HC Deb 08 August 1904 vol 139 cc1479-85

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."

MR. COURTENAY WARNER (Staffordshire, Lichfield)

said this Bill was an example of the injury a Chancellor of the Exchequer could accomplish by upsetting the finances of the country. There were two objections to the Bill. One was that it was bad finance; and the other was that it upset the entire financial world by the issue of Treasury Bills at the present period. Immediately the Resolution on which the Bill was founded was introduced, Consols fell to eighty-seven; but when it was' announced that Exchequer Bonds were to be issued, and that only about £6,000,000 would be required, an improvement in the financial situation at once occurred. He would move that the Bill be read that day three months.

MR. WHITLEY (Halifax)

, in seconding the Amendment, said it was very desirable that the House should have a clear statement as to the exact position of the floating debt. As far as he could make out, the amounts referred to in the Bill as authorised by various Acts to be raised by terminable annuities, which the right hon. Gentleman now proposed to take power to raise by Exchequer Bonds, represented a total of nearer £28,000,000 than the £10,000,000 recently mentioned. The amount authorised but not vet raised under the Naval Works Act was £14,800,000; under the Military Works Act £10,580,000; under the Public Buildings (Expenses) Act £1,600,000; and there were also various other smaller items. He believed it was a fact that the net result of the borrowing during the current year would be that the National Debt would be £2,500,000 larger at the end of the year than it was at the beginning. That was a very serious condition of affairs two years after the close of the war, and one which ought to make the House pause before granting these extended powers to the Chancellor of the Exchequer. He had given the right hon. Gentleman private notice of the Questions he desired answered; therefore it was unnecessary to detain the House at greater length.

Amendment proposed— To leave out the word 'now,' and at the end of the Question to add the words 'upon this day three months.'"—(Mr. Courtenay Warner.)

Question proposed, "That the word 'now' stand part of the Question."

MR. STUART SAMUEL (Tower Hamlets, Whitechapel)

asked whether there was any special reason for Exchequer Bonds being mentioned as the form in which the money should be raised. Exchequer Bonds were extremely unpopular in the City, and were not accepted on foreign money markets. Treasury Bills, on the other hand, were an extremely popular form of investment. On previous occasions the Chancellor of the Exchequer had taken a discretion as to the manner in which he should raise money, and there appeared to be no advantage in fixing Exchequer Bonds as the form to be adopted in this case.

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

complained of the House having to discuss at so late a period of the session and at such an hour of the night an important Bill involving a totally new policy with regard to capital expenditure. He feared that the enabling of the Chancellor of the Exchequer to raise capital sums more easily would tend to increase the pressure put upon him to incur capital expenditure. In his Budget speech the right hon. Gentleman said he was doing his best to curtail capital expenditure as much as possible, but inasmuch as the amount had been reduced only from £10,000,000 to £9,250,000 his efforts had not achieved any very substantial result. Last year the net reduction of debt amounted to under £1,000,000, but this year there would actually be an addition of about £2,500,000, and, worse still, the £9,250,000 would be borrowed at a higher rate of interest than was being paid on the £7,000,000 that would be paid off. He could only express his profound regret at this large capital expenditure.


said the more he listened to the observations of the hon. Gentleman on this subject the more impracticable appeared to be his view of the situation. Many of the works upon which this capital expenditure was to be made had been in progress for some time, and contracts for their completion had been entered into. Such contracts could not be stopped in the middle simply because, on financial grounds, it might be convenient to postpone the operations. In consultation with his colleagues he had agreed that new works not necessary for the completion of those already entered upon or not urgently required for the defence of the country should not be begun under present circumstances, and the money which he had indicated as the capital expenditure likely to be required during the current year was for works now in progress and for defensive works urgently required. The hon. Gentleman was mistaken in supposing that it would be easier for the Chancellor of the Exchequer to borrow by means of Exchequer Bonds than under the old system of terminable annuities. It was a much more delicate operation, and he had resorted to it only because it was necessary to carry out the will of Parliament as embodied in previous Acts. The Bill authorised the Treasury to raise by Exchequer Bonds any money which they were now authorised to raise under enabling Acts by terminable annuities. The amount which he anticipated would be expended on capital account under those Acts during the present year was £9,250,000, and under the Bill just read a second time power was taken to raise a further £2,600,000 for the purposes of the Cunard Agreement. He could not say the exact amount that would be required for that purpose during the current year, but he did not anticipate that it would exceed £600,000, so that the total to be raised this year would be about £9,750,000 He had reason to believe that from £3,000,000 to £4,000,000 would be available in the ordinary way, and to that extent he would be able to provide for the expenditure by terminable annuities. The balance he proposed to raise by Exchequer Bonds. It was perfectly true that the Bill did not limit the power to raise money by Exchequer Bonds to the current year. The Questions asked by the hon. Member for Halifax in the letter to which he had referred involved a great number of figures, which could be more conveniently given in reply to an unstarred Question. He might say, however, in regard to the price at which recent issues had been made, that the Treasury Bills issued on 2nd July for six months were issued at rates equivalent to £2 5s. 3d. per rent. The Bills issued on the 2nd of July, for twelve months, were issued at an

interest of £2 18s. 2d., while Exchequer Bonds were issued during the present month under favourable circumstances at £98 13s. 6d., giving a yield in interest of £3 9s. 9d. The hon. Member opposite had suggested that he should provide for these borrowings by Treasury Bills. There were already nearly £29,000,000 of Treasury Bills outstanding, and they had to rely upon them for financing the Exchequer. He did not think that under the circumstances it would be a wise proceeding to issue a larger amount of Treasury Bills, and they were not suitable for a loan which there was no possibility of paying off when the Bill fell due.

MR. RUNCIMAN (Dewsbury)

said that by issuing Exchequer Bonds instead of Treasury Bills the country was paying 1 per cent. more. If it was worth 1 per cent why issue Exchequer Bonds? In one of his speeches the Chancellor of the Exchequer drew attention to the enormous growth of local indebtedness and he lectured local bodies for borrowing so largely. His opinion was that corporations like Manchester and Leeds would feel ashamed if their credit fell so low that they had to pay 3½ per cent. interest for their loans, because they only paid 3 per cent at the present time. It was rather a significant comment that when the right hon. Gentleman issued Exchequer Bonds he should have to pay a larger rate of interest than the local authorities whom he lectured for their extravagance.


said he did not wish to put the House to the trouble of a division. He had made his protest, and he asked permission to withdraw his Amendment.

Amendment, by leave, withdrawn.

Main Question put:—

The House divided:—Ayes 129 Noes, 32. (Division List, No. 316.)

Agg-Gardner, James Tynte Balfour,Rt.Hn. A. J. (Manch'r Bond, Edward
Anson, Sir William Reynell Balfour,RtHnGerald W.(Leeds Boscawen, Arthur Griffith
Arkwright, John Stanhope Balfour, Kenneth R. (Christch. Brassey, Albert
Arnold-Forster,Rt.Hn. Hugh O Banbury, Sir Frederick George Brodrick, Rt. Hon. St. John
Atkinson, Rt. Hon. John Bigwood, James Butcher, John George
Bain, Colonel James Robert Bingham, Lord Carson, Rt. Hon. Sir Edw. H.
Balcarres, Lord Blundell, Colonel Henry Cavendish,V.C W. (Derbyshire
Cecil, Evelyn (Aston Manor) Knowles, Sir Lees Pym, C. Guy
Chamberlain,RtHn.J.A.(Worc. Law, Andrew Bonar (Glasgow) Rea, Russell
Chapman, Edward Lawrence, Wm. F. (Liverpool) Reid, James (Greenock)
Cochrane, Hon. Thos. H. A. E. Lee,Arthur H. (Hants, Fareham Renwick, George
Coghill, Douglas Harry Legge, Col. Hon. Heneage Ridley, Hon.M.W. (Stalybridge
Colomb,Rt.Hon. Sir John C.R. Long, Col. Charles W(Evesham Roberts, Samuel (Sheffield)
Compton, Lord Alwyne Long,Rt.Hn.Walter (Bristol, S Robertson, Herbert (Hackney)
Corbett, T. L. (Down, North) Lonsdale, John Brownlee Round, Rt. Hon. James
Craig, Charles Curtis(Antrim, S Lowe, Francis William Royds, Clement Molyneux
Crossley, Rt. Hon. Sir Savile Lucas, Col. Francis (Lowestoft) Rutherford, W. W. (Liverpool)
Dalkeith, Earl of Lucas,Reginald J.(Portsmouth Sackville, Col. S. G. (Stopford
Davenport, William Bromley Lyttelton, Rt. Hon. Alfred Samuel, Herbert L. (Cleveland
Dickson, Charles Scott Macdona, John Cumming Samuel, S. M. (Whitechapel)
Disraeli, Coningsby Ralph Maconochie, A. W. Scott, Sir S. (Marylebone, W.)
Douglas, Rt. Hon. A. Akers- M'Arthur, Charles (Liverpool) Skewes-Cox, Thomas
Doxford, Sir William Theodore Majendie, James A. H. Sloan, Thomas Henry
Durning-Lawrence,Sir Edwin Massey-Mainwaring, Hn. N. F. Smith, Abel H.(Hertford,East
Fergusson,Rt.Hn.Sir J(Manc'r Montagu, G. (Huntingdon) Smith, Hon. W. F. D. (Strand)
Finlay, Sir Robert Bannatyne Moon, Edward Robert Pacy Stanley, Rt.Hon. Lord (Lancs.
Fisher, William Hayes Morgan,David J(Walthamstow Talbot, Lord E. (Chichester)
Forster, Henry William Morpeth, Viscount Talbot,Rt.Hn. J.G.(Oxf'd Univ.
Galloway, William Johnson Morrell, George Herbert Thornton, Percy M.
Gardner, Ernest Mount, William Arthur Tomlinson, Sir Wm. Edw. M.
Gordon, J. (Londonderry, S.) Muntz, Sir Philip A. Tuff, Charles
Gray, Ernest (West Ham) Murray,RtHn.A. Graham(Bute Ure, Alexander
Green,Walford D.(Wednesbury Murray, Charles J. (Coventry) Valentia, Viscount
Greene, Henry D.(Shrewsbury) Murray, Col. Wyndham (Bath) Walker, Col. William Hall
Greene, W. Raymond (Cambs. Newdegate, Francis A. N. Warde, Colonel C. E.
Gretton, John Nicholson, William Graham Webb,Colonel William George
Hambro, Charles Eric O'Neill, Hon. Robert Torrens Wilson, A. Stanley (York, E.R.
Hamilton, Marqof(L'nd'nderry Palmer, Sir Walter (Salisbury) Wyndham, Rt. Hon. George
Heath, James (Staffords.N.W. Parkes, Ebenezer Yerburgh, Robert Armstrong
Hermon-Hodge, Sir Robert T. Percy, Earl
Hope,J.F.(Sheffield, Brightside Platt-Higgins, Frederick TELLERS FOR THE AYES—Sir Alexander Acland-Hood and Mr. Ailwyn Fellowes.
Hudson, George Bickersteth Plummer, Sir Walter R.
Hunt, Rowland Powell, Sir Francis Sharp
Jeffreys, Rt. Hon. Arthur Fred Pretyman, Ernest George
Keswick, William Pryce-Jones,Lt-Col. Edward
Boland, John Higham, John Sharpe Runciman, Walter
Brigg, John Hobhouse, C.E.H. (Bristol, E.) Slack, John Bamford
Bright, Allan Heywood Horniman, Frederick John Sullivan, Donal
Buxton, Sydney Charles Jones DavidBrynmor(Swansea Thomas,David Alfred (Merthyr
Caldwell, James Jones, William (Carnarvonshire Toulmin, George
Causton, Richard Knight Kilbride, Denis Warner, Thomas Courtenay T.
Delany, William Layland-Barratt, Francis White, Luke (York, E. R.)
Elibank, Master of Lough, Thomas Wilson, Henry J. (York, W.R.)
Ffrench, Peter M'Arthur, William (Cornwall)
Flavin, Michael Joseph O'Brien,Kendal(Tipperary,Mid TELLERS FOR THE NOES—Mr. M'Kenna and Mr. J. H. Whitley.
Gladstone, Rt.Hn.HerbertJohn Mr.Reckitt, Harold James
Helme, Norval Watson Roe, Sir Thomas

Bill read a second time, and committed for this day.

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