HC Deb 02 August 1912 vol 41 cc2527-9

(1) The Treasury may borrow from any person, by the issue of Treasury Bills or otherwise, and the Bank of England and the Bank of Ireland may advance to the Treasury on the credit of the said sums, any sum or sums not exceeding in the whole ninety-two million eight hundred and forty-seven thousand three hundred and forty-three pounds.

(2) The date of payment of any Treasury Bills issued under this Section shall be a date not later than the thirty-first day of March, one thousand nine hundred and thirteen, and Section six of the Treasury Bills Act, 1877 (which relates to the renewal of bills), shall not apply with respect to those bills.

(3) Any money borrowed otherwise than on Treasury Bills shall be repaid, with interest not exceeding five pounds percent. per annum, out of the growing pro- duce of the Consolidated Fund, at any period not later than the next succeeding quarter to that in which the money was borrowed.

(4) Any money borrowed under this Section shall be placed to the credit of the account of the Exchequer, and shall form part of the said Consolidated Fund, and be available in any manner in which such Fund is available.

Mr. JAMES HOPE

I beg to move, in Sub-section (3), to leave out the word "five" ["five pounds per cent."], and to insert instead thereof the word "four."

1.0 P.M.

I know it is the custom in Appropriation Bills for the Treasury to take power to borrow at 5 per cent., but I would ask why it is necessary to put in so high a figure. I quite understand that for a short period of time it might not be possible to get money at 5 per cent., or even at 10 per cent., but when you insert figures in any Bill of this kind you ought to put in the figure of a likely rate; otherwise the Treasury might very easily be led into acts of improper borrowing. To put in a figure as high as 5 per cent, does tend to encourage the Treasury to borrow at a higher rate than may be necessary. We have heard a good deal about the depreciation of credit recently, and we ought not to put in a figure of this kind in this Bill to encourage the notion that 5 per cent, should be regarded in any way the normal figure at which the Government of this country may borrow.

Mr. LLOYD GEORGE

This is the figure which has been inserted in every Appropriation Bill for some generations. I cannot give the exact number. It is quite necessary that the Government should take that power. I think that during the American bank crisis, when the Unionist Government was in power, the Bank rate was 7½, entirely due to that crisis, and the Government had to borrow at 4½. That shows that the margin is a very reasonable working margin when there is a great crisis of that kind, which sends up the Bank rate. I do not think it would be safe for us to alter the figure. As a matter of fact the Government always borrow at about that rate.

Mr. JAMES HOPE

The only remark I would make in answer to the Chancellor of the Exchequer is that if he intends to provide against a possible crisis, he ought not to put in a maximum figure of 5 per cent. He says that at the time of one crisis they had to borrow at 4½, but on some other occasion they might find it necessary to pay more than 5. His argument shows that we ought not to put in any maximum. If we put in a maximum for ordinary purposes it should be 4 per cent., but if he contemplates a great crisis, then he ought not to put in any maximum.