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

PIERS AND HARBOURS.

In reply to Mr. FINLAY,
Sir J. PABINGTON said that it was intended to intro-
duce a bill to facilitate the construction of piers and har-
bours, but it must be postponed until Government received
a report on the subject.
DISEMBODIMENT OF MILITIA.
Mr. J. WESTHEAD asked the Secretary for War
what regiments of militia were to be disembodied, and at
what time, and whether, when the number of officers of any
regiment much exceeded the relative proportion of non-
com missioned officers and privates, the Government would
permit a limited number of officers to return to their homes ?
General PEEL said it was contemplated to disembody
some regiments of militia, and with reference to the latter
part of the question, arrangements were being made by
Government to carry out the object alluded to.

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
beeniunded, 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. WILLOTJGHBY 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 L 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.s,
Sir C. LEWIS--The hon. member for Peterboraiigli.has
done good service to thehoiiiein 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
fundingof 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 hat 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 oPParliament, 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-
verment 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-
hanks 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—muoh 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
incidentally the 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, and
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 :hose 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 proof 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, accordingas 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 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
buynd Exchequer-bills, ch e
Means qbui ell sr bills, or sell Exchequer-bills and buy stock.
With respect to this ulterior power, I do.not believe it is
nodoubt
liable to any serious abuse. With regard to funding Ways
abuse,aoubant
dthl ciatniintethaagrt respecteet
hatmeans
there
to be taken for guarding against that misapplication of
power. (Hear.) Practically the funding of Ways and
would
be a very serious
debt
s lleeanbt
wibtilhlosiico
tlejleunadnothuboritedtylyamun
of
Parliament
a re
mo
enct;abtinotntohfehmhodnesed
must dearly understand that when Exchequer-bills are
whichili funded no debt is created without the authority of Parlia-
ment.nhtehde debttowhichstich
Exchequer-bills are just as much debt as Consols,
and whether the form is transferred or not from unfunded
to funded,
I toinfoneasls;
lanednthasrtabinding
hone
ththe
ationd.ed i
r
any advantage accrues to the public or to the Savings-banks
the Commissioners front
--- Power :of fanding Excheq_
_ner-bills.
Possibly advantage may arise, aDA perhepe the quinoeuor