The Sun.
London, England, 1854-05-09 00:00:00

7 T

/

fortunate delusion upon the subject`. (Cheers and lough*
ter.) My right hon. friend during that quarter never took
one farthing out of the Bank of Ent_eland—(hear, hear)—
and if you please, you may see that demonstrated, to the
satisfaction even of the learned member for Wallingford,
btiferulyeaoitduhaobtnohrortohtweootlka,bot
9.oefabtthgeu
quantity
(111'n eraerturn.) sltwihsipcherfmecbatuylyt
of deficiency bills;
loan, from your banker when you have 1,5001." or y 2
00w401y1 in,
his till, I hold that, so far from his being your Credit°. creditor,
you
ofdro;mlMalfie
eMalintir:lsy.)satt°
fied. The learned gentleman and I have made a compact
across the table, ar d I venture to say that if he follows me
to the end, we shall both arrive happily and satisfactorily
at the same conclusion. (A laugh.) My right hon, friend
the member for Halifax, in the month of April, 1847, took
deficiency bills to the amount of 2,267,0001., and he liqui-
dated his last bill in May; but the minimum excess of the
public balances in the Bank during that quarter over the
advance in deficiency bills was 1,696,0001. ; and therefore
I most respectfully submit that, instead of my right hon.
friend having taken accommodation from commerce, he
was giving accommodation to commerce. (Hear.) He
certainly was giving less accommodation to commerce than
if he had taken no accommodation bills ; still, at the same
time, he was giving accommodation to commerce, and the
complaint made against him was neither more nor less than
this, that he was claiming and exercising a right to make
Jise of his own money. (Hear.) He roads use of it with
suLlr a liberal and generous spirit that the smallest sum he
left A n the Bauk on any one day was 1,695,000/. But the
queetten has been asked of me—" Why borrow from youa
banker :,'hen you have money of your own with him ?"
That is a question not so easy to answer as some may sup-
pose. All I cen say is, that such is the system which we find
established, and though my notions in these matters are
very revolutionary, I have not yet reached such a pitch of
boldness as to say that I object altogether to borrowing
from our banker, even though we may have money with
him. But, sir, I come now to my own case, which is the
most important of all, because I am held up, not as an
occasional borrower—a man who borrowed only occasion-
ally might be forgiven—but the right hon. gentleman the
member for Buckinghamshire has repeatedly termed me in
this house an " habitual borrower." My answer is, that I
have borrowed in consequence of the large drain caused by
the liquidation of minor stocks and other circumstances;
but I think I cannot fairly bo called an " habitual" bor-
rower, and for this reason—l have borrowed only once.
t e I
s a (Hear.)
cane
o assure
If mya mrightaccusedy hon, f, it wa
ouo, ofb:rrowing during the last quar-
ter.mactlyboarepeHtitalioifnax.of
friend the exactly
r for
I was not indeed quite so liberal as he was; but though it
of 3,000,000 e or 4,000,000/.
was currently reported and believed that I was a borrower
had one shilling. (Hear, h duringlnithee
amount
unt o quarter,fde file
inevereney
actually brought to charge was'7
bills issued last quarter' wasear
21,490,16b0b1ut
upon
amount
interest was paid, Now mark, while we tOok defi-
ciencyptresew(Hreegnarr,dhseathr.e)
ist theuilt
oßha
fornk twashe noeaysee lessrof tb? than
lastl ,
bills and paid that interest, the excess of balance
16
quarter as
deficiency bills. And now, having stated that I borrowed
only once, and that I had always an excess of balance
the Bank, I hope the right hon. gentleman the member for
Buckinghamshire will let me know, after that, how he de-
fends the term " habitual borrower " which he has repeat-
edly applied to me in this house. (Hear.) Now, sir, we
come to the April quarter, and here I am most desirous that
no misapprehension should prevail. I believe lam correct
in stating that when the public read the amount of income
charged on the Consolidated Fund at the end of the last
quarter, they saw at the close of that charge the amount
of Exchequer bills which would probably be required to
cover the deficiency on the Consolidated Fund. The amount
was 5,852,0481.; and I believe the public were under the
impression—nay, I may even go further and say that the
great bulk of the members of this house were likewise
under the impression—that that was really a loan which I
had contracted with the Bank, and which I was to liqui-
date from the incoming revenue. I say, then, that if such
an impression does prevail, it is of the greatest importance
to the public interests that it should be dispelled, and that
the truth should be made known. It is of the greatest
importance to the public interests that these sham, ficti-
tious figures, which are only calculated to mislead and de-
ceive, not however intentionally, and to create alarm in
the public mind, should have their right value put upon
them. I have done what lay in my power to place the
matter on a proper footing, and I shall continue my efforts
in the same direction. As I have said, the deficiency in
April was stated in the quarterly returns at 2 ,859 0481 to
which should be added a small sum of 240,0001. which was
left out in mistake, making the total nominal amount of
advance to be required from the Bank of England,
6,092,0481. The amount issuable at that period, according
to the usual practice, was 5,643,000/., and the amount on
which the public would have paid interest would have been
4,730,000/. And this reminds me that it has been stated
in another place that no issue of deficiency bills could have
been made with a view to economy, because interest was;
only paid on the amount which was issued. I will let the
committee judge of the accuracy of that statement from
the fact which I have already mentioned—namely, that in
the last quarter, when wo paid 364,000/. for interest, we
had not ono shilling from the Bank. But, as I have
said, the amount which would have been brought to
charge in the present quarter would have been 4,730,000/.
The maximum amount which has actually been
brought to charge, in consequence of the mode of issue
which has been adopted, is 3,048/. Sir, I repeat, I have
been borrowing during the present quarter under peculiar
and extraordinary circumstances. The maximum excess of
the Bank advances over the public balances during the pre-
sent quarter has been 1,350,000/. On a former night anxious
not to overstate the case, and not having at that period,
although I had been workingi petty hard, penetrated into
the inscrutable mystery of deficiency bills, I was not aware
of the whole arrangement. I then stated that the cash ad-
vanced by the Bank amounted to 2,150,000/. ; but I stated
the case against myself, because the maximum excess of the
Bank advances, on the 19th of April, was only 1,350,0001..
That sum was subsequently reduced to 900,0001., and I be-
lieve at the present moment that debt is entirely extinct.
(Cheers.) Therefore, sir, I think I have disposed of the ac-
cusation of being an habitual borrower from the Bank. I
hope also I have disposed of the charge of being an enor-
mous borrower, because it appears that, under extraordi-
nary and peculiar circumstances, the sum I have been ow-
ing is 900,000/., and that for a period of between four and
five weeks. (Hear.) Sir, the real truth is that the amount
wo borrow in this way is of little importance one way or
the other. The sums I have named are all trifling sums --
they scarcely affect the business of the Bank; and the only
important question which you have to consider is, are you,
or are you not, to make use of your own deposits? There
is no complaint whatever from the Bank ; and I think I
have shown you that the complaints which have been tnedd
against me aro not founded on justice. I may here add,
what I have not yet mentioned, that the greater part of the
Bank advances have gone in meeting naval and ordnance
charges in connection with the expedition to the East ; so
that, in point of fact, but for those charges, the whole sum
which it would have been necessary to borrow from the
Bank would have been 400,000/. or 500,000/. (hear.) Then
sir, it is said that there was an understanding between the
Government and the Bank. There could not be a greater
error. When my right hon. friend the member for the
University of Cambridge, together with the late Sir Robt.
Peel, made the agreement in 1844 which now governs the
relations between the Government and the Bank, there was
a distinct understanding come to that the Government
should always maintain "the usual amount" of deposits in
the Bank, which means, in other words, a small amount of
deficiency blls, for the one is the correlative of the other.
It was also agreed that if, on the one hand, the public
balances should be increased beyond the usual amount, the
Government NI ere to have a claim upon the Bank for a
share of the profits ; but if, on the other hand, the balances
should be diminished below what they commonly were,
then the Bank was to be entitled to remuneration from
the Government. Well, sir, in order to ascertain what
was meant by " the usual amount" of the advances, per-
haps the fairest manner would be to take the average
amount in the quarters immediately preceding the agree-
ment of 1844. That amount was, doubtless, taken as the
foundation of the compact; but it was an amount exceed-
ing that which I have taken during the last two quarters,
under extraordinary and peculiar circumstances. e
(tah,rai
And now, sir, with regard to notice. It is supposed '
nothing was done by me to prepare to Bank authorities
for what was cooling. Now, I hold in my hand
a memo-
randum which I placed in the hands of the
Governor of
document.
the Bank on the 26th of July, 1853, and in
le,
as the ope-
ration
failed,
I pointed out that it was extremely probable,
that on the
in regard to the stocks had then
sth of January we should bills demand deficiency to the
amount of 3,300,000/. more than the amount which was
actually taken. I trust, therefore, that as far as notice
_
of what was due to
was concerned, I was not unmindful
the Bank and to the great interests involved. (Hear.) It
is also, to state that, although
the authorities of
proper,
the Bank have since laboured under circumstances of some
difficulty, at the period when my memorandum was de-
livered not the slightest objection was made to my pro-
posal. With respect, sir, to the accommodation of trade, I
believe I need not go deeply into that question, because
trade has not been injured, and has not complained. Ido
not think that a state of things in which, for tho greater
part of this year, the rate of discount in Lombard-street
has been below 5 per cent. is much to be complained of, all
circumstances considered. But then it is said that we have
been favoured by the Bank, and that we aro paying rates
of interest lower than those common in the market. That,
again, is a total and entire fiction. The rate of interest, I
admit, is apparently low, but it really is not so. The esta-
blished system is this. At the end of every quarter the
Chancellor of the Exchequer writes to the Governor of the
Bank, hoping that the court of directors will provide what-
ever amount of deficiency bills may be required to meet
the public charges. Last year the rate of interest was
only id. a day ; at present it is 2d. a day, or 3 per cent.
per annum, which undoubtedly is a low rate of interest ;
but I think you will not consider it so low when you bear
in mind that the Bank received in the last quarter upwards
of 300,0001. as interest upon deficiency bills, when the
minimum of the excess of the public balances over the
Bank advances was 1,160,000/. Although the nominal rate
of interest which we are to pay in the present quarter is 3
per cent. per annum, the real rate we are to pay upon the
sums advanced to us by the Bank in excess of the public
balances is a rate which varies from day to day between 4
and 5 per cent., according to the issue of deficiency bills,
as regulated by me ; but if the deficiency bills had been
issued in the ordinary manner, the rate of interest would
have been from 6to 7 per cent. I do not call that an im-
moderate rate of interest for the public to pay upon de-
ciency bills ; at all events, it disposes, I think, of the notion
that the Bank has sacrificed its interests by taking from
the Government only a low rate of interest. Nosir
the question arises, whence is it that all these delusionsecompletely
have arisen? Why is it that the public is so compl
in the dark with respect to the issue of deficiency_lsn
ybill
will
This house seemed to beequally in the dark. 3
recollect the speech of the hon. member for
Peterborough,
a gentleman who was himself Governor of the Bank last
in this house—and
in which he declared, in his place
year,
gentleman
the member
for Buckinghamshire and several
lie was believed by the right hon. _t
would be
others—that we
obliged to demand from the Bank in the present quarter a
sum three times larger than we proposed to ask. His
statement was credited, and why Because you have got
ts,
a statement fitted for
a fictitious statement of accounts,
is a class of people who
purpose ere
every of delusion.
think that mystery in finance is a virtue. A laugh.) I
am bound to say that I am the not quite sure that Com-
ptroller of the
Exchequer does not in some degree partici-
nion. (Laughter.) Ho is very unfortunate
upon this subject pate in that opi
of alteration in the mode of issuing and
•
meeting r deficiency
bills. Earl Grey appears also in the
same positron—and if I refer to Earl Grey, I cannot do so
without expressing the sincere respect I feel for his cha-
racter, his abilities, and his patriotism—(cheers)—but Earl
Grey is
stated to have said in another place that the
effect of the change in the mode of issuing deficiency bills
had been to blind the public. There is a short answer to
that statement. The effect of the change could not pos-
sibly be to blind the public, for the public was, unfor-
tunately, blind already. (A. laugh.) The public believed
that 6,000,000/. of deficiency bills were to be issued when
only 1,000,0001. were issued, and that 3,000,000/. were to
be issued when none were issued at all. I admit, sir, that