Star.
London, England, 1829-05-12 00:00:00

FUNDED RICHISQUZIL SILLS.

On the motion of the CH.11=11.1.011 of the Erma-
WU, the Order of the Day was read for receiving the
Report of the Committee cf Ways and Means.
Lord ALTHORPE said be had listened with the
greatest attention to the speech of the Chancellor of the
Exchequer on Friday night last, and it appeared to him
that the plan which the Government had adopted, of
funding Exchequer bills, was nothing more than going
back to the practice of borrowing money for the pur-
pose
of buying in stock. He knew there was a great
difference of opinion whether it was more pr:ferable to
apply the surplus to the funded or the unfunded debt;
but all were agreed that it was an longer necessary to,
borrow money for the purpose of buying stock. What
was the state of the case ? It appeased there was a surplus!
of three millions in the hands of the Government, and
they were about first to borrow money and then apply the'
three millions to the purchase of stock, as if they were'
re .11y borrowing money for that specific purpose. If his
Majesty's Government had determined to apply the sur-
plus
to Exchequer Bills, it was easy to give notice to
that effect, and the country would not have incurred the
loss which it was now quite clear it must incur. He
saw no necessity for the course which was adopted, and
he regretted his Majesty's Government should make so
disadvantageous a bargain. He thought the better way
would be to have a competition by way of loan. He
objected to the principle of funding Exchequer Bills; at
the same time he was not prepared to go so far as an
Honourable Member had done, and call this a pro&
gate expenditure of the public money. He saw there
would be so great an inconvenience in offering opposi-
tion at present, that though he could not support the
bur gin which the Ministers had made, be would not
divide the House on the subject.
The CHANCELLOR of the EXCHEQUER said,
that the Noble Lord had objected to the funding of Ex-
chequer Bills, because he considered it was reverting to
the system of borrowing money in order to purchase
stock; but it was, in fact, an arrangement similar to
what an individual might make, who, having a number
ei bills out, and also mortgages to a certain extent on
his property, might think it expedient to increase mote
mortgages for the purpose of lifting some of the bills.
By this means the debt would not be payable on demand
at the option of the tredior, but at the option of the
Government. The Noble Lord seemed to think it would
be more expedient to apply the residue which was
accruing, and which was likely to amount to three mil.
lions, to the purchase of Stock at once; but if it was an
object to relieve the country from any part of the Un-
funded Debt, it certainly should be done as early as
possible. The debt was at present much under its no-
minal amount ; but if they were to anticipate that it
should rise to the nominal amount, paying off three
millions of it now would evidently save a large sum to
the Government. He thought it was more advantageous
so apply it to the funded than the unfunded debt, but he
thought both ends might be eventually answered by first
funding the Eachequer Bills. By this arrangement they
would receive 1021. 76.4 d. per cent. in exchange for
Exchequer Bills. Not only his own experience, but the
xperience of his predecessors in office, taught him that
the plan which had been *dotted was, under present
circumstances, the most expedient.
Sir J. WROTTESLEY said that if the Government
thought the course adopted was good policy it was cer-
tainly legal. It appeare'i to him that as long as these
was a funded debt tf.e object should be, by securing a
small interest. to hold the funded debt at high pre-
mium. The Right Honourable Gentleman had stated
that the Bank o England held eight millions of Excite.
quer Bills, but he (Sir J. Wrotte.le)) could not admit
that the Bank ssood on the same footing with the pub.
lie. He thought the best plan to adopt by it would be
at the end of the quarter, when the amount of the sur-
plus should be ascertained, to give him notice of what
could bar paid, and to have a proportionate quantity of
Exchequer Bills ca, cel!ed. It they had a Loge sinking
fund, as in the time of Mr. Pitt, he agreed that all this
machinery would be unnecessary. He hoped the inten-
tion was to economise as much as possible; in t. e pub-
lic ousts in particular. It some better cour.e was not
proposed it we old appear that the system was kept up
for the accommodats n of the clerks, and not they kept
for the good of the public.
Ms. MABERLY had heasci nothing to induce him
to alter the opinion he had before expressed. He re-
greyed having made use of any harsh expression, but he
could not retract any pot of what he had said. The
question was, fist, whether it was expedient to reduce
the unfunded debt ? and next, whether it had been done
in the best mantles ? He himself thought the unfunded
debt ought to be reduced, but he did not think it had
b en done in the best way. He contended that there
had been a most tremendous loss in not applying the
three millions to the Three and a Half per Cents. By
,uch a c urse as that now pursued there had been a loss
of upwards of 600,0001. since the Right Honourable
Member had been made Chancellor of tie Exchequer.
The loss on annuities was 7,3464 which, multiplied by
25 years' purchase, amounted to 183,6001. It had been
said, that if they had dune what he recommended, the
Three and a Half per Cents. would rise. He had no
doubt they would, but there would be then a consider-
able edentate' in reducing the interest. Then follows
the surplus of 3,40140004 on this there was a loss of
435,0001. It appeased that ten shillings annuity were
bought by the Government for 141. 9s. I Id. and sold
the same day for IV. 101. thus leaving a balance of,
11. 16s. BJ. against the public on ten shilling annuities.
At this s ate the loss on three millions would be 435.0001.
which he repeated was a most enormous waste of the
public funds. He regretted that his Honorable

Fs fend the Member for Montrose was not in Its House,
as he knew he would have some strong documerts in
support of his opinions. He must again protest
' against the system of buying and selling. The loss
*lnch the country sustained by the Governmeot pur-
suing this system had .already amounted to 27,000.0001
He knew that the Right Honourable Gentleman (she
Chancellor of the Exchequer) wend.' endeavour to shot*
that he (Mr. Maberly) was in ',tor ; but all he c.luld
say was, that it the Right Honourable Gentleman sue-
ceeded in proving the ern r he would get up in his place
-and give him credit for exposing any fallacy. It was
quite true that the Right Hon. Gent. could not have',
paid r if the Bank of Englatid without reducing the cir-
culating medium ; but what bas he done now ? He had
merely exchanged securities, and laid cut Bank notes in
a more unprofitable si ecies of secutity. It was quite
unfounded to say that the holder of Etch. quer Bills
expected his premium. No such condition was implied
or understood upon the purchase of the Bill, or by the
original holders. It was his (%Ir.Maberly's) firm con-
viction that the mismanagement of the Government in
those transactions bad cost the public no less a sum
than 600 0001. and with such mismanagement it was
impossible to expect that taxes could be reduced. It was
should come, or even rumours of w4r, the unfunded
debt would be found as a mill stone round the neck of she
country. As the Right Hon. Gent. (the Chancellor of
the Exchequer) had pl. dged himself to the proposed
scheme, he (Mr. Maberls) certainly would not ask the
House to reject ; but that was the only consider edam on
which he retrained from pressing the question to a
division, as the bargain made by the Right H•in.Gent.
was the must improvident he had ever heard of.
Mr. HERRIES said. thst considering the obsesva
Idons which the lion. Member who had just sat down
had made as to the idconveniences arising out of an
unfunded debt, he should have conceived that that
Hon. Member would have been the last min to deal so
severely with any operation tending to diminish the
amount of that species of debt. The lion. Member
himself had given very elgent, and to his mind suffi-
cient, reasons for the step which his Right Hon. Friend
(the Chancellor of the Exchequer) had taken, and ac-
cording to the Hon. Member for Abingdon's arguments,
the only reproach to which the Chancellor of the Exche-
quer was liable was, that he had fallen short of what
would have been advisable, and had not carried the
principle of reducing the unfunded debt far enough.—
With respect to the operation of the sinking fund in re-
ducing the unfunded debt, it was quite obvious that the
Sinking Fund would not have dour as much in a whole
year towards the reduction as this measure had effec.ed
at one blow. No man who considered the relative ad-
vantages of a funded and unfunded debt could be at all
doubtful as to the expediency of a measure for reducing
the litter. An unfunded debt. to a certain amount,

might certainly exist with perfect safety ; but when it
exceeded that amount not only the excess but the whose
debt became dangerous. The policy of keeping the
unfunded debt within a limited amount, thereto'', had
been universally acknowledged, and his Right II n.
Friend bad only acted upon that principle. It was
quite a mistake, however, to suppose that the operation
had been effected by money. It was not effected by
money, but by negotiation with those holding one
species of Security. in order to induce them 10 exciidage
it for another. The party who exchanged Exchequer
Bills for a claim to the same amount in the toads
gave up the right of being paid at his own option,
and was liable to remain without being paid until the
Government thought proper to pay him. Under pre.
sent circumstances, in his opinion, it would have been
very dangerous to pay off any considerable potion of
the unfunded debt in money.; for by so doing there
would be a likelihood of contracting the circulating
medium. Much bad been said by the Hon. Member
for Abingdon as to the improvidence of the bargain
which had been made and the management of the Go
vernment; bet all the arguments on this subject had
been applied to particular points, without reference to
the general question. The views in which the Houlletn-
ber had come to the conclusion that the Government had
made a bad bargain were very narrow and impertect.l
In all those views the reduction of the national debt was
*vet looked, and though it was more immediately profita-
ble to purchase in the higher stocks than in the lower,
but the Government always purchased in the loner
stocks, as being mote advantageous ultimately to the
public. The advantage of the policy of the plan
adopted was opposed to die arithmetical advantage.
With respect to the premium there was also some mis-
take. There was nothing given by the Government to
the holder of Exchequer bills but the bonus of U. 10s.
It was not because the holder received mote than his
lOU in the market that the Government paid more.
The Government had a right to pay off the claim when-
ever it was thought pr•tper with lOW. After all that
had been said the public were still plats by this
operation of funding the three millions. The Govern-
ment received a premium of 96 0001. on the purchase
of the bills; and now, upon converting them into four
per cents. the coneettion was effected at a loss of 45.000 i

These was no operation less likely to create a sensation
than that which had taken place; and he was prepared
to contend that, in making this bargain. the Govern.
went had shown a proper regard for the public interest.
Mr. P. THOMSON said, that every argument urged
by his Hon. Friend (Hr. Moberly) had been confirmed.
by the Right Honoutable Gentleman who had just sat
down. The Honourable Member then reflected upon
the improvident nature of the bargain made by the
Right Honourable the Chancellor sif the Exchequer,
and said that the sensible way would have been to have
applied the surplus Revenue to the discharge of the un-
kind. d debt. ft Ministers, however, were resolved to
have a bargain, t'ley might have done it without mak.
ing so very bad a one. It was only wanted to fund
three millions, and 18,800,00 W. were subscribed, which
clearly incised that, had the market been thrown open
to public competition, much better terms might have
been obtained—(Hear.) The Right Honourable the
Chancellor of the Exchequer himself had said, when
he (Mr. Thomson) had the honour of seeing Lim
relative to the subject of the Auction Duties Bill, that
when a thing was put up to public bidding a higher
price was always obtained. Having entered his protest
both against the principle on which the three millions
were landed, and the manner in which it had been done,
be should offer no further opposition, as, however mis-
taken the Government may have been in their present
financial measure, he believed them to have done what
they considered best for the interests of the country.
Mr. WARD said, that, although the Right Honour.
able Gentleman h ' acceded to the wish of the Finance
Committee to reduce the unfunded debt, be could not
conceive either the necessity or expediency of that re-
duction. He was not aware of any excess having
been found, at any time, in that species of security.
During the war the number of Exchequer bills was
double what it was at present, and yet no inconve-
nience was felt. The only exception to what he said
was during the panic, which, as it affected every
thing. could hardly be quoted as an exception. There
was, however, this consolation in the present measure,

that, 'batten disadvantage thin might result from
the funding of three millions of Exchequer bills,
Gut of 28 millions. it would be little compared with the
advantage ne should de ive born the temaining yes
millions. It had been said that we might have made
A better bat gain had the Sock been left open to Vim•
pets• ion; but, although 18,800,0001. had been sub,
scribed, let many inch. idua Is had subscribed three,tol,.,
and e.en five times mole than they wanted, merely
with a view to get a larger proportion of the whole.
Indeed he was sure, taking out of the calculation the
Exche uer bills in the hands of the Bank. of trustees,
and others, who would not part with them, that there
was n. t so many disposable as 18,000.0001.—(Heee,
h..ar).—The Honourable Member for Abingdon bed
spoken of the tidbits cost the country sustained by
buying up the three per cents. instead of the three and'
halt, but he should remember that the fundholdet, when
he lent his money, relied upon that being due, and upon
the sinking fund, that continually upholding ihe value
of his stock. It would not be either honourable or po.
litic to disappoint him. The fonds of France and P. ussii
wet e at par. and the United States • ould soon discharge
their debt a.together. We outtltt not to make the food.
hooter reo tot iult having lent hi. money to foreigneit
In 1819 a Resolution mssed that House to devote 64
minims annually to the poi poses of a Sinking Fund, but
ut.fort mutely since that time noChancellor had beets able
to bring the matter to bear. The fundholder, hose,e,,
was not told of that. but was pet mitt• d to go on but mg•
and selling. The present Chancellor had told them lacy
that he had not the means to devote mote that three
nsillatn to the purpo.e of a sinking fond, and yet he v.,,r
told to disregard all that had pt•s• d, and to attend to
:he principle on Willa Eutieq..er kills had Jul heiti been
funded, but t. pay 'hem off at pai. tie !loved the
Chancellor would p. rsevere in his course, and %stolid
not lend !Amami to plans called improvenients,but which
would io fact be any thing but such.
Mr. HUSKISSON said. he per feel Is agreed with the
Hon. Gelid. man tbat the rescuers of the country eve
equal to every burthen that might he i ecessary to im.
pose on them. It it weietrue that Exchequer bills,ubich
We an interest of but thiee per cent. a ere at a premieres
of seventy shillings. it was plain that the holders must
calculate, not on their treine paid f ff at par, but on chile
being purchased in something like V e mantle' that bad
now been done. Tnese was. however, a huge amount
of Eachequer Bills in the hands of tie Bank which had
n issued at par, and I.e thought Government vooild
have acted more wisely by applying the sulpha
revenue to the diminuticn of the amount of thou
Bills. When the Government next funded Exche.
quer Bills be would advise, that instead of fixing the
terms themselves. they would require tenders Goth
the public. He had heard that there wls mi re than one
tender made to the full amount of the three millions
wanted. We Mere losing between 60,0001 and 700001.
a year. by not having purchased Three and a Halt pet
Cents. instead of Thsee per Cents. with the Sinking
Fund. He would advise the employment of the future
surplus revenue in the seduction of the Exchequer Bills
in the hands of the Bank of England; and when they
•ere sufficiently reduced, in the purchase of Three and
a Half per Cent. Stock. as the most advantageous sp.
plication for the public.
Mr. BARING said, that while be agreed in the ge.
neral principles laid down by his Right Hun. Pitied
who had just sit down. yet he thought there sete cir.
cumstances that justified the operation made by the
Chancellor of the Exchequer. It was impossible to pay
off the three millions of Exchequer Bills issued by Mr.
Caliumg at a premien'. to the same persons by whom
they had been purchased. and that being the caw,
and it being the interest of the country to keep the
Exchequer Bills in the highest estimation as a sue.
sky, he did not see how the Bills in the hands of
the public could be paid off but by an operation si-
milar to that of the Chancellor of the Exchequer. It
was true three millions of Exchequer Bills might hive
been paid to the Bank, but as this was the year the small
notes were called ins the public might have taken an
alarm on the supposition that the Bank required the
payment; and he thought the Right Honourable Gen-
tleman acted wisely in avoiding the responsibility. He
was much afraid of having a surplus of unfunded
debt, anal lamented we were not in a mote independent
situation respecting the reduction of debt. Nothily
could exceed the folly and extravagance that had takes
place by attempting to keep up a sinking fund by bor•
rowing with one hand to pay with the other; but if ever
the finances of the country fell into a state of difficulty,
it would be from the abandonment of the just principle
of a Sinking Fund.
.Mr. J. MARTIN sold be was confident the Canceller et the
Exchequer could have funded Exchequer Bits at par la the Four
per Cans. instead ed paying 4101 ins per cent.
Mr. WAR BURTON said, k had been shows mew clearly lbw
a Inn at £400,000 was interred by the Chancellor of the Es.
chequer's 6nandal operations.
The Report was then brought up and agreed to, and a WI
ordered to be brought in en the said emulations.
The Report on the Sinking Fund Acts was brought spied
agreed to.
The Metropolitan Police Bill was read a second time, and ors
4usd to be committed oa Friday.
'lb. Clerk et be Pleas Intend Mil was read a third time mi
posed.
The Irish Fisheries BM was read a second time, and 'Aired*
.fie amoodwed to-marrow.

- -
The Report Odle Annuities Bill was brought up, arid the Bi
was ordered to be read a t►ird time to morrow Uthe. eogroessa.
The Greeowich Pandas BiU went thnoigh a Committee.
The remaining orders ►aving been disposed at, Home&
loomed at a Qualms to Two o'Caoom _