The Sun.
London, England, 1854-03-22 00:00:00

funds if he had renewed Exchequer bills at the same high
rate of interest as they bore in June, 1852. In June, 1852,
Exchequer bills were at 755., and they fell to 555., and
therefore the rate of interest was lowered. These are bills
running for twelve moithi; and the interest was lirl. per
day, or 455. as the interest for the whole of the year, which,
after deducting income tax, came to 435. Well, then, the
premium on these bills—which you will recollect are re-
deemable at par at the expiration of the year—was more
than equal to the whole interest, and yet the right hon.
gentleman says that that was not a state of things which
called for my interference. (Hear, hear.) Sir, I say it is
the right of the public to borrow upon the best terms that
it can; the necessary restraints of law place the public at
treat disadvantage in its dealings with the Bank and
other parties ; and on account of these great advantages
inherent in the nature of their position, it is still more
the essential obligation of the Chancellor of the Ex-
chequer to borrow for the public on the best terms
that he can. Now, I say that the time I made the re-
duction to ld. a day was the proper time for doing so,
and I prove it by saying that I did it. The honourable
member for Peterborough, with less attention to accuracy
than I should have expected from his position, says that I
reduced the interest to ld., and the bills then fell to a dis-
count. Well, was there anything that intervened between
those events? Does the hon. gentleman mean to say that
they fell to a discount when I reduced the interest ? Sir,
the reduction of the interest was announced in the second
week in February; and here are the prices of Exchequer-
bills on the business day of each menth, and the Ist of
June is the earliest of the days on which there is the
slightest mention of a discount. Therefore, I say the hon.
member is seriously in error on this matter, because
for three months after the reduction of the interest the
Exchequer-bills remained at a premium, and therefore the
fair inference is, that when they came to a discount the
change took place on account of the increasing pressure on
the money market, and not on account of the reduction.
I propose to adopt what I think is a fair mode of dealing
with this question. The right hon. gentleman, who was
so large and full on such a multitude of points of perfect
unimportance, which he dressed and decked out with a
finery belonging to himself, passed over in total silence
and oblivion those other matters that were not so conve-
nient for him to notice. I made a reference when we dis-
cussed this subject before, -which I think a fair reference,
and one calculated to bring this question to an issue ; be-
cause the charge made against me, if I understand it, is,
that by an imprudent reduction in the rate of interest on
Exchequer-bills last spring I caused a violent reaction and
an increase of expense. Well, then, if that be the case,
what I say is, that I will look to a neighbouring country.
You say I produced a violent reaction that I am now
paying (and it is true) double the rate of interest that I
was paying twelve months ago ; and the reason you
give—which is not true—is, that, the reduction I made
was too low. Well, !now, what was the state of the
case twelve months . ago in France? Twelve months
ago the rate of interest on one class of French
Exchequer-bills was 1i per cent. ; and I think I may
say, with all due respect, that it was not a hope-
less case for the English Government to expect that
their bills should float for longer dates, at the same rate of
interest, with tho Exchequer-bills of the Government of
France. You say I would net have required to double the
rate of interest unless I had first reduced that rate of in-
terest too low. Well, but look at the case of France. The
Exchequer-bills, which were at the rate of 11 per cent.
twelve months ago, only a few days ago were raised to 4
per cent. So that while I have to double the rate of in-
terest on Exchequer-bills, the French Government had
to treble the rate of interest on their Exchequer-bills.
Now I shall trouble the right honour able gentleman for
an explanation of that fact, when he next sets him-
self to complain of my imprudent reduction as having
doubled the rate of reduction on the rate of interest on the
Exchequer-bills. (Cheers.) Sir, it is not necessary for me
to enter at great detail into these matters. The right hon.
gentleman spoke in the most alarming terms of the formi-
dable accumulation of deficiency, bills. He said it might be
very true that we had saved 10,0001. or 20,0001. on Ex-
chequer-bills ; but what was that to the very serious loss
which the country would sustain on the deficiency bills
which that saving rendered necessary ? Sir, here are the
returns of the deficiency bills for the three last quarters,
being all that have yet been made urn. The cost on defi-
ciency bills for the first of these quarters was 621. ; for the
second, 7701.; for the third, 4811. (Great laughter and
cheering.) A sum amounting to between 1,0001. and
1,2001. is the whole amount of charge caused by these
tremendous and overwhehningdeficiency bills. (Renewed
cheering.) The right hon. gentleman, I confess, some-
times appears to me, in the heat, or, at least, in the force
which he brings to bear upon these discussions, to dilate
upon these subjects in a manner which might tend to cause
great alarm in the public mind. I remember, sir, on former
occasions, when questions relating to the public credit were
discussed, it was done with great reserve. At a time when
not more than 900,0001. remained as a balance in the Ex-
chequer, to meet the demands of the next quarter day, the
fact was alluded to, indeed, but the allusion was made in
grave and sober terms, by no means in those orations which
we are now accustomed to hear night after night ; and I
must confess that at first serious alarm entered my mind,
when I heard, and admired while I heard, the brilliant
oratory of the right hon. gentleman ; but at the same time
serious apprehensions entered my mind, lest, knowing the
high authority of the speaker, alarm should seize upon the
public mind. I said, here is my predecessor in office tells
ing the public that it is impossible for the Chancellor of
the Exchequer to meet his engagements next quarter day.
Sir, that might have caused great alarm among gentle-
men in the City. The last time when the right honour-
able gentleman favoured us with these displays—l know
not how it may be to-morrow—(laughter)—but the last
time he so favoured us was on the 6th of March. On the
7th, I was curious to know what was the effect of his
speech, and I found that the Consols, whioh on the 6th
stood at from 901 to 91, stood on the 7th at from 91 to
91k. (Roars of laughter.) After all the dark anticipa-
tions I had formed, air, I confess this proved to me no
inconsiderable relief. (Cheers.) I come now, sir, to the
main questions on which the right hon. gentleman has
challenged me—the two main topics in his speech—one of
which was the abortive action upon the funded debt, and
the other the state of the balances in the Exchequer. Here
the right hon. gentleman marshalled against me a great
array of premonitory sentences, and after a long accumu-
lation of epithets, he wound up with the declaration that
it was absolute madness—l think those were the words—
absolute madness to present any plan for the reduction of
the interest on the national debt last March. Bat the
right hon. gentleman forgets that I referred him before
to his own opinions. (Expressions of dissent from Mr.
Disraeli.) No, he remembers that, but he forgets what
the opinions were to which I did toter him. He comes
dowh here in March, 1854, full of wisdom, after the
fact. But he forgets what was the state of opinion in
March and April, 1853. Sir, I was curious to know what was
the state of public opinion at that time ; what was its action
upon the funds ; what were the general sentiments among
those interested in money matters; and those who will
take the trouble to refer to that period will find that all
who censured me on that occasion, censured me because I
had secured too little for the public. (Cheers.) I referred
to that opinion expressed by the right hon. gentleman •
and he says, what a wretched thing is the argumentum acl
horainerc But, sir, I did not use it as an argumentum, ad
hominent. I used it, because at that time, in his objec-
tions, the right hon. gentleman represented public opinion,
and because he knows that public opinion has varied,
therefore the right hon. gentleman has also altered his
tone. But the right hon. gentleman did then make
that objection. We did not hear a word then about the
prospects of a bad harvest, or of the state of the funds, but
the right hon. gentleman went into a long and imposing
detail of the state of the public debt. He showed how one
Minister after another had reduced, some one million,
some one million and a half; and what do you mean, he
said by your paltry reduction, which even at the outside
cannot amount to more than half a million a year. It will
not do that he should say, what any of us may say, that
we have learned samething from the experience of the
past. Oh, no, he says, all the facts where then in exist-
ence. But he entirely forgets to allude to the fact—
though I reminded him of it the other night—that both
he and his learned brother in finance beside hind united in
warning and censuring me, not because I proposed a re-
duction, but because that reduction was so insignificant.
Sir, I must now refer in a few words to the question of
the balances of the Exchequer ; and in doing so I must
refer to the speech of the hon. member for Peterborough.
Far be it from me to complain of the speech of the hon.
gentleman. I regret that in subsequent allusions to the
speech of the hon. gentleman he was described by several
members as the Bank director; not because I do not think
that he is a most useful and worthy Bank director, but lest
the impression may be produced out of doors that he spoke
in his official character of Bank director. But, sir, I think
the house will see, from the speelh of the hon. gentleman
that the relations between the Bank of England and the
ffnancial department of this country, though of an intimate
are still of a most independent character ; and I fear,
moreover, the impression may be produced that the rela-
tions existing between him and me are not eminently
favourable to the fortunate conducting of our financial
affairs. (Hear.) Sir, I find no fault with the speech of
the hon. gentleman, but I think it may be inferred from
what he said that I had recently been to the Bank more or
less as a suppliant, asking for loans at less than their mar-
ket value, and putting upon the Bank a pressure, on the
assumption that it was bound to have regard to the inte-
rests of the Exchequer, apart from its own interests as a
standing corporation. Sir I disclaim any such intention
or act ; and, moreover, I think I may say, though I was not
present at the meeting of the Bank proprietors held a few
days ago, but I have been informed that a question was then
put to the Governor of the Bauk by one os the proprietors,
who wished to know whether a proposition had been made
which was favourable to the interests of Government, but
at variance with the interests of the Bank, and the Gover-
nor, as I am informed, replied distinctly that he had 're-
ceived no such proposition. Sir, it is perfectly clear that
the Government have no right to demand a pecuniary ad-
vantage of a single farthing in their transactions with the
Bank. It is the business of the Bank to charge the Go-
vernment—and it would be perfectly compatible with the
most friendly relations between them to do so—the fair
value for any accommodation which they may afford. Sir,
the honourable gentleman also dwelt upon the history of
the deficiency bills in a manner which I think may cause
serious public misapprehension. What is the state of the
case ?Isit a question of principle or of degree ? Is it the
opinion of this house that deficiency bills are an illegiti-
mate means of supplying the public exigencies? If they
think so, let those who think so repeal the act of Parlia-
ment by which the power is committed to the Chancellor
of the Exchequer to negotiate the issue of deficiency bills.
I contend for directly the contrary. The act was passed
forty years ago, and they have been in use ever since.
The hon. gentleman quoted the state of th 3 balances dur-
ing the last six years; and it is true that they have been
less used during that time than during the thirty-seven
years before. And why ? Because, for the last six
years, the excess was the other way. The deficiency in
the revenue was so great in 1841, the deficiency bills had
attained such a height in combination with a deficient re-
venue, that they exercised a pernicious influence upon pub-
lic cre,lit. Is that a reason why we should not reserve a
reasonable and a moderate amount of deficiency bills ?
What is the opposite doctrine ? It is that the finance
minister ought to have a constant accumulation of money
in the Bank throughout the quarter, beginning by low
balances of half a million or a million, and running up at
the end to nine or ten millions. I. do not believe that is a
very good course to be taken, either for the trade of the
country, for the Bank, or for the Government. You wait,
then, to hear what is the opposite doctrine upon this sub-
ject. My doctrine is, as I have said, that a moderate and
reasonable use of deficiency bills is not only compatible
with the welfare of the country, and consistent with the
maintenance of public credit, but that it is the most con-
venient for all parties. (Hear.) The hon. member for
Peterborough accedes to that doctrine ; but then he says
that the present amount of deficiency bills is an excessive
amount

Mr. HANKEY—I did not say excessive.
The CHANCELLOR of the PciiEQUER—I do not
mean to quote the exact expression used by the hon. mem-
ber, but rather the effect of what he said ; and, as I under-
stood his meaning, it was that the Government had issued
xu9re deacienoy than they oght, lay own yiew of