The Sun.
London, England, 1853-04-23 00:00:00

which undoubtedly are at variance with mine. The hon.
and learned gentleman appears to think it is perfectly safe
to assume, and to act upon it as a practical principle, that
we are going to create a great revolution in the value of
money. He refers to a state 'of things forty years ago,
when he says the value of money was 5 per cent., whereas
it is only now 3 per cent. He infers, • therefore, that the
value of money will continue to fal, as heretofore, as if
the process had been in steady and continuous working
from time immemorial. But what is the use of going back
only forty years ? If you go back at all, you should go a
little further. Go back more than 100 years, when, as I
stated on a recent occasion in this house, the value of
money was less than 3 per cent., and when Three per Cont.
Stock sold in the London market at 1061. and 1071. Well,
that is a most vital fact, and if circumstances had not
changed with us, I think the bill before the house would
be a very unwise one. But circumstances have changed,
and the fact that the value of money stood at such a rate
forty years ago should not deter us from proceeding with
the measure now upon the table. The hon. and learned
gentleman speaks in very vivid and glowing terms of the
growing wealth and prosperity of the country. I was sur-
prised to hear these expressions from the lips of the hon.
and learned gentleman, for I have been under the impres-
sion, for some considerable time past, that the hon. and
learned gentleman entertained very different views of the
state and prospects of the country, and that he occasionally
indulged in such prophecies as only the most melancholy
imaginations could conceive with regard to the results of
our present mode of commercial legislation, under the in-
fluence of which he says England is not only careering
along the road to ruin, but has nearly reached the goal.
(A laugh.) lam glad the honourable and learned gentle.
man has seen cause to change his views, though I am afraid
he is likely to fall into the other extreme, for he looks not
only for the increasing prosperity of the country, but like-
wise for a considerable, continuous, and permanent decline
in the value of money. He proposes to legislate upon that
consideration, and finds fault with us for giving a forty
years' guarantee, by which he thinks we shall cheat our-
selves out of a great deal we should otherwise have. I
need not say that these are not the views upon which the
construction of this bill has been based. (Hear.) We
acknowledge that -there is a tendency to depreciation in
the value of money, and we seek to avail ourselves of that
tendency ; but •we do not go the length of the hon. and
learned gentleman in his prognostications of the continued
fall in the -value of money until it reaches a point much
below what it is at present, and we think that schemes of
a speculative and illusory nature would be injurious to the
country and unworthy of Parliament. (Hear, hear.) The
hon. and learned gentleman spoke for some time in a man-
ner which I could not follow ; but I presume his remarks
were pointed to the improvement which would be made in
the scheme by the omission of one of the alternatives.
Now, I think if Parliament were to send me into the money
market with a maimed and impracticable scheme in my
hand, it would be one of the most unwise things it could
possibly do, discreditable to itself, injurious to the public,
and destructive of the proposed plan. (Hear, hear.)
Whatever the committee decides upon, I do trust it will
define to itself clearly the object it proposes by this bill.
If it does not approve of that object, let it reject the bill
altogether ; but if it does approve of it, then I hope it will
not stint us of the means necessary to the attainment of
the object in view. (Hear, hear.) Again, the hon. and
learned gentleman has expressed his dissent from the entire
principle of the bill, and has spoken of the ruinous and ex-
travagant rate of interest, 21. 155., which we are about to
guarantee ; and he has likewise rferred to the expediency
of not increasing the capital of the national debt.
These are the points upon which I will trouble the com-
mittee with a few remarks farther on ; in the meantime I
will notice another observation which has fallen from the
honourable and learned gentleman, who insisted that the
scope of this measure is to be extended hereafter, and that,
if possible, it is to be applied to the whole of the
500,000,000/. of debt. Now, here the hon. and learned
gentleman entirely misconceives my position. He says that
because I ask you to give me leave to operate to the extent
of 30,000,0001. of the Three per Cent. and Two-and-a-Half
per Cent. Stocks, it therefore follows that when that stock
shall have been exhausted I shall come and request you to
authorise me upon the same terms to create more stock.
Now that is an entire misapprehension of the object of this
bill. The object of the bill so far as regards the Two-and-
a-Half per Cents. is entirely different. It is to give terms
to secure the establishment of the stock, but having esta-
blished the stock you may then improve the terms, and so
far from asking power to create more stock upon the same
terms, I should say, without being able to anticipate the
precise course events will take, that it would not be proper
to give the same guarantee. (Hear.) The stock once esta-
blished, you will have standing ground upon which to take
up your position in order to extend and increase your finan-
cial operations, and you will be in circumstances to create
additional 'stock upon terms more favourable to the public
as well as more favourable to the creditor. The hon. and
learned gentleman opposite occupied a considerable length
of time by frequently reiterating, but not thereby mate•
rially strengthening, the assertion that the three proposals
or options offered to the public creditor are not equi' alents,
and he accuses me of having said they were equivalents.
Now the hon. and learned gentleman ought to know per-
fectly well, that when we speak of equivalents in this mat-
ter, we do not mean equivalents simply and solely accord-
ing to arithmetical calculation. Considerations of conve-
nience enter into price--considerations of security enter
into price—and we can put into figures the value of a forty
years' guarantee, and the value of the power of transfer.
ring public securities by an easy and inexpensive mode.
When I stated that these things are equivalents, I meant
to speak with the submission and the hesitation which
every man ought to entertain with regard to his own judg-
ment ; but the learned gentleman speaks positively on the
point, and says there is a very large difference in actual
money in favour of the Two-and-a-Half and against the
Three-and-a-Half: Proceeding by arithmetic alone, no
doubt be was right, but I of course consulted an actuary on
the point on. which the learned gentleman is so decided,
and his answer showed a different opinion to that of the
learned gentleman. Of the 110?. he pronounced the pre-
sent value to be 911. 13s. 4d. ; of the 821. 10s., he pro-
nounced the value to be 961. ss. This Three-and-a-Half
per Cent. Stock, which is supposed to be so absurdly infe-
rior in value that it cannot, according to the learned gen-
tleman, be for a moment put in competition with the Two-
and-a-Half, is estimated more highly by the actuary of
whom I speak. In considering these equivalents, there
are, it should be remembered, a great variety of elements
which we ought to take into consideration. Some of these
elements are certain, some uncertain, and we can only be
guided in regard to them by the light of experience. The
learned gentleman is not satisfied to treat this question as
most people of experience iu money matters treat it, as a
matter of great difficulty, about which all prospective opi-
nions should be pronounced with great hesitation. He says
that this is demonstrated, and that that is demonstrated,
and tells us that it is perfectly monstrous, if you can se-
cure the circulation of bonds at 2/. 10s. for forty years, you
should give the holder of stock 21. 15s. and then 1101. The
learned gentleman said, " Why not stop at these bonds—
you may immortalise yourself by issuing 500,000,000 of
hxchequer bonds ?" That is the proposition he demon-
strated himself so clearly. I am repeating the words of the
learned gentleman, who said, " These Exchequer Bills aro
capable of being floated, or they are not ; if they are not,
why found expectations upon them ? If they are, why not
convert the whole of the Three per Cents. into them ? "
Sir F. KELLY explained that he had only recommended
trying them as far as they could.
The CHANCELLOR of the EXCHEQUER —The
learned gentleman never intimated that there was the
slightest difference between the practicability of issuing
20,000,000/. of them and the practicability of issuing
500,000,000/. Now, there is a difference, and though they
may be useful up to a certain point, and obtain a- given
price up to that point, we have to ascertain that point and
that price by experience. I have, for that reason, only
asked your authority to issue them to a limited amount,
for to take unlimited power would be to discredit them in
the first instance, and would look as if we intended to
flood the market. When, however, you have ascertainec
the wants of the commercial community, you can colidue

your future operations accordingly. But the learned gen-
tleman goes further, and says it is perfect folly and ab-
surdity to suppose there is any difference in the value of
50s. annuity proceeding from registered stock, and
Exchequer-bonds bearing 50s. interest. He says there is
no appreciable difference; the prices of these two things-
50s. secured on Exchequer-bonds and 50s. on registered
stock—woull be identical. There again I think he forms
his conclusions with a degree of positiveness which would
have surprised me if he bad dedicated his life to these
questions instead of devoting it to the engrossing labours
of his honourable profession of which he is so deservedly
distinguished a member. It appears to me, on the con-
trary, that though we cannot at the present moment tell
what the value of these funds will be, it is reasonable to
suppose-that there will be a very considerable value attach-
ing to these Exchequer-bonds, from their convenience,
over and above what registered stock would have to a
certain class of holders. He complains also, that it is not
definitely fixed in the bill on what terms these bonds are
to be issued. It appears to me that it would not have
been right to fix that. Our duty is to issue, on the best
terms that we can ' • and it was impossible for me to have
formed a rational computation beforehand. If I had
endeavoured to compute the terms on which they were to
be issued, I should have put them too high or too low ; the
only course was to ask, within reasonable limits, for a dis-
cretion when the time came, because we shall then be in a
position of fuller knowledge, and shall enjoy fuller means
of judgment than it is possible we can at the present
moment. The learned gentlemen says it is an object of
great importance to create a Two-and-a-Half per Cent.
Stock, but that an object of still greater importance is not
to increase the capital of the debt. He admitted that it
was desirable to create the Two-and-a-Hslf per Cent.
Stock; his main objection was the increase of the debt.

.. -
I am not so sanguine as to hope, by any wholesale and
permanent reduction in the value of money, to reduce the
debt ; but I would readily go this length—that it is most
desirable we should introduce into our financial system a
stock bearing a rate of interest which, in case the value of
money should be subject to favourable alterations, would
form a basis for extended operations. I beg the committee
to perceive that they could not make sure of creating a
Two-and-a Flail per Cent. Stock by means of Exchequer-
bonds ; if we could have done so I never would have
troubled you with a •Two-and-a-Half per Cent. Stock, but
would have been perfectly satisfied. But the learned
gentleman must remember that the question of all was
whether the bonds should, or should not, be at the expira-
tion of forty-one years redeemable at the option of the
holder. If you could get out the bonds irredeemable,
then the experiment would have substantially and com-
pletely succeeded. Then you would have a substantial
basis for the Two-and-a-Half per Cent. Stock. You
would then have standing ground from which to work
more extended operations. But it is impossible for any
man to say at this moment whether•we• can do that or

not, and r would net advise you to give up the chance
of
doing it. What 'I recommend is, do not trust to that
chance. This is the reason why Government proposed
this Two-and-a-Half por Cent. Stock, and not at all
because they highly estimated the increased nominal
capital of the debt. And to this question, the increase of
the capital debt, I will now address myself. It has
been always a matter of regret to me that the house
has shown apparently an almost complete indifference on
the subject of increasing the capital of the debt ; but I
propose to it at present a moderate increase of the capital
debt, and ask the house to give the Government power to
increase the capital to a very limited extent. This, though,
is not because I think it an indifferent matter, but because
I and my colleagues thought the price worth paying for the
will not
attainment of
a great object of public policy. Our proposal
merely bring about a reduction of the rate of
charges, but an object of public policy will be gained by the
establishment of such stock. Let 118 see, then, whether the
House of Commons is prepared to lay down
the principle
that under no circumstances will it consent to increase the
capital of the debt. Will the House ( f Commons bind itself
to borrow always at the current rate of interest, and under
no circumstances increase the capital of the debt ? If the
House of Commons be ready to adopt that principle and to
adhere to it with firmness, I must confess I think, not-
withstanding the temporary inconvenience, the house
would have adopeed a very wise and patriotic deterraina-
tioA, and I should be most unwilling to make any proposal
Which-Would stand in the way of such a resolution. My