HL Deb 13 June 1854 vol 134 cc28-45

Order of the Day for the Third Reading read.

EARL GRANVILLE

moved the third reading of the Exchequer Bonds Bill, on which he would out at present make any comments, but would reserve himself for any objections that might be urged against it. He might only state that the Exchequer bonds intended to be created by this Bill were not what was usually understood as an addition to the debt; the money which they would raise was merely intended to meet the exigencies of the Exchequer till the revenues granted by the House of Commons, and which he hoped would also be granted by this House, came into the Exchequer.

Moved, That the Bill be now read a Third Time.

On Question, Resolved in the Affirmative. Bill read 3a accordingly.

LORD MONTEAGLE

If I attempt to delay your Lordships, at this inconvenient hour, I hope you will bear in mind that I am not responsible for the present Bill, for the time at which it is brought forward, nor for the position in which we are now placed. This Bill was introduced without one word of explanation from the Government, though it is one of the most important measures of the Session, and sanctions a loan of 6,000,000l. to provide for the service of the year. The Committee on this Bill has been negatived, and the stage of the report avoided, and thus we are brought to the third reading without having been afforded one single opportunity for discussion. I do not complain of my noble Friend for urging on the measure at the present late hour, when the attention of the House has been long engaged on another question, because he has stated that it is really necessary that this Bill should now be read a third time; and I assured him on a previous occasion that I am the last man to stand in the way of this, or any other measure which the public service requires. But as I feel this Bill to be in many respects impolitic and unprecedented, I cannot acquiesce in its third reading without calling your Lordships' attention, and that of the public, to the peculiar principles on which it rests, and the strange enactments which it contains. I am perfectly conscious of the extreme inconvenience both to your Lordships and to myself of this discussion at an hour so very late as the present, and I am reminded of that which fell from the pen of a distinguished writer, who, in describing an imaginary speech, supposed to be delivered in the other House, suggested as its opening sentence—" Mr. Speaker, induced by the extreme impropriety of the occasion, I rise for the purpose of calling your attention to the present Bill." [Laughter.] If I could have taken any earlier opportunity of discussing this measure, I should feel that the satire implied in the words I have quoted might well apply to me. But the Bill was introduced, and has since passed through its various stages, without explanation; and, without meaning anything disrespectful to my noble Friend who has now moved the third reading, I must say that a more limited and meagre explanation than that with which he has favoured us was never vouchsafed, even in defence of a Turnpike Bill, against which one single petition was presented. I shall now proceed, without further apology, to call your Lordships' attention to the principle of this Bill, only stating that the noble Lord may accept from me the most frank and most unreserved assurance that if this had been a mere Loan Bill, empowering Her Majesty's Government to raise six millions of money for the public service, even though I might not have thought the precise form of the measure the best adapted to attain its end, I would not have occupied your Lordships' time with objections. But I regret to say, that I consider the measure to be highly objectionable in principle, containing clauses pregnant with evil, which, if adopted, are likely to lead to great public inconvenience and abuse. I may here advert to the preliminary point to which the noble Lord called our attention, and on which he and I are distinctly at issue. I assert, and the noble Earl denies, that the 6,000,000l. to be raised by this Bill constitutes a loan. The Chancellor of the Exchequer maintains the negative, still more stoutly. I contend that, according to the common meaning of words, according to all legal interpretation, to all historical authority, and all Parliamentary precedent, this Bill is a Loan Bill in all respects. To imagine that you can divert the public attention from that fact, by drawing distinctions between this Bill and many others, which have passed from the days of Charles II. down to the present time, is only to engage in that intellectual display which was a favourite exercise of the subtlest casuists; namely, the attempt to show a distinction without a difference. I shall advert to this hereafter, and for the present shall only protest against such misapplied ingenuity. It is to the collateral and incidental enactments that I object, more than to the question how the money is to be raised. I object to the power which this Bill confers upon the Chancellor of the Exchequer, to do a great deal more than to raise six millions of money. You confer upon him powers to raise by this Bill money for the public service, at his unrestrained will and pleasure—to sell his securities in the public stock market—to purchase with the money received new securities of another kind on the part of the Government; and, backed as the Government will be by the enormous fund at their disposal, I allude to 35,000,000l. the capital of the savings banks, the Chancellor of the Exchequer will be in a position to influence the stock market and the price of the unfunded securities in a manner inconsistent with the safety and the interest of the holders of the funded and the unfunded debt. I condemn the transfer of the functions of the Government from Downing Street to Change Alley. Now this is no necessary part of a loan, though I have no doubt the Chancellor of the Exchequer has a good reason for asking Parliament for these powers, and that reason will be found in the nature of the securities themselves. It is doubtful whether these securities are popular, as the phrase is, or, to use another phrase, whether they are offered in a form that is suited to the "taste of the money market." These difficulties may, it is true, be overcome; and it is so proposed to surmount them, by making a lavish bargain; for there is no doubt at all, that if you will but only offer a sufficient money inducement, there is no amount of disinclination which you cannot overcome. It is, therefore, proposed to raise these 6,000,000l. at a rate of four per cent interest. This, I think, is an extravagant increase in the rate of interest; and let it not be said that, because on a former occasion I complained of an injudicious lowering of the rate of interest in 1853, that therefore it is not possible you may err in the other direction in 1854. We know that the reverse of wrong is not necessarily right. You give this extraordinary amount of inducement, which measures the disinclination of the public to accent your securities upon fair and equal terms. You give this rate of interest, which is entirely disproportioned to the rate to be realised either in Consols or in Exchequer bills, and this difference not only proves the impolicy of the present arrangement, but it measures also the disadvantages of the securities which you offer. Of the recommendations of these securities, indeed, we have already heard much—but of their disadvantages, the Chancellor of the Exchequer has experienced still more. They are nearly identical with those bonds which you tried to issue last year, and in which you signally failed; when asking for 30,000,000l. you only obtained 400,000l. That failure naturally rendered the present securities distasteful to the public. Is it wise or politic to make use of these securities which have already proved to be distasteful to the public, and for which the increased pica you have to pay is the evidence and the measure of the mistake you have already committed? Yet that is what you are persisting in at the present moment. I have lately heard the securities of France referred to and compared with the securities of England in a way that has altogether surprised me. The illustration is not very flattering to our credit just at present, when the interest on our unfunded debt has been raised, whilst that of France has been reduced. I regret to say that we have been compelled to raise the interest of the new Exchequer bonds to four per cent, whilst the interest on the Bons de Trésor has been reduced by one per cent by the French Government. Is there not something extraordinary, something wrong, in this? But let us seek its cause. By the course taken in 1853, you prejudiced the credit of the unfunded securities, which by your predecessors in office were uniformly relied on for emergencies like the present. By your past transactions with regard to the Exchequer bills, you have deprived their holders of that security which, up till last year, they were never without—the security that the Chancellor of the Exchequer, for the time being, would never deceive himself into a belief that he could work a miracle, and that his Exchequer bills could remain dry, like Gideon's fleece, when all other kinds of securities were saturated with dew. Former Ministers seem to have confessed that they must submit to the ordinary laws of the money market, and that the interest on their Exchequer hills must rise when the value of money rose, and fall when the value of money was depressed. This is now changed, and, on the contrary, the holders of those securities found last year, for the first time, that this rule applied to them in the inverse, and not in the direct ratio—that, as the value of money was rising in all other securities, the Chancellor of the Exchequer lowered the value of those which they were so luckless as to hold. The result has been that you have deprived yourselves of the aid of the unfunded debt. These once favourite securities are no longer acceptable in the money market. Yon have been obliged to go into that market with securities of a new description, and, in order to make them palatable, you have been compelled to offer terms which you never need to have done but for the error of your antecedent transactions. Is it not a strange and wonderful thing that we should see a great and powerful country like England—greater in her credit than in her wealth—greater from her fidelity to her engagements than from the amount of bullion deposited in her coffers—is it not a strange and wonderful thing that such a country should be compelled to raise the value of her unfunded debt from one and a half to four per cent in one year? Within the last twelve months the interest on Exchequer bills had stood at one and a half per cent, and now, by the present Bill, the interest upon these proposed securities is raised to four per cent. I say that is a phenomenon altogether unexampled in the moneyed affairs of this country. Nothing of the kind ever happened before—nothing more extraordinary in itself, or more dangerous in its consequences. I find, my Lords, that in what I stated on a former occasion I have been misapprehended or overlooked; at least it has not been answered. The argument I took the liberty of urging to your Lordships on that occasion, my noble Friend did not then meet, and he has not met now. I then called your Lordships' attention to this fact, that you must now be prepared, if this Bill is bonâ fide to be carried into operation, to cast upon each of the years 1858, 1859, and 1860, an additional burden of two millions, to be borne by them, in addition to the ways and means which they will require to meet the ordinary expenditure of those years. I took the liberty then of stating to your Lordships that such a mode of payment was inconsistent with the declaration, so ostentatiously made, of providing for the service of the year, out of the year's revenue. A second argument which I used was the following:— I told you, that you incurred a great and obvious risk; that you committed—I do not use the word at all in a personal sense—a gross act of presumption in taking upon yourselves to predicate what would be the condition of England during those years. To this no answer has been given by tile Government; but since that time I have heard it asserted by some eager partisans, in reference to this last argument, "Oh, that is not what is meant. We do not pledge ourselves to pay off these bonds. what we do mean is this—that when those years come, the securities will be provided for in the same way as railway bonds are provided for, by the issue of new securities of a similar kind to those which now existed." If that were so intended, the Bill before the House was an imposture. The Bill gave no such powers to Her Majesty's Government, nor had any one responsible Minister ventured to suggest that the issue of new securities was one of the principles of the Bill. On the contrary, all that has been said in defence of the Bill goes upon the opposite principle. Your Lordships and the promoters of the Bill must take either one ground or the other; you must either assume that the money is to be paid, as my noble Friend states, in 1858, 1859, and 1860, or you must take the opposite side, and argue that the securities now issued are to be replaced, when the tune arrives, by similar securities then to be created, and in that way escape from the risks you incur by casting an additional burden upon these years besides their ordinary expenditure. Now, I do not attribute to Her Majesty's Government any intention at variance with the Resolution they have proposed, and therefore we most fall back upon the other difficulty—that we are, in fact, anticipating the resources of other years. It is said that the satisfaction of one security by the issue of another is what is every year practised in the case of Exchequer bills. Aye, but then you issue Exchequer bills in accordance with the law of the land, and in accordance with the public expectation that such exchange shall take place. But here you adopt altogether a new principle. In place of promising to exchange, you profess to extinguish the whole debt you contract by the end of the year 1860, by paying off the holders of the bonds at par. Now, on that subject, I have to say that the security you offer to the holders is imperfect. No doubt, you inform them, that they are to be paid off when the time arrives, but you have not provided any means by which they are to be paid off. They are to be paid out of such funds as Parliament may then be pleased to provide. You provide for the Exchequer bills by making them chargeable on the supplies of a given year, but here there is no provision made for their discharge; it rests simply on a general declaration of Parliament to pay. Nor are these bonds, when due, receivable like Exchequer bills in taxes or duties. I have another mode of accounting for the unpopularity of these securities. I have already stated reasons why the public do not like these securities; an addi- tional reason for their dislike is, that they are too small in amount of capital. All public securities, to be acceptable, ought to be sufficient in their amount to create a market. My noble Friend knows that in that species of public securities in the conversion of which, unfortunately, so much of the public money was lately lost—the South Sea securities—though their rate of interest was equal to that of Consols, and though they were secured, like Consols, upon the credit of the State, yet they never reached the value of the Consols by one and a quarter per cent. Why was this? Because the capital was so small in amount that there was no sufficient market created for them; and without buyers, and without sellers, it is impossible that you can render securities palatable to the mass of mankind. Of that we have still another example. The Scotch Security Stock, which a few years ago was paid off, was guaranteed by the State; but the amount was so insignificant that it could not command a market. Now, the Chancellor of the Exchequer is unwarned by these examples. His six millions, even taken as a whole, are too small a capital to create a market, unless engrafted upon some of our larger stocks; but, not content with this, he makes matters even worse than they naturally would be, because he divides his loan of six millions into three different series, each of which, being issued under different conditions, will necessarily sell at a different rate, so that it is not one market for six millions of stock which he seeks to create, but three markets for loans of two millions each. My noble Friend will recollect that when this measure was first introduced, one prominent argument urged in its favour was that the bonds would be so advantageous—that they would give such great facility to commerce—that they would pass rapidly from hand to hand; that a person going to the country might take a bundle of them with him as he might take a bundle of five-pound notes; and that he could dispose of them as easily. I then took the liberty of doubting whether this would be so. The provisions of this Bill prove that I was right; for I observe it is proposed that each of these bonds may be registered and disposed of by transfer in the books of the Bank of England. I believe that this change was loudly called for by the public, but it will destroy the facility of passing the new bowls from hand to hand, which was formerly held out as their greatest ad- vantage. I may here remark that, with respect to this transfer, the clauses in the Bill do not adequately carry out the purposes of the framer, and if it were not for fear of intrenching upon the privileges of the House of Commons, this House might well apply itself to an amendment of those clauses. I would provide clauses rendering the forgery of these transfers, or any fraudulent use of them, penal. You have given the power to transfer, but you gave no security against the forgery of that transfer. In like manner you provide clauses protecting the bond from forgery, but you have forgotten to provide against the equal offence of forging the coupons which are attached to the bonds. These are matters which I think this House might well be permitted to employ itself in remedying, without trenching upon the privileges of the other House, and yet, according to the manner in which the two Houses now act, you cannot make any amendments in these Bills, even with the object of furthering and carrying out the views of the House of Commons. I have already stated that my main objection to this Bill is the power of interference which it gives the Government in the stock market, a power of interference especially dangerous taken in connection with the power of selling the capital stock of the savings banks. I stated originally, and I repeat it once more, that by law the power is confided to the Chancellor of the Exchequer. I go further, and admit that I do not object to his power of investing in any public securities all deposits that come into his hands, and the dividends received upon the value of the whole amount of stock. But this Bill goes much further, and to a much more dangerous extent, for the Chancellor of the Exchequer having a power to sell the stock of the savings banks, this Act enables him to invest the money received for the stock so sold in the purchase of these new securities. Now, I object to the purchase of the new securities out of the proceeds of the savings bank stock. And here I must call your Lordships' attention to a singular circumstance. In the original print of the Bill, as it was laid before the House of Commons, that danger seemed to have been foreseen, and to have been guarded against. In that draft many significant and pregnant words were introduced. The words gave full power to the Government to invest in these securities all such moneys as come into the hands of the Commissioners of Savings Banks "for in- vestment." What moneys were those? All such moneys as parties paid into the trustees of savings banks on account of deposits, and also all dividends payable on account of savings banks stock, which the trustees were bound to invest. But it excluded, according to the import, and, I believe, according to the intention of the framers of the clause, the proceeds of all sales of stock. But these words, "for investment," which were in the original House of Commons Bill, have been omitted from the Bill in its further progress, and they are now omitted. This seems, as far as I can learn, to have been done without notice and without discussion. Now, I must say I object to the specific power which the omission of these words confers upon the Chancellor of the Exchequer. I think it is a dangerous principle. Nothing will be easier than for the Chancellor of the Exchequer to buy up every one of the six millions of the bonds with the money of the savings banks, to hold them in hand till the years 1858, 1859, and 1860, and then to present to Parliament the option of funding the securities, instead of paying them off. If, under the circumstances then existing, it should be found impossible or inconvenient to defray these heavy charges out of the ordinary resources of those three years, can you entertain any doubt that the other and easier alternative will be accepted, of funding these bonds so held by the Government, thus converting the expenses of the war of 1854 into a part of the permanent debt of the country, and doing that very act which the whole of the arguments, the whole of the principles, every opinion urged by the promoters of this Bill condemn, and ought to preclude them from doing? I say there is great danger that this will be the case. On another ground the measure is open to objection. I contend that it is proposed contrary to the pledge of the Government thrice given. Parliament was assured that no loan would be raised. I again ask you whether it can be seriously denied that this is a loan? Many attempts have been made to disguise the character of this transaction; but I contend that when one party obtains the use of the property of another, and gives a promise to repay what he has received, this transaction between a lender and a borrower is a contract for a loan; and that which is transferred from one to the other is a loan, and nothing but a loan. My noble Friend affects to doubt whether such is the proper designation for this transaction; but as no one has a greater command of the English language than the noble Earl, would he be good enough, in any observations which he may make in reply, to tell the House, if this is not a loan, what on earth it is? It is not a purchase, because there is no permanent transfer of property; it is not a gift, because the money is to be repaid; it is, therefore, a loan, and nothing but a loan, and the powers of language, all the nice distinctions of Escobar or Snares, will never destroy that meaning and designation which common sense and common parlance assign to the transaction. But my noble Friend says that this is not the interpretation that ought to be put upon it. He does not say it is not a loan, but he says it is not what is ordinarily meant by a loan. I can assure him he is in error. If I were to go into the origin of the first loan, contracted in the time of Charles II., I might show that the loans were then contracted on the charge of the revenue of the year. You extended your financial system in the reign of William, when you got into the habit of dealing with money in a more permanent manner; but, even then, loans were made to the Government on Exchequer bills; they were also made charges upon the malt tax, and other sources of annual revenue. I may cite one example more upon this head, which I think is conclusive, and will prove that whether money is borrowed for a time, limited or prolonged, certain or uncertain, the money borrowed can only be considered and described as a loan. I had occasion, as Chancellor of the Exchequer, to contract the largest loan that has been contracted in modern times. I allude to the slave loan. I was anxious that the whale weight of that burden should not be cast on posterity. I wished that the present generation should pay a large proportion of the debt, and therefore I contracted the first loan of 15,000,000l., partly on the security of terminable annuities, and partly on the usual principles of a permanent debt. The whole 15,000,000l. was raised by one contract, and was secured by one Act of Parliament. Can it be seriously contended that the permanent debt is, and that the terminable annuities are not, a loan? Can any reasoner suggest that no loan was made because the security was terminable? What were Pitt's dealings in terminable securities but loans? What was that part of his system of policy which, if he had adhered to it, would have protected him from the severe strictures and attacks which have lately been made upon him—what was it but a series of loans? Is it to be believed that the three or four millions of terminable annuities which will fall in between 1860 and 1870, are not annuities contracted and to be paid for on the understanding that they were loans? Therefore, whether you look to the obvious and common sense meaning of the word, or whether you look to the principles which regulate them, you will find that the present arrangements are loans, and nothing but loans. It has been stated in another place that I made a charge against the Government of a most foolish character. The charge was conveyed in these words:— It was stated that after having pledged ourselves on the 5th of March last that there should be no loan, we gave notice on the 21st of April that we should have a loan. No doubt a most grievous and damaging accusation to bring against any Government if there was one word of truth in it. But that slight and unimportant element is totally wanting. We never pledged ourselves to Parliament in March that there should be no loan, and there was no loan on the 21st of April. What I said on the 6th of March, I stated on the instructions of my Colleagues, and what I said under their instructions was this, that while they found it impossible that they should commit themselves by any pledge or abstract declaration, they felt strongly that it was the duty and policy of the country to make, in the first instance, a great effort from its own resources, and that effort we recommended the country to make. Then, what appeared on the 21st of April was no loan, but a provision temporarily to raise money. I beg to call your Lordships' attention to the closing words of this sentence. They completely justify my assertion and my argument. It is admitted that this Bill is a provision temporarily to raise money. I wish no better description of a loan. The money is raised for a temporary purpose, but it is raised by way of loan, for it is borrowed, and is to be repaid. I shall not advert to some hard words that were used against me on that occasion, because I am quite sure they were not meant to be personally offensive. The character of the right hon. Gentleman who used them, his talents and his taste, make we unto filing to suppose that they were spoken in a manner intended to give personal offence, and, therefore, I entirely pass them over; but I think your Lordships will see that if I have occupied your time in proving that a transaction between a borrower and a lender is a loan, and nothing but a loan, there was at least some reason for my doing so. I could have wished to have made some further observations on this subject, but I do not like to delay the House in its present deserted state, further than to say that I cordially approve of the new taxes which the Government have proposed. If I have freely and frankly censured what appears to me objectionable, I feel much greater satisfaction in offering my humble meed of approval of what I think to be right. If the Government had been actuated by selfish considerations, they would have made a different selection; but if the look to the duty they owe to the public, I do not believe that the taxes could have been better chosen, more advantageous in themselves, or more beneficial to the revenue. There may, however, be other opportunities for discussing the malt tax, the income tax, and the spirit ditties. I shall certainly vote for them all, satisfied that on the whole they have been wisely selected, and that they ought to receive the support of your Lordships. The noble Lord concluded by moving, for the sake of recording his opinion upon the subject, the Amendment to which he had referred in the course of his speech—namely, that the Commissioners of Savings Banks should only employ in the purchase of the Exchequer bonds that portion of the property of the savings banks which they held in their hands "for investment."

EARL GRANVILLE

My Lords, notwithstanding the blame that my noble Friend has laid upon me for having made such a short statement in introducing the Bill to your Lordships, I cannot regret that I did not interfere between him and the House, because no amount of explanation I might have afforded would have described the Bill more accurately than did the short statement which I laid before your Lordships. The noble Lord has given the House to understand that this Bill contains several novel provisions; but I think be has altogether failed to show that it contains clauses of any such description. There was one hypothesis which my noble Friend gave at the beginning of his speech, on which I do not think he had any right to found an argument. The hypothesis was, that this particular security is distasteful to the public. The fact does not appear to be so. All that can be subscribed for has been subscribed for. The scrip is now at a premium. The applications for it have been in larger numbers than the Chancellor of the Exchequer desired; and although I have not the know- ledge of financial matters that my noble Friend possesses, yet if the time should ever come when it may be thought desirable to issue more of this particular description of stock, I shall be surprised indeed if it does not meet with greater favour from the public even than it has hitherto done. The noble Lord then went on to state his great surprise at the increased amount of interest allowed for this description of stock, intimating that it was owing to the dealings of the Chancellor of the Exchequer with the other part of the unfunded securities of the country last year. But he entirely omitted to mention other causes which have led to the increase in the value of money. He entirely omitted the deficient harvest; he omitted to state that we were at the beginning of a war with one of the greatest Power, in Europe—a war which called for additional armaments from all the other Powers in Europe, every one of which was in great want of money. This is so notorious, and so naturally accounts for the increased rate of interest, that I should think it an insult to your Lordships' understandings to attribute the rise in the rate of interest to the dealings of the Chancellor of the Exchequer with the unfunded securities. When the Chancellor of the Exchequer saw that Exchequer bills were at a large premium, he was justified in reducing the rate of interest upon them; and his justification is to be found in this—that every one of the Exchequer bills were at that time renewed; and though three millions of bills were cancelled at a late period of the year, and the rate of interest was obliged to be raised, yet the amount of interest at this time is no higher than would have been obtained if the rate had never been reduced. Then the noble Lord alluded to the great presumption which he attributed to us in professing to know how the payment of these bonds was to be met in the years 1858, 1859, and 1860. It may be on account of my own ignorance in financial matters, with which the noble Lord is so conversant, but it appears to me that this presumption, as the noble Lord calls it, is of the smallest amount possible. Can it be said that there would be any difficulty in meeting the payment of Exchequer bonds to the amount of two millions in any one year, when year after year you are in the habit of meeting the payment of Exchequer bills to the amount of from sixteen to seventeen millions? With regard to his argument, that there was nothing in the Bill which provided for the due payment of these bonds When the time comes, I really cannot understand it. I cannot see what the object of such a statement can be, unless it be to throw some discredit upon those bonds when they shall be issued. In the very last year of the noble Earl's own reign as Chancellor of the Exchequer, a large amount of Post Office revenue was given up by the noble Lord's own measure of the penny postage, and the only provision made to meet the deficiency of revenue caused by that measure was a Resolution proposed by the noble Lord himself, that in the next Session Parliament would find the necessary resources. That may appear to be an objectionable course perhaps; but in the present case there can be no such objection. It seems to me that this measure is perfectly analogous to the ordinary plan of Exchequer bills. It is intended by it to provide for the immediate exigencies of the Exchequer. The money is not intended for the ordinary expenditure of the country—it is a mere anticipation of that taxation of which the noble Lord approves; and it appears to me idle to talk of presumption in the Government, believing that these taxes will give the Government ample resources for meeting the Exchequer bonds at the required time. With regard to another argument which the noble Lord used, I must say I am not aware that any expectation was ever held out that these bonds would answer the purposes of a five-pound note, by passing from hand to hand. The very reverse appears to be the case; for as the bonds will bear interest, they never could have been intended to pass from hand to hand. Then, as for the alarm which the noble Lord on a former occasion excited, with regard to the difficulty of carrying the measure into practical execution, I must say that, owing to the noble Lord's own exertions, that difficulty has now entirely vanished. With regard to the words which the noble Lord has referred to as having been left out from the original draft of the Bill, I have to state that that omission was made advisedly, because, if approved of as they stood, they would have hail an ambiguous meaning. If the noble Lord's Amendment were carried it would have no lega1 meaning whatever. The words are that the Commissioners of Savings Banks may invest in these securities all the savings banks stock they may hold in their hands "for investment." All the money that the Commis- sioners hold in their hands is for investment. But the noble Lord objects to the money being invested in these new bonds; and though the Commissioners may exchange their stock for Exchequer bills, the noble Lord wishes to exclude them from Exchequer bonds. I cannot think that the House will agree with the noble Lord upon this point. There is one remark which the noble Lord made, and which I think he must have made inadvertently. He said that we invested the savings banks money in these bonds for the benefit of the holders in savings banks. These were the words the noble Lord used; but I cannot imagine that he meant to use them, for the noble Lord knows perfectly well that the money once invested is Government money and not the money of the holders, because if they were to profit by an increase in the rate of interest it would follow that they would lose by a decrease. The Government is responsible for the money, which is not used at the risk of the holders. Now, that being the case, it appears to me perfectly monstrous that the Government is not to be entitled to use the money in any way which may seem most advantageous to the public, and are not to judge for themselves whether it is desirable to invest it in Exchequer bonds as well as in Exchequer bills or annuities. As to the alarm expressed by the noble Lord at the power of the Chancellor of the Exchequer to deal with 35,000,000l. in this manner, it was quite clear, as regarded this Bill, that it was impossible to deal with any such amount, because the Bill only extended to 6,000,000l. The noble Lord, in criticising what I said with regard to loans, has, I think, not dealt fairly with me, and has represented me as saying what I did not say. He has made me deny that this is a loan, although he admitted afterwards that it was not a loan in a technical sense. What I did say, and what I do not wish to enforce by any casuistry, was this:—There are two different opinions as to the mode of meeting the expenses of the war. Some think that we ought to make every effort out of the income of the country, and by means of taxation derived from the resources of the country, to meet the expenditure of the war year by year; others, whom I think to be wrong, but whose opinions are entitled to every respect, hold that the war will confer a great benefit upon posterity, and that posterity therefore ought to be called upon to share the expenses of it; and that, in order that pos- terity shall take its share in the burden, we should add to the permanent debt of the country, which it is so difficult practically to reduce. In opposition to that course, the line which the Government has taken, rightly or wrongly, is this:—Taking a liberal estimate of the expenditure, they have, with the consent of Parliament, provided moans which will more than cover that expenditure. They do not come now for 6,000,000l. to pay a portion of that expenditure; all that they do is to propose, in the same manner as the first 1,700,000l. of Exchequer bills were voted, to take a certain amount of money in order to keep a balance in hand available for certain contingencies. It is not clear, in fact, that the whole of that 6,000,000l. will ever be called for; and, if called for, it is not at all certain that the incoming revenue will not enable us gradually to diminish the debt by exchanging it for Exchequer bills before 1858, 1859, and 1860. But even if we cannot do that, what is the danger which the noble Lord apprehends? He says that by this Bill we take power to sell stock, to exchange it for Exchequer bonds, and so add to the permanent debt of the country. I trust I have already explained that we are not adding to the permanent debt. The noble Lord entered into some detail as to the grammatical explanation of the word "loan." I could not at first understand why he should dwell with so much emphasis upon that point, till I found he was alluding to some speeches which have been delivered by the Chancellor of the Exchequer in another place. I had the pleasure of listening to those speeches, and without referring to the applause with which they were received, or to the votes Which followed them—because a great result may be produced by remarkable eloquence, even when exerted in a wrong cause—I must say, when the noble Lord deprecates so much the result of these financial measures, that it struck me as a remarkable fact—considering that the moneyed public of this country are not persons very readily led away by sentiment—that the value of the public securities, after three several reviewed distinctly given and calmly reviewed and reflected upon, has risen to a very remarkable degree. With regard to the noble Lord's Amendment, in addition to the objections I have already made, I have to state that I asked the chief authorities in these matters in the other House what the effect of such an Amendment, emanating from your Lord- ship's House, would be upon the fate of the Bill, and I am sure that when I tell my noble Friend it will be impossible to touch the Bill in the way he proposes without endangering the chance of its becoming law, it will not be necessary for me to press him to withdraw his Amendment.

LORD MONTEAGLE

rose to explain. With respect to the remarks of the noble Earl upon the measure of the penny postage, he begged to state that he did not rest the guarantee for replacing the revenue lost upon a Resolution of the House of Commons; he made it a part of the Postage Act itself that the deficiency created by that measure should be made up by the Legislature. He admitted at the time that the measure involved a financial loss; and he was much reproached by the more sanguine for doing so. He had wet with much obloquy for the measure; but a full justification of it was to be found in an admission made by the present Chancellor of the Exchequer, who, while stating, as one of the alternatives of the additional taxation which he did propose, that he might add to the fixed rate of postage now charged for letters, with that impressive eloquence for which he was distinguished, drew such a striking picture of the moral, political, social, and financial benefits of the Postage Act as it stood, as to satisfy all who heard him that it would be unwise to interfere with it. He was not aware that he had used any words calculated to alarm the depositors in savings banks. if he had done so, he could assure their Lordships it was entirely an inadvertence. He could not for a moment held that there was any possibility of loss to the holders in savings banks from the money being invested by the Government. If there was a loss, that loss would accrue to the State; and the depositors in savings banks had the same security for their money as the Rothschilds or the Barings.

Amendment negatived without a division.

Bill read 3a and passed.

House adjourned to Thursday next.