The Stourbridge Observer, Cradley Heath, Halesowen & District Chronicle.
Stourbridge, West Midlands, England, 1888-03-17 00:00:00

OUR NATIONAL DEBT.
GOVERNMENT SCHEME OF CONVERSION.

The House of Commons having gone into commit-
tee on Friday of last week, the Chancellor of the Ex-
chequer rose to explain his proposed scheme of con-
version, of which he predicted at the outset that it
would lighten the public burdens and raise the public
credit. He reminded the committee that by a singu-
lar coincidence it was on the Bth of March, 1844, that
Mr. Goulburn proposed a conversion scheme dealing
with £250,000,000, and that on March 22 the scheme
received the formal assent of Parliament. Quoting
the reasons given by Mr. Goulburn for anticipating
that his scheme would be successful—the public ex-
pectation, the high price commanded by sound
securities, the low rate of interest of the
floating debt, the generally satisfactory state of
the revenue, and the condition of the bal-
ances —he showed in detail that they all
existed now in equal force. On one point, indeed,
perhaps, he said, he was not so favourably situated,
as there was not the same serenity of the political
atmosphere, the same absence of all disturbing
causes; but he added emphatically that he had no
fear of his plan being compromised by any foreign
complications, and the Government felt less anxiety
on this head now than they would have done six
months ago. Next he showed by reference to the
yield of foreign and other securities that investors in
almost every kind of security have had to accept the
fact that the rate of interest has fallen, and to submit
to a reduction of their incomes. Reviewing the
principal conversions effected by Mr. Vansittart,
Mr. Robinson, ' Mr. Goulburn, Lord Althorp, Mr.
Gladstone, and Mr. Childers, he explained their
main features, laying especial stress en the
manner in which the dissentieets had been treated,
and indicating those methods on which he intended
to ask Parliament now to insist. The moral which
he gathered from these precedents was that for a suc-
cessful conversion assent must be presumed in the
absence of dissent, that the time for the expression of
dissent must be strictly limited, that power must be
taken to deal with dissentients as Parliament shall
direct, and that power might be taken either in the
same or a separate bill. He also drew the lesson that
there must be no increase in the capital of the debt,
and that the greatest success had been attained
where the rate of interest had been reduced
gradually, each step being guaranteed for a
certain number of years. Passing then to his
proposals, he first described the debt to be dealt
with—viz., "New Threes," £166,000,000, redeemable
without notice and in any amount; "Reduced,"
£69,000,000; and Consols, £323,000,000, the two
latter being entitled to a year's notice, and redeemable
in sums of not less than £500,000; and, after discus-
sing the various methods of conversion which had been
suggested by creating Two-and-Three-quarters or
Two-and-a-Half per Cent. stock by giving an option,
&c., he said at last that, the Government, preferring
simplicity above all things, had decided on the crea-
tion of a Two-and-Three-quarters per Cent. stock, de-
scending automatically to 24 per cent. The higher
rate of 24 per cent. would be given for 15 years, and
after that the rate of 24 would be guaranteed for 20
years longer. But in order to induce the holders
of Consols and Reduced to come in at once
to the same terms he offered in the case
of "New Threes" that the first year's interest
should be 3 per cent., followed by 14 years at 24.
The "New Threes " would be given to March 29 to
come in, trustees being allowed until April 12, and
assent being assumed where no dissent was signified.
As a further inducement to the Reduced and Consols,
and in consideration of their foregoing the year's
notice to which they were entitled, if they came in by
April 12 they would receive a premium of f per cent.
—that is, ss. per £lOO, payable in cash. As to the
New Threes no commission would be given, but a com-
mission of Is. 6d. per £lOO would be allowed to
authorised agents on the other stocks. Arguing the
question from the stockholder's point of view, he
expressed a strong opinion that there would
be very few dissentients, and though he
would not now indicate the precise measures, he
pointed out that Parliament would have power
to deal with them. If they took their money, how,
he asked, would they invest it ?—and he reminded
the Committee that the Government had now some
ten millions a year to invest, which would enable
them to meet any difficulties in a determined manner.
As to the saving to be effected, if only New Threes
were 'to be converted, it would be from April, 1889,
£410,000, and from April, 1903, £820,000, and if the
whole scheme were successful the entire saving would
be from April, 1889, £1,400,000, and from April, 1903,
£2,800,000 a year. This, he thought, was worth
making an effort for, and after insisting on the neces-
sity of despatch, he concluded by repeating his
belief that the scheme was conceived in a sense of
equity to the public creditor and to the taxpayer.
Mr. Gladstone, while reserving his opinion as to the
merits of the scheme, said it was clearly the result
of laborious and thorough examination, which had
been conducted in a wise spirit, and he congratulated
the Chancellor of the Exchequer not only upon the
plan, but also upon the way he had put it forward.
Remarking that no date had been fixed for a definite
vote upon the question, he had no wish, he said, to
press for a day to be fixed then, but he suggested
that it was of the highest importance that a definite
judgment should be given by the House at the earliest
possible moment. As to its advantages, he said the
prospect opened inspired him with the hope that
much benefit would result to the public as well as to
the State. Mr. Goschen had in no degree overstated
the immense improvement in the resources of the
Government available for the conversion, and he
urged the House to give the scheme tt candid and
impartial consideration.
The Chancellor of the Exchequer, replying to a
string of questions, said the Government proposed to
bring in the bill on Tuesday, and to take the second
reading at a morning sitting next Friday. He also
said it was not intended to give stockholders formal
and personal notice of the conversion otherwise than
by advertisement in the London Gazette, but the
Government would take every means in their power
to insure that during the next fortnight every one
interested had proper notice.
The necessary resolutions were then agreed to.