The Sun.
London, England, 1829-06-25 00:00:00

SAVINGS' BANKS.

We adverted last week to a certain financial opera-
tion of great importance, which is believed, by
many persons in the city, to he carrying on at this
moment by the Government, under' cover of sales
of stock made fur the Savings' Bnks, for the gradual
reduction of the debt owing to the Burk of Eng-
land. In consequence of the notice then taken of
it, the subject has begun to excite some interest,
and letters have been addressed to this paper from
various quarters, requesting a further elucitlation of
it. It is not possible, of course, to convey any
complete information, because access cannot be ob-
tained to the records of the various offices through
which the business is (or is presumed to be) car-
ried on. The inquirers must therefore be content
with certain facts which we are about to lay before
them, which may be received, we think, as unde-
niable evidence that the debt to the Bank of Eng-
land is gradually undergoing reduction, and as this
takes place by means not explained by any of the
financial documents laid before Parliament, there is
a fair presumption, under all the circumstances,
that the funds belonging to the Savings' Banks
have been partially employed for this purpose, which
lies quite within the scope of those powers con-
ferred on the commissioners of the sinking fund, by
the late act for regulating the business of those
establishments.*
The sales of stock for the account of the Savings'
Banks are also a matter of certainty, being now
made in the open market, and regularly transferred
under that description. When they first com-
menced, it was believed, and we concurred in that
belief, that they were made to answer calls on the
various Savings' Banks throughout the country,
arising out of the general distress among the lower
orders ; but as they increased in magnitude, and
most of the inquiries made tended to the conch',
sion that the deposits in Savings' Banks, taken in
the aggregate, were not materially declining, people
were led to look for some other motives for the
sales in question.
We proceed to submit the proof that the debt to
the Bank is gradually undergoing reduction. It is
derived from the examination of various parlia-
mentary documents, for which we are indebted to
the kindness and industrious research of a friend
who takes great interest in such matters, and the
facts stated are well worthy of the attention of all
who are similarly disposed.

I. It appears, then, that according to the Budget
of the Chancellor of the Exchequer, the surplus of
income over expenditure for the year ending Ja-
nuary 5, 1829, was 5,683,9651. Of this sum,
about 4,000,0001. was applied to the sinking fund,
leaving a balance of about 1,700,000/. to be applied
to other purposes.
2. By a return to an order of the House of Com-
mons it also appears, that the Exchequer-bills held
by the Bank of England on the 26th of February,
1828, amounted to 9,460,6281.; and by a subse-
quent return it appears, that the Exchequer-bills
held by the Bank of England on the 28th of Feb.,
1829, amounted to 8,130,4981.; and therefore it
would seem that a great part of the before-men-
tioned balance of 1,700,0001. has been applied to
the redemption of Exchequer-bills in the hands of
the Bank. A very useful application.
3. It farther appears that on the sth of July,
1828, the deficiency in the consolidated fund was
8,343,017/., and that on the sth of January, 1829,
this deficiency was only 5,367,403/., being a reduc
tion of about 3,000,000/. Add this to the before.
mentioned redemption of 1,300,000/. Exchequer-
bills, and it will then appear that between the sth
of July, 1828, and the 28th of February, 1829,
there has been a redemption of about 4,300,0001. of
unfunded debt; but by what means the money has
been obtained we are still to seek ; because it also
appears that to accomplish this redemption of
4,300,000/. there existed only a balance surplus of
about 1,700,000/., and therefore either there must
be some mistake in the public accounts, or the Go.
vernment has ways of raising money with which
the public at large are unacquainted.
That the Government, by means of the Savings'
Bank Act, has the power to sell stock, and to create
fresh stock in lieu of that which is sold, is certain;
that it has availed itself of this power is also cer-
tain ; but that it should have done this to so large
an extent as 2,600,000/. is very doubtful. But,
whatever its actual extent, or to whatever extent it
may be carried hereafter, the operation is certainly
judicious, and many desirable objects are by this
means accomplished. It reduces the unfunded debt,
it keeps the paper circulation of the Bank of Eng-
land within certain lists and limits; it gradually
renders the Government independent of the Bank
of England ;—in one word, it brings us back to first
principles, and to a sound natural state of things.—
And whereas our constant practice for these many
years past has been to supply every deficiency of
revenue by borrowing paper from the Bank, instead
of borrowing capital from the public, and thereby
creating an excessive quantity of paper currency ;
so do we now undo all this, arid by the sale of
Savings' Bank stock, and supplying the place of that
which is sold by the creation of fresh stock, do we
borrow capital from the public, in order to reduce
the quantity of paper.
The only doubtful point in the case is, whether
the Government ought to have the power by one
' general act of Parliament (the Savings' Bank Act)
to raise money by the sale and creation of stock,
instead of having this power conferred on it by
several successive acts of Parliament, and in pro-
portion as the money is raised. To this the only
reply is, that the Government having always had
the power to borrow paper of the Bank, ought to
have the same power to borrow capital of the public.
The question, when accurately stated, reduces itself
to this,—whether the Government, having always a
general unlimited power to do w rong, ought not also
to have the same power to do right ?
This is the question on a comparison between two
different modes of proceeding; .but if we consider
the thing absolutely and per se, it is very doubtful

* The following are the clauses of the Savings Bank
Act to which we have referred :

" 50. And be it further enacted, that it shall and may
be lawful for the said Commissioners, and they are hereby
authorized and empowered, to lay out from time to time
(if they shall deem it expedient, under such regulations'
as the said Commissioners shall direct), the whole or any
part of the monies which shall he standing in their names
in the books of the Banks of England and Ireland respec-
tively, in pursuance of this Act, in the purchase of Ex-
chequer-bills, held by the said Banks respectively, or by
the public, as the case may be ; and the said Commis-
sioners shall be entitled to receive for the sum or sums
laid out by them in Exchequer-bills, such an amount of
Si. per centum Consolidated or Reduced Annuities trans-
ferrable at the Bank of England, as the said sum or sums
of money would have bought if the same had been ap-
plied to the purchase of Si. per centum Annuities, esti-
mating the amount of such annuities at the quarterly
average price of Si. per centum Annuities, which shall have
been purchased with the monies commonly called the Sink-
ing Fund, in the same quarter of the year in which such
Exchequer-bills shall have been purchased; and the said
Si. per centum Annuities, and the dividends arising thereon
from time to time, shall constitute and form part of the
funds belonging to the said Commissioners on account
of the said Savings Banks and shall be subject to the
same provisions, and to the same and the like purposes, as
all other capital stocks and dividends standing in their
names on the said account shall and may be subject and
liable to ; and the Accountant-General of the said Gover-
nor and Company shall, within five days after such entry
shall have been made as aforesaid, certify to the said Com-
missioners the amount of the 3/. per centum Annuities
so placed upon their said account under the provisions of
this Act.
" 54. Provided always, and be it further enacted, that
it shall and may be lawful for the said Commissioners, and
they are hereby authorized and empowered, to sell from
time to time, if they shall deem it expedient, any part of
the said Bank annuities which shall lie standing in their
names in the books of the Bank of England and Ireland
respectively, in pursuance of the said recited Acts, or this
Act, to apply the whole or any part of the monies pro-
duced by such sale or sales in the purchase of Exchequer
Bills, in the same manner, and under the same regulations
and provisions, as any other monies are authorised to be so
invested by the said Cominissioners."