§ Order for Second Reading read.
§ MR. BAXTER
, in moving that the Bill be now read a second time, said, it was a measure of some magnitude and importance. The principle of the Bill was very simple, and the details might be left for consideration in Committee. The Chancellor of the Exchequer, in his Financial Statement of last year, explained the provisions of the Bill to some extent; and no doubt that explanation would be in the recollection of those Members who took a special interest in the question; but it would only be respectful to those hon. Members that he should now make a brief statement. From a very ancient period the funds of the Court of Chancery had been managed by an officer called the Accountant General; and, without impugning in the slightest degree the arrangements made either by the present holder of the office or his predecessors, he should not be going out of the way if he said that some of the principles on which the business of the office was conducted were not quite in accordance with the 775 financial practice of the 19th century. For example, there were two sets of accounts—one kept in the office and the other in the Bank of England; and the assertion would scarcely be credited, but still it was true, that there was no check or audit of these accounts. They might be right or wrong; but the suitors had no guarantee of their accuracy. Thus very great inconvenience had been occasioned, and many complaints had been made by solicitors and suitors, because there was great delay in the paying of money. He did not refer to the proverbial delays in the proceedings of the Court of Chancery; but he referred to delays in the payment of suitors after decisions had been given in their favour. Further, in addition to the usual holidays at Christmas, Easter, and Whitsuntide, the office of the Accountant General of the Court of Chancery was closed—with the exception of three or four days—from the 20th of August to the 28th of October, and during that time no suitor could obtain payment of the money due to him. The salary of the Accountant General was £4,200 a-year, and he had certain perquisites besides; and the whole expense of the office was between £17,000 and £18,000 a-year. In 1869 the Government took into its own hands the lesser funds of the Court of Chancery, and by the present Bill it was proposed to do the same thing with regard to the larger funds, which still remained under the control of the Accountant General, by transferring his office altogether to the office of the Paymaster General, and by re-arranging the business of the department upon a more defensible and modern basis. It would be agreed that the Government of the country ought to be responsible for money belonging to suitors in courts of law; but at present the Government had no control over the vast funds in Chancery, either as regarded the mode in which the accounts were kept, or the investment of the money. It had been said that very little harm had arisen from this state of things, inasmuch as, during the last 150 years, not more than £1,000 or £2,000 had been lost by forgery or fraud; and this objection was the only one urged against what might be called the principle of the Bill. His answer to the objection was—How could they place any reliance upon a statement of this kind? there being no check or 776 audit; the losses may have been much greater, and undiscovered frauds may have taken place to any extent. So far from this being an argument against the principle of the Bill, it was one in its favour. Even granted that there had been no losses from defalcation in the past, that was no reason why they should not take precautions against losses in the future. Up to the year 1854, the funds of suitors in the High Court of Admiralty were not subject in any way to the control of the Government; but in that year the Registrar of the Court proved a defaulter to the amount of £25,000. As Parliament had to make good the deficiency, great alarm was taken, and the result was the funds were transferred to the Paymaster General, just as it was proposed to transfer the Court of Chancery funds by this Bill. The people of this country were scarcely aware of the magnitude of the funds which belonged to the suitors in the Court of Chancery. A Return made to Parliament on the subject on the 13th of March showed that the funds in the hands of the Court of Chancery amounted to no less than £60,425,400 5s. 6d., and of this sum nearly £57,000,000 was invested in the three principal stocks of the country. The amounts of each of these three stocks stand in the Stock Books at the Bank of England in the sole account of the Accountant General; but in the account books kept in his office, as well as in the duplicate accounts kept in the Chancery Office at the Bank of England, the funds of the suitors are distributed amongst about 30,000 separate accounts for each cause. The Bill proposed to change very materially the practice with respect to the investment of the funds of the suitors. At present a suitor had the option of letting his money remain in the hands of the Accountant General or of having it invested at his own risk. The Bill provided for giving the suitor the security of the Government for the investment of his money by permitting it to be treated, subject to the approval of the suitor, in the same manner as if the suitor had placed it in the savings bank, the Government paying interest at the fixed rate of 2 per cent. A mistaken notion had got abroad that the Bill provided that those who were getting higher rates of interest now would be compelled to sell out and to deposit their money at 2 777 per cent interest; but in truth the Bill provided nothing of the sort. It would depend upon the suitors whether the money were placed upon deposit or not; but he believed that a very great number of suitors would choose to place their money upon deposit at a fixed rate of interest. The House would at once see the great benefit the Government would derive from the change. Paying interest at the rate of 2 per cent, the Chancellor of the Exchequer would be able to put out the money again so as to yield 3¼ per cent, the profit on every £1,000,000 of Chancery funds thus dealt with amounting to £12,500. The Bill would, moreover, in respect of its establishment of an audit, prove beneficial by greatly simplifying the system of checks, and leading to lessened expense by a consequent reduction of the staff of clerks. The changes proposed to be effected by the Bill had been frequently recommended by societies and gentlemen interested in the improvement of the law, and the whole of the changes, except the transfer from the Accountant General to the Paymaster General, which was not contemplated at that time, were recommended by the Royal Commission appointed in 1863, and which reported in the following year. The members of the Commission investigated the subject with the greatest possible care, and they were the real authors of the measure which he had the honour to introduce to the House. The plan of investment suggested, if adopted by the House, might, if Parliament so willed it, be used as a very powerful lever for the reduction of the National Debt. Under it, £50,000,000 or £60,000,000 of stock might be converted into Terminable Annuities, upon which there would be a considerable yearly surplus after paying the 2 per cent, and this surplus could be invested in the purchase of Terminable Annuities. The present Bill, however, would not give the Government of the day power to do anything of this sort, and such power could only be given by a special enactment, upon which of course the House would have the opportunity of expressing its opinion. Without anticipating the small questions that might arise in Committee, he would simply move that the Bill be now read a second time, which he believed gave very great facilities to suitors, and would prove an immense benefit to the public.
§ Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Baxter.)
§ MR. CRAWFORD
said, the Bill, the second reading of which his hon. Friend had moved, was identical with one that had lain upon the Table of the House last year. It had haunted the Notice Paper throughout the whole of the Session, appearing not less than 16 times for a second reading, faithfully attended throughout by the Amendment it was now his duty to ask the House to consider. He did not insist upon his Amendment from any feeling of obstinacy; still less was he actuated in his opposition by any interest, implied or supposed, on the part of the Bank of England. He begged to make that statement pointedly, because it had been most improperly asserted in one of the public journals that the Bank of England had an interested voice in the matter. The Bank had no interest whatever in the Bill, except in this way—that the Bank was now burdened with a large establishment of clerks to maintain the double system of accounts; and one effect resulting from the passing of the Bill would be that they would be relieved from this burden. His reason for taking part in the discussion was simply that he had in a weak moment, in the year 1861, consented to become a Member of the Commission referred to by his hon. Friend. The Commission, which numbered among its Members Lord Kingsdown, Sir William Page Wood—the present Lord Chancellor—and other high authorities, occupied about three years in prosecuting the inquiry. Attention was directed, in the first place, to the procedure in the office of the Accountant General. In the course of their investigation the Commissioners invited a statement of opinion from the Incorporated Law Society and the Provincial Law Association, as the representatives of the legal profession in town and country. Both those societies had since petitioned against the proposals of the present Bill, and based their objection upon the very principle which seemed to have recommended the measure to the consideration of the Government. The Commissioners, having thus directed their attention to the mode of procedure in the Accountant General's office, proceeded to make certain recommendations 779 which had the weight of unanimity; but the course they recommended was not in any way analogous to that proposed by the Government. The Commissioners arrived at the conclusion that the whole of the reforms they considered necessary to introduce in the office of the Accountant General were such as might he properly carried out in the office itself under the direction of the Lord Chancellor. The Commissioners did not contemplate any such vast change as that proposed by the Government. Under the recent statute the stock relating to what were termed the public moneys of the Court had been cancelled, Parliament having assumed the responsibility of meeting by annual Votes the charges formerly borne upon the interest of these accumulated funds. Consequently, there only now remained to be considered those funds which consisted of the moneys of the suitors. This Bill was called "The Court of Chancery (Funds) Bill;" but he maintained that the title was wholly misleading. It led some hon. Members to suppose the Bill dealt exclusively with funds belonging to the Court of Chancery which were not private funds; while, on the other hand, it had not directed the attention of the public to the fact that the funds proposed to be dealt with by the Bill consisted, to all intents and purposes, of private moneys. The funds to which the measure would apply consisted of investments amounting to upwards of £60,000,000, and of this enormous sum not a penny was public property. It was all the property of infants, lunatics, trustees, and others, which had been intrusted to the Court for administration. At present these moneys were exclusively under the control of the Court of Chancery, and he maintained that no sufficient case had been made out for divesting the Court of such control. It was true, as his hon. Friend had remarked, that there was no audit of these accounts in the sense in which the word audit was ordinarily applied; but it was impossible to have a more effectual audit, in reality, than was afforded by the fact that there were two parties to every suit contending for the money, or interested in its application. It was very important to bear in mind that during the 180 years which had elapsed since the office of Accountant General was 780 created only one fraud had been discovered, and that was only to the extent of £1,000. It was true that the whole of the investments were made in the name of the Accountant General; but if an order were made to sell out any portion of the stock belonging to a particular suit, it was the duty of the officer in the Chancery Office of the Bank of England to see that there was a sufficient amount of securities standing to the credit of that suit. It was thus impossible that any money could be wrongly applied. Again, it was important to remember that there were two separate records kept of the transactions connected with the administration of money by the Court of Chancery, so that if the records in Chancery Lane were accidentally destroyed all the particulars might be obtained from the records at the Bank. This was, to a certain extent, an advantage, although he admitted that the present system of keeping the accounts was cumbersome. With the single exception mentioned by his hon. Friend, there was no allegation of fraud in the administration of the funds from the foundation of the office of Accountant General to the present time; and, therefore, it could not be maintained that there was any necessity on the ground of additional security for a change in the existing system. There was no analogy whatever between the present case and, that of the Admiralty moneys. This Bill proposed to make an important change in the whole administration of the funds of the Court of Chancery. It proposed to abolish the office of Accountant General, the duties of which were performed under the direct orders of the highest legal authorities in the kingdom, and to transfer those duties to a political department of the State. He understood the Paymaster General was a subordinate officer of the Treasury, and he was unable to view, except with jealousy, the transference to that officer of duties like these. The Bill proposed that certain rules should be made by the Lord Chancellor, and should have the effect of law as soon as they received the approval of the Treasury; but, judging from the schedule, these would practically place the administration of the funds in a great degree under the direct supervision of the Chancellor of the Exchequer for the time being. Recent 781 experience had shown there existed good reasons for not mixing up politics and law with each other; and fresh facilities ought not to be given for raising political questions in that House in reference to matters connected with the responsibility of the Court of Chancery and its officers. The Treasury would, by the provisions of the Bill, have a voice in making the rules in the first instance, and in altering them afterwards. One provision struck him as being very peculiar. It was that the Lord Chancellor might, with the concurrence of the Treasury, make rules which would have the effect of abrogating any general orders of the Court of Chancery relative to the matters aforesaid, whether they were confirmed by Parliament or otherwise. Consequently, if Parliament had passed a law, any of the provisions of which came within this clause, the Lord Chancellor and the Chancellor of the Exchequer would have power to abrogate that law. The Bill further proposed that any enactment in any Act inconsistent with this rule should be repealed. His experience in lawmaking was not large; but this was the first time he had ever known it proposed that the heads of two departments of the Government should have the power of repealing clauses of Acts of Parliament. The Secretary to the Treasury had explained that investments of moneys in Court at present were made in any of the recognized securities, and that when investments already made came into Court they were not disturbed without the consent of the parties. The sums invested according to the present arrangement yielded 3¼ per cent, and the Chancellor of the Exchequer hoped to get possession of them for 2 per cent, and make a profit of at least 1 per cent, in return for the additional security afforded to the suitors. The success of the operation, however, depended upon the length of time the moneys were likely to remain in the hands of the Court. Money likely to be in Chancery for two or three years would not come into the hands of the Chancellor of the Exchequer, because the loss of the suitors would be appreciable. Probably he would receive only those sums likely to be in the hands of the Court for not less than a year or six months, and if that were so it would be necessary for him to invest the money immediately 782 it was paid into Court in order to prevent loss to the Exchequer. If he delayed he would lose much of the interest out of which he hoped to pay the 2 per cent. Then there was also the question of repayments. The Chancellor of the Exchequer had last year spoken of the stability of the fund as compared with the savings banks deposits, which were influenced by bad times. But suppose a sum of £750,000 to be waiting for distribution, and that the order of the Court were made in March, towards the close of the financial year; it would be very inconvenient for the Chancellor of the Exchequer to provide the cash or to sell out £750,000 of stock at such a time. He mentioned these as important considerations which should not be lost sight of in considering the practical working of the scheme. Another point necessary to be considered was whether the scheme was sound in itself, without respect to any consideration of the solvency of the Government as representing the country, and upon this he could not see with what safety the Government could use the suitors' money in the way proposed. The savings banks had been referred to as offering an argument in support of the scheme; but the depositors in the old savings banks felt their money secure simply because they had a Parliamentary guarantee at the back of the investment. The savings banks' accounts rendered up to last year showed that the trustees, as a body, were insolvent. The public looked to them for £39,000,000, and their securities amounted to only £36,000,000, showing a deficiency of £3,000,000. What were these securities? Out of £36,000,000 not less than £27,000,000 were Terminable Annuities, and if any circumstances should arise to cause a run upon the savings banks, while the value of all securities would be reduced, these Terminable Annuities would be unsaleable on almost any terms. There would, no doubt, be a considerable difference in the interest payable to savings banks and under this scheme; but the Chancellor of the Exchequer must keep a portion of this balance uninvested, and if the right hon. Gentleman obtained large sums on large accounts when they came in course of payment he must provide all the money by the sale of such of the securities as he held. A Paper published in 1870 by 783 order of the House gave a return of the amount of interest received and paid to the depositors in savings banks. From 1818 to 1828, when the rate of interest was £4 11s. 3d., the sum paid was £67,670 over and above the interest received. From 1829 to 1843, when the interest was £3 16s., the excess paid to depositors was £95,705. During the last period, from 1844 to the present time, when the interest was £3 5s., or 2d. per diem, the average amount paid over and above that received was £76,000. His object in moving the Amendment was to state, in the first place, that the reforms which were proposed and recommended by the Royal Commissioners in 1864 were all of them reforms which could have been made, and efficiently and effectually carried out, by the Court of Chancery. With the single exception stated by the hon. Member (Mr. Baxter), there had been no allegation of fraud or defalcation in the Accountant General's Office during the long period of 150 years. It was not a wise thing to deprive the Court of Chancery of responsibility herein, and to connect the administration of justice with a political department of the Government—namely, the Treasury. The Chancellor of the Exchequer would not succeed in his expectation of receiving large sums of money belonging to the suitors at 2 per cent. He had no objection to the Government taking into their own hands and having the use of the sums that had not been claimed for a series of years, or the funds—such as deposits on private Bills—that ought to go to the Board of Trade. There was this difference, moreover, between depositors in savings banks and suitors in Chancery—that the money paid in to-day by the former could be withdrawn by them to-morrow at their own will and pleasure, while suitors in Chancery could not act on their individual will. The money was not under their own control, and it ought to be administered on the same principle of perfect security as heretofore. The question of the audit of these accounts had been the subject of a correspondence between the Treasury and the Controller and Auditor General of accounts; but he could not understand whether it was the intention of the Treasury that the whole of these accounts should undergo an audit every year at the hands of the public accountant. There was first the 784 audit of authority, and then the audit of accounts. There was the order of the Court of Chancery, and he should like to know whether it was intended that the Controller and Auditor General was to be intrusted with the audit of the authority under which money was to be paid away and stock sold. There was then the audit of accounts, which could be done by any one acquainted with figures upon the examination of the accounts and a reference to the vouchers, The audit portion of the scheme would require the most careful examination. It was in rather an uncertain position at the present moment. He had now endeavoured to state his objections to this Bill; but he should not have presumed to have interposed in so technical a matter, if he had not obtained some practical acquaintance with the matter as a Member of the Royal Commission. The hon, Gentleman concluded by moving, as an Amendment, that the Bill be read a second time that day six months.
, in seconding the Amendment, said, that the Bill carried out several of the recommendations of the Royal Commissioners, but it also contained a feature that was not considered by them, and which did not form any portion of their Report. It was the most objectionable part of the Bill, and it was on that account that he opposed its further progress. He ventured to think that no cause had been shown for the abolition of the office of Accountant General. There was no analogy between the case of the Registrar of the Admiralty and that of the Accountant General, because no such system of checks prevailed in the former office as that which existed between the Court of Chancery and the Bank of England. The efficiency of this system was such that for 150 years—ever since, in fact, the office was established—no defalcation had ever been shown or even suspected. The Accountant General had been too much regarded as an executive rather than an administrative officer of the Court. The business of his department was of enormous value and amount. He was, in fact, the administrator of the estates of the suitors in Chancery, under the direction and order of the Court. These affairs ought to be superintended by a man of legal mind and education, and well acquainted with the habits and 785 practices of the Court. The Bill, however, proposed to place these matters in the hands of the Paymaster General, who was a mere nominis umbra—a mere shadow. The Paymaster General or Chancellor of the Exchequer would be unable to superintend the funds personally, and the duty would accordingly be intrusted to clerks. This would be inconsistent with the interests of the suitors. The Accountant General was now trustee for the suitor for the due and proper administration of his estate, and his only interest was to perform that duty properly. The Chancellor of the Exchequer was about to sweep all the money away; but for what purpose it was not known, though there was some idea that it was to be turned into Terminable Annuities, and to make it in some way applicable to the State. The Chancellor of the Exchequer would then be in a double capacity, and he should have an interest in the suitor as well as in the State; but the inference could only be that the Chancellor of the Exchequer's interest would be with the State and not with the suitor, as the one would be antagonistic to the other. Some members of his profession were afraid, too, that difficulties would be raised by the Chancellor of the Exchequer in complying with the directions of the Court. Then, again, the fund, as a strictly Government fund, would only yield 3 per cent interest; whereas Chancery funds ought to have an opportunity of getting a better return by their investment in India and other stocks. Powers of this kind had been given to cestui-que trusts; but the Bill would prevent Chancery suitors from enjoying this advantage. Defalcations, it was said, were possible, but they had not occurred, and the Government might protect itself against such a contingency by devising a proper audit, such as that suggested by the Commissioners. As to the 2 per cent to be allowed to funds placed on deposit, if it was a legitimate transaction it might by a simple enactment be carried out by the Accountant General, and if not legitimate it ought not to be carried out by the Government. The Bill apparently contemplated an audit; but it gave no details as to its nature, and the Treasury seemed to have crude notions respecting it. Sir William Dunbar, in some correspondence with the Treasury, had shown that the orders of the Court were 786 legal instruments, which had to be correctly interpreted. They often contained complicated directions, and a legal auditor would therefore be necessary, so that the Bill would result in the retirement of the Accountant General on his full salary, and the appointment of a successor at an adequate salary. Great expense would thus be entailed, and how far the expense would fall on the Court or suitor he could not say. He objected to the Bill, on the ground that it was unnecessary, inexpedient, and uncalled for, and also injurious to the interests of suitors.
§ Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day six months."—(Mr. Crawford.)
§ MR. SINCLAIR AYTOUN
said, he objected to the Bill because it would afford to the Government a means of extending a system of finance which he believed to be in the highest degree objectionable. He believed the motive which led to the introduction of this Bill was a desire, not to benefit suitors, but to extend the system of Terminable Annuities. It must be in the recollection of the House that not many years ago the first Lord of the Treasury introduced a scheme for converting £24,000,000 which he (Mr. Sinclair Aytoun) believed was technically known as Book Debt, due from the nation to the depositors in savings banks, into Terminable Annuities. That scheme was not then carried out; but in the next Session, he believed, when the right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli) was Chancellor of the Exchequer, it was carried out, and that Book Debt of £24,000,000 was, as stated by the Government—although the transaction was merely illusory—converted into Terminable Annuities. The real signification of that transaction was simply this—that a charge, equivalent to interest and a certain sum in the shape of sinking fund for the extinction of that £24,000,000, was imposed upon the Consolidated Fund, while the nation remained liable to the depositors in savings banks for the entire amount of their demands. He could not conceive any transaction more puerile or mischievous—he meant mischievous as mystifying the people with respect to the public accounts, and making those accounts more 787 difficult of comprehension. The Secretary to the Treasury, in a speech to which he had listened with considerable astonishment, stated, among other reasons for the passing of this Bill, that though there had been no defalcation, even of the most trifling sort, with regard to the funds of the Court of Chancery, there had been a defalcation in the Court of Admiralty. He had often heard extraordinary statements from the Treasury Bench; but during the 10 years he had the honour of a seat in the House, he had never listened to anything so extraordinary as this argument for an alteration in one department because certain faults had been committed in another. His main objection to the Bill was that it would enable the Government to extend the system of Terminable Annuities by the introduction of a great degree of mystification into the public accounts and to impose upon the people of this country, without the consent of the House of Commons, an additional amount of taxation. The Secretary to the Treasury stated that the system of Terminable Annuities could not be extended by anything contained in this Bill, and that it would require a further Act of Parliament to enable the Government to make use of the sums which they would obtain possession of under the Bill. But he would like to know whether, though the Bill would not directly confer upon the Government any power of converting the money in question into Terminable Annuities, it would not, when taken in connection with an Act previously passed, enable them to extend the system of converting capital stocks into Terminable Annuities? [The CHANCELLOR of the EXCHEQUER: No.] In 1866 an Act was passed, 29 Vict., c. 5, for dealing with the funds of the savings banks. By the 4th section power was given to the Commissioners of the Treasury from time to time to cancel stocks and create equivalent Terminable Annuities. Suppose the Chancellor of the Exchequer converted £5,000,000 of this savings banks stock into Terminable Annuities, which he held himself, would not the 17th clause of the Bill before the House confer upon the right hon. Gentleman entire power to convert any amount of stock into Government securities of equivalent value? Would it not be in the power of the Chancellor of the Exchequer by the 17th clause of this Bill to 788 invest the suitors' money in Consols and then to exchange it for annuities, which he had created in his character of trustee, by virtue of the authority conferred upon him by 29 Vict., c. 5? To the extension of the system of Terminable Annuities he had the most insuperable objection. It had never been alleged by any Minister, either or the Liberal or Conservative Government, that there was any benefit in the creation of Terminable Annuities beyond this—that it placed it beyond the power of Parliament to recede from the obligation which they had undertaken of providing for the gradual reduction of the National Debt. But this solitary advantage did not really belong to the system, because Parliament had nothing to do but to repeal the Act which placed the Annuities on the Consolidated Fund, and then we should be exactly where we were before. The whole transaction would come to an end, and it would become apparent that a sinking fund had been imposed upon the country subject to all the evils of a sinking fund which years ago had been considered and exposed. He wished to know how the interest of the taxpayer was to be promoted, or, rather, how it was not to be sacrificed, by the Bill now before the House? He understood that there was a considerable sum in the Court of Chancery which could not be invested, because it was necessary to meet any demands for payment which might be made by order of the Court. It was now proposed that 2 per cent should be paid upon this entire sum, amounting probably to £3,000,000. The payments to which he had referred would at once have to be made out of the Consolidated Fund, while the profits which the Chancellor of the Exchequer anticipated from investing the money at a high rate of interest would be only gradual, and would not take effect for a considerable number of years. It was generally supposed that the Government intended that the Bill should confer power upon them to deal only with the cash now in the Court of Chancery, and that the stocks, whether Consols or other securities, were not to be interfered with. But it appeared to him that the 16th clause conferred very large powers of dealing with the property of persons who might not have the means of effective resistance. The Bill proposed to deal with the property of minors, lunatics, and others not capable of managing 789 their own affairs. Again, any one who read the letter of the Controller and Auditor General would see that, in his opinion, the audit proposed by the Government would not he effectual. He should therefore oppose the Bill, because it conferred upon the Government powers of extending a system of finance which rendered the public accounts difficult to be understood, and because it had not been shown that any satisfactory system of audit would be established under the Bill.
said, he was sorry this Bill had been brought forward by the Government. In his opinion, the Government had quite enough to do to manage their own business, and therefore the balance of convenience and inconvenience was very much against the proposal that they should now set themselves up as quasi-trustees of private property. There was no possible reason why, after this beginning, the Government should not lay their hands on all other private property held in quasi deposit for the sake of obtaining some advantage to the public in the reduction of Debt by means of Terminable Annuities. The savings bank money was in your own hands, and you only extended your power of dealing with it; but this was strictly private property, and he did not know where you were to draw the line if you made this beginning. If you could make an advantage for the public with £60,000,000, à fortiori you could turn £200,000,000 to still greater advantage, and the amount of public and private deposits of one sort or other with which the Government might deal was inconceivable. There was another serious objection to the Bill. At present no public men stood more free from suspicion of wrong-doing in money matters than the Government of this country. But if the Government took into their hands the power of dealing with vast sums of money, a great effect would be produced upon the public funds, and people about them, who would know of the buying and selling, would be subjected to imputations from which they were now free. He did not mean that anything wrong would be committed; but the mere suspicion would inflict great injury on the character of our public men. As to the details of the Bill, he did not mean to say that the money would not be as secure as it was before; but he did not 790 see any certain security provided. The Paymaster General was not an officer of the Court, and any day might write "No effects," if he pleased. Sometimes, as we knew, he was without funds, and had to apply to the Bank, and in such a case how were the parties to get their money? Moreover, a recent action had shown that Courts of Law had no power over Government officers. On the whole, whatever the gain in the reduction of the public debt, the danger of this measure far outweighed this possible advantage. The pleasure of grabbing other people's money was so great and so catching that if you began here you would, no doubt, go on to take a pretty good sweep of other moneys. He should, therefore, support the Amendment for the rejection of the Bill.
§ MR. BOUVERIE
concurred with what had fallen from the right hon. Gentleman (Mr. Henley). The Court of Chancery now held these funds in conformity with legal rules and by an officer of the Court. It was a very different thing when the Government of the day proposed to use it for the purpose of jobbing in Stocks, for that was the long and short of what was to be done. Last year the Chancellor of the Exchequer avowed that the object was to dabble in the Stocks with this money for the purpose of reducing the capital of the National Debt by means of Terminable Annuities. The possible gain from such a system was not equal to the risk that would be run. Every one understood the system of the Court of Chancery, which acted as stakeholder for the litigants; but if he were a suitor in the Court, he should not feel so comfortable about getting back his money if the Paymaster General had the nominal control of it. The Paymaster General was the mere shadow of a name. He had himself held this office for a few months, and his official duties consisted in going once a week to Chelsea Hospital, and sitting there a couple of hours for the purpose of pensioning old soldiers. That was all he (the Paymaster General) had to do. All the financial business connected with the office was done by a subordinate officer of the Treasury, with whom the Paymaster General had nothing whatever to do; and besides the official duties he had described, the only practical consequence of being Paymaster General was 791 that having been an accountant to the Crown, you could not for some time give a valid title to any estate you wanted to dispose of, because the Crown might have a prior claim. Nobody in that House knew who the Paymaster General was. There was once a most able Paymaster General—Macaulay. But neither Macaulay, nor any other person who had in recent times filled this extraordinary office, could tell what the duties of the Paymaster General were. It was difficult for him (Mr. Bouverie) to find out who the present Paymaster General was, and it was only by searching the Red Book he had discovered that the present Paymaster General was the Earl of Dufferin, who had just been named by the Crown as Governor General of Canada. Was the Paymaster General, an official exercising the functions he had mentioned, to be put in the front of this Bill as responsible to the suitors and the public? If Government wanted to take this money, let them take it and deal with it in the name of an officer of the Treasury, who might be called Deputy Paymaster General; but do not let them put forward the holder of an obsolete office, pretending that that was a proper substitute for the Accountant General. The acuteness of the Chancellor of the Exchequer could not defend such a proposal, although something might be said in favour of the Treasury having this money, which could treat itself as a bank. Already it had appropriated the Suitors' Fund, which amounted to £5,800,000. The State gave a guarantee, engaging to meet any claim upon that fund; and now the right hon. Gentleman was going to appropriate a further sum of £60,000,000, and make the State give a similar guarantee. Practically, it was now a debt by the public. Part of the money was already invested in the Stocks, and it mattered little in whose name it was invested; but it would be an absurdity to knock on the head the Accountant General, an officer whose position was known, who had given functions to discharge, whose course had been very clearly marked out for a long series of years by orders of the Court, and to set up in his stead an officer whom nobody knew, who had no given functions to discharge, who was a mere shadow, and who was really not responsible for the proper discharge of his duties. These might be objections to a 792 clause to be urged in Committee; but he would counsel the right hon. Gentleman to devise for the discharge of these functions a better officer than one who would be under no real responsibility to the public.
§ MR. MAGNIAC
said, that hon. Members, in opposing the Bill, had conjured up bugbears which had no existence save in their imagination. The suitor was dependent upon the funds of the Court of Chancery; but if he had only the Court to depend upon, he would not find the security good. It was, in fact, the security of the State, and whether the money was invested in the Three per Cent Consols or in Terminable Annuities everybody knew that the value of the security was the same in either case. What would be the value of Consols on the day that Terminable Annuities became valueless? He had ventured once before to remonstrate against the depreciation of Terminable Annuities; and, in a case where they did not require to realize a large capital, he could not imagine a better security. This was not a political Bill, but a financial one; but the Chancellor of the Exchequer had nothing to gain by dealing with public money, whether it were that of suitors or of taxpayers. He could not touch this money as Chancellor of the Exchequer; he had simply to deal with it as a public officer, whose acts were subject to public supervision. The Chancellor of the Exchequer would probably make money by it, for if "short" money were taken out other money would come in to meet it; he would have in hand that average which constituted the profit of the banker; and it was probable there would be a considerable margin upon which a handsome profit would be made at 1¼ per cent. Jobbing sales, such as had been alluded to, would be avoided; and there would be a steady investment of the funds. The idea of a run on the balance was not to be apprehended any more than a run on the Consols or on the Bank of England. He was surprised to hear an hon. Gentleman state that there was no advantage in this Bill. Everybody knew how utterly insufficient the present security was. A minor's money might be placed in Consols, and on the minor coming of age the stock had to be sold out, and it might happen that the money might all the time have been just as well 793 kept in a bag, so far as profit was concerned. It was, therefore, a great advantage that the money might under the present Bill be put by in a way which would give some interest for the time during which it had been invested. The right hon. Member for Kilmarnock (Mr. Bouverie) had given a picture of a high official such as, he thought, ought not to have been presented to the House. The Paymaster General was a man appointed by the Bill to act in a certain capacity, and that was simply to give his signature in obedience to the order of a Judge in Chancery; but if they were to have an aspiring gentleman in the office, who would inquire what the money was wanted for, then there might arise those dangers about payments to which allusion had been made. He should support the second reading of the Bill.
§ SIR JOHN LUBBOCK
said, he hoped the Bill would be read a second time. He did not think that Terminable Annuities, when held by Government Departments, were open to the objections which had been brought against them by the hon. Member for the City of London (Mr. Crawford). He was not in favour of the Government assuming banking functions; but that remark did not apply to the so-called "short" money in the Court of Chancery because it was deposited there for certain purposes, and was not generally easily removed. He did not, however, understand why the Accountant General should retire on a pension equivalent to his full salary, and it was undesirable for the House to commit itself to such a proposition as that. He thought the Bill would, in several respects, introduce improvements. For instance, he was as anxious as most people for holidays; but he wished them to be individual and not departmental, because great inconvenience was experienced from the time the Court of Chancery was now closed. He was also anxious that the offices created under the Bill should be situated near the Bank of England, for it was very inconvenient, when a person had to receive money out of Chancery, that he should have to go to one part of London to get the cheque, and afterwards to another part of London to get the cheque cashed. It was also an unnecessary regulation that everyone who received money from Chancery should be identified 794 by a solicitor, and it was inconvenient to insist on the personal attendance of those who had to receive money. Believing that, if all these points were taken into consideration, the Bill would be of considerable advantage to the public, he hoped that it would receive the support of the House.
THE SOLICITOR GENERAL
observed that the hon. Member for the City of London (Mr. Crawford) had told the House that neither personally nor as the representative of the great constituency of the City had he any interest in opposing the present Bill; but it must be remembered that it appeared, from a Return of cash balances, that there was a sum of £587,132 standing in the Bank of England on which no interest was paid, and that must be an advantage to the Bank. Then it was said that the title of the Bill was misleading; but he submitted that that was quite a mistake. Then with regard to the assertion that there was no sufficient cause for the passing of this Bill, he would refer to the recommendations of the Commissioners on this subject, two of which were exceedingly important. One of the points referred to by them was that under the present system the Accountant General was not strictly a trustee, but a banker of the Court of Chancery, and was responsible to his clients for the money belonging to them. Now, there was no responsibility except his personal responsibility. What was offered in the place of that? The guarantee of the Government of the nation. If any mistake or fraud should take place the nation would become responsible, and not the Accountant General, and the suitor would have better security than he had at present. The Accountant General was not only a banker, but he received the produce of the loose cash in hand. This was something like £3,000,000, though at present nearly £2,500,000 of it, under the Courts of Justice Act, was lent to the Government. It yielded no profit to the suitors, but under the new system they would receive 2 per cent; whereas at present they could get no interest unless they consented to be speculators in the Funds, which involved the liability of a loss by having to sell out when the Funds were low. The Bill would not deprive them of the option of speculating. There would be another great benefit to the suitor under the Bill. The 795 Court of Chancery was closed for a considerable period, and the Accountant General's Office was closed also. He could understand the advantage of the long vacation for lawyers; but could not understand why the Accountant General's Office should be closed. Under the present Bill the system would be changed, and the offices of the Accountant General and the Paymaster General would be open all the year round. Provision would also be made under one of the clauses for cashing small cheques in the same building in which they were received. The hon. Member for the City of London had alluded to the audit, and had stated that there could be no more effectual audit than that of the two parties to the suit. Now, what did the Report of the Commissioners, which was signed by the hon. Member, recommend? The establishment of an effectual audit, and the discontinuance of keeping duplicate books at the Bank of England.
§ MR. CRAWFORD
said, the hon. and learned Gentleman was misinterpreting his remarks. What he had said, in answer to the statement of the Secretary of the Treasury, was, that there was no audit, and that the manner in which the accounts were kept was equivalent to an audit. He had also said that if the present system was cumbersome, it might be done away with; he had not quoted it as a good system.
THE SOLICITOR GENERAL
accepted this as his hon. Friend's present opinion, but thought he must have held a different opinion at the time he signed the Report of the Commission, because it was founded on the circumstance that the present system was not effectual—that the system of keeping duplicate accounts should be discontinued. As to the Bill mixing up justice with politics, the notion was absurd. The real treasurer of these funds was the Government; for if any gross fraud were committed, the suitors would appeal to the State for redress, on the ground that it had established an insufficient mode of keeping the accounts. There would be great force in this plea, which was urged by the Admiralty suitors with success, the nation having to make good the loss. It had been said that Courts of Justice had no remedy against officers of the Government. All, however, that had been decided was that servants of the Crown were not accountable in their 796 ordinary Ministerial capacity to Courts of Justice, but to the Legislature. Wherever an Act of Parliament made them liable, they would be liable, and unless the Paymaster General obeyed the orders of the Court, he would be liable, under the 9th clause, to the same penalties as the Accountant General. His hon. Friend had said that the deposits would be so small that the Government would not get sufficient to pay the 2 per cent interest and the other expenses of the office; but in another part of his speech he said they would be so large that by dealing with them the Government might, in times of pressure, be embarrassed. Both those statements could not be correct. A private banker's customers might call for all their deposits at a moment's notice; but with regard to these funds ample notice would be necessary, and the forms of the Court of Chancery would insure ample time for finding £750,000, or any other sum that might be called for. As to the Paymaster General having no money, the Accountant General, his money being either at the Bank of England or in the Funds, was equally liable to that contingency. He had been surprised at the remarks of the right hon. Gentleman (Mr. Bouverie). Whether the duties of Accountant General or Paymaster General were performed personally or by deputy was quite immaterial; the name by which the corporation was called did not matter as long as there were sufficient safeguards against malversation. It was said that the Bill would give too much power to the Lord Chancellor, because it would enable him, with the consent of the Treasury, to make new rules and regulations. Now, the Lord Chancellor possessed that power at present, and this Bill, instead of framing a new practice, would merely continue the old one, which had never yet been known to fail. It had also been said that the 16th clause would empower the Paymaster General to turn people's stock into cash without their consent, but this was quite a mistake. It simply enabled suitors entitled to stock to apply to the Court for an order to sell it out and turn it into cash, which would be done without an actual sale, thus avoiding the delay and expense of an actual sale, which were incident to the present system. The hon. Member for Kirkcaldy (Mr. Sinclair Aytoun) had said the Chancellor of the 797 Exchequer could convert the Consols belonging to the suitors into Terminable Annuities; but the 29 Vict., c. 1, to which he had referred, enabled the Chancellor of the Exchequer to deal with only £5,000,000 in this manner. The Bill did not enable the Chancellor of the Exchequer to deal with more than the £500,000 remaining in the Bank of England—a comparatively small sum as compared with the £60,000,000 upon which the National Debt Commissioners would pay 2 per cent. The present Bill had been framed for the advantage of the suitors in the Court of Chancery, and the fact that it might ultimately lead to the paying off of some portion of the National Debt by way of Terminable Annuities, ought to be regarded, in his opinion, as a benefit and not as a grievance.
§ SIR RICHARD BAGGALLAY
said, he did not share in the doubts, which some hon. Gentlemen seemed to entertain, as to the security which the suitors of the Court of Chancery would have in the event of the Bill being passed, but he had a twofold objection to the Bill itself. Before, however, proceeding to state these objections, he would observe that the taunt which had been thrown out by the Solicitor General, as to the motives which had actuated the hon. Member for the City of London (Mr. Crawford), in the speech he had made, was an unworthy one. The Solicitor General appeared to think that the hon. Member was influenced by a desire to keep the cash balance of £500,000 in the hands of the Bank of England; but considering that the profit derived by the Bank for managing that balance amounted only to the sum of £1,542 per annum, for which they had to open 30,000 different accounts, and deal with upwards of 50,000 separate cheques, the Bank was not likely to be influenced by any such trifling consideration. His (Sir Richard Baggallay's) first objection to the Bill was that it did not appear to be an honest Bill, for it had a further purpose and object besides its ostensible object. They were told that the purpose of the Bill was to abolish the office of the Accountant General of the High Court of Chancery, and to amend the law with regard to the money paid into that Court and as to the management of the securities of the suitors; and nothing appeared, either in the title 798 or preamble, to show that the ultimate object of the measure was to carry on the business of banking with a sum which might be variously stated at any sum from £3,000,000 to £60,000,000, borrowing that money at 2 per cent from the suitors, and making whatever profit was possible out of it. He did not object to allowing the suitors to have their money invested on deposit at 2 per cent; but that could be carried out without any transfer of the funds from an officer of the Court of Chancery to an officer of the Treasury. Then it was provided in this Bill that the money might from time to time be lent to the Commissioners of the National Debt; but nothing was said in the Bill as to what the Commissioners were to do with the money when they received it, though we knew from another source that they were to apply it to the purchase of Terminable Annuities. His second objection to the Bill had reference to the fact that the Accountant General stood in the position of trustee for all the funds in the Court of Chancery. These funds amounted to about £60,000,000, the whole of which, except a sum of about £3,000,000, were represented by Government or other securities. The proposition now was, as indicated by the Chancellor of the Exchequer last year, to allow the Government to use the larger portion of these trust funds, paying 2 per cent for such use and applying any profit they might make to the benefit of the public by relieving the taxpayers. No doubt a scheme of that kind was likely to receive general approbation from those who had to pay taxes. But was it just? Was it honest? What would be said of any other trustee who said to the person whose money he held in trust—"You may be satisfied with 2 per cent interest, and I will apply your money in the endeavour to get something to my own advantage?" Such a proceeding would not be tolerated for a moment in an ordinary trustee, and he did not see wherein the Court of Chancery differed from trustees holding funds under ordinary circumstances. He admitted the right of the Government to tax suitors in Chancery for the payment of the expenses of the Court, or for the erection of any buildings required for the business of the Court; but he confessed that it appeared to him that whatever profit was 799 derived from use of the suitors' money should be applied to the benefit of the suitors themselves. He should, therefore, support the Amendment.
§ Question put, "That the word 'now' stand part of the Question."
§ The House divided:—Ayes 89; Noes 37: Majority 52.
§ Main Question put, and agreed to.
§ Bill read a second time, and committed for Friday 19th April.