§ Order of the Day for the Third Reading read.
§ EARL GRANVILLE
said, that in moving the third reading of this Bill, he found he stood in rather an awkward position; for, after what fell from him the other night in reply to the remarks of the noble and learned Lord opposite (Lord St. Leonards), he was supposed to have entered into an engagement to make a statement with respect to the Bill, and in reference to all the arguments bearing upon it. It appeared, however, that it would be desirable to introduce some amendments to carry out the noble and learned Lord's suggestions, and that it would be necessary to introduce another Bill for that purpose. The question of the injustice done to suitors in Chancery was under the consideration of the Government. As it was a Money Bill, it was not competent to their Lordships to make any amendments in it. He thought it would be the most convenient course to move the third reading of the Bill, reserving to himself the right of offering any explanations that might be required to those objections which noble Lords might urge against the Bill.
§ Moved —That the Bill be now read 3a
§ The EARL of DERBY
appealed to the noble Earl, whether he thought the course he proposed was becoming in the present state of the House [alluding to the fact that not above nine or ten noble Lords were present], and whether he really thought they ought to proceed with a question of such immense importance, on which many noble Lords were anxious to express their opinion, without one word being said respecting it since it came down from the other House, or without one opportunity of discussing it having been afforded to them. It might be quite true it was not competent to their Lordships to alter the Bill, but they ought to have an opportunity of considering the principle of it, and it was really turning the proceedings of their Lordships' House—he did not wish to use any language unnecessary strong—but it was giving a character to the proceedings of their Lordships' House which he was sure the noble Earl was the last man to desire, if they took the course he suggested.
§ EARL GRANVILLE
would have been very anxious to yield to the recommendations of the noble Earl in any other Bill, but the present Bill required that another 1031 should be introduced into Parliament on the subject-matter of it, and it would cause great public inconvenience if there were any delay. He was quite ready to make his statement if their Lordships desired it.
§ After a short conversation,
§ The EARL of DERBY
said, that if it were only for the objections of his noble and learned Friend near him, and for the statement of the noble Earl opposite, that it would be necessary to introduce a supplementary Bill, there were reasons enough not to take the third reading till they saw what that other Bill was; at all events, it should be postponed till the House of Lords knew what the measures of Government were.
The EARL of WICKLOW
observed, that if noble Lords were absent, it was their own fault. The Bill was down on the paper for a third reading among the Orders of the Day. They had most likely gone away because they knew no amendments could be introduced.
§ LORD MONTEAGLE
said, he must protest in the strongest manner against the argument of his noble Friend (Lord Wick-low), because the usage of Parliament precluded their Lordships from amending Bills of this kind, that their Lordships were, therefore, precluded from discussing them; when, in fact, such measures were frequently of a nature such as, above all others, to require free comment in their Lordships' House. This principle was fully recognised in practice. Let the House recollect the long and important discussions which more than once had taken place in that House upon the Property Tax—a Bill, which, nevertheless, according to usage, their Lordships could not touch. But it also appeared that the noble Earl objected to the present discussion, because the Bill had reached its third reading without debate. He must remind the House what had been the reason of this forbearance. It was a concession made for the convenience of the Government—made with the distinct understanding that the Bill should be considered and discussed on a future stage. In the present instance a most unprecedented course was proposed. The House was called on to pass a Bill without having received one word of explanation from the Government; without an observation of any kind except as relating to some clauses of a purely legal character, not affecting the principle of the Bill. He entreated their Lordships to pause for those explanations which were yet to be given. 1032 Let the House at least know what it was about to do before it passed a Bill of such great public importance as the present.
§ EARL GRANVILLE
said, he had been misunderstood if it was supposed he had made any objection to offer a lengthened statement with respect to the Bill, to the third reading of which he asked their consent. As it appeared to be their Lordships' wish, he would state the objects of the measure. Their Lordships were aware that the public debt of the country was divided into certain stocks—namely, the consolidated annuities, the reduced annuities, and other minor stocks, the South Sea, and other annuities, and it had been for a long time the object of the Government to reduce the interest payable upon this debt. With regard to the 500,000,000l. of the principal stocks, a great difficulty existed—namely, that under the Acts of Parliament by which the money was raised, notice was required to be given twelve months before the reduction of the interest. Now no Government could undertake to pay such an enormous sum as that twelve months hence, when various fluctuations in the money market might take place. With regard to the South Sea and other small stocks, amounting to about 10,000,000l., that difficulty did not exist, and the Government accordingly proposed to deal with those stocks. By this Bill three proposals were made for effecting that object: one was by the issue of a 3½per cent stock, and which would be issued at 82l. 10s. That would produce a rate of interest amounting to 2l. 17s. 2d., and would reduce nominally the amount of the debt. The second was to issue a stock at 2½ per cent, which would be redeemable at the end of forty years, for 110l.; and it was unnecessary to say what improvement would be effected in their finances by having a stock of that description. The third mode of commutation was by issuing Exchequer bonds, bearing, for not more, and possibly for less, than the first ten years, an interest of 2l. 15s. per cent, and afterwards of 2l. 10s. per cent. Great advantages were anticipated from the creation of those bonds, as it would no doubt be highly advantageous to trade and commerce that there should be a security like this, passable from hand to hand, and one which persons in foreign countries might keep in their own possession. It was, indeed, said, that as Exchequer bills only bore interest at 1¼ per cent, they would be exchanged into these Exchequer bonds to the disadvantage of the Go- 1033 vernment; but he did not himself think that this contingency was at all likely to occur, because it had always been considered disadvantageous to fund Exchequer bills, nor had it ever yet been done, except when there was a greater increase of interest to be gained than would be the case under the operation of this Bill.
§ LORD MONTEAGLE
said, that even after the explanation given by his noble Friend (Earl Granville) he acquiesced very reluctantly in entering upon the discussion of this most important measure, in a House so thin as that he was called on to address, and at so protracted an hour of the evening. Distinguished as his noble Friend was for his clearness of statement, and for that unassuming ability which recommended him at all times to those whom he addressed, he must nevertheless state that the explanation offered on the present occasion failed altogether in justifying either the Bill or the purpose it was intended to effect. He (Lord Monteagle) would have undertaken to prove there were abundant reasons to justify postponement to a future night, if he were not aware from his own official knowledge that great public inconvenience might result from recommending such a course to their Lordships. He was therefore driven to the discussion, though conscious in doing so of being placed under all possible disadvantages. He regarded the Bill as being not only extraordinary from the mode in which it was framed, rendering its discussion peculiarly complicated and difficult, but because it comprehended a novel and most dangerous principle, of which, disguised as it might— and by the use of the word disguised he did not mean to attribute any disingenuousness to its framers—he felt it his duty to make their Lordships and the public fully aware. But of this hereafter. He would first remind their Lordships that the President of the Council had not stated or even suggested any definite advantage proposed to be attained by this extraordinary plan for commuting a portion of the public debt. He had not stated in what way the public credit of the empire would be strengthened by the consequences of the proposed enactment; how our financial operations would be facilitated, or economical reforms would be effected. Nor was it surprising that even with his acknowledged ability he had failed in doing so; for unless endowed with the spirit of prophecy, it was utterly impossible to foretel 1034 the result in a case where the judgment of the money market could not be anticipated, but was left embarrassed and perplexed by the offer of three conflicting and antagonistic propositions. It was impossible to form even a guess with respect to the ultimate result, unless that of a total failure of the plan. The House and the public were alike in the dark. The present proposition differed from all others which had ever been offered to Parliament for the conversion or extinction of any portion of the public debt. If a loan was proposed to be contracted for, or if a funding of Exchequer bills were recommended, a Minister could at least explain his meaning, defend his measure, and point out its future consequences. But in the present instance we were called on to deal with three different proposals, founded on irreconcilable principles, and unintelligible when taken in combination. It seemed to him to be a new version of the Merchant of Venice, got up at the Downing Street Theatre Royal, and to be represented by Her Majesty's Servants for the amusement of the monied gentlemen of their own and of another religion. The three caskets were proposed to be set out for the choice of the suitors; but in which of them the Treasury Portia was contained, if indeed to be found in any one of them, time only could discover. This uncertainty in regard to its result was one of his great objections to passing this Bill. No one, he thought, would be found to dispute that it was most unwise, he might almost say most perilous, for the Government at any time to interfere gratuitously with the public securities; or to do so at all unless they saw their way clearly, and were able to show to Parliament a well-grounded expectation of some certain or at least highly probable advantage. Public credit ought not to be made, at any time, the subject of rash, unmeaning, or hasty experiment. Stability and repose are the primary elements of public credit and confidence. We seem now, on the contrary, invited to set aside this principle, by meddling with the funds in a manner the most strange, unintelligible, and unprecedented. The uncertainty which the President of the Council had candidly expressed—the three proposals being left to the choice of the fundholders, and to be selected or rejected according to what his noble Friend had most ingenuously called "the fancy of the stock mar ket"—furnished inadequate reasons for legislation in a manner likely to disturb 1035 all classes of public securities—not only the South Sea Annuities, but the 3 per cents, and the whole of the existing unfunded debt. The other House of Parliament had been for many years familiarised with a mode of stating a question, which, from the authority of the great statesman who used it, has almost passed into one of the formulas of Parliamentary logic. "Three courses are open to me," was often the commencement of an able discussion. But the speaker uniformly examined each proposition carefully, and proceeded, by what he called the process of exhaustion, to exclude two, and ultimately to give able and convincing reasons for pursuing the third course. The framer of the present Bill seems to have followed the example of his great master, though in the first operation only. He, too, describes three propositions; but in place of selecting the best he adopts all three, leaving the ultimate decision, not to the Treasury, not to the Houses of Parliament—not to his own high intellect— but to what has been so well and candidly called, by the official advocate of the Bill, "the mere fancy of the stock market." Nor was the uncertainty of the effect of the present Bill, the only objection he felt to its enactment. It was as inconsistent as it was uncertain. The Bill presented alternatives to the stockholder, which, if acted on conjointly, would directly neutralise each other, as affecting the State. For instance, by the creation of 3½ per cents it is proposed to reduce the capital of the debt. By the creation of the 2½ per cents it is proposed to increase that capital. The unfunded debt seems to be considered, in one part of the Bill, as inconvenient, and requiring reduction; whilst, at the same time, the creation of Exchequer bonds assumes a contrary principle Whatever opinion might be entertained upon other parts of the plan, he (Lord Monteagle) had no difficulty in saying, that to adopt the course of increasing the capital of the debt, appeared to him to be contrary to every sound principle of finance recognised by the latest and highest authorities. In order to explain his meaning more distinctly, he would proceed to call the attention of the House to the alternative modes of proceeding, one or other of which might be adopted for the reduction of the national debt. The Treasury might endeavour to pay off principal, or to reduce interest. When the interest at which money had been borrowed by the State continued high, the reduction of the 1036 rate of interest was in most cases the preferable course. Hence, since the Peace it had been largely and most successfully resorted to. More praise had often been claimed and given for the result of these operations, than the fact of the case warranted. The interest of money, upon the fall of which the reduction of the debt depended, was no more within the control of a Government than the state of the atmosphere; though to profit by a favourable opportunity, and to effect a reduction of interest by a wise and well-considered proposition, did require skill and statesmanship; and he must be permitted to say, in passing, that no one of these successive operations seemed to him to have been more creditable to the Finance Minister of the day than the large reduction of interest effected by his right hon. Friend Mr. Goulburn: that reduction was wisely conceived, and promptly and successfully executed. But at the present time, when the interest of the public securities was low —when the interest upon Exchequer bills more especially had already been reduced below the rate warranted by the state of the money market—when the proceedings of the Bank of England, and the judgment of commercial men, led to the anticipation of a rise in the value of money rather than a fall; above all, when the enormous magnitude of the 3 per cent debt coupled with the contract entered into by the State, to give one year's notice if reduction were contemplated, it did not appear to him that the present was an opportunity when any great saving was likely to be effected by attempts to reduce the interest of the national debt. The other alternative — namely, that of paying off capital, was that which might most fitly be resorted to; but to this the original plan of the Government, in adding 10 per cent to the capital stock created, was diametrically opposed. It is true that, during the progress of the Bill, the House of Commons had induced the Chancellor of the Exchequer so far to vary his plan as to create a sinking fund, intended to extinguish the additional capital which he had himself gratuitously created. In thus escaping from one inconsistency, the Government had, however, by this step, involved themselves in another; for whilst the object of the conversion into a lower stock had been to lessen the charge of the debt, the effect of the new sinking fund was to increase it. A more serious objection, however, remained to be considered. By the present Bill it was pro- 1037 posed that Parliament should resort to a new-mode for effecting the conversion of debt. It Was proposed for the first time to issue new securities, called Exchequer bonds, the denomination of which was left uncertain, except that the minimum was fixed at 100l. But the Bill did not make any provision for the ultimate convertibility of these securities; it was not determined by law, as it ought to have been, how these bonds were to be redeemable, and whether at the option of the Government, or at the option of the holders. The decision was left absolutely to the Treasury. Surely this Was a most indefensible mode of legislation; the least that could have been expected was, that, upon a point like this, the Government should make up its mind, and Parliament should form some definite resolve. The possibility of leaving to the holders of any considerable amount of these securities an option to be exercised forty years hence of requiring the whole amount of their principal to be paid in money, however great the amount of that principal might be, and whatever might be the national exigencies at the moment, was an imprudent engagement into which he did not suspect that the Treasury would enter. But, on the other hand, to leave these securities without any fixed power of redemption at all on behalf of the holders was wholly inconsistent with their credit and circulation. He observed further, that no provision for the payment of interest was made beyond the expiration of the term of forty years, and therefore the proposed Exchequer bonds, whatever might be the apparent engagements under which they were issued, created in reality no legal obligation beyond that of a forty years' annuity. If these observations were correct— and that this objection was felt by others as it was by himself—the attempt to issue these Exchequer bonds was likely to prove an utter failure. He would, however, now reason upon an opposite hypothesis, which was that of the Chancellor of the Exchequer. In place of anticipating failure, he would assume the popularity and credit of these securities, and would therefore reckon on their success. This would, in his judgment, lead to consequences far more dangerous than a failure of the financial project. The most important feature of this Bill was, that for the first time, as he believed, in the modern history of England—at a time, too, when we were free from the pressure of any financial difficulty—Parliament was invited to sanction 1038 the issue of Government negotiable securities intended to pass by delivery from hand to hand, after the fashion of a circulating medium, which securities were not by law made convertible into the current coin of the realm. The public were consequently left without the only real security against over-issue. It is true that the amount of bills was now limited. He alluded here to the Bill as first introduced. Even in its present state, as amended, there was no restraint to prevent a Minister in times of difficulty or distress from applying to the Legislature for a power to make a more unlimited issue. He sincerely hoped that Parliament might not, by authorising this step, be considered to sanction the issue of Government inconvertible paper. This would be in fact to Set aside an all-important principle, the rigid observance of which had hitherto distinguished England from all other countries in Europe. It is true that the public had been protected by the caution of the House of Commons from permitting an unchecked creation of this new species of debt. The system could not now extend beyond 30,000,000l.; but within that boundary he apprehended that much mischief might be done, unless the evil of the whole plan Was arrested by its impracticability. The danger of violating a principle, though thus incurred without a motive, would still be great. It seemed, however, that the experience of foreign countries is relied upon as an example and a justification. The very terms of bonds and coupons bespoke their continental origin. These did not reconcile him, neither did he anticipate that they would reconcile the public, to newfangled securities, to be substituted for those which had long Sustained the credit of English finance. He would entreat the House to avoid the risk of being led away by any supposed analogy between these new bonds and Exchequer bills: the former are confessedly irredeemable for a period of forty years, and he had shown that no funds for their redemption are provided even at the end of that time, neither are any funds provided for the payment of future interest when the forty years shall have elapsed; the latter, on the contrary, are Government bills of exchange payable in coin twelve months after issue, or receivable in payment of taxes when come to maturity. Hence no Government could, with any regard to their own interest, deal with these latter securities in a manner inconsistent with the 1039 public service. Whilst affording to the banker and the capitalist a highly convenient investment, these securities were protected from any considerable depreciation. If the general rate of interest varied, the Government, in relation to such short securities, possessed the means, by making corresponding reductions of interest, either by raising or lowering the interest on Exchequer bills, of profiting by the cheapness of money, or of meeting any pressure upon the money market by raising the interest on these securities. How were such arrangements to be effected with respect to securities of forty years' date? The important advantage he had described would be lost altogether. The public were encouraged to hope that the new bonds would have a permanent and unvarying value, passing from hand to hand, without the expense of brokerage. This was a mere fallacy. The forty years' annuity represented by the bonds must fluctuate with the rise and fall of all other public securities, and the value could only be ascertainable through the medium of the market. Indeed, if the wishes of the Chancellor of the Exchequer could be realised—if these bonds became a species of savings bank investment for the humbler classes—if they were sold at the new provincial stock markets, which it is supposed advantageous to encourage and establish, it might rather be apprehended that these securities would, by reason of the relative weakness of their holders, be more exposed to fluctuation from panic and similar causes than were any other class of the public securities. He had already observed that the prudence of the House of Commons had fortunately imposed a limit upon the issue of the bonds; but this, it should be remembered, merely affected the amount of the bills, and not the principle of the measure; and if the scheme succeeded, he understood it was intended by the Chancellor of the Exchequer to apply to Parliament for an extension of authority for further issues. As the Bill now stood, the Government of England for the first time became bankers and issuers of inconvertible paper. A sanction was also given to one of the most mischievous fallacies for which the currency agitators had long contended, namely, the possible conversion of the capital of the national debt, or of any considerable portion of it, into a circulating medium. This is the same dangerous fallacy which has been lately adopted by the Emperor of the French in the crédit foucier —a system under 1040 which a part of the enormous mortgage debt of France, amounting to several hundred millions sterling, is proposed to be represented by billets de gage transferable, but not subject to immediate convertibility. Were their Lordships to be invited to follow this example in days of financial prosperity, and it is to be hoped of financial wisdom? It may be said, that the limitation of these bonds to a minimum denomination of 100l. would be a check against the abuse which he had described. He doubted this. Once establish the principle of inconvertibility, and where was the mischief to stop? The country may be safe in the hands of the present Government, but it was just possible that at some future period, power might pass into the hands of a "Little-shilling" Birmingham Administration. If 100l. bonds were not found to circulate freely, they might be split into bonds for 50l, 25l, 10l., or 5l. The original Exchequer bills issued by Charles Montague (Lord Halifax), in the reign of William III., were made out for sums as low as 5l. each. There was no calculating the danger of such a system; and the ultimate result might be, that our currency would be exposed to a debasement and depreciation as fatal as that of some of the Continental States. These bonds were, it seems, also recommended upon the ground that, made transferable from hand to hand, without endorsement or other formality, they would become negotiable in foreign countries. He confessed that this result would constitute, in his mind, an additional danger rather than a recommendation. If they circulated abroad, they must necessarily, to a certain extent, be exposed, in addition to home fluctuations of value, to the casualties and panics incidental to a commercial and to a political crisis in foreign States. He was told indeed, and noble Lords were aware from their own experience, that Bank of England notes now circulated freely on the Continent. That was true; but he should like to inquire from the cautious and experienced directors of the Bank of England whether this new continental circulation constituted in their judgment a benefit or an inconvenience? Even if it were considered to be a benefit, it by no means followed because a promissory note, payable on demand in gold at 3l. 17s. l0½d. the oz., maintained a steady value—that securities, which he had proved to be liable to all the fluctuations of the public funds, would receive the same acceptance, and be entitled to the 1041 same stability of credit as Bank paper. The contrary rather was obvious. Another matter was entitled to grave consideration — the question of forgery, and the physical durability of the proposed securities. If attempted to be circulated for forty years, of what materials was it proposed to make these bonds? If struck off on paper for the purposes of circulation, he doubted much whether all the ingenuity and machinery of this country would provide a material that would last for forty years. It was suggested that parchment or vellum might be used. Should this course be taken, the protection against forgery, derived from a distinctive paper, would be altogether lost. Also, in proportion to the hardness of the substance on which the impression of the plate was taken off, the liability to its effacement would be augmented, and hence would arise a new risk and liability to forgery. He begged to suggest, as an amending Bill was admitted to be required, that it would be absolutely necessary to add to the existing clause against forgery further provisions against the unauthorised possession of the machinery, tools, or paper, by which the forgery of those bonds could be accomplished. This was indispensable for the protection of the State, and of the holders of these securities. However painful it was to himself individually, to advert to the atrocious frauds committed in his own department by Mr. Beaumont Smith, he felt it his duty to give to the House the results of the experience he had derived from the discovery of those criminal acts. He ventured to forewarn their Lordships that infinitely greater dangers were to be apprehended from the proposed Exchequer bonds, and their coupons of interest, than any which had been found incidental to the manufacture of Exchequer bills. These dangers would greatly augment if these bonds were unfortunately to circulate in foreign countries. The progress of science, and more particularly the art of anastatic printing, greatly increased all the facilities of fraud. Again, he would beg to refer to the directors of the Bank of England, and inquire from them whether they considered that it would be consistent with the safety of their great corporation to render themselves liable for forgeries circulated on the Continent? If the Government of England, by any encouragement, however slight, even by a mere favourable expression of opinion, were to countenance the foreign circulation 1042 of these Exchequer bonds, he could not help thinking that further dangers would arise —dangerous questions of responsibility would be urged against us by foreigners—and ultimate loss to the public would ensue. It had been said that this Bill was to be received as the commencement of an experiment to try whether in one way or another the Treasury could accomplish the reduction of the 3 per cents. A more tempting bait and a less naked hook must, however, be provided than the present, to give much chance of success. On a former occasion he had been reproved by his noble Friend opposite (the Earl of Derby) for suggesting, on the authority of Sydney Smith, that absolute wisdom was not invariably to be found in the 3 per cents. However that might be, he felt some confidence that, taking into account the enormous magnitude of the stock, and the twelve months' notice required for its redemption, the holders of this class of securities would be found tolerably well able to protect themselves against any undue depression of interest at the hands of the Chancellor of the Exchequer. They were at least much too conversant with practical affairs to be tempted to convert their securities into bonds in the absurd expectation of escaping either brokerage or fluctuations of price. A further financial objection might be urged against the plan of the Chancellor of the Exchequer, still gratuitously assuming, as a possibility, its success in the market. It was proposed to permit the exchange of all Exchequer bills for the new Exchequer bonds. What would be the result of this operation if effected? The former securities amounted in value to about 18,000,000l. sterling; these bills floated at par, or at a small discount, paying an interest unprecedentedly low, namely, l½per cent. These bills it is proposed to replace by securities paying 2½ or 2¾ per cent interest. By this operation a certain loss must consequently be sustained, which loss should be deducted from any possible gain the Treasury might obtain from other parts of its proposal. The Exchequer bill market, already seriously affected by the recent reductions of interest, would be, in this case, utterly destroyed by the competition of the new hands. Now this he felt to be, if it took place, not only a great financial mistake, but a great financial danger. The abuse of an unfunded debt had, in former times, been most flagrant, 1043 and in England it was sustained only through the fatal help of a Bank restriction. The same abuse was carried to a still greater extent in foreign countries, and more especially in France—where securities unprovided for might hereafter be found less to deserve the name of a floating than of a sinking debt. But the true principle and practical application of an unfunded debt were so important and so valuable, when wisely used, that such securities could not, with any prudence or safety, be rejected or discarded by the Treasury. Our own history showed us that in great contingencies nations were often called upon to make prodigious and sudden efforts for their own defence. Should such a contingency recur in our times—if we were required to make unexpected exertions—were the demands upon the national resources to exceed the income of the year, if the exigency was not permanent in its character, we might wisely avail ourselves of our credit, and raise the funds required by means of our floating debt. If we should unwisely preclude ourselves from taking a course which may be compared to obtaining temporary accommodation from our banker, in preference to mortgaging our estate, we might hereafter be driven to raise the necessary ways and means by adding to our permanent debt. Not only would this be objectionable upon general principles, as being the creation of a debt more difficult of redemption; but a permanent debt contracted in a time of exigency, would always be raised to a disadvantage, and at an enhanced rate of interest. Should the Chancellor of the Exchequer's measure be successful, and were the money market to be filled with small Exchequer bonds, we might vainly seek to negotiate our Exchequer bills, or should be compelled to do so at a heavy loss. This had been abundantly proved in later times by the injurious competition of railway debentures with the market for Exchequer bills, affecting seriously the circulation of these Government securities. He begged to thank their Lordships for the great indulgence with which they had heard him, compelled as he was to address them at such an inconvenient hour, and at such length. He would willingly have been excused from making these observations; but entertaining, as he did, a strong objection to the principle of the Bill under discussion, as well as to its details, it would have been inconsistent with the duty he 1044 owed the public from the official station he had formerly filled, as well as from that which he at present occupied, to give a silent vote, or to disguise his opinion. While he disclaimed every unkind feeling towards the framers of the present measure, or any disposition to deal uncandidly with the measure itself, he would not have felt justified if he had not, even at the risk of wearying their Lordships, frankly expressed his opinion.
§ EARL GRANVILLE
would not be encouraged to occupy the attention of their Lordships by the unmerited praise of one who had so long had experience as Chancellor of the Exchequer. With respect to the options given to the public, the great objection he (Earl Granville) had seen stated in print was, that the Government were doing the most irrational and extravagant thing possible, for it was said that they professed to offer three equivalents to the holders of stock, one of which was so far more favourable to them than the other, that their selection of it was certain. On the contrary, the noble Lord had given the advantage of his great experience and authority to the opinion that those alternatives would be so much the same that the public would be like the lovers who had their choice of the caskets in Shakspeare. He held in his hand a list of several operations of this nature—one of which took place on the 20th of August, 1839; and he was not sure but that his noble Friend held the office of Chancellor of the Exchechequer at the time. By that operation 4,900,000l. Exchequer-bills were converted into stock at 110l., 109l., &c, giving an actual increase to the debt of 490,000l. [Lord MONTEAGLE stated that it was not the amount to which he had objected.] The noble Lord said it was not the amount that he cared for; but as the principle to which he objected was involved in that operation, the operation of 1839 was open to the same objection. The noble Lord seemed to labour under some misapprehension with respect to the Exchequer bonds, comparing them to bank notes. He said that their Lordships ought to object to the Government issuing an unlimited amount of bank notes when there was no bullion to represent them. There was no bullion to represent those bonds, because it was money which was owing; and the only difference made in respect of the funds was in the machinery by which they were now put in the form of a bond. He did not believe that 18,000,000l. of Exchequer 1045 bills would be exchanged for that amount of bonds. Exchequer bills had an advantage which nothing else could have—which was that they were redeemable at the end of the year; and from the fact of their being so redeemable, they had a value in the eyes of a banker which no other security had.
§ On Question, Resolved in the Affirmative: Bill read 3a accordingly, and passed.
§ House adjourned till To-morrow.