor of the Exchequer, with considerable distrust however in his own judgment, because the right hon. Gentleman, by his almost intuitive knowledge of financial questions, and by the special opportunities which he possessed of obtaining accurate information in regard to such questions, must necessarily be the person best qualified to decide on the most favourable moment for carrying out the object which he had then in view. But he (Mr. Baring) would nevertheless confess that he saw symptoms which led him to doubt whether the present period was exactly the one for introducing a 2½ per cent stock into the market. It was true that the right hon. Gentleman might have been encouraged in that undertaking by the success which had attended his reduction of the interest on Exchequer bills to 1½ per cent. But he (Mr. Baring) did not feel sure that that latter operation was not a hazardous one; and he could not help thinking that the right hon. Gentleman might in the month of June find it very difficult to maintain that low rate of interest on those bills. He need not remind the right hon. Gentleman that if his present proposal should not prove to be successful, it would be much better it had never been made; for it would then have the effect of needlessly unsettling men's minds, and giving a stimulus to all kinds of schemes which no one could regret more than the right hon. Gentleman himself. [The CHANCELLOR of the EXCHEQUER: Hear, hear!] Whether that was or was not the right moment for the adoption of such a scheme, he must bow to the decision of the right hon. Gentleman. But then came the question—was the mode which he had selected the best he could have chosen? Now, without wishing to say anything derogatory to the knowledge and the talents of the right hon. Gentleman, he must confess that when the Resolutions first came into his hands, be was at a loss to understand what the right hon. Gentleman intended to do. They contained a little of everything. The first Resolution seemed to be framed for the purpose of reducing the debt, the next for increasing the debt, and the third for leaving the debt just where it was. The right hon. Gentleman said he wished to consult people's tastes. Now, he (Mr. Baring) doubted whether, in financial questions, the Chancellor of the Exchequer ought to do otherwise than form his own opinion as to his own object, and carry it into effect by the most simple propositions. But in the present case he considered the right hon. Gentleman's propositions far too complicated. He ought to have made up his mind whether it was worth while to increase the debt for the purpose of diminishing the interest, and simply to have made that proposal—or he ought to have proposed a reduction of the nominal amount of the debt, by a guarantee of the existing interest, or nearly the existing interest. The right hon. Gentleman proposed, under these circumstances, and with an increase of the principal of the debt, to issue a 2½ per cent stock. To that proposal he (Mr. Baring) had a very strong objection, because it involved an increase of the national debt without a strong or valid reason. The right hon. Gentleman said he was disposed to reduce the amount of 2½ per cent stock to 20,000,000l. Now, the more the right hon. Gentleman reduced the amount of stock, the more limited he would make the market, and the less likely would he be to succeed in his operation. The price of the stock would depend entirely upon the market, and a too limited amount would counteract the object which the right hon. Gentleman had in view. The right hon. Gentleman said if the Committee would agree to it he was willing to apply the sum which he would save in the shape of interest to the creation of a sinking fund, which would provent the future increase of the capital of the debt. Now, he (Mr. Baring) was very much afraid that in moments of distress and pressure the sinking fund would be destroyed, and that the debt would be permanently increased. He should also remind the right hon. Gentleman that there was one point which he seemed to have omitted from his calculations. In his financial statement on Monday evening, he had reckoned on a saving of 100,000l. from the proposal then before the Committee; but that saving could not be effected if the reduction of the interest on the debt were to be applied to the creation a sinking fund. That was a point of some importance, as the right hon. Gentleman had allowed himself, in his financial statement, a surplus of only 493,000l. Of that sum 200,000l. was derived from casual sources; and as he would diminish the remaining 293,000l. by a sum of 100,000l., he would have a surplus of only 193,000l. derived from permanent items of taxation. It appeared to him, therefore, that that was a state of things which it would not be desirable to establish. The right hon. Gentleman had suggested a number of plans of his own, and had promised to take into consideration a number of others which had been suggested to him. His plan appeared to be a complication of schemes—a most ingenious puzzle; and he did not think they would be able to understand what they were required to vote upon. With respect to the third proposal of the right hon. Gentleman—the proposal for the issuing of a number of transferable bonds—he should say that he could see no objection to such a scheme, although he believed it would be impossible to decide at present whether the right hon. Gentleman would find for those bonds as great a demand as that which he anticipated. The whole success of the scheme depended on this—were the people holding stock so frightened at the danger of reduction—did they anticipate so permanent a reduction in the rate of interest that at a year's notice they would convert their 3 per cents into a fund bearing a less interest? He was totally at a loss to understand the calculations of the actuary to whom the right hon. Gentleman had referred, because, if he meant to say that 110l. stock, bearing 2½ per cent, was only worth 91¾l., it was absurd, if 3½ per cent stock at 82l. 10 s. was worth 97l. The right hon. Gentleman thought the bonds would bear an extraordinary value on account of the power of transferring them without any formality beyond that of passing them from hand to hand. But it had been stated that the very same kind of commodity existed in France and Holland, and bore about the same value as ordinary stock. Why, then, should any difference exist here? He thought they would circulate in competition with the debentures of first-rate railway companies, which gave a higher rate of interest with undoubted security. The right hon. Gentleman said they would be easier to borrow upon than other commodities. Now he (Mr. Baring) doubted that assertion. Men borrowed on those commodities which were most easily saleable, and he believed that a man would be able to borrow more easily upon the old 3 per cents than upon transferable bonds. As to the difficulty of transferring stock for the purpose of obtaining temporary loans, every one knew that it was of no importance at all. The right hon. Gentleman imagined that he would find great markets in Liverpool, Manchester, and Leeds; but the transactions in such towns were very much guided by the London prices, and the facility of the electric telegraph rendered the transfer most easy, wherever the bonds might be. He considered the plan of the right hon. Gentleman too complicated. But his great objection was the unnecessary increase which it would cause in the national debt. He did not think such an increase at this particular time at all justifiable. Whatever might be the talents of a Chancellor of the Exchequer, he did not think the Committee ought to follow him in making such experiments. His belief was, that while we ought to be economical in our expenditure and chary in our taxation, we ought not to indulge in that worst of all extravagances—the increase of our liabilities and engagements; we ought not, in attempting to create a market for 2½ per cents, to commit ourselves to an increase of 10,000,000l.—to an amount originally proposed without any limit. But whether the amount should be 10,000,000l. or 50,000,000l. the principle was the same; and he should regret to see a British Parliament, and a Committee of the House of Commons, hold up to the world that in the time of our prosperity we were disposed, under no emergency, for no very great result, to sanction a principle which he considered most objectionable, he had almost said dishonest.

MR. W. WILLIAMS

said, that if the right hon. Chancellor of the Exchequer now succeeded in breaking down a portion of the 500,000,000l. of 3 per cents, he would be enabled, at no very distant time, to effect possibly a reduction of the remainder. He (Mr. Williams) could scarcely imagine a state of things in which the funds would be sufficiently high to enable a Chancellor of the Exchequer to effect a reduction of interest on the whole of that amount. If the right hon. Gentleman could succeed in operating on any considerable portion in the first instance, they might hope at no distant time for some such operation as that by which the right hon. Member for Cambridge University (Mr. Goulburn) had effected his conversion in 1844. It might be said that even if the right hon. Gentleman succeeded with 100,000,000l., there would still be 400,000,000l. to attack. But then it should be recollected that a vast proportion of that amount was in the hands of parties who could not become dissentients. Taking the proposition of the right hon. Gentleman as a whole, and so ultimately to reach the remainder of the debt, it was in his opinion the interest of the Committee to support it.

MR. LAING

said, that the subject under discussion was reduced to a simple issue, namely, whether it was or was not desirable to create a 2½ per cent permanent stock, to serve as a barometer to test the public credit. If so, it was necessary to pay a price to effect the operation, and the only question was how that price was to be paid. The object of the Chancellor of the Exchequer was the most economical mode of purchasing it. If he were to sell 2½ per cent stock in the market at a discount, or borrow the money, he would certainly increase the national debt by a much larger sum than it was now proposed to do. The only remaining question was whether we would pay the price which the operation would cost, or throw it on posterity. It was contended by the hon. and learned Gentleman (Sir F. Kelly), who opened the debate with so much ability, that the new stock would present such superior advantages, that no one would be found to take Exchequer bonds. In this opinion he did not agree, for it was the opinion of all the practical men with whom he had conversed on the subject, that Exchequer bonds would be more in demand than any other kind of stock offered by this conversion, and that it would command a higher price, and would become the favourite stock of the two. Although he did not think the present was a convenient time for settling the conversion of the whole debt, yet he believed it was favourable for laying the foundation of a siege which might lead to a successful capitulation. If by this experiment they were enabled to lay the foundation of a conversion, he thought they might ultimately be in a position to effect a considerable reduction of our national burdens. He was of opinion, that although the discoveries of gold in Australia and California might produce a revolution in financial affairs, still he did not think they would effect such a change that money would never be dear again. It was quite possible that in ten or twelve years we might find ourselves in one of those cycles of prosperity, when we might be enabled to effect a very considerable conversion of the public debt. If so, much credit would be due to the Chancellor of the Exchequer, who had the boldness and confidence to propose such important changes.

CAPTAIN LAFFAN

said, that, however desirable it might be, even on a small scale, to create the 2½ per cent stock, and let it go into the market, yet it appeared to be completely settled that the advantage was not to counterbalance the greater disadvantage, in fact and in feeling, of adding to the nominal amount of the debt. He must confess he felt some surprise at the statement of the right hon. Chancellor of the Exchequer, that when the first and second propositions were submitted to an actuary, he had declared that the comparative value of the two propositions was, that the 110l. stock paying 2½ per cent, redeemable forty years hence, was worth 91l. 13 s. 4 d., and the 82l. 10 s. stock paying 3½ per cent, also redeemable at the same period, was worth 96l. 5s. 8 d., being equal to 4l. 11 s. 8 d. in favour of the 82l. 10 s. 3½ per cent stock. He (Capt. Laffan) was at a loss to find upon what calculations these conclusions were drawn, because, from a calculation he bad made by the ordinary rules of mathematics, he had arrived at a different result. If the right hon. Gentleman had stated the nature of the case which had been submitted to the actuary, then the Committee would have had an opportunity of forming a better estimate as to the correctness of the conclusions he had drawn. From calculations which he had made, he found that 91l. 13 s. 4l. was the same stock which represented a perpetual annuity of 2l. 15 s., and that 96l. 5s. 8 d. was the stock which represented a perpetual annuity of 2l. 17 s. 9 d., therefore the question submitted by the Government to the actuary must have been, what was the value of a perpetual annuity of 2l. 15 s., and of a perpetual annuity of 2l. 17 s. 9 d. Consols, being in both cases at par? There was only one other point to which he wished to refer, and that was with reference to the price at which the Government were to issue Exchequer bonds. He found on looting to the 32 d clause of the Bill that no sum was named at which the Chancellor of the Exchequer was to issue them, and this was a point on which the Committee ought to have some information.

MR. J. B. SMITH

said, he thought the right hon. Chancellor of the Exchequer had very properly availed himself of the present opportunity of abundance of money and the prosperity of the country to make an effort for the reduction of the interest on the national debt. The only question was, as to the best means of doing so. As to the first proposition, of offering 3½ per cent upon a stock of 82l. 10 s., he saw no objection to that scheme, and he thought the right hon. Gentleman might have gone further in the same direction. He thought the time was come when they ought to make some effort for reducing the capital of the debt, and extinguishing it, if possible. He believed the public were prepared even to make some temporary sacrifice in order to gain that important object. As to the second proposition, that of the 2½ per cent stock, he had an insuperable objection to the increase of the capital of the debt. But the right hon. Gentleman proposed to capitalise the difference between the 2l. 15 s. he proposed to pay, and the 3l. we were paying now. He approved of that proposition, and he thought the right hon. Gentleman might carry the principle further, and by extending the period to ninety-one years, he might convert the whole into terminable annuities. But the whole question was so important that he thought a Committee should be appointed to try and discover some scheme by which the debt could be reduced with advantage equally to the creditor and to the nation. With regard to the 2½ per cent scheme, he certainly was in favour of the plan now proposed, that the difference between the 3 per cent stock and the 2½ should be capitalised, so that at the end of the forty years the nominal capital would be extinguished. He was happy to see that the right hon. Gentleman had seen the folly of his predecessors in adding to the capital of the debt, and he was therefore surprised he had fallen into the very course which he had himself deprecated. With regard to the Exchequer bonds, he thought it would be a most useful description of stock; but it was impossible to state whether they would circulate beyond a limited extent, until it was known whether at the end of the forty years they were to be payable at the option of the holder or of the Government. He was strongly in favour of their being payable at the option of the Government; but he would prefer having a Committee appointed to consider the whole question.

MR. J. A. SMITH

said, he was glad to hear the observations of the hon. Gentleman who last addressed the Committee. He could not help thinking, little as he agreed with most of what had fallen from the hon. Member for Huntingdon (Mr. T. Baring), that there was too much truth in his observation that that House had been too indifferent to the subject of the reduction of the debt. He regretted that more had not been done in that direction, and that more attention had not been paid to the subject of terminable annuities. He cordially agreed with the hon. Gentleman the Member for Stockport (Mr. J. B. Smith), that the public would gladly submit to some temporary sacrifice in order to obtain the benefit of having the debt reduced at some fixed period. Let hon. Gentlemen consider that the keystone of the operations by which the right hon. Gentleman the Chancellor of the Exchequer proposed to get rid of the income tax in 1860 was the falling in of an amount of terminable annuities at that period, and they would see the full importance of this question. With regard to the subject before the House, he regretted that the hon. Member for Huntingdon, whose intimate acquaintance with the subject was so well known, had not alluded to one particular point on which the whole importance of the 2½ per cent stock depended. It was known to the hon. Gentleman, and to every one acquainted with the subject, that it was of the utmost importance to begin the creation of a 2½ per cent stock. Unless that were done, the conversion of the debt into a lower description of stock would be prevented, or at least would be considerably delayed. He appealed to the right hon. Member for the University of Cambridge (Mr. Goulburn) for the confirmation of this opinion, that it was of the utmost importance, in reference to the reduction of the annual charge, that a 2½ per cent stock should be created. If this experiment succeeded, it would be open to the Chancellor of the Exchequer, in case the present prosperity and case in the money market continued, to go on with a further reduction of stock at 107½, or 110l. for every 100l.; for though he was not so sanguine as some hon. Gentlemen, yet he could not deny the possibility of a further reduction in the value of money, and he thought it was the duty of the Government to be open to take the advantage of it. And, therefore, though he agreed in all that had been said respecting the impropriety of adding to the nominal capital of the debt, still, as he regarded this as a step in the right direction, he could not but cordially wish the experiment all success.

MR. HUME

said, he had heard with much satisfaction the statement of the right hon. Chancellor of the Exchequer, and he hoped he had put that statement on record in the form of a Resolution—that on no occasion should loans be raised lower than the current rate of interest, so as to add to the capital. On every occasion that the Chancellor of the Exchequer referred to, where that had been done, his voice had been raised against it. But the question now before them was, whether this ¼ per cent, which was to be raised by the transaction, should be established as a sinking fund. He confessed a good deal of his objections were removed if that were done. He had no objection to the first proposition before the Committee, that of the 3½ per cent stock; and he would willingly see that carried to any extent, and he would very gladly see a large portion of the debt converted into terminable annuities. With regard to the sinking fund of the ¼ per cent, one might say what did they gain by it? Why, they admitted this—the establishment of a 2½ per cent stock; and he thought the experiment was worth the risk.

MR. WILKINSON

said, they had before them two propositions. The one was a good bargain for the stockholder, but a bad one for the public; while the other was a bad bargain for the stockholder, but a good one for the public. It did not require much forethought to know which of them the stockholder would prefer. He did not think that the creation of a 2½ per cent stock was of so much advantage as some hon. Gentlemen supposed; and with regard to the Exchequer bonds, if these were not redeemed at the option of the holder, he was afraid they would not float. Upon the whole, he thought it was yet too soon to attempt a conversion of the debt.

MR. J. B. SMITH

said, he wished to ask if the right hon. Chancellor of the Exchequer had any objection to lay on the table the calculation of the actuary which he had read to the Committee, with the question on which it was founded? He could not help thinking that it must have been founded on some mistake.

The CHANCELLOR OF THE EXCHEQUER

said, he quoted the answer of the actuary in answer to some observations of the hon. Gentleman opposite. His object was to show that there were elements in the calculation which were not reducible to figures, and he said that in what was reducible to figures, if the premises were so and so, then the results would be so and so. But the actuary did not undertake to calculate the risk of redemption from one year to another, as that must depend upon questions of war or peace—upon the case and prosperity of the country, or the reverse. He had only to say, in answer to the question of the hon. Member for Montrose (Mr. Hume), that he was prepared to bring up a clause which would give effect to the proposition he recommended.

MR. DISRAELI

Sir, when this question came before us first in the shape of a Resolution, as it is now in the shape of a Bill, the general impression was that Her Majesty's Government were about to deal with the great body of the public debt. That was the general impression. The sum that was to come under the immediate or contingent operation of the measure, whether in Consols or other denominations of stock, would be about 500,000,000l. sterling, and there can be no doubt that when that impression first went abroad it was very startling. The subject was one of immense interest—as, of course, the unlimited conversion of the national debt must be considered, and if even on a limited scale, it is still of considerable importance. The popular idea on this subject is, that, at some happy moment, the Minister might reduce the rate of interest, if not altogether immediately, yet partially, and ultimately, to the rate of 2½ per cent; and no doubt the effects of that operation would be considerable. Let the Committee bear in mind what the effect would be. Instead of paying, as we do now, the sum of 15,000,000l. sterling a year, we should save 2,500,000l., and we should only pay 12,500,000l. a year, and of course the country would anticipate from that operation the great and beneficial effects which would accrue from such a reduction of the national burdens. Now, let us see what will be the saving gained by this proposition of the Government. The plan has been slightly altered since I entered the House, but perhaps the Committee will allow me to read the sketch I made upon the proposition as it originally stood. I take the 30,000,000l. 3 per cent Consols to be converted into new 110l.; I take the 30,000,000l. of the New Exchequer Bonds, and the 440,000,000l. to be converted into capital at the rate of 82l. 10 s. per 100l., making altogether 500,000,000l., for which we now pay 15,000,000l. interest per annum. If the plan of the Minister be completed—and I presume to impress on the Committee that it is of the utmost importance in the consideration of these financial projects that we should consider them as complete—the effect would be this, that 30,000,000l. at 110l., paying interest at 2l. 15 s., would amount to 866,000l. in round numbers; that 30,000,000l. of Exchequer bonds at 2l.15 s. would be 825,000l.; and the 440,000,000l. with interest, 2l. 17 s. 9 d., would be 12,705,000l., making altogether interest to the amount of 14,396,000l. Now, deducting that from 15,000,000l., which we are now paying, there would be an annual saving of 600,000l. in round numbers. If the result were that these Exchequer bonds should displace Exchequer bills, there might be a considerable loss. But I will not take that as the probable or even possible result. If, then, the plan of the Government be carried into full effect, the result would be that this amount of annual charge would be guaranteed for forty years; that for all that time there could be no possible action on the debt, with the exception of a slight reduction on the Exchequer bonds; so that, with that exception, for forty years there could be no greater reduction than this 600,000l. a year.

Now, I beg the Committee, before they decide on this proposition, to follow me while I put before them, as briefly as I can, some notes I have made of preceding operations on the national debt, and contrast the amount saved to the country by preceding operations with the project of the right hon. Gentleman now placed before us. In 1717, when the first conversion of the debt was made by Sir Robert Walpole, he dealt with dividends amounting; in round numbers, to 1,500,000l.; the amount of dividends now to be dealt with is 15,000,000l. The saving effected by Sir Robert Walpole in that 1,500,000l. was 324,000l. a year. The saving now to be effected upon 15,000,000l. is only 600,000l. a year. That is an important consideration—one on which the Committee will not deem it inexpedient to reflect; and there was no specification in the Act of 1717 for any guarantee of the interest, which is an important point in all our calculations. If, then, you contrast the project of the right hon. Gentleman the Chancellor of the Exchequer with the plan of Sir Robert Walpole in 1717, it is clear that we do not by the present plan effect an arrangement that is nearly half so beneficial to the country. There was a further reduction of debt from 5 to 4 per cent in the 1st of George II. By it a saving of 340,000l. a year was effected—more than half of the saving which is now proposed to be effected—and in this case, also, there was no guarantee. I am anxious to impress this fact upon the Committee, because the guarantee is here one of the most important elements in our calculation. Now I will take the conversion of debt which occurred in 1749, and which was effected by Mr. Pelham. He reduced the debt from 4 to 3 per cent, and the saving in that case was 565,000l.; nearly as great a saving as will be effected if the whole of the present project be carried into effect. I believe that Mr. Pelham did give in this instance—I am speaking from memory—but I believe he did give a guarantee of seven years; but still that was a very limited guarantee in comparison with the guarantee of forty years to which our attention is now called. In all these conversions, then, the terms contrast favourably with those to which our attention is called by the present Minister. We approach now to more modern times—to the year 1822, when Mr. Vansittart effected a reduction of interest from 5 to 4 per cent. Let us see the capital with which he dealt, the saving which he effected, and let us consider the saving which is now proposed to be made. He had to deal with a debt of 159,000,000l., and the saving which he effected amounted to 1,200,000l.—that is to say, double the amount which Her Majesty's Ministers pretend by their present project to save. The consideration then given was a bonus of 5 per cent, making 4,400,000l.—a sum not much differing in amount from that which the right hon. Gentleman has given as an alternative; and the guarantee in this case, though it occurred so recently as 1822, was only for seven years. The Committee will observe that in all these conversions of debt, from the first effected by Sir Robert Walpole to the last in 1822, the terms and the results were extremely different from those now under our consideration. If you look to the guarantee—and it is most important you should look to the guarantee—you find that it is limited, that it was given with hesitation, and that its termination was within the immediate experience of the generation that dealt with the operation. In 1824 a further amount of the capital debt was dealt with equal to 76,000,000l., and the saving effected was about 400,000 a year—a considerable sum, especially when you contrast the capital dealt with, with the amount of 500,000,000l., upon which a saving of only 600,000l. is to be effected. The guarantee in 1824 was only for five years.

The Committee will observe that, with the experience amounting to nearly a century in these financial conversions, the Legislature acted with respect to guarantees with so much caution, and with such a deep persuasion of the responsibility of undertaking such an engagement, that before that period the guarantees never exceeded seven years, and that in 1824, after the financial experience of the French revolution, and of Mr. Pitt, the only guarantee given was for five years. These are important facts for the Committee to bear in mind, because, although it may not at first sight seem that a guarantee is an engagement of so much importance, it will ultimately be found to be a considerable element in all these arrangements. In 1830 there was a conversion effected, which was the first of those great operations which will ever render the name of the right hon. Gentleman the Member for the University of Cambridge (Mr. Goulburn) memorable in the financial history of this country. The right hon. Gentleman then dealt with a capital of 153,000,000l. and effected an annual saving of 750,000l. a year, and the consideration given was a guarantee of 3¼ per cent for ten years. An option was also given of 70l. of a 5 per cent stock—an arrangement somewhat similar to the proposition of the first alternative of the present Chancellor of the Exchequer—and it is a remarkable circumstance that the amount of that stock subscribed for did not exceed the small sum of 500,000l. In 1834 there was a small reduction, to which I will not further allude than to say that the principle of a guarantee was again applied, but only for six years. In 1844 there was the great reduction effected by the right hon. Member for the University of Cambridge. A capital was then dealt with of nearly 250,000,000l.—half of the large amount which is—I will not say now under our consideration—but which forms the subject of our speculative anxiety. The consideration given was a guarantee of 3¼ per cent for ten years, and of 3 per cent for twenty years after, that is to say, that after the year 1854 there was a further guarantee for twenty years at the rate of 3 per cent; but in that great and successful operation the united guarantee only reached to thirty years.

Let me now place before the Committee the remarkable circumstances which contrast that period with the present. In 1844, when the right hon. Gentleman made those conversions, Consols were at 3l. 1 s. per cent interest, Exchequer bills were at 2l. 4 s., the balance in the Exchequer was 4,700,000l., the floating debt was between 17,000,000l. and 19,000,000l., the capital, as I have previously stated, dealt with by the right hon. Member for the University of Cambridge was250,000,000l., the immediate saving was 600,000l., and the ultimate saving 1,200,000l. a year. What is our position now in these respects? Instead of Consols being at 98½, they are above par; Exchequer bills, instead of bearing 2l. 4 s. per cent, now bear only 1l. 10 s. 5 d.; the balances of the Exchequer are, instead of 4,700,000l., nearly double that amount; while the floating debt is actually lower at present than in 1844. Notwithstanding that the Chancellor of the Exchequer is thus dealing with the debt under so much more favourable circumstances, he only effects a saving of 600,000l. upon 500,000,000l. of the debt, and this too with a guarantee which will prevent him from operating on that large amount for forty years. What are the general circumstances of the country which can induce the Committee to authorise an arrangement which appears on the surface so improvident and so limited in its results as that which I have contrasted with all the operations which have preceded it? Is the rate of interest higher? Is the country less prosperous than at those times? The interest upon our floating debt is lower; the balances in the Exchequer are greater, the interest of money is lower, yet the right hon. the Chancellor of the Exchequer proposes an immense financial operation, which, if you pursue it to its possible termination—and unless it effects such results it is scarcely worth the discussion it is undergoing—only contemplates a Saving to the country of 600,000l. a year for forty years. What I also object to in the propositions before the Committee is, that the right hon. Gentleman has himself settled the terms upon which these operations, possibly of so great an extent, and which influence so greatly the circumstances of the time, should be made. In my opinion it is the duty of a person in the position of the Chancellor of the Exchequer, wishing to effect such an object, rather to throw upon the public creditor the responsibility of offering terms which might be agreeable to him, than to come down to this House and peremptorily say, "These are the terms which I lay down, and these are the terms only which I can accept." The right hon. Gentleman says, "You may impugn the validity of my reasoning, and the position which I have adopted with respect to this question; but I have a sovereign object to obtain—I want to establish a 2½ per cent stock." I think the hon. Member for Lambeth (Mr. Wilkinson) touched that point in a proper manner. Nothing can be more important than a 2½ per cent stock, if you can obtain it by legitimate means, and if a 2½ per cent stock is the natural consequence of your financial condition. But there is nothing magical in a 2½ per cent stock, A 2½ per cent stock can be created and established at any time, if you choose to pay for it. If this is to be a factitious result, an artificial consequence, there is no Finance Minister, even in a time of war, when money is scarce and interest is high, who could not create a 2½ per cent stock, if he chose to do so. The question, of course, for the Committee is, what are the terms by which it is proposed this costly consequence may be best accomplished? I freely admit that it is the first duty of a Minister of Finance to consider the question of the interest of the public debt; and I think it is highly to the credit of the right hon. Gentleman that he has given all the energies of his able and creative mind to this subject. But the right hon. Gentleman knows full well that there is no great originality in attempting to deal with such a subject. The question is, how to deal with it at the right time, and to be able to deal with it in a manner in which you may effect your ultimate purpose. Now, the right hon. Gentleman has in this instance been ingenious, but premature. It is totally impossible, by any combination, however clever, by any device, however complicated and ingenious, to make the public creditor take a lower rate of interest than the state of the money market will authorise. It is quite impossible to suppose that you can succeed in digging "pitfalls" and making snares for the public creditor. There is not a more crafty creature in existence than the public creditor. You may give him all the alternatives which an ingenious mind can conceive, but the public creditor has a test for the value of his debt, and he will go to Capel Court, and will there find out exactly what his money is worth in the market. This brings me to a point which I think the Committee ought fairly to consider before it agrees to any of these proposed arrangements. You may rely upon it that all indirect attempts to deal with the public debt—I will not say will always fail, but will always be difficult, and that your arrangements as a general rule, on that subject, should be simple. If the state of the money market is such that you can deal directly with the rate of interest, it is unnecessary for us to enter at all into the subject; but if, from particular circumstances—the amount of the debt which you propose to act upon, and the artificial safeguards which surround it—you do not consider yourself justified in acting directly upon it, and must act indirectly, there is no more legitimate means, if you wish to establish a 2½ per cent stock, than by going fairly to the public and saying, "We want to establish a 2½ per cent stock, what is the guarantee in the present state of the money market, with 3 per cent as the established rate of interest, which you would require from the country for the establishment of this stock?" That is a simple proposition which the country would understand. It is possible that they might ask from you a very long guarantee, for aught I know longer than even forty years; but then you would be in a clear position of considering whether it was expedient, wise, and politic to grant such a guarantee; and that brings us to the important question of what are the prospects as to the rate of interest of money in this country; I will not now enter into any speculations on this subject; it is a question which has engaged the attention, not only in this but in other countries, of some of the deepest thinkers and profoundest political economists and inquirers into monetary matters who have, perhaps, ever flourished. But no one can deny that there are new phenomena in the present day with respect to these subjects which no previous Minister of Finance had ever had to deal with. When the right hon. Gentleman the Member for the University of Cambridge (Mr. Goulburn) proposed his great financial scheme, he knew what was the probable amount of the precious metals in the world. He knew pretty well what had been the cycles of commercial prosperity and adversity to which reference has been made this evening, he had naturally considered in all its ramifications, and all its possible results and bearings, the important question of terminable annuities. What are the present circumstances? Is there anybody who can calculate the present amount of the precious metals in the world, or what it will be in forty, thirty, twenty, or even ten years hence? The question of terminable annuities, to which the hon. Member opposite (Mr. J. B. Smith) has given in his adhesion to-night, while he at the same time recommended that the whole subject should be referred to a Select Committee—no great compliment, by the way, to the right hon. Gentleman the Chancellor of the Exchequer—has assumed a very different character in the estimation of some of the most important thinkers since the metallic discoveries; and it has become a question whether we should deal with that willingness with which we should have done ten years ago, with the conversion of the national debt into terminable annuities. My opinion is, that the country is not prepared to make any sacrifice at all upon the subject: it is rather disposed to watch what may be the consequences of these important changes which are rapidly and daily occurring. I will not presume to give an opinion upon the subject. All I ask the Committee to do is to remember that we are living in the midst of great changes, and that before these great changes took place the most successful Chancellor of the Exchequer never contemplated the guarantee of interest beyond twenty years, and that now, in the midst of phenomena which are perplexing our profoundest thinkers and most experienced statesmen, and agitating the hearts and exciting the hopes of nations and communities, we are called upon to enter into a guarantee for forty years at a rate of interest for a conversion which, if carried into complete effect and if perfectly fulfilled, will save only to the country 600,000l. a year. Under these circumstances I think I am only doing my duty when I entreat the Committee to pause before they sanction this operation. I will not go into that important question, which greatly interests the public mind, and which has already greatly influenced the Committee, namely, whether we ought to increase the capital of the national debt. I do not think there are two opinions on the subject. Why, then, do you do it? What are we to gain by it? Are you in war—or in danger? Is Ireland starving? Is there a famine in the land? Are there any of these conjunctures, exigencies, or emergencies which might authorise you to do that which philosophy might condemn, but which the strong necessity of life must force you to adopt? The Committee is asked now to consent to increase the national debt merely for a financial caprice, and in order to gratify a laudable humour, but still for nothing which is either peremptory or urgent. This point has been so well urged by others that I do not press it. What, however, I do press upon the Committee is the absolute necessity of considering the nature of the guarantee—that that guarantee may be even of greater importance than the rate of interest itself—and that this is not the time when a guarantee of forty years fixing the rate of interest should be made. With these grave objections to the measure, I do not think the Committee are taking a very unfriendly part towards the Government if they ask them to pause, in order to reconsider the Resolutions. What has taken place with respect to these Resolutions since they were first introduced into this House? There have been already five important changes made in them. The right hon. Gentleman came down to the House, and, taking us somewhat by surprise, gave notice for a Committee to consider the Acts relating to the public debt. We all remember the excitement that was produced by that announcement. The Resolutions were circulated on the following day. In the first alternative the Resolution was as it now appears in the Bill before the Committee. The second Resolution, which was to establish this great desideratum of a 2½ per cent stock, was of an unlimited character, and would have extended to the whole debt. Great consternation, therefore, prevailed on the subject of the second alternative. The leading journal of the day announced to the country that there was a proposition to increase the national debt by the amount of 50,000,000l. When we came down to the House to consider these Resolutions, by the courtesy of the hon. Member the Secretary to the Treasury, a second edition of the Resolutions was put into my hands, while he informed me, at the same time, that there were a few trifling alterations proposed to be made. Upon casting my eyes over the amended Resolutions I saw that the very subject which had agitated the City of London, and had created such consternation, had disappeared, and the second alternative was to be limited in its operation. I do not say the limit was not wise, discreet, and proper; but surely, irrespective of the fact that it is always as well to have time to consider Resolutions of this character, the very fact that before we had had any opportunities for considering them, so great an alteration should have taken place, was some reason why ample time should have been given not merely for the House, but for the Government, to consider the Resolutions to be submitted. In addition to the first proposal, of limiting the 2½ per cent stock to 30,000,000l., another great change has now been introduced, by which the 3½ per cent stock has been limited also to 30,000,000l. The circumstances of this alteration, however, have been satisfactorily explained by the Chancellor of the Exchequer—at least satisfactorily to me—and we may therefore say that this is the first night of the Resolutions being discussed. I understand, also, that there has been a third proposition made to-night, namely, that in order to meet the great objection felt against the consequences of the second alternative, namely, the increase of the national debt, an amount of 3,000,000l. or 4,000,000l. should be funded for the purpose of forming a "sinking fund." On such a proposition two considerations very naturally occur. In the first place, is it wise that there should be a "sinking fund" established upon such a principle? Are we, in 1853, to be borrowing with one hand, in order to pay with the other? Is it, in an age of financial reform, that you are to re-establish such a sinking fund? There is also another important consideration—when such announcements are made without notice, what effect will such a sinking fund have on the financial estimate offered by the right hon. Gentleman the other night? The hon. Gentleman the Member for Huntingdon (Mr. T. Baring), who always addresses this House with that authority which his great talents and experience command, called the attention of the Committee and the country to the financial consequences of the sudden change—a change not announced when the House met this evening, but in the heat of debate. My hon. Friend called attention to the financial consequences of the change, to the consequences on the surplus—for we have a surplus—of 460,000l. We have 460,000l., 100,000l. of which is formed by a possible saving of interest of the public debt if this plan of 2½ per cents is adopted.

The CHANCELLOR OF THE EXCHEQUER

was here understood to remark, that the surplus was derived from the whole operation of his scheme.

MR. DISRAELI

Whether the amount of saving was on the whole, or on only part, of the propositions, the result is the same so far as my argument is concerned. How the right hon. Gentleman's surplus is made, from what source it is derived, and how formed—if it is only 460,000l.—I cannot congratulate him on it, for I recollect the time when such a surplus would not have been received with much satisfaction. But we have already three important changes in an important measure, which by an unusual ebullition of temper on the part of the noble Lord (Lord J. Russell), and an unintentional mistake on the part of the right hon. Gentleman, we are not allowed to discuss. Not only has the limit of the 2½ per cents been placed at 30,000,000l., and a similar limit placed upon the 3½ per cents, and a sinking fund been proposed, but a fourth proposition had been made to-night, by which the 2½ stock was to be limited to 25,000,000l., and not to 30,000,000l. as at first proposed. I do not say that these changes are not wise, discreet, and proper, but I think they show clearly that the scheme has not been sufficiently matured, and that there has not been given to the subject that consideration, that large devotion of time and thought, which becomes a question of this nature; and that when a Minister of Finance and his Colleagues deal with so vast a question as the public debt, and deal with it unnecessarily, it is just as well that the proposition which they put before the Committee should show some better evidence of consideration and of care. All I want to do is this—I do not want to make unnecessarily a party division on the subject; but I ask the right hon. Gentleman not to precipitate this question, and to give it further consideration, and not to let us be forced to vote on the Amendment of my hon. and learned Friend (Sir F. Kelly). What is that Amendment? It is one which says virtually that in all these changes and conversions of the public funds, and reduction of the public interest, it is not wise, expedient, or politic, to increase the capital account of the public debt in this country. If there is a division I must vote for the Amendment, for the sake of the principle which it enunciates, and which I think is a sound and salutary one. But I say at the same time I hope to be prevented from that division, by the right hon. the Chancellor of the Exchequer telling us—and it is no great condescension—that he will give to this subject more time and more thought than it has yet apparently received.

MR. GOULBURN

Sir, I must return to the right hon. Gentleman the Member for Buckinghamshire my thanks for the complimentary expressions he has used towards me respecting my conduct when in office. I fear that I shall make but an unworthy return, for it will be my duty, in commenting upon his speech, to use that freedom of speech which is the privilege of hon. Members of this House in the discharge of their public duty. The right hon. Gentleman began his speech by telling us what was the state of public opinion upon the subject of the reduction of the national debt. He told us that there prevailed among the public a general opinion that we could at once deal with 500,000,000l. of debt, and effect a great reduction of interest. I will not dispute with the right hon. Gentleman whether that is a correct view of public opinion upon the subject; but I will say, whatever public opinion may be, if it is in error upon subjects of this kind, it is our duty, as representatives of the people, to bring the matter so fairly before them in our discussions as to correct their errors by our superior knowledge, and afford to the people, what they are always ready to accept, accurate information as to what is our true financial situation. In this I think the right hon. Gentleman has failed. The right hon. Gentleman thought it right to consider the proposition of my right hon. Friend as a measure which was absolutely complete; and he made a statement of what, in his opinion, would be the very limited results of it. He stated what my right hon. Friend was to save by these arrangements—that he would save so much of annual interest upon 30,000,000l. of Exchequer bonds, and so much on 30,000,000l. of 2½ percent stock, and upon the remainder when the conversion of 440,000,000l. of 3 per cents into 3½ per cents should be carried; and then he triumphantly exclaimed, "a saving of 600,000l. only in annual interest!" The right hon. Gentleman must have forgotten that he was sitting by the side of my hon. and learned Friend (Sir F. Kelly), whose argument has been, that what we were to seek to obtain was a reduction of the capital of the national debt. If in this view 440,000,000l. of the present debt is to be converted into 3½ per cent stock at 82l. 10 s. per cent, the right hon. Gentleman ought to have stated the reduction of capital by that operation as one of the financial results of the scheme, in order that the Committee might have had before it, not merely the amount of annual interest that would be saved, but the amount of capital that would be reduced—an advantage which I should have thought the right hon. Gentleman would be one of the first to admit. But the right hon. Gentleman, anxious to depreciate the value of the measure of my right hon. Friend, endeavoured to do so by contrasting the saving of annual interest which it would effect with that effected by antecedent measures of a similar nature, and he began with the Administration of Sir Robert Walpole. He told us that Sir Robert Walpole, upon a limited amount of debt, the interest upon which was 1,200,000l., effected a reduction of 300,000l. The right hon. Gentleman's own statement ought to have shown him he was making a representation which could not be applicable to the present case. The whole sum, he said, which Sir Robert Walpole was dealing with was 1,200,000l., and he effected a saving of 300,000l., or one-fourth of the whole. Now, how was that effected? Why, in Sir Robert Walpole's time the debt was paying 6 or 7 per cent interest, and when you reduce from 6 or 7 per cent to 5 or 4, of course you make a larger saving than when you reduce the interest from 3 per cent to 2½. The same principle applies to some of the succeeding reductions to which the right hon. Gentleman adverted. There were reductions from 5 per cent to 4, and from 4 to 3½; and if you are to suppose, and the country is to be led to suppose, that as you advance in the reduction of the debt you can in each succeeding stage realise the same actual amount of saving, I say, so far from correcting public opinion, the right hon. Gentleman is disseminating through the public a most grievous cause of error and general dissatisfaction. Let us put the most favourable case. Let us suppose the interest of the debt reduced to 1 per cent, and hon. Gentlemen wish to make a fur- ther reduction. Do you expect you could make a saving of 2 or of 1 per cent? It is an absurdity. I say, therefore, that the contrast of the right hon. Gentleman as to the actual amount saved in each case is not only fallacious, but that it cannot escape without the public being convinced of its error. Then the right hon. Gentleman, in order to contrast former measures with that of my right hon. Friend the Chancellor of the Exchequer, came down to the period at which Mr. Vansittart, afterwards Lord Bexley, effected a reduction. He admitted that Lord Bexley did at that time give a guarantee to a certain extent; but he told us—what I was surprised to hear from a right hon. Gentleman who bad filled the office which he has filled—that Lord Bexley never increased the capital of the public debt by the measures he proposed with a view to reduction of interest. Why, in the year 1824, Lord Bexley gave 138l. 3 per cents for every 100l. 5 per cents, thus increasing the public debt—not by a trifling sum, but by no less than 38 per cent—upon the whole of the operation. So far, then, as the case of Lord Bexley goes in opposition to my right hon. Friend, put in its most exaggerated form, the reductions which he proposes will fairly bear comparison.

MR. DISRAELI

I was referring to, and I mentioned, the amount of the bonus given by Lord Bexley.

MR. GOULBURN

I am referring to the operation of the year 1824. Then the right hon. Gentleman came down to the period in which it was my own fortune to effect a large reduction of the debt under circumstances peculiarly favourable to such an operation; and he states that a guarantee was given at that period, that there should be no further reduction until a certain period had elapsed, but that it was comparatively short as compared with that which my right hon. Friend now proposes. Now what I have already stated as to the reduction of interest, applies to the question of guarantee. As you advance in the reduction of interest on the debt—that is, as you require those who have a smaller interest to make a considerable sacrifice—you must offer them some corresponding advantage in order to induce them to accept the terms you propose, for if you propose to make any considerable reduction, without some corresponding advantage of this sort, you will fail in the operation. I believe that if in 1844 I had not given the protection of thirty years' guarantee to the holders of the 3½ per cents from the period at which the Bill passed, the measure I introduced, which Parliament was pleased to sanction, and which was so successful, would probably have been a failure. But there are particular reasons, it is said, why guarantees are objectionable; and I will admit, for the sake of argument, they are. But there are circumstances why the guarantee until the year 1894 carries no apprehension in the mind of any man who calculates rationally as to the probability of the future. Take the proposition of my right hon. Friend the Chancellor of the Exchequer. Suppose he said the whole 500,000,000l. ought to come under the arrangement, which I do not think he apprehends as likely to take place; but suppose it does take place, and the stock is irredeemable until 1894, and there are then 500,000,000l, of stock upon which you can operate—will that interefere with the reduction of the national burdens? Quite the reverse. In the year 1874 you have 250,000,000l. which will, at that time be released from guarantee, and upon which you may reduce the interest with advantage, because having such a sum to deal with it will be much easier to manage than it would be upon the enormous amount of the total sum. Having the advantage, under the arrangements of 1844, of 250,000,000l. open to reduction in 1874, it is no disadvantage that the remainder of the national debt should not be redeemable till 1894, and that you may then deal with it without twelve months' notice The right hon. Gentleman (Mr. Disraeli) stated that there is a great resemblance between the present period and that when the last reduction was effected; but I am sure he will give me leave to dissent from that proposition. In the two cases in which I dealt with the public debt, I had to deal with a debt which with the exception of a small portion, was entirely open to reduction without any notice whatever. I had nothing to do but to signify to the public the terms which the Government were prepared to take, and to ask those who dissented to state the fact of their dissent. There was no difficulty, therefore, when the proposition was made, as to the moment at which it could be adopted; the public debt did not run any hazard during the intervening period which might arise from an altered state of the country; from apprehensions of war, or disturbances abroad, or anything which might disturb financial arrangements. But at the present period we stand in a totally different situation. We have this 500,000,000l. of debt upon which we are anxious to reduce the interest. Upon the Consolidated Annuities we are bound to give the holders twelve months' notice; and as my right hon. Friend has said, "Where is the Minister who will dare, in the present state of the world, to say that, twelve months after such a notice being given, he will be prepared to redeem 300,000,000l. of debt?" The Reduced Annuities stand upon a different footing. Here you are obliged to give six months' notice of reduction; but he must be a bold Minister who would undertake, this day six months, to say that the state of our monetary condition would enable him to effect the reduction. The difference between the two positions, then, is this—that in 1844 the Government had the power of free action without the risk of intervening circumstances, whilst at this moment they have no power of action at all beyond that of holding out such terms as the public may be willing to accept, from time to time as circumstances may render it advisable. This is the justification of the measure brought in by my right hon. Friend. He did not urge it as a measure to effect larger reductions in the national debt upon the moment; but he said, and said truly, "There is in the present state of the monetary transactions of the world, a prospect of the terms which the Government can hold out, of the holders of the irredeemable debt transferring their claims into a debt which may become redeemable being accepted; and I will recommend the House to adopt my proposition." And in putting forth that proposition my right hon. Friend was justified in offering a variety of propositions, any of which holders may accept. It is quite true, as the right hon. Gentleman the Member for Buckinghamshire says, there is no more wary animal than the gentleman upon the Stock Exchange; he is able to calculate accurately the chances of profit he may derive from one stock or another, and he will probably outwit the public in the particular bargain which he makes. But, on the other hand, these gentlemen, wary as they are, are of different classes, and the stock which suits one individual may not suit another; and there are advantages unconnected with pecuniary profit which will make one or other of the stocks acceptable to the public. This is also a justification of the measure of my right hon. Friend. Shackled as he is, unable to compel the reduction of interest with respect to those who hold in the 3 per cents Consols and in the Reduced, he has no alternative but, by yielding some advantage, to induce them voluntarily to accept either one alternative or the other. The right hon. Gentleman (Mr. Disraeli), concurs with those who have expressed the opinion that it is of the highest importance to establish a 2½ per cent stock. The question then is, what is the price it is desirable to pay for an advantage of this description? Some Gentlemen have said they did not see the particular advantage of it. But I think it must be apparent. To myself it comes with the strongest force, because if there had not been a 3½ per cent stock when I effected the reduction of the 4 per cents, I should have been embarrassed with greater difficulties in the execution of the measure than I actually found. The question then is, is the price which my right hon. Friend proposes, of 10 per cent upon the capital to be created, more than the advantage he is likely to derive from the creation of 30,000,000l. of 2½ per cent stock? My right hon. Friend has suggested, if it be thought inexpedient to increase the capital of the debt, that the object may be easily accomplished by an arrangement which, while it gives 2l. 10 s. per cent to the public creditor, would place in the hands of the Commissioners for the Reduction of the National Debt the surplus interest which would more than replace the capital which the public might be called upon ultimately to redeem. Whether it will be the pleasure of the Committee to adopt that suggestion or not, I will not say. If you take the whole interest there is an increase of surplus which will render a larger sum available for the reduction of the national debt, the saving upon the particular debt being in addition to the surplus from which debt is to be redeemed; but do you wish to have a separate account upon the 2½ per cent stock alone, my right hon. Friend has no objection. This will, therefore, obviate the feelings of those who, frightened at a name rather than a reality, are anxious to avoid anything like an increase to the capital of the national debt. But the right hon. Gentleman (Mr. Disraeli), says my right hon. Friend has been premature in his proposition; that he ought to have waited for some future and more favourable period when he might have effected a greater reduction. I wish the right hon. Gentleman had prefigured the period at which he thought it safe that the Chancellor of the Exchequer might give the six or twelve months' notice that stockholders in the 3 per cents would be paid off. If you cannot designate such a period, the sooner you give them the option of converting their stock voluntarily, the better for the country. It has also been objected by the right hon. Gentleman that changes have been made in this measure during its progress. I am aware it is easy where alterations are made to inculpate those who made the original proposition; but I am quite unable to judge of what is the utility of going into Committee at all if it be not to receive suggestions; and, if they are not inconsistent with the principle, and do not interfere with its action, to adopt them. The notice of the limitation upon the 3½ per cent stock did not affect the principle of the Bill. So it was with the sinking fund of 2½ per cent. This was far from infringing on the principle of the Bill, or affecting its operation. The right hon. Gentleman concluded by adverting to the smallness of the surplus provided by the Budget; but he will permit me to say I did not expect such an observation from such a quarter. At all events my right hon. Friend has this advantage, that his surplus is derived from legitimate sources. It is not derived from the application of funds which do not form part of the revenue of the country. I shall sit down by expressing my confidence in the experiment which my right hon. Friend is about to make. I trust the Committee will sanction it, for by accepting it they will, in a greater or less degree, be laying the foundation for future reductions of the national debt.

SIR JOHN PAKINGTON

said, that after the able manner in which the subject had been discussed, it would be presumptuous in him to detain the Committee for more than a few minutes. He wished to advert, however, to what had fallen from the right hon. Gentleman the Member for the University of Cambridge (Mr. Goulburn), and he was the more desirous of doing so because he agreed with his right hon. Friend (Mr. Disraeli) in attaching the greatest weight to whatever fell from the right hon. Gentleman on financial subjects. The right hon. Gentleman (Mr. Goulburn) had hardly acted fairly in reproaching his (Sir J. Pakington's) right hon. Friend (Mr. Disraeli) for having omitted to state the bonus which Lord Bexley offered to the stockholders. His right hon. Friend had mentioned the bonus of 5 per cent which Lord Bexley gave in 1822, when dealing with the large sum of 159,000,000l. But what was the amount in question when the 38 per cent was given? Why, only 1,000,000l. With that view he should refer to what fell from the right hon. Gentleman the Member for the University of Cambridge in 1844, when he proposed his most important operation in reducing the 3½ per cents. The right hon. Gentleman now said he thought the Chancellor of the Exchequer right in submitting to Parliament and the country several alterations, but that was not the course pursued by the right hon. Gentleman in 1844. On referring to the speech of the right hon. Gentleman he found the plan of the 2¼ per cent stock, now produced by the Chancellor of the Exchequer, as nearly the same as possible under the different circumstances of the case. The very same plan now proposed for the forcible reduction of the 3 per cents was then suggested by the right hon. Gentleman as one of the possible plans in reducing the 3½ per cents. The right hon. Gentleman said— Another plan, very much entertained by the public, and on which much has been said in its favour, is to create a 2½ per cent stock, and to give the holder of every 100l. in the 3½ per cents such an amount of the 2½ per cent stock as will produce an interest of 3 per cent per annum."—[3 Hansard, lxxiii. 737.] At another part of his speech the right hon. Gentleman said— Another principle on which I am determined to act is this—that I do not think it just to purchase present advantage at the expense of burdens to be sustained by those who come after. I think with respect to debts incurred in case of war, it is quite legitimate that posterity should bear their share of the burdens. But to incur additional debt in times of peace, and thus burden those who come afterwards, with the view of obtaining greater relief for ourselves, is a course which I say I myself reprobate, and I am sure when I mention it I shall meet with the general concurrence of those who hear me."—[3 Hansard, lxxiii. 737.] The right hon. Gentleman then mentioned that the amount of additional debt in that case would be 50,000,000l. As the Chancellor of the Exchequer introduced this scheme, the addition to the debt would have been just the same; but one of the many modifications was to limit the issue to 30,000,000l., and now he understood that it was to be still further reduced to 25,000,000l. Whether it was to be 30,000,000l. or 25,000,000l. at first, he understood the scheme was put forward as an experiment to be further extended, supposing it proved acceptable to the public. The right hon. Gentleman the Member for the University of Cambridge, in the same speech said— A great nation like this may hereafter be engaged in wars and beset with difficulties, and, under necessity, obliged to recur to the money market to support so large an expenditure, and whatever desire there may be to effect an immediate saving, I say that to march on in such a course would be fatal to the permanent interests of the country."—[3 Hansard, Ixxiii. 738.] He thought no language so strong had been used on this occasion on that side of the House. The right hon. Gentleman, as he understood, distinctly said, in 1844, that the principle which the Chancellor of the Exchequer now adopted was a principle which he then declared he must reprobate, and to march on in such a course would be fatal to the permanent interests of the country. Such being the plan of the Chancellor of the Exchequer, he could not help claiming the opinion of the right hon. Gentleman the Member for the University of Cambridge. He understood the right hon. Gentleman held a different opinion to-night, and believing it fair to choose between the opinion of 1844 and the opinion now, he was glad to find his views supported by so high an authority as the right hon. Gentleman.

SIR FITZROY KELLY

said, he wished to set himself right on certain points adverted to by the right hon. Gentleman the Chancellor of the Exchequer; but, first, it was essential to notice an incidental point which had arisen with reference to the statement of the right hon. Gentleman on Monday night. He certainly understood the right hon. Gentlemen to say on that occasion that there would be a saving of 100,000l. by the operation of the Bill. Of course he did not imagine, nor did he know that any one imagined, that the right hon. Gentleman sought to identify that particular sum of 100,000l. to be saved with 100,000l., part of the surplus anticipated in the present year. But, if he understood the statement of the right hon. Gentleman, the deduction of 100,000l. from the credit side of the Government account would reduce by 100,000l. the surplus anticipated, and would reduce the receipts of the Exchequer during the whole period this operation remained in force. And now, if he understood correctly the statement of the right hon. Gentleman, the 100,000l. would not be entirely taken away, but would be reduced by a sum of 87,000l. a year, supposing the substitution of one plan for the other, as the right hon. Gentleman had to-night agreed. The right hon. Gentleman had also appeared to imagine that he had entertained and expressed a very strong opinion as to the early probability of a reduction of interest on the capital of the country. He begged to say he had not presumed to express—he could hardly venture to say he had formed—any conclusive opinion on that subject. But that there was a general and extensive, and perhaps a well-founded expectation in the mercantile community, and in the public mind, that a very considerable reduction in the interest of money would shortly take place, was conclusively proved by the very ingenious and exact calculation of the right hon. Gentleman himself on a former occasion, by which it appeared that the mere guarantee of the 3 per cent stock, which existed and was payable for twenty years, was worth some 3l. on every 100l. If the assurance of 3l. per cent interest remaining unchanged for twenty years was worth 3 per cent, it was not extravagant to anticipate a great change would shortly take place. The proposal of the right hon. Gentleman mitigated, but did not entirely remove, the objections, to which all the Committee seemed to have acceded, on the increase in the capital amount of the debt. That plan still left wholly unaffected one great objection—that an undue and extravagant amount of interest, and for an unreasonable period of guarantee, was proposed by this bargain. And on this point he appealed to hon. Members opposite, who seemed occasionally to assume the special office of guardians of the public purse, if they could sanction the proposition of the right hon. Chancellor of the Exchequer. The right hon. Gentleman charged him with having expressed himself with undue confidence in the expression of his opinions. If he had done so, with a single exception he regretted it; and that exception, from which he did not at all feel disposed to shrink, was in expressing his belief that no man having 100l. to invest in one or the other of these proposed stocks, would invest it for the receipt of 2l, 10 s. interest with a capital of 100l., if he could obtain 2l. 15 s. with a capital of 110l. The right hon. Gentleman had entirely misapprehended the observations he had made on the subject of the transferable bonds, seeming to suppose that he had expressed an opinion that the bonds might be issued to an unlimited extent; what he said was the very reverse—that he believed none of the bonds would be accepted by the public, so long as anything remained to be accepted under the two other alternatives offered by the Bill. The right hon. Gentleman still persisted in arguing that there was something in the nature of these transferable bonds that would confer so great a value on them as to make the propositions No. 2 and No. 3 identical, and had omitted to notice his statement, confirmed by his hon. Friend the Member for Huntingdon (Mr. T. Baring), that in all the countries where similar bonds existed they were precisely at the same price and of the same value as registered stock. Upon what ground, therefore, the right hon. Gentleman could imagine that when he should issue these bonds they would be at a premium of some 10 per cent, to say nothing of the difference of interest below stock of the same character, he was at a loss to imagine. He felt that every object the right hon. Gentleman had in view could be effected without resorting to this proposed extravagant bargain, and without increasing the national debt. If the right hon. Gentleman was correct in believing that these Exchequer bonds would be accepted by the public, the state of the money market, and the credit of the country, must be such that he could obtain at least 30,000,000l. at 2½ per cent; and the only question would be, whether the guarantee was for a sufficiently long period of time. If the state of the money market was such that he could issue 30,000,000l. of transferable bonds at 2½ per cent, he might make the experiment of creating a 2½ per cent stock by the issue of Exchequer bonds, placing them on the same footing as in other countries, where they were convertible at the pleasure of the holder, into registered stock, and registered stock was convertible into these bonds, at the pleasure of the holders. Insomuch as he understood the Chancellor of the Exchequer still persevered in the second branch of this clause, namely, that part which proposed to create a 2½ per cent stock upon capital of 110l. and guaranteed interest for forty years of 2l. 15 s.; and inasmuch as, independently of the objection that it would increase the national debt, that appeared to him a bargain most unjust, and most extravagant as against the State; and in favour of the public creditor, he should oppose the clause and divide the Committee upon it.

Question put, "That the words proposed to be left out stand part of the clause."

The Committee divided:—Ayes 234; Noes 175: Majority 59.

List of the AYES.
A'Court, C. H. W.	Egerton, Sir P.
Adair, H. E.	Ellice, rt. hon. E.
Aglionby, H. A.	Elliot, hon. J. E.
Alcock, T.	Emlyn, Visct.
Anderson, Sir J.	Esmonde, J.
Anson, hon. Gen.	Evans, Sir De L.
Atherton, W.	Evans, W.
Baines, rt. hon. M. T.	Ewart, W.
Ball, J.	Fagan, W.
Barnes, T.	Feilden, M. J.
Beckett, W.	Fergus, J.
Bell, J.	Ferguson, Col.
Berkeley, Adm.	Ferguson, Sir R.
Berkeley, hon. H. F.	Ferguson, J.
Berkeley, hon. C. F.	Fitzgerald, J. D.
Bethell, R.	Fitzgerald, W. R. S.
Biddulph, R. M.	Fitzroy, hon. H.
Biggs, W.	Forster, M.
Blackett, J. F. B.	Forster, C.
Brand, hon. H.	Fox, W. J.
Brocklehurst, J.	Freestun, Col.
Brockman, E. D.	Gardner, R.
Brotherton, J.	Gibson, rt. hon. T. M.
Brown, W.	Gladstone, rt. hon. W. E.
Browne, V. A.	Glyn, G. C.
Bruce, H. A.	Goodman, Sir G.
Bulkeley, Sir R. B. W.	Goulburn, rt. hon. H.
Burke, Sir T. J.	Grace, O. D. J.
Butler, C. S.	Graham, rt. hon. Sir J.
Byng, hon. G. H. C.	Gregson, S.
Cardwell, rt. hon. E.	Grenfell, C. W.
Caulfeild, Col. J. M.	Hanmer, Sir J.
Cavendish, hon. G.	Harcourt, Col.
Chambers, M.	Hastie, A.
Chambers, T.	Hayes, Sir E.
Chaplin, W. J.	Headlam, T. E.
Charteris, hon. F.	Heard, J. I.
Christy, S.	Heathcoat, J.
Clay, Sir W.	Heathcote, G. H.
Clifford, H. M.	Herbert, H. A.
Clinton, Lord R.	Herbert, rt. hon. S.
Cockburn, Sir A. J. E.	Hervey, Lord A.
Cocks, T. S.	Heywood, J.
Coffin, W.	Heyworth, L.
Collier, R. P.	Hogg, Sir J. W.
Compton, H. C.	Howard, hon. C. W. G.
Corry, rt. hon. H. L.	Howard, Lord E.
Cowan, C.	Hume, J.
Cowper, hon. W. F.	Hutchins, E. J.
Craufurd, E. H. J.	Hutt, W.
Crossley, F.	Ireton, S.
Crowder, R. B.	Jermyn, Earl
Currie, R.	Johnstone, J.
Dalrymple, Visct.	Johnstone, Sir J.
Bering, Sir E.	Keating, H. S.
Divert, E.	Kershaw, J.
Drumlanrig, Viset.	Kinnaird, hon. A. F.
Drummond, H.	Laing, S.
Duff, G. S.	Langton, H. G.
Duff, J.	Lawley, hon. F. C.
Duke, Sir J.	Legh, G. C.
Duncan, G.	Lewis, rt. hon. Sir T. F.
Duncombe, hon. W. E.	Lindsay, hon. Col.
Dunlop, A. M.	Locke, J.
East, Sir J. B.	Lockhart, A. E.

Lovaine, Lord	Russell, F. C. H.
Loveden, P.	Russell, F. W.
Lowe, R.	Sadleir, J.
Luce, T.	Sawle, C. B. G.
Mackie, J.	Scobell, Capt.
MacGregor, J.	Scully, F.
M'Taggart, Sir J.	Seymour, Lord
Mangles, R. D.	Seymour, W. D.
Manners, Lord G.	Shelburne, Earl of
Massey, W. N.	Shelley, Sir J. V.
Matheson, A.	Smith, J. A.
Matheson, Sir J.	Smith, J. B.
Maule, hon. Col.	Smith, rt. hon. R. V.
Miall, E.	Smyth, J. G.
Milligan, R.	Smollett, A.
Milner, W. M. E.	Stafford, Marq. of
Milnes, R. M.	Stanley, hon. W. O.
Molesworth, rt. hn. Sir W.	Stapleton, J.
Moncreiff, J.	Stirling, W.
Monsell, W.	Strutt, rt. hon. E.
Moreton, Lord	Stuart, H.
Morris, D.	Talbot, C. R. M.
Mulgrave, Earl of	Thicknesse, R. A.
Mure, Col.	Thompson, G.
Murphy, F. S.	Thornely, T.
Norreys, Lord	Towneley, C.
Norreys, Sir D. J.	Vane, Lord H.
O'Brien, C.	Vernon, G. E. H.
O'Brien, P.	Villiers, rt. hon. C. P.
O'Brien, Sir T.	Wall, C. B.
O'Connell, M.	Walmsley, Sir J.
O'Flaherty, A.	Warner, E.
Osborne, R.	Wellesley, Lord C.
Otway, A. J.	Wells, W.
Palmerston, Visct.	West, F. R.
Patten, J. W.	Whalley, G. H.
Pechell, Sir G. B.	Whatman, J.
Peel, Sir R.	Whitbread, S.
Peel, F.	Wickham, H. W.
Pellatt, A.	Wilkinson, W. A.
Phillips, J. H.	Williams, W.
Phillimore, J. G.	Wilson, J.
Phillimore, R. J.	Winnington, Sir T. E.
Pilkington, J.	Wise, A.
Pinney, W.	Wood, rt. hon. Sir C.
Pollard-Urquhart, W.	Wortley, rt. hon. J. S.
Ponsonby, hon. A. G. J.	Wrightson, W. B.
Portal, M.	Wyndham, W.
Power, N.	Wyvill, M.
Pritchard, J.	Young, rt. hon. Sir J.
Ricardo, O.
Rich, H.	TELLERS.
Robartes, T. J. A.	Hayter, W. G.
Russell, Lord J.	Berkeley, C. G.

List of the NOES.
Adderley, C. B.	Beresford, rt. hon. W.
Arbuthnott, hon. Gen.	Blair, Col.
Archdall, Capt. M.	Bowyer, G.
Arkwright, G.	Brady, J.
Bagge, W.	Brisco, M.
Baillie, H. J.	Brooke, Sir A. B.
Baird, J.	Bruce, C. L. C.
Ball, E.	Buck, L. W.
Baldock, E. H.	Buller, Sir J. Y.
Bankes, rt. hon. G.	Butt, G. M.
Baring, T.	Butt, I.
Barrington, Visct.	Cairns, H. M.
Barrow, W. H.	Carnac, Sir J. R.
Bateson, T.	Chelsea, Visct.
Bentinck, Lord H.	Child, S.
Bentinck, G. P.	Christopher, rt. hon. R. A.

Clinton, Lord C. P.	March, Earl of
Clive, R.	Mare, C. J.
Cobbett, J. M.	Masterman, J.
Cobbold, J. C.	Maxwell, hon. J. P.
Codrington, Sir W.	Miles, W.
Conolly, T.	Michell, W.
Coote, Sir C. H.	Mitchell, T. A.
Cubitt, Mr. Ald.	Montgomery, H. L.
Davison, R.	Montgomery, Sir G.
Devereux, J. T.	Moody, C. A.
Disraeli, rt. hon. B.	Moore, G. H.
Dod, J. W.	Moore, R. S.
Duncombe, hon. A.	Morgan, O.
Dunne, Col.	Morgan, C. R.
Egerton, W. T.	Mullings, J. R.
Egerton, E. C.	Muntz, G. F.
Emley, Visct.	Murrough, J. P.
Evelyn, W. J.	Naas, Lord.
Farnham, E. B.	Newark, Visct.
Fellowes, E.	Newdegate, C. N.
Floyer, J.	Newport, Visct.
Follett, B. S.	Noel, hon. G. J.
Forbes, W.	North, Col.
Forester, rt. hon. Col.	Oakes, J. H. P.
Forster, Sir G.	Ossulston, Lord
French, F.	Packe, C. W.
Freshfield, J. W.	Pakington, rt. hn. Sir J.
Gallwey, Sir W. P.	Palmer, R.
Galway, Visct.	Peacocke, G. M. W.
Gaskell, J. M.	Percy, hon. J. W.
Gore, W. O.	Potter, R.
Graham, Lord M. W.	Prime, R.
Greaves, E.	Repton, G. W. J.
Greenall, G.	Robertson, P. F.
Greene, J.	Rolt, P.
Greville, Col. F	Sandars, G.
Grogan, E.	Smith, W. M.
Gwyn, H.	Smyth, R. J.
Halford, Sir H.	Somerset, Capt.
Halsey, T. P.	Spooner, R.
Hamilton, Lord C.	Stafford, A.
Hamilton, G. A.	Stanhope, J. B.
Hanbury, hon. C. S. B.	Stanley, Lord
Henley, rt. hon. J. W.	Stephenson, R.
Herbert, Sir T.	Sullivan, M.
Hildyard, R. C.	Swift, R.
Hotham, Lord	Thesiger, Sir F.
Jocelyn, Visct.	Thompson, Ald.
Jolliffe, Sir W. G. H.	Tollemache, J.
Jones, Capt.	Tomline, G.
Kelly, Sir F.	Tudway, R. C.
Kendall, N.	Turner, C.
Kennedy, T.	Tyler, Sir G.
King, J. K.	Vance, J.
Knight, F. W.	Vane, Lord A.
Knox, hon. W. S.	Vansittart, G. H.
Lacon, Sir E.	Verner, Sir W.
Laffan, R. M.	Villiers, hon. F.
Langton, W. G.	Vivian, J. E.
Lennox, Lord A. F.	Vyse, Capt. H.
Lennox, Lord H. G.	Walcott, Adm.
Leslie, C. P.	Walpole, rt. hon. S. H.
Liddell, H. G.	Whiteside, J.
Lockhart, W.	Whitmore, H.
Lucas, F.	Williams, T. P.
Lytton, Sir G. E. L. B.	Wodehouse, E.
Macartney, G.	Wyndham, Gen.
MacGregor, J.	Wynn, H. W. W.
M'Mahon, P.	Wynne, W. W. E.
Maguire, J. F.	Yorke, hon. F. T.
Malins, R.	TELLERS.
Mandeville, Visct.	Mackenzie W. F.
Manners, Lord J.	Taylor, Col.

Clause agreed to; as were also Clauses 3 to 31 inclusive.

Clause 32.

CAPTAIN LAFFAN

said, he begged to ask whether the right hon. Chancellor of the Exchequer, would have any objection to insert in it a provise that no issue of these bonds should take place under par?

The CHANCELLOR OF THE EXCHEQUER

said, he thought it would be better not to insert such a proviso, but to leave the matter to the discretion of the Government. At the same there was no doubt it would not be desirable to issue these bonds much below par.

MR. T. BARING

said, that if there was an impression that these bonds would be issued under par, it would have an unfavourable effect upon the subscription.

MR. GLYN

said, that he had no doubt these bonds were likely to be exceedingly popular, though no doubt they were open to objection, arising from the risk attendant on the transfer of a document payable to bearer, as many of them might eventually get into the hands of trustees, who would naturally object to hold documents which did not give them that security for which, as trustees, they bad a right to look. He thought it would be desirable that a power should be given to trustees to have these documents written up as stock on handing them into the Exchequer.

The CHANCELLOR OF THE EXCHEQUER

said, that the Bill would give not only to trustees, but to all persons who held these bonds, the power to convert them into stock whenever they pleased.

Clause agreed to; as were also the remaining clauses of the Bill.

House resumed; Bill reported.