§ Mr. JOYNSON-HICKSasked the Chancellor of the Exchequer if he is aware that United States Government Two per Cent. Stock is now quoted at 100 and Consols at 79; whether he is aware that in the seventies the United States had to borrow at 5 per cent., while Consols returned 3¼ per cent.; and if he can give any reason for the change in the credit of the two countries?
§ Mr. HOBHOUSEAs the National banks in the United States are compelled to deposit with the Treasury Government bonds as part security for their capital, as full security for Government moneys deposited with them, and as a full equivalent for every bank note issued to them, the Government has been able to issue two per cent, bonds at par, the greater portion of such bonds being necessarily acquired for banking purposes. An issue of fifty million dollars of Panama Canal Bonds 489 Three per cent, has just been made by the Government at an average premium of 2½ per cent. These bonds have no circulation privilege but may be held as collateral security by the banks against Government deposits. For this reason, the price realised, even in the case of these bonds, is probably in excess of their value upon a purely investment basis. That the United States Government had to borrow in the 'seventies at 5 per cent, is not surprising seeing that the Civil War lasted from 1861 to 1865 and that the total Public Debt increased from £13,509,000 on the 30th June, 1860, to £577,758,000 six years later. It has now been reduced to about £200,000,000, and the improvement in public credit reflects the stronger financial position of the Government, as compared with 1866. Any comparison of the public credit of the United States with that of this country at the present time on the basis of the current market prices of the respective securities would be misleading owing to the special circumstances affecting the market for United States Bonds to which I have referred.