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

present state of public credit is not unsatisfactory. About
a fortnight ago something, which I will not designate a
panic, or even alarm, but only apprehension prevailed. No
people in the world have more self-command and know-
ledge of their own affairs than the people of this country.
In times of trouble and disturbance the imagination is ac-
tive, and men sometimes take an erroneous view of their
position, but in this country the public mind soon recovers
from any temporary aberration of this kind. Let us look
at the matter as it stands. Perhaps the best way of esti-
mating the present condition of pudic credit is to compare
the price of public securities here with the price of cerre-
sponding securities in the most favourable foreign country
and secondly with their price in this country :.t a former
period. I will there ore compare the state of our puidlo
credit now with what it was twelve months ago, and with
the state of the public credit of France. On the Ist of
April, 1853, the price of the French Three per Cents. was'
79f. 25c. ; on the Ist ,of April, 1851, they were 62f. 60e. ;
so that there was a fall of 16f. 65c., or uearly 2 i per c nt.
I will now take English Consols. On the Ist of April,
1813, they were at 1)4 ; on the Ist of April, 1854, they
were at 864. Thus th-re was a fall of 13g, or a decline of
about 14 per cent. in the value of those great securities in
England, compared with 21 ncr cent. decline in similar se-
curities in France. (Hear, fiear.) Now, compare the pre-
sent price of Console with what it was 20 years ago —and
I trust the house will remember that we are in the midst
of an European war, and that we are called upon to pro-
vide extra armaments for the purposes of the war. Ido
not propose to go back to years of war in producing my
standard of comparison ; but I assert, that compared with
years of peace, the present state of the public funds is not
altogether devoid of material for satisfaction and congra-
tulation. There are six. within the last 20 years of peace,
in which the price of Consols has gone lower than it now
is in the midst of war. Those years are-1847, when the
price was, 798 ; 1848,swhen it was 80k. Four other years
preceded—years of peace—when Consols still went down.
In 1841 they were 874 • in 1840 they were 87 ; in 1836—a
year of great prosperity—they declined to 86i ; and in
1834, a year of uniform prosperity, they were only at 87g.
It appears, therefore, that yen have not always been able
to keep up the price of Consols. What is this state of our
public securities now—in the midst of disturbance and
menace—compared with France, or with a few years ago
in this country? On the Ist of April, 1853, Exchequer-
bills in England—l am going to institute a comparison be-
tween Exchequer-bills and similar documents in France,
Bons de Tresor —stood at 14 per cent. ; on the Ist of April,
1854, they stood at 3 per cent., being an increase of up-
wards of 1 0 per cent. in the rate of interest. On the Ist
of April, 1853, corresponding documents in France bore a
rate of interest varying according to the terms—according
to echanges—from 14 and 2 to 3 por cent., the mean rate
being 24 per cent. On the Ist of ,April, 1854, our bills
stood at 44, s,•and 54 per cent, the mean rate being 5 per
cent. While we, therefore, have an increase of from 14 to
3 upon 1001., the French increase is from 24 to 5, or very
nearly 122 per cent. I have, therefore, shown that the
rate of interest is lower in this country than in France,
and that the rate of interest in several subsequent years is
lower than it is in France. This is the whole statement
with which I think it necessary to preface the motion
which I have to make. I have confined myself strictly to
matters of fact, although I might have had much more
to say—altogether warranted by the importance of the
subject—upon this very subject. No doubt, many oc-
casions may arise on which this portion of the manage-
ment of the debt may be discussed. I trust I have
shown that, taking all circumstances into consideration,
it is needless to view with any alarm or appre-
hension what has occurred within the last few weeks.
With respect to the unfunded debt, it is moderate, and
likely so to continue, which is gratifying under the diffi-
cult and menacing circumstances in which this country
and the whole of Europe are placed. Having said thus
much, sir, I will only move that the balance-sheet be laid
upon the table.
Mr. DISRAELI—WhiIed agree with the right lion.
gentleman that the occasion for laying the balance-sheet
upon the table is not a convenient opportunity for discus-
sion, still it must be admitted that the Chancellor of the
Exchequer has opportunities to collect and compare his
facts and statements which I have not. I accept the pro-
mise of the right hon. gentleman, that he would make no
observations beyond those naturally and necessarily educed
from his motion upon the piper. The returns which I
have moved for have no refereace to the present matter in
dispute. I confine myself, therefore,. to matters of fact ;
and I beg to remind the house, in vindication of orevious
statements of my owo, of one or two circumstances which
should not be forgotton—l mean, first, as to the probable
amount of
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the
aianloyuenatrof deficiency bills. I stated that, so far as I could
form an estimate, it appeared to me that the balance in
the Exchequer, upon 'the sth of April, would not exceed
3,000,00J1. The right hon. gentleman upon that occasion
said, that he hail the misfortune to differ from me I bag
to remind the house that my estimate was not 'prepaied
with the data which the right hon. gentleman has at his
command; still, the present balance, which is not more, I
believe, than 2,800,000/., affords a proJf that my estimate
is more accurate than his. It appeared to me, also, that
the right hon. gentleman would require 6,01),0 !0/, of de-
ficiency bills. The right hon. gentleman said that the de-
ficiency bills would nut exceed 4,0,0,0001. or 4,500,0001.
I said 6,000,0001. It now appears that they amount to
5,412,040/. I think, therefore, that I was much more
accurate in my estimate of the amount of deficiency bills
than the right hon. gentleman. I did not collect from the
right hon. gentle.iian, but I gathered from what he said
two or three weeks ago, that the state of the consolidated
fund was—

The CHANCELLOR of the EXCHEQUER.—It doesn't
in any manner affect my statement. What are called the
Consolidated Fund Bills are bills lent by the Bank, but
not held by the Bank ; but held by the public, or, through
the public, by the Commfasioners of the National Debt.
They amount to about 750,0001.
Mr. DISRAELI continued—Having adverted to these
two topics, I must make to the house one or two observa-
tions upon the subject of deficiency bills. I confess that to
me the statement of the right hon. gentleman is not satis-
factory. The right hon gentleman acknowledges that the
public requirements exceed the resources at the end of the
tinancial year to the amount of 6,000,0001., but ho says
that he did not require to borrow that amount from the
Bank—the revenue came in, and he managed to get on, but
he could not conceal. from the country that he was at that
time deficilnt to the extent of 6,000,0001. The right hon.
gentleman may put off the evil hour; still the fact remains
that the public Treasury is minus 6,000,0001. The right
hon. gentleman treats very lightly, and I must say that he
veryingeniously glazed over, the very important subject
to which lam about to refer. I shall follow his example,
and adhere to facts, but not enter into any arguments
upon the subjects, although I must observe that the views
which the right hon. gentleman expressed upon the subject
are not the views which are entertained by men of busi-
ness, who, I believe, daily experience the evils of the sys-
tem which he proposes to encourage. See, now, what was
said upon this subject before the Distress Committee in
1848. I shall not cull an answer here and there, but I
shall quote evidence which I believe will be undeniable
I mean the evidence of the hon. member for Kendal. He
was asked :

"By the returns before the committee, it appears %bat in
October, 1841, there was a demand for 4,800,0001. ; in Oc-
tober, 1842, for 4,900,000/. ; in Oct., 1843, for 3,700,0001. ;
in October, 1844, for 2,500,000 ; and iu October, 1845, for
829,000/. Subsequently to that, the Exchequer balances
becoming full, that demand ceased ; but supposing that in
October, 1817, there had been a demand upon the Bank of
England for advances for' the public service to the extent of
three or four millions, what would have been the conse-
quence of such au advance in the then state of the
reserve ?"
His answer was—

" Either the Government must have been refused, or the
directors must have limited the commercial discounts, in
order to meet the demands of the Government, or they must
have sold stock to draw in the notes and advance them again.
upon deficiency bills."
The examination went on.

" It is unnecessary- to pursue the consequences of refusing
the demand of the Government, which would have been the
refusal of the means of paying the dividends, but, passing to
the second alternative, what do you conceive would have
been the consequence of limiting the commercial accommoda-
tion, at that period, to that extent? There would have been
an enormous increase to the pressure. It would have been
almost the ruin of the commercial world to have refused (lis-
counts then. If two millions had been the amount of the
deficiency bills, I do not think the Stoek-market would have
borne the sale of two millions of securities at that time, At
any rate, it would have occasioned almost equal pressure at
the refusal of discounts, and a great depreciation in Govern-
ment securities, That period of pressure was relieved by the
issue of the letter of Lord J. Russell and the Chancellor of
the Exchequer.

" Do you consider that the effect would have been the
same with respect to commercial credit if the letter had been
issued, not for the purpose of relieving commercial pressure,
but in order to obtain an advance for Government purposes
I think it would have been a dangerouu experiment for the
Government to have issued a letter for the purposes of Go-
vernment, they would not have had much sympathy on the
part of the public.
" Then in the event of circumstances happening which,
either by increasing the expenditure of the country, or by
limiting the revenue of the country, would have the effect of
reducing the balances in the Exchequer, is there not, as a
consequence, an impending necessity of borrowing upon defi-
ciency bills to pay the dividends ? Certainly.
" Then, in the event of any circumstance reducing the
banking reserve to the extent to which it was reduced in
October last, do you see any mode of extrication from that
difficulty at such a period ? Not any mode of relief from
that difficulty upon an application made by Government to
the Bank at any period. I conceive. Government might have
been relieved by a loan."

But, says the right hon. gentleman, you had in 1844 and
1845 to meet an amount of deficiency equal to that which
I now call upon you to provide for. But what was the
state of the balances in the Exchequer in 1844 and 1845 ?
They were much more considerable than they are now.
There is an opinion which ought to influence the house
upon the subject of Government borrowing upon deficiency
bills. The right bon. gentleman (lid not advocate the habi-
tual borrowing upon deficiency bills • and we are unable to
gather what the whole-amount of the deficiency bills is likely
to be. Bat the appeal of the hon. member for Kendal is
not the only one. I myself was a member of that com-
mittee, and I remember that we had before us one of the
principal partners in the house of Baring and Co.—l mean
Mr. Bates. What did Mr. Bates say ? Mr. Bates attri-
buted the panic of April, 1847, to the fact of the Bank
being called upon to advance heavily upon deficiency bills.
I want the house to consider this. Are we now in a posi-
tion which forbids -our believing that a panic may ever
occur again ; and is it advisable that we, with the prospect
not merely of an European war, but of a protracted war,
should pursue habitually the much-to-be-deprecated sys-
tem of borrowing upon deficiency bills ? I cannot assent
to the statement of the right hon. gentleman so, far as the
balances in our Exchequer are concerned, or as to the mode
by which he proposes to replenish them—namely, by habi-
tually obtaining loans from the Bank on deficiency bills;
nor can I think it one on which the country can be fairly
congratulated. If the right hon. gentleman pursues that
course he will find himself ultimately in great difficulty.
I would much sooner that he should, during the recess,
devise some means by which he could put an end to that
necessity, and then, when the next financial discussion
takes place—Which I suppose will be of a more coutrover-
gal nature than this—the right hon. gentleman would be
in a position which would inspire the country with much
more confidence than it at.present possesses. (Rear.)
Mr. T, BARING was certainly very much surprised to
find that the right hon. gentleman the Chancellor of the
Exchequer should have thought it necessary to introduce
the paper which he had laid on the table with so long and
elaborate a ststeinent. (Hear.) If he had understood him
aright, the object of the right hon. gentleman in so doing
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