TREASURY BILLS. These bills are issued by the Treasury under 40 Vict. c. 2 for money borrowed by the Government and form part of the unfunded debt of the country. They may be payable at three, or six, or nine, but not more than twelve, months from the date of the bill. By Section 5 the principal money of any Treasury bill shall be charged on and payable out of the Consolidated Fund of the United Kingdom. Section S says with respect to the issue of Treasury bills the following provisions shall have effect : (I) Treasury bills shall be issued by the Bank of England under the authority of a warrant from the Treasury, countersigned by the Comptroller and Auditor-General of the re ceipt and issue of Her Majesty's Exchequer ; (2) each Treasury bill shall be for the amount directed by the Treasury.
By Section 13 the Bank of England may lend to Her Majesty upon the credit of Treasury bills, any sum or sums not exceeding in the whole the principal sums named in such bills. The first issue of Treasury bills was in 1877.
In a letter to the " Economist," Novem ber, 1909, Lord Welbv explained that Treasury bills were invented by Mr. Walter
Ilagehot in 1877. The Chancellor of the Exchequer wished to provide certain funds by an increase of the floating debt. Mr.
Bagehot's advice was asked, and he replied : " The English Treasury has the finest credit in the world, and it must learn to use it to the best advantage. A security resembling as nearly as possible a commercial bill of exchange—that is, a bill issued under dis count, and falling due at certain intervals— would probably be received with favour by the money market, and would command good terms." His advice was acted upon, and the bills have continued in favour ever since.
When the Government requires to borrow upon Treasury bills an announcement for tenders appears in the Gazette and forms of tender may be obtained from the Bank of England. As the bills do not carry interest, they are tendered for at a discount.
The following is a specimen of a Treasury bill :—