§ Bill considered in Committee.
§ (In the Committee.)
§ Clause 1 agreed to.
§ Clause 2 (Treasury may cancel additional Amount not exceeding £5,000,000, and create terminable Annuities).
§ MR. HUBBARD moved that the clause be struck out. In dealing with the deposits of savings banks they ought to secure a safe investment, an investment which paid a good interest, and one which was easily salable. With a view to those requirements, nothing could be more undesirable than the investment in terminable annuities. It would impose the necessity of constantly buying and selling in the money market by the Government, and would entail a loss upon the community, for which the Government were trustees. The object was to pay off a portion of the; National Debt, and really to create a fictitious sinking fund, to which the right hon. Gentleman had in former times expressed his objection. These terminable annuities were to absorb the £100,000 which was to be obtained from the tax on charities, and, under the altered circumstances of the Budget, he thought the proposal inconvenient and unnecessary.
§ THE CHANCELLOR OF THE EXCHEQUER
said, his hon. Friend had a great aversion to terminable annuities; while he (the Chancellor of the Exchequer), on the contrary, thought they were of great advantage to the country, and that they supplied a steady and quiet machinery which was always at work with a view to the gradual liquidation of the debt. The great objection to their extension was the difficulty of disposing of them in the open market. It was not proposed now to do that, but to make a purely financial experiment, which, while leaving ample stock for all the purposes of savings banks, would give an extended operation to this very salutary principle. It was quite true that he opposed a proposition for re-establishing a sinking fund, and he had not changed his opinion; and he had been a party to raising a loan 1138 partly on terminable annuities. This proposal was not liable to the objections made against Mr. Pitt's sinking fund, which compelled the Government to be buyers and sellers of stock at the same time, with the moral certainty that they would buy the stock on worse terms than they sold it, independently of the cost of the operation. In ordinary years the Government would not be buyers of stock, and they would not be sellers of stock. He was sorry to differ from his hon. Friend, who was so conversant with subjects of this kind, and though he would not enter into the general merits of terminable annuities, he would remind him of the speech of his hon. Friend the Member for Peterborough (Mr. T. Hankey), who, in 1860, completely answered the objections of his hon. Friend, and with great ability stated sound reasons for regarding with favour those securities.
§ SIR HENRY WILLOUGHBY
wished to know what would be the effect of converting £5,000,000 into terminable annuities. What would be done with the income derived from them? He feared the Chancellor of the Exchequer was laying the possible foundation of a very serious deficiency in the Savings Bank Account. He thought more time ought to be given for the consideration of so weighty a principle as that involved in this proposition.
§ SIR STAFFORD NORTHCOTE
hoped, that in the case of these annuities, interest and principal would be kept separate. There was a great deal of force in the remarks of the hon. Member for Buckingham (Mr. Hubbard), and he hoped they would receive due consideration. The best mode of reducing the debt was by keeping the expenditure below the revenue. Even in favourable years, however, if they took into account the borrowed money expended on fortifications, the outlay generally exceeded the income. As long as that was the case, it was a mistake to attempt to reduce the debt by artificial means. At the same time, be saw no grave objection to the creation of a moderate amount of annuities, and therefore hoped that his hon. Friend, having uttered his protest, would not press the Committee to a division.
§ MR. THOMSON HANKEY
approved the clause, as it involved no more than an ordinary banking transaction. There was always a certain, though limited, market for annuities, and he thought the Chancellor of the Exchequer was right in availing himself of it whenever he had the opportunity.
§ MR. AYRTON
expressed a hope that 1139 the hon. Gentleman opposite would not take the sense of the Committee on the question which had been raised. He, at the same time, must beg to enter his humble protest against the Bill, upon the ground that it contained no clause whereby the National Debt Commissioners, as bankers for the savings banks, could raise the capital which they might be called upon to pay. It was, he thought, the duty of the Chancellor of the Exchequer to introduce a clause entitling the Commissioners to raise the stock if demands should be made upon them beyond the funds in their hands.
§ THE CHANCELLOR OF THE EXCHEQUER
, said, there was no distinction between that portion of the annuities alluded to by the hon. Gentleman opposite, which constituted capital, and that which constituted interest. The stocks realized and the dividends went indifferently into a certain fund, liable to meet the demands of the trustees on behalf of the depositors, and such portion as was not required for that purpose it was the duty of the Government to invest in the best manner they could. In answer to the hon. and learned Member for the Tower Hamlets (Mr. Ayrton), he might observe that the advantage which the Savings Banks Fund would derive from the working of the Bill would be that by the return annually of a larger sum into the hands of the Government ampler means would be afforded of meeting the demands of the depositors from time to time without being compelled to sell their stock. The power of purchasing annuities the Government had set about using; but latterly they had been unable to use it to so great an extent, for the simple reason that the savings banks took more money away than they put in. When the savings banks began again to put in the funds, the Government would, he trusted, be enabled to make more profitable investments in their behalf. The fortification loan had, he might add, answered very well for those institutions.
§ SIR HENRY WILLOUGHBY
said, it was a serious matter to find that the amount of savings bank money paid in was less than that paid out.
MR T. BARING
considered the Bill rather a complex measure, but expressed himself in favour of the creation of terminable annuities as being the only practical way of diminishing the National Debt.
§ Clause agreed to.1140
§ Remaining Clauses agreed to. House resumed.
§ Bill reported; as amended, to be considered To-morrow.