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coming to the character both of the government and of the Bank, has been carefully attended to in what has been pro posed in the accompanying Paper under the head of Reduction in the Charges of Management. But as some conversation has already taken place respecting the arrangements made in this respect, as well by the Act of 1791, cap. 33, as by the Act of 1800, cap. 28, and as they are also referred to in the Report of the Committee on Public Expenditure, it may be necessary, perhaps, thus separately to offer a few short observations upon these engage
dency of this plan will be, to diminish the total amount of exchequer bills at any given time jointly in the hands of the Bank, and in the market. If the Bank continue desirous of holding the same amount which it now finds convenient to take, the period at which it will be enabled to procure them in exchange for its own notes, will be retarded, and, on the supposition of the Bank holding exchequer bills to the same amount as it now does, the quantity circulating in the market will be necessarily reduced. Should this arrangement be preferred, it is proposed that it should be equally liable to be reconsidered with-ments.-It cannot be disputed that by the in one year after the termination of the war. It is only here necessary further to observe, that exchequer bills, exceeding what would be required upon this plan, to be deposited in any quarter, are, as the law now stands, payable into the receipt of the revenue, and consequently that, without any fresh legislative enactment, or without laying itself open, by any possible construction, to the imputation of trenching on the privileges of the Bank, government might, in transitu, exchange the bank notes received in the different departments of the revenue for exchequer bills, which would then be paid by the different receivers general into the exchequer. But the mode now proposed would be more simple in its execution, and less liable to interrupt that good understanding, founded on liberal principles, which ought at all times to exist between the government and the Bank, and which it is certainly not less the interest, than it will undoubtedly be felt to be the duty, of both parties to maintain in the discussion of the present arrangements.
No. III. Copy of a separate Paper,
Act of 1791, cap. 33, the Bank acquired a title to be paid at the rate of 450l. per million for the management of the then debt; and that this title remains to this day entire and unquestionable, with respect to so much of that debt as is not yet paid off-The amount of debt existing on April 5 of that year, was 219,685,195./. the amount of debt redeemed by the ope ration of the then Sinking Fund, and its accumulation, and by the redemption of the Land Tax, up to the 1st of Feb. 1808, is 78,939,6691.; leaving unredeemed on Feb. 1 next, 140,745,526. For the management of this debt, subject to the further reduction which will be daily effected by the above-mentioned Sinking Fund and its accumulation, and by the further redemption of Land Tax the Bank would have a clear right, under contract, to an allowance for Management at the rate of 450l. per million; unless it should appear upon further investigation that the public have a right to deduct from the total amount of debt, as it stood in 1791, the total amount of debt since paid off and cancelled by all or any of the sinking funds, or other means the public has appropriated to that purpose :-a question which, when it is considered that, with a reference to any augmentation or diminution, the debt is considered as one account, and that, [in point of fact, both the several debts and several sinking funds were consolidated in 1802, may, it is conceived, fairly admit of an argument; and in this case, the total of unredeemed debt to which this contract would apply, would be about 90 millions. By the Act of 1800, cap.
It being understood to be the wish of the governor and deputy governor of the Bank, as well as of those in the direction with whom they have consulted, that whatever proposal is made by government, it should, at least in the first instance, be founded upon a fair and equitable review of existing arrangements; taking into consideration the services derived to the public on the one hand, and on the other, the advan-28. it is enacted (inter alia) « That during tages accruing to the Bank, instead of such proposal being limited by a strict reference to the letter of any actual contracts or engagements;-this wish, which is certainly more liberal, and more be
the continuance of the charter, the Bank shall enjoy all profits, emoluments, benefits and advantages whatsoever, which they now have, possess, or enjoy by virtue of any employment by or on behalf
of the public," but with the following | tainly, under such a contingency, feel it proviso," subject nevertheless to such to be no unreasonable expectation, and restrictions, rules and directions, and also should be called upon by my duty to to such other agreements, matters, and urge it to the utmost, on the part of the things, as in the said acts and charters public, that for the above 250 millions, (i. e. all former acts and charters) or any of that part of the debt with respect to the them now in force, are contained or pre- allowance for the Management of which no scribed." It is remarkable that the Act specific contracts can be said to exist, such of 1791 is not specifically adverted to;, it allowance' should be confined as nearly as is only by the general words of reference possible to the increased charge which may to all other acts and charters, that it can be supposed to be actually incurred by be comprehended, and therefore it may the Bank, in consequence of this addition be fairly argued, that the specific rate of to the debt of 1800; so as to obtain, if not allowance for Management granted by immediately, at least within a short pethat act, was not particularly under atten- riod, by the rapid diminution of the latter, tion, for if it had been, it can hardly be an abatement equal to a fair and immediconceived that it would not have been ate average abatement upon the whole.-It specially adverted to and it is unques- is unnecessary to go into particular calcutionable that the proviso last mentioned, lations upon such a subject; but it must as much refers to the directions and rules be obvious that supposing the rate of aland powers of agreement granted to the lowance for the portion of the debt not treasury, with respect to the allowance for subject to the supposed contract of 1800, management in the Annual Loan Bill, as to be managed at a rate as high as 3001. to the Act of 1791. Their charter, there- per million (a rate, which under the cirfore, reserving to them all the benefits cumstances here stated, and with a view which they then had by virtue of any em- to an average, it would not be reasonable ployment for the public, subject to this to expect), a very few years would elapse proviso, must be understood to reserve to (probably not more than ten years) before them the right of Management, but sub- the whole allowance for management ject as to the amount of Management, to would be less, under any given circumwhat the treasury may think reasonable.- stances, than is now proposed, whilst the If, however, notwithstanding this view of reduction of allowance would be still gothe case, and contrary to every expecta-ing on, so long as any of the debt of 1800 tion, the Bank were now to assert, and were enabled to make good a claim to be allowed at the rate of 450l. per million on such portion of the debt, as it stood on April 5, 1800, as has not since been redeemed, there would remain at this moment about 250 millions only (the whole debt being 613 millions) to which any new scale of allowance could be applied. But if such a claim were insisted upon, and if the Bank were advised to stand upon the strict and literal execution of a contract, which, as far as it rests upon the act of 1800, is only to be maintained (if tenable at all) by general implication and reference, whilst it must be obvious, that this same contract, by the continued and unforeseen operation of those very circumstances which create pressure and difficulty in the country, is become impro-vance.-The Committee, ever anxious to vident and disadvantageous to the public, promote the interest of the public, as well and, in the same proportion, over-pro- as of their proprietors, are of opinion, that ductive to the Bank; and that their profits a reduction on the rate of management of are in like manner greatly increased by the national debt, as proposed by the many other transactions, necessarily in-chancellor of the exchequer, may, with cident to and growing out of that pres- some modifications of no very great mosure and those difficulties; I should cer- ment, be consented to on the part of the VOL. X.
should remain, without any security to
cated to the Chancellor of the Ex-
The Committee having taken into con sideration the Proposals suggested by the Chancellor of the Exchequer; beg leave to return the following Answer, and Observations: They are of opinion, that a farther advance, to the extent of 500,0001. on account of the Unclaimed Dividends, may be acceded to on the part of the Bank; on similar conditions with the former ad
into the Exchequer, for the use of the public, on the condition, that the public money shall continue to be kept in the hands of the Bank, and the accounts bétween the Exchequer and the Bank continued according to the present practice. In that case, and on that condition, the committee are of opinion, they might con
Bank. In regard to the large sums of public money of the exchequer, and the balances of the public drawing accounts in the hands of the Bank; these, however considerable at particular periods, must fecessarily always be of an uncertain and fluctuating amount; for which reason, and for others continually operating in the great scale of their business of bank-scientiously propose to their court to reing, the committee deem it impossible to commend the court of proprietors to pay ascertain, with any degree of precision, into the exchequer, for the use of the the profits that may be made, arising public, the sum of £. annually, from the employment of those balances. during the continuance of the war; and But, on all accounts they are of opinion, whenever the period of peace arrives, this that it would be highly imprudent for the subject, and others of great moment, will Bank to make an advance to government probably require farther consideration.— in the way of loan of a capital sum of The chancellor of the exchequer will be money equal to one-half of their presumed pleased to turn this suggestion in his amount, even with the deductions pro- mind, and determine which of the two posed. They therefore cannot recommend plans he shall prefer to propose to the to their court, for the purpose of being Bank. With respect to the quarterly issue brought before the court of proprietors, for the Redemption of the National Debt, the first mentioned plan or proposal, in the committee are unanimous in most sorespect to those balances. But, as the lemnly deprecating any alteration in the Paper suggests another mode, by which present mode of conducting that very imthe exchequer itself may make advantage portant branch of the public business, or of the public money paid into the exche- diverting any part of its funds, to any quer; the Bank neither can, nor ought to other purpose, than that to which by law make an objection thereto, or to any plan they are appropriated, and which has so obviously intented for the benefit of the happily been enacted by the legislature. public. On the contrary, any facilities The system hitherto pursued has given conveniently in their power, the committee universal satisfaction to the public, as well have no hesitation to say, the Bank will as to the stockholders, and has evidently always with alacrity afford.-It should, been attended with the most beneficial however, be understood, that if this plan effects on the public credit of the nation. be adopted, the Bank should not be obliged-The committee have no object of profit at the end of every quarter to purchase, or take, on that account, exchequer bills to a larger amount than two millions.— The committee, however, are aware, that possibly it may not be altogether a desirable circumstance, in the management of this business in the Exchequer, to overturn the forms of office, and a system, that has been established and acted upon for a very great number of years; and that sometimes, what seems tolerably easy in prospect, may not always be found perfectly so in practice. They, therefore, on their part, beg leave to suggest a proposal, which possibly may deserve the consideration of the chancellor of the exchequer, and be more acceptable, and eventually even more profitable to government, than the mode just mentioned. It is much less complex in its nature, and demands no altération nor innovation on the present practice, which is perfectly well understood. It consists only in the Bank paying a certain sum of money, annually,
in view from the quarterly issue of this
cellor of the Exchequer to the Go-
Downing-street, Jan. 11, 1808. Gentlemen; In the several conferences and communications which I have lately had the honour of holding with you respecting the expectation formed by me, on the part of the public, of an advance by the Bank for the public service, the particular grounds of that expectation have been discussed under three heads, namely: 1st. Unclaimed Dividends.-2dly. The Charge for the Management of the Public
Debt.-3dly. Balances arising from Deposits of Public Money in the hands of the Bank.
not the less firmly convinced in my own judgment of the truth and accuracy of this position; and having, I think, succeeded in fully satisfying you, that a plan, the outlines of which I have had the honour of stating to you, might easily be devised, and with the sanction of parlia ment carried into effect, by which these, balances might, to a very great extent, be rendered productive of profit to the public you must be sensible, that, however desirous I may be of avoiding to trouble you with any futher discussion of the mode in which, according to my judgment, advantage is derived to the Bank from the public balances, or of the precise extent to which those advantages are carried, it would be altogether inconsistent with my duty to the public, in the view which I have now shortly stated, to avoid pressing upon the consideration of the Bank, the expediency of ensuring to the public, in some shape or other, that reasonable degree of profit which they are entitled to expect, and which, as I have already observed, it is within the competency of
Having most maturely considered every thing that has passed between us, in these discussions, I now feel myself enabled and called upon to make to you the following proposals, under each of the above heads; and I request that you will submit them to the Court of Directors, for their consideration and concurrence. 1st, That out of the Unclaimed Dividends a sum of 500,0001, shall be advanced for the service of the present year, under similar, provisions to those contained in the Act of 1791, cap. 33, and in addition to the sum of 376,7397. already advanced upon that account; but so as to secure that the amount of such dividends remaining in the Bank shall never be less than 100,000l. 2dly. That the sums to be allowed to the Bank for the Management of the public debt, shall, from and after the 5th of April next, be regulated by the following scale -When the total amount of debt unredeemed shall exceed 400 millions, and not exceed 550 millions, the Bank shall re-parliament to secure to them, from the use ceive an allowance for management at the rate of 3401. per million per-annum upon the whole of such debt: and when the total amount of such debt shall exceed 550 millions, the Bank shall receive the allowance of 340l. per million for such 550 millions; and for any excess of debt which may now exist, or may hereafter be created, beyond 550 millions, the rate of allowance for management shall be 300l. per million for the whole of such excess.--I have only farther to propose on this part of the subject, that the 4,000l. paid to the Bank by the Exchequer, under the denomination of "House Money," should be discontinued; but it is not my intention, if the above proposals are acceded to, to suggest any alteration in the established rate of allowance for receiving contributions to the loan or to the lottery. -The consideration of what may be the proper rate of management in the event of the debt unredeemed being reduced below 400 millions, may be reserved for subsequent arrangement when such an event may take place.-3dly. With respect to the Public Balances; although I have not been so fortunate in the several conferences which we have had upon the subject, as wholly to convince you, that the advantages derived to the Bank from the deposit of those balances, must be in proportion to their average amount; I am
of those balances. As, however, any plan for this purpose to which the Bank might not be a party, though free from objection in its principle, could not be carried into execution, without a departure from the course of business which has so long subsisted between the Bank and the Exchequer, I should on that account prefer an arrangement promising even something less of advantage to the public, which would leave this course of business in its accustomed, channel; and, as I cannot doubt but that the Bank will concur with me in preferring to avoid any deviation from a long established system, it appears probable, that, from this and other considerations, it may be more satisfactory to them, as it will certainly be to me, that the one or the other of the following propositions, (unquestionably not formed upon any too sanguine view of the comparative profit which in another mode might be obtained for the public) should be acceded to by the Bank: viz. That the Bank shall, on or before the 5th of April next, advance to the public for the service of the year, a loan of 3,000,000, without interest, but the principal to be secured by exchequer bills payable twelve months after the ratification of a definitive treaty of peace: or, that the Bank shall, on or before the 5th April in the present and each succeeding year during the continuance
of the war, and within twelve months after the termination thereof by a definitive treaty of peace, pay into the receipt of the Exchequer, there to be held at the disposal of parliament, the sum of 150,000l. sterling. In proposing this alternative in the mode of affording to the public that degree of aid which, upon the most moderate principle, and with a reference to the advantage that might otherwise be obtained, it appears reasonable to expect on account of the deposit of public money in the hands of the Bank, I feel it a duty at the same time to urge, in the strongest manner, the superior convenience and advantage which would accrue to the public service from the adoption by the Bank of the proposed loan, instead of an equivalent annual payment into the Exchequer. In stating this comparative view of the two proposals, and my decided opinion in favour of the advance by way of loan, I cannot doubt, from the general disposition of the Bank, that it will be a most powerful motive with the court to give a preference to that proposal; unless, from some reason of which I am not aware, it should appear to them absolutely necessary for the interests of the Bank to confine themselves to an annual payment.In order to prevent the possibility of any future misunderstanding of the principles, and grounds on which the present arrangement, as far as relates to the deposits of public balances, is brought forward, I think it necessary to observe, that the proposal to confine the duration of the advance by way of loan, or of the annual payment into the Exchequer, to the period of the present war, and twelve months after the termination of it, is by no means to be understood as an admission on my part, that, at the expiration of such period, the public will no longer be entitled to look to any advantage from the continuance of such deposits; but simply as a provision, by which the government and the Bank may be respectively enabled, under the change in the state of affairs which will then have taken place, (probably affecting the amount of public ba- Resolved, That the Court of Directors lances in the hands of the latter,) to con- do accede to the proposal of the Chansider of a new arrangement. And I have cellor of the Exchequer, to lend, for the further to add, that, as the proposal I have use of government, 3,000,000l. on exchenow made is founded on the view I have quer bills, without interest, during the taken of the present annual average amount war; provided it is stipulated to be returnof those balances, assuming that amounted within six months after the ratification to be not less than ten millions sterling, I wish it to be understood that the present arrangement, if carried into effect, should
| not be construed to preclude his majesty's government (with the sanction of Parliament if necessary) from using in such manner as they might think proper for the public interest, and consistent with any existing engagement with the Bank, any excess of balance over and above the said ten millions, if it should appear that such excess were likely to be permanent and of sufficient magnitude to call for some application of it, by which, without interfering with the arrangement now proposed to the Bank, it might be rendered productive of advantage to the public; but without calling upon the Bank for any direct assistance beyond the amount now proposed; an assistance which, whatever difference of opinion may exist as to the circumstances by the operation of which they are enabled to grant it, will, I cannot doubt, upon a fair consideration of the whole case, appear to be entirely consistent with those principles of equity and mutual liberality, which ought to prevail in the adjustment of so important an arrangement, growing out of the extensive transactions existing between the public and the Bank. I have the honour to be, &c. SP. PERCEVAL. No. II.-Copy of a Paper intituled,
"Resolution of the Court of Directors.' 14th Jan. 1808. Resolved, That the proposal of the Chancellor of the Exchequer, to take 500,000l. from the Unclaimed Dividends, in addition to the former sum of 376,7391. be acceded to by this court.
Resolved, That in respect to the rate of Management, the following scale be proposed:
On 600 millions at 340l. per million.
of a treaty of peace, and under the complete understanding, that all transactions. between the public and the Bank shall be