§ Order for Committee read.
§ SIR FITZROY KELLYsaid, he must now state his reason why he thought the House ought not to proceed further with this Bill. In the first place, the statements which he had made on a former occasion had not been refuted. He had said that the marketable value of these three new stocks were 93l. 91l. and 90l., and no more. The result of the transaction was, that the holders of these stocks were losers by the conversion to which they had submitted, of about 7, 9, and 10 per cent on their capital, to say nothing of their loss of interest. The amount of these stocks was about 2,500,000l., and, therefore, the result of the operation was, that the unfortunate holders had been losers of upwards of 200,000l. by the bargain. These state- 1399 meets he now ventured to make to the House, upon the highest authority—upon the authority of more than one person connected with the money market in the City of London, and who were well acquainted with it in all its parts and branches. If such be the result, then the question arises, will this House enable the Government to continue and repeat those proposals to the remaining portion of the public, having been accepted by some upon whom their acceptance had entailed a very serious loss—a loss of not less than 200,000l.—and a loss, too, which they must now endure? It might, indeed, be said that those unfortunate persons had not been compelled to accept these stocks; that under the Act of Parliament they had an option either to be paid off in 100l. money, or to accept the proposed amount of the new 3 per cent stock. Such persons, he was quite willing to admit, had not any great claim to the consideration of the House. It might be no valid argument on their parts to say, We believed in the different representations made by the various Members of the Government, that in proposing these three stocks they gave so many equivalents for 100l. It might also be said, that it was the business of those persons to have calculated better, and that they should not have listened to the representations of the Chancellor of the Exchequer; that, in short, they had only themselves to blame if the equivalents for 100l., in the shape of new stock, turned out to be only worth 90l., 91l.,and 93l. But yet it might be fairly urged that, such being the result of those operations, the Chancellor of the Exchequer was not warranted in proposing the renewal of such terms, nor Parliament in sanctioning such a proposal; for how did the matter really stand? They were to pay off some 9,000,000l. or 10,000,000l. of South Sea and other stocks; and they proposed to the holders of 3 per cent Consols and Reduced to convert 90,000,000l. more into any of these three new stocks. Accordingly the Act passed for that purpose. The proposal was made, but it now appeared that instead of 100.000,000l., of which the Act authorised the conversion into one or other of these new stocks, and of which the Government spoke in so confident a manner, the whole quantity taken was only between 2,000,000l. and 3,000,000l., and there was no reason for anticipating that any greater amount of these new stocks would be demanded, seeing that the holders of those stocks 1400 would lose the very large sum which be had just mentioned to the House. If the Bill had merely enabled the Government to propose to the other holders of South Sea Stocks, who were supposed to have no opportunity of converting their property, the option of converting it into any of these new stocks, that Bill would be objectionable upon the grounds urged against the former Bill when before the House; and in the present state of the money market it would be nugatory, unless to some who had peculiar occasion for these particular stocks. No man would, he believed, be found to accept any one of those three alternatives. He thought, therefore, that as it was holding out an inducement to the public, or to some amongst the public, to accept a proposal, which might bring upon them a very serious loss, that it ought not, under its present conditions, to be sanctioned by Parliament. It had been observed that the failure of the scheme of the Chancellor of the Exchequer was caused by the weather and the seasons, and such adventitious circumstances as it was impossible to foresee when the scheme was before the House. But he (Sir F. Kelly) must take leave to call the attention of the House to the unquestionable fact, that, with regard to the expediency and the justice of the conversion from any old stock to any one of these new stocks, the failure had occurred entirely uninfluenced by those causes, which had no effect upon the question whatever. If any one having 100l. 3 per cents when the Bill passed, had commuted it into 110l. of the 2½, which was the best of the three new stocks, let them see how they stood in consequence of the fall in the public securities. He had exchanged 100l. 3 per cent consols against 110l. new 2½ consols which had been at 100l., but were now at 981., or a little less; but a fall in the price of consols, whether occasioned by the payment of dividends, or by the events which had been alluded to, and which occasioned the fall in public securities generally, was not greater than the fall which had taken place in the 2½ per cents. The only difference was, that if the funds had varied in the same state they were in when the Bill passed through Parliament, 100l. then would be 100l. still, but these new two-and-a-halfs, instead of being 93, would now be 95. If there were a fall of 2 per cent in the one stock, there would be a fall of 2 per cent in the other stock, and no more. Therefore, with respect to this 1401 scheme, the case stood as it did when Bill was first before Parliament. None these new stocks had anything like an equivalent for 100l. 3 per cent stock, and therefore any Act of Parliament which held out to the public the idea that, by accepting any one of those three stock they would be accepting an equivalent that which they abandoned, was a delusion to which the House of Commons ought not to be a party, seeing how the case stood The Chancellor of the Exchequer said the public would sustain no loss by this transaction. He (Sir F. Kelly) did not charge upon the Government the loss which ha occurred; but it certainly was incorrect to say that the public had sustained no loss. If the Government had, warned by events paused before they proceeded further with the Bill, and deferred until more settled times the paying off of South Sea Stock they would have been savers, and therefore gainers of at least 2 per cent on the whole 9,000,000l. or 10,000,000. paid off. He repeated, he did not bring any charge against the Government, further than that they held out delusive hopes. But what he complained of was, that, in the repeated warnings which had been given whet the Bill was before the House, the Govern went should have persisted in holding out those delusive expectations. The scheme was ably devised, but it failed in its ma chinery—it failed entirely in the mode in which it was attempted to be worked out. The object of the Bill was to remove from the stock market a cluster of small stocks which disturbed the financial operations of the Government, and by which the fund were affected; and they wished, in lieu thereof, to bring into existence three kinds of stock of a still minor amount and description, and which were to be suffered to disturb the money market for the next forty years, for without a breach of public faith they could not be extinguished before that period. There was, in his opinion, on, way of remedying the Act. The mischief, as he had already said, was not in the original conception of the scheme, but in its machinery—if accompanied with suitable machinery, the creation of those three new stocks would, in his opinion, have been productive of great advantages to the public and to the Exchequer. But the misfortune was, that the Chancellor of the Exchequer having conceived the idea of the creation of those three new stocks, undertook a task which was beyond human capacity He believed that if any one could have 1402 been successful in such an operation, it would have been the right hon. Gentleman, had he not endeavoured to achieve what no man could effect, namely, to ascertain the future value in the market of three new and untried stocks. The right hon. Gentleman had on more than one occasion appealed to former measures of Finance Ministers, and particularly to a measure proposed in 1844; but he begged to point out to the House that the two cases were not analogous. In former cases, the value of the new stock proposed to be created was accurately known, while in the present instance that was not the case. As matters now stood, there was only one way in which the evil could be remedied or corrected, and that was by the results of experience as to what those newly created stocks were worth. They might yet, if they would do justice to the stockholders, offer those who had dealt in those new stocks a sufficient addition to their amount to make them really worth 100l. They might make an equivalent increase in the capital of the amount of 2½ and 3¼ per cent stock, so as to be a real and true equivalent to 100l.; and even still 30,000,000l., 60,000,000l., or even 90,000,000l., might be converted into these stocks. He admitted this step would immensely add to the capital of the national debt; but that again might be provided for by a measure similar to that which the right hon. Gentleman had consented to adopt when last the Bill was before Parliament. In its present shape, he objected to the Bill, and he would take the sense of the House upon it. By the Bill, the right hon. Gentleman proposed that any of the holders of those stocks might convert them either into the new stocks, or 3¼ per cent, or guaranteed 3 per cent stock. He objected altogether to that proposal. Having found that the money stocks fell 8 or 10 per cent, or at least were that much less than they expected they now would be, the Government now came forward with a clause, saying, "Accept one of those three new stocks; you can, though we know you will not, accept them, but you can have instead the 3¼ per cents." He thought that the House would act most wisely by at once frankly admitting that this scheme of treating these three new stocks as equivalent to one another, or as equivalent to 100l., had proved to be founded on a not unnatural misapprehension, and that, therefore, the evil should be allowed to stop where it was, and that Parliament should be applied to 1403 for its authority to charge upon the Consolidated Fund the sums which had been paid off in money. So strong a sense had he of the injustice and impolicy of the Government's project with respect to these stocks, that he should feel it to be his duty to take the sense of the House upon the question of going into Committee on the Bill.
§ The CHANCELLOR OF THE EXCHEQUERsaid, that his answer to the hon. and learned Gentleman was this. The hon. and learned Gentleman had stated a particular opinion in regard to the present Value of certain stocks; but, in the first place, that was a matter entirely of opinion, and, in the second place, even if the opinion of the hon. and learned Gentlemen were correct, he (the Chancellor of the Exchequer) did not think it had the slightest bearing on the question whether the House should go into Committee on this Bill.
§ SIR HENRY WILLOUGHBYsaid, that he took a very grave view of the probable effect of this Bill in case it should pass into law. It seemed to him calculated to strike at the very root of our national credit.
MR. J. B. SMITHsaid, he considered that, the South Sea Company having assented to the right hon. Gentleman's first proposition to accept a money payment, it was a very bad precedent in the Government to depart from the first proposition and to proceed to the second. The first proposition, having been deliberately made and deliberately accepted, should have been adhered to,
§ MR. WILKINSONsaid, he should support the Bill, simply on the ground that the Chancellor of the Exchequer must be enabled to meet the engagements he had been authorised to contract.
§ House in Committee.
§ Clause 1.
§ MR. SPOONERsaid, he wished to know whether the South Sea Company, as a Company, having refused to accept the offer which had been made to them, were to have the offer repeated?
The CHANCELLOR or THE EXCHEQUERsaid, that the parties embraced by the first clause were several classes of proprietors who were disabled by the Charter of the South Sea Company from taking part in the proceedings of the Company. These classes were three in number: first, the class of corporations, or public bodies; secondly, the class of private trustees; and, thirdly, the class of smaller proprietors, 1404 who, not holding 500l. of the Company's stock, were not entitled to vote at the Company's meetings. "With regard to the corporations, there were from a dozen to twenty of these bodies which held some 100,000l. of South Sea Stock; and the amount held by the class of private trustees was from 1,700,000l. to 1,800,000l. The total amount of South Sea Stock held by the three classes was between 2,200,000l. and 2,400,000l., or about two-thirds of the whole capital or trading stock of the Company. All these parties being disabled from taking any part in the debates of the Company son the question of whether they should accept the commutation or not, the commutation must be taken to have been declined—as the law stood—as far as these parties were concerned; but without their having, in reality, given any vote in the matter, although they held by far the larger portion of the stock of the Company.
§ SIR FITZROY KELLYsaid, that supposing he was a trustee holding 500l. of South Sea Stock, he wished to know why he should not be able himself to commute at once without the intervention of the Company? Why should the Company be made the medium for effecting the operation?
§ The CHANCELLOR OF THE EXCHEQUERsaid, that the South Sea Company was a corporation possessed by law of a certain indivisible trading stock, although the interests of individuals in that stock was made saleable and transferable from one party to another. The consequence was, that when the Government made the offer to the Company to commute its stock, the effect of the commutation not being accepted made it absolutely necessary for the Company to come to Parliament for powers to divide this trading stock, which was otherwise indivisible. It was necessary that that should be dealt with by a private Bill, and the House had passed a private Bill, which amounted to the practical resuscitation of the Company; but that was a matter entirely distinct from the one they were now discussing. He had thought the most convenient course to pursue was to deal with the South Sea Company as a public body, and he proposed to give the trustees the same power, as far as regarded their portion of the stock, as the whole body had possessed by their votes. This clause must therefore be considered in conjunction with certain other clauses in the private Bill of the South Sea Company, 1405 which had been read a third time that day.
§ Clause agreed to.
§ Clause 2.
§ The CHANCELLOR OF THE EXCHEQUERsaid, that this clause grew entirely out of the view which the South Sea Company took of its own interest, and had no connexion whatever with the operation which had lately been going on. The Company desired to be constituted a trust Company, and Parliament had assented to its being made so. One condition to the carrying out of that arrangement was, that the Company should have a guarantee fund of 300,000l. in the public securities; and it was now proposed that that guarantee should be formed out of the Company's present stock, so as to obviate the roundabout and lefthanded operation of the Company's being compelled to sell their stock to-day in order that they might reinvest it again to-morrow.
§ MR. MALINSsaid, it was plain to everybody that the scheme of the Chancellor of the Exchequer had been a total failure; but the bargain ought to be adhered to, and the dissentient holders of the stock should be paid off. If the right hon. Gentleman had not sufficient balances in the Exchequer for the purpose, let him come to Parliament and ask for the necessary means.
§ Clause agreed to.
§ Clause 3.
MR. J. B. SMITHsaid, he thought the Chancellor of the Exchequer would place himself in a very disadvantageous position if this clause were passed; for if, on the 25th of December, the Treasury offered a commutation, and the parties had eleven days to consider whether they should accept it, operations might take place in the money market which would embarrass the right hon. Gentleman in his arrangements. He wished the Chancellor of the Exchequer to explain what course he proposed to adopt in the event of the stockholders refusing to accept the alternatives held out to them under this clause, which he much feared was a probable event.
The CHANCELLOR or THE EXCHEQUERsaid, he must decline giving any explanation on the point, whatever might be its interest. He protested against the public discussion of remotely possible contingencies by Gentlemen, some of whom, he was hound to say, seemed to speak as if they had no other object than that of ex- 1406 aggerating the difficulties under which the public was placed, as likely to have very mischievous effects. He did not subscribe to the doleful and melancholy vaticinations in which some had indulged, nor was he prepared to accept the liberal and munificent offers which had been held out to him, of means for raising a loan to get out of the serape. This might be a short and easy mode of proceeding for him; but it would not be advantageous for the public, of whose interests they were bound to act as stewards. He was quite ready to admit that he was placed in a disadvantageous position with regard to some of his arrangements; but he regretted that the public were also subjected to the same disadvantage. It was quite impossible, however, in the present state of uncertainty, that he could enter into any details as to the mode of proceeding it might be most prudent to adopt in making arrangements under this measure.
§ MR. HENLEYsaid, he thought this Bill was very obscurely drawn, and regretted that the Chancellor of the Exchequer had not condescended to inform the Committee what was the amount of money to which the clause now under consideration would apply. In his opinion, the measure proposed to the Committee would tend very greatly to destroy the public credit.
§ The CHANCELLOR OF THE EXCHEQUERsaid, he must complain that the right hon. Gentleman who had just sat down stated that he had not condescended to inform the Committee of the amount proposed to be commuted. He had already informed the Committee that the amount would probably exceed 2,000,000l.
§ SIR FITZROY KELLYsaid, he thought that the right hon. Gentleman would be placed in a very difficult position by the passing of this measure. If, on the 1st of November, he should be called upon to fix the price, and the 3¼ per cents were at par, the Government must, in any case, be losers. Suppose the right hon. Gentleman fixed the price at 99l.; then, if the stock rose, persons would accept the new stock, and if it fell they would accept the 100l., so that in either case there would be a loss of the public money.
§ MR. SPOONERsaid, he protested against the proposal, for he was of opinion that any difficulty which existed the Chancellor of the Exchequer had brought upon himself.
§ Clause agreed to; as were the remaining clauses.
§ House resumed.
§ Bill reported as amended.