The Sun.
London, England, 1853-04-09 00:00:00

.."--
, .
_ .
/ A---,--,--,_---- .
•
7/ )
- • - - - - . _
• ..ior- .--, ..,,..,_ N 4-0-,,,
.. - ..\ .
<c,41.4, :LW' -,- 1•,,) f•,--
----
.. \ '
;::::----- / __—
. .
ff , ;,...4.llclfii., •.t.-.-:-...? t.'-'4. -Ao'li Q"j"`
_ •--._ ',4„,'''TZ,;) i
liki. \ ~.ftv,l, ...,,, ~
-‘)
(
-1,114:-....,- ~,,
,7\*:..-":1_,,,, 7'-',..-PC '.l
40.464,..-fr4 'l,
"a
- ~.,- ' " r ' N''' ' . iv, I Trr_t.". •
f &
kt.,-t.,,,0,...„ _ -,„ . --......„.. ~,,,,„,•,___ 0k..,_, „,, ~,,o. , _ —,l, -
‘,..- ik,.,i'.-.,
_.A.
--4.,4.-- / •-,,.
\7-'" •
\•:-:
~
_,- , .-1-. -..--. --''--z--,,,, 4,-Ir." , lit° ~ --.!Z bit oz T . ''s ".
A -0 . 4,,i,-,:v Div. - 4,2 v x.ll ,
~,,,,,,v ..„,„„...
--S"P------- ,11
,---...-

tabs the real price. The actual present price, therefore, of
the Three per Cent. unguaranteed Stock is 991. 17s. 6d.,
that is, 1001. 12s. 6(1., minus the 15s. which has accrued as
part of the dividend. The price of the Three per Cents.
guaranteed for 21 years is 1021. 17s. 6d. The value, there-
fore, of your guarantee, not to reduce the interest below 3
per cent. for 21 years, in the market at the present time,
as tested by the daily transactions, is no less than 3 per
cent. Now I want to get hold of that value, if I can, for
the public. (Hear, hear.) Let us guarantee some of this
stock which has now no guarantee, and let us perpetuate
for the benefit of the public the increased value which will
thereby be obtained. (Hear.) Another of the uses to which
the Exchequer Bonds may be usefully employed will, no
doubt, be that of obtaining temporary loans upon their
deposit, without any expense, and affording ample security
to the lender. This is a circumstance which will also tend,
no doubt, to increase the value of thesebonds. (Hear.) There
,is another point, which I confess I look upon as one of
considerable importance in connection with this subject.
If we go back for a certain number of years, we find
ourselves in a period when dealings in public securi-
ties were almost entirely confined to the metropolis. In-
deed, with reference not only to public securities, but to
stock generally, it could hardly be said that there was a
stock market out of London. The immense progress of
enterprise, the formation of a multitude of joint-stock com-
panies of different descriptions—many of them of a high
class—investments in railways to the extent of 200,600,090/.
or 300,000,0001., giving rise to transactions every year of
immense magnitude, and various other circumstances con-
nected with the commercial condition of the country, have,
however, led to the establishment of regular stock markets
in the provinces. Liverpool, Manchestr, Leeds, Glasgow,
Birmingham, and other towns have stock markets, where
a very large amount of business is transacted ; but at the
present moment, considered properly as " stock," the pub-
lic securities are almost entirely excluded from the pro-
vincial markets. Ido not mean to say that nobody in the
provinces holds public securities for the purposes of invest-
ment. No doubt many persons do, but they hold them
through the medium of agents and correspondents in Lon-
don. lam most anxious, therefore, if it can be done, to
bring the public securities into the, provincial markets ;
because I believe that, by enlarging the scale of demand,
you would increase proportionately the value of the com-
modity, just as when, with a fixed number of buyers, if
you increase the amount of commodity you reduce its va-
lue ; so, when with a fixed amount of commodity you in-
crease the sphere of the market and the number of the
buyers, you augment and enhance the value of the commo-
dity. (Hear.) Some persons may perhaps ask why we do
not propose to alter the present mode of transfer of public
securities by personal appearance at the Bank, and the in-
scription of a signature in the books to the same simple
manner to which ordinary securities are transferred. lay
reply is, that I do not see my way cleat to such a measure.
The present mode of transfer—for London, I mean, which
is the centre of monetary transactions, not only of Eng-
land, but of the world—is as near as possible to perfection ; •
it is the most rapid, the cheapest, the most secure, and the
most satisfactory, which has ever been devised. There
may be a mode by which, without breaking up that system
which works so well in London, the provinces may be pro-
vided with a mode of dealing with these securities. I
confess, however, that I am not as yet aware of that plan,
serious matter to sacrifice
the great central market
tahned
immense
ac edr tv
nani nt layg
eb:wahvi
eehry
enjoys for the purpose of benefiting the minor markets.
No doubt we shall achieve a great good if we can, by the
means now proposed, get the public securities into the pro-
vincial markets. The advantages derived would be that
you will give an increased value to the securities, and you
will introduce a further element of steadiness into the mar-
ket, for when you deal in one market only you are rendered
more liable to the influence of combination than you would
be by having a number of markets for the same commo-
dity. (Hear.) Another recommendation which securities
of this kind will possess will be that they will form most
eligible investments for foreigners who may wish to be in
Possession of public securities, and to have the documents
which constitute their right to the property in their own
possession. These are the principal considerations which
have induced her Majesty's Government to ask the house
to give their permission to issue this description of stock.
There are, however, two points of considerable difficulty
connected with this subject, to which I ought not to omit
to refer. The first question which may be asked is, " Are
these securities which you call ' Exchequer bonds' to be
merely very long dated Exchequer bills, which at a certain
period Parliament, whether it will or no, and irrespective
of circumstances, may be called upon to repay? or are they
to be securities guaranteedon the part of Parliament
against any reduction or interference for a certain pe-
riod, but with respect to which, after that period,
Parliament, and Parliament alone, shall enjoy the
power of redemption, to use, or not to use, as it
thinks fit ?" Now, her Majesty's Government felt the
difficulty of coming to any conclusion in the absence of
that direct information which they could only receive from
the full expression of public opinion and the discussions
which are elicited in the public journals and elsewhere,
when a plan of that kind is proposed. We felt the diffi-
culty of coming to an absolute decision on those questions
in the dark. We had to choose two courses, both of which
were attended with considerable difficulties, and by the
adoption of either of which we might have sacrificed a
very considerable part of the objects which we had in view.
If, for example, we had said, " These securities shall be
securities absolutely irredeemable at the will of the holder"
—if we had determined to invite the House of Commons to
vote such a proposition to-night, we might have run the
risk of discrediting those securities at the first moment
they were born into the world, and of thus seeing the
whole plan abortive. If, on the other hand, in order to
ensure the working of the plan, we had written expressly
in the resolutions before the committee that these securi-
ties were to be redeemable at the option of the holders, we
might have been told, as in point of fact we have been,
that the securities are so satisfactory in their character,
that, as permanent, irredeemable securities, there may be
many persons found who would be willing to hold them.
It appeared to her Majesty's Government, therefore, that
the wiser course was to ask Parliament to entrust them
with a discretion in the matter, and using the time infor-
mation, and the discussion which will be elicited between
the present time and the period when the act is palmed and
the securities issued, and be permitted to act for the best,
as the circumstmees may seem to them to require. It is
quite plain that to get out these securities at the rate of
interest proposed---24 per cent.—it would be well worth
while to make them redeemable at the option of the hohler
after a certain number of years. At the same time it is
by no means certain that, even by succeeding up to th It
time, we should still succeed in the principal object which
we have in view, and that is bringing before the public eye,
and enabling the public freely to deal with public securities
bearing 2i per cent. interest, while the Exchequer bonds
to bo issued would in fact be long dated Exchequer bills,
land not permanent securities. (Hear, hear.) The com-
mittee will see that we propose to ask for power to sell the
" bonds" in open market, and to apply the produce of their
sale to the purchase of Exchequer bills. The committee
will, no doubt, be jealous of bestowing such a power upon
the Government. They may suppose that the Govern-
ment will throw them away, or give them away, or that
they will be so stiff in their dealings that when the full
value is offered for them it will not be taken. It appears
to use upon the whole, that while those who have to act
for the State may fail in the discharge of their duty, yet,
upon the other hand, the objection would be very great to
the committee now fixing absolutely the terms upon which
these bonds should be issued. Her Majesty's Government
are your agents in the matter, and you will hamper and
prevent us taking advantage of the circumstances which
may arise up to the latest moment, if you insert in these
resolutions absolutely the terms upon which these Exche-
quer bonds must be sold if disposed of in that way. Her
Majesty's Government have thought, for various reasons,
that the best way of meeting the reasonable desire of Par-
liament to be completely master of all these transactions,
would be to ask you to confer upon the Government such
an amount of discretion as will be ample for the purpose
and will enable them to deal freely with the securities'
about to be created, but at the same time to limit the
amount of the securities which shall be issued by them
under these resolutions, and for this reason I have pro-
posed that the amount to be issued shall not exceed the
sum of 30,000,0001. Another limitation which is pro-
posed is, that the power to issue Exchequer bonds will
absolutely cease and determine on the 4th of April,
1854. It is not that I assume either that 30,000,0001.
will be the utmost limit to which Parliament will go, or
that no bonds will be issued after the day named. The
object of the limitation in both cases is, that we shall have
the power to try the experiment, as your agents, to a
limited extent ; but to come back to you for increased
powers if we find occasion to go beyond the extent named
in the resolutions. (Hear.) It may be asked, what is the
nature of those bonds, and would they constitute a suffi-
ciently broad basis for the operati.,n which we are
proposing to Parliament ? To this I must say I think
not I have said much in commendation of instruments
of this character as a form of public security. But I think
it is obvious—and it has been broadly remarked in many '
of those intelligent discussions on the subject which have
already appeared since the resolutions were printed—that
these bonds would not be securities of the most desirable
description for all the parties who are at present holders of
public stock. I look upon these bonds as being in a man-
ner commercial and trading securities, which will suit the
purposes of the classes engaged in commerce generally,
including, of course, those who are dealers in public sto;ke
But there are very large classes of holders of stock, who
are in different circumstances, to whom it would be my
advantage to have the power of transferring stock
cheaply and rapidly, inasmuch as they do not wish
to transfer it, to whom it would be no recom-
mendation to have the interest payable in the manner
proposed, and with whom the present mode of proceeding
is perfectly satisfactory. These classes consist of the
t
permanent holders of public stocks—of those who hold
as permanent property, and who hold them is the
capacity of trustees, or under private settlements. Her
Majesty's Government, therefore, do not propose to found
their operations upon the issue of Exchequer bonds alone.
because it is obviously desirable, if it can be done without
mischievous
propose that alreadyth ere all
tion, but to make those improvements fall over all classes
shuodedla,
be a means of voluntary conversion of in the
viz.,u
of the public creditors. Therefore, in order to meet the
creditor, we
I hae
probable views and wants of the public creditors
be-
longing e classtpoertmhaantent
to which
strictest
sense of the word, " the Great Three per Cents." In ap-
proaching this great phalanx of the Three
de-
fended as it is by its amount, per Cents., , its rate of interest, and the
necessity for a twelvemonths' notice, we must deal with it,
as a prudent general would when approaching a fortifica-
tion of the first class, and our. steps must be directed by
the utmost caution. The proposal of her Majesty's Govern-
ment is to give terms which. 1 b
as being too liberal to ave not seen described
o the fundholder. I: am fully con-
vinced that it would be
but at the samean error to give terms too liberal ;
time, when it is said that von would get
you are
very much better terms than
asking, much
as I should respect the estimatewhich they form, I should
respect the opinion still more if it was founded upon actual
account instead of being merely an estimate. The proposal
of the Government is that any person who now is, or may
be, interested in the Three per Cent. Consols, and who shall
between the time of the passing of this act and the 10th of
October, 1853, signify his desire to commute any or all of
his share in the stock, may have the option of exchanging
each 1031. of such stock into one of three forms. The first
of these will be the Exchequer bonds at par, upon the ad-
vantages of which I have already dilated at some length ;
secondly, into a New Three-and-a-Half per Cent. Stock, to
be created for the purpose, upon these conditions, that
1001. of Perpetual Annuities, now bearing 3 per cont. in-
terest, may be exchanged for 821. 10s. of this New Three-
and-a-Half per Cent. Stock, giving to the present holder
of stock an income of 21. 17s. 9d. per cent., instead of 31.
per cent. The reduction in this case is certainly not a
large one ; but the impression appears to be that even this
reduction will not be very readily submitted to. For
my part, I have not the least fear of seeing it very
extensively adopted. The advantages of this commutation
are not to be limited to the rate of interest; it will be
fortified with a guarantee of no less than 40 years
-1
alase,
period, no doubt, but small in the history
of
national
a Threen a de
at the expiration of which period, instead of beingcl _
per Cat, Suck, it will be one a 34 100., redeemable

[PRICE SD.

s extend it-knowing that our fathers borrowed money from
the public at 51. and even 6/. per cent., and that we bor-
a ! row it at 31. per cent.-we assume that we are travelling
, down an inclined plane. But it is a curious fact that there
was a time when the public credit was higher than it is at
, the present time. I think it was in 1739, 114 years ago,
j and in the month of July, that the Three per Cents., which
, are now just at par, were at the price of 1071. I wish to
call these facts to the recollection of the committee, in
order that they may appreciate the real difficulty attend-
, ing an operation of the character which we have now in
view. Now, with respect to the Exchequer bonds, I pro-
pose that the issue of them will have the following leading
characteristics, which I will in the first instance state con-
cisely together, and without any comment of my own. In
the first place they will be transferrable by simple delivery,
and without cost or expense of any kind. In the second
place they will bear interest in the first instance at the
rate of 21. 15s. per cent., and subsequently at the rate of
so with respect to the number of years
21. 10s. ; and I propose
during which the interest shall continue at 21. 15s.
per
cent. that a limit shall be fixed by Parliament, beyod
which that rate of interest shall not be allowed to extend,
and that a discretion shall be given to the commissioners
of the Treasury to reduce that limit before they come to
the actual period for issuing the bonds, so that we may
give the public every advantage of tho latest information
of which the Government is in possession at the time
when they are called upon to afford it. The bonds will,
after the Ist of September, 1864, at the latest, but per-
haps from an earlier period than that, bear interest at the
rate of 21. 10s. per cent, till September, 1894. After the
year 1894 they shall be subject to redemption, but whe-
ther by the State or by the holders is a point to which I
shall presently more particularly advert. My present pro-
posal is, that the question as to at whose option the
bonds shall be redeemable shall not be decided by a vote
of the committee to-night, but shall be confided to the dis-
cretion of her Majesty's Government. I propose also that
these Exchequer bonds to be issued shall not exceed, under
any authority to be conveyed by these resolutions, a sum
of 30,000,0001. in amount. There are many other minor
questions, which are, however, of considerable importance,
with respect to these bonds, and which bear materially
upon the value and popularity of these securities. Among
them I may mention the form in which the bonds are to
be drawn, the mode in which the interest is to be paid-
which will probibly by coupons attached to the bonds-
the places at which the interest is to be paid-that is to
say, whether at the Bank of England, or at the Bank of Ire-
land, or also, at the branch banks, the mode of securing these
bonds against the possibility of forgery, and the means to
be adopted for replacing them when lost. Many of these
arrangements are of an executory description ; they will
require a great deal of careful consideration ; and it is not
necessary now to detain the house by any details respect-
them. We propose that these Exchequer Bonds when
issued may be used in various modes ; and I am sure the
committee will forgive me for stating, in as plain language
as possible, the propositions contained in the resolutions,
for the wit of man has not yet devised a mode of framing
resolutions of the kind so as to satisfy the jealous but just
demands of Parliament for information in cases of this
sort, and at the same time to frame a pleasant and what is
called a readable document. (A laugh.) I propose that
these Exchequer Bonds shall be capable of being disposed
of in four different modes. The first is that they shall be
exchangeable against Exchequer Bills. There may be
hon. members who may say, " Why not leave the Ex-
chequer Bills alone. Surely you ought to be satisfied with
the conditions under which you now hold so large a sum
as you have invested in Exchequer Bills, viz., at the rate
of interest not rising above the very moderate figure of 1
per cent." My reply is lam perfectly satisfied with the
present condition of Exchequer Bills. But the condition
of Exchequer bills is like a summer sky-it may be varied
or even reversed under the influence of circumstances, in
a very short time. The funding of Exchequer bills, when
you have an opportunity of doing so, is a wise operation,
and I do not say that it would be unwise under certain cir-
cumstances if we were to use these Exchequer bonds at the
rate of 211 per cent. for the purpose of funding Exchequer
bills which we hold at 12 per cent. When you can get
your quantity of Exchequer bills very low, then their po-
sition becomes secure ; but when you have got it low, you
are enabled thereby to strengthen greatly the position of
the Government against any possible vicissitudes, and the
Government are enabled to go into the market as borrow-
ers, in a case of emergency, with an amount of advantage
which they could not possibly obtain if the rate of Ex-
chequer bills was not low. Now, with respect to this par-
ticular proposition, which is not actually that we should
fund Exchequer bills, but that we should exchange Ex-
chequer bonds against Exchequer bills, I will just state to
the house the rate at which previous fundings of Ex-
chequer bills have been effected. In the year 1826 there
was a funding of Exchequer bills, and the rate at which
they were commuted was 1001. Exchequer bills for 1071.
in the Four per Cents. representing a rate of interest of
41. 6s. Bd. per cent. ; in 1829,1001. in Exchquer bills upon
being fnnded brought 101/. lOs in the Four per Cents.
thus representing a rate of interest of V. ls. 2d. per cent. ;
in 1839, 1001. Exchequer bills were commuted at the rate
of 1091. and 1101. in the Three per Cents., representing a
rate of interest equal to 31. 6s. per cent. ; in 1841, Ex-
chequer bills were again funded upon the condition of
being exchanged at the rate of 1001. for 1121. 2s. of
Three per Cents., the interest being equivalent to
31. 7s. 3d. per cent. Thus, whenever you have had
occasion to fund Exchequer bills, the best terms
upon which you have succeeded in doing so have been at
the rate of 31. 6s. per cent., and they have been funded at
rates even as high as 41. Gs. Bd., and that rate of interest
not representing, as in the case of Exchequer bills, a tem-
porary bargain, which in a few months might be modified
by the Government, but representing the contracting of a
new public debt, as permanent as any other portion of the
public debt of the country. These facts form, we think, a
justification of the request of her Majesty's Government,
that we may be trusted, within the limits laid down in
these resolutions, to exchange Exchequer bonds against
Exc;sequer bills, for the purpose of funding at the rate of
21. 10s. per cent., thus effecting a saving of snore than 1
per cent. theizn
funded.
at which
TLx Exchequer
übriplloss
eh have
which we propose Exchequer bonds shall be applicable is,
that they shall he exchanged against the "stocks" which,
by these resolutions, it is proposed to commute. We pro-
pose, also, that Exchequer bonds may be sold by the Go-
vernment, and the proceeds of their sale applied to the
purchase of " stock, for the purpose of cancelling it, or
to the purchase of Exchequer bills. These bonds are like-
wise intended to meet the particular case with respect to
the small portion of the public debt which we give abso-
lute notice to pay off; and this might be found the most
convenient mode of dealing with it - that we sell the
bonds, and apply the proceeds in cash to meet the demands
of those who might require to be so dealt with, for, keep-
ing extreme cases in view, it might possibly occur that the
balance, in the Exchequer might not be sufficient to meet
the demands which might be upon it. This subject has
been one of careful and anxious consideration, and one of
the great difficulties besetting questions of this nature is,
that they of necessity involve arriving at conclusions upon
questions of great importance with very imperfect infor-
mation. Public feeling, after all, and the opinion of the
commercial classes, are the tests by which ultimately a
measure of this kind can alone be tried, and what will bo
the state of public feeling at a given time with respect to
such measures is a matter upon which very opposite judg-
ments, even under the most favourable circumstances, will
greatly fail. I cannot blame myself for not having taken
all the means in my power, compatible with the strict and
absolute secrecy which those measures require, to ascertain
what prospects, according to the best and highest judg-
ments, there of bringing out " bonds" of this kind in the
market. But, at the same time, it was matter of extreme
difficulty to arrive at such certain data as would have jus-
tified the Government in absolutely fixing upon terms of
the proposition, from which there should be no variation
whatever. I will now, however, state the grounds upon
which we think that these " bonds" will be popular cur-
rent securities. In the first instance, the very easy trans-
fer of these securities entirely without cost. It is very
difficult for us to say what may be the precise effect of that
easy and rapid transfer without cost, because we have no
precedent to guide us among the various descriptions of
the present public securities of the country. We have,
however, a partial means of forming a judgment on the
subject, from the fact that there are many foreign securi-
ties current in this country, and which are transferable
from hand to hand without cost. I by no means compare
those foreign securities with those which we now propose to
deal. I hope that without undue pride, Englishmen may
so far lift up their heads as to flatter themselves that the
instruments by which they secure their claims upon any
public security in this country do, at any rate, hold a very
high rank-perhaps it would not be too much to say the
highest rank-among documents of a similar character in
the other countries of Europe, It does happen, howd
ever, that there are sometimes foreign securities current
in this country, bearing the same rates of interest
and similar in almost every respect, but differing in
this one respect viz., that in the one case they
require a a formal legal 'process in order to their
transfer, while in the other the transfer is effected by
merely passing from hand to hand. I believe that I am
correct--and shall be borne out by the opinion of many of
the best informed men-in saying that this power of easy
and rapid transfer from hand to hand adds as much as
several pounds per cent. to the value of the securities which
enjoy that advantage. (Hear, hear.) We propose, then,
that these bonds shall possess is advantage, that they will
also be of a permanent character, so far as fixing a long
term during which no change can take place with respect
to them. I must take this opportunity of pointing out
what an important effect, not so much in the present case
as in the others, this element of guarantee exercisesthe
price of public securities. My right hon. friend the on o
'
mem-
ber for the University of Cambridge, when
provided
that
October,
T hree nB5l t
d- -Qo u 3
a r
per ter
epercent.,
o Cents.t.
likewise
sh o
provided
u ld
b e rervded
t twenty
etc
nhe
tadyt,
after
they should have a further certain currency
term
they
of
years at the rate of 3 per cent., withint which
should not be subjectan stoefr tourt hhterere cistidouecloon-
n. J Whattis is the
perfectly
possible to give an answer
the value,
o
vtalufea,
guarantee
tpereebseynrt
scriliracmumensttannoctesto
o f
reduce mt
money
n ele rate
and
partifcrulomar
tsheecrpiriretsyenbteltoimwe3r pelrtcewnitll.
withinof
o rltleewsctetneudt 371):3tonhnaeta yteris, after all, is only a guarantee not
to reduce below 3 per cent. ; but the committee has the
means of testing exactly the precise value of that guarantee.
The present price of the right hon. gentleman's (Mr. Goul-
burn) Three-and-a-Quarter per Cents.-which will become
Three per Cents. after October, 1854,
tober,
ye
arsls,lma ist wapipllenarsot
fbveemliathhlee
to further reduction for twenty
official records of yesterday's sales, is 1031.55. the dividend
having just been paid, so that that does not enter into the
calculation. This particular stock has, however, three
Idividendse
eyievte oonree c ediivvei
daetntdh thenext
October,rt a
e of
next
3e
second pern cent.
April, and the third in October, 1851. As the excess of
dividend which will be received upon each of these occa-
sions is just 2s. 6d. for each, I must deduct that sum in
order to compare the case of this guaranteed with the un-
guaranteed stock. Deducting, therefore, the 7s. 6d. due to
the augmented dividend, it will leave as the price of the
guaranteed Three per Cent. Stock, 1021. 17s. 6d. That is
tdhaey.eexfact price, according to the official sale list of yester-
your Three per Cent.' Stock, guaranteed against any
further reduction for 21 years. This being so, let us now
see what is the price of the Three per Cents not fortified
by any such guarantee-that is to say, Consols. From the
same official record, I find that the
selling price of Consols
. was 100/. 12s. 6d., but as the dividend upon this stock is
payable in July, one half of the dividend, that is, 155.,
nuci b. dedtteted from the apparent price in order to rower-