HC Deb 09 March 1888 vol 323 cc706-38

Considered in the Committee.

(In the Committee.)


Mr. Courtney, I can assure this Committee that it is no common expression of Parliamentary tradition when I say I rise to submit certain Resolutions under a grave sense of responsibility. Whether we look at the magnitude of the interests involved or the effect upon the credit of the country of the failure or success of any attempts to deal with the National Debt—everyone who makes proposals with regard to the Debt must feel that he must make out a strong case for the action he proposes to take before he is justified in disturbing the markets or credit of the country. I feel sure that I shall be able in the present case to prove that Her Majesty's Government have scarcely any option, but that they are compelled to take the course I am about to take. I believe that the measures we propose, if we are successful in passing them through this House, will tend materially to lighten the burdens of the country, to raise its credit, and to increase its resources. By a strange historical coincidence, if it had been possible to make this Motion yesterday, it would have been the exact day—namely, the 8th of March—when Mr. Goulburn, the Chancellor of the Exchequer under Sir Robert Peel, proposed a large and most successful scheme of conversion 44 years ago. He proposed that conversion on the 8th of March, and on the 22nd of March his proposals received the final assent of the Legislature. I presume there is no one in this House, except the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone), who was at the time a Member of Sir Robert Peel's Government, who has a personal recollection of that great measure Any hon. Member who wishes to master these matters should not fail to road the speech which Mr. Goulburn made on that occasion. If I did no more than repeat the speech almost verbatim to this House, I should make out the case for the course I propose to ask the Committee to follow. Mr. Goulburn rested the expediency of conversion upon the following four considerations—(1) the general expectation of the country; (2) the amount of capital seeking investment and the general fall in the rate of interest; (3) the strong position of the Revenue; and (4) the manageable proportions of the Floating Debt. If I could follow his reasoning through every one of these motives, I should prove to the Committee that if the motives for a large measure of conversion existed then, they are equally strong, if not stronger, at the present moment. I have said that Mr. Goulburn rested his proposals, in the first place, on the general expectations of the people. I do not know, and I have no means of ascertaining, how far the general expectations of the public now correspond to the expectations entertained in 1844, but I may look to the facts to see how far general expectations have been translated into the operations of the market; If I may say it, no one can have observed the general tone of public opinion without noticing that there is a universal feeling that the time for a scheme of conversion, and a bold scheme of conversion, has arrived. There is no better test of general expectation with regard to a scheme of conversion than the contrast which may be presented in the prices of Stock equal in security, but different as regards the terms under which they are redeemable. Take Stocks of equal value. It will always be found that in proportion as such Stocks stand in danger of being redeemed at par they enjoy a lower rate of interest. If you contrast at any time the value of the Stocks which are redeemable with those that are not redeemable, you will find a certain test of the expectation of the public with regard to the conversion of the former class of securities. Now, in Mr. Goulburn's time the irredeemable Consols had risen from 91½ in 1836 to 98½ on the 8th of March, 1844. At the same time' Three-and-a-Halfs, which were redeemable, had risen only from 99 to 101⅜ Precisely the same contrast, only more marked, is observable to-day between the great rise in irredeemable and the comparatively small rise in redeemable Stocks. In 1880 Two-and-a-Half per Cents stood at 80, and in 1888 (8th of March) they stood at 96, arise of 16 per cent. Consols in 1880 stood at 97⅝, and rose to 102 in 1888, a rise of only 4⅜ per cent. Thus irredeemable Stock has risen 16 per cent, while the other has risen no more than 4⅜ per cent. The second ground upon which Mr. Goulburn relied was the large amount of capital seeking investment and the high price of sound securities. When I look around me now, I would invite hon. Members to consider if we are not also in a position to say that there is an immense amount of capital seeking investment, and that the price of sound securities has risen to an extreme extent. Other sound securities have been passing Government securities in the race, because Government securities have ever hanging over them the fear that they may be converted at any moment, while other securities enjoy an immunity from this danger. And the country has been in this position—that we have neither been able to gain the advantage of a reduction in the rate of interest, nor, on the other hand, have we been able to enjoy the benefit of a rise in the price of Consols because of the fear of conversion—a fear which has continued from year to year without coming to anything, to the detriment of the taxpayers of the country. If the opportunities for investment are more numerous now than they were in Mr. Goulburn's time, at the same time the amount of capital seeking investment is also far vaster at the present day. I call the attention of the Committee to some figures which will give evidence—conclusive evidence—of the rise in the price of the best Stocks. I will take 10 years. Metropolitan Three and a-Half per Cent Debenture Stock stood in March, 1879, at 102; in March, 1888, it stands at 112—a rise of 10 per cent. Great Western Four per Cent Debentures in the same period has risen from 105 to 129, or 24 per cent; North-Western Four per Cent Debentures have risen from 107 to 130, or 23 percent; Midland from 105 to 129, or 24 per cent. It will be seen that the debentures of these three great Railway Companies have risen in 10 years 24, 23, and 24 per cent respectively, showing a greater demand for safe investments. What during that time has been the fate of Consols, which represent the credit of the country? They have risen from 96⅜ to 102⅜—only 6 per cent. The country, therefore, has not had an equal advantage from the increase of capital seeking investment, and the general reduction of interest which has taken place. What was the third joint on which Mr. Goulburn insisted? He pointed to the low rate of interest on the Floating Debt. Mr. Goulburn's case was extremely strong when he spoke. Exchequer Bills wore giving to the holders only £2 4s. 0d. per cent. I am now able to borrow for the nation on Treasury Bills for six months at the rate of £1 12s. 7d. per annum—an extremely low rate of interest. With regard, then, to the Floating Debt, if in Mr. Goulbum's time he thought it manageable, it is still more manageable now. We have to deal with, even more favourable conditions at the present time, and also with more manageable amounts. In his time the Floating Debt, represented by Exchequer Bills, stood at £18,500,000. Our Floating Debt, represented by Exchequer and Treasury Bills, is under £ 14,000,000 at the present moment. So we stand in a better position than did Sir Robert Peel's Government in 1844. Sir. Goulburn spoke, further, of the position of the Revenue at that time, pointing out how it had increased and showed a more satisfactory condition than had existed for some years before. Again, I am able to say, though I will certainly not anticipate any declarations which it may be my duty to make when I have the honour to propose the Budget, that there is every evidence that our Revenue certainly stands, relatively to our Expenditure, in as good if not a better position than when Mr. Goulburn proposed his successful conversion, and with regard to the balances at our command they will, I trust, prove extremely strong. Every indication I have at present shows that the balances with which we shall be able to face any financial operation which may be necessary will be such as will be creditable to the resources of the country, and form a firm foundation for carrying out the proposals which I shall have the honour to submit. In one respect I will admit that I am not so favourably situated now as was the Government of Sir Robert Peel in 1844. No doubt there is not now the same serenity in the political atmosphere of the foreign world; there is not the same confidence in the continued absence of disturbing causes. But, on the other hand, I think that if in these days we were to wait until causes of apprehension wore entirely removed, until universal disarmament had lulled us into an absolute sense of confidence in prolonged and certain peace, it would be long before any Government could try to lighten the burden which the interest of the Debt imposes on this country. I am weighing every word. I say. I have no fear that the success of my plan will be compromised by any foreign complications; and I believe the Government ought to feel loss anxiety on this score at the present moment than might have been the case a mouth or two ago. And now, Sir, having explained the conditions which I believe to be favourable to conversion, I feel relieved, as Mr. Goulbum felt relieved, from dwelling upon the duty of the Government to deal with the matter if the conditions are favourable. We cannot be content to see the credit of the country, as expressed in the price of its securities, kept down by that fear of conversion to which I have alluded. Surely, we ought to endeavour to see whether we cannot remove this incubus on the credit of the country and let our Stocks rise in the same manner in which the Stocks of other countries have risen. It will be seen—and I can quote figures to that effect—that while Consols, the historical Stock of this country, the champion Stock of the world, if I may use the phrase, used to have a proud pro-eminence over all other Stocks, they have been severely pressed in competition by the Stocks of other countries, from, the fact that the latter were not in the position in which we have been—namely, hampered by enormous difficulties in dealing with their Stocks. We have seen that these Stocks have risen in an infinitely greater proportion than the Stocks of the richest country in the world, whose credit ought certainly to progress proportionately to that of any other country. Here are some figures as regards other States. An investor in the Stocks of the United States—which is, I, however, frankly admit, an entirely abnormal case—in 1867, 20 years ago, used to receive £8 12s. 8d. interest on his capital. In 1887 he received £3 1s. 6d. Now I take the case of an investor in the Stocks of steady-going, peaceful, and consistently solvent States. Twenty years ago, an investor in Dutch Stock received £4 11s. per cent for his money; in 1887 he received £3 8s., a fall in interest of £1 3s. An investor in Swedish Stock received 20 years ago £5 3s. He now receives £3 17s., a difference of £1 6s. An investor in Consols, on the other hand, received 20 years ago £3 4s. He now receives £2 19s., a fall of only about 5s. I merely dwell on these figures to show that we have not had the advantage of the reduction in the rate of interest which has been enjoyed by almost all other States. Our Colonies and Dependencies have had greatly the better of us in this respect. In Indian Stocks the fall during the last 20 years has been 17s. An investor in Canadian Stock used to receive £5 17s. 8d. Last year he received £3 14s. 7d., a fall of £2 3s. 1d. An investor in New South Wales Stock received formerly £5 10s. He now receives £3 13s9d., a fall of £1 16s. 3d. I will not press this argument any further; but what I wish to point out is this—and here I trust I may have the assent of the Committee—that the investors in almost every kind of security have had to accept the fact that the rate of interest is falling, and must now be content with a smaller income from their capital than they enjoyed before. They have had to bow to the inexorable logic of facts, and if now the Government propose to reduce the income of the holders of Government securities, they are simply giving effect to natural causes which, have operated on every other kind of security. They are only putting the holders of Consols in the same position as the holders of other securities. In consequence of capital ceasing to command the same rate of interest which it used to command, investors in Consols have to make a certain sacrifice of income—a sacrifice which the State is bound to claim, as other States have done in the interest of the taxpayers of the country, and in the interest of those who wish to see the burdens of the people lightened. Mr. Courtney, I have endeavoured to prove that it is the duty of the Government to tackle this question, and I have endeavoured to prove the favourable circumstances which surround us for carrying out that which we believe to be our duty. And now I wish to call the attention of the Committee to the precedents which we have in this matter, and, technical as the subject is, I trust that I shall not weary the Committee if I point out to them what our forefathers have done in this direction, and what we may learn from the examples which they have set us. There have been, I think, four or five successful conversions in the history of the last 60 years. In 1822 Mr. Vansittart, the then Chancellor of the Exchequer, converted Navy and other Five per Cents, amounting on the whole—I call the attention of the Committee to the magnitude of the sums dealt with in those days—to £152,000,000. And hero we have the first example of a very interesting point, that in this conversion Mr. Vansittart did not ask the holders to assent; but Parliament enacted that those who did not dissent should be assumed to have assented to the terms proposed. I would call the attention of the Committee to this course, which has been followed on every occasion when a successful conversion has taken place. Mr. Vansittart allowed one fortnight to holders to notify their dissent, and a longer period to residents abroad. Holders not dissenting wore deemed to agree. A fortnight in those days represented a much shorter time than a fortnight would at the present day, owing to the difficulty of travelling and the absence of telegraphs; yet the House will observe that in 1822 it was thought right by Parliament to give a fortnight's notice to the holders of a given Stock to say whether they assented, and to enact that if within that limit they did not signify dissent they should be held to have assented to the conversion. It was not assumed that all would assent, and the question arose as to what was to be done with the dissentients. [A laugh.] Well, I it was very simple; and I am not sorry that this should be emphasized, because it is upon this point that a great part of my case will rest. There has been a general impression that all holders of Government securities, whether Consols or Reduced, or Now Three per Cents, are entitled to be all paid off on a certain day in full unless they; assent to the terms of conversion offered, and that dissent implies immediate payment, and the consequence is that fund holders are tempted to offer a kind of passive resistance to the State. They say—"we hold some £500,000,000 Stock; and no Government can pay off that sum on a given day; we smile at you; we defy you; you will never be able to deal with us; we know that you cannot touch us." Those who have studied the history of previous conversions will have discovered the great and serious error which fund holders labour under in that respect, and it is in order to dispel that error that I have to trouble the House with the precedents which show that our forefathers certainly did not deem it necessary to proceed in that fashion. Dissentients in the case I have been quoting were to be paid off in the order of the receipt of their notices of dissent. Such payment was to begin four months from the commencement of the time allowed for the notice, and I call the attention of the House to the words "to be continued at such periods and in such manner as Parliament may direct "—that is to say, Parliament then kept in its hands, as it has done in all successful conversions, and as I shall ask it to keep in its hands on the present occasion, on which I hope also to make a successful conversion, the power to pay off the dissentients "at such periods and in such manner as Parliament may direct." Mr. Vansittart proposed to convert £152,000,000, a large order; and what was the amount of dissentients? The amount was under £3,000,000 sterling, and he paid them off. I come now to the next conversion. In 1824 Mr. Robinson had to deal with a somewhat smaller sum. He had to deal with £75,000,000, which he proposed to reduce from 4 to 3½ per cent. In this case six months' notice was necessary. Nevertheless, the non-expression of dissent was here again deemed to signify assent. Six weeks from the 23rd of April wore allowed for dissents to come in, and again, it will be asked, what did Mr. Robinson propose to do with those who dissented? Did he propose to pay them all off on a certain day? Not at all. He undertook to pay off one-third of the holding of dissentients on the 10th of October, and the remaining two-thirds wore liable to be paid off "at such time or times, and either in one sum or in such proportion or proportions as might be fixed by the Treasury," provided six months' notice was given, and not less than one-tenth part of the remaining amount was paid off at one time. Again it will there be seen that the same principle was acted upon. Parliament did not require the Treasury to pay off the I whole of the dissentients on a given day, but it left great elasticity in order to regulate the time of repayment according to the amount held by dissentients; and I particularly wish to point out that having enacted that not less than one-tenth part should be paid off at one time, Parliament evidently meant that the Chancellor of the Exchequer might pay off one-tenth at one time. The dissentients at that time held Stock to the amount of £7,000,000, and they were all paid off in full at once. The next case was Mr. Goulburn's conversion of the New Four Per Cents, amounting to £154,000,000, into an equal amount of Three-and-a-half per Cents, guaranteed for 10 years. This was in 1830. Again assent was presumed unless dissent was signified between the 26th of March and the 24th of April. Less than a month was thus given for dissent; and again dissentients were to be paid off at such periods and in such manner as Parliament might direct, and in the order of the receipt of their notices. I entreat the Committee not to think that I am performing an unnecessary task in citing all these precedents, because they bear very directly on the proposals that the Government are about to make. I wish to prove that the proposals which the Government, on their responsibility, are about to submit to the Committee are entirely in harmony with the precedents that have been set to us, and I shall endeavour to establish that we are proposing to follow those successful conversions on parallel lines; and I shall appeal to this House of Commons to do what previous Houses of Commons have done on similar occasions—to give us similar powers in order that we may have the hope of securing a similar success. What happened under Mr. Goulburn's Act of 1830? The dissentients were only £3,000,000 out of £154,000,000. Remember that in all these cases these eminent men faced the same problem that you have to face now. They faced gigantic sums; they took great powers, and the result was successful, notwithstanding the largeness of the sums. There was a smaller conversion in 1834. Lord Althorp in that year converted Four per Cents, amounting to £10,600,000, into an equal amount of Three-and-a-Half per Cents, guaranteed for six years; and there, again, assent was presumed unless dissent was signified between May 8 and May 28, about three weeks being given for the dissentients to come in. On that occasion there was a much larger proportion of dissentients—namely, £4,000,000, and they were paid off at once by the Savings' Bank money in the hands of the National Debt Commissioners. That was a smaller operation than any I have yet alluded to. Now I come to the great and very successful operation of Mr. Goulburn in 1844, and, as it is mainly on the lines of that precedent that I ask the House to act on this occasion, I wish to call the special attention of the House to its features. It was a gigantic operation—namely, the conversion of £249,000,000 of Three-and-a-Half per Cents into an equal amount of Three-and-a-Quarter per Cents, guaranteed for 10 years, and then falling automatically to Three per Cents, guaranteed for 20 years. There are the existing New Threes as they are called. And with regard to all this Stock, with the exception of £10,000,000 which stood upon a special footing, assent was presumed unless dissent was signified between March 11 and 23. Notices of dissent were to be numbered as received, and dissentients were to be paid off in such order, at such period, and in such manner as Parliament might direct. Again, you find this great power entrusted by Parliament to the Executive Government to pay off dissentients in such order and manner as Parliament might direct. The powers given were strong, the terms offered were fair, and what was the result? Out of £249,000,000, there were only £103,000 of dissentients. I now come to the case of my right hon. Friend the Member for Mid Lothian (Mr. W. E. Gladstone), who in 1853 attempted a similar task. He had to face greater difficulties than had been encountered by his Predecessors, and greater difficulties than those which exist at the present moment. That large sum of which I have just spoken, and which had now become the New Threes, but which, though large, were a manageable amount—at that time, I think, some £200,000,000 could not be touched, under the terms of Mr. Goulburn's conversion, until the year 1874. Therefore, the right hon. Gentleman could only deal with the tremendous sum of Consols and Reduced which, I think, amounted at that time to fully £500,000,000; and they stood in this favourable position, that he could not, as previous Chancellors of the Exchequer had done, act suddenly with regard to them; he could not impose the short notice which previous Chancellors of the Exchequer had been able to give, and which had in great part facilitated their success. Consols and Reduced were entitled to a year's notice, and, consequently, the right hon. Gentleman was quite unable to apply that principle of non-dissent signifying assent which characterized all previous conversions. I need not add, because it is in the memory of those who have studied the subject, that the right hon. Gentleman had other difficulties—that, unfortunately, he fell upon evil times, and that before his conversion could be sufficiently tested there were foreign troubles which disturbed the Money Market, and threw down the price of Consols; and thus the scheme which he so carefully elaborated was beaten partly by the state of the Money Market produced by the course of foreign events, and partly by the special difficulty of his position in not being able to give a short notice. The scheme of the right hon. Gentleman was of necessity purely optional, and the consequence was that there was great difficulty in his carrying it out under the circumstances of the year 1853. The right hon. Gentleman at that time spoke of the immense obstacles to approaching those Three per Cents—the great phalanx of Consols as I think he called them—and he pointed out the disadvantage at which any Chancellor of the Exchequer would be placed in tackling Consols. But at the present moment the amount of that gigantic Stock has been considerably reduced, and there exists a Stock which did not exist in his time—namely, the New Three per Cents; or rather they existed in his time, but it was impossible for him to operate upon them; but now they are a Stock which it is possible for a Chancellor of the Exchequer to operate upon. It will be Been that what I wish to suggest to the Committee is this—that the comparative failure of the scheme of the right hon. Gentleman was not due to the inherent difficulties of conversion, but to special circumstances. It was due to the particular circumstances of the time, and to the fact that the very success of the previous conversion had postponed the powers of redemption in the hands of the Chancellor of the Exchequer with regard to the more manageable portion of the public funds. I now come to the last attempt at conversion—that of my right hon. Friend the Member for Edinburgh (Mr. Childers), who again adopted the optional principle. My right hon. Friend did not say that compulsion should never be tried, but he said that he desired to make the first attempt one of agreement rather than of compulsion. After all the criticisms that had been passed on the right hon. Gentleman, I may yet say this with confidence—that the step he took then, though it had at the time only a partial success, has, nevertheless, paved the way to the possibility of a larger conversion now. It has enabled us to test the relative value of other kinds of Stock, and has proved most valuable in preparing the ground. No one who examines those indicators of the resent value of Government securities, the Two-and-Three-Quarters and Two-and-a-Half per Cents, will say that the creation of those testing machines of public credit in this country has not been extremely useful, and enabled us to go forward with a confidence which otherwise it would have been exceedingly difficult for us to feel. The terms given by my right hon. Friend were these—he gave £102 of Two-and-Three-Quarters, or £108 of Two-and-a-Halfs (both irredeemable till 1905) for £100 Three per Cents, which was a guarantee of about 20 years from the date of conversion, He further gave holders six weeks in which to decide what course to pursue. Just my right hon. Friend did not give this option at once, but some time after the Act was passed; he gave it from September 7th till October 17th, while his Budget speech was made on April 24th. Thus the Stockholders had practically six months in which to reflect, and when we recollect the powerful interests arrayed against my right hon. Friend—and everyone knows the enor- mous powers that may be exorcised by the fundholders—with all this strength arrayed against him, with so long an option and without any compulsory powers behind him, it is not surprising that he did not succeed to the extent which he could have wished. Nevertheless, he succeeded in converting £4,600,000 into Two-and-Three-Quarters, and £19,200,000 into Two-and-a-Halfs, and this Two-and-a-Half per cent Stock which my right hon. Friend created has been most valuable to us. I do not speak of the price of Two-and-a-Half Stock during the last two or three days, when the imminence of conversion may have had some effect; but this Stock had previously shown that the credit of the country was better than a 3 per cent credit, and therefore the Government were bound to see whether they could not utilize in some way or other that bettor credit, in order to secure some advantage for the taxpayer of the country. Now, I wish to ask the Committee what is the moral of the precedents with which I have troubled them at such length? It appears to me that they show us that the conditions of successful conversion on a large scale are, that assent should be presumed in the absence of an expression of dissent, that the time allowed for the expression of dissent should be strictly limited, and that power should be taken to pay off the dissentients in such manner as Parliament may direct. This latter power may be taken either in the same Bill that fixes the terms of conversion, or, as has been more frequently the case, in a separate and subsequent Bill. The first Bill usually states that the dissentients shall be paid off in such manner as Parliament may direct, and a second Bill is then afterwards introduced determining the mode of payment, Parliament being thus guided in the stops it may take for redemption by the amount of the dissentients. Two other lessons are to be learnt—that there has existed in nearly all these cases a strong objection to add to the capital of the Debt, and that the greatest success has attended these operations where the rate of interest has been reduced, by gradual steps, the interest of each stage being guaranteed for a certain number of years. Mr. Courtney, having now dealt with the precedents, I come to the proposals which it is my duty to submit. I would wish, in the first place, to state the position of the three kinds of Stock at the present time. Those who have given study to the subject are thoroughly aware of the difference in these Stocks, but there is a kind of popular idea that Consols mean Three per Cents generally. Technically the term Consols mean Consols proper, and not the New Three per Cents or the Reduced Three per Cents. Strictly speaking the great bulk of the Stocks are called in the Market Consols, while there are smaller amounts called the New Three per Cents and the Reduced, different conditions attaching to each of those different Stocks, the present figures are as follows:—the New Threes amount to £166,000,000, the Reduced to £69,000,000, and Consols to £323,000,000. I may now point out in passing that the Committee will observe how greatly the operations of previous Chancellors of the Exchequer in reducing the National Debt have succeeded in bringing these figures into much more manageable proportions than they had some 30 years ago, when it was infinitely more difficult to attempt such a scheme as the Government are about to propose to-day. And I wish to call particular attention to thi3 fact—that of the three Stocks I have named, while Consols and Reduced can only be paid off after a year's notice, and in sums of not less than £500,000 at a time, the New Threes, on the other hand, which have survived for 14 years the period when their guarantee against redemption came to an end, can be paid off without notice and in any amounts. This Stock represents and really is the same Stock as that which endured conversion at the hands of Mr. Goulburn in 1844, and the time for which it was guaranteed against redemption and reduction of interest expired in 1874. It is most important to remember that by the terms of its creation this Stock was liable and subject to redemption aft or 1874. There is no other provision bearing upon its redemption, yet it has been contended that it can only be paid off en bloc at one time. Whether that contention is accurate or not depends upon the reading of the words, "subject and liable to redemption after the year 1874." Anything further is inference, and it appears to me that inference is all the other way, and that all the precedents up to this time go to show that Parliament would be able to pay off the Stock in any manner it pleased. The whole dealing of Parliament with these matters has gone to show that Parliament will not allow the Government to be reduced to an extremity, and to be forced to pay off every holder of a particular Stock by a given day. There has been a desire to deal with the holder fairly and equitably, but, at the same time, in a manner compatible with the interests of the State. I reject entirely the theory that the New Threes must be paid off at one moment and in one mass. Certainly equity must be observed in their payment. It is the duty of a great State and it rests with those who are responsible for its acts, and who represent it for the time being, to see that every possible justice and equity is shown to the creditors of the State. The equity in this case is, that they are liable to be redeemed after a certain date. But they are not entitled to the year's notice which attaches to Consols and Reduced. They are precisely in the same position to-day as the bulk of Three-and-a-Halfs were at the time of Mr. Goulburn's conversion. The present Government will deal with the New Threes as Mr. Goulburn dealt with the Three-and-a-Halfs in 1844, with certain modifications, which I will explain to the Committee, and they will follow the same lines, mutatis mutandis, as were followed by Mr. Goulburn in 1844. And now we have next to ask ourselves in what manner we ought to proceed—that is to say, if we are going to convert, what is the best system of conversion; and what are the terms we are going to give? Four courses are possible. We could convert into Two-and-a-Halfs, or into Two-and-Three-Quarters, or into a Two and-Three-Quarters Stock falling after a certain number of years to 2½, or we could give an option to take two different kinds of Stock. With regard to the latter alternative—that of giving an option to take two different classes of Stock—history teaches that simplicity is one of the best secrets of success; and it is better not to confuse the mind of the investor by offering him several alternatives. It is far better to rely upon some simple and equitable proposal which he can easily and thoroughly understand. Therefore I reject the idea of giving an option. Let me call attention here to a matter to which I must again allude before I sit down. It has been represented to me from different quarters, both by the representatives of trustees and by the representatives of the great banking interests, that if it can be done, it is far preferable and more to the interest of all parties concerned that there should be one large Stock. I propose to follow, generally, that principle, and that principle will have effect given to it if the holders of Consols and the holders of Reduced are willing in any considerable numbers to accept the same terms, with such modifications as I shall point out, as will be given to the holders of the Now Threes with which I propose to deal on the lines laid down by Mr. Goulburn. There is no reason why the three kinds of Three per Cents should not be amalgamated into one Stock, with great and evident convenience and advantage to the holders of each of them. To that end it is desirable to establish a system of quarterly instead of half-yearly dividends, which will be more advantageous for the State, and more convenient for the investors themselves. Having thus rejected the idea of offering to the investor a number of alternatives, I also reject another suggestion—namely, that of establishing a Two-and-Three-Quarters per Cent Stock, which does not go down automatically to Two and a Half. My right hon. Friend the Member for South Edinburgh (Mr. Childers) was right, in making his optional proposal, not to go too far, or attempt too much; but dealing, as I think the Committee will, compulsorily with the matter, and requiring the investor either to accept the terms offered or to be paid off, I do not think that I should secure the advantage to which the State is entitled if I were simply to convert into a Two-and-Three-Quarters per Cent Stock. We ought, I think, to reduce the Stock to 2¾ for a term of years, and then to let it descend automatically without any further action of Parliament to 2½ percent, precisely in the same manner as the Three-and-a-Half per Cents descended automatically, first to 3¼ and ultimately to 3 per cent. You will see from what I have said that I also reject the proposal that the Stock should be im- mediately reduced to 2½ per cent. I do not deny that strong arguments have been urged upon me in that direction. The interest, however, of the investing public and that of the great banking community in this matter is not entirely identical. I am not sure but that the banking community would prefer a Stock of 2½ per cent, at once settling the question as regards interest, and leaving room for an increase in the capital of the Debt. But, on the other hand, the interest of annuitants and of the community at large seem to lie in a different direction. The investing public do not care as much as the banking community do for a rise in the price of Stock, because a great many of them have only an interest in the revenue derived from Consols and other Stock for a given time, and not in the body of the Stock. It is useless to say to the annuitant that the price of his Stock will rise from £95 to par, in the course of a few years, if in the meantime the interest is to be cut down to 2½ per cent instead of 2¾. I think Mr. Goulburn was right in adopting the principle of breaking the fall to the annuitant, and that it will be better to go down by degrees than at once to make ½ per cent difference in the rate of interest. If you go by very large stops at a time you will make the case of the present annuitant harder than was the case of the old annuitant, because taking ½ per cent off 3 per cent will be felt by the annuitant more than taking ½per cent off 3½ per cent. Looking, therefore, to the general interest of the community, the Government have decided not to follow the course of reducing the rate to 2½ per cent immediately. Another chief reason for not taking that course is, that we do not wish to add, as we should be compelled to add if we proceeded on that basis, to the capital of the Debt. You may say that you can establish a Sinking Fund, and so adjust the matter that there would be really no difference. Nevertheless, there is a strong objection to the system of offering a considerable bonus to the holders of existing Stock to induce them to convert it into Stock of a lower denomination. We have, therefore, accepted the principle of a Two and Three Quarters per Cent Stock, descending automatically to 2½, and after the most careful examination of the prices of the different Stocks representing the credit of the State, of the Local Loans Stock, of the 2½, the 2¾, and of the Three per Cent Stock, we have thought that a middle term, that would at once secure equity to the State and to the fund-holders, would be to give a term of 15 years at 2¾, descending automatically to 2½ for 20 years. The right hon. Member for Edinburgh proposed a scheme by which 2¾ would be given for 20 years, and £102 of the new Stock for each £100 of old. The advance, however, of what I may term the credit of the country and the experience we have gained of the Stock created by the right hon. Gentleman have indicated that it is desirable to shorten the number of years, and we should not be entitled to adopt his scheme without injustice to the taxpayers, or to give a larger number of years at 2¾ than I have stated. But I ought to mention one further modification which we propose. I have said that we offer 15 years of 2¾, but we are anxious that the terms we offer to the holders of the New Three per Cents should be also accepted by the holders of Consols and Reduced Stock, with certain modifications. The holders of those Stocks are entitled anyhow to continue to receive 3 per cent for one year longer. As, therefore, we wish to give the same Stock for the sake of simplicity to the holders of every kind of Three per Cents, and at the same time to insure the large Stock I have alluded to, we propose to make this further modification—that instead of the New Threes continuing only a half year at their present interest of 3 per cent, we shall give them one year at 3 per cent and 14 years at 2¾. This will give trustees time to turn round, and annuitants time to adjust themselves to the new terms. The holders of New Threes would in any case be entitled to continue at the same rate of interest from April to October next, but we propose to let them continue at the same rate of interest from April next to the following April. I am bound to say that in making this proposal I have consulted the general interest rather than my own, if I may say, so as Chancellor of the Exchequer, because in postponing the relief to the taxpayer for a whole year I am destroying the advantage which. personally I might have derived from a reduction of interest that would have made an important difference in the Budget for the year over which I shall have control. A year of grace in which they can turn round and accommodate their expenditure to their incomes will be, I believe, an immense been to small investors. I have stated that dividends should be paid quarterly. Assent will be presumed unless dissent is expressed by March 29.


Will that apply to the case of all Stocks?


I am obliged to the noble Lord for his interruption. My answer is—No, only to the New Three per Cents. I will refer to the case of the other Stocks presently. In making this proposal I shall, of course, have to appeal, I hope not in vain, to the House and to hon. and right hon. Gentlemen opposite to facilitate the passage of this Bill, so that it may pass this House before March 29, because they will see, by what has gone before, that upon the rapidity with which such a measure is parsed, and upon the decision and determination of the House to support the Government, its success must ultimately depend. I trust, therefore, that if the principle of the Bill is opposed by right hon. Gentlemen opposite, they will fight fairly, so that if it is supported by the majority of the House it may be passed within a reasonable time. I also trust that right hon. Gentlemen opposite will think that this is a fair notice to give, and that the time could not have been extended without danger to the measure, and without departing from substantial precedents which have resulted in success. As regards trustees, I am anxious that they should have every possible opportunity afforded them to remove their Trust Funds to other securities if they should think fit to do so, and we, therefore, propose that the time for trustees to express their dissent should be extended to April 12. There are frequently difficulties in the case of the trustees of charities and of public property, and I am not anxious, and I am sure that the House of Commons is not anxious, that trustees should be taken at a disadvantage. I may further say that clauses will be introduced into the measure to relieve trustees from any responsibility connected with the pro- posed conversion of the Stock held by them, and, under the circumstances of the case, to make their action easier. Provision will also be make in regard to powers of attorney and other matters, so that the scheme may work smoothly, as, in fact, similar schemes have done on previous occasions. I now come to the question of Consols and Reduced. Here we must bear in mind, first, the expediency of amalgamating all the Stocks into one great Stock; and, secondly, the privilege enjoyed by holders of Consols and Reduced that they cannot be paid off without a year's notice—that is to say, they have an option against the State. If we were to give notice to-morrow that Consols and Reduced should be redeemable after the lapse of a year, the holders would be able to wait and to take advantage of any events which might happen and which might tell against the Government, and the Government might be placed in the position of wanting funds, not, indeed, to pay them all off, which would not be necessary, but to deal substantially with the Stock. It will be an immense advantage if the holders of Consols and Reduced can be induced to forego their right of notice for one year, and to accept at once the same Stock which is offered to the holders of the New Threes. What I offer, therefore, the holders of Consols and Reduced is this—that, in consideration of their foregoing the right of notice for a year, they should have the advantage of ¼per cent; in fact, that they should receive £100 of the new Stock and 5s. in place of every £100, the 5s, to be paid in cash on conversion, so that they may take identically the same Stock as is offered to the holders of the New Threes. I do not know whether I have made myself distinctly understood. I wish to be very clear on this point, and the Committee will allow me to repeat the statement. In consideration of the holders of Consols and Reduced assenting to come in now within a given date—that is to say, before the 12th of April—and thus relieving the Government of the difficulties it might encounter, not insuperable difficulties, in giving the notice I have spoken of, they will be entitled to 5s advantage per £100 over the New Threes. I may further add that in the case of the New Three per Cents, where conversion is automatic—that is, where we presume assent unless. dissent is expressed—in fact, in the compulsory part of the scheme, a commission to agents, solicitors, or brokers would seem out of place, and I do not propose to offer it. But in the case of Consols and Reduced, where the initiative rests with the holders, and where a large portion of the trustees and investors most probably consult their agents—whether they are bankers, solicitors, or brokers—and where proceedings must be taken at the Bank of England for giving effect to the option, if exercised, I propose to authorize the Bank of England to pay a small agency commission of 1s. 6d. per £100 to authorized agents, so that the holders of such Stock may not have to sacrifice any part of the ¼ per cent which is given them in consideration of their foregoing their year's notice in any expenses attendant on the conversion. And now I wish to state, both with regard to the New Threes, where the compulsory process is employed, and with regard to Consols and Reduced, what are the arguments to be urged why holders should accept the terms of conversion. I wish to point out to them in what position they would stand if they did not accept the terms which we give them within the time which we offer. And, first, as to the New Threes, let me point out to the Committee the position in which they stand. The holders might, perhaps, use two arguments. One is to say to the Government—"You cannot pay us off; we hold £166,000,000, and we defy you to be able to pay off that amount." The other argument they might use is to say—" We do not mind if you do pay us off." Now, with regard to the first argument, I have pointed out to the Committee that Mr. Goulburn risked paying off in 1830 £150,000,000, and in 1844 £250,000,000. But the Exchequer at the present moment is infinitely stronger than it was in 1844. Consider for a moment the immense resources at the disposal of the Government. In 1844 there wore under £30,000,000 in the hands of the Savings Banks Commissioners; but I ask the Committee to remember that that fund, which is at the disposal of the Government for assisting them in transactions of this kind, at the present time, instead of being £30,000,000, is £60,000,000, immediately available to be utilized, if Parliament thinks fit, and safely utilized, in paying off dissentients. Then there is the cheapness of capital at the present moment and the resource of drawing on Exchequer bonds and bills. I will not trouble the Committee by reading the precedents; but in all the cases where Acts have been passed to make payment to dissentients, the widest powers have been entrusted to the Treasury in order to deal with them. I notice that in the debate of 1844—perhaps the right hon. Member for Mid Lothian may remember it—not a single question was asked of Mr. Goulburn as to the measures he would take for paying off dissentients; and in 1830, when one or two Members raised the point, Mr. Goulburn declined, I think very wisely, to state the process by which he would pay them off. I do not know whether it will be thought that I should be pressed to state the precise methods by which dissentients would be paid off. I should strongly deprecate such a course; I should strongly deprecate being placed at a disadvantage compared with previous Chancellors of the Exchequer, who have been allowed great latitude on this point; and I hope right hon. Gentlemen opposite may see their way in this respect also to follow the precedents which have been set. All I ask is that the Government may be given the power which has always been given hitherto—namely, the power of paying off the dissentients in such manner, and in such order, and at such periods, as Parliament may direct. If this be done, I do not think it possible that we should be driven into a corner. The resources at our disposal are extremely great. Personally, I do not anticipate any large number of dissents, for reasons which I think will command themselves to the Committee; but if there are a considerable number, I make no doubt we shall have ample power, with the assistance of Parliament, to take such measures as will promptly discharge their claims. Now I come to the second possible argument—"We do not mind if you do pay us off. We will take the money at par and reinvest it in other securities." I will assume, but I will not grant, that the new Stock will not be above par. But this is the point to which I invite the attention of the Committee—in what manner are the holders going to invest those millions which they say they will take from the Exchequer? Where will they find the investments? To what markets will they go with the sovereigns in which they will be paid off? Where will they find safe Stocks in which to invest in the circumstances? I say they could not find such Stocks; and I can prophesy what would happen. They would have to come and buy the very securities which we should put on the Market in order to pay them off, and to take them at a lower interest than the Stocks they now own. I trust I have made that clear. My argument is this. Supposing £50,000,000 were to be paid off; it will be raised by Exchequer Bills, by the issue of new Stock, or it will be taken from the Saving Bank Funds. There will be no new securities of the highest character in which the money so paid could be invested except those new securities which we shall offer. Or, again, supposing they did buy other securities, those who sold those securities to the buyers would be the persons who would be compelled to invest in the Stock which we put on the Market. I do not, therefore, apprehend that there will be any large number of dissentients among holders of New Threes. But I now ask why Consols and Reduced should come in, protected as they are by a year's notice? Consols are less than £330,000,000 now, and of Reduced there are not more than £60,000,000 worth in the hands of the public. If we were to give notice to Consols and Reduced now, they would be very much in the same position next year which New Threes are in to-day, only that they would have to be paid off in amounts of £500,000 or more. But it would not be necessary to pay off in such small amounts. We have resources now which our Predecessors did not enjoy. We have £10,000,000 a-year which has to be invested in Government Funds; and looking to the fact that it was clearly not the intention of Parliament to pay off Consol-holders in a day, it seems to me to be clear that we should be able and would determine to deal with Consol-holders, if they do not see their way to come in on the optional terms, not indeed in an arbitrary, but in a very decisive manner. We cannot endure this state of things to continue, that they should at once enjoy the rights of 3 per cent interest, when the national credit justifies a lower rate, and should be paid off not at par, but at 2 or 3 per cent above par. There- fore, it is obvious that it will be necessary to make arrangements, after first giving a year's notice to Consols and Reduced, in order to begin the process of the gradual redemption of those Stocks. But I trust that such a process will not be necessary. If they come in now they gain terms which I think the Committee will feel are fair terms. We offer them 5s. down, which represents the difference between 2¾ per cent and 3 per cent for one year; and they will have what I know they value, a single large Stock, an object which might be defeated if Consol-holders in large and overwhelming numbers should refuse to come in; and surely it would also be to the interest of the Consol-holders wore the Market in the largest sense to be relieved from that constant apprehension which we felt if there is a likelihood of their being paid off by degrees, and from that uncertainty which has so long prevailed. I trust, therefore, that, taking a prudent view of their own interests, at least a large number of them will take the new Stock on the terms which we propose. I trust that I have made our proposals sufficiently clear to the Committee, considering their extremely technical character. I need only add this with regard to Consols, in case a difficulty should be raised about the dividends being payable on the 5th of January and the 5th of July, that if the holders come in they will be paid at once the accrued interest, which is f per cent on the 5th of April, and will thon receive the same Stock as all the others—a Stock bearing a quarterly dividend, of which the first quarter will be paid on the 5th July next. It remains for me to show, what I trust will be of interest to the Committee—namely, the saving to the Revenue which will result from these proposals. If the New Threes alone are converted, there will arise an advantage to the Revenue from April, 1889, of £410,000 a-year; and from April, 1903, of £820,000; but if the conversion should be thoroughly successful, if Consols and Reduced should come in, if our hopes in that respect be realized, then from April, 1889, there would be in round figures a saving of £1,400,000 a-year, and after 14 years more a saving of £2,800,000 a-year. I have put these figures before the Committee, and the Committee will judge whether they are a sufficient inducement to engage this House upon the great work to which I invite then in the measure which I have announced. We know how greatly we touch some vast interests in this matter; but these interests are not vaster than those which have been tackled successfully before by other Chancellors of the Exchequer. The country is as strong to deal with a problem of this sort as it has been in previous times, and I firmly believe that if Parliament should see its way to support the present Government in this matter, as previous Parliaments have supported other Governments, we shall be able to give this great relief to the taxpayers of the country, while at the same time offering what I regard as most fair and equitable terms to the holders of the public funds. Mr. Goulburn, in the speech to which I have so often alluded, repeatedly spoke of the duty of the Government, as servants of the public, to make the best terms possible for the public, but also to show sufficient tenderness in dealing with the creditors of the State, so as not to injure that great engine of credit upon which all States must rely in times of trouble. It would be a great disaster if any proposals of this kind, though they might relieve us from a certain burden, affected in any way the reputation of the country, either for honesty or for power. I believe that our present proposals are conceived in a sense of equity both to the creditors of the State, and to the taxpayers. We place large proposals before the Committee, and appeal to the House of Commons to pass them rapidly into law, if hon. Members see that they can countenance the principles which we have embodied in them.

Motion made and Question proposed, That it is expedient to authorise the conversion of the New Three Per Cent. Annuities, the Consolidated Three Per Cent. Annuities, and the Reduced Three Per Cent. Annuities into certain other Annuities, and to provide for the redemption of the New Three Per Cent. Annuities."—(Mr. Chancellor of the Exchequer.)

MR. W. E. GLADSTONE (Edinburgh, Mid Lothian)

It is with great satisfaction that I rise to discharge a debt, which I think the Chancellor of the Exchequer has laid upon us, by making the acknowledgments which his statement deserves. It is quite plain to me, apart from the merits of his plan, that the project he has laid before us is the result of laborious, careful, and thorough examination, which has been conducted in a wise spirit of regard for a long course of precedents which have afforded him material help and guidance in considering his proposals; and likewise that his mind is fully alive to the principle which ought to govern his conduct, and to the great objects which he ought to have in view in seeking economy for the benefit of the State and the nation; but at the same time bearing in mind that economy can never be safely sought or satisfactorily attained if there be any forgetfulness of the principles of equity in the case of those with whom we deal as public creditors, and also bearing in mind the most fatal of all errors undoubtedly which a Finance Minister or Parliament could commit—namely, the taking of any steps which would have the effect of lowering the standard of public credit in this country, or producing any uncertainty in the public mind as to the position which Parliament has maintained. So far I have very great satisfaction in congratulating the Chancellor of the Exchequer upon the plan which he has laid before us, and upon the manner in which he has addressed himself to a very arduous labour. The Chancellor of the Exchequer, in the midst of the vast subject before him, not unnaturally, did not mention to us on what day he proposes to bring this subject under the consideration of the House with a view to a definitive vote being taken upon it. I take it for granted that he has no intention of asking the House on this occasion for any vote which will in the slightest degree commit the House or fetter the freedom of its judgment. One word on the subject, and it is that, having a recollection of what has passed on previous occasions, I am quite sure there is no way in which we could more seriously injure the great public interests involved in this question than by making any undue demand upon the Chancellor of the Exchequer for a lengthened time, with a view to the consideration of this matter. Of all things to be desired, and what I am sure I may expect my hon. Friends near me to keep in view and to impress on our minds is, that it is of the highest importance that we should proceed to give a definitive judgment upon this question at the very earliest moment consistent with the largeness of some of the points and the necessary complexity of the subject. Therefore, whatever reasonable demand the Chancellor of the Exchequer may make in that respect undoubtedly will have our support. I think, without prejudice to the freedom of judgment of the House, I may fairly say that the prospect which the right hon. Gentleman has laid before us inspires us with the hope that much public benefit may be extracted from the plan which he has propounded. I will not say whether it is to operate upon the largest scale which the most sanguine man may hope for, or whether it will operate only upon a more limited scale which the Chancellor of the Exchequer regards as being more absolutely within his reach; but I will confine myself to the general observation that much good, I feel satisfied, will be extracted from it. No doubt, the question of the precise amount of time to be allowed for giving assent is a question of considerable delicacy and difficulty. I do not think it right that we should be more severe on the present occasion than the latest precedent warrants. But, on the other hand, it is right that we should take into view that within the last 30 or 40 years, and since the latest of the greater operations, the means of communication have been very greatly facilitated and expedited, and something may be allowed to the Chancellor of the Exchequer on that very account. There was one point on which the Chancellor of the Exchequer made an appeal to us, and which I am very desirous to answer. He said that he hoped that there would be no undue disposition to press him for a disclosure of the terms and particulars at the present moment, or at any early stage, as to the mode in which repayment is to be effected in those cases in which it is necessary. With regard to this subject, the Chancellor of the Exchequer undoubtedly made out a very strong case from references to former examples, showing that it has been the practice of Parliament, founded upon wise principles of consideration for the public interest, to reserve to itself great discretion, either to be exercised by itself or by the Executive Government, and it has not been the practice to make premature engagements which might have the effect of causing considerable embarrassment at later stages with respect to the details of the manner in which, in the event of refusal to accept these terms, repayment to the public creditor would be made. Then I wish to refer to another point mentioned by the Chancellor of the Exchequer, and undoubtedly it is a point which the public creditor will justly and wisely take into his consideration. I speak here from a long experience of these matters, and having felt most severely the comparative impotence of the Exchequer as it stood 40 or 50 years ago, with respect to the amount resting in its hands and available at its own discretion for making good its position in the Money Market in the event of a great monetary operation upon the National Debt. I think that the Chancellor of the Exchequer has in no degree overstated the immense improvement in the position of the Exchequer. I may even say that, although the Chancellor of the Exchequer has not understated it, yet the statement he made is one which would not of itself, I think, give the full measure of that improvement. In one portion of his speech he said that at the time of Mr. Goulburn's operation the Government had nothing in their hands excepting £30,000,000 of Savings Banks' deposits, which, however, might be regarded as a fund intended to assist them in carrying through an operation of this kind. He then went on to say that there is now a capital of £60,000,000 instead of £30,000,000 at the command of the Government. Now I venture to make two remarks upon that subject, both of them tending not to weaken, but rather to enhance, the effect which it may be calculated to produce. First of all with regard to the £30,000,000. At the time when Mr. Goulburn had to effect his operation we had not yet reached to the full acknowledgment of what I take to be undeniably the sound and true doctrine that, with regard to Savings Banks' deposits, the State or the Chancellor of the Exchequer is a banker and not a trustee. The old doctrine which the trustees of Savings Banks were then disposed to promote was that he was only a trustee, and had no more discretion in the use of those funds than a trustee possesses. A banker does, at his own risk, as he thinks proper with the funds at his command. The Chancellor of the Exchequer does what he thinks proper, or what Parliament has thought proper to enable him to do. It was only in a long course of years that that doctrine came thoroughly to be understood. But the Chancellor of the Exchequer, in another portion of his speech, stated what is most important—namely, that if you take the capital value of the deposits now in the hands of the State, they are far more than £60,000,000. I believe they have distinctly reached £100,000,000; but for convenience, and even the enhancement of the power of the Government, a large portion of these deposits has been converted into Annuities now rapidly repayable, which consequently places a large amount month by month, or certainly quarter by quarter, at the disposal of the Chancellor of the Exchequer. This I venture to say, because I think it is material, that it should be understood that if, on the one side, he is endeavouring to deal with a very large amount of the Public Debt, on the other hand, he is in a position of strength which has been gradually in course of expansion, and which I hope Parliament will enable him to use to the public advantage. I will not detain the House with further observations, except on this occasion to give my congratulations and the expression to him of my hearty good wishes for the careful and candid and, as far as possible, favourable consideration of these proposals, which evidently have been elaborated with so much care by my right hon. Friend, and the expression of my own full conviction that no motives connected with the organization of Party or difference of opinion on any other subject, will prevent the House, or any portion or section of the House, from giving to this subject and to these proposals an entirely and absolutely candid and impartial consideration.


In reply to the question put by my right hon. Friend I have to say that I shall bring in a Bill founded on the Report of these Resolutions on Monday. The Bill, I hope, will be in the hands of hon. Members on Tuesday, and we propose to take the second reading on Friday at a Morning Sitting at 2 o'clock. I would add the expression of my most cordial thanks to the right hon. Gentleman for the manner in which he has received these proposals, and say how deeply gratified I am to have, I will not say the countenance, for I do not wish to commit my right hon. Friend, but the general sense of approval of my right hon. Friend, who was in the Government of Sir Robert Peel in 1841, when Mr. Goulburn's second great and successful conversion took place.


I understand that the second reading of the Bill will be taken on the 16th of March?




Then what will be the exact day on which notices will be given. I understand it will be on the 29th of March?


In the case of the Act of 1844 Mr. Goulburn proposed Resolutions on the 8th of March; the Royal Assent was given on the 22nd of March, and the time for expression of dissent expired on the 23rd of March. In this case the time for such expression is prolonged beyond what it was in the days of Mr. Goulburn—namely, to the 29th March; but we shall press forward the Bill if there is a general feeling in favour of it in the House. After it has passed the second reading on Friday we shall proceed immediately to take the Committee stage, and then the remaining stages as fast as possible. I should hope, if there is a general assent to the broad principles of the Bill, that it may become law on the 23rd or 24th of March.


The right hon. Gentleman will excuse me, I am sure, for asking one other question. On what date are we to understand that notices will issue?


No individual notices have been given in this case.


I am speaking of Gazette notices.


Of course, every opportunity will be taken to give the utmost publicity. I have not examined all the precedents on this point; but every means will be taken to ventilate the subject so that holders generally will know what is going on; and I shall be most careful to see that every one has proper notice.

MR. BARTLEY (Islington, N.)

asked if this would affect the interest on the Savings Bank Accounts. Would this be dealt with in the Bill?


No, it is not touched in the Bill. No doubt it is a question which, will arise at a future date.


I may point out to the hon. Gentleman that this is an entirely separate and distinct arrangement. The position with regard to the Savings Bank Trustees is a mere coincidence.


asked how the right hon. Gentleman the Chancellor of the Exchequer would ascertain who were the trustees, seeing that the Bank of England did not recognize trustees in their books.


If the hon. Gentleman puts this question at another time, I will explain what the clauses will be with regard to trustees. The point is one that will not fail to be noticed.


said, he would point out that obviously the statement of his right hon. Friend would go all over the country in the papers of that evening, and therefore no one would have reason to complain of want of notice.

MR. MURDOCH (Reading)

asked when the bonus of ¼ per cent to the consenting holders of Consols was to be paid—whether or not it would be paid with the first dividend.


Yes, Sir; it will he paid with the first quarterly dividend, if not before.


said, that he understood that until there was fresh legislation the Savings Bank system would remain as at present.


Yes Sir.

Question put, and agreed to.

The following Resolutions were also agreed to:— (2.) That the sums required in connection with such conversion and redemption be raised by the creation of now stock, or by the issue of Exchequer Bonds, Exchequer Bills, or Treasury Bills, or by temporary loans, and that the principal moneys so borrowed, and all interest from time to time due thereon, be charged on the Consolidated Fund. (3.) That such new stock be created, bearing interest for the year ending on the 5th day of April 1889 at the rate of three pounds per cent, and thereafter until the 5th day of April 1903, at the rate of two pounds fifteen shillings per cent, and thereafter at the rate of two pounds ten shillings per cent, and that the dividends thereon be paid quarterly. (4.) That all sums for defraying expenses incurred in carrying out such conversion and redemption, including such sums as may be required for facilitating such conversion, and additional remuneration to the Banks of England and Ireland, be charged on the Consolidated Fund. (5.) That provision be made for carrying out the arrangements necessary for such conversion of stocks and redemption of annuities.

Resolutions to be reported upon Monday next.