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

persons, travelling in Belgium would be telieVed from the
atino.l7ance and trouble of giving passports.
WAR SHIPS IN JAPAN.

Mr. WARNER asked the First Lord of the Treasury
-whether it was true that a considerable naval force had been
directed to proceed to the Japanese waters, and whether
precautions had been adopted to prevent any consul or other
civil authority from commencing a war with Japan without
ja.ttructions from the Government.
Lord PALMERSTON said he believed a part of the
squadron which had been in the Chinese waters would
visit Japan, not with any hostile intention, but to give
more Support to English interests in Japan.
PUBLIC BUSINESS.
in reply to Mr. BENTINCIE,
Lord PALMERSTON said it was intended b go into
committee of supply on Thursday evening, but with regard
its the army and navy estimates, they would be proceeded
with according to the progress made with other business
during the week.

THE VACANT SEATS.
In reply to Mr. BENTINCK,
Sir G. C. LE WIS said that the bill relating to the four
seats to be appropriated to new boroughs would not be taken
on Thursday next.
CONSOLIDATED FUND AND EXCHEQUER
BILL ACCOUNTS.
The house went into committee on this bill.
The CHANCELLOR of the EXCHEQUER moved
the following resolutions :
" 1. That it is the opinion of this committee that the
principal moneys of Exchequer bills issued under the au-
thority of Parliament, together with the. interest thereon,
which may become payable from time totimeohall becharged
upon and paid out of the Consolidated Fund of the United
Kingdom or the growing, produce thereof. 2. That the
interest on such Exchequer bills shall during their cur-
rency by law be payable half- yearly by coupons
and shall be paid at the Bank of England. 3. That an
option shall be given at the expiration of each 12 months to
to the holders of Exchequer bills to be paid the prin-
cipal moneys of all Exchequer bills held by them, and
such principal moneys when paid shall be paid to the
holden' at the Bank of England ; and that all Exche-
quer bills not so paid off from time to time shall have
currency for the next 12 months following the date of such
option. 4. That, when such Exchequer bills shall be paid
off, the Commissioners of her Majesty's Treasury may issue
the like amount of Exchequer bills to replace the Exchequer
bills so paid off. 5. That all Exchequer bills shall be re-
ceivable for duties granted to her Majesty during the last
six months of each year during which such bills shall have
currency by law."
The right hon. gentleman said the subject to which he de-
sired to call attention was undoubtedly an important one,
although he was afraid it would not be found the most at-
tractive of all those which might be submitted to their no-
tice, namely, the present legislative arrangements with
regard to the instrument of publie credit called Exchequer
bills, and certain proposals he was about to make to alter in
some material respects the footing upon which those bills
were at present placed. • For a number of years changes
had been going on in the monetary condition of the country
which had tended very much to contract the market of
business for bills of this description. The principal change
had been that a great number of securities now existed to
compete successfully with Exchequer bills, and thereby
narrowed the demand for them. Of course it might have
been open to the public to keep on the market amounts of
Exchequer bills equal to those which were formerly in use,
but it could only have been done by raising the rate of in-
terest to a point at which the employment of such bills
would have ceased to be advantageous to the public. The
consequence has been that their amount has been progres-
sively diminished, and it was to thecause of that diminution
and the mode of improving their condition, that he desired
to direct the attention of the committee. The select commit-
tee appointed in 1857 directed attention to this among other
subjects, and in the fourth section of their report they made
some important recommendations. The principal of these
was that Exchequer bills instead of continuing to be voted
as part of the annual supplies, and to be made chargeable
upon the grants of Parliament for supply services, should
be transferred at once to the consolidated fund, and that
they should likewise cease to be, so far as the corpus of the
bill was concerned, annually renewable, but should be made
current, for a period so long as might be convenient, or so
long as it might go without being renewed. In the main,
the first four of the resolutions were intended to give effect
to the recommendations of the committee. They were not,
indeed, absolutely bounded to those recommendations, be-
cause they contained certain particulars which might
bo considered developments and applications of the prin-
ciple on which the recommendations were founded. The
fifth resolution, on the contrary, was beyond the scope of
the report of the committee. It involved in principle a re-
currence to the former policy of the state, and in that view
he should trouble the committee with a few distinct and
separate remarks on the subject. With regard to the ques-
tion of Exchequer bilhs, he held that the public, which was
the borrower, and the holder of the bill, who was the lender,
had strictly a common interest. Generally speaking, the
confidence of the borrower and the lender were one and the
same. But over and above what related to the condition of
Exchequer bills on the market there was a separate condi-
tion. The Exchequer bills with which they were now
dealing were called Supply Exchequer bills. They were
voted in committee of supply as part of the supplies of the
year, and when they were presented for payment they were
obliged to be paid under the law of the country out of
money which was already pledged to the supply services of
the year. The origin of this custom, whldh had now be-
come exceedingly inconvenient to the regular progress of
the public service, was to be found in the nature of the
original instrument itself. When they were first resorted
to they were simply instruments of credit issued in antici-
pation of revenues which had been granted by Parliament,
but the collection of which had proceeded slower than had
been anticipated, and slower than the exigencies of the pub.
lie service required. Therefore the practice was to issue from
the Exchequer an engagement at a short date, which was to
stand in lieu of monies which Parliament had devoted to meet
the charge on the establishments of the country, and as these
instruments were used inenticipationof such money, it na-
turally followed that they were to be liquidated out of the
monies themselves when they came into the Exchequer.
Practically speaking, they had no connexion whatever with
the supplies of the year. They looked on them as constituting
a great portion of the unfunded debt of the country, and as
such they renewed the power to issue the instruments from
year to year without the slightest regard to what was originally
termed supply. Exchequer bills bore a low rate of interest,
and yet they had been compelled to exchange them at a
time when the rate of Bank discount had been not less
than £8 per cent. They had to expect that a considerable
amount of those bills should be presented for payment in-
stead of being renewed, with a view to a more profitable
employment of money by the holders; but out of the whole
amount of bills, namely, six millions, only one million had
been presented for payment. He now wished to call the
attention of the committee to the Course the Government
were compelled to take with reference to those bills. They
were not allowed to pay them out of the consolidated fund,
but out of the moneys which were appropriated by Parlia-
ment to support the army, navy, civil establishments, and
the collection of the revenue. The consequence was that
a million must be deducted as the first step from those
moneys. In the meantime, how were those establishments
to be supported ? That involved a system of double charge.
There could net be a more inconvenient arrangement than
one which made Exchequer bills payable out of that
money. The bills could not be • withdrawn, and they
were compelled to renew them in a most compli-
cated form. They ought therefore to detach wholly the un-
funded debt from its relation to the supplies of the year, and
deal with it as a portion of dAt distinguished essentially
from the funded debt, being liable to be paid off at certain
times. There were other reasons which made it very dee
tellable, so far as the 'public were concerned, that the basis
of these instruments should be altered. It was extremely
necessary the Government should have in their hands the
power of using those instruments in quantities which could
be regulated according to convenience. In time of war the
amount of those bills was required to be large, but in time
of peace the requirement would not be so great, and yet
there was no regular and formarmethod of enabling Go-
vernment to cancel those bills by a direct act. Those bills
could not consequently be allowed to lapse except in small
quantities, and their re-issue was necessary, whether on
financial grounds it might be desirable or not. The con-
sequence of these proceedings was that the law provided a
remedy which was of an exceptionable kind, i.e., it enabled
the Commissioners of the National Debt, without any
application to Parliament, to go through the process
termed the funding of Exchequer bills. Though that was
a very defective arrangement, yet as the law now stood it
was the only means by which it was possible to effect any
material contraction in the amount of Exchequer bills which
at any time might bo current-in the market. Again, nothing
was more cumbrous than the instrument which the finance
minister had at present in 'his hands for meet* any tem-
porary depression in the price of Exchequer bills. Of course
°ln the great fluctuations in the money market of this
country, which Were becoming more considerable and more
"pis, dtnr thenin fiirmar tithes, instruments of this nature
mu
like other securities undergreat fluctuations of
price ; but what he" wAsfied' fa d6g° as o
as possible the character Of steadiness.
was give the bills as far
sure in the money market Sometimes the pres-
s of extremely short duration,
but whenever
it eat" it told on these instruments. Exche-
quer bills went to a discount,lhenieand it was desirable to have
the means of keeping
for it was not to the credit of the State at or above par ;
t that they should for
any length of time be current at k discount,
i or that they
should ever go to a discount of
j-
eoentateenidsiaterable amount.
The only mode in which that ob
on
the at present be met
was by raising the rate of interest
exchequer bills which might be is market, and as the time
of
less. ihanl2 months if it hemp-
for which the bills ran was net
pened that there was a pressure ehertlyafter their issue, the
only remedy o
which could be applied was one
of a costly
character, and might have the effect of carrying the Exche-
quer bills before the eipiration of 12 months to a premium
so high as to be equally intolerable as the discount to wbsee,
they had previously been. The inconveniences to the public
might be thus stated : First they were called upon at the
expiration of every 12 months to go to the west end of the
town and present all the bills anddeposit them for examine_
Lion. The bills remained out of their possession for some
days, and they returned and had the new bills presented to
e men.
Be This was a serious incenvenience to commercial
Be therefore proposed the 1011041 tie Whalen of the
12g rec°,P2-71-e