The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1842-03-08 00:00:00

HOUSE 0.9 COMMONS
TIIE EXCHE4UER-BILL FRAUD

-TnuagpAy

The CHANCELLOR of the EXCHEQUER rose, and, after a
few introductory observations, said,—An extensive fraud
has been committed by means of a forgery of public securi-
ties to a very considerable amount. That forgery was com-
mitted by a breach of confidence on the part of a public offi-
cer, and by one of those gross violations of duty, which
happily are rare in the annals of this country, but which,
in proportion as they are rare, create, when they do occur,
general sensation and considerable alarm. The mode in
which the fraud was committed was simply this :—au indivi-
dual in the department having had reposed in him the confi-
dence of his superiors ; having been in that department for 28
years ; being connected with parties who had distinguished
themselves, both in the civil and military service of the coun-
try—an individual who had enjoyed the uninterrupted con-
fidence of a series of auditors and comptrollers in his de-
partment—who had received the strongest testimonies as to
his abilities and honesty from Lord Grenville, Lord Auck-
land, Sir J. Newport, and until of late of the present Comp-
troller of the Exchequer, had been guilty of the deplorable
crime of violating a most sacred duty, and abusing the
powers which he possessed to defraud the public, in
whose service he had been so long employed, and to
whom he was under the strongest obligation of duty,
to serve with honour and' good faith. The mode in which
he committed the fraud was by possessing himself of papers
entrusted to him in his official capacity, and having so pos-
sessed himself of those papers, by taking them from the office
in which he served, in order to forge the name of the noble
lord, whose signature Exchequer Bills were by law bound to
bear. He then availed himself of these forged bills as nego-
tiable instruments. But this was an offence which if it had
not been committed guardedly and with great precaution
would have admitted of easy detection. The course this in-
dividual pursued, assisted by agents, whose crime, perhaps,
did not equal, but certainly approached near to that of the
principal in the transaction—the mode in which he conducted
the fraud was to give those Exchequer Bills so forged as de-
posits for loans of money on condition that the very bills so
deposited should be returned to him on payment of the mo-
ney, or on other Exchequer-bills being given in the room of
these which had been originally deposited. Thus by con-
stantly at each successive change of Exchequer-bills forging
new bills, with a view to replace those forged bills already
outstanding, he contrived effectually to prevent the pre-
sentation of the forged bills at the Exchequer-office, and
to hinder their general circulation among the commercial
community of the metropolis. Thus, he committed in
the first instance a breach of every honourable obliga-
tion ; and afterwards, by an artful concealment of the
forged instruments issued, he succeeded in escaping
, the detection to which a different course would have
certainly exposed him. On the 20th of October last an in-
dividual called upon me at my office, and informed me that
an offer had been made to him of ExChequer bills in depo-
sit in return for a loan of money, and told me that the
rate of interest offered to him upon the loan had so far
exceeded the market rate of interest, that he suspected
the bills had been stolen, or that they were the property of
some other person. Upon that information baying been
communicated to me I felt it was my duty and I lost no time
to inquire into the matter. (Hear, hear.) In consequence
of the information given to me, as I already stated on the
20th of October, the result was, that, on the 25th of the same
month, in consequence of the inquiry which was instituted,
the guilty author was taken into custody. (Ministerial
cheers.) Five days only had been occupied in bringing to
light a fraud which had been so long perpetrating. '(Cheers.)
Let it not be supposed that I mention that fact to gain any
credit for the government, or for their activity. Far from it.
But I do it for this reason :—it is surprising that when so
many persons bad been engaged in the fraud—amongst the
many persons who must have been cognizant of it, there
was not one public officer who had given any information
whatever on the subject ; and the result of the immediate
inquiry instituted was, that this fraud, which was carried
on from April, 1836, till October, 1841, had been detected in
the short space of time I have already mentioned. (Cheers.)
The right lion. gent. then took a glance at the conduct which
the government pursued in the matter which is already well
known to the public, and continued, I say, Sir, and I say it
advisedly, that this offence could not have been committed
in the midst of the intelligent community which inhabits the
metropolis without the person being in communication of
some persons, I will not say who were conscious of the guilty,
but I will say who must have had some knowledge of the,
transactions going on, and whose duty it was to have
given information. Why, Sir, we gave the result of the
first detection of the offence. No sooner were the pro-
ceedings taken against the individual Smith, than I re-
ceived from various quarters details of suspicious circum-
stances that had occurred. I understood from one gentleman
that he had been offered Exchequer Bills for a loan, but he
rejected them, as they were suspicious, and this gentleman
gave me to understand that the same parties had a quantity
of Exchequer Bills—these individuals devoid of character—
that they were all ready for signature. These are circum-
stances, on the part of the public, which require to be en-
tered into, that we may properly understand the real nature
of the subject. It is, therefore, with this view that I shall
call upon parliament to institute a specific inquiry—Ooud
cheers)—not to be conducted by a committee of this
house—(hear, hear)—or by a mere commission appointed
by the crown, but, sir, by a commission appointed by par-
liament to investigate the real nature of these several
transactions, to see how business was transacted by these se-
' veral persons, to know whether they were men of such sus-
picious characters that honest men would hardly be connected
with them ; whether the money advanced on the bills
received in return an interest beyond the market rate. (Hear.)
These and a variety of other circumstances require to be
rigidly and strictly investigated before the house can be cal-
led on to come to any final decision on the question ; nay,
before we can be called on to understand the nature of
the case with which we have to deal. (Hear, hear.) Sir,
an inquiry of this kind requires the highest moral considera-
tion ; it is essential that the public of the country should
know how business is conducted. To the claims for com-
pensation brought before me, I have, as I conceived it my
duty to do, given the most decided refusal. The granting of
claims for compensation, in a case of this kind, is to take
away from the public the greatest security they have against
I the repetition of such offences, and is to do all in your power
to render such practices of more frequent occurrence. For if I
- were once to give my opinion that a man taking these bills
; were to be compensated for any loss he might undergo,
l what could Ido more, to remove all blame from him ? Or
what could I do more effectual, to encourage a criminal
• individual to seduce a public servant—being sure that
the termination of the affair must be that he should
receive any money that he had expended. I, therefore,
sir, have chosen to given the least encouragement to propo-
sitions of this kind, and I do most decidedly advise the house
; and parliament to weigh well all the considerations of this
• case, before they are led away by any statements of party or
• individual hardship, or individual suffering, before they yield
to claims of this nature. The hon. gentleman then argued
that there was no distinction as regarded the claim of corn-
, pensation between the law as applied to forgery on indivi-
duals or the public, and briefly alluded to the amendment
which an hon. member had given notice of.
Mr. KEMBLE said.that many of the holders of those ex-
chequer bills were amongst the most respectable persons in
the city, and he hoped, therefore, that the house would sus-
' pend its judgment until the inquiry should have taken place.
Mr. LEADER was of opinion that there had been great
carelessness in the Exchequer Bill-office, and it would be
very hard if the holders were to suffer in consequence of
that carelessness. _ _

Mr. BLEWITT acquiesced in the motion of the Chancellor
of the Exchequer, and withdrew his motion upon the subject
which stood for last evening. _ . _

§ii.lll-INCiis was afraid that the Chancellor of the Ex-
chequer had rather prejudged the case as against the holders,
but it was to be remembered that those exchequer bills were,
to all appearance, in every respect perfect.
Mr. F. BARING was glad that this commission was pro-
posed, and had only to observe, that while in office he had
never heard a whisper of anything wrong about the issue of
exchequer bills.
After some observations from Colonel SIBTHORI' and Mr.
RICARDO,
Mr. WAKLEY said the public was prepared to indemnify
the holders of those bills.
Sir R. PEEL hoped that no principle would be established
by the house until it should be in full possesSion of all the
facts of the case. His right lion. friend (the Chancellor of
the Exchequer) had been misunderstood when it was sup-
posed that he had charged all the holders of exchequer bills
with negligence. It was, however, most inexpedient to enter
upon any discussion until they had the facts before them.
After a short conversation leave was given to bring in the
bill.

Mr. FRENCH moved that the house should resolve itself
into a committee of the whole house, to address her Majesty
with a view that such measures might be taken as might ap-
pear most likely to secure to Ireland the advantages of rail-
way communication._ _

Mr. SHAW seconded the motion, with the view of dis-

suading his honourable friend from pressing his motion at
the present time. (Great laughter.) He was sincere, and
he meant to support his motion, but he felt, if now pressed,
it must fail, as the governmerit would not be likely to do
otherwise, in the present state of public affairs, than

oppose it.
Mr. ItuniNcrox said that a vast deal was due to Ireland,
and a greater liberality should be displayed in furtherance of
public works in that country. Considerable aid might be
given by government, without making any advance of money.
In one instance an offer of capital had been made to com-
plete a railway, provided government would secure 4 per cent.
upon half the capital, taking into their own hands a mortgage
upon the whole property.
Lord ELIOT was fully alive to the importance of railways
in Ireland, though he could not look upon it as a want, such
as it certainly had been in a manufacturing country like Eng-
land. He was unwilling to hold out any expectations by
saying thuovernment would hold the subject in considera-
tion ; for, in fact, the government were not prePaied to
recommend any project of this kind, which would call for an
advance of public money. He was of opinion that there was
no reason whatever to despair of railways being constructed
in Ireland by individual enterprise. Under all the circum-
stances, he should move the previous question.
Mr. O'CONNELL was of opinion that it would be advan-
tageous to Ireland if railroads were constructed there under
the inspection and with the responsibility of the government.
He regretted, therefore what he had heard from the noble
lord, for the report on Irish railways had estimated the profit
so low (only 6 per cent.) as to cast a perfect damper upon
private enterprise. As the motion was opposed by the go-
vernment, he hoped his hon. friend would withdraw it.
After some observations from Captain JONES and Mr. S.

O'BRIEN,
Sir R. PEEL said if the Government could honestly agree
to the motion of the hon. gentleman he had no doubt that it
would thereby conciliate great support for the
,Government
in Ireland ; but in the present state of the finances of the
countrv—even if such an interference by the Government
were deemed advisable, the Government would not entertain
the proposition. If private enterprise shrunk from such
projects, he doubted the policy of forcing such speculations
by the influence of the state. If the people of Ireland would
forget party spirit and party animosities there was energy
enough to carry out railways from Dublin to Cork, Water-
ford, or any other large town, the traffic of which might hold
forth a reasonable prospect of a profitable return upon the
capital embarked. There could not be any objection to Go-
vernment superintendence, and with that and the facilities
which parliament would give to save the expenses of private
legislation he felt assured that there was public spirit and en-
terprise enough in Ireland to furnish the requisite capital.
After a few words from Mr. WAKLEY,
Lord J. RUSSELL said he coincided in very many of the
principles laid down by the right hon. baronet, but still he
thought that a time might arrive when it would be right for
Parliament to take measures for the construction of railways
in Ireland.
Mr. FRENCH then withdrew his motion.
Sir R. PEEL said he did not mean, in declining to give pub-
lic money for such a purpose, to be understood that Ireland
should not have the same advantage as was extended to
England—namely, the advantage of borrowing an amount of
Exchequer bills, upon giving such security as might he
agreed to.
Lord MAHoN obtained leave to bring in a bill for the
amendment of the law of copyright.

HOUSE OF LORDS.—FRIDAY.
The Earl of ABERDEEN, in reply to a question from the
Earl of Clarendon, relative' to the state of Spain, said that
it was the wish of the government that the present govern-
ment of Spain•should be maintained, and be was ready to
confide in the promises of the king of the French that he
also was anxious for the preservation of its interests. Vari-

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Lion wholly withopt foundation, and repudiated by that chief
himself. If any occurrences should take place in Spain
that would endanger British subjects residing there, .ship's
of war would be sent to their protection, and every justifiable
means would be resorted to with the view to sustain the
present government of the ancient ally of this country, be-
lieving.as he did that the maintenance of that government
would be essentially beneficial to the Spanish nation.

Lord BROUGHAM drew the attention of the government
to the smallness of the pensions to the daughters of Sir R.
Kennedy (X5O each), who had rendered such essential ser-
vices to the country, and whose honesty was so strict that he
died in absolute poverty.
The Duke of WELLINGTON said his attention had not
been called to the subject. Sir R. Kennedy was a most de-
serving officer, and no individual deserved more highly of
his country for the manner in which he had discharged the
arduous office of chief commissary general. He had in the
course of his services most satisfactorily accounted for sums
passing through his hands to the amount of from 54 to 55
millions sterling. He would most certainly give his atten-
tion to the subject.
Lord MONTEAGLE then brought forward his motion rela-
tive to the exchequer bill affair, and entered into a long
statement with a view to show that in the frauds which had
taken place he was wholly blameless. He rested his defence
upon the fact that he had caused no material alterations
to be made in the usual procedure of the office, and
was therefore guilty of neither negligence nor misfeasance.
All the regulations of the office had been in existence up-
wards of a century, and had been repeatedly before parlia-
ment. In the inquiry which had already taken place, there
were five points only which would seem to imply anything in
the shape of censure on his office, and to these he would call
attention. The first was having only one instead of two
counterfoils, but the second counterfoil system was long
since done away with, and was really no protection. The
second was, that the paid off bills had not been compared
with the counterfoils. The hills were not paid off in his
office, and it was not the fault of his department that such
comparison had not taken place. The third point was that
the counterfoils had been destroyed without an order from
the treasury. This was true, but it had been the constant
practice since 1828 to destroy them without treasury warrants.
The fourth point was the signing of bills, of the same issue,
' by more than one person. This was also the case, and his
fault was that he had signed a far greater number, in propor-
tion, than had been signed by his predecessor. The fifth
point was the having signed bills without the presence of a
clerk. This was also true, for after having worked during
office hours, and finding that it was desirable to despatch bu-
siness, he had bud these bills carried in boxes to him to the
House of Lords and the Privy Council, and hild there signed
Them, taking on his return to the office a receipt from the
chief clerk for the number thus sent to him from the plates
where he had signed them.- °ht. of 137 cases in which be
Had signed exchequer bills, in' 12 cases only had he thus'
signed them away from his office, and this signing away from
the office had also been done by Sir J. Newport, his prede-
cessor. The noble lord concluded by moving for an inquiry
which would say "aye" or " no" as to
,whether his depart-
ment was to blame for these frauds.
Lord BROUGHAM rose for the purpose of defending Sir J.
Newport, and said that when that right hon. baronet was ill
bills had been taken to his house for signature. But there
was a most material differeuce between the two cases. Sir
J. Newport signed deficiency bills only, which were payable
to the governor and company of the Bank of England, and
which, if lost or stolen, were utterly unavailable; whereas the
bills signed by his noble friend-(Lord Monteagle) were ex-
chequer bills, of comparatively small amount each, and pay-
able to bearer ; so that, had the box been broken open, the
party doing so might have raised thousands without any diffi-
culty, and absconded.
Lord MONTEAGLE disclaimed any reflections upon Sir
John Newport, to whom he was under the greatest obliga-
tions during the 20 years in which he had acted with him in
his political career.
The Duke of WELLINGTON did not believe that the com-
missioners or the government ever intended to imply the
smallest blame to the noble lord, or to impute it to his ne-
gligence that these frauds had taken place. As the govern-
ment had proposed an inquiry in the other house of parlia-
ment, if the noble lord would say what points he wished an
inquiry to be directed to, he would speak to the government
about it, and on Monday he would give him an answer on
the subject. There was really, in his opinion, no charge
whatever either against the nobleiord or his office.
Lord MONTEAGLE then withdrew his motion.