The Sun.
London, England, 1861-03-05 00:00:00

committee, to entirely do away with that necessity for the'
annual renewal 3f the bills, meaning merely the bill itself,
not the obligation to pay the money. Ito proposed to sub-
stitute for bills annually exchanged instruments Of perma-
nent currency, having attached to thern n- iatimber of cou-
pons, entitling the holder te receive the interest at the pro-
per time. These coupons might be renewed from period to
period, but the bill itself would remain in p,,Fsession of the
holder until, like a 'Bank note, it became worn from use,
and no longer convenient for eirettlation. to giving perma-
nency to this bill it was not intended to give permanency to
the currency of the bill. The bill would run on from year to
year without any renewal, but the currency would be re-
newed at the commencement of each year as it was now;
that was, the holder .cvonid .be entitled to claim payment as
now, tut if he aid not claim payment within the proper
timo a fresh term of 12 months would tommence, and so
on, tones guatie.s. Besides these changes, which would be a
great convenience to the commercial world) he also proposed
to alter the present arrangements, and to entrust the whole
of the money business connected both with the liquidation
of the bills and the payment of the interest and principal,
to the hands of the Bank of England, to be transacted as
part of the business of the Funded Debt. The holders of
these bills had materially suffered from the great range
in the fluctuations in the price of the bills. He did not
say it was possible to effect any great change in this
) respect, but ho was confident that something might be
done. Those fluctuations had not been so great as the
fluctuations in the price of the funds, or in the rate of com-
mercial discounts, but still they had been 'considerable.
The right honourable gentleman then referred to a state-
ment of the minimum and maximum price of Exchequer
bills in each of the last 20 years, and said that there
were only five of those years in which the price had not
fluctuated as much or more than 30s. In 1841 the maxi-
mum fluctuation was ils. ; in 1819, 265. ; in 1850, 18s. ; in
1851, 235. ; and in 1854, 245. On the other hand there
were years in which the fluctuations were at or above 60s.
In 1845 the fluctuations went up to 595. ; in 1847, to 67!L ;
and in 1853 to 90s. In the fourteen months from the begin-

ning of October, 1847, to the end of December, 1848, the
fluctuation was not less than 98s. in the price of Exchequer
bills. It was obvious that those fluctuations were much
connected with the difficulty of applying the natural remedy.
namely, raising the rate of interest. If the interest were
raised for a modsrate period of time, that would be an in-
strument which would be more easily used, and by which
the discount would be more readily checked, but if they in-
terposed to check the dise.ount by using a measure which
might cost the public at once £lOO,OOO or £200,000, and
might end in leaving Exchequer bills as much too high, in
reference to the state of the money market, as they were
'previously too low ; that, he must say, was a measure which
could net be resorted to without considerable deliberation.
The last objection was the echeance of the bill, the days
when it could be liquidated being rather remote. In mer-
cantile transactions a bill for six months was considered a
very long bill, but Exchequer bills ran for twelve months.
The proposal he made was to enable the holders of these
bills to claim payment at a much earlier date than they now'
could. Before 1838 the state of the law, with regard to the
presentation of bills, conformed to the original theory on
which their whole legal status was founded. They were
always made chargeable on the supplies of the year follow-
ing the year in which they were granted, and that being so,
the rule was, that, they might be presented for payment on
any day from the close of the financial year in which they
were granted. • This was not a convenient arrangement, as
Exchequer bills were presentable for payment at different
periods from the date at which they were issued. For example
Exchequer bills issued on the 6th of April were not present-
able for twelve months ; if they were issued on the 4th of
April they were presentable in payment of taxes after the lapse
of a single day. Practically the effect was this—Exchequer
bills were issued at various periods of the year, and conse-
quently a number of them were payable at short dates.
That was the state of the law before 1838 ; but in t hat year
a different rule was substituted. The rule established was
that Exchequer bills might be presentable in payrrient of
tax es at any period exceeding twelve months from the date
of their issue. The consequence of this was to destroy
altogether the privilege which holders of Exchequer bills
enjoyed, because as every bill was liable to be discharged in
money at the expiration of twelve months, it was not
likely that a man who could receive his money in direct

payment,. would undergo the roundabout process of pay-
ing it in liquidation of taxes. What he proposed was
'that during the last six months of the year for which

Exchequer bills should have currency by law, those bills
should, at the option of the holder, be receivable
in discharge of any claim for duties or taxes due to her
Majesty. This was an important provision which he
hoped the committee would adopt. The effect of it would
be this. The Government issued Exchequer bills in the
middle of March, and again in the middle of
June. The holder of a March Exchequer bill would be able
to claim that it should be received by the Government in
satisfaction of any duties which might be owing to the
Government in and after the middle of the following Sep-
tember, and until the middle of the March next year, when
the full twelve months would have elapsed. The holder of
a June bill would be able to make the same claim in the
middle of December, and at► any period following the middle
of December, and until the middle of the following June.
Thus these instruments would, in a very considerable de-
gree, have the character of six months' bills, and the holders

of both March and June bills would have the power of liqui-
dating a portion of them every quarter. There could be no
doubt that the substitution of this arrangement would be
considered very desirable by authorities on financial affairs.
Would it be attended by any inconvenience to the interests
of the State ? It might, perhaps, be feared that when the
revenue was running short, the presentation of these bills
in lieu of money might produce a pressure on the public
resources, and expose us to some risk of danger with
regard to fulfilling our engagements. He,however, did not
think there was any ground for that apprehension. He had
a :statement showing the practical working of the system
during years when Exchequer bills were presentable for
payment of duty after short periods. From the conclusion
of the war to 1825 it happened that considerable quantities
were presented, but they did not cause any inconvenience
to the State. There were certain natural limits within which
the privilege was usually exercised. Exchequer bills were
held almost exclusively in London, and as they were pre-
sented chiefly in payment of customs duties, it would be
extremely, difficult to make use of them in that way on a
scale so extensive as to produce inconvenience to the public
revenue. By the second resolution be proposed that the in-
terest should be half-yearly instead of yearly. That would
be a most useful proposition. A great but indireCt advan-
tege of it would be that the Minister of Finance, in rectify-
ing the position of Exchequer bills in the market, would
henceforth naturally and regularly raise the rate of interest
not for the unexpired part of 12 months, but for the unex-
pired part of six months. That being the case, he might
venture more freely than he now did to raise the rate of in-
terest. He had been obliged to trouble the committee with
a number of these details, because the proposition was one
of considerable importance. He was not aware that he need
go any furtheilhan to say he should be very happy to give
any explinations which any hon. member might ask of
biol. But he must say one word with reference to the no•
lice given by the hen. baronet the 'member for Evesham
(Sir 11. Willoughby), who intended to move as an addition
to the Gth resolution, " That the Commissioners for the
National Debt should not be empowered to fund any Ex-
chequer bills without the previous consent of Parliament!!
He did not' wish to oppose such 41 resolution, - but, on the
other hand, hellopeil to induce the hon:' member to with-
draw it. The motion of the hon. baronet was to prevent
the Commissioners of the National Debt from funding
.Exchequer bills. • Ile.Was himself friendly to the principle
of such a-proposition; but last year he included a provision
for this purpose, But a provision which.was very conve-
nient in a measure relating to the' general finances• of the
nation would not, he thought, be 'convenient in the measure
now before the house. In point of fad; it was too much
and too little. It would be limited tootle description of EX-
chequer bills, and he meant those that were ordinarily and
habitually dealt with in the open market, and. it would be
very inconvenient to mix up legislation on these bills with
other bills that were scarcely dealt in by the public, but
which were of very great importance in regulating the
finances of the country—he meant the two. descriptions of
bills, deficiency Exchequer bills and 'ware and means Ex-
chequer bIITS:' By far the most ebjettletiable 'description
of power possessed by the CoramiSsieners of the National
Debt was-that of funding deficiency
,Exchequer hiliS and
ways and means Exchequer bills, because the Practical
effect was that the deficiency on the ,year watt added , to
the funded debt-of the country without 'the knowledge of
Parliament, It would not do to, leave- that; power in ex-
istence and it the same time to deal iith a minor power'
in a bill, of this kind.' What he wished the.hon. baronet'
ta do WAS to bring forward his proposition on amore suit-
able occasion. He need hardly say that when a Government
had proposed by Act of Parliament to part with this power,
a representative of the Government wonld hardly think
himself justified in using it.
Mr. W. WILtIAMS said one ,of the prepositions in
these resolutions would add greatly, to tke convenience of
the holders of Exchequer bills, and also save some expense
to the GoVernmcnt in their not being. called upon for the
renewal of the whole atnount. This was one of the propc.
sitions recommended by the committee on public moneys
which sat four years ago. He asked whether the right hon.
gentleman would take an early opportunity of carrying out
the recommendations of that committee.

. _
. - Mr. Alderman SALOMONS" said .he would take the
opporttinity of expressing, in the name of the monetary in-
terest in the City; a general approbation of the resolutions.
He thought, however, he might apply to the' case a homely
maxim, and Say that the Chancellor of the Eichequer had
shut the stable-door after the steed had been stolen. It
.might be useful to:review briefly the oauses of, the, discou-
ragement that T• had fallen on Eitehetittei9bills; arid : he. be-
lieved that' if ;night he-traCei to an'errot cerriniiited so-far
back as 1851::Exchpquerhills at that time enjoyedan inte-
rest of 3 'pee cent., and were at a premium of 7,i. or S'.. and '
an attempt w 'made to reduce the interest to a point whiCh
prevented their' floating in the Market, and some three mil-
li"-4weie paid bit. Since that time there had been w great'
increase of floating securities of another aesdription, East
g-'
India debentures: and railway debentures, and there was no'
longern!nd,ueeitient to bankers anticapitalists to hold Ex-
litcin er bills bearin a loWrate4f,fhterest, , There, was some
. ,
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