The Earl of Lauderdalesaid, that when he on a former occasion put a question to the noble lords opposite, whether or not they had taken any measures to convey the opinion of ministers to the individuals about to lend their capital to the French government, something had fallen from them that went to show that some communication had taken place. Under that impression he had then given notice of his intention to move for copies of all communications, which had passed upon the subject. Be- 429 fore he proceeded further, he wished to be understood as solely restricting his observations to the conduct of government. With respect to the sacred right of individuals to dispose of their property, it was unquestionable; indeed, he would say, that it was perhaps the best thing for the country that the holders of property should actually, at their own discretion, dispose of it to the best advantage. So far from arraigning any disposition of it by individuals; he was convinced that the embarking money in the line that brought the most profit, was, in the end, most beneficial for the general welfare. It was a far different question to consider whether the disposition of such property in the funds of a foreign nation, arose from the encouragement of the government, or was solely the act of the individuals themselves. It was to the nature of that encouragement that he pressed his motion. Instances were to be traced in our history, when the artificial effects of financial regulations, such as the sinking fund, had made it necessary to call for legislative provisions. It had been the practice of the noble lords opposite to attribute the foundation of the sinking fund to Mr. Pitt; upon what grounds was to him unintelligible. The distinguishing feature of Mr. Pitt's sinking fund was, that it paid off a much smaller proportion of debt than any of those that before existed. When in 1716 sir Robert Walpole established his sinking fund, money became from its operation so abundant, that the interest progressively declined from 6 to 5 and 4 per cent. In 1727 the rate it bore was four. In two years afterwards the minister, from the encouragement to send the disposable capital abroad for higher interest, brought in a bill preventing the loan of money to foreigners. The policy of this day was different: the treaty of 1814 actually afforded the encouragement to take capital out of the country, and invest it in that of foreigners. By a provision in that treaty, commissioners were appointed to determine the amount of balances between this country and France, relative to the maintenance of prisoners of war, although in a subsequent part, the claim of this country regarding the balance due, was wholly given up to France. Then why were the commissioners appointed? The thing was not capable of explanation; as in point of fact, the balance due to this country from France was considerably greater than that of France against us. 430 Why had not the balance been demanded, and the British creditors of France at once indemnified out of the treasury? If loans such as these were encouraged, it would be impossible ever to have an efficient sinking fund in that country. And were they not encouraged by the treaty of 1814? After the stipulations of that precedent how was it possible to refuse the same guarantee to any future creditor? On what principle could a distinction be drawn? Besides, there arose from the circumstances of the transaction, an additional reason against any refusal. The money secured by the treaty of 1814, was borrowed by France to carry on hostilities against this country. The money about to be advanced now, was for the purpose of enabling her to fulfil her engagements with Great Britain. He could not imagine any other cause for that strange clause in the late treaty, but that it might operate as a sort of bonus to the capitalist to lend his money to a foreign state. It was therefore most essential to see what were the nature of the communications between government and the individuals. Every side of the House must be aware, that in no part of our previous history was this country involved in greater financial distress. It had been his province at various times to attract the attention of their lordships to one great branch—the alteration in the circulation of the country. Amongst the causes assigned by the bank directors for the restriction of cash payments, great stress was laid by them on the advances to government, and the foreign loans. How would these foreign loans operate, when the bank would be so shortly obliged to pay in specie? The truth was, that if such a system was persevered in, the act of parliament for that object would be only so much waste paper. But then the noble lord opposite would answer that the sum about to be advanced from this country was extremely small. Did he not recollect, that in the correspondence with the bank the loan even of the sum of 300,000l. for Ireland, to be raised in this country, was assumed to promise a most prejudicial operation. Had the noble lord considered what the rate of interest was in foreign countries? Was it not higher than here? And if therefore any thing approaching to encouragement was held out it was in the nature of things that money would go from the country where the interest was lowest.—It was said, that the credit of this coun- 431 try was so firmly established, as to render any alarm on that subject unnecessary. If, however, the price of the funds were taken as a criterion, it would be seen that they bore by no means such a proportion to the rate of interest on common mercantile transactions, as they had formerly borne, and that in fact, money vested in government securities procured a higher rate of interest than if vested in private securities. It was well known, that the rate of interest at which bills of exchange were at present discounted, did not exceed 4 percent. If a government security were deemed equally good, it was evident that the three per cents, would have been at 75. When such a disparity existed it could not be denied, that die credit of the country was affected. Notwithstanding the state of our own funds, he did not wish any means to be taken to restrain capitalists in the disposal of their money; but as the evident tendency and effect of the article of the late treaties with France, in behalf of the English creditors of that government, was to give an encouragement to the investment of capital in foreign funds, which would not otherwise have existed, he wished to have all the correspondence which had taken place on that subject before the House, that they might be able to decide whether the government had given an antidote to the mischievous effects of its former measures, by a distinct declaration, that to insist on such conditions from France would form no part of our future policy. He was the more anxious that such a declaration should be made, as he recollected that the loans of the bank to other countries first brought its affairs into that disorder which led to the suspension of its cash payments. The noble earl then moved for copies of all official communications with his majesty's ministers on the subject of the loan lately negociated in France.
The Earl of Liverpoolsaid, the answer he had to make was short. There had been no official communications on the subject alluded to in the motion. He had however, no difficulty in stating, that the individuals concerned being at full liberty, like all other English subjects, to vest their property in the manner most convenient to themselves, had received from his majesty's ministers neither encouragement nor discouragement The government of this country were not parties in the concern, they had entered into no engagement, they had given no guarantee, present or eventual, with reference to the transac- 432 tion. The loan, indeed, could not be said to be negociated in England. It was a loan of the French government with certain great houses in Europe, in which indeed one of the great banking houses in this metropolis had taken an important share. But the noble mover had said, that under the peculiar circumstances of the case, the loan should not merely have been not encouraged, but should have been discouraged. He (lord Liverpool), in the exercise of his discretion, had not thought it consistent with his public duty to discourage that transaction, though he felt it right the individuals should understand that they entered on their own responsibility into this transaction. The peculiar circumstances on which the noble mover had recommended a departure from that which he acknowledged should be the ordinary policy in such cases were two. The first, the articles in the two last treaties with France; the second, the laws relating to the sinking fund. The articles in the treaties referred to, were those in which the government insisted on a compensation for the losses of British creditors of France, by the reduction of the funds in consequence of the revolution. Now, with regard to these articles, it had never been admitted even upon general grounds, that individuals had a right to expect the same, or similar articles to be inserted in other treaties to be concluded possibly and most probably under very different circumstances from those under which the former ones had been concluded. But there were some peculiar circumstances which entirely removed the danger of the articles being drawn into precedent. Had the noble mover forgotten that in the commercial treaty with France concluded in 1787, the very first article stipulated, that if at a subsequent time the relations of peace should be disturbed, one year after the declaration of war should be allowed to the subjects of each county, to withdraw their effects from the other country. The consequence of that article was, that many British subjects did invest their money in the French funds. The peculiar nature of the war which afterwards broke out, and the general confiscation of property in France, prevented that article from being carried into effect. Now he did not mean to say, that this article in the treaty of 1787, gave the creditors an absolute right on the protection of this government; but it gave them a strong claim to be taken into consideration in the 433 formation of the new treaty, if that could be done without sacrificing greater interests. It was, however, quite impossible that the contractors of the present loan could set up any such claim. If, therefore, there was nothing in the general policy of the country which should induce the government to discourage such a loan, there was certainly nothing in its peculiar circumstances which should render it necessary. It was evident that the articles in the late treaties, founded on the consideration of the article in the commercial treaty, and the losses into which individuals had been led on the faith of it, could form no precedent for any future negociations.—The second ground of the noble mover was the operation of the laws respecting the sinking fund. The noble earl had taken occasion to disparage the principles of the sinking fund, as he had before taken occasion to do, both in that House and in print. He had stated, that no merit was due to Mr. Pitt for the principle of the sinking fund, for, it had been established long before his time. This was true; but what had been claimed for Mr. Pitt by his friends was, that in the course of a long, calamitous and expensive war he had adhered rigidly to the principles of the sinking fund, and had never stopped its operation. On this his merit was founded. When the finances were in a more flourishing state.—which though the noble mover did not anticipate, many others did confidently look forward to—the operation of the sinking fund on the money market would be most important. The noble mover thought it most impolitic to pay off a part of the debt, because the price of that which remained would be so much increased, and capital would thus be forced to foreign countries. The capitalists would not look, however, to the rate of interest merely, but to a combined consideration of the rate of interest and the security. He allowed that a great deal of capital would force its way to foreign countries. If the peace was long and the rate of interest reduced, that must be the necessary consequence; and it would be most unwise to attempt to prevent this overflow. The sinking fund would shorten the time in which the country would arrive at that state to which all countries would wish to arrive; he said "would wish," because the low rate of interest and the overflow of capital were the best criteria of the prosperity of the commerce and trade of the country. It would be a strange mode of rea- 434 soning, to desire to overturn the system which would lead us to that result, because from this, as from all other good, some slight evils would follow. He allowed the rate of interest which money vested in the funds bore was greater than it should be expected to be, when compared with the usual rate of interest in mercantile transactions. If money thus vested did not produce more than four in the hundred, the three per cents, would of course stand at 75. But there were a variety of circumstances arising from the distresses of the times, particularly a desponding view of the state of the country however occasioned, which might have produced the present comparative depression of stock, without resorting to the supposition that credit was seriously affected. As to the committees in 1797, to which the noble mover had referred in support of his opinions, as to the causes of the former stoppage of payments at the bank, he (lord Liverpool) did not think so highly of the wisdom of those at that time examined as the noble mover seemed to do. We had now greater experience on that subject to direct our decisions. He did not deny that the great foreign expenditure at that time led to the suspension of cash payments—that it was fortunate, he did not doubt, in which he differed from the noble mover, but that it was necessary he was not persuaded. While he was on this topic, he thought proper to state, that as to what he had said in the last session on the resumption of cash payments, there had been nothing which he had then said on that subject on the fulfilment of which he did not now place the most entire reliance. He concluded by observing again, that the motion could have no effect, as no official communications with the contractors of the loan existed.
Lord Hollandsaid, that the noble earl who had just concluded, had not adverted to all the circumstances of the case. He had said, that all the peculiar advantages under which the last treaties were made, were not likely to recur. He thought, indeed, one circumstance should not be suffered to recur, namely, that the government of the country should buy two or three millions for individuals by six or seven millions out of the public purse. If the ministers of this country continued willing to give up seven millions for 2½ millions, they might be sure the French government would at all times be ready to admit such an article, and that even 435 if they had been as successful in war as they had been unsuccessful, they would not have been at all averse to such a proposition. It was to prevent such a sacrifice of public to private interest from forming an encouragement to the transfer of capital to foreign countries, that measures were rendered necessary. The noble earl had omitted also one circumstance respecting the article in the treaty of 1787, though he had fairly acknowledged that it was not obligatory on this government. That article had been referred to by the British creditors of the French government, as affording them a claim to compensation, at the time the noble earl, and the government with which he was connected, concluded the peace of Amiens. The government of that day, and he believed the noble earl himself, treated this claim as extravagant, absurd, and inadmissible. Lord Auckland's treaty had thus been done away, not only by the lapse of years, and by the renewal of the relations of peace and amity in 1801, but by the disclaimer of the government, and now at this distance of time, it had again been raised up to entitle the holders of French stock, even those who had invested their money recently, to an indemnity, to be paid, not by the French government, but by the sacrifice of seven millions of British money. On the subject of the sinking fund the noble earl had also omitted one circumstance. The expenses of the past war had deprived us of all sinking fund in peace. The revenue was not sufficient, or scarcely sufficient, to cover the interest of the debt, and the expenses of the government, without any sinking fund. From this, as well as the other causes, it was most impolitic at this time to give a special encouragement to the capitalists pf this country to vest their money in the French funds. That the effect of the articles in the treaties was such, he thought, had been shown, and it was their duty to prevent their being drawn into precedent. It was hardly necessary for him to disclaim the vulgar and unfounded prejudice against the individuals so disposing of their money. They had a right so to dispose of their money, and were, of course, if they thought it advantageous, perfectly justified in doing so.
§ After a short reply from the earl of Lauderdale, the motion was negatived without a division.