The Sun.
London, England, 1861-02-07 00:00:00

DENMARK.

A telegram, dated Copenhagen, 4th Feb., says:—
" The Dagbladet gives a formal contradiction to
the report published by some of the Hamburg
papers, to the effect that the European Powers had
strongly urged Denmark to make concessions, and
that the Powers had declared they should not re-
cognise a blockade by Denmark if attacked by the
Federal troops. The whole story is declared to be
a' pure fabrication.' "

BANK OF ENGLAND.

SPECIAL MEETING THIS DAY.

A special meeting of the Governor, Directors, and
proprietors of the Bank of England was held
this day, in the Bank Parlour, for the purpose of
considering a letter from the Chancellor of the
Exchequer containing proposals to the Governor
of the Bank of England for the revising the allow-
ance to the Bank of England, under the 49th Geo.
IV., for the reduction of the national debt. There
was a very large attendance.
Bonamy Dobree, Esq., the Governor, presided.
The minutes of the last court having been read,
The CHAIRMAN said the secretary would read
the letter referred to, which was as follows :

DOWNING-STREET, Jan. 31, 1861.

Gentlemen,—Her Majesty's Government laving
had under their consideration the following report
of Sir Alexander Spearman, Mr. Arbuthnot, and
Mr. Anderson, dated November, 1860, on the
expenses incurred by the Bank of England in
conducting certain duties on behalf of the public
in connection with the issue of notes, the care of
the public balances, and the management of the
national debt, the Government considers that this
report should be submitted to Parliament, and it is
to be desired that on producing it, they should be
prepared at once to state and to act upon the view
which they take of its contents.
I accordingly proceed to lay that view before
you, following herein the precedent furnished by
the conduct of my predecessors in office at former
periods, and the course most agreeable to the inti-
mate relations which have ever prevailed between
the Government and the Bank, and to the charac-
ter of the weighty duties performed by the Bank
on behalf of the State.

I commence by adverting to the two former of
the three important subjects opened in this report
—namely, the expenses and profits connected with
the issue of notes, and with the custody and use of
the public balances. _ _

On neither of these subjects do her Majesty's
Government deem it their duty to submit any pro-
posal to Parliament.
The profits connected with issue they do not
regard as upon the vr hule a desirable subject for
legislation, otherwise than in connection with issue
itself. They were so treated in 1844, and they were
left upon a footing with respect to any renewal of
the question, which her Majesty's Government see
no reason to disturb.

In like manner with regard to the advantages
connected with the use of the balances. This point
was fully considered in the correspondence of 1844,
between the Government and the Bank.
Mr. Goulburn stated the views of the advisers
of the Crown, and reserved the discretion of the
State as to a participation in the profits of the
public deposits, should they, from any circum-
stances undergo material increase or reach an
extraordinary amount; while the Bank reserves
its freedom to consider what its own rights might
be in the event of their reduction. The subject
was, we think, judiciously handled on both sides;
the case contemplated by Mr. Goulburn has not
arisen, and we propose to leave it in this point also,
as it was left by the correspondence presented to
Parliament in 1844.

I have, however, to subjoin to what I have now
stated, a qualification of limited extent. The Com-
mittee of the House of Commons on Public Monies,
which reported in 1858, recommended the abolition
of deficiency bills, and the, substitution, in cases of
deficiency, of advances in a different and simpler
form, together with a change in the basis on which
such deficiency was to be calculated.
It is the intention of her Majesty's Govern-
ment to propose, in the coming session, legislation
in general conformity with the tenor of these re-
commendations ; but I have mentioned the subject
in this place rather with a view to strict accuracy,
than because it is of any great moment in the
adjustment of the pecuniary relations between the
Government and the Bank.

With respect to the third and remaining sub-
ject, the management of the National Debt, the
Government conceive that the time has come
when they may justly call upon Parliament to
reconsider the rates of charge fixed by the Act
of 1808, and still substantially in force, although
as matter of account, reduced by the payments
which the Bank makes to the State to the extent
of £188,078 per annum in respect of composition
for Stamp Duties and of profit on the issue of
notes.

The Act of 1808 assigned to the Bank, as a remu-
neration for its charges and its responsibilities in
the management of the National Debt, an annual
sum of £340 per million up to the limit of 600 mil-
lions, and an annual sum of £3OO per million
beyond that limit, with a proviso for a rate of pay-
ment of £450 per million, in case the debt should at
any time stand at less than 400 millions. It is also
provided that Terminable Annuities shall be
reckoned at 25 years' purchase.
Referring to the several communications which I
have had the honour of holding with you, I shall
waive all argument upon this subject and shall
simply proceed to state the particulars of the
changes which the Government think may reason-
ably and advantageously be introduced into the
subsisting arrangements.
I. We propose to ask Parliament to enact that
a new plan shall take effect from the commence-
ment of the next financial year, and shall remain
in force for twenty-five years certain.
11. The method of set-off by which the Bank
gives credit on account of profits of Issue and. of
Stamp Duty composition to the State, and deducts
the amount so credited from its charge for the
Debt, was in conformity with the system under
which the public revenue was managed and ac-
counted for at the date of the subsisting arrange-
ments. But in 1854, an Act was passed which
provided for the payment into the Exchequer of
the gross revenue of the State. Agreeably to the
spirit of that Act, her Majesty's Government are of
opinion that the sum of £188,078 allowed by the
Bank s hou
al dg a
innos
tlonger
usbt
lincabsu
ta thated utchtieo n
sumfroom
its charge f
£60,000, being the composition for stamp duties,
should be paid to the department of Inland Revenue,
and the sum of £128,078 being the allowance
out of profits of issue should be paid to the Exchequer
as part of the miscellaneous revenues of the country.
The charge for the management of the debt would
then stand as a separate and distinct charge, and
would be defrayed under an Act for the
purpose out
of the Consolidated Fund.
111. It seems evident that the valuation of
Terminable Annuities is, by much, too high. A
public annuity, granted for 99
years, would be
worth something more than 25
at its inception ; at its years' purchase
value would descend
in a mishing series to zero, and the mean
value of it would probably lie between 12 and 15
c)
r years.tio Annuitiesna granted for shorter terms would
represent 4uhiepts for commercial dealing of P
nably ro-
tively 1i i rrTiver scope. And the compara-
tively nature of th.; market for these ennui- ,

ties would make it probable that they would be
managed at an inferior cost in relation to their
value. Under these circumstances, it is the opinion
of her Majesty's Government that all terminable
annuities henceforward granted by Parliament
should, for the purposes of Bank management, be
valued as follows :

If originally granted for more than 50 years,
at 15 years' purchase.
If, for any lesser term, at 10 years' purchase.
IV. Before I come to the rate of allowance to
be made to the Bank for the management of
the debt, I have to propose a somewhat different
adjustment of the present graduated plan, with a
view to giving greater fixity to the arrangements
now contemplated during the time for which they
are to last.

The Bank now receives the greater part of its
remuneration, namely, that on 600 millions of debt,
at £340 psr million; and only 136 millions at tho
lower rate of £3OO per million. Now the outlay
of the Bank in connection with this branch of its
business does not appear to vary greatly with the
minor variations in the amount of the debt, whether
upwards or downwards. For the bulk of the debt
it must keep its premises and the bulk of the esta-
blishment.

We therefore propose, and we confidently antici-
pate the concurrence of the Bank in proposing that
the great bulk of the remuneration also should be
placed at the first 600 millions of the debt ; or,
more specifically, that the rate per million, not ex-
ceeding 600 millions, instead of as now being but
slightly greater than the rate above it, should be
double that rate.

Thus, the effect of any changes that might be
adopted by Parliament in the form of the public
debt would become comparatively of small impor-
tance to the Bank as a trading establishment.
V. With respect to the rate of remuneration—
we propose to introduce a bill into Parliament
which shall fix prospectively, as the rate of remune-
ration, the sum of £3OO for the first 600 millions of
the debt, and of £l5O for the excess beyond 600
millions. The payment of £4,000 per annum,
termed house-money, and the payment of £1,579
on account of South Sea debt to cease and deter-
mine.

The effect of this proposal will be to place the
annual remuneration to the Bank on the present
amount, in round numbers, at about £200,000 a
year. The dormant provision of the present law
under which the bank would be entitled to a pay-
ment of £450 per million, if the debt under their
management were reduced below 400 millions, is
one which her Majesty's Government see no reason,
to disturb.

To a proposal of this nature, her Majesty's
Government are in hopes that Parliament would
be induced to give the sanction of its authority ; and,
on the other hand, they trust that the authorities of
the Bank will deem it one affording to them the
just and adequate remuneration for the important
services which they have performed, we believe to
the entire satisfaction of the public, under such re-
gulations as are now in force regarding them.
In conclusion, I have to add that it will be emi-
nently satisfactory to her Majesty's Government,
and will also be agreeable to the spirit in which
the Bank of England adjusts itself to the densanda
of commerce and of monetary transactions, if you
should be able to assure me of the intention of the
Bank to afford increased facilities for business, such
as would be supplied by a material contraction of
the periods of shutting, if they cannot be dispensed
with altogether ; and also with respect to the pay-
ment of the dividends to such holders wherever the
Bank may have branch establishments.
I have the honour to be, gentlemen,
Your very obedient and faithful servant,
(Signed) W. E. GLADSTONE.
To the Governor and Deputy Governor
of the Bank of England.
The GOVERNOR said the secretary would now
read the reply of the directors.

The SECRETARY read the communication, which
was as follows :

Bank of England, 6th Feb., 1861.
Sir,--We have the honour to acknowledge the
receipt of your letter of the 31st ultimo, which
we have submitted to the consideration of the
Court: of Directors, and they have resolved Ito •
recommend to the Court of Proprietors to accept
the proposals of her Majesty's Government, con-
tained in the letter of 'the Chancellor of the •
Exchequer, dated the 31st of January,, 1861, for
regulating the remuneration to the Bank of
England for the management of the national debt,
for the period of 25 years.
As these proposals involve a very considerable
reduction in what has always been regarded as
only an adequate remuneration for the services per-
formed and the risks incurred, the Court of Direc-
tors desire to express to her Majesty's Government,
that they are induced to accede to this reduction,
mainly because the combined management of the
ationat .11ent, and of the collateral Departments
of Issue and Banking, enable them to exercise a
very important economy in the labour charge, and
in the other expenses of Bank administration.
The directors will also be prepared to make
arrangements for facilitating transfers in the
public funds, by limiting the closing of the books
to the shortest period possible ; but for this purpose
the authority of Parliament will be necessary ; and
in regard to the payment of dividends to the fund
holder at places where the Bank has branches, the
views of her Majesty's Government shall be carried
out to the utmost practicable extent.—We have the
honour to be, Sir, your most obedient and humble
servants, (Signed)
BONAMY DOBREE, Governor;
ALFRED LATHAM, Deputy-Governor.
To the Right Hon. the Chancellor of
the Exchequer, Downing-street.
The CHAIRMAN said—Before proceeding further
he would state that the directors had had the matter
under their consideration, and the result was the
letter which they had heard. It had been the object
of every government to obtain a greater profit out
of the administration of the affairs of the Bank.
They had not hitherto considered that the Bank
was overpaid for the immense services it performed.
It travelled an immense deal for the purpose of col-
lecting the revenue, and brought them to their seve-
ral accounts; and again, the Issue Department cost
re uch money, and for this they received nothing ;
and again much of these costlypremiseswere rendered
necessary for the public business. The directors had
had several interviews with the treasurer, and
argued the matter, but he regretted they had failed
to produce the desired effect on the Cabinet. After
many interviews and much anxiety we have brought
the negociation to the point explained in those let-
ters, and the Court now asked the directors to agree
to the plan proposed which was stated in the fol-
lowing resolution, " That the proposal of her Ma-
jesty's Government, as contained in the letter of the
Chancellor of the Exchequer, dated the 31st Jan.,
1861, addressed to the Governor and Deputy-
Governor of the Bank of England, be recommended
to the Court of Proprietors for adoption.
In reply to a question,
The CHAIRMAN said the sum to be received of
Government for the management of the national
debt for the years 1860-61, will be :
On 600 millions at £340 per million .. £204,000 0 0
On £136,278,369 at £3OO per million .. 40,883 10 2

Total .. £244,883 10 2
The sum to be hereafter received will be--
On 600 mils., at 300 per mil. .. • . £lBO,OOO
On £136,278,362 at 150 per mil. 20,441

£200,441

£44,442

Management of South Sea Stock
Add house money
.. ..

£1,579
4,000

£5,579

Total sum to be given up
.. • • £50,021
Mr. W. J. PRESCOTT complimented the directors
on the efficient manner in which they had con-
ducted their negotiations with the Government.
He explained at some length the position of the
Bank as regards the Government, and pointed out
that although the Bank lost some money by the
new arrangement, it was a gainer in having its
position in connexion with the Government settled
for 25 years; and the loss was, he thought, more-
over compensated for by the decrease in the cost of
management. He moved that the Court concurs
in the recommendation of the Court of Directors
to accede to the proposal of the Government con-
tained in the letter of the Chancellor of the Exche-
quer, of Jan. 31, to the Governor and Deputy
Governor of the Bank of England for regulating
remuneration of the Bank of England for the
management of the National Debt for 25 years.
Mr. SALOMONS seconded the rcsolu-
tion,coAnledmuerrrinagn entirely in the view of the last
speaker.

Mr. M. CLARK protested against the course pur•
sued by the Government. Considering the amount
of capital it had belonging to the Bank of Three
per Cents., the Government ought not to seek to
make such a hard bargain.
Mr. Tin, M.P., thought the last speaker had
mixed up two questions, namely, the money lent to
the Government;and the cost of the management