The Sun.
London, England, 1859-03-11 00:00:00

THE SUN, LONDON, FRIDAY EVENING, MARCH 11, 1859.

dered as a whole, and the opinion of the house taken upon
all the arrangements. The hon. gentleman had alluded to
a doctrine enunciated by his right hon. friend the member
for the University of Oxford, that you ought to levy as much
money as you could by taxation • but it was equally true
that if, you borrowed money at all you ought to borrow as
well as you could. This money was raised at an emergency
during the Crimean war. More money was wanted to pro-
vide for the service of the year ; a loan was then out, and
therefore the only means by which it could be raised with-
out breaking faith with the takers of that loan was by is-
suing Exchequer-bills. They were issued, and had since
been funded, and substantially the same thing had taken
place as if the money had been borrowed by loan at that
time. This power was one the possession of which enabled
the Chancellor of the Exchequer of the day to raise money
in such form as was most economical, and therefore most
advantageous to the public, whose interests alone he could
desire to consult ; and therefore he hoped that this resolu-
tion would not receive the sanction of the house.
Sir H. WILLOUGHBY said that if you wanted to raise
£7,600,000 with the Three per Cents. at 95, you would have
to create £8,000,000 of stock. In this case, however, the
amount of stock created had been £8,469,237; therefore at
the first blush of the transaction the public appeared to have
lost £469,237 by the transaction. In the year 1847 Mr.
Goulburn was compelled to have reeourse to the same sys-
tem. He created £7,627,000 of stock, and he (Sir H. Wil-
loughby) believed that during a series of years nearly
£16,000,000 had been added to our funded debt. He hoped
a measure would be introduced to limit the action of the
Chancellor of the Exchequer in creating funded debt to
cases where the interests of the savings-banks were alone
concerned. It was never intended to make the money of
the savings-banks an engine for creating new debt, except
in some great emergency, and he trusted the practice now in
vogue would be put an end to at once and for ever.
Sir C. LEWIS—The hon. member for Peterborough has
done good service to the house in calling its attention to the
recent funding of Exchequer-bills. He has accompanied his
statement with an abstract resolution that in future no fund-
ing of Exchequer-bills heldby the Commissioners of savings
banks should take place without the special authority of an
act of Parliament. That resolution he submits in conse-
quence of the recommendations of the committee on savings
banks which sat last session, and which suggested that no
sales, purchases, or exchanges of stock or securities held by
the commissioners should be made, except as required for
the purposes of the savings-banks themselves, and that no
funding of Exchequer-bills held by the commissioners should
in future take place without the special :authority of an
Act of Parliament. In consequence of successive issues of
Exchequer-bills, some of which took place during the late
war, all of which, let me observe, were made under the
authority of an act of Parliament, and therefore received
the attention of this house at the time, the Exchequer-bills
on the Ist of July last amounted to £20,889,000. The hon.
member for Peterborough, in speaking of Exchequer-bills,
and their conversion into funded debt, talked of increasing
the national debt, and seemed to regard Exchequer-bills
as of a different nature in respect of public obliga-
tion from funded debt. It is quite true that, according to
the theory of Exchequer-bills, they are charged only upon
votes in supply, and they may be paid off at certain short
periods; but we know that practically the vote for the re-
newal of Exchequer-bills is taken annually as a matter of
course, that Exchequer-bills are just as much a portion of
the permanenent debt as Consols, that precisely the same
obligation lies, and that, although there is a power of vary-
ing the interest, we should for all practical purposes regard
Exchequer-bills as being as much a portion of the national
debt as the Three per Cents. The amount of Exchequer-
bills on the Ist of July last was undoubtedly large, but it
was not larger than the unfunded debt had been in previous
times, even with the addition of £4,000,000 of Exchequer-
bonds. Let the house bear in mind, however, that a large
portion of the Exchequer-bills, viz., £7,600,000, were held
by the Commissioners of the Saving-banks. Practically,
therefore, they were withdrawn from the market—they
were in the hands of the Government, and they did not
influence the market rate of Exchequer-bills. The Chan-
cellor of the Exchequer, in the exercise of a discretion
which he possesses under an Act of Parliament, and which
had been often exercised in previous times, but not, I
think, until last January since 1853, funded £7,600,000 ;
and the point which I was desirous of hearing explained
by the Secretary for the Treasury was what was the
motive of funding that amount, because I am not
aware that any advantage accrued either to the Go-
vernment or to the Commissioners of Savings-banks
from that operation. (Hear, hear.) The commissioners
held a large portion of stock ; they also held a large amount
of Exchequer-bills ; they could have sold either the one or
the other according to the state of the market; and, there-
fore, although I do not dispute the legal power of the Chan-
cellor of the Exchequer, and although that power had been
exercised by many of his predecessors, including some of
our best financiers, I do not clearly understand at present
wherein the benefit to the Commissioners of Savings-
banks or to the Government consisted in the operation
which took place. The Exchequer .bills were at a premium
of 375. per cent., and therefore the commissioners could; by
going into the market, to a certain extent, have realised
their bills at a premium. If Exchequer-bills had been at
great discount there might have been a stronger prima facie
case for the exercise of the power possessed by the Chan-
cellor of the Exchequer, but, seeing that the commissioners
held a large amount of stock—much more than sufficient to
meet any demand by depositors—which they could at any
time realise, and seeing that Exchequer-bills were at a
high premium in the market, I cannot understand, without
further explanation, what was the motive of the Chan-
cellor of the Exchequer in funding the entire amount of
the Exchequer-bills held by the commissioners. The right
hon. gentleman, when addressing the house on the previous
occasion, seemed to think that he was following out a policy
which I had seen commenced during the war. It is true
that during the war, when money was raised by the issue
of fresh Exchequer-bills, it was found advisable that some
of them should be taken by the Commissioners of
Savings-banks. That I believed at the time was an opera-
tion advantageous to the Government, to the public, and
not less so to the commissioners; but I did not, while I
held the office of Chancellor of the Exchequer, resort to any
funding of Exchequer-bills in the hands of the commis-
sioners, and I am not aware that anything occurred until
January last to render such an operation expedient. It is
one thing that the power exists, and another that it should
be exercised without any apparently sufficient reason.
With respect to the motion of my hon. friend, that is a
general question, going, beyond the particular operation
under our consideration. This power exists at present by
Act of Parliament, and I apprehend that the fact of the
house acceding to this resolution would not repeal the pro-
vision of the existing act. It would merely amount to the
expression of an opinion on the part of the house, and the
Government would then find itself armed with a legal
power, which in point of law it was justified in exercising,
but would scarcely know whether its discretion was fettered
by the resolution of the house. On account of the form of
the resolution, I shall not be able to support the motion. If
the question were to be brought under the consideration of
the house with a practical view, the proper course would
be to bring in a bill to repeal the provision I have alluded
to, and deprive the Government of the power it now pos.•
sesses by statutory enactment. (Hear, hear.) But that
raises the question as to the expediency of this power,
and to decide that question• we must look to the report
of the committee of last session containing the recommen-
mendation. The main object of that commission was to
investigate the administration of the savings banks, and
incidentallythe committee considered the financial questions
involved in the management of the money of the savings-
banks, and the powers with which Government is invested.
Though I fully admit the value of the opinions of this com-
mittee on the general question of the management of savings-
banks, I must, with great respect for the members who com-
posed it, express some doubt as to the consideration they
gave to the financial questions involved in their report,sand
to show my reason for distinguishing between these two
parts of the report I would call attention to one remark
made by the committee, which seems decisive as to the fact
that they had not carefully considered the financial part of
the question. In page 6 the report states that during the
period from 1828 to 1844 there were large transactions in
the purchase and sale of Exchequer-bills by the Commis-
sioners of the Savings-banks, and then it goes on to say
that it appears that the money of the savings-banks was
frequently employed in the purchase of Exchequer-bills,
when they were at a discount, and that such purchases
continued for a considerable period of time. I take it that
the meaning of this part of the report is that the Savings-
bank Commissioners abused their trust, because they
bought Exchequer-bills when they were at a discount.
Now, it must be quite obvious that if the Savings-bank
Commissioners bought Exchequer-bills when they were
at a premium, they might have made a bad bargain for
the public ; but if they bought them at a discount,
they bought them at a time when the pur -lase was
most advantageous to the public. (Hear, hear.) There-
fore that very circumstance, which this committee point
out as proving the disadvantageous nature of the transac-
tions of the commissioners and the abuse of their trust, is
the clearest prciof that they made, an advantageous bar-
gain, and understood better than the committee the nature
of their trust. (Hear, hear.) I therefore think that the
committee did not very carefully consider the financial
bearings of the question, and on that account am the less
disposed to place any very great value upon their recom-
mendation in respect to this part of the subject. (Hear.)
Just let us look at the two branches of the recommendation
of the committee. They say that no sale or purchase of
Exchequer-bills, stock, or securities, should be made ex.

cept as required for the purposes of the savings-banks
Practically speaking, the Government is the banker for the
! savings-banks. The money paid over by the depositors in
the savings-banks is employed by the Government as an
independent banker. The Government is debtor to the sav-
ings-banks, and acting as a banker for them it is reasonable
that it should have the power to vary its securities and to
sell stock and buy Exchequer-bills, or sell Exchequer-bills
and buy stock, according as the state of the market renders
either operation advantageous. There is nothing out of the
way of a banker in these two operations, and the recommenda-
tion of the committee would deprive the Commissioners of the
Savings-banks of that power. It is also proposed that with
respect to the funding of Exchequer-bills the hands of the
Government should be tied up. lam not prepared to say
that there is any very great value to the Government in the
possession of that power. It is possible that circumstances
might arise in which the power of funding Exchequer-bills
may be of importance. I confess it does not appear to me
that it is a power liable to be seriously abused. I cannot
see any material difference between the funded debt and
the unfunded debt. Gentlemen seem to think that there is

something more easy to discharge or light in pressure in the
unfunded debt than in the funded debt. I apprehend that
any belief of that kind is a complete delusion, and that the
unfunded debt is just as much national debt as the funded
debt. Therefore this power, which sounds so alarming, of
funding Exchequer-bills, does not very much frighten me
in reference to its exercise: but whether that power is of
any essential use to the Savings-banks Commissioners or
not, I think it most essential that they should have the
power of varying their securities, and a satisfactory reason
ought to be alleged why the Government, being the banker
for the savings-banks, should not possess the ordinary
Powers of a banker to vary its securities, to sell stcck and
With Exchequer-bills, or sell Exchequer-bills.and buy stock.
liable
respect to this ulterior power, I do not believe it is
and Isl° any serious abuse. With regard to funding Ways
bfoe abeveeaus bins' no doubt that in that respect there would
serious
enfor
guardingcta li ca then s t
teat
trYak
rower. (Hear.)fuudingmisoafppwrliacaytsionanodf
practically
Means bills does undoubtedly amount to a creation of funded
debt without the authority of Parliament •but the house
when must clearly understand thate ,
n Exchequer-bills are
funded no debt is created without the authority of Parlia-
ment. Exchequer-bills are just as much debt as Consols,
and whether the form is transferred or not from unfunded
to funded, the debt is still national, and as
binding
on the
nation. The doubt, which I confess I entertain, is whether
any advantage accrues to the public or to the Savings-banks
Commissioners from the power of funding Exchequer-bills.
Possibly advantage may arise, and perhaps the Chancellor

of the Exchequer will be able to state an adequate reason
for the operation.
Mr. T. BARING was a member of the committee re-
ferred to by the right hon. gentlemai. That committee was
appointed to inquire into the admini3tration of the funds of
the savings-banks, and to see whether due security was
afforded to the depositors. The right hon. gentleman said
the committee had no right to inqure how the money was
disposed of.
Sir G. C. LEWIS said he did rd mean to question the
powers of the committee, but had only said, judging from
the report, that they had not incpired into one branch of
the subject so carefully as into anoter.
Mr. T. BARING said that the rght hon. gentleman had
stated that the Government was banker for the savings-
banks; but one question for the committee to consider was
to what extent the Government vas a security to the de-
positor, and the result of the incrtiry was, as he believed,
that all these changes of securities were not made always for
the benefit of the savings-banks, but sometimes to aid a
needy Chancellor of the Exchequer n his operations. (Hear.)
That was the ground on which tie committee ventured to
recommend that some limit shoull be placed on the power
of the Commissioners of the National Debt, or in other
words, of the Chancellor of the Exchequer; for every one
knew that in reality they were tie same. (Hear, hear.)
The committee had presented they views. Their opinions
might, as the right hon. gentleman had said, be utterly un-
worthy of the notice of the house, but they had only done
their duty in recording their view as to the propriety of
continuing the power at present vested in the Chancellor of
the Exchequer. The motion before the house, however,
was not of sufficient weight to be of much avail. It was a
mere resolution which no Chancellor of the Exchequer
would be compelled to act upon; and there could be no
doubt that the proper mode of electing the proposed object
was by an Act of Parliament, in the debates upon which
the whole matter might be fully discussed. It had always
appeared to him to be most objectionable to vest in the
Chancellor of the Exchequer the power of secretly, without
the cognisance of the public, and without that notoriety
which was essential for the credit of the country, trans-
ferring-the unfunded debt into funded debt, thus throwing
a mass of funded debt upon tie market without previous
notice. (Hear, hear.) He did not say that the transfer
from Exchequer-bills into Consols was an increase of the
debt of the country ; but it was an increase of one portion
of the debt without notification to the public, and it was
this which made it objectionable. Under the present sys-
tem the commissioners had authority whenever convenient
to fund Exchequer-bills, so that there was as it were a kind
of mill, into which Exchequer-bills being put came out
funded debt, and this went on round and round as long as
it suited the convenience of the Chancellor of the Exche-
quer. He had no doubt that the power was honestly and
conscientiously exercised by Chancellors of the Exchequer.
but he considered that it was one which could not
exist with safety to the credit of the country. (Het.r, hear.)
Mr. GLADSTONE—The hon. gentleman opposite has
proposed a resolution to limit, in a particular point, the
powers of the Chancellor of the Exchequer as the guardian
of a very large mass of public money placed in his hands,
and to'provide that no funding of Exchequer-bills heldby the
Commissioners of Savings-banks be made without the special
authority of an Act of Parliament. The discussion which
I have heard leaves upon my mind the impression that,
whatever may be the merits of the particular transaction
under review, the reasons for adopting which have not as
yet been fully stated, the whole subject is one on which it
would be inexpedient for the house to come to any practical
conclusion, unless it were founded upon a more thorough
investigation of the subject than has yet taken place.
(Hear, hear.) It is quite plain that the powers of the Chan-
cellor of the Exchequer, as the keeper of the public money,
are enormous. I don't hesitate to say that, in my opinion,
they require review and reconsideration, and that in some
important particulars they ought to be limited. Undoubt-
edly, however, if there be any one point of special danger
to the public created by those powers, it is not that which
is raised by the motion of the hon. gentleman ; but it is the
power which the Finance Minister possesses of creating
new public debt by the funding of deficiency bills, or, in
other words, of meeting deficiencies in the revenue of the
country from year to year by the creation of new debt,
without the authority of Parliament. (Hear, hear.) That
is an enormous power, and it is not merely speculative in
its character ; but it is a power which has been used in a
manner highly detrimental to the public interest ; and
if the house is to go into the matter at all, it should direct
its atttention to that, which is by far the more serious
part of the subject. With regard to the more limited
question opened by the hon. gentleman opposite, I agree
that that also deserves the attention of Parliament, and that
the state of things at present established by law is not alto-
gether satisfactory. For the most part I concur in the
views and observations of the right hon. gentleman the
member for Radnorshire. At the same time, I think that
the house has not had sufficiently under its view the various
questions that are involved in these great monetary trans-
actions of the Chancellorof the Exchequer. The Chancellor
of the Exchequer is the greatest banker in the country, and
I believe, also, that he is the greatest operator on the Stock-
Exchange in London. (Hear, hear.) I don't enter upon
the question of whether that should be so or not. I believe
that it would be injurious to the public interest that you
should altogether deprive him of his power in this respect;
but undoubtedly he ought to act under rules and on prin-
ciples that have been maturely considered and deliberately
adopted by the House of Commons. (Hear, hear.) Instead
of that we have a system which has grown up from time
time in great degree by haphazard. The Chancellor of the
Exchequer is frequently in a difficulty to know how far he
is justified in using the powers with which the law invests
him, and it would be greatly for his advantage, as well as
for the satisfaction of the public, that it should be deter-
mined by the house in what manner, and on what prin-
ciples he was to iirocceed. But the chief object which I have
in rising is to nnice what has been said by my hon. friend
behind me on the subject of savings-banks funds, because
we are at issue on a point which itought not to be difficult
to settle. My hon. friend the member for Huntingdon
thinks that the funds in the hands of the Commissioners
of the National Debt are the funds of the depositors
in savings-banks. In my opinion there cannot be a more
gross delusion. (Hear.)%They are not the funds of the Com-
missioners of Savings-banks any more than £5O remaining
in a banker's till belongs to me, if I happen to have depo -
sited £5O with him. It does not belong to me, it is his
money, to use it as he thinks fit, subject to its repayment to
me. To say that the depositors in savings-banks were to
place their money in the hands of a public body, and were
to be responsible for the prudent use or gross misuse of their
funds by that body, would be doing them anything but a
kindness. It would be impossible to lay down a rule that
would be more ruinous to the depositors themselves. What
do you do ? You take the money of these depositors and
you give them the entire security of the public for their
money. They cannot have a better security, and if you give
them that, they have no interest in the employment of the
money; it doesn't signify to them if you fling it to the bot-
tom of the sea. So long as the treasury of the country is '
sound, it does not matter one rush what the Chancellor of
the Exchequer does with the money. If he invests it well
they are no richer, and if he plays all the tricks of the
mountebank, or disposes of it with the artifices of the
swindler, they are none the poorer. The depositors in
savings-banks have nothing to do with the question, and it
is only weakening and impairing their position to make
them depend upon the prudence of the Minister instead of
upon the credit of the British public. (Hear.) Ido not en-
tirely follow the member for Radnorshire when he says
that there never can be an increase of the public debt
from a transaction such as that which recently occurred.
With regard to that transaction I give no opi-
nion. I know no more than he does the reasons which led
the Chancellor of the Exchequer to adopt it ; and
I only speak, therefore, of the general principle.
It does not appear but that there might be an increase of
the public debt under the exercise of this powet by the
Chancellor of the Exchequer. If the Commissioners for
the Reduction of the Public Debt are the holders of
£1,000,000 in Exchequer-bills, and the Chancellor of the
Exchequer finds that £1,000,000 at a rate that will ex-
punge the assets of the commissioners to that amount,
replacing them by. £1,100,000 of stock, the first impression
of the transaction is that it is a mere matter of account, and
that the public is neither more nor less indebted than before,
because the £1,100,000 is a portion of certain assets, the
property of the public themselves ; and if the public are, on
one hand, creditors, they are, on the other, debtors to that
amount. But contingently the transaction may add to the
public debt ; for whereas before, by means of the £1,000,000,
the Chancellor of the Exchequer might have gone into the
market, and, by selling that amount, made the public really
debtors to the buyers by £1,000,000, he has now the power
of going into the market and selling £1,100,000; therefore,
to the extent of the difference of £lOO,OOO, there might be
a creation of new debt by a transaction of this kind. I
would suggest whether it would not be useful, while leav-
ing the Chancellor of the Exchequer the powers he now
possesses, with regard to this exchange of securities, to
provide that all such transactions shall, as a matter of
course, be brought under the review of a committee of this
house. (Hear, hew.) Ido not pretend that this should
stand in the place of a consideration of further and fuller
measures on the subject; but the house does entertain a
certain amount of jealousy of these operations; in the city
of London also the operations of the Chancellor of the
Exchequer are regarded with considerable jealousy, because
they interfere with the regular transactions in stock, and
the house would be exercising its constitutional juris-
diction if, by some special organ, it assumed a periodical
review of all operations of this kind. It is well worth the
consideration of the house whether it should not make some
provision that would prevent it depending on any indi-
vidual member inviting attention to the subject—whether
there should not be some regular and fixed machinery by
which operations of this kind could be brought under the
consideration of Parliament and regulated beforehand. It
would be dangerous to say that the Chancellor of the Ex-
chequer shall not exercise the power, because the advantage
of an operation might be lost by the necessity of making an
application to Parliament; but it is quite another thing to
provide the means of a more rapid submission of the opera-
tion to the- audit of the House of Commons.

Mr. W. WILLIAMS thought it was the duty of the
house not to allow the existing act to remain any longer on
the statute-book. He had never known a transaction of
this kind in which the public had not sustained a loss. He
hoped the hon. gentleman would withdraw his motion, and
bring in a bill.
Mr. HENLEY could not at all agree with his right hon.
friend that the savings bank depositors had nothing to do
with what became of their money. What the right hon.
gentleman said was quite true in so far as the principal was
concerned ; but they must remember that there was such a
thing as interest. The depositors complained that they did
not receive quite so much as they ought ; and the answer
was, that if the Government realised and paid them off, it
would lose by the transaction. That might be so ' • but
then the depositors had a right to ask, "How much have
you lost by jobbing ?" He (Mr. Henley) suspected that it
was in this sense that the committee had complained of the
commissioners buying Exchequer-bills at a discount.
The CHANCELLOR of the EXCHEQUER wished to
recal the attention of the house to the motion that was

really before it ; and he would not therefore enter

into collateral subjects, which were no doubt interesting,

but, which were not raised by the resolution. The notice.

being to call attention to the late funding of Exchequer-
bills, for which he (Mr. Disraeli) was responsible, and
which had taken place by his advice, he could not but re-
gard it, notwithstanding the hon. gentleman's courteous
expressions, as a vote of censure upon the operation ; for it

was in consequence of that operation that the house was

called upon to legislate, and of course to legislate in the way
of censure. He (Mr. Disraeli) had been asked why ;the
Government had taken the step of funding £7,600,000, aad
he would now tell the house the reason. In the course of

the autumn his attention had been called to the subject by
a complaint on the part of the Commissioners of Savings
Banks, to the effect that the security they held was a losing
one, and that they were not receiving the interest that they

would have done under another form of investment. It
might be said that the Chancellor of the Exchequer and
the Commissioners of the National Debt were but a single
person, and that this was a fiction used in discussion. But
in fact that was not so. There were two accounts ; there
was the account of the savings-banks, and there was the
general account of the country. Of course those who were
responsible for that account did not wish to see a loss appa-
rently under their management regularly accruing upon
the savings-banks, and therefore they naturally wished to
put an end to what had a very ugly aspect, and for which
they were responsible. Though that was one of the rea-
sons, he candidly admitted that that was not the reason
which had induced him to sanction this operation. His
attention was called to the large amount of Exchequer-bills
then in existence, and to that of which nobody could be
insensible, the very delicate state of the Exchequer-bill
market, and he was asked to consider what might be the
effect of having so large an amount of Exchequer Bills, not
afloat, but in existence, and what consequences of great in-
convenience and injury might possibly accrue from those
circumstances. He naturally inquired what was the reason
why the Savings Bank Commissioners were in possession of
so large an amount of Exchequer Bills as between seven and
eight millions sterling. Perhaps the house would like to
know that that was not a natural or usual state of things,
and how very rapidly that amount had accrued. At the close
of 1854, the commissioners had only £200,000 of Exchequer
Bills. It was true they had £1,600,000 of Exchequer Bonds,
making altogether of the unfunded debt in their possession,
£1,800,000. On the sth July, 1855, between bills and bonds,
the amount had reached £3,315,000. At the close of 1855,
it was £4,886,000, and on the sth July, 1856, £6,875,000.
He found the amount between seven and eight millions ;
and it appeared to him that this was a very dangerous state
to be placed in, the Exchequer Bill market being a very
delicate market, and naturally so, from the very unsatis-
factory state of that security. Suppose these securities,
which were periodically paid off, had become liable to be paid
at a moment when there was a great scarcity of money ;
suppose there had been such a state of affairs as suddenly
occurred in 1857 for example—the minister insisted on going
to the savingsbanks, and finding that they had a very large
amount of capital in the funds to assist him, would have
found that their resources were entirely absorbed and clogged
up by themselves holding seven or eight millions of Ex-
chequer Bills. This was very unsatisfactory not only to the
Chancellor of the Exchequer, but to the Commissioners of
Savings Banks themselves. t was thought necessary, and it
was not done hastily to sanction a change which would put an
end to that system. Mr. Baring had talked of needy Chancel-
lors of the Exchequer availing themselves of these securities
for their own benefit ; but in this instance the change was
made for the benefit of the savings banks themselves ; for
they received, in lieu of a security which they viewed with
distrust and suspicion, one with which everybody was satis-
fied. That was the real reason which had prevailed upon him
to sanction the funding of this large amount of Exchequer
Bills held for the savings-banks; and he believed that the
course was one very much for the advantage of the savings
banks, and one in which the government itself was really
not at all interested. Because, so far as the prices of
Exchequer Bills floating on the market was con-
cerned, this £7,800,000 could not at all affect them. They
were in possession, practically, of the Government; and he
had to ask himself how they came into the possession of the
Government. He was obliged to look at the circumstances
which had led to this rapid increase in the hands of the
Savings Banks Commissioners; and it appeared that those
circumstances had arisen in a very legitimate and proper
manner. They had arisen in consequence of a very excep-
tional and extraordinary event—the occurrence of a war,
in which that house voted Exchequer-bills, in order that
the minister of the day might raise money on them to carry
on the war. He looked upon the funding of these Exche-
quer-bills as virtually the completion of that transaction.
He had no hesitation in using the phrase of gentlemen op-
posite ; no doubt, it was virtually the completion of a loan
which the country had incurred to carry on the war. But
it was completed in a legal manner—in a manner perfectly
satisfactory to the Commissioners of Savings • banks. And
it was really of no advantage whatever to the Government
beyond, that advantage which must always accrue when
funds of this kind were in a satisfactory and healthy con-
dition, That was the real reason why this funding had
taken place ; and he believed that it was an operation ne-
cessary and advantageous, and strictly in consonance with
the law of the country. He deprecated the motion being
passed. The subject would not be dealt with at all satisfac-
torily by acceding to the motion ; but he was perfectly will-
ing to admit, as he had done before, that the state of our
unfunded debt was not by any means satisfactory. He did
not think that the instrument of security itself—the Exche-
quer-bill—was an instrumentadapted as much as it ought to
be to the times in which we lived. The shortness of its date,
the possibility of its becoming due• to a large amount when
there was a great strain upon the money market, or even
a panic in the public mind, were circumstances highly dis-
advantageous; and it was quite possible that the wisdom
the Administration and Parliament might some day or other
substitute some instrument to represent our unfunded [debt
more effective than the form which at present existed. The
whole subject of Exchequer-bills was and had been for
sometime under the consideration of the Government. With
respect to the recommendations contained in the report of
the committee on public monies, he regretted that cir-
cumstances had prevented him from bringing all the recom-
mendations of that committee fully before the house ; but
he hoped shortly to do so, and he should then be able to
speak more definitely on the subject of Exchequer-bills than
it was convenient for him now to do. He hoped that the
house would not sanction the motion. He was convinced
that the power entrusted to the Chancellor of the Exche-
quer had been exercised greatly to the public advantage,
and he should not be afraid of failing to establish that if
that were really the point at issue. The real point was the
recent funding of Exchequer-bills, the cause of that fund-
ing, and whether, in consequence of that funding, the house
ought to interfere by legislation to express its disapproba-
tion thereof. He had detailed the main reasons which in-
fluenced him in that course. He had not in the least con-
sidered the convenience of the Government, but solely what
he thought was due to the condition of the savings banks
themselves. He believed that it was a necessary, operation;
he knew it was legal ; and he trusted that the house would
not, by passing this resolution, express disapprobation of
it.

r Mr. WILSON wished to call attention to two points. So
far from the market being in a perilous state at the time of
this transaction, Exchequer-bills were at a premium of 341-
to 371-; so that there was nothing to justify any extraordinary
course. That course had been taken on the 31st of January;
had the Government waited a few days they, might have ob-
tained the sanction of Parliament. As the bills were vir-
tually in the hands of the Government where was the
necessity of funding them ? It was said the funding had
been made for the convenience of the Savings Bank Com-
missioners ; but the effect would be to increase the interest
to be provided for from £163,000 to £250,000. As the de-
positors in savings banks received a uniform rate of interest,
the sole question was whether this was a good bargain for
the Exchequer. The great objection to the proceeding was
that by converting unfunded into funded debt, it was taken
out of the province of Parliathent, and the Chancellor of
the Exchequer lost the power of taking advantage of the
varying rate of interest in renewing his Exchequer-bills.
It was said that the amount of Exchequer-bills was very
large--twenty millions—at the time of this operation; but
the average amount of late years had been eighteen millions.
Mr. HANKEY said that the house had had the advan-
tage of hearing different opinions from three Chancellors of
the Exchequer. He would not press the motion.
' The motion was then withdrawn. ,
MILITARY ORGANISATION.

Captain VIVIAN moved for a select committee to in-
quire into the effects of the alterations in military organisa-
tion regarding the War-office and Board of Ordnance made
in the year 1855, and also to inquire whether any changes
are required to secure the utmost efficiency and economy in
the administration of military affairs. Considering the
amount of our military expenditure, it was important, he
observed, to see that this large item was economically as
well as efficiently 'expended. He would point out one
or two defects. There was a central register for
letters, which seriously impeded their delivery at the
proper branch. About 1,200 letters a day reached
the office. When referred to the proper branch,
the junior clerk made his minute on a letter, and so
on through half-a-dozen grades, until it came to the Secre-
tary of War; one writing, " I approve"—another, " I agree,"
and so on. (Laughter.) This showed pretty clearly what
"circumlocution" meant. Recently a requisition was made
for some oats for the Cape ; one clerk thought they ought
to go in sacks, another in tubs, another in barrels ; and
ultimately the question was referred to Sir Benjamin Hawes,
who decided in favour of sacks. (Laughter.) Meantime the
requisition itself was forgotten, and the oats did not reach
the Cape until after a delay of six months. (Hear, hear.)
Looking at the danger which at present existed of peace
being disturbed, he trusted that we should not again wit-
ness the humiliating spectacle of a splendid army being
sacrificed by the neglect of ordinary precautions; and the
Minister who should succeed in placing our military organi-
sation on a satisfactory footing would entitle himself to the
lasting gratitude of the country. (Hear, hear.)
General PEEL said that he did not intend to oppose the
motion which his hon. and gallant friend introduced with
his usual moderation and temper. (Hear, hear.) There was
nothing in the motion or the speech of his hon. and gallant
friend to lead him to suppose that there was any intention=
his part to cast censure or to express want of confidence in
the heads of the two departments to which the motion re-
ferred. (Hear, hear.) It was net brought forward in a
party spirit—(hear, hear)—and, indeed, the organisation of
the military departments of the country was too much a
matter of importance to be made the subject of party dis-
cussion. (Hear, hear.) The object of the motion was to in-
quire, not whether the system was duly administered, but
whether it admitted of any improvement. To that he had no
objection, and could have no objection. Improvements might
be made and he was actually carrying some out himself
at that moment. The motion of the present year was dif-
ferent from that of last year. He trusted that the object of
the motion was what it purported to be on the face of it—
that there was no intention of submitting the undoubted pre-
rogative of the Crown to a committee of the house, or of sub-
jecting the discipline and command of the army to any
greater control than what the house now possessed in the
presence of a responsible Minister, who was directly bound
to account for every shilling that was expended, and indi-
rectly responsible for the manner in which the duties of the
Commander-in-Chief were executed. As he wasnot going to
object to the motion of his hon. and gallant friend, he would
not enter into any of the details to which he alluded. In one
part of the speech of his hon. and gallant friend he could not
agree. He could not agree in the opinion that the prestige
of the British army had deteriorated, nor that the system at
present, existing was so defective as he seemed to suppose.
(Hear.) His hon. and gallant friend should recollect that
the system which was in existence during the Crimean war
had been changed, and whatever further improvements
might be decided on by the committee he should be glad to
carry them into effect. (Hear, hear.)
Lord HOTHAM was glad that his right hon. and gallant
friend granted this committee, for there existed in the public
mind a wide-spread feeling that those advantages which it
was expected would follow from the consolidation of the
military departments had not yet been realised.
Sir DE L. EVANS agreed in what had been said by the
noble lord, that there was a feeling abroad which rendered
necessary the appointment of a committee, and thought that
the Government acted judiciously in granting it. The dis-
cipline and control of the army ought to rest with the mili-
tary Commander-in-Chief, but there was also a question
of patronage which he believed lay at the bottom of
many complaints, and which ought to be inquired into.
(Hear.) If the responsible Minister had no control in this
respect they could not well hold him responsible. He hoped
the committee would remedy the evil, but if it was not well
selected and competent evidence produced, it would end in j
moonshine

Captain VIVIAN offered a few words in explanation to
the effectthat his motion last year was intended to establish a
clear and well-defined distinction between the two depart-
ments.

Sir F. SMITE; bore testintony to the advantage of having
an inspector of engineers.
The motion was then agreed to.

CHURCH RATES.
Sir A. ELTON moved a series of resolutions affirming
the exmeliency of discontinuing church rates, conaclin the
maintenance of the fabric of the Church o the zeal and
liberality of the clery and laity; of empowering a corpo-

ration, formed of the incumbent and churchwardens, to
hold and administer property appropriated to the Church ;
and of transferring the powers of the present vestry with
reference to the parish church to a new vestry, consisting of
contributors to the Church funds, the churchwardens to be
chosen therefrom. He stated reasons why, in his opinion,
the abolition of church rates must form the main ingredient
of any measure on this subject, and he proceeded to discuss
the resolutions seriatim. Those who desired to see the set-
tlement of this painful question should, he said, provide
some reasonable machinery that would enable Churchmen
to bear the burden that would be cast upon them, and
thereby secure the passage of the bill in another place.
Mr. S. EST,COURT suggested to Sir A. Elton that, in
the existing circumstances of this question, having detailed
his views, he would do better to withdraw the resolutions.
Mr. COWPER concurred in this suggestion, thinking
that no useful object would be gained by the motion.
After a few words from Mr. NEWDEGATE, the mo-
tion was withdrawn.
NEWFOUNDLAND FISHERIES.

LordBURY called attention to the Newfoundland fisheries,
and moved an address to her Majesty for copies of any corres-
pondence between the English and French authorities in
Newfoundland, or between the Governor of Newfoundland
and the Secretary of State for the Colonies, or between
the English and French Governments, which may show
the construction placed by the French authorities upon the
treaties which now regulate the Newfoundland Fisheries.
He admitted that this was a delicate subject, involving
questions of international law, in which we were at issue
with an ally, and which should not be discussed in an angry
spirit. His only object was, he said, to ventilate the sub-
ject in the house. France had made great demands, which
had been met by great concessions, and he wished to know
on what principle the negotiations were based. He gave
an exposition of the treaties on the subject of fisheries, of
the titles which the French derived from them, and of the
claims they had put forward.
Sir E. B. LYTTON said,—l can assure the noble lord
that I highly appreciate the temper as well as the ability
which he has shown on this subject ; and, so far from wish-
ing that he had not interfered in the matter, I am, on the
contrary, glad to think that we may secure so able a de-
fender of the rights and interests of the colony of New-
foundland, of which I myself am, as it were, the profes-
sional advocate. The-noble lord, I think, will see beforell
sit down that I am positively precluded from entering in
detail into this particular question. It is a subject to which
I have devoted great attention. It is one on which I have
formed a very decided opinion, but, as the noble lord has
truly stated, it is one that involves very subtle points of
argument and some serious ground of danger. I hope that
the disputes may be settled and the danger may be pre-
vented by amicable negotiation. I will not follow the noble
lord through his able historical disquisition, but will simply
admit that it is perfectly true that for the last 30 years ne-
gotiations have been begun, have been dropped, and have
been resumed with the French, with regard to their alleged
right of fishery in Newfoundland. The late Government,
believing that a mutual understanding between the French
and, the English Governments as to their respective rights
could not be arrived at by negotiation, attempted a kind
of compromise—viz., the convention of 1866, by which
we ceded a portion of our claims, and gained in return an
extension of our right of fishing on the coast of Labrador
and also a right to take bait. I cannot concur in the noble
lord's opinion that the right hon. gentleman opposite (Mr.
Labouchere) neglected British interests in this matter. The
Legislature of Newfoundland objected to that convention
and it fell to the ground. The noble lord spoke of the tra-
ditionary polidy on which he imagines every Secretary of
State is to act ; but I must remind him that during the
ascendancy of that political party with which he is con-
nected, there were no less, than eight successive Secretaries
for the Colonies in one single year. (Laughter.) If each
of those Secretaries of State had followed out a policy of his
own, you would have had eight traditionary policies for the
British colonies • and I would then ask the noble lord
whether he thinks that we should long have many colonies
left to us. I think the noble lord asked me whether I ap-
prove of the convention of 1856. I will venture to say that,
whether I approve or disapprove of what was done in that
year, I may assume that, if the right hon. gentleman the
member for Taunton were put now in office, he would not
make in 1859 the same propositions as he made in 1856,
partly because of the rejection of them by the Newfound-
land Legislature, and partly because further evidence on
the subject has been furnished to the Government. Hav-
ing considered that evidence. I have come to the conclusion
that the refusal of Newfoundland to concur in the conven-
tion was justified. When this convention was rejected by
the Legislature of Newfoundland, the French Government
expressed a determination to maintain its existing rights ;
they were summed up very briefly by the French authori-
ties ; they demanded the fulfilment of the treaty--nothing
more and nothing less. I can assure the noble lord I have
carefully examined this question in all its bearings ; and
if the noble lord should himself be nor successor in
the office of Secretary of State,. and wish to
pursue a traditionary policy, he will have an opportunity
of examining my minutes, and I think he will be
startled by their extent. Her Majesty's Government in-
quired whether the Government d France was disposed to
re-enter into a consideration of the convention, in order to
ascertain what are the rights claimed by the French, and
the manner in which those rights have been exercised. We
have proposed the appointment of a mixed commission to
investigate the facts on the spot, and to inquire into the
manner in which the provisions of the treaty are observed
by both parties. Her Majesty's Government are of opinion
that restrictions have been imposed on French fishermen to
which, it is alleged, they ought not to be exposed ; so, on
the other hand, it believes there have been encroachments
and deviations from the treaty on the part of the French
fishermen, which the people of Newfoundland have ex-
pressed a determination to resist. Now, I must say the
French Government have replied to this proposal in a most
friendly spirit. The commission will be appointed, and
proceed to make its inquiry in the beginning of May. I
think I may venture to hope that all chance of a collision
between the two parties arising out of the state of affairs in
Newfoundland is over ; for it is understood on both sides,
that during the ensuing fishing season, and while inquiry
by the commission is in progress, the English and French
commanders are to exercise all necessary forbearance with
regard to any occurrence that may lead to a dispute ; and
all measures of repression on the part of the French Go-
vernment will be suspended. The Government of France,
in acceding to our proposal, at the same time expressed a
hope that its having done so would be accepted as a fresh
instance of the friendly and conciliatory spirit by which it
is actuated. And at this stage of the proceedings I trust
the noble lord will acknowledge that it is neither wise nor
prudent to publish papers bearing on the very points in dis-
pute, which we hope are about to be examined in a spirit of
friendly inquiry. - There is no objection to publish the cor-
respondence, or extracts from the correspondence, that has
passed between the two Governments on this question of
the Newfoundland fisheries. But with regard to the other
papers, I think, as we shall have the report of the commis-
sioners themselves in a few months, that will be the natural
time to produce them, without the intervention of Parlia-
ment. This commission will, I hope, pave the way to a final
settlement of all the matters in dispute between both parties
to the negotiations.
Mr. LABOUCHERE said that as this question had been
a source of irritation between France and England for some
years, it was most desirable that there should be a satisfac-
tory arrangement. He did not understand from the right
hon. gentleman's remarks whether or not the commissioners
were to be empowered to conclude a convention, or whether
they were merely to inquire.
Sir E. B. LYTTON said the commissioners were merely
to inquire how the treaty provisions had been carried out
by both sides.
Mr. LABOUCHERE—Carried out ?
Sir E. B. LYTTON.—Or what breaches had been com-
mitted.
Mr LABOUCHERE thought that all that was pretty
well known already. Commissions had been appointed on
several occasions. There was one in 1848, one in 1850, and
one in 1851, and all these attempts to come to a settlement
of the disputes had entirely failed. The commissioner, Mr.
Merivale, was a man well able to deal with this subject.
He endeavoured to settle the matter without reference to
the colony, but that course was only taken on the condition
that any convention should not come into force until it had
been assented to by the Legislature of Newfoundland.
What took place ? A convention was framed, and when it
went to Newfoundland the-Legislature there did not assent
to it. Well, the French Government made no complaint on
that ground, and the Legislature of Newfoundland was
equally satisfied on that occasion. To go further into detail
on what then took place would be but wasting the time of
the house, and he was the less willing to do so because ne-
gotiations were now pending in the matter. He trusted that
his noble friend would be satisfied with the papers which
the right hon. baronet was willing to give him. His noble
friend had alluded to the system of bounties, which were
given both by the French and United States Governments:
He could not but think that his noble friend had much over-
estimated the effect of these bounties.
Mr. M. GIBSON said the difficulty which defeated the
last convention was, that the Newfoundland local Legisla-
ture had not been previously consulted, and he censured
such a course of proceeding on the part of the Imperial Go-
vernment. He hoped that, whatever treaty was come to,
nothing would . be ,conceded without a proper equivalent,
and a full communication with all parties concerned, and
that no rights of British subjects in Newfoundland would
be ceded to any foreign Power whatever.
Mr. WYLD thought that if a mixed commission were
appointed, one member ought to be nominated on behalf of
the Newfoundland Legislature.
Lord BURY replied. He was anxious to know whether
the persons having property along the shores of Newfound-
land, proposed to be ceded to France, were to be compen-
sated. He should" also like to know what were to be the
powers of the commissioners now proposed to be appointed.
Mr. LABOUCHERE explained that the treaty which
fell through did not propose to cede a single acre of the
shore. It merely dealt with rights of fishing.
Mr. S. FITZGERALD could assure the house that the
right hon. gentleman (Mr. Labouchere) had shown no de-
sire whatever to sacrifice the interests or to interfere
with the rights of the inhabitants of Newfoundland without
the ascent of the local Legislature. In answer to the noble
lord's question he had to state that commissioners had been
appointed on both sides to inquire, but with strict injunctions
not to enter into any engagements for the future. They would
also have the assistance of the Legislature of Newfoundland.
Sir H. VERNEY thought that the house was much in-
debted to the noble lord who had brought the subject for-
ward. To causes similar to those to which the noble lord
called attention we had to attribute the loss of 500 miles of
coast known as Russian-America, of the Island of Java, and
various other places, which might have been preserved but
for the negligence of which the noble lord so justly com-
plained.
Motion withdrawn.
HUDSON'S BAY COMPANY.
Mr. C.' FORTESCUE rose to move for an address for
copy of any correspondence between the Colonial-office and
the Hudson's Bay Company with reference to the charter
or to the licence of trade of that company since the 22nd of
February, 1858, being the date of the last returns upon
the subject. 11 e thought it must be admitted that the
time was approaching when the information he called for
could be no longer withheld.
Sir E. B. LYTTON was understood to say that all the
papers required were not as yet at the disposal of the Go-
vernment. When ready, there would be no objection to
their production.
Motion withdrawn.