Sitting of 18 February 1823

BANK BALANCES.—
Mr. Grenfell, in moving for a return of the Balances of the public money in the hands of the Bank of England, observed, that in 1815, when he first brought this subject under the consideration of the House, the deposits lodged with the Bank amounted to no less a sum than eleven or twelve millions. The loss to the public from this source was estimated by the committee on the public expenditure, at more than 500,000 l. per annum. The services performed by the Bank were merely those discharged in an ordinary banking transaction. The amount of the deposits had been reduced to about 4,000,000 l.; but there was still no necessity for leaving so large a sum as this wholly unproductive in the hands of the Bank. Nothing, in fact, would be more easy than to make such an arrangement as would give the public a participation in the profits arising from these balances; and, if the present chancellor of the ex-

137
chequer would grant to him, what he could never obtain from the last, a committee to examine into this subject, he pledged himself, not only to prove the insignificant nature of the services performed by the Bank, but to suggest a plan to the House, which would give the public a fair participation in that profit. The whole services which the Bank performed to the public were the transfers and the payments of the dividends. He found no fault with the mode in which this was managed; but, good as it was, it was overpaid. The payment of 270,000 l. a year, which the Bank received for the performance of this service, was surely too much. He had no hesitation in saying, that it might be done for 70,000 l., and thus a saving of 200,000 l. a year to the public would be effected. He had no wish to provoke unpleasant discussion; but he had some hopes from the new chancellor of the exchequer, to whose attention he would earnestly recommend the subject.
The Chancellor of the Exchequersaid, that as he had no objection to the production of the papers, he should decline entering at present into the subject. He stood in need of all the information which could be afforded him; and he felt that none could be more valuable than that of the hon. gentleman. When the papers should have been produced, if the hon. gentleman thought proper to submit a motion on the subject to the house, it would be his duty to state the conduct he proposed to pursue.
Mr. Baringexpressed Ins surprise, that his hon. friend had again made that statement to the House which had been so often refuted. The subject of the balances in the hands of the Bank was one of which he had not lost sight for many years. He had stated, that these balances had formerly amounted to 11,000,000 l., but were now reduced to 4,000,000 l. or 5,000,000 l., and had contended, that the public was entitled to share the advantages arising from the possession of these balances. To that argument had frequently been opposed the statement, that the Bank held the balances by virtue of their parliamentary charter. When the renewal of that charter had been negotiated, Mr. Pitt expressly enumerated, among the advantages which the Bank were to enjoy, and for which they then made the government a remuneration, that of holding the public balances, which were then estimated at
138
about five millions. His hon. friend stated, that they now only amounted to between four and five millions, and yet he came there every year to state that something was due on this account to the public; when, in point of fact, the advantage had been estimated and paid for by the Bank on the renewal of their charter. Since that period they had advanced sums of money to the government at small interest, and others without any interest at all. Whether too much was paid for the management of the public debt or not, was an entirely distinct question.
Mr. Manningsaid, that the deposits of the balances of public money were necessarily made with the Bank, because the government could not safely intrust them to any private hands. When the accounts should be produced, he would show, and he hoped satisfactorily, that the Bank was justified, by their charter, in all they had done.
Mr. Ricardosaid, it was true the Bank had made a compensation for the grant of the charter; but it was not sufficiently great for the advantages they had so long possessed. If, during his continuance in office, the Bank of England should apply for a renewal of the charter, he hoped the chancellor of the exchequer would be particularly careful that they did not overreach him. Before any such bargain should be made, it would be the duty of the right hon. gentleman to consult the House as to the terms of it. If it should be open to public competition, much more would be given for it than had ever yet been offered. From the advantages which the Bank had derived, it was impossible not to see, that the terms had been very much in their favour.
Mr. Grenfell, in reply, said, that the warmth with which his hon. friend (Mr. Baring) defended the proceedings of the Bank was not at all surprising, when it was recollected, that he was a director during the period of the transactions of which he had so often complained. He was a party to all that had been done, whether it were good or ill. His hon. friend went back to the charter, and the terms upon which it had been made with Mr. Pitt, and concluded, therefore, that the question of balances was closed. But, did he recollect that, eight years before that period, the Bank had agreed to give up three millions without any interest whatever? Did he recollect that Mr. Vansittart, after having always denied the

139
principle for which he (Mr. G.) contended, agreed to it at length, and brought in a bill, by which he took away six millions more from those balances? Did any body believe that the Bank would give up nine millions, out of their spontaneous liberality? It was said that the charge for management amounted only to 7d. or 8d. per hundred pounds. But, however small this might appear in itself, when the amount of the public debt was regarded, it was much too large. The question was not whether 7d. or 8d. was small, but whether 270,000 l. was not a sum totally inadequate to the service performed. He was confident that if justice were done to the public, a saving of 200,000 l. per annum might be effected—100,000 l. by a proper application of the balances in the Bank, and 100,000 l. by a reduction of the expenses in the management, without any injury to the establishment. He was firmly convinced, that the subject ought to be referred to a select committee.
Mr. Maberlywished the Bank to have a good bargain, and thought they should be liberally treated; but he thought also, that it was the duty of the chancellor of the exchequer to ascertain whether the act relative to the rate to be paid for management was conclusive, upon which he understood the highest legal opinions were divided. He had no doubt that 100,000 l. might be saved without interfering with the fair remuneration to the Bank; but the reference to a committee would set that matter at rest. He trusted that no new charter would be granted, without due deliberation as to its terms.
Mr. Humewould take that opportunity of throwing out a suggestion, that it was probable the Bank charter might never be renewed. A million and a half might be saved by the establishment of a national bank. He knew some notions had got abroad respecting the danger of such an establishment; but when it was recollected that they had an annual payment of 60,000,000 l., he was confident ministers world see the advantage of a national bank, by which, in issuing 30 or 40 millions of their own paper, they could effect an annual saving of a million and a half. He hoped the present chancellor of the exchequer would be in office when the charter should expire; and that he would avail himself of the opportunity of adding so much to the ways and means of the country.
Mr. J. Martinwished to know, whether
140
it was intended to lay before time House an account of the unclaimed dividends. No such return had been made for the last eight years.
The Chancellor of the Exchequercould not give at that moment a positive answer to the question of the hon. member.
Mr. J. Martinintimated his intention to make a motion on the subject.
Mr. Manningsaid, that the subject had been under the consideration of the bank directors, and that an order had been issued to prepare such account.
Mr. Grenfellsaid, it had been observed, that a difference of opinion existed between legal authorities, as to the liability of the Bank to have the charge for the management of the public debt re-examined and altered. He very well knew, that an opinion had been given on this subject. Sir Samuel Shepherd, when attorney-general, and the present attorney-general, at that period solicitor-general, gave it as their opinion, on the case which had been laid before them, that the system could not he interfered with. But the opinion of no legal man was infallible; and the view which a lawyer took of any question must depend on the way in which the case was put. When he saw that case and opinion, it struck him that the question was not stated in the way in which it ought to have been; and he thought that if it had been drawn up properly, the legal opinion would have been, that the act of 1808, did not close the question; but that the subject was open to revision.
Mr. Manningsaid, it ought to be stated, that that case was not drawn up by the Bank, nor submitted to counsel, with the privity of the Bank. It was the work of other parties; they were not responsible for it. After the opinion given, gentlemen must feel considerable doubts whether any alteration could take place in the charge for managing the public debt.
The several motions were agreed to.