The Sun.
London, England, 1854-04-12 00:00:00

is 2,778,000/. ; and now it is desirable that I should make
a statement to the house a ith reference to the manner in
which that balance is brought up to the amount necessary
to cover the charge upon the quarter just gone, being
the largest during the present year. The amount of
the charge, consisting as it does of the interest in the
permanent debt and the terminable annuities, and of
the amount to be applied to the sinking fund in respect
of surplus revenue, is, of course, very much larger, as will
be sent on the 6th of April than on the previous year. In
the statement which is published regularly the probable
amount of deficiency-bills required to meet the charge of
the last quarter is stated at 5,852,000/. It is not unnatu-
ral that some uneasiness should prevail in the public
mind—deluded and mystified as I must say it is by our
system of public accounts—when anything called by the
name of deficiency appears to reach such a formidable
amount as 5,852,0J01a However, according to ordinary
usage, some deduction must be made from this sum, and
the actual amount of deficiency bills brought to charge in
April, 1854, was 5,472,0001. This, however, makes no
material difference; 5,472,0 01. is a very large sum of
money to have the ugly word "deficiency" attached to,
and I confess I do not wonder that gentlemen who are not
aware what the figures really moan should be astounded at
the idea of demands being made-on the Bank of England
from the public for temporary accommodation to so large
an amount. I wish the house to understand what the
amount of this accommodation really is, and, if hon. mem-
bers will follow me, they will find that the figures which
I have just quoted bear no rational relation to it. In the
first place, it may be observed that even in April, 1853,
when the balances in the Exchequer were extremely low,
and the apparent amount of deficiency bills to be issued
1,407,0001., a large sum of public money was in possession
of this Bank of England. But of this sum of 1,407,0001.,
not more than 300,0001. was chargeable with interest. The
sum brought to charge in April, 1853, then was 300,0001,
while, in April, 1854, the present quarter, it is 5,472,0001,
being an apparent increase of 5,172,0001. The house and
the public will naturally be desirous of knowing what
has occasioned this increased amount of deficiency bills
and accommodation from the Bank. The fact is, how-
ever, that the figures given in the accounts as now drawn
up indicate anything but the real state of the account
of the public with the Balk; they do not tell the truth
to the public, but leave persons to draw false inferences,
and, therefore, I think it material to state the facts to
the house, the more particularly, because I perceive that
even the best-informed persons out of doors are under the
belief that the amount of deficiency bills, stated in the
account published on the 6th of April last, really represents
a similar amount of accommodation given by the Bank of
England to the Government. The way in which these
sums are calculated is this—it is reckoned on the assump-
tion that the whole of the charge which has accrued against
the public, which the public is liable to pay, and which the
public will be called upon to pay in the course of the in-
coming quarter, will be effectively charged at the com-
mencement of the quarter, although it is evident from ex-
perience—and experience is sometimes more certain than
demonstration—that it will not be so charged at the com-
mencement of the quarter, but that a large portion of the
money represented by the figures will remain in the hands
of the bank until the calls of the public have been over-
taken by the growing revenue of the quarter. This is the
way the discrepancy arises. What does the house suppose
is the amount of the discrepancy ? We have heard state-
ments from hon. members—and I do not impute blame to
them on this account—of the great amount of accommoda-
tion which the Government had obtained from the Bank
at the opening of the present quarter. Four, five, or six
millions were spoken of as the amount of this accommoda-
tion. The real amount is very different. Having taken
advice as to my competency to do it, I have deemed it my
duty—not so iuueh with a view to any pecuniary saving,
as for the removal of what I conceive to be, at this moment
a mischievous and dangerous apprehension—to regulate the
issue of these deficiency bills in point of time, with some
reference to the coming demands on the Bank; that is to
say, to apply to this particular part of the public service
the self-same principle which is applied to every other
branch of the public service, the principle—naively, of
charging the account enly in proportion to what are
known to be the coming demands upon it. By the
adoption of that rule, the total amount, of deficiency
bills chargeable against the public is reduced from the
formid. hie figure at which it stands in the papers before
the house, namely, 5,812,0001., to the much more moderate
figure of 2,803,0004 The stun of 2,808,0001. represents the
amount of deficiency bills chargeable against the public
yesterday. lam not able to state what the amount is to-
day, but I believe it is not more, and proboady it is less.
2,808,030/. was the amount of deficiency bills chargeable
yesterday. Let it not be supposed that the deficiency bills
have been reduced to this amount by unduly starving the
public account, and running the risk of exposing those who
have just claims to receive the answer, "No effects." On
the contrary, the balance on the audit roll or dividend ac-
count yesterday, when the business of the Bank termi-
nated, was 670,0001. The actual amount of accotngioda-
tion afforded to the public yesterday was 2, 29,01'0/. lam
not about to enter into details connected with this subject
at the present moment, but I confess my opinion is that
if we were at peace, if we had not a growing expenditure,
if there was not the risk that the expenditure may possibly
grow with greater rapidity, and at the same time with
greater uncertainty than in ordinary times, 2,129,0001. is
not an extravagant sum to receive in accommodation from
the Bank, when we look to the amount of the quarter's
revenue, and the mode in which it accumulates from the
commencement of the quarter to its close. This, in my
opinion, has reference to ordinary circumstances, not to
those of the present moment. At the present time it must
obviously be our desire to take security against chances
which at other times it would not be necessary to take into
consideration. I speak, therefore, of this 2,129,000/. as
an amount to be progressively reduced, as I doubt not it
will be, without the smallest difficulty. What I wish to
impress upon the house is, that the sum in question re-
presents the actual amount of accommodation afforded to
the public bo the Bank, and that the sum of 5,812,0001.,
which appears in' the quarterly account, really has
reference to no actual transaction. [Mr. DISRAELI.—
You have not stated the amount of requirements.]
I thought I had done so. My object has bean to
show that the nominal amount of deficiency bills
which appears. in the quarterly statement represents the
difference between the amount of requirements and the
balance actually in the Exchequer on the sth of April, and
that the amount of accommodation from the Bank, which
really is an accruing and approaching charge, is given in
the same statement as if it were an actual charge. I will now
refer to another poipt which has not been noticed in this
house, but which has been the subject of a considerable
observation out of doors. It has been supposed that large
and unusual demands have been made by the Government
on the Bank of a character calculated to reduce the amount
of capital in the market available for commercial purposes.
If we were going from year to year with the expenditure
exceeding the income, which it was necessary to make up
by deficiency bills, or even if it should be found necessary
to issue deficiency bills in consequence 'of this house Rot
having provided adequate funds to meet the public expen-
diture, I can understand that, pro tanto, the effect would
be to withdraw from commerce some portion of those re-
sources on which commercial men rely for carrying on
their transactions; but there never was anything so ludi-
crously erroneous as the statement that, in the present
case, the demands of the Government have withdrawn
from the general purposes of the London money-market
either the large sum set down in the quarterly statement
under the head of deficiency-bills, or the smaller sum
which I have mentioned as the correct one, or, indeed,
any sum-at all. Exactly the contrary is the case. The
truth is, that every farthing of the large disbursements
which the Government pays out goes into the money-
market, and is available for the purposes of commerce.
The supposed amoant of loanable capital withdrawn on
the sth of April was 2,129,000/., but on the 7th the Go-
vernment paid out into the money-market 2,003,000/.
What became of that sum ? It was not like 2,000,0001-
consumed in an excess of expenditure over income. It
was paid to the holders of stock. They did not tie
the money up in napkins and put it away. (Hear.)
No ; they either employed it in commercial transactions
or purchased other stock with it, and in either case the
money was just as available for the purposes as if it had
remained in the balances of the Bank. This was the case as
respects the present quarter, but look at the last. In
January 6,018,0001. was in like manner paid out of the
Government funds of the Bank into the money-market arid
added to the loanable capital of the country. That whole
amount added to loanable capital by these payments from
the balances and by deficiency-bills has been, in round
numbers, 8,000,0001., while the whole amount withdrawn
from the market by accommodation from the Bank
amounted up to yesterday to the sum of 2,129,00)1. These
are matters of fact which admit of no argument, and I
think they show that the Government have not, in the pro-
cess of liquidating stock, withdrawn from the money-
market any portion of the funds which, under ordinary
circumstances, are applied to purposes of commerce. I
must shortly refer to another point, because it is one
which is supposed to-involve a breach of faith. An idea is
entertained by some persons that in 1844 a compact, not
written but understood, was entered into between the
Government and the Bank—l do not mean to say that this
notion is countenanced by any persons connected with the
Bank—according to which demands for deficiency-bills
were not to be made upon the Bank, under the charter
then granted. Of this compact no trace can be found, bat
a written compact exists, drawn up in very express terms.
The terms of the contract were fully discussed at the time
-between Mr. Goulburn and the then Governor and Deputy
Governor of the Bank, and the agreement arrived at was
this—that when the public balances should be below what
at that time was their usual amount the Bank should have
a claim for interest against the Government, and, on
the other hand, that when they should be above the
usual amount the Government should have a claim
against the Bank for a share of the profits arising
from the deposits. Oa a future occasion I may
feel it my duty to enter more fully into this subject,
which has some important considerations connected
with it ; I now refer to this compact only for
the purpose of showing that.the assumption on which Mr.
Goulburn and the Governor and Deputy-Governor of the
Bank proceeded was, that the public balances, and, conse-
quently, the amount of deficiency bills—for they are cor-
relative—were to remain in future as they stood at that
time. The question then arises, what was the state of the
public balances and the extent of demand for deficiency
bills at that time? If I were to refer, as I might, 'to the
amount of deficiency bills and public balances in the year
before the compact was entered into, I should almost ap-
pear to prove too much. What I purpose doing is this—
to take the two quarters immediately preceding the ar-
rangement entered into between the Government and the
Bank as a measure of the usual state of the public balances
and demand for deficiency bills, because these two quarters
make the best case for the Bank, as showing the largest
amount of balances. In the quarter ending the 6th of
January, 1844, the amount of balances was 6,462;000/. ;
and on the sth of-April, 1844, it was 3,967,0001.. Let us
compare this with the account for 1854, which is supposed
to present such remarkable features. On the sth of Janu-
ary, 1854, the balances were 3,711,000/. ; and on the sth
of April, 1854, they were 5,472,0001. The average of the
two quarters of 1841 was 4,714,0301., and the average of
1854 was 4,591,0001. Thus it appears that the average of
1854 is less by 123,0001, than the average of 1814, when
the Government entered into the compact with the Bank.
I now turn to the question of Exchequer bills. The
amount of those securities was, in 1853, 17,742,0001.,
and the minimum point attained during the year was
12,897,000/. The present amount of Exchequer bills
is about 16,600,0001., while the amount which Parlia-
ment has authorised to ba issued is 17,774,0001., and
therefore the actual issue is 1,174,0001. short of that
authorised. It is probable that some portion of the re-
maining amount may le issued from time to time, as
the exigencies of the service may require, but I have no
reason 'at present to expect that it will be necessary for
me to apply to Parliament for a further grant of Ex-
chequer bills during this session. A few words more on
a matter immediately relating to the unfunded debt. I.
beg to assure the house that in what I have said or may
say I am influenced by no-merely personal considerations;
all I am!anxious fdr is the mainteaance of those sound prin-
ciples on which the security of our financial system dope, ds,
and by an adherencuto which alone we can hope to meet
all demands 'which may be made on the &chequer. The