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

THE SUN, LONDON, SATURDAY EVENING, APRIL 23, 18!)3

hence the Government would
.probably obtain better
terms), because he was of opinion that a great national
benefit would be effected, and the amount of the national
debt pro tanto would be reduced. (Hear, hear.) With re-
gard to the Exchequer bonds he felt, in common with the
right honourable gentleman, the great benefit they would
confer on the commercial community ; but he would sug-
gest for the right honourable gentleman's consideration
whether by issuing so large an amount he would not drive
the whole of his Exchequer bills out of the market. He
objected to the bill in so far as, if passed into law, it would
enable the stockholders to exchange their stock against
alternative No. 2, and he called upon the Government to
do justice to the public by refusing to complete such a dis-
advantageous and extravagant bargain, and by trying first
what might be done to induce the holders of stock to ac-
cept the transferable bonds. By that means they would
avoid the necessity of increasing the capital of the national
debt, would have time to acquire a larger amount of expe-
rience than they at present possessed, and would lay the
foundation of a Two-and-a-Half per Cent. Stock, an object
which they deemed of such great national importance.
He concluded by moving that the clause embodying alter-
native No. 2 be expunged from the bill.
Mr. SPOONER objected to tying up the hands of the
Chanceller of the Exchequer for forty years by entering
into a guarantee for that period. At the present moment
the holder of 1001., stock received 31. of interest, but it
was proposed to offer him 821. 10s. at the end of forty
years, and for this guarantee the nation would not save
more than 2s. 3d. percent. The operation might be per-
formed in a short time, with more benefit to the country,
and be would therefore propose that the guarantee should
be limited to the term of twenty years.
The CHAIWELLOR of the EXCHEQUER said, if be
could believe with his honourable friend that the proposed
guarantee was too favourable to the public creditor, he
would at once accede to his motion ; but this was a ques-
tion of calm, careful, deliberate opinion, and after endea-
vouring to form the best judgment he could upon it, he
was convinced that the guarantee proposed in the bill was
that which the house should adopt. The honourable and
learned gentleman opposite appeared to think that no
harm would be done by omitting one of the alternatives
offered to the holders of stock. He (the Chancellor of the
Exchequer) was of an entirely contrary opinion. (Hear,
hear.) His view was, that the dignity of Parliament
would be lowered by such a proceeding, and that the
wisdom of Parliament anct of the Government would be
exhibited in a ludicrnis light, if they came out with offers
altogether unequal to the just expectations of the stock-
holders. (Hear, hear.) An honourable gentleman near
him had given notice of a motion to limit the amount of
stock convertible into the proposed Three-and-a-Half per
Cents. He could understand the meaning and object of
that motion, because if their knowledge was limited it was
right they should limit the range of their experiment.
All along he hid found great difficulty when dealing with
this subject, in consequence of the ignorance which pre-
vailed. The opinions of hon. gentlemen in that house
were all well enough ; but those opinions would not help
him when he went to the stock market and endeavoured
to transact business there. (Hear.) It was, no doubt,
very satisfactory to know the opinion of any honourable
member of that house with reference.to a subject of such
vast importance as the present ; but that opinion was as
light as a feather in the stock market, and would not, he
was afraid, assist him much in his financial operations.
hA laugh.) But it was important to beer in mind what
is proposal really was. They were now about to pay to
the holders of 500,000,0001. of Three per Cent. Stock, either
perpetual annuities of 31. per cent. per annum, or 1001. in
hard cash, and that 100 d. not taken piecemeal, but at once,
after the expiry of twelve months' notice. They were
under such conditions at present that; unless they could
amend them, it was perfectly hopeless and impossible to
attempt an operation upon the capital of the debt. There
was no man in his senses who would say, either in the pre-
sent, or in a more faVourable, or, indeed, in any conceiva-
ble state, that at the end of twelve month's notice they
would be prepared to pay up the whole of 500,000,0001. of
debt. It was therefore he came to the house and said,
" Let us feel our way gradually—let us proceed upon the
principal of varying the terms and conditions on which the
public debt is held—let us endeavour to improve them
likewise, both as to the rate of interest immediately avail-
able and the plan of subsequent redemption." By adopt-
ing that course, they would not subject themselves to the
necessity of paying an enormous sum upon,twelve months'
fairnot to the
bu wouldhtolders of
secure the
he
would
ds wrehlilecvhe, wthheileppuebrlfie:tilny
'part from a heavy annual burden. That was a great ob-
ject of policy. The terms they offered must be liberal,
and he believed it would be far better to offer too much
than too little. (Hear, hear.) If they offered too much,
their experiment was but limited, and when they came to
takerepeat
advantage
or extendof
i t
thethey experience
contthey raethatdheaci
iretueirmreds., and
On
the other hand, if they went into the market and offered
too little, he had no hesitation in saying that there would
be a reaction highly unfavourable to the scheme. (Hear,
could
hear.) What was the purpose of the alternative before the
house ? It was this—that they should say to the holder of
1001. of stock, "If you will submit to an annual loss of
2s. 3d. upon your• dividend, and likewise to the acceptance
of 821. 10s. of capital stock in Three-and-a-Half per Cents.,
instead of your 1001., we will give you a guarantee for a
period of forty, years." What did the public gain ? It
gained an immediate remission of about Bth per cent. upon
the interest, and the chance of the redemption of the capi-
tal after forty years, at a reduction of 17/. 10s. per cent.
He was far from saying that the public gained a certainty
of redemption at the end of forty years for 821. 10s. He
thought, judging from 'experience, that in no long time
after the period mentioned an opportunity for redemption
would occur, but he would not say it would occur exactly
at the end of forty years. At all events, however, the
public gained ith per cent. upon the interest. and after
40 years the power of redemption, whenever the financial
state of the country would enable them to exercise it.
(Hear, hear.) He thought that these were very consider-
able advantages indeed, and for his own part he would not
consider it an improvident transaction if the House of
Commons were disposed to act upon the whole public debt
upon such terms at the present moment, and undoubtedly
he should regard the Minister as fortunate who should be
the instrument of effecting such an operation. (Hear.) At
the same time he did not object to limit the operation for
the present, because it would still be in his power to come
back to Parliament and ask leave to extend it. He hoped
he had now laid the question clearly before the committee,
and he confidently submitted that no case had been made
out for diminishing the guarantee proposed in the bill. If
the stock so guaranteed should be taken up by a portion of
the present holders of stock, that would not be considered
as pledging the house to offer the same guarantee to the
rest of the stockholders. The house in that case would as
a matter of course improve the terms offered—improve
them, he meant, as regarded the interests of the public—
but in the meantime, in order that the scheme might bo
favourably received and established, it was necessary that
a good guarantee should be given. (Hear.)
Mr. SPOONER wished to know if the present discus-
sion was limited to the South Sea and other minor stocks,
or if it applied to the whole of the Three per Cent. Stock ?
The CHANCELOR of the EXCHEQUER replied that
the clause before the house had reference solely to the
minor stocks.
Mr. SPOONER said that in these circumstances he
would withdraw his motion, for, while he strongly ob-
jected to tying up the hands of the finance minister for so
long a period as forty years, still he did not think the
minor stocks of sufficient importance to justify his inter-
vention at that stage of the discussion.
Sir F. KELLY agreed with the last speaker that-it was
unnecessary to offer any objection to that part of the bill
which related to the South Sea and minor stocks ; but he
thought it right to state, for the information of the Chan-
cellor of the Exchequer, that he should raise the very same
question when they came to consider the guarantee for 40
years to 30,000,0001. of stock. He coincided in the opinion
expressed by the right hon. gentleman opposite, that it
would be better to offer too much than too little, still he
thought the terms proposed were too liberal, and when the
proper time arrived he would submit a motion to the house
upon the subject.
The CHANCELLOR of the EXCHEQUER said they
were now dealing with the clause which related exclusively
to the South Sea and other minor stocks ; but it appeared
from the statement of the hon. and learned gentleman op-
posite, that while he would not object to the 40 years'
guarantee in regard to those stocks, he intenied to raise
the question when the committee came to consider the
more important portions of the scheme. He only desired
to point out to the hon. and learned gentleman that it
would be better to discuss the point in connexion with the
question he had himself raised with respect to the Two-
and-a-Half per Cent. Stock. The course hitherto pursued
had been in strict accordance with established and consti-
tutional usage. Although the resolutions of the house had
no effect in point of law, yet, with regard to the commu-
tation and redemption of stock, the course of proceeding
had always been that the resolutions of the house -a, ere
acted upon by the parties whose duty it would be, under
the act of Parliament, to give the requisite notice of the
redemption. Accordingly, acting strictly upon that prin-
ciple, Mr. Speaker had communicated to the holders of
stock the resolutions at which the house had arrived. Now
the resolutions ran in these terms—that the holders of
minor stock should give
.notice within a given period of
their intention to claim such and such stock in lieu of
what they now hold. Their right therefore to give such
notice had certainly been in existence for a considerable
number of days, and although he was not in a condition to
say whether any such persons had given such notice, or
whether they had even formed an intention to do so, yet
he felt himself some doubts and scruples about any inter-
ference at all with the terms upon which the house had
declared its intention to deal with those minor stocks.
Mr. F. KELLY declared himself much astonished at
what had just fallen from the right hon. gentleman. He
never understood that in adopting the resolutions brought
forward by the right hon. gentleman—a step which the
right hon. gentleman himself represented as necessary to
enable him to introduce a bill—the house pledged itself to
support the whole of the alternatives offered to stock-
holders. None of the alternatives, he contended, had yet
received the direct sanction of the house, nor had the
house agreed to the issue of any such notice as that which
the right hon. gentleman stated had been sent to the holders
ef minor stock.
Mr. HUME took precisely the same view as the hon.
notice binding the house to the and learned gentleman, and he considered it a dangerous
precedent that any
alter-
natives embodied in the bill should have been given to the
holders of stock. With respect to the general question, he
proposed might be safely tried,
he thought, as an experiment. He had no objection to
debt, though the plan now
a
strongly objected to increasing the capital of the national
reasonable amount of security being given,
of the there was much truth in the remark
Chan-
cellor of the Exchequer that, in order to secure the
to offer superior
esta-
blishment of the stock, it was necessary

terms.
The CHANCELLOR of the EXCHEQUER said that
both the hon. and learned gentleman and the hon. member
for Montrose had entirely misapprehended him. He never
intended to convey th 3 idea that the house had pledged
itself to pass the three alternatives embraecd in the bill.
What he did say :was that legal notice had been given by
an officer of that house to the holders of the minor stocks,
that certain resolutions had been adopted by the commit-
tee and reported to the house, so that the parties in ques-
tion might have time to form their judgments on the sub-
ject. That did not bind the house to anything.
Mr. SPOONER withdrew his amendment.
The CHANCELLOR of the EXCHEQUER—I regret to
find, after the very kind manner in which the honourable
and learned gentleman •has referred to me, and after the
favourable terms in which he has spoken of the bill, that his
objections to the scheme are of such a broad and sweeping
character. I was at a loss for some time to understand to
what part of the plan his objections applied. At ono time
it appeared as if his objections were limited to the question
of the Two-and-a-Half per Cent. Stock ; while at others he
described the whole scheino as being impracticable, incon-
venient, and unjust. I am bound to say that I think the
objections of the hon. and learned gentleman do really go
to the root of the bill. • I think his remarks have been dic-
tated by certain commercial and politico-economical :views,

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 fall, 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 Cent.
Stock sold in the London market at 106/. and 1071. Well,
that is a most vital fact, and if circumstances had not
ch
forty
ah ne adantgvhye deeer
very
fwra
csui
unwise
with
ohri reasseh,t
oolt
nuhteleh; ivnankßl
outoettdh
of
firebrmoi 1 I b
nu
son
aneeetfyfoaronsrmt h
stood
e oeptdrhoeaactvhe
proceeding
duu
ices
nhhe wouldga anwgr
rate
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. 15s. which we are about to
guarantee ; and he has likewise referred 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
500,000,0001. 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 1101. he pronouncod the pre-
sent value to be 01/. 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 10 them by the light of experience. The
learned gentleman is not satisfied to treat this question as
most people of experience in 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 21. 108. 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—
Eou may immortalise yourself by issuing 500,000,000 of
xchequer 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 whold.of the Three per Cents. into them ?"
Sir F. KELLY explained that ho had only recommended
trying them as far as they could.
The CHANCELLOR of the EXCHEQUER The
learned gentleman never intimated that
slightest difference between the practicability
20,000,0001. of them and the practicability of issuing
e
500,000,0001. Now, there is a differense, and though they
pricem a y bueputsoe useful
that point,
to a
w certain
h avor fwas issuingit
and
that price by experience. I have, for that reason, only
for to take unlimited power would be to. discredit them in
we intended to
the first instance, and would look as if
have-to point, ascertainand otbhtaati obtain
point n given
ve
asked your authority to issue them to a limited amount,
flood the market. When, however, you have ascertainedct
the wants of the commercial community, you can conduct
your future operations accordingly. But the learned gen-
tleman
saysth e
raenicel
goes further, and says it is perfectn folly and ab-
surdityof.
e
to suppose there is any differencee th
t 1 stock,"alue
s of these two things—
no appreciable difference ; the price
Exchequer-bonds
annu t y
Exchequer-bonds and 50s. on registered
5Qs. secured on
stock—woull be identical. There again I think he forms
his conclusions with a degree of positiveness which would
have surprised me if he had dedicated his life to these
reg
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 morxent 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-ansi-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-Half 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 Half per Cent. Stock by means of Exchequer-
bonds ; if we could have done so I never would have

troubled yenwith 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 I would not 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 per 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
attainment of a great object of public policy. Our proposal
will not 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 us 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 of 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 determina-
tion, and I should be most unwilling to make any proposal
which would stand in the way of such a resolution. lay

honourable and learned friend has said there is a great con-
stitutional principle involved in our not increasing the
capital of the debt ; that it is a great constitutional prin-
ciple not to increase the capital of the debt by borrow-
ing at a rate t f interest lower than the cum nt
rate of interest. Where did the honourable and learned
gentleman find this great constitutional principle? I
must confess myself astonished at the facility with which
honourable gentlemen on convenient occasions (it did not
require the ingenuity of the honourable gentleman to do it)
manufacture particular opinions, and declare their main-
tenance involved great constitutional principles. (Hear,
hear, hear.) I think the question of increasing the
capital of the national debt is one which involves the
exercise of prudence and discretion, but to say it involves
a great constitutional principle is, in my opinion, putting
it on very novel and much too high grounds. What have
you been doing for the last 20 years, and what has the hon.
and learned gentleman been doing ? for during a portion of
that time he has sat in the house, has heard questions in-
volving this great constitutional principle decided, and large
financial operations performed, without once raising his
voice against them, though they caused an increase in
the capital of the debt. Here is a list of operations
since the peace, in every one of which there was a
systematic and habitual increase of the capital of the
debt. In April, 1826, they funded 8,000,0001. of Ex-
chequer bills, four per cent., at 1001., adding 500,0001.
to the capital of the debt. In 1829 they funded
3,000,0001. of Exchequer bills, at 1011. 10s., adding
45,0001. to the capital of the debt. In August, 1839, they
funded 4,990,000/. Exchequer bills, at 109/. andia fraction,
and added 490,0001. to the capital of the debt. In 1841,
they funded 5,000,0001. Exchequer hills, adding 605,0001.
to the capital of the debt. In 1822-23 they converted no
less than 150,000,0001. of Five per Cent. Stock, adding a
capital to the debt of 7,500,090/. So late as 1847, in the
presence of nearly every man now in the house, 8,000,0001.
of money were borrowed, and 720 0001. was added to the
capital of the debt. In 1818, 2,000,0001. of stock was
created, adding 140,0001. more to the debt. So that, on
the whole there has been within the last five years no less
than 10,500,0001. added to the capital of the debt, and this
addition, too, be it remembered, was not to secure a great
object of policy, but simply with a view to the reduction
of annual charges. For my own part, no alternative has been
shown to me which would gain the object of establishing a
Two-and-a-Half per Cent. Stock except the creation of a
Two-and-a-Half per Cent. Stock at a premium. Suppose,
instead of my coming down to the house with the scheme
I have developed, I had asked the house to authorise me
to go into the market and offer Two-and-a-Half per Cent.
Stock for what it would, fetch, it would in that case have
been quite open to the house to object to a plan which
would have had the effect of increasing the capital of the
debt.
Sir F. KELLY said—Not if there was a guarantee.
The CHANCELLOR of the EXCHEQUER—If I had
asked the house to authorise me to go into the market and
sell 1001. Two-and-a-Half per Cent. Stock for what it would
bring, my opinion was that such a step would increase the
capital of the debt a great deal more than would this pro-
position, for I should not be able to get 1001. for it, and
must have sold it for its market value. The value in the
market would not come so near 1001. as 1001. was near to
1101., so that that would increase it, not merely by ten
cent., but by considerably more. In point of fact, we
must take it either in meal or in malt. If you think it an
object of policy to establish a Two-and-a-half per Cent.
Stock you must be prepared to pay the price for it—an
equivalent price. There is no way to create a Two-and-a-
Half per Cent. Stock but that which I propose, namely,
stating plainly, " We give you an amount of stock over
and above 1001.—we give you a premium on the stock
over and above 1001." Either we must do that, or else
take the Two-and-a-Half per Cent. Stock into the market
and sell it for what it will bring—a plan which as I have
already said, would, increase the nominal capital of the
debt more than he proposed. This is the plan, and
that the alternative. Proceeding on the assumption—an
assumption borne out by those who are conversant in these
matters—that Two-and-a-Half per Cent. Stock brought
into the market would not sell for ten-eleventh parts of
1001., it is quite clear that if it sold for any less, it would
add, in so far, to the capital of the debt. I know but one
way in which both these objects can be obtained, first,
the creation of a Two-and a-Half per Cent. Stock ; and,
secondly, the prevention of any increase in the capital of
the debt. I might say that, inasmuch as South Sea and
other minor stocks might be converted into Two-and-a-
Half per Cent. Stocks, if it were only the question of
amount, I had no objection to reduce the whole sum of
Two-and-a-Half per Cents. to 20,000,0001., instead of
30,000,0001. The main question, as I have stated, is
whether the committee will, on any consideration, agree
to the augmentation of this nominal capital of the dbt.
In my opinion there is only one way to deal with it. We
must elect between abandoning altogether the Two-and-a-
Half per Cent. Stock, and the adoption of this mode of
proceeding, to devote to the purpose of the reduction of
the debt the annual saving made by the establishment of a
Two-and-a-Half per Cent. Stock. If the house chooses to
determine that the annual saving shall be so devoted, it
will be in its power entirely to prevent any increase, real
or nominal, to the capital of the debt. Under the pro-
posed plan the Two-and-a-half per Cent. Stock_ will be
dealt with in the market according to the dividend paid
upon it, the holder of the stock will have nothing to do with
its redemption, it will stand there as Two-and-a-Half per
Cent. Stock. You will provide that in respect of every 31.
now payable by the Bank to the holders of Consols, that
sum shall be commuted to 21. 15s. ; the other ss. will be
payable to the Commissioners for the Reduction of the
National Debt, and. these ss. will be applied to the pur-
chase and cancelling of stock, thus completely, but gradu-
ally extinguishing the nominal capital you now propose to
add. Another plan has been proposed, namely, that
instead of offering Two-and-a-Half per Cent. Stock at once,
we shall offer stock which for ten years shall be three per
cent. ; for ten years more two-and-three-quarters, and for
ten years more two-and-a-half ; but this operation extended
over a period of thirty years will not attain the object I
have in view in the establishment of a Two-and-a-half per
Cent. Stock. If I adopt that plan I must surrender my
policy. Now, if the house create a Two-and-a-Half
per Cent. Stock, at the rate of 1101. for every 1001.
Consols, to an extent of 30,000,000/., and 5,000,0001.
more of minor stocks are converted, that will give
us a total of 35,000,0001. of Three per Cent Stock
commuted to two-and-a-half. The addition to the capital
of the debt as it stands on paper would be 3,500,000/. ;
the saving in the annual charge would be 87,5001. ; the
annual application of 87,5001. to the purchase of
Consols throughout the whole period of forty-ono years,
supposing you take one year with another, good and bad
times, as they came, and Three per Cents. always at par,
would cancel each year 87,5001. of Consols. The interest of
the Consols so cancelled would be 2,6251. In the first year
then you would save on the new stock created 87,5001;
you would buy Consols with it, and the cancelling of the
Consols would effect a saving of 2,6251. The same amount
would be saved the next year and the next, the succession
rising gradually by 41 equal steps to the full annual saving
of 87,5001., which it will be seen amounts to 3,587,0001.,
the sum wanted. In other words, stock to the amount of
3,587,5001. would be cancelled. By this plan, though the
saving at first will be iusignificaut, yet it would grow
rapidly with the amount of stock cancelled, until it reached
the full amount ; and at the end of the term there will not
be a farthing of nominal capital added to the debt. In
this way you will get the Two-and-a-Half per Cent. Stock
out in the market, and by making a comparatively -slight
and judicious sacrifice at present will prevent the least in-
crease of the capital of the debt, real or nominal. If a
plan more free from objection can be suggested which will
attain the object we have in view, I shall be happy to
adopt it,
it, but no such plan has been suggested so far—no
plan whch, together with the end I propose to achieve,
will accomplish the establishment of a Two-and-a-Half per
Cent. Stock. Thus, by making a sacrifice of the full bene-
fit of the annual saving, and postponing it for this purpose
you will prevent the slightest increase at the expiration of
the prescribed period to the nominal capital of the debt.
If any plan could be suggested which would carry out the
policy wehavo in view in a manner more entirely free from
exception than this, I should be most happy : but no such
plan has been suggested. All the plans which have been
suggested to me aro liable to one fatal objection or other.
Either they are plans which nobody could act upon, or they
are plans which would not secure the creation of the Two-
and-a-Half per Cent. Stock which I aim at, orplans that would
postpone the creation of that stock. If the committee con-
cur with me in thinking that it is important to create a Two-
and-a- Half per Cent. Stock, I venture respectfully to submit
this mode of proceeding, by which you will ensure the crea-
tion of that stock. You will by that mode ensure its creation
immediately. The operation of the reductions you provide
for will not complicate that stock, but will be entirely
_a
separate matter. Your substantial objects will all be gained
if the enjoyment of the annual saving shall be postponed.
But the policy will be established, and the capital of the
debt will not be increased by one farthing. (Hear, hear.)
That is a plan which I hope will remove the objections of
the hon. and learned gentleman. If there is any further
give, and if I have not succeeded
explanation which I cars
tter I shall be happy to do
the Ina
In explaining fully,shouldact t'n,
My desire is, that the committee the matter
with its eyes open. I can only say that it will be a great
satisfaction
to me—not a reluctant concession wrung from
me—but it will be a great satisfaction to me if the House
of Commons is prepared for the future to lay down the
principle that it will not consent to any augmentation of
the public debt. (Hear, hear.) No one will adopt that
principle with greater eagerness than myself. You will
never find on my part a disposition to flinch from it. And
I now give a test of my sincerity, by tendering a plan
which, although its first effect will be to put on paper, cer-
tainly, a nominal increase of the debt, will entirely remove
that increase at the expiration of the period already men.
tioned. (Cheers.)
Mr. T. BARING did not consider that the circumstances
of the country justified the present scheme of the Chan-
seller of the Exchequer. Unless there was a strong ground
for the increase of the debt, it ought not to be permitted.
The right hon. gentleman had referred to several instances
of an increase taking place in the debt, but the periods
when those operations took place were not analagous to
the present. The country was not now in such distress
that it need be relieved from a portion of its
annual bur-
dens
at the expense of those who were to come after for
;
the hon. gentlemen opposite were in the habitof telling
the house that the country was never in such a state of
' prosperity. (Hear, hear.) The right hon eman said he was ready to apply the saving of interes'tgentl to the purpose
of a sinking fund, but if he did, he would find that as
soon as a moment of distress arrived, the sinking fund
would be put aside, while the increased debt would rest
on the public. (Hear, hear.) But in calculating this
application of the saved interest the right hon. gentle-
man had forgotten that in his budget he had already
reckoned upon 100,000/. a-year from the effect of his ope-
rations on the debt. (Hear, hear.) The right hon. gen-
tleman's scheme seemed to be a combination of different
plans; it was like an ingenious puzzle, and what with
them and with other plans which had been suggested
to the right, hon. gentleman, the committee would hardly
know what they were going to divide upon. With respect
to the third alternative of transferable bonds,'he,had not
the slightest objection to that proposition ; but, if the right
hon. gentleman left the option of a 2:4 per cent. stock, he
certainly would not get so much from the bonds as he anti-
cipated. Tho right hon. gentleman's calculation that 1101.
of ono stock was only worth 911. 135., and that 821. 10s. of
another stock was worth 961. 55., it puzzled him very much
to comprehend. (Hear, hear.) The right hon. gentleman
had calculated that the bonds would bear an extraordinary
value on account of their being transferable without any
formality from hand to hand ; but the hon. member for
Suffolk had shown that a similar security existed in France
and Holland, and bore not more than the same value of
the inscribed stock. He did not believe that a man would
_ _

be able to borrow more easily on tiiese vbOlds. than on the
Three per Cents. ; and as to the difficulty of transferring
stock for temporary loans, everybody knew that that was a
matter of no importance. He regarded the right hon.
gentleman's plan as rather too complicated and too con-
fused; but the great objection to it was, that it necessarily
involved an increase of the national debt, and he should be

sorry to see the British Parliament declare to the world
thrit, in a time of prosperity, it was disposed, under the
pres Sure of no emergency, and for the purpose of obtaining
no very great result, to sanction a principle so objection-
able, and. he had almost said so disastrous, (Hear, hear.)

Mr. W. WILLIAMS said that if the Chancellor of the
Exchequer now succeeded in breaking down a considerable
portion of the 500,000,000/. of 3 per Cents., he would be
• the
enabled at no very distant time to effect a reduction of te°
remainder on something like the wise principle of the re-
duction effected in 1841. He thought, then, it was the
interest of that•house and of the country to support the
right hon. gentleman in his proposition to effect that grea!
and important object. (Hear, hear.) He had expressed
in strong terms his opposition to the principle of increasing_
the national debt, but if by doing that to the extent of
3,000,0001. they could, in the course of no distant tiine,
effect the reduction of the debt, as he had no doubt thel,
might, perhaps by the sum of 400,000,000/., it would be
immense advantage to the public. Taking the proposition
of the right hon. gentleman as a whole, and so ultimately
to reach the remainder of the debt, it was in his opinion
the interest of the house to support it.
Mr. LAING said, the question at issue appeared to hie'
to be of the plainest description—whether it was or not
desirable to create such an amount of 23 per cent. perma-
nent stock as would servo as a barometer to test the state
of public credit. He trusted they would be prepared to
pay the market price for effecting the commutation into
that stock, but it appeared that the mode in which tee
right hon. gentleman the Chancellor of the Exchequer
proposed to effect it was the most economical that could
be adopted. He thought also the ss. over the 21. 158. in-
terest might well be devoted to the purpose of a sinking
fund. The hon. gentleman the member for Huntingdon,
and the hon. and learned member for East Suffolk, seemed
to think that the 23 per cent, stock would be so desirable
that none of the Exchequer bonds would be taken ; but be
be:ieved the probability to be that they would command a
premium. The time was favourable for laying the founda-
tion of a system for the reduction of the national debt, anti
of ultimately getting Ha of a great part of our national
burdens.
Captain LAFFAN said that, however desirable it might
be, even on a small scale, to create the 23 per cent. stock,
and lot it go into the market, yet it appeared to be coil
pletely settled that the advantage was not to counterbal-
ance the greater disadvantage, in fact and in feeling, of
adding to the nominal amount of the debt. But a state;
ment of the Chancellor of the Exchequer had surprise"
him. The right hon. gentleman had stated that on the'
question being submitted to an actuary, as to the actual.
value of the two propositions of 821. 10s. 3i per cot',
stock, redeemable 40 years hence, and of 1101. 24 Per,
cent. stock, redeemable 40 years hence, he had given as the
value of the latter 911. 13s. 4d., and of the former 961.58.`
&l. ; being 41. lls. Bd. in favour of the 34 per cent. stock'.
He was at loss to know how the actuary had arrived et •
that conclusion ; and it must be observed that the opinion
of an actuary, like that of a member of the legal profession,
must depend upon the case submitted to him ; but, on en-
deavouring to trace out the principle that had guided the
actuary to the conclusion he had mentioned, he found thSt
the 911. 13s. 4d. was precisely the amount of Consols at rfl;
that would give a perpetual annuity of 21. 17s. 9d. wi
respect to the Exchequer bonds, the power of selling them •
was left undefined by the bill, but he should like to know
whether they would be authorised to be sold below or
above par.
Mr. J. B. SMITH had no objection to the first proPeati
tion of the 33 per cent. stock, but he thought the Chance:.
for of the Exchequer might have gone further in the;
direction, and that the time had arrived when they, shoul"1
lay the foundation of a system ro • the extinction, if Peet,-
ble, of the national debt. He believed the public were
prepared, if necessary; to make a temporary sacrifice wi
gain that important object. The Chancellor of the Exehe'.
quer had proposed that they should capitalise the cliff.
stock
and between the 21. 15s. on the new 23 per cent. sfo'7,.
and the rate they at present paid. He thought the rig";
hon. gentleman might have gone a little further and create'
an amount of terminable annuities ; but that question Was
so important that he would suggest the propriety of ar
pointing a committee to consider whether some schoro
might not be proposed by which a liberal offer might
made to the public creditor, alike advantageous to
and to the nation. As to the Exchequer-bonds, by the 0,1
they were to be redeemable at the end of 40 years, at t'iS
option of the holder or of the Government. He bon
rather make it imperative on the holder, leaving the option
only with the Government.
Mr. J. A. SMITH was one of those who for many Ye'll
had regretted that more had not been done for the redne:
tion of national debt, and that more attention had n;_"
been paid to the subject of terminable annuities, and he
cordially agreed with the hon. member for Stockport th,a,
the people of this country would very cheerfully submit`:
a temporary sacrifice, in order to have so great a benefit a:e
some period being fixed for a large reduction of te
national debt. As to the measure more immediately under
the consideration of the house, he regretted that the hen'
member for Huntingdon in his very able speech had not
alluded to the point on which the whole matter of the 7°
per cent. stock depended. It was known to the Kin'
member particularly how important it was to begin
creation of a 23 per cent, stock. It was of the utrnos
importance, with a view to the future reduction of the
amount amount of annual charge, that we should begin wit
the creation of a2i per cent. stock. There might, af
no distant period, be a great reduction in the value
money, and means should be provided to enable 14-'
Government of the country to take the advantage of any
such change.
Mr. HUME considered that it was a point of very Veit
importance to break into the capital debt by any 7,31.
means, and he was sure the country would submit to ,
reasonable sacrifice to effect that object. The nearer ar.
proach we made to the conversion of our debt into too'
nable annuities the better.
Mr. WILKINSON did not perceive the enormous ad-
vantage anticipated by so many honourable gentlenly
from the creation of a 23 per cent, stock, and certati
it was not an object justifying any addition to the eaPt
debt.

Mr. J. B. SMITH asked if the Chancellor of the Exfll6;
quer had any objection to lay on the table the calculate e
of the actuary which he had read to the house, with
eir
question on which it was founded ? He could not M 0,
thinking that it must have been founded on some mild tja ho
The CHANCELLOR of the EXCHEQUER 0,, at'
quoted the answer of the actuary in answer to 003-
servations of the honourable gentleman opposite. fr,u.
object was to show that there were elements in the el': l
Wien which were not reducible to figures and ho
that in what was reducible to figures, if the,premises wiehi
so and so then the results would be so and so. But 0°
actuary did not undertake to calculate the risk of retie% tion from one year to another, as that must depend up
af
vestions of war or peace—upon the ease and prosperitYdrere
the country, or the reverse. He had only to say, in ant.,"re-
to the honourable member for Montrose, that he was per"
pared to bring up a clause which would give effect to "
proposition he recommended.
On the question being put from the chair,
tien
Mr. DISRAELI rose and said—Sir, when this quo
00'
came before us first in the shape of a resolution, as it is ,
in the shape of a bill, the general impression was that her;
Majesty's Government were about to deal with the great
body of the public debt. (Hear, hear.) That was tro
general impression. The sum that was to come under tut
immediate and contingent operation of the measure Ivowa
be about 500 millions sterling, and there can be no doubt
that when that impression first went abroad, it was veil,
startling. The subject was one of immense interest---e'
vast importance ; as, of course, the unlimited conversion
of the national debt must be considered, if extensive and
complete, of Aso character and greatness which none -
calculate—if even on a limited scale, it is still of consider"
able importance. The popular idea
on the subject is Lba„.
in some happy moment, the Minister might reduce the ral-
of interest, if not altogether immediately, yet partiall:4
and ultimately to the interest of 21 per cent, ; and r
doubt the effects of that operation would be considerabo'
Lot the committee bear in mind what the effect would be'
Instead of paying, as you do now, the sum of 15 million'
sterling a-year, you would save 21 millions, and you vrnui
only pay 121 millions a-year, and of course the country
would anticipate from that operation the great and bene
&dal effects which would accrue from such a reduetieu.
of the national burdens. Now let us see what will be
the saving gained by this proposition of the Goverili
went. The matter has beenslightly altered since I entereto
the house, but perhaps the committee will allow mew
read the sketch-1 made upon the question as it oriOnf",,,`g stood. The Government proposes to create thirty m 11,11%,
of stock at 21 per cent., increasing the capital stect,„d
110 g., thirty millions more of Exchequer bonds at par, trtj •
440 millions more at 3i per cent reducing the capita
stock to 821. 10s. Upon the 500 m"illions, as matters 04,0 stand, you pay fifteen millions a year. If the plan .d ,"; Minister be completed—and I presume to impress upon " committee that in considering any financial proposition lvt
must consider it as completed—we cannot
test it witlicqlof
assuming its completeness—then the thirty millions 1001. stock, at 2i per cent. interest, will involve an annt'pr charge of 866,0001.—the thirty millions of Exchalndi-
. bonds issued at par, and bearing 2 per cent. interest, wig
cost 825,0001.—while the 440 millions, bearing 3i per een";a
and issued at 821,105., will cost 12,105,0001,.—altogether
annual charge of 14,396,0001. If I deduct this from 111
fifteen millions we now pay, there will be an annual o'7l
slightly exceeding 600,0001. If, then, the plan of the Gieo
vernment be carried into full effect, the result would 01.
,
that this amount of annual charge would be guaranteed
forty years ; that for all that time there could be no pas,
Bible action on the debt, with the exception of a slight
duction on the Exchequer bonds • that, with that exFi,ryt
tion, for forty years there could 'be no greater reduatre
than this 600,0001.' a year. Now, I beg tho house, Ida' nt
they decide on this proposition, to follow me while 12d0
before them, as briefly as I can, some notes I have 1100
of preceding operations on the national debt, and Gant?. ng
the amount saved to the country by preceding operations
with the project of the right hon. gentleman, In
I believe, the first conversion of debt took place by fob
Robert Walpole. He dealt with dividends to the at
of 11 millions. The dividends that are now to be deal
with amount to fifteen millions. The saving effected
Sir Robert Walpole on a dividend of 1A millions amonn,‘"s
to 324,0001. a year, (Hear, hear.) The saving tha%g
now proposed to be effected upon dividends amount
to fifteen millions is now 600,0001. That is an importao
consideration—one on which the committee will not &yip
it inexpedient to reflect ; and there was no specificationoo
the act for any guarantee of the interest, which ist.eo,
mosk important point in all our calculations. If, tith
you contrast the project of the right hon. gentleman ,1.•
the plan of Sir Robert Walpole in 1727, it is clear thai•s,
do not by the present plan effect an arrangement thi'a.,
nearly half so beneficial to the country. There was of
ther reduction of debt from 5 to 4 per cent, in the n,“.",
George 11. By it a saving of 340,000/, a-y ear was er to
—more than half of the saving which is now proposed,oo.
be effected—and in this caso also there was no guaranybe.
I am anxious to impress this fact upon the committel
cp.
er
cause the guarantee is here one of the most impertan sloe
ments in our calculation, Now I will take the conv,
bf
of debt which occurred in 1749, and which was effecteaet.,
Mr. Pelham. He reduced the debt from 4to 3 Per e:.i.ot
and the saving in that case was 565,000/. ; nearly as sc,ro-
a saving as will be effected if the whole of the present raid
ject be carried into effect. I believe that Mr. Pelham be-
in this instance—l am speaking from memory-1 that
lieve he did give a guarantee of seven years, but still
was a very limited guarantee in comparison with th 400
rantee to which our attention is now called. In
those
conversions, then, the terms contrast favourably w",' ister•
to which our attention is called by the present ginB22,
We approach now to more modern times—to the year 4 per
when Mr. Vansittart reduced the debt from 5 toe gal"
cent. Let us see the capital with which he dealt, t•'-'__hich
ing which he effected, and let us consider the saving
is now proposed to be made. He had to deal 12',.ected
debt of 150,000,000/. and the saving which he °oles
amounted to I,2oo,oobl.—that is to say, double the. s t",
which her Majesty's Ministers by their present pre.l.nra
Thec•
tend to save ; and the guarantee in this case, though
curred so recently as 1822, was only for seven year' debt,
committee will observe that in all these concessioilsu,oo
t 01
from the first effected by Sir Rober Walpole to the
1822, the terms were extremely different and the
ivlidety
were extremely different from those now under e'v

• If you look to the guarantee—and it is most impor-
tant
that you should look to tho guarantee—yon will find
and 4,4 was limited, that it was giVeu with hesitation,
that its termination was within the immediate expe-
rience, of the generation that dealt with the operation.
11,1%1,321 a further amount of the capital
.debt was dealt
40ou erpial to 76,039,0001., and the saving effected was
eo 'W/t• a-year—a considerable sum, especially when youf
be
the capital dealt with, with the sum
be 'W"),°OOl,, upon which a saving of only 600,0331. is to
The llected. The guarantee in 1824 was only for five years.
committee will observe tha', with the experienao
„;teatintiug to nearly a century in these financial conver-
-80-eas, the Legislature acted with respect to guarantees with
1, much cantion, and with such a deep persuasion of the
liesrnsihtlity of undertaking such an engagement, that
~,e-eree-ere that period the amarantees never exceeded seven
and that in 1824, after the great financial experience
°f the yrench revolution'; and the great experience of Pitt,
TheutuY guarantee given was for five years. (Hear, hear.)
mind are important facts for the committee to bear in
tee ecause, although it does not appear that a guara.n-
-reati,l', al, engagement of so much importance, it will ulti-
t.r be found to be a most important element in all these
vitertelinen.ts. (Hear.) In 1830 there was a conversion
Fill el which was the first of those great operations which
over render the name of the right hon. gentleman, the
versaber for the University of Cambridge, memorable in the
financial history of this country. The right hon. gentle-
man then then dealt with a capital of 153,000,0001., and effected
giv:anual saving of 750,0001. a-year, and the consideration
actip a guarantee of 31 per cant. for ten years. An
on was also given of 701. of a Five per, Cent. Stock, an
s-!noernent somewhat similar to the proposition of the
-"It alternative of the present Chancellor of the Exch.,
(Ter, am it is a remarkable circumstance that the amount
of that stock subscribed for did not exceed the small sum
of
a million. In 1834 there was a small reduction, to
viplechol will not further allude than to say that the prin-
Years guarantee was again applied, but only for six
the 1844 there was the great reduction effected. by
right hon. member for the University of Cambridge.
orenaPital was then dealt with of nearly 250,000,0001—half
oew3 large amount which will not say now, under
consideration—but which forms the subject of our
"Zeculative anxiety. The consideration given was a gua-
Isatee
tve„, °‘ 31 per cent. for ten years, and of 3 per cent. for
the-:"Y Years after, that is to say, that after the year 1854,
of there was a further guarantee for twenty years at the rate
the P!r cent.; but in that great and successful operation
taJ'ited guarantee only reached to thirty years.. Let
stur'ace before the committee the remarkable =cum-
pre,-,e;e3, which, contrast between that period and the
14,714. (Hear.) In 1844, when the right hon. gentle-
" Made those conversions, " Consols" were at 31. ls.
rcent. interest, Exchequer bills were at 2/.
.45.,..the
lance in the Exchequer was 4,700,0001., the floating debt
nth was
17,000,000/. and 19,000,0001? the capital dealt
504 Was 250 000 000/ , the immediate saving was 600,0001.,
atZ the ultimate, saving 1,200,000/1• a year. Now, in-
the dof Consols being at 98A they are above par ; Ex-
beaper bills, instead.of bearing 21. 4s. 6d. per cent., now
iaistentlY 11.10 s. sd. ; the balances of the Exchequer are,
_ ell as;"" of 4,700,000/., nearly double that amount ;.and the
2sTov-,'T!g debt is actually lower at present than in 1844.
thli,?l,lthstanding that the Chancellor of the Exchequer is
cir "ealing with the debt under so much more favourable
instances he only effects a saving of 600,0091. upon
Ala;'°,, ,0001. Of the debt, and this too with a guarantee
Itiao‘eliu„,Will. prevent him- from oerating on that large
Sett for forty years. (Hear ,hear.) What are the
oral circumstances of the country which can induce the
the ~tee to authorise an arrangement which appears on
that'llr,it.lce so improvident and so limited in its.results.as
ILA; watch I have contrasted with all the operations which
e preceded it? Is the rate of interest higher ? Is the
ii-"autry isas
prosperous than at those times ? The interest
11 our floating debt is lower ; the balances in the Ex-
irer are greater the interest of money is lower, yet the
14t hula. the Chancellor of the Exchequer proposes an
1,4 s ,nse financial operation, which if you pursue it to its
results tele financial termination—and unless it effects such
ults it is scarcely worth the discussion it is undergoing
*."60,1ad he only contemplates a saving to the country of
.19°01. for forty years. (Hear.) What I also object to
h 0 he propositions before the committee is, that the right
1,0,1!•• gentleman has in himself settled the terms upon
~,i,(-11 these operations, possibly of so great an extent,
h:ch influence so greatly the circumstances of the time
uld he made. It was the duty of a person in the posi-
stt a of the Chancellor of the Exchequer wishing to effect
thch an object, rather to throw upon the public creditor
responsibility
of offering terms which might be agree-
the Ulm, than by coming down to the house and saying
in are the terms which I lay down, and these aie the
"'ring only which I can accept. The right honourable
gentleman says, " You may impugn the validity of my
reasoning, and the position which I have adopted with re-
Peet to this question, but I have a sovereign object to ob-
,tain—l want to establish a Two-and-a-Half per Cent.
ctock." I think the hon. member for Lambeth touched
that point in a proper manner. Nothing can be more im-
portant than a Two-and-a-Half per Cent. Stock, if you can
obtain it by legitimate means, .and if a Two-and-a-Half
per Cent. Stock is the: natufai consequence of your finan-
cial condition. But there is nothing magical in a Two-
and-a-Half per Cent. Stock. (Hear, hear.) A Two-and-a-
tfalf per Cent. Stock can be created and established at any
time, if you choose to pay for it. (Hear.) If this is to be
a factitious• result, an artificial consequence, there is no
financial minister, even in a time when money is scarce
and interest is high, who could not create a Two-and-a-
-11,,,a1f per Cent. Stock, if he chose to do so. (Hear, hear.)
The question, of course, for the committee is, what are the
ruin oe by which it is proposed this costly consequence may
accomplished ? I freely admit that it is the first duty
of a minister of finance to consider the question of the in-
ei.rest of the public debt, and I think it is highly to the
trie"'t of the right hon. gentleman that he has given all the
the
of hie able and creative mind to this subject. But
te right hon. gentleman knows full well that there is no
t originality in attempting to deal with such a subject.
tvt.clnestion is, how to deal with it at the right time, and
effell able to deal with it in a manner in which you may
1%0..7 your ultimate purposa. (Hear.) Now, the right
I,eixtitlenaan has in this instance been ingenicus, but
44 ture. (Hear, hear.) It is totally impossible, by
veerellioiaub4,tion, lOwever clever, by any device, however
u that you can make the public
ken r 'axe a owes rate of interest than the state of the
imiaZ,l2narktt will authorise. (Hear.) And it is quite
haw, °le to
PliPose that yoif can succeed in digging "pit-
'roe mans,- „reaxing snares for the public creditor. (A laugh.)
°":,,e him all the alternatives which an ingenious
the value conceive but the public ;:reditor has a test for
will eh °' his debt,
(tie ere find and he will
money is worth.
go to Capel-court, and
gear, bel out exactly what 1! s
conmaitt r.)
ee This brings me to a poiinst wicnoTletehsitnokatnhye
of the e „ ought fairly to consider before
.a,„,
directB arrangements- You may rely upon it that
.all in-
Is attem o deal with the public debt—l will not
alwayssfait will always be difficult, and that
be-arran em nts,l'asa, general rule, on that subject should
Yeoss e.al'le•g Ifethe state of the oney 'market is such that
spay t." deal directly with the rate. of interest, it is unneces-
f can 119 -to enter at all' into the subject ; but if,
Wrii%,--LParticular circumstances'—the amount of the debt
guards You propose to act upon, and. the artificial safe-
la4i",,s which surround it—you do not consider yourself
there Led in acting directly upon it, and must act indirectly,
a't is
no more legitimate means, if you wish to establish
the 1,7,a,nd-a-Half per Cent. Stock, than by going fairly to
li;-
. a-'"c awl saying, " We want to establish a Two-and-
perllt Cent. Stock, what is the guarantee in the pre-
the 4tate of the money market, with three per cent. as
ft,ilie`ltablished rate of interest, which you would require
That "Y° country for the establishment of this stock ?"
deret.,-`g,a simple proposition which the country would un-
Yeei :no- .It is very possible 'that `they,would ask from
Nl:every long guarantee, for aught I know longer than.•
every years ; but then. you would bo in a clear posi-
Nit°, considering whether ie,Watir expbdient, lyise, and
the iC to grant such * guarantee, and that brings us to
rate—Portant question.of what are the prospects as to the
ehte of interest of money in this country. I will not now
ti nr,„,,1,nt,0 any speculations on this subject ; it is a ques-
-,,,,1neh has engaged the attention not only in this, but
eco"er countries, of some of the profoundest political
°Miats and inquirers into monetary matters who have,
are 'al's, ever flourished. But no one can deny that there
to the Phenomena in the present day with respect
ever subjects whisk no previous minister of finance had
- ‘0 deal with- When the right hon. gentleman the
greeTtber' for' the 'University of Cambridge proposed his
am, financial scheme, he knew what was the- probable
pre ant of the precious metals in the world. He knew
Per it' well :what had been the cycles of commercial pros-
this Y and adversity to which reference has been made
eau:vetting ; he had naturally considered in all its ramifi-
pertans, and all its possible results and bearings, the im-
the lat question of the terminable annuities. What are
calejresent circumstances ? Is there anybody who can
Voeft to the present amount of the precious metals in the
open, or what there will be in forty, thirty, twenty, or
taiti ten Years hence ? The question of terminable ao-
mheseiso, to which an honourable member has given in his
that the to-night, while he at the same time recommended
teitte_ whole subject should be referred to a select c.om-
hoia. e----no great compliment, by the way, to the right
tualegdentleman the Chancellor of the Exchequer—has as-
of mac,a very different character in the estimation of some
meta c, Itl°st important thinkers since the period of the
aehc discoveries, and it has become a question whethehr
should deal with that willingness with which we should
(.I°ne ten years ago, with the conversionof national
into terminable annuities. My opinonus, that the
thlntr,s,
not prepared to make any sacrifice at all upon
the 411",lect, it is rather disposed to watch what might be
rap;c°,llsequences of these important changes which are
0p,,(,"Y and daily occurring. I will not presume to give an
L'3ll, upon the subjct. All I ask the committee to do
geal, remember that owe are living in the midst of these
pia,' changes, and that before theso great changes took
tie;e the most successful Chancellor of the Exchequer
yeaer contemplated the guarantee of interest beyond
.20
are s, and that now in the midst of phenomena which
en-e Perplexing our profundest thinkers and most. Fxpen-
ho ed statesmen, and agitating the hearts aud exciting the
RUIZ: Pi' the nation, we are called upon to enter into,
ra.
Bich nt,e for forty years at a rate of interest for a COM ei
if carried into complete effect and if perfect
ed, will save only to the country 600,0001. a year.
lyaci; ;hear.) Under these circumstances, I think lam
bef ,-°lng.tay duty when I entreat the committee to pause
ths°o they sanction this operation. I will not go into
mitt'l:aaPortant question, which greatly interests the public
and which has already greatly influenced the com-
the Whether we ought to increase the capital of
,pational debt. Ido not think there are two °pillions
Rtteirt subject. Why, then do you do it ? What do you
Is ,Y it? (Hear, hear.). Are you in war—or in danger ?
tbe , eland stning? Is there a famine in the land? A.re
I,4,l„tanY. of these conjunctures exigencies, or emergencies
mush
might authoriae you to 'do that which philosophy
rakW,. condemn, but which the strong necessity of life
vo_enlorce you to adopt ? The committee is asked now to
ea',isst to increase the national debt merely for a financial
8( Lniliel lair4hn4nott,iintig order to gratify a laudable humour, but
which was either peremptory or urgent.
}hot ear.) This point has been so well urged by others
th'lc not preas •t What, however, Ido pres.s upon
unetucroomorof itthtee is the absolute necessity of considering the
.e guarantee, that that guarantee may be even
Zlflagr,e,atser. importance than'the rate of interest itself, and
ti444llleisrautee
not the time when a guarantee of forty years
of interest to be paid should be made. With
eergoeBeingitraveellietcatkips to the measure, I do not think the
Government if ing a very unfriendly part towards the
eider
rthey ask them to pause, in order to recon-
mac_ esolutiona. (Hear, hear.) What has taken
itiCorrith respect to these resolutions since they were first
cam` need into the house ? The right hon.gentleman
e lawn creep
to the house and taking
lata, lave notice fora ,comm'itteoto
,17er the public debt. We all remucesomnsbosimedreertwhthehagetreabcayttsgUerxer-: resoltitiot that was produced by that, announcement. The
first ns were circulated, on the following day. In the
toe ternative the resolution was as it now appears in
b
Wiiicv Iv- efore the committee. The second resolution,
toy, Ras establish this great desideratum of a Two-
ter, Pei Cent. Stock, was of an unlimitated charac-
coaatr,w2uld have. extended to the whole debt, Great
--"w•CD, Prorituled‘ollih9 subject of the mond Alter-

native. One of the leading journals announced to the
country that there was a proposition to increase the na-
tional debt by the amount of 50,000,030/. When we came
down to the house to consider these resolutions, by the
courtesy of the hon. member the Secretary to the Treasury,
a second edition of the resolutions was put into my hands
informing me, at the same time, that there were a few
trilling alterations proposed to be made. Upon casting
my eyes over the amended resolutions, I saw that the very
subject which had agitated the city of London, and had
created such consternation had disappeared, and the
second alternative was to be limited in its operation.
(Rear, hear.) Ido not say the limit was not wise, dis-
creet, and proper, but surely, irrespective of the fact that
it it is always as well to have time to consider resolutions
of this character, the very fact that before we had had
any opportunities for consulting them so great an altera-
tion should have taken place—surely was some reason why
have been given not merely for the house, but for the Go-
vernment to consider the resolutions to be submitted.
(Hear, hear.) In addition to the first proposal of limiting
the Two-and-a-Half per Cant. Stock to 30,000,0001., an-
Other great change has been introduced by which Three-
an,i-a-Half per Cent. Stock has been limited also to
30,4300,0001. I understand that there has been a third pro-
position made to-night, viz. that in order to meet the
great objection felt against the consequences of the second
alternative, viz., the increase of the national debt, an amount
of three or 'four millions should be funded for the purpose
of forming a "sinking fund." On such a proposition two
considerations very naturally occur. In the first place, is
it wise that there should be a " sinking fund " established
upon such a principle ? Are we, in 1853, to be borrowing
with one hand in order to pay with the other? Is it, in
an age of financial reform, that you are to establish asiuk-
ing fund based upon that vicious principle which you have
so denounced, and so energetically rejected ? (Hear.) Ano-
ther consideration was, what would be the effect of the es-
tablishment of this sinking, fund upon the financial state-
ment with which the Chancellor of the Exchequer favoured
us the other night ? But there was a further alteration.
Not only had the limit of the per Cents. had been placed
at 30,000,0001., and a similar limit placed upon the 3a per
Cents., and a sinking fund had been proposed, but a fourth
proposition had been made to-night, by which the Two-
and-a-Half Stock was to be limited to 25,000,0001. and not
to 30,000,0001. as at first proposed. (Hear, hear.) I do
not say that these changes are not wise, discreet, and pro-
per, but I think they show clearly that the scheme has not
been sufficiently matured, and that there has not been
given tothe subject that consideration, that large devotion
of time and thought which becomes a question of this na-
ture—(hear, hear)—and that when a minister of finance
and his colleagues deal with so vast a question as the pub-
lic debt, and deal with it unnecessarily, it is just as well
that the proposition which they put before the house should
show some better evidence of .consideration and of care.
(Hear, hear.) All I want to do is this—l do not want to
make unnecessarily a party division on the subject ; but I
ask the righ hon. gentleman not to precipitate this ques-
tion, and to give it further consideration, and not to let us
be forced to vote on the amendment of my hon. and learned
friend. What is that amendment? It is one which says
virtually that in all these changes and conversions of the
public funds, and reduction of the public interest, it is not
wise or expedient, or politic, to increase the capital account
of the public debt in this country. If there is a division I
must vote for the amendment for the sake of the principle
which it enunciates, and which I think is a sound and sa-
lutary one. But I say at the same time I hope to be pre-
vented from that division, by the right hon. the Chancellor
of the Exchequer telling us—and it is no great condescen-
sion—that he will give to this subject more time and more
thought than it has yet apparently received. (Hear.)
Mr. GOULBURN said the right hon. member for Buck-
inghamshire had made some remarks upon what he consi-
dered the very limited results of the measure proposed by
the Chancellor of the Exchequer, and had said that in the
first instance the saving under the contemplated arrange-
ment would be only 600,000/. in annual interest. The right
hon. gentleman seemed, however, to have forgotten that
what they were principally endeavouring to attain was a
reduction of the capital of the national debt. The right
hon. gentleman was evidently anxious to depreciate the
value of the measure, and he endeavuured to do so by con.:
treating it with antecedent measures of a similar nature
which had been adopted. He (Mr. Disraeli) had alluded to
the reduction of 300,0001. during the administration of Sir
R. Walpole, when the whole interest of the debt was
1,200,0001., but he did not tell the house that at that time
the debt was paying an interest of 7 per cent. When they
reduced the interest from 7 to 5 per cent. the Government
had of course the means of making a much larger propor-
tionate saving than when it was afterwards reduced from 5
to 4 and from 4to 4 The right hon. gentleman had re-
ferred to the reduction effected by Lord Bexley in 1822, and
stated that Lord Bexley did not increase the public debt by
the measure which he proposed. But in 1824 Lord Bexley
gave 1381. Three per Cents. for every 1001. Five per Cents.,
thus increasing the public debt by a considerable amount.
He (Mr. Goulburn) thought, then, that the proposal of his
right hon. friend the Chancellor of the Exchequer would
fairly bear comparison with Lord Bexley's measure. [Mr.
Disraeli said he had mentioned that the amount of the bonus
given by Lord Bexley was something under 5,000,0001.]
Yes, the right hon. gentleman had mentioned that in speak-
ing of 1822, but had omitted what took place in 1824. The
right hon. gentleman (Mr. Disraeli) then came down to the
period when he (Mr. Goulburn) effected a large reduction of
the debt under circum stances peculiarly favourable to such an
operation, and he stated that, although a guarantee was then
given against the further reduction of the interest until a cer-
tain period had elapsed, it was a short guarantee compared
with that now proposed b 7 the Chancellor of the Exchequer.
With regard to guarantees, as they proceeded in the reduc-
tion of the interest of the debt, and required a considerable
sacrifice from those who received a smaller interest, they
must necessarily give such persons some advantage in order
to induce them to accept the terms which were offered. He
believed that if, in 1844, he had not given the protection
for 30 years from the period at which the bill passed to
the holders of 3 per cents., the measure he then introduced
would probably have been a failure. There were, how-
ever, particular reasons in the present instance why the
guarantee to 1894 should not excite no apprehension.
Suppose the Chancellor of the Exchequer should succeed—
which he did not suppose was likely—in inducing the
holders of the whole 500,000,0001. of stock to come into
his arrangement. That stock was irredeemable till 1894,
and there would therefore at that time be 500,000,0001. of
stock upon which they might operate. But would this in-
terfere with the reduction of the national burdens ? Why,
they had 250,000,0001. locked up till 1874, but it would
then come under their hands, and upon that amount they
might reduce the interest with advantage. (Hear, hear.)
He must say he thought it was a great advantage to have
the opportunities for the reduction of the debt so divided.
The right hon. gentleman (Mr. Disraeli) had said that
there was a great difference between the present period
and that at which the last reductions of debt were effected
In the two cases when he (Mr. Goulburn) reduced the pub-
lic debt he had to deal with a debt which, with the excep-
tion of a very small portion, was entirely open to reduc-
tion without any notice whatever ; and he had nothing to
do but to signify to the public the terms which the Go-
vernment were prepared to offer, and to ask those who
dissented to express their dissent. There was, . therefore,
no interval between the time at which the prodosition was
made and that which it could be accepted.• The difference
between the two periods was this, that in 1844 the Govern-
ment had the power to effect the reduction, whereas, at
the present moment, the Government had no power at all,
except that of holding out to the public what the
public would choose to accept. (Hear, hear.) ,His
right hon. friend did not bring forward his measure as one
that was to effect large and enormous reductions of the
national debt in a moment ; but what he said was, that in
the present monetary. transactions of the world, there was
a prospect of holding out terms to those who had a redeem-
able debt to transfer that debt, so that it might becoine
irredeemable on certain conditions, and that ho was pre-
pared to make such a proposition. In making that pro-
posal ho thought his right honourable friend was justified
in stating a variety of modes to the -house. (Hear, bear.)
It was true, as had been observed, that there were no more
wary animals than the gentlemen of the Stock-Exchange ;
but, wary, as they were, those gentlemen were
composed of different classes, and the stock that
suited ono individual might not suit another. There were
advantages that belonged to the different classes of stock
that made them acceptable to different classes of indivi-
duals. (Hear, hear.) There were objections, no doubt,
sincerely entertained to any increase of the debt, but his
right hon. friend had suggested that if that was inexpe-
dient it might easily be accompanied by an arrangement
which would give them a yearly increase of the surplus to
be applied towards the reduction of the national debt.
(Hear, hear.) But the right hon. gentleman (Mr. Disraeli)
said the Chancellor of the Exchequer was premature in his
proposition, and that he should have waited till a future
and more favourable period. He wished the right hon.
gentleman had stated the period at which the Chancellor of
the Exchequer was likely to be able to give the requisite
notice ; but, if that period could not bo fixed, then the
sooner they gave holders the option of taking that course
by which a reduction might be voluntarily effected the
better for the interests of the public. (Hear, hear.) The
right hon gentleman also objected to the changes which had
been made in the measure during its progress. He was
quite aware that it was easy, when alterations were made
in committee, to inculpate those by whom the measure was
introduced ; but what, he asked, was the utility of going
into committee at all, and wasting their time in discus-
sions of this kind, if it was not to receive the suggestions
of those who had given their attention to the subject, and
to make such improvements as might be adopted without
infringing upon the principle of a measure? (Hear, hear.),
Then the right hon. gentleman adverted to the smallness of
the surplus announced in the budget. That was an obser-
vation which he did not expect from the right hon. gen-
tleman. (Hear, hear.) Small, indeed, the surplus was, but
his right hon. friend the Chancellor of the Exchequer had
at least this advantage, in stating that it was derived
wholly from legitimate sources. (Har, hear.) In conclu-
sion, he had to expresi his belief that the scheme of his
right hon. friend would lay the foundation of future reduc-
tions in the annual expenditure of the country, and that it
was a scheme alike honourable to him and advantageous to
the country. (Cheers.)
Sir J. PAKINGTON said, the right hon. gentleman who
ehadof
thejnw just
sxts
henp
Exchequer
ekttunheer had
course
proposition
was
ri givenghte h
ha t
k hise
n ospnibnimointttihngatetehveerChal ancelloralterna-
tives
andblya laid
e rbeforeght
hon.t he housegentleman
; but
u
himself in 1844, when he proposed a most important alter
cl in
alter-
ation in reducing the 3,3 per cents. The house
must, there-
fore, choose between the opinion expressed by the rig ht
hon. gentleman in 1844, and the opinion which he expressed
now. (Hear, hear.) For himself he was disposed to think
that the view taken by him in 1844 was the '
right one, and
that it was the view which ought to be followed by the
house. (Hear, hear.)
Sir F. KELLY briefly replied.
The committee then divided on the question, " that the
words proposed to be left out stand part of the bill," when
there appeared—
Ayes
Noes

... 231
... 175

Majority for the Government ... ... 59
The clause was then verbally amended and agreed to.
Clauses 3,4, 5,6, 7,8, 9, 10, 11, and 12 were agreed to.
Clause 13 and the following clauses, up to the 31st, were
agreed to.
On clause 32, for the issue of Exchequer bonds,
Captain LAFFAN wrested that it might ho well to
frame tho clause so that they should not be issued and
sold below par.
The CHANCELLOR of the EXCHEQUER thought
the clause might well be loft as it was. There were some
things that it was better not even to talk. of. (A laugh.)
Mr. GLYN observed that many of these bonds might
get into the bands of the trustees who might have an ob-
jection to the risk of instruments payable to bearer ; it
might be advisable to allow them to be written up into
stock.
Sir F. KELLY thought a power to the holder to convert
them into stock would aid in the great object of establishing
a 2/. 103. per cent. stock.
The CHANCELLOR of the EXCHEQUER fully in-
tended that such a power of converting them into a regis-
tered nouritifshoida tte given, auclehelieved that the hill,