COLONIAL GOVERNMENT SECURITIES. RESOLUTION.

HC Deb 19 June 1888 vol 327 cc660-83

SIR GEORGE BADEN-POWELL (Liverpool, Kirkdale)

said, the Motion he had to bring forward that evening was of a far-reaching and very important character. It referred to a subject with which he was very familiar, and he should not, therefore, have to detain the House at undue length in explaining it. The question he was about to deal with was very anxiously watched by our Colonies and by those in England interested in them. It was also watched with equal anxiety by those persons in the United Kingdom who, as trustees or beneficiaries, were concerned in the investment of trust money. He thought it would be interesting to the House if he gave one or two details on three points which seemed to him most important in connection with the subject of his Resolution. One of those was the necessity which existed for action in the direction in which he wished the House to travel; the second point was with regard to the actual value, from a financial point of view, of Colonial Government Securities; and the third and last point, which he would deal with very briefly, would be the facilities for action in the direction which he advocated. He would premise that he did not intend to advocate the laying down of any positive law, but that he merely wished that permissive power should be given both to Colonial Governments and to trustees and others who were in charge of trust monies. He might add, that he wished, so far as he could, to give effect to the results of the discussion which took place upon the subject at the Colonial Conference of last year. In the first place, with regard to the necessity for action in this direction, they had absolute proof that such action was necessary, and they also had relative proof in the legislation which had already taken place in recent years. The absolute proof was, that while the wealth of the country placed in the hands of trustees was on the increase, the opportunities for investment of these trust monies was on the decrease. There were various indications, and a great many statistics could be brought forward to prove that the trust wealth of the country was very rapidly increasing. He could mention that death properties for the last 15 years had increased from the annual value of £120,000,000 to £180,000,000; and they also knew that new securities admitted to quotation last year amounted to £175,000,000. These statistics proved that there had been almost a fabulous increase in the relative wealth of the United Kingdom, and he should not be far wrong in saying that during the last 30 years the amount of that wealth had increased by something like 70 or 80 per cent, and it was no unfair assumption to say that the amount of money entrusted to trustees for investment had increased in like proportion. When they turned to the securities available for the investment of trust monies, they found there had not been anything like a proportionate increase in available securities. Consols and other funds under Government control had decreased by £100,000,000, roughly speaking, within the last 30 or 35 years. His right hon. Friend the Chancellor of the Exchequer in his great Conversion Scheme, which had met with so well-merited and such universal success, had relieved this country of a further burden of £100,000,000 of debt. He reminded the House that at the time of the conversion taking place he had a Motion on the Paper which he had not moved, because he did not wish to do anything which would in any way endanger the success of the scheme of the right hon. Gentleman. He would now allude only to one other security in which trustees invested their monies, and that was land; hon. Members would know that in landed securities there has been a great decrease in value, and that there were trustees at the present time who would certainly not invest in landed securities. Therefore, the range of investment available for trustees had decreased; while on the other hand the trust monies had very largely increased. He now came to the relative proof—that was to say, the change which had been effected by recent legislation in connection with this subject. There were a variety of Acts of Parliament under which the Chancery Court or the Judges of the Superior Courts were empowered to make general lists of securities in which trustees could invest. Until quite recently, those general lists included Consols, the Stock of Municipal Corporations in the United Kingdom, and the Stock of the Metropolitan Board of Works, about which latter he would say nothing, because the case of the Board was sub judice at the present moment. The Select Committee, in 1883, added to the list first-class railway debentures; then, at about the same period, a list was made of the securities in which capital monies raised under the Settled Land Act could be invested, and that included Chancery Securities, bonds, mortgages, debentures or debenture stock of any railway company of the United Kingdom which had paid a dividend for 10 years. Shortly before that time, they had passed the Trust Act for Scotland, which provided that trustees might, unless specially prohibited by the constitution or terms of the trust, invest funds in East India Stock or the Stock of any Colonial Government approved by the Court of Chancery or the Court of Session, and also in the bonds of any Colonial Government approved as aforesaid, provided such stocks or bonds were not payable to bearer. Now, in one respect that was precisely what he desired to see made legal in the United Kingdom; but in another respect it was not what he wanted. It met with his approval in respect of the fact that the list included the Inscribed Stock of any Colonial Government; but he objected to it, because it fixed on the Chancery Court or the Court of Session in Scotland the duty of deciding whether any particular Stock was a fit subject for the investment of trust monies. They knew, on the very highest authority, that this Act had been inoperative, because it threw on the Court of Chancery and the Court of Session the duty of deciding between particular Stocks, which necessitated expensive inquiry at the cost of those wishing to invest; but he believed the Judges also felt that in excluding any Stock specifically they were doing an injury to the security which it might not deserve. He had pointed out the necessity which existed for increasing the means of investment for trustees, and he had shown that recent legislation had tended in the direction which he thought desirable. He now wished to call the attention of the House to what he might term the intrinsic value of Government Securities for trust investments, and that was a point on which he was perfectly satisfied many hon. Members were better informed than himself—among them the right hon. Gentleman the Member for South Edinburgh (Mr. Childers), whom he was glad to see in his place. He would mention a few facts which he believed would be interesting to the House. In the first place, these Government Securities were of great magnitude at the present time. He had made out a list of Securities which showed that the total value of British Government Securities was £840,000,000; the total value of British Local Corporation Securities, £78,000,000; Colonial Government Securities and Inscribed Stock, £115,000,000, and Foreign Government Stock, £714,000,000. From that they would see that Colonial Stock had already taken a prominent place in the field of invest- ment. These Colonial Government Securities, he would point out, represented money lent to the Colonies, and chiefly supplied to the Colonies from the hoarded capital of the United Kingdom. He might mention incidentally that the Chancellor of the Exchequer had received in taxes and stamps on these Colonial Government loans a sum which already exceeded £800,000, so that the Exchequer of the country had benefited to that extent directly from loans made to Colonial Governments. But those loans had a greater and more direct value with regard to the United Kingdom. It had been calculated, on the high authority of the Agent General of the Cape Colony, that no less than 85 per cent of Colonial loans were expended on the products of the United Kingdom, especially in machinery, rails and other manufactures. Then he need hardly enlarge on the fact that those loans opened up our Colonies for trade and for the people; and were it not for those loans, which amounted to £230,000,000, the Colonies would not now be, as they were, the most profitable openings for investment and commerce. Another point which he wished to impress upon the House was the rapid growth of the Colonial loans. They had increased in less than 35 years from £5,000,000 to nearly £230,000,000. In the Australian Colonies, in 1851, there was a total borrowed capital of £58,000; now there was a borrowed capital of £140,000,000. The Crown Colonies in the year 1851 had a total borrowed capital of £890,000, and now the total stood at £6,000,000. In North America there was a total borrowed capital, in 1851, of £4,000,000, and the total borrowed capital now was £54,000,000. In South Africa, in 1851, there was no Public Debt, whereas last year the Public Debt amounted to £26,000,000. He would like to call the attention of the House to a few curious and interesting facts in connection with Colonial loans. With regard to the Income Tax, he had only been able to got Returns relating to the 11 years from 1872 to 1883. Those Returns told them that of the Incomes under Schedule C, returnable for Income Tax from what he might call roughly Government Securities, had remained at about £21,000,000 sterling; the incomes from Government Security in India had also remained equal at about £7,000,000. Incomes derived from Foreign Govern- ment Securities were, in 1872, £9,000,000, and they had fallen in 1883 to £6,800,000, a fall of no less than £2,600,000. He did not know whether this fall in the incomes derived from Foreign Government Securities was due to anything in the nature of repudiation, or non-payment of interest, or to the dislike which the British public had to invest in foreign securities; but he said, while the income from foreign securities had fallen by £2,600,000 in 11 years, the income from Colonial Securities had risen by no less a sum than £3,600,000, and they stood in 1883 at £6,700,000, and that increase he believed was still going on. He thought he had shown, at all events, that the investing public had acquired confidence in Colonial Government Securities, as opposed to the securities of Foreign Governments. They had heard frequently that the Colonies were piling up enormous Debts, although they had no European wars to provide for; and that in some Colonies the Debt represented something like £40 per head of the population. That was looked upon by some as a matter of great grief. It seemed to him that, in considering that fact, they should bear in mind three things. In the first place, they should consider what were the prospects of the Colonies. They knew that the Colonies were in process of enormously rapid growth. He would not trouble the House with details, but to arrive at an index number they might add together millions of external trade, internal trade, shipping, and population. If those elements of prosperity were added together, they would find that, in 1851, the prosperity of the Colonies was represented by 75, and that it had in 30 years increased fivefold, and was now represented by 370. That rapid growth had not ceased, but was still in active progress. Again, they must remember that in natural wealth our Colonies had resources which had not yet been by any means fully developed; there was the fertile soil and genial climate, and there were, as in South Africa, besides mineral wealth many other resources. To those natural advantages they should add all the artificial advantages, such as railways, telegraphs, and other works of civilization, in which the Colonies had made enormous strides. The second point was that our Colonies, especially the self- governing Colonies, were controlled by Englishmen, who, above all things, were practical men and knew that they were trusted at home, because of the enormous mass of private capital sent out from this country to carry on various industrial enterprizes in the Colonies. The third observation he had to make was that they should ask themselves on what these Colonial loans had been expended. He had been into this subject in great detail, and he must ask the House to take on trust the result he was now able to lay before them. He found that of the total of £230,000,000 of Debt, £145,000,000 had been expended on railways; £56,000,000 on harbours and other directly remunerative works; and something like £7,000,000 or £8,000,000 in introducing population to the Colonies. Roughly speaking, 90 per cent of the total amount of loans made to our Colonies by this country had been expended on what he might call directly remunerative works. There remained about £25,000,000 which had been expended on such unremunerative objects as deficiencies in revenue, war expenses, and the floating of loans. He reminded the House that the Chancery Lists of Trust Investments included the Stocks of Municipalities in the United Kingdom; and he ventured to say that no Municipality could show so excellent a record of remunerative expenditure as our Colonies could produce. If they required further proof than that, they had only to look to the Money Market for the value placed on Colonial Securities, and they would find that in the last 15 years interest had fallen, on an average, from 6 to 4 per cent. They would also find that many 4 per cent Colonial Securities now stood at £105 to £106—that was to say, at a premium of from £5 to £6 per cent. A recent Canadian loan, issued at 92½, now stood at nearly 96. He found that all the Colonial 4 per Cent Stocks stood at above £106, except the New Zealand Stock, which was at 99. On the other hand, the price of 4 per Cents, 5 per Cents, and 5½ per Cents in the great countries of Europe did not exceed £100, except in the case of French Stock, which stood at £104. The Argentine Republic Stock stood at £98, and United States 4 per Cent Stock stood at a premium of £129 per cent. He hoped he had said enough to show that while there was a necessity for increasing the field of investment for trustees, Colonial Government Securities were, at all events, worthy of consideration. He now came to his third subject. It might be asked, if these securities were as good as they were represented to be, how was it that they had not yet appeared on the list of the Court of Chancery. That matter had been fully gone into at the Colonial Conference of last year, and at the commencement of the discussion there were laid before the delegates two objections made some years ago by the Lord Chancellor. Those two objections were very pertinent and very practical, the first of them being that there was no means in this country of suing a Colonial Government, and the second objection was that there was no limit of issue to Colonial loans. The first objection that there was an entire absence of the means for holders of Colonial Stock of enforcing their claims for interest or repayment against Colonial Governments in this country was an objection which, although serious, had been grappled with by the Colonial Conference, and he could state that it no longer existed, because every Colonial Government was perfectly willing to take such measures as would render its Agent easily suitable in England in respect of the interest or the repayment of the loans. Then, as to there being no limit of issue, which was a more grave matter, the value of Government Stock depended ultimately on the solvency of the nation raising the loan, and trustees would have to depend on the solvency of the Colony in whose stocks they invested. But there was a remedy, and he ventured to say a practical one, in this case—namely, that in any Act of Parliament which should authorize the Court of Chancery to admit Colonial Government Securities to the list of Trust Investments, it would be possible to state that those investments might be made in the case of any particular Colony, the stock of which—for instance, its Four per Cent Stock—was at par. That would have the effect of establishing an automatic rule leaving the solvency of the Colony to be judged on the London Stock Exchange. But he had not proposed to suggest any remedy of his own; he merely alluded to that to show that there was an automatic means of settling the point. He would like to mention briefly another objection which had been urged, which was that by increasing the credit of the Colonies, as they would do by such a measure, they would be interfering with the Government Funds of this country in respect of their market value. He did not think that would be an unmixed evil. If there were a large demand for our rapidly diminishing Public Securities, some who had money in Consols would get more interest for the price they paid for those Consols. But even if they did some small damage to the credit of the United Kingdom, he imagined that its credit would be on so high a pedestal that the damage would be trifling as compared with the good they would do to the Colonies. He trusted he had given reasons to justify his hope that eventually the Legislature would take such steps as might be necessary to realize the object of the Resolution he had placed on the Paper. He thought that by adopting his proposal, they would be conferring an advantage upon the people of this country, and upon our fellow-subjects in the Colonies; they would be supplying trustees, and above all the beneficiaries under trusts with a much needed channel of investment, and they would certainly be doing something to promote the credit and trade of the Colonies. His object was, however, to ventilate this subject, and to lay this statement before the House rather than to suggest any particular method of dealing with the subject. He had heard that legislation of this kind might soon be proceeded with in "another place," and he believed that that was a proof of a tendency to act in accordance with the suggestion contained in his Resolution, and he ventured to say that that House would before long proceed in the same direction. He saw in their places hon. Friends who were much given to writing and speaking on the subject of Imperial Federation, and who, he felt sure, would support his Resolution, because the only foundation for a united Empire was that its material interests and resources should be consolidated and utilized. For those reasons he would now move the Resolution standing in his name.

MR. OSBORNE MORGAN (Denbighshire, E.)

said, he rose to second the Resolution which had been introduced by his hon. Friend in so able and ex- haustive a speech. He would ask the House first to look upon the question purely from the investor's point of view. There could be no doubt that what was called conversion of the National Debt, although admirable for the Chancellor of the Exchequer, fell on a certain class of individuals very heavily. It meant to a certain class of persons that their whole income was reduced at one fell swoop from £400 to £350 a-year, which might involve the loss of a certain number of small comforts, and in a certain sense, the necessaries of life. It was, therefore, only natural that they should seek to find some reasonably secure investments which would give a higher rate of interest than those in which trustees were now allowed to invest. There appeared to him to be a general demand for that; and he would point out that his hon. Friend was by no means without precedents for his Resolution. Thirty years ago, Lord St. Leonards had brought in a Bill which gave powers to trustees to invest in India Four per Cents, and certain other securities, and that Bill which passed into law was followed in 1871 by an Act which enabled trustees to invest in the Stock of the Metropolitan Board of Works, and the principle of the present Motion was admitted in the Scotch Trusts Act of 1885. It would, of course, be contended that these cases were not on all fours with the present; and, no doubt, in the case of the India Four per Cents, it might be urged that Indian finance was, to a certain extent, under the control of the Imperial Parliament, which was not the case with any Colonial Securities. But the difference was more apparent than real. Although Parliament exercised some control over Indian finance, he had never been able to ascertain precisely what the control was. He had sometimes come down towards the end of the Session and listened to a discussion on what was called the Indian Budget, when the Secretary of State or the Under Secretary for India made a speech to a select audience of 10 or 12 Members, half of whom were asleep, on the very difficult subject of Indian finance; but he could not help thinking that that sort of control was of very little value. There was, of course, the other difficulty to which his hon. Friend had referred—namely, that there was no power to sue a Colonial Government in this country, as they could the Metropolitan Board of Works, in case of default. But was there any real danger in that respect? Even the smallest South American State now knew that if it made default in respect of the interest or principal, its name would be wiped out of the Stock List of every nation. He believed that, with the exception of Turkey and two or three Central American Republics, there was hardly a State of the World in default; and as to the danger of Colonial Governments making default in the payment of interest on their loans, they might as soon expect the Chancellor of the Exchequer to make default in respect of the interest of the National Debt. As his hon. Friend had pointed out the Debts of the Colonies were not, as in the case of European loans, incurred for the purpose of maintaining bloated armaments, but for remunerative purposes. Mr. Deakin, the representative of Victoria at the late Colonial Conference, said— In Victoria, we have scarcely any Debt at all; we have borrowed it is true, £30,000,000, but three-quarters of that is invested in railroads, and these railroads are paying full interest on the investment and also a surplus into the Treasury, so that on three-quarters of the money we simply receive interest and pay it out again. The remainder of our loans, with a small exception, is invested in waterworks, which pay, or before long, will pay, the full amount of interest. Hence there is practically no National Debt, though there are great national assets. The money is invested in commercial enterprizes which pay their own interest. The same might be said of the other great Colonies. But could it be said of the Debts of the great European countries? Could it be said of the Debt of France, which was incurred entirely for war purposes; or even of our own Debt, on which we paid interest to the amount of more than £20,000,000 a-year, and which was incurred for the purpose of carrying on bloody and too often barren wars? It might be said that the condition of the Colonies might be changed; but he held that it was impossible to get mathematical security in any investment. One of the securities most approved by the Court of Chancery used to be mortgages on freehold estates; and he could point out numerous cases in which trustees had invested money, as they were empowered to do by law, in freeholds, and had lost not only the interest, but more than one- half of their security in consequence of the well-known depreciation of land due to agricultural depression. He could quote the case of Lord Eldon to show how the most prudent of men might be deceived in a matter of that kind. Lord Eldon was the most cautious of Judges, of whom he believed Lord Campbell said that he doubted for a whole month whether there was anything to doubt about. That most cautious Judge, in two cases, only allowed trustees to deviate from the elegant simplicity of "the Three per Cents," as he called it. In one case he allowed the trustees to invest in turnpike bonds, because "nothing could ever supersede roads;" in another case to invest in the purchase of a rotten borough, "because rotten boroughs would last as long as England itself." That showed that the most cautious of men were liable to be misled in the matter of investments. He believed that Lord Halsbury and Lord Herschell approved the principle of his hon. Friend's Motion, which he might say was also entirely approved by one of the Judges, and he would go farther and say that every well-drawn deed contained the powers in question. He had himself several times inserted such a clause both in deeds and wills, and he took it to be the duty of the Legislature to enable trustees to do what prudent trustees would do if they had the power. But there was a broader and more general ground on which he asked the House to accept the Resolution. He had the honour of occupying for some six months the position now so worthily filled by the Under Secretary of State for the Colonies, and he was able to say that the adoption of the Resolution would undoubtedly tend to improve the relations between the Colonies and the Mother Country. No one who was acquainted with the proceedings of the Colonial Conference could fail to see how deeply interesting this question was felt to be by the colonies, who he was convinced would regard such action as was here proposed as a graceful recognition of their status. There was not a steamer which discharged its cargo on the shores of our Colonies, there was not a letter sent home, not a telegram which flashed its tale of joy or sorrow from the Mother Country to her children, that was not an additional link to the bonds which bound our Colonies to us, and he believed that nothing would tend more to promote that Imperial unity which they all desired, than the knowledge that the Motion of his hon. Friend had been accepted by the House of Commons.

Motion made, and Question proposed, That, in the opinion of this House, the suitability of Colonial Government Inscribed Stocks for Trust investments should be more adequately recognized."—(Sir George Baden-Powell.)

THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, Hanover Square)

said, he approached the consideration of this subject with every desire to do justice to the efforts which the Colonies had made to maintain their credit. It was a sign both of the honesty of our Colonies and of their strength and vitality that, in the comparatively short term of their existence, the credit in which they stood was superior to that of most European countries. He felt how fully they deserved the position which they held in the money market, and no remark would fall from him which could in the slightest degree detract from the gratification which every member of the Empire must feel that not only our own finances were in a satisfactory state, but that there was scarcely a Colony whose finances did not rest on a secure foundation. Our Colonies had borrowed rapidly and freely. His hon. Friend pointed almost with pride to the rapid strides with which they had competed in that respect with Foreign States; but he was not sure that the magnitude of their debt was one of the arguments which would commend itself to the House of Commons. He was not one of those who for one moment would depreciate the sentimental aspect of the question. He quite understood that the Colonies attached importance to the legislative position of their loans. It was not, therefore, from any want of sympathy that he spoke. But we were bound to look at this question not from the point of view of the present only; we must look at it with regard to the future and to all the interests at stake. His hon. Friend admitted that his proposal, if adopted, might do some small damage to the credit of this country. As temporary guardian of that credit, he should be extremely jealous of anything which would trench even in the slightest degree upon it. It was apparent that there was likely to be at all times a tendency to borrow from the State; and looking to the vast number of objects for which it was desired to have recourse to Imperial credit, he, as Chancellor of the Exchequer, must say that nothing ought to be done which could in any way tend to bring about the result which his hon. Friend was able to contemplate with equanimity—namely, a reduction in the price of British Stocks. It was his duty to look to the interest of the credit of the State, and to point out that we must have regard to the tremendous demands which might yet be made upon the credit of the State, and that not in emergencies only, when a difference of 1 per cent in the price of Consols might be of importance to this country. Not only might we have to borrow in great emergencies, but there were many occasions when the State ought to lend for useful purposes. Whatever view might be taken of the Motion, hon. Gentlemen ought to dismiss from their minds that part of the argument which went to show that by adopting it we should not tamper in the slightest degree with the borrowing power of the Imperial Government. His hon. Friend spoke of the difficulty which trustees experienced in finding facilities for investment. He did not see that there was that difficulty which his hon. Friend seemed to think, but he wished to point out what was the essence of the case. The House was not asked simply to authorize investments by trustees in Colonial Funds. What his hon. Friend asked was that where, by will, trustees had been precluded from investing in Colonial Funds the State should set that aside and authorize the inclusion of Colonial Funds. It had been said that in every well-drawn trust Colonial Stocks ought to be included. He certainly thought they ought to be. If he had to establish trusts himself he would probably include a portion of the Colonial Stocks. But it was a different thing to say that where a will had been made and trusts created, and where Colonial Stocks had been excluded, we should step in and say that they ought to be included. That was really what was asked. It was asked that we should establish these securities in a position which was not an- ticipated by those who made the trusts. He did not say that the proposal, if adopted, would have any great practical effect. But he would like to call attention to some circumstances which might ultimately produce friction. With regard to the action already taken by the Courts of Law, he believed that various options had been given to trustees. For instance, they were allowed to invest in Municipal Stocks, but the Courts had found it extremely difficult to arrive at any conclusion, and the Act had come to be inoperative in regard to those Stocks. With regard to the action of the Scotch Courts, it had been found so difficult to establish what would be a safe Colonial Stock that in this case, too, the law had been practically inoperative. If we legislated in the direction recommended by his hon. Friend and vested the discretion in the Courts, the Courts would probably be averse to undertake it, and the law would be entirely inoperative. He had referred to the possibility of friction, and with regard to this question it must be remembered that we must put all Colonies on the same footing. It would not be possible to draw up a Schedule of Colonies, and say that the credit of this one and of that one was good enough, but that the credit of a third was not good enough to be put on the same footing as Consols. His hon. Friend behind him had given instances of some Colonies which were as safe as possible, and whose credit stood so high that there could be no question, at all events for many years, of their absolute solvency. But we must judge not by the best Colonies, but also by the weakest. It would be impossible to draw up a list. Was the Court of Chancery, then, to consider the credit of all the various Colonies; were the Judges to meet and say what was the borrowing power of each Colony? With the greatest reverence for those august gentlemen, he doubted whether that was a task for which they were properly qualified. His hon. Friend had, with great ingenuity, invented an automatic process by which it could be decided whether the Stocks of a Colony were to be admitted or not. He had proposed that when the Four per Cent Stock of a Colony stood above par investment should be permitted in its funds, and vice versâ. But he would ask the House to remember that the very object of trusts was to give a permanent security. Why was money put under trust at all? Simply in order to give a more permanent character to the investment than could be given to it otherwise. If they were to judge any Stock by its value at a given moment, they would be applying a test which, in the end, would be misleading. A Stock might be above par at issue and then fall below it. The hon. Member had compared the value of these Stocks with those of foreign countries, and had shown that, greatly to the credit of the Anglo-Saxon communities, their Stocks stood higher. But none of these foreign Stocks were, or ought to be, included in trusts. They stood in the category of those Stocks which might be invested in if the testator chose to select them, but no Parliament would assert that it was right to include the Stocks of any foreign country, however great and powerful, among those in which permanent investments should be made, By his comparison, therefore, the hon. Member did not show that the Stocks of those communities should be included in trusts. Allusion had been made to another difficulty with regard to Colonial Stocks—namely, that we had no control over them. That was certainly a very strong objection to dealing with these Stocks in the manner suggested. The right hon. and learned Gentleman opposite (Mr. Osborne Morgan) had said that we had only a shadowy control over the finances of India, but we had a much greater control over the finances of India than over those of our Colonies. The finances of India were administered by a Secretary of State and under the control of the Imperial Government. While he hoped that it would be long before the ties between us and any of our Colonies were severed, it was clear that those ties were not of the same character as those which bound us to India. We had no control, for instance, over the finances of Australia; we could not limit their issues in any degree. What Government would venture to veto any financial proposal made by one of our self-governing Colonies? They were asked to put on the same footing with securities now included in trusts funds which were well deserving of credit, but over which that House had absolutely no control, and to vary trusts in order to do this was a step far in ad- vance of anything which they had yet done. The right hon. and learned Gentleman had said that in any case they might make mistakes, and he had shown that securities had been included in trust investments which could become dangerous, such as mortgages on land, which had been deemed a safe security at one time. But there were two inferences which might be drawn from this; on the one hand, they might give up the idea of placing a definite limit on trust investments because they were not far-seeing enough; but, on the other hand, they might confine their trust securities to those with regard to which they had absolute confidence that they would be safe in all conditions. They had such absolute confidence with regard to British Funds; but, in spite of their belief in the Colonies, they had scarcely advanced sc far that their Stocks could be put on entirely the same footing. They should be careful before they widened the area of those securities which ought to be included in trusts. There were two other objections which had been raised. One was that it would not be possible to sue the Colonies; and the other was that we had no control over the amount of issues. They had been told that they wore to be able to sue the Agent General of a Colony in this country; but if there were to be such a thing as a repudiation, he did not expect that there would be such assets with the Agent General in this country as would afford much security in such disappointing circumstances. He thought that, at all events, there should be simultaneous action on the part of the Colonies, and that the Colonies should agree to propose means to enable the holders of their Stock to sue. With regard to any power of limitation of the issues of the Colonies, his hon. Friend had almost given up that question; nor, indeed, was it desirable that their issues should be limited so long as they were employed in remunerative and excellent work. He placed before the House in no dogmatic spirit these considerations, which, at all events, ought to be present to their minds before they advanced on the road suggested by the hon. Member. He had not said one word which was disparaging to the credit of our Colonies, or wanting in sympathy for their development, both financial and industrial. He felt to the full what had been said by the hon. Member, that the fact of this country, as far as possible, assisting the Colonies by its Money Market was a circumstance which would contribute to the maintenance of the bonds which existed between them and this country. But sometimes, when the Colonies were irritated—and they were irritated at causes which we occasionally thought somewhat slight—at those moments they were apt to forget the advantages which they derived from their connection with the Mother Country. Although their high credit was due in the main to their industry, good management, and business-like qualities, on the other hand, he believed that it was also largely due to the fact that they were able to come as Colonists and fellow-subjects to the London Money Market, and to find greater facilities and greater readiness to lend than they would find in any other Money Market in Europe, or than they would find if they were to cut themselves adrift and to become independent communities. Reference had been made to the extraordinarily low rate of interest at which Canada had lately been able to borrow money; but he had the highest authority for saying that that was in part due to the conversion which had lately taken place, and to the fact that the rate of interest had been generally lowered. What had taken place with regard to Imperial Funds had reacted on others, and Canada had thus derived great support from what had taken place with regard to the National Debt of this country. He thought it would prove extremely agreeable to the Colonies that this Motion had been brought forward, and he hoped that they would be gratified by the tone of the debate. He trusted, especially as the Motion did not suggest any practical steps and was simply an abstract proposition, that it would be withdrawn, and not pressed to a Division.

BARON DIMSDALE (Herts, Hitchin)

, in supporting the Resolution, said, he thought it very desirable that the powers of trustees should be enlarged, that they should not be limited and confined, as they now were, to the old funds, but, where it was advisable, they should have an opportunity of investing in these new trusts.

MR. A. M'ARTHUR (Leicester)

said, that, as he had spent many years in the Australian Colonies, he desired to say one or two words. The Australian Colonies and the House had every right to be thankful to the hon. Gentleman the Member for the Kirkdale Division of Liverpool (Sir George Baden-Powell) for bringing this question forward. The right hon. Gentleman the Chancellor of the Exchequer had very properly said they were all satisfied as to the security offered by the Colonies for any investments of this kind. He (Mr. A. M'Arthur) was frequently asked by persons as to the Colonial Securities, and his invariable answer was that they were quite as good and safe as the Bank of England. It had been said we had not yet touched the bottom of the Australian Colonies. He thought we had scarcely touched the surface of them. There was an amount of mineral and vegetable wealth in those Colonies which it was almost impossible to exaggerate. While he admitted the truth of the statement of the right hon. Gentleman the Chancellor of the Exchequer that the Colonies owed much to this country, this country owed a very great deal to the Colonies for the outlet for English capital which they afforded. He had great pleasure in supporting the Motion of the hon. Gentleman, the adoption of whose suggestions would be of great benefit to this country and the Colonies.

SIR RICHARD TEMPLE (Worcestershire, Evesham)

said, he rose for the purpose of rectifying a mistake which the right hon. and learned Gentleman the Member for East Denbighshire (Mr. Osborne Morgan) appeared to have made. The right hon. and learned Gentleman said that the finances of India were really not under the control of the House of Commons. When that statement was very justly challenged by the right hon. Gentleman the Chancellor of the Exchequer, the right hon. and learned Gentleman said that, at all events, the control was shadowy. He begged the right hon. and learned Gentleman's pardon; the control was real. He assured the House that the Indian finances, from beginning to end, from top to bottom, in general and in detail, were under the fullest control of the Secretary of State, who was, as a Minister of the Crown, responsible to this House. Certainly, India had an interest slightly adverse to the Resolution of his hon. Friend the Member for he Kirkdale Division of Liverpool (Sir George Baden-Powell), because the investing in Colonial securities would pro tanto divert capitalists from the Indian securities pertaining to railways and canals in India. Still, we were bound to consider the interests of England also. Now, of late, English investments had been narrowed—landed securities had been inevitably depreciated, and now, by the recently successful operations of Government, even Consols wore less valuable to investors than they were. Therefore, we must look further afield to our Colonies; and, having regard to the prosperous case arrayed by his hon. Friend's statistics, he must admit the Resolution was worthy of acceptance in Indian circles and in all other circles.

MR. EVANS (Southampton)

said, he rose to address the House for the first time with great deference, because he felt that his want of knowledge of the formalities of the House might cause him to transgress some of them. When he came down to the House he had no intention whatever of taking part in the debate, and he only rose to do so because, when he read the Resolution of the hon. Member for the Kirkdale Division of Liverpool, he interpreted it to mean that the hon. Gentleman asked authority for trustees to invest their trust funds in Colonial Securities. The right hon. Gentleman the Chancellor of the Exchequer had placed a somewhat different interpretation upon the Resolution, and, therefore, he hoped the hon. Member for Kirkdale would state the exact meaning of his Resolution. If the Resolution meant, as he supposed it did, that trustees should have the right to invest their trust funds in Colonial Government Securities when no such direct authority was given in the trust, he should oppose the Resolution to the very last. Under such circumstances, he should be sorry, in the first place, for the beneficiaries under the trust, in the second place for the Colonists themselves, and in the third place for the right hon. Gentleman the Chancellor of the Exchequer. The right hon. Gentleman the Chancellor of the Exchequer had intimated that there was a danger which was certainly familiar to him (Mr. Evans), and which must be familiar to all those who knew Colonial Governments well—there was a danger which arose from the facilities to borrow. There were connected with the Colonial Governments, as there were in this country and in every country, a certain set of people who loved to borrow money without any thought as to the way they were to expend it. He was familiar with several of the Colonies of this country, perhaps more familiar than most hon. Members of the House of Commons, and he knew from experience that loans were obtained without any clear understanding as to the way in which the money was to be expended. Many loans were not originated as they ought to be—for some great exploit or some great expansion of the country for which the money was borrowed. They often originated in the wish of certain financiers to borrow first, and find the means of spending the money afterwards. If the hon. Member for Kirkdale proposed this Resolution with the view of the investment of trust funds in the way he (Mr. Evans) had described, it would be necessary that the debate should be carried on much longer, in order to show—certainly he would undertake to show—the many fallacies in the hon. Gentleman's statement. The hon. Gentleman had referred to market price; but market price was something by which no one ought to be guided. The hon. Gentleman had spoken of the United States Four per Cents being at £29 premium. Within the last 20 years he (Mr. Evans) had bought that stock at 62 discount. How could they take that as a proof of the value of Colonial Securities? It was utterly fallacious. Again, it was necessary to draw the attention of the House to the fact that all these improvements in the Colonies were really commercial enterprizes. If they applied the test of the Market, the lenders of money could well examine the enterprizes, and if they found them worthy of support they would lend the money at a fair rate. If, however, the promoters could turn to trustees—the majority of whom were quite unable to investigate the securities, and quite unable to form an opinion whether the securities were good or not—they would have the trustees trying to persuade the Colonists to borrow their money. When the Colonists had borrowed the money they would try to spend it in some way or other, a proceeding unlikely to result favourably for either party. The right hon. Gentleman the Chancellor of the Exchequer had gone so completely over the ground that he would not further trespass upon the patience of the House.

MR. GRAY (Essex, Maldon)

said, that if the House would allow him, he would like to make one or two remarks upon the subject under discussion. He was very much indebted to his hon. Friend the Member for Kirkdale (Sir George Baden-Powell) for having called the attention of the House to the question, and although he (Mr. Gray) appreciated all the right hon. Gentleman the Chancellor of the Exchequer had said as to the necessity of treating with the greatest care the powers given to trustees, he desired to point out that there was another side to the question, and that was the question of the interest of the annuitants. At the present time land was looked upon somewhat suspiciously as an investment, and although the Conversion Scheme of the right hon. Gentleman the Chancellor of the Exchequer might be said to have been brought to a successful issue, there were many people in England who felt that that Scheme had not been an altogether brilliant piece of legislation for them. He alluded now, of course, to the annuitants. He had heard from many annuitants that their incomes had been so reduced by the Conversion Scheme that they found it was very difficult to make ends meet. There was one class of annuitants who had felt the Conversion Scheme more severely, perhaps, than any others, and they were the annuitants who received their incomes from Chancery held property. It seemed to him very hard that the law should say to these people—"You must invest your money in the Court of Chancery," and that that should be supplemented by legislation, which said—"and we will give you just what we like for your money." He hoped that although the right hon. Gentleman the Chancellor of the Exchequer was not prepared to accept the Resolution of the hon. Member for Kirkdale, the right hon. Gentleman would consider the question and deal with it before long, perhaps in a modified form.

MR. BRADLAUGH (Northampton)

said, he only rose in consequence of the very extraordinary declaration of the hon. Baronet the Member for the Evesham Division of Worcester (Sir Richard Temple) that the House of Commons had complete control over the finances of India from top to bottom. As far as his experience went, the only opportunity they had of even alluding to the finances of India was the opportunity afforded by the introduction of the Indian Budget. That Budget was generally introduced when the rest of the Business of the House was disposed of, and when the House was comparatively empty. It was not true that they had an opportunity of dealing with the Secretary of State for India as they had of dealing with other Secretaries of State, because his salary did not appear in the Estimates. The control which Parliament exercised over the finances of India was really limited to the risk of the ballot.

SIR GEORGE BADEN - POWELL

said, he had a difficulty to find anything to reply to, because all that had been said substantially supported his Resolution. The only objection urged against automatic regulation was that there was no security against a fall in value; but all Funds were liable to fall in value, and therefore the objection was not specially applicable to Colonial Securities. He wished to see legislation which should include such securities and enable trustees to invest money in securities which were not as yet open to trustees; but he supposed the legislation would not be retrogressive and would not affect existing trusts. He thought the House was with him, and therefore he asked leave not to press the Resolution to a Division.

MR. ANDERSON (Elgin and Nairn)

said, he did not think such a conclusion would be at all satisfactory. It was an extraordinary thing, if the House were in favour of the Resolution, to suggest that it should be withdrawn. He had moved a similar Amendment to the Budget, and the right hon. Gentleman the Chancellor of the Exchequer (Mr. Goschen) then said that the proposal should be favourably considered by the Government and facilities given for legislation this Session. He understood that a Bill had been introduced into the other House, and that the Prime Minister had assented to the principle of this Resolution. He did not think the Resolution should be withdrawn, except upon the understanding that there would be legislation this Session.

THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, Hanover Square)

said, that accepting the hon. Member's interpretation of his own Resolution, that it was not to involve the setting aside of trusts, it would be better to withdraw it in view of the legislation pending in "another place."

Motion, by leave, withdrawn.