HL Deb 16 July 1855 vol 139 cc879-83

LORD MONTEAGLE moved for Copies of all Correspondence between the Governor and Deputy Governor of the Bank of England and the Chancellor of the Exchequer, on the subject of the Departure from antecedent Practice in paying the Dividends as introduced by Mr. Gladstone in April, 1854. From the time of the formation of the Consolidated Fund on the recommendation of Mr. Pitt, it had been the invariable practice, at the commencement of every quarter, to strike a balance between the sums actually in the Exchequer and the liabilities to which the Consolidated Fund was then subject; and when, as was unfortunately too often the case, the charges to he provided for exceeded the funds actually in hand, the Government were empowered to issue Deficiency Bills for the amount required, on the security of which the Bank of England were empowered to make advances, and immediately proceeded to pay the charges due. Till the month of April, 1854, these Deficiency Bills were all issued at once for the amount ascertained to be wanting; but, last year, a practice was introduced of only issuing just such an amount of Deficiency Bills as it was thought would be sufficient to meet the current demands of the day. The change which had taken place was not, in his opinion, creditable to the Treasury, and practically produced no saving to the public; for arrangements might have been made between the Bank and the Chancellor of the Exchequer to prevent any possibility of excess of charge. Since the new arrangement had been made, the country had only escaped by miracle from a suspense of the payment of the dividends. A departure from the undisturbed usage of fifty years, regulating the payment of interest of the national debt—a usage not complained of by any one—was a matter on which their Lordships had a right to ask for explanation. A course had been taken by the Government to which the Bank stated that they were indisposed to assent, and they required the intervention of the Government to indemnify the Bank from any injurious result attending a change the legality of which was controverted. The Government gave a pledge to guarantee the Bank; and he wanted to know what was the guarantee entered into? It could hardly be denied that the subject was one of the gravest public importance, especially at the present moment, when new loans were about to be contracted.


said, he really never could conceive the feelings of a railway-buffer until he found himself sitting in that capacity, Session after Session, in the long-continued collision, be- tween the noble Lord and the right hon. Gentleman the late Chancellor of the Exchequer (Mr. Gladstone). Chancellors of the Exchequer passed away; but the noble Lord, immortal and unchanged, remained to wage this battle, with perfect good will, certainly, and courtesy to the unfortunate buffer before their Lordships; but, at the same time, with great vigour and energy. He believed the noble Lord to be perfectly accurate with respect to the practice of issuing money for the purpose of paying the dividends up to 1854. The noble Lord seemed to treat the change then made by the late Chancellor of the Exchequer as most wanton and unnecessary. But the ground on which the late Chancellor of the Exchequer came to that conclusion was, that it appeared to that right hon. Gentleman, as it also did to him (Earl Granville), that that which the Government had been doing was devoid of common sense. The borrowing from the Bank of a large sum of money, which it was almost physically impossible should be required for the purpose in view, the giving an appearance thereby of a deficiency which did not exist, and at the same time paying interest for money not wanted, appeared to be a very senseless proceeding. The course taken by the late Chancellor of the Exchequer was this—instead of issuing Deficiency Bills for an amount which could not possibly be called for on the first day of paying the dividends, the right hon. Gentleman provided for the largest sum ever called for on one day, and, over and above that, gave a large margin; and so by the accruing revenue perfect security was taken for the maintenance of good faith with the public creditor. On this subject a large correspondence had taken place between the late Chancellor of the Exchequer and the Bank; and last year he (Earl Granville) informed the noble Lord that it was of a private character. The noble Lord, however, was perfectly accurate now in stating that one of those documents, from the heading, partook technically of the nature of an official document. The whole of the correspondence had been left by the late Chancellor of the Exchequer at the Treasury for the information of his successors, and, as he had on a former occasion stated, that right hon. Gentleman had personally no objection to its production. The Governor of the Bank of England, Mr. Hubbard, in answer to a question which he had put to him, stated, that personally he had not the slightest objection to the whole of the correspondence being produced; but, on asking him whether, putting the personal question aside, he thought it was for the public advantage that the correspondence should be published—his answer was "No." In the same way the right hon. Gentleman the late Chancellor of the Exchequer stated, that personally he had not the least objection to the publication of the correspondence; but on putting to him the question, whether he thought it would be for the advantage of the public to do so, he replied in the negative. The opinion of; the present Chancellor of the Exchequer, was also asked, and he answered, "that though of course Parliament had a perfect right to call for these documents if it thought fit, yet, as a matter of expediency, it would not, in his view, be for the benefit of the public that they should be produced." It was on these grounds I that he objected to the proposal of his noble Friend, and he hoped that under; these circumstances he would not persevere in his Motion.


said, he had not made his Motion from mere curiosity, but from an anxiety to have on the table a correspondence which had produced an absolute change in the whole mode of paying the public creditor, and had overthrown every precedent upon the subject. To this change the Bank objected; the Directors, as he understood, disputed the legality of the change, and only acquiesced in it upon receiving from the Government a guarantee or indemnity, which was practically an indemnity entered into by the State. He asked their Lordships to call for these documents, and thus see what this engagement was, and whether it was a wise or an unwise one into which the late Chancellor of the Exchequer had entered. He should not be discharging his duty to the public if be did not press for the production of this correspondence. He was at a loss to conceive how the Government could refuse to a House of Parliament that which was already known to every Bank director, and from the publication of which no harm could result to the public service. Why, then, should it be withheld? He hoped their Lordships would not abandon their just privileges, but would by their vote enforce the production of these papers.


would like to hear from his noble Friend opposite (Earl Granville) on what ground he entertained the belief that the production of the information sought for could be in the slighteat degree prejudicial. His noble Friend (Lord Monteagle) had shown that negotiations had taken place between the Bank and the Government, which had led to a total change in the system of paying the public dividends; and when it was considered that a portion of the correspondence which had taken place involved a guarantee, without which the Bank would not have entered into the new arrangement, he thought his noble Friend was not asking too much when he wished to have all the information on the subject that could be produced. There was no question at present as to the approval or disapproval of the new system. As his noble Friend observed, it might be a most beneficial arrangement, or it might be one involving considerable difficulties in connection with the payment of the public securities; but it was surely right that their Lordships should know what the arrangement was. How the correspondence could be of a private character, or its production prejudicial to the public interests, he could not see—more especially as the whole of the correspondence had been laid in extenso before the Court of Directors of the Bank of England.


said, that the principal objection raised by the direction of the Bank to the change was, that it would be illegal. The right hon. Gentleman the late Chancellor of the Exchequer took the opinion of the law officers of the Crown upon that point, and fortified that opinion by a reference to the noble Lord upon the woolsack. That opinion was, that the course which he proposed was legal, and that being legal he was bound to pursue it. He did not see that this correspondence could give their Lordships any information beyond what his noble Friend (Lord Monteagle) had shown himself to be already possessed of. At the same time he was unwilling, without strong reasons, to refuse any papers which might be asked for; and if his noble Friend (Lord Monteagle) still pressed for the production of this correspondence, and was supported by his noble Friend opposite (the Earl of Derby), he should not divide their Lordships against him.

Motion agreed to.