The Press. — London, England, 1854-11-25 00:00:00

1108 MR. GLADSTONE. WE have described Mr. GLADSTONE'S first financial operation—his reduction in the rate of interest on Exchequer Bills. It has resulted in a direct loss to the country of more than 200,0001. a year. _ We proceed now to his second—namely, the re- demption of the South Sea Stock. He has himself pronounced this operation abortive ; and, having made this confession, he has complained in the House of Commons, with asperity, if not with rudeness, that any one should presume to comment further upon it. It may be that, in Mr. GIADSTONE'S private rela tions, absolution may follow confession; but in the case of a Finance Minister the public will be a se- vere judge; and, as journalists, we hold that neither the self-humiliation nor the confession of the peni tent can relieve us from the duty which we owe to the public of criticising and exposing the delin- quent. The history of the transaction is a short one. It is not uninstructive. In its results it will be found to involve not only great pecuniary losses but politi cal considerations of the gravest and most serious nature, and to have bearings and relations which we undertake to show have contributA4 in no small de gree to " the timid counsels " which have given such advantages to Russia, to the delays and difficulties with which our armies have been encompassed, and to the doubtful issue which now seems to hang over our first and most important campaign. When Mr. GLADSTONE became Finance Minister, his object was to outdo his predecessors and to pro pound something new, surprising, comprehensive. Rash and self-willed, he neglected, as we believe, the advantages he possessed in the counsels of men with greater financial experience than himself. Mr. DISRAELI, by reducing the interest on Exchequer Bills opportunely and cautiously, effected a saving of 35,0001. a year. Mr. GLADSTONE'S first object was to outdo Mr. DISRAELI, and he involved the country in a loss of 200,0001. a year. Mr. GOULBURN in 1844 successfully converted our Four per Cents. into Three and-a Quarters, and effected an immediate saving of 622,0001. a year. Mr. GLADSTONE contemplated the grand scheme of converting what he called " the Feat Three per Cents.," amounting to 500,000,0001., into a magical Two and-a-Half per Cent. We shall examine the results. There was 9,584,740/. (we will take it, for conve nience, as 9,500,0001.) old South Sea Stock. Mr. GLADSTONE designated it "patriarchal." It bore interest at the rate of three per cent., wag held by a small proprietary, and was scarcely known on the Stock Exchange. The conversion of this stock he made the basis of his operation. On the Bth April, 1853, he astonished the public by laying on the table tf the House of Commons certain resolutions having reference primarily to this stock, but which he stated to be the foundation of his larger and more comprehensive scheme. Upon that larger and more comprehensive scheme we do not mean at present to comment. It has been con signed to oblivion with the abortive schemes of other Chancellors of the Exchequer—and peace be to the ashes of all ! But we have to do with what Mr. GLADSTONE described as the just and prudent propo sition for the conversion of these minor stocks, because the country, as we shall show, is paying dearly for this his second financial blunder. We shall not trouble our readers with the details, an outline will be sufficient for our purpose. He gave the holders of these stocks the option of four alternatives, viz., that for every 1001. of the old stock they might receive 1. 821. 10s. in a new Three-and-a-Half per Cent. Stock, with a guarantee against a reduction of interest till the year 1894. 2. 1101. in a new Two-and-a-Half per Cent. Stock, with the same guarantee against reduction of interest till 1894. 3. An Exchequer Bond for 1001., with interest at 21. 15s. per annum, and a guarantee against reduction till 1804, the interest to be thenceforth 21. 10s. till 1804. 4. In case none of these should be accepted, a money payment of 1001. on Jan. 5, 1854, for every 1001. of the old stock. Being desirous of likewise giving the holders of the 500,000,0001. Three per Cents. a foretaste of the ad vantages they were hereafter to receive under his larger scheme, he proposed further that commuta tions might be made, on the same terms, by the holders of Consols or Reduced Three per Cents. for these new Three and-a-Quarter per Cents., new Two and a-Half per Cents., or Exchequer Bonds, limiting the commutations in the two former cases to 30,000,0001. each. From the compulsory commutation of the minor stocks he stated that he expected only a moderate reduction in the rate of interest : if one quarter per cent. "it would be about 25,0001. a year." From both, namely, the voluntary commutation of Three pe, b 6 1 1 11 E PRESS. Cents., and the compulsory commutation of the minor stocks, he stated, in his budget speech of the 18th April, 1853, that he anticipated a saving of " not less than 100,0001., the final result, he hoped, " would show a considerably greater saving." " I " venture," he said, "now to take credit for 100,0001. " on that account " ( Hansard, vol. 125, p. 1,354). We have stated we would deal only with his opera tion upon the minor stocks. First, then, with regard to its success. He contemplated a rush for his new and popular stock—there was a rush—but it was a rush for money. The parliamentary paper (48) of 14th February, 1854, informs us that of the 9,564,7401. minor stocks there had been commuted only 1,493,4381., that there had been paid in money 6,048,7581., and that there remained to be paid in April, 1854, 2,020,545/. The first illustration of the effects of this operation shall be taken from a case which has happened within our own observation. A holder of 1,0001. South Sea Stock, yielding him 301. a year interest, warily and wisely, was a dissentient from the plan of commutation. Accordingly, on the sth January, 1854, he received his 1,0001. in money paid out of the Consolidated Fund. Straightway he went to the Stock Exchange, and with the same money he pur chased 1,0001. Three per Cent. Consols at a fraction under 03. This, of course, gave him a gain of 701., and subjected the country to a loss of 701. 1,0001. was taken out of the Consolidated Fund to redeem 1,0001. in South Sea Debentures, which Debentures were replaced by Consols rendering the same interest and being of the same value for the sum of 930/. ! Well, then, there was paid out of the Ccnsolidated Fund, in the whole, on the sth January, 1854, 6,048,7581. Every 931. of this would have redeemed on that day, or at least represented on that day, 1001. of Consols. The gain, therefore, to the holders of the 6,048,7581. South Sea Stock, and the loss to the country, was no less a sum than 423,4091., inde pendently of the 2,020,5451. remaining to be paid in April, which we shall notice presently. Mr. GLAD STONE, we are aware, in his speech on the Bth May last, endeavoured to refine this away by stating that a portion of this six millions was paid out of balances in the Exchequer, which balances were unproductive. We shall point out by-and-bye what it has cost the country to replace these balances. But we are desirous first of putting the matter in another aspect, and that the most favourable we can for Mr. GLAD STONE. The old charge on the 9,564,7401. at 3 percent. was 286,9491. The Lords' paper (39) 27th Feb.,1854, informs us that the new charge on the 1,493,4381. com muted for the new stock is 41,2311. 19s. 10d. The commissioners for the reduction of the national debt made purchases early in *January, 1854 (when the six millions was taken out of the Consolidated Fund), at 921. For convenience we will suppose the value of Consols to have been 93, or, in other words, that the interest of money in the funds was 31.45. sd. The annual value of the 6,048,7581. then taken out of the Consolidated Fund, supposing it to have been applied in reducing the national debt by the commissioners in the legitimate way, was about 195,0001. We have stated that we have taken the matter in the most favourable aspect for Mr. GLAD STONE. We have taken the price of Consols at 93; had we gone further into the year we might have taken them at 86, or even lower. There remains, then, the '2,048,758/. which had to be paid on the sth April. We believe that the arrangement under which the settlement of this last remnant of " the Patriarchal Stock" was effected makes the rate of interest about four per lent. Our account, then, with Mr. GLADSTONE will stand thus : OLD CHARGE. Three per cent on £9,564,740 NEW CHARGE. On aum com muted On eum paid in money bth Jan (F6,048,768) £195,000 0 0 On aLm paid sth April 0318,183 Loss So that by this operation, taking it in its meat favorable point of view for Mr. GLADSTONE, the country, instead of obtaining a gain of at least 25,0001. a year, as he modestly expected, has been subjected to a loss of more than 80,0001. a year. But is this all 7 We stated we should inquire at what cost the money taken out of the Consolidated Fond has been replaced, and whathas been the effect of this ill-judged proceeding. It will be seen, by reference to page 5 of the parliamentary paper (1) 31st. Jan., 1854, that the result was to reduce the balance in the Exchequer from nearly nine millions, as it stood on sth Jan., 1853, to less than four and a half millions, an amount smaller than at the end of any quarter since 1847, and this at a period when the country was just going to engage in the present war. The smallness of this balance in the Exchequer rendered necessary, first, the issue of the 1,750,0001. Exchequer Bills in advance of the revenue, which formed a part of Mr GLLDSTONE'S Budget of March SATURDAY, last, and, secondly, of the credit for 6,000,0001. in Exchequer Bonds or Bills, which formed a part of his summer Budgets. These large sums, nearly equal in amount to the money required by the dis sentient holders of the Patriarchal Stock, will be found to stand the country at nearly four per cent.; so that, in round numbers, the loss might be taken at one per cent. on eight millions, or 80,000/. a year, subject only to the small gain of about 3,5721., which has been extracted from the few unwary, simple minded stockholders who, beguiled by the specious assertions of Mr. GLADSTONE, in an evil hour con sented to commute their Patriarchal Stock for his new-fangled Two-and-a-Half per Cents. and Ex. chequer Bonds. We wish we could stop here ; but has it occurred to our readers to income how far the " timid and divided counsels" which have proved and promise to prove so disastrous as regards the conduct of the war may be attributed to an exhausted Ex chequer—exhausted by Mr. GLADSTONE'S two great operations, upon which it has been our duty to com ment; and how far apparitions of dissentient stock holders may have been pressing upon his mind, and depressing his energies, when he presented to the House of Commons an estimate for conveying a few regiments to Malta, at a time and under circum stances when a prudent, united, and energetic Cabi net would have proposed the means of transporting an overpowering army to the shores of the Crimea? This is, in truth, under present circumstances, a very painful topic for comment or reflection, and we would willingly spare Mr. GLADSTONE any crimina tion beyond that which his own conscience must occasion. But the judgment of the journalist must he stern as well as just. Frequently we have charged Lord ABERDEEN, because of his tendencies towards Russia, with his share of the responsibilty of this disastrous war. We are compelled now to charge Mr. GLADSTONE with the heavy responsibility of rashly proposing this uncalled-for and abortive opera tion at a time when he, though not the public, was aware that war was imminent. On the 21st of March, 1853, more than a fortnight before the announcement of the great scheme for converting the 500,000.0001. of our Three per Cents, the Cabinet had received Colonel ROSE'S letter of the 7th of March -110 of the printed correspondence. There are many previous intimations of menacing proceedings by Russia, but in this letter Colonel ROSE states distinctly that, unless the Porte received prompt and energetic assistance, the balance of power would be destroyed by the Menschikoff mission. Was that a time to tamper with the promises of the country, to make experiments with the public securities, and to exhaust the balances in the Ex chequer? The history of our country, and indeed of all countries, will show, in letters of blood, that campaigns have been lost and that national dishonour and injury have been sustained, more frequently from the want of adequate pecuniary resources in lime of war than from the want of valour on the part of armies, or capacity on the part of generals. Why, we ask, was this expedition delayed ? Why was it detained at Constantinople? Why allowed to linger in the pestilential valleys of Bulgaria? Why was it, and is it, inadequate in numbers and means of every kind for such an enterprise? Why are we told that even Austrians" express surprise and indignation at the " strange want of activity and foresight displayed by " the Western Powers ?" and why is the result now ap parently trembling in the balance ? Why, but because, while Lord ABERDEEN, true to his antecedents and the prejudices of his long career, clung to the hope of peace and of the restoration of Russian ascendency, Mr. GLADSTONE, in his arrogance and ambition, com mitted financial blunders which had impaired the available financial means of this country, and which be was endeavouring to defend, and explain away, and cover, when he ought to have been making pre paration for the war. But how long is all this to go on? Notwithstanding his failures, are we to continue to entrust Mr. GLADSTONE with the management of our finances, and Lord ABERDEEN with the conduct of the war ? If we do, it requires no prophet to pre dict that the course must be—imbecile counsels — insufficient means —a disastrous campaign—an I ignominious peace. 4 The overland mail reached (Trieste on Thursday, with dates from Canton, to Oct. 9; Calcutta, 20; and Bombay, 28. In India general tranquility prevailed, and no warlike preparations were in prospect. The harvests were good and the weather favourable. The Em bassy from Ava had arrived at Rangoon. Canton was still besieged by the rebels. Some tea had arrived there. Foochow and Ningpo were quiet. The pirates were doing much harm. Teas have fallen in price. Silks have advanced. The British barque Thomas Chadwick had been wrecked. We regret to announce that Mr. Justice Coleridge is unable to attend to his judicial duties, in conse quence of severe indisposition.