Commons Sitting of 16 February 1807

NEW PLAN OF FINANCE.
Lord Castlereaghrose for the purpose of moving the postponement of his Finance Resolutions from this to some future day. He knew that in considering the Resolutions of the noble lord, (H. Petty) his own must of course come under review, but he hoped that the noble lord, considering the magnitude of the subject, would be disposed to grant some further delay. At all events, he was desirous of entering upon some explanation of the modification of the noble lord's plan, which he had offered the other day, as he was aware that from the short time allowed him for consideration, there might be some objectionable points in it. What he had offered was merely a modification of the noble lord's plan, and he presented it only with a view to relieve the noble lord from the embarrassment to which he must otherwise be exposed. He, however, felt that an explanation was the more necessary, because though from this it should appear that this modification was more objectionable than was at first apprehended, yet the noble lord in pointing out the defects of this, would give an illustration of the defects of his own plan, and combat his own proposition rather than prove the expediency of the modification. He wished therefore that his modification should be clearly understood, though it would not give relief to the extent which he at first supposed. His lordship then acknowledg-

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ed that his resolution stated a smaller charge than would really be necessary. It stated, that in the ninth year a loan of between four and five millions would be necessary to be charged on the consolidated fund. But he had not noticed the progressive sums, and consequently the progressive charges on the consolidated fund. It was in fact necessary to provide, not only for the sum advanced but also for the sum staken from the consolidated fund, and that thus for 9 years taxes to the amount of 6,019,000 l. would be requisite at the close of the ninth year. The two grounds on which he wished to modify the noble lord's plan, were these: 1st. To relieve him from the necessity of mortgaging the war taxes; if his modification did not do that, it did nothing; 2dly, To limit the amount of the loans within the year, and consequently the charge. By the noble lord's plan, the loans would rise from 12 to 32 millions, and what he wanted was to relieve the market from the dangerous effects that would result from the borrowing of such an enormous sum as 32 millions within the year. His modification was expensive for the present, but, if acted upon, it would come to this, that at the end of nine years, you would have an alternative of acting according to circumstances for the next eleven years. If the war continues for the whole twenty years, then he admitted that it could not be carried on without additional loans, and an addition to the permanent taxes. But if peace should be made on or before the 9th year, then no new taxes would be required in addition to those which the noble lord proposed, for the excesses of the sinking fund would be disposable for the loan of the preceding year. But supposing the case of war, then 3 millions must be raised to be distributed over a period of 6 years, and the balance in favour of his plan, even on the supposition of twenty years war, would be the difference between 6 millions and 21 millions pledged. He objected to the system of double loans; first a loan, then the interest, and next a loan to pay the interest of the interest. But if this plan was to be acted on, then it ought to be for a period as short as possible, and he thought it should be confined to 9 years, instead of 20. Whatever embarrassment there might be in the modification, it arose out of the noble lord's own complicated system. The spirit, therefore, of his 8th resolution was still just, though greater loans would be neces-
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sary than it supposed. But the objection did not at all attach to the 9th resolution. His modification would still relieve the noble lord from the mortgage of the war taxes, and from his loans of 32 millions. Whatever advantage the noble lord would derive from his increased sinking fund, yet that would not counterbalance the inconvenience to the money market. It was sufficiently obvious that they wished for no vexatious delay; he had exposed himself to the risk of falling into mistakes, from his anxiety that the outlines of his view of the subject should be before the house before the discussion of the plan. But yet he was under considerable embarrassment from not having been able to obtain from the noble lord the subsequent tables, which were wanting to enable him to complete his own view; though he admitted that this did not proceed from any unwillingness in the noble lord to furnish them. But certainly the embarrassment was excessive, to be called upon, with such a short preparation, to decide upon a plan not for one year, but for 20 years, a circumstance in which the credit of parliament was materially involved. The noble lord proposed to call upon the house to decide upon the first resolution. He admitted that this did not preclude the parliament from taking up the subject again, but it was unseemly for parliament to be placed in such a situation, that it must adopt a plan for 20 years, and then be obliged, like children, to revise it in a year or two. This exercise of discretion would be attended with great embarrassment and loss of parliamentary character. He really therefore wished that in the further proceedings on this subject, some method should be agreed upon, which would prevent this embarrassment, and enable parliament to decide on a full view of the subject. For this purpose, two courses might be adopted. The noble lord might allow it to lie over for some time, till the members should have had full time to consider it in the present session; or if that should not be agreed to, then as a dernier resort he would propose that the noble lord should only act upon his plan for one year, and leave parliament free to investigate it in the interval between this and the next sessions. It was so embarrassing and difficult, that the noble lord, or his successor, must desist from the execution of it. This was his opinion, and he hoped the loble lord would not press it into a committee at present, when he must know

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that parliament was so little prepared to enter upon the consideration of the plan. The accounts which he had called for would soon be before the house, and then the noble lord might proceed in the present session, but now it was merely a question of confidence on the part of the ministers, and submission on the part of the house. He hoped the noble lord would not proceed with this intended plan on the spur of the moment. This improper haste would be attended with great mischief, and in the end prove highly derogatory to the character of parliament. He concluded by moving, that the consideration of his Resolutions should be postponed to that day se'nnight.
Lord Henry Pettydid not think it necessary to enter upon that part of the noble lord's speech, which contained his amended statement. He certainly would not object to any day for the consideration of the noble lord's resolutions, only, he must observe, that they must come under review in discussing the present plan. He wished only to say a few words with respect to the delay solicited by the noble lord. He denied that this was a question of confidence on the one part, and submission on the other. Ministers wished to adopt the plan, not from a vain confidence in themselves, but upon a full and deliberate investigation by parliament. It would be recollected that he had first moved the resolutions two or three weeks ago, that a fortnight was allowed to consider them, that this period ended last Wednesday, and that it was only on that day that the proposal was made for going into the committee. All he asked now was, to vote them in the committee: the report would come up next Wednesday, and they might then be further considered and discussed. They might also be discussed in the different stages of the bill, which it was desirable to carry forward with all reasonable dispatch, that ministers might proceed to the general financial plan. This dispatch was not required from any difficulties arising from the want of an immediate supply, but because it was desirable to proceed to contract for the loan as soon as possible.—The motion of lord Castlereagh for the postponement of his own resolutions was then agreed to.
Lord Henry Pettymoved that the House should resolve itself into a committee to consider further of the Finances of the Country, which was agreed to. On the motion for the Speaker's leaving the chair.
Mr. Longrose. The noble lord, he observed, must recollect that he had told the house that various tables were to be distributed, in order to enable that house to acquire a full and complete view of his plan. Gentlemen had had them but for a short time, and he submitted to the noble lord's candour, whether it was possible even for those who were conversant with subjects of this nature, to make themselves masters of it within a period so limited. It would certainly give more satisfaction if the consideration should be postponed for a few days. However as the house was called upon to discuss the noble lord's plan, he would now offer the few observations that at present occurred to him.
Lord Henry Pettyobserved, that the right honourable gentleman had better state these in the committee.
Mr. Longreplied, that he thought it more regular to proceed now, as his objection went rather to the principle of the plan than to the detail. He observed, however, in continuation, that he did not object even to the principle to a certain extent. It might possibly be a fatal error to adhere too pertinaciously to the present plan of taxation, and though he thought that the noble lord's plan was carried to too great an extent, yet he was fully aware of the difficulties attending his situation. He did not, however, consider the difficulty which the noble lord found last session, in finding out proper objects of taxation, as a proof that new taxes could not be raised. But he fully admitted that it was highly expedient to impose no new taxes, for the present, if it could be avoided. This was his opinion, and it was sanctioned by that of the noble lord's predecessor. New taxes to any great extent would occasion a very heavy pressure on the people at present. Then what other resources were there? There were two, namely, the war taxes and the sinking fund. His noble friend (Castlereagh) objected to the plan of compound loans. But whether the borrowing was from the consolidated fund or the war taxes, there must be supplementary loans. To a certain extent, therefore, he saw no objection to borrowing from the war taxes. But he must object to the system of pledging the whole of the war taxes, independent of the property tax, and at last the property tax also. The noble lord ought to borrow only on such as might be supposed to yield their fullest amount in time of peace. He might continue the war for five years, by borrowing

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on this portion of the war taxes. The sum of 11 millions might be annually borrowed in this way, or 13 millions, if necessary, and for those sums the permanently productive war taxes, with the expiring annuities, would afford an ample provision for five years. He thought the war taxes ought not to be pledged to a greater amount, as it was contrary to the policy of this country. The convoy tax, for instance, could not properly continue beyond the duration of the war. The taxes on tea and spirits also would certainly be diminished in their amount during peace. Could the noble lord possibly expect that these would always yield their present amount? He surely could not, and yet this plan took the whole of these taxes at their highest amount. The noble lord might so manage as to increase the amount of the war taxes, when the loans must be procured on disadvantageous terms, and diminish their amount when the loans could be contracted for on easy terms. He ought to recollect the nature of his system of ways and means. He ought to consider the furious objections made to the property tax, which was called a system not of taxation, but of confiscation. He ought therefore to pause before he pledged this and other taxes.—But if he had great doubts as to the propriety of pledging the war taxes to the full extent proposed by the noble lord, he had still stronger doubts respecting the data on which the plan was founded. The noble lord supposed that the war expenses would not exceed 32 millions annually during the whole period. He could not reasonably conclude that there was any probability that this would be the case. He ought to have taken into account the subsidies that might be wanted, and the depreciation of money which must take place in the course of that time. It was true that the noble lord had stated, that for subsidies a distinct provision must be made, but at the same time they ought rather to have been taken into the general account of expenditure, as it was unusual to provide for subsidies distinctly by that name. The right hon. gent. then stated his objection to the system of the accumulation of the sinking fund, and providing for the loans at 5 per cent. instead of one per cent. according to the old plan, as it afforded an undue advantage to the stockholder, at the expense of the public. He had great objections to the plan of accumulation adopted in 1802. It never was
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the object of the original proposer of the sinking fund that it should be allowed to accumulate so as to extinguish the debt. The intention was principally to keep down the debt, so as to prevent it from becoming inconvenient to the public. For the proof of this it was only necessary to look at the plan of 1786. The maximum of 4 millions was then established, and after the fund had attained to this, then the interest was to be at the disposal of parliament; so, from the year 1808, 200,000 l. of taxes might be taken off annually, or applied to other purposes, as the case might be. But the noble viscount who was chancellor of the exchequer in 1802, altered this plan, and undoubtedly then had the full assent of a right hon. friend of his (Mr. Pitt) now no more. No one was more ready to submit to the superior judgment of his right hon. friend alluded to than he was, and especially on a matter of this sort, but still he felt great objections to the plan then adopted, and since that time he certainly had seen no reason to alter his opinion.—But he did not object to the borrowing from the war taxes, if this should be confined to 5 years. The noble lord imposed no new taxes for the first 3 years. He highly approved of that, not merely on account of the relief which it afforded to the people, but also because it rested upon principles of sound policy. For by this means taxation might be had recourse to with greater vigour afterwards if this should be necessary, and besides, this circumstance would have the best effects upon the permanent taxes. If, therefore, the period had been confined to five years, he could have had no objection to the plan. The noble lord might have, in the mean time, observed the progress of the sinking fund, of the war taxes, and of the permanent taxes, and borrowed upon these as he should find it expedient. But to take a period of twenty years, and to proceed upon the supposition that thirty two millions only would be required for the war expenditure, was to legislate on grounds the most uncertain and erroneous that could possibly be conceived.
Mr. Tierney rose.The right hon. gent. who had just sat down, objected to the period of 20 years, and thought that the fittest stage to stop at was 5 years. But his reasoning proceeded on erroneous grounds, when he supposed that this plan was intended to legislate to 20 years. It did no such thing. It merely held out

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what might be done in 20 years, certain data being allowed. It did nothing what ever to tie up the hands of the house, or to prevent them from adopting such alterations as circumstances might render necessary. It was no disadvantage to argue with a view to a period of 20 years, as the argument was not to be conclusive or binding; but to satisfy the house that so much might be done in twenty years, would not prevent them from exercising their discretion afterwards. The right hon. gent. agreed, that it would be inconvenient to impose new taxes at present: that was conceded by the noble lord near him, and by the general voice of the country, not only by those who merely wished to be relieved from the pressure of taxation, but generally by those who looked to the policy of the thing. It did certainly afford a hope that recourse might be had with more vigour to the permanent taxes, and he was glad the right hon. gent. had said so, because this served to remove the objection which he himself had made with respect to the amount of the permanent taxes. As to the permanent taxes, he agreed that some of them might fall short of their present amount, but this was no objection whatever, unless the plan went to cut off the power and the means of imposing taxes hereafter. Now, so far was the plan from doing this, that even by the right hon. gent.'s own confession, it tended to render the sources of taxation more productive. The plan was not absolutely wedded to the present taxes. Others might be imposed if there should be a deficiency. The whole proceeded on this, that such was to be the amount of loans if the war continued for such a time. Where the taxes proved unproductive, others must be provided to supply their place, and according to the right hon. gent.'s own shewing, it was better to have recourse to taxes afterwards, if they should be wanted, than to raise them at present.—The next point that called for observation was, the extent to which the war taxes were to be pledged. The right hon. gent. agreed that it was a proper thing to pledge the war taxes, but not to the extent proposed, and thought that it was improper to have a 5 per cent. sinking fund, instead of one per cent. as formerly. But this was entirely of the nature of a bargain with the stockholder. He agreed with his right hon. friend that the sinking fund was not
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originally intended solely for the benefit of the stockholder. The advantage was given to the stockholder, but the fund was principally intended for the benefit of the public. He thought the measure of 1802 an improper one, and he and another were the only persons who spoke openly against it on that occasion; and contended that the allowing of the sinking fund to accumulate would be inconvenient to the country. Then, what was the remedy? The noble lord had chosen the proper medium by his plan. He had given the stockholder the benefit of the 5 per cent. instead of one per cent. at present, with a view to the great loans that might be necessary afterwards, so that the whole was for the benefit of the country, which was the great object of the sinking fund. It was intended to facilitate the loans, the immediate increase of the sinking fund. That was the reason why so large a per centage was allowed at first.— Why, then, the right hon. gent. talked about the improbability of the war expenditure being confined to 32 millions. But his noble friend had not pledged himself that this alone should be the amount of the expenditure. His object was to shew, that supposing the war expenditure should not exceed the enormous sum of 32 millions, still the war might be continued for so long a time without any additional taxes. This was a circumstance which must occasion astonishment in every one, and must excite amazement from one end of Europe to the other. The right hon. gent. might say, that an additional sum would be wanted; why, then, loans must be provided to answer that. The right honourable gentleman had then adverted to the subsidies, and said that these had not been usually provided for distinctly as subsidies, but had been included in the loans. But he had never heard of a loan where the object of subsidies was concealed. They were generally provided for distinctly by way of loan, or by a vote of credit, which was understood to apply to unforeseen expences. The plan took the basis of 32 millions, because some basis must be adopted. Any one might take 34 millions if he pleased, and calculate the advantages of the plan upon that. He would only have to make the requisite allowances, and that was all the difference. But in the mean time it was a good thing when 32 millions could be produced, and the only question was whether this was the best

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mode of managing that sum. There was no doubt as to the sum being produced. That being the present sum requisite for the war expences, and that sum being produced, this plan proceeded upon the supposition that thirty-two millions would be the amount of the war expenditure. As to the depreciation of money, he did not very well understand what the right hon. gent. meant by that argument, for, if there was any mode better than another to prevent the depreciation of money, it was to prevent any additional taxation. It was curious then to have this thrown in the teeth of those who were doing that which of all other things tended most to prevent the depreciation which was apprehended. That this depreciation might take place, however, to a certain extent, was not at all unlikely; but it was one of the advantages of this plan that it confined it within proper bounds. This was all that was necessary in reply to the right hon. gent. as he had not entered into the details of the plan. His objections, therefore, to the principle appeared to be ill-founded.—The house then went into a committee.
Mr. Roseaddressed the Committee nearly as follows:—I am aware of the disadvantage under which any one must rise in this committee, to make observations at all unfavourable to a plan which holds out to the country a certain prospect of not being subjected to taxes for 3 years to come; and that for a considerable period, such as shall be necessary will be to no considerable amount. Objections, however, of so serious and important a nature press upon my mind upon the subject that unless they shall be removed by the noble lord, they will compel me, in the discharge of my duty as a member of parliament, to resist at least the immediate adoption of it, especially on the basis proposed; under a persuasion that if, contrary to the present impression on my mind, the scheme shall be found to be a good one, other means than those proposed must be devised for carrying it into effect. High eulogiums were bestowed by the noble lord in the course of his opening Speech, on the system of the Sinking Fund, and on the one for raising large sums within the year, towards carrying on the war; and great praise was very liberally given to the incomparable man (Mr. Pitt) whom this country and the world have had the misfortune to lose, for having established those systems. I
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naturally expected, therefore, to hear some proposal similar in principle to those: the Resolution, however, under our consideration is the converse of that principle, as it not only has a direct tendency to interrupt the progress of the old Sinking fund, in paying of the present debt, but anticipates our resources instead of providing new ones. The truth is, which cannot be concealed, that instead of following up the principle established and acted upon by my late right hon. friend, of increasing the sinking fund, and diminishing the debt, it is proposed to us to adopt one, which in the course of its operation, will have the effect of diminishing the Sinking Fund, and increasing to an immense amount the capital of the debt. Any wise and practicable plan that could be devised for avoiding, as far as may be prudent, the imposition of taxes, arising out of the systems alluded to, must be received with as much partiality by me as by any member in this house, considering who was the author of those; but nothing can lead me to approve of any diversion of the Sinking Fund from the purposes to which it is now applicable by law, without all the consequences of that having been previously and most attentively weighed. I was averse to the departure from it in 1802, foreseing the danger of a further deviation; and it was with reluctance that Mr. Pitt gave his consent to it, as is well known to others as well as to myself. The authors of the present scheme admit, as they must do, "that they take in aid certain excesses to accrue from the present Sinking Fund." which is explained by a statement, that it is meant the application of the old Sinking Fund shall cease when it shall be equal to the interest of the present debt; by which I take it for granted is meant, the amount of the debt at the time when the income of the Sinking Fund shall be equal to the interest of the debt, and not to the amount of the interest of the debt at this time. It is true that when Mr. Pitt established the Sinking Fund, it was limited to 4,000,000 l. and the surplus was to be at the disposal of parliament; but if that had not been altered in 1802, to compensate for the Sinking Fund having been provided by Mr. Addington, for 86,000,000 l. of capital then funded, there can be no doubt but that the surplus above the 4,000,000 l. and the an nuities as they shall fall in, would have been left to the aid of the Fund. I must at the same time, do Mr. Addington the justice to

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say, that, so far from shrinking from proposing taxes, he made an addition to them considerably beyond the amount of the interest of the debt created; and that, by the alteration then made, the ultimate liquidation of the debt is somewhat accelerated,—I wish, however, not to be understood to express an opinion, that in no possible case should there be a diversion of any part of the Sinking Fund:—great expectation has been held out to the public (whether prudently or not is, perhaps, not worth enquiring about) of an exemption from taxes. I am aware too that many gentlemen may think we have done enough for posterity, and that we should now consider of some relief for those who have already made great sacrifices, and have cheerfully submitted to heavy pressures; but even if the committee shall be of that opinion, I shall still contend that the mode proposed for affording that relief would, in its consequences, be most mischievous. I am anxious, therefore, before the plan proposed by the chancellor of the exchequer is adopted, that sufficient time should be allowed to consider whether any other can be suggested, which, although it may not afford all the relief we have been led to expect, may at least avoid the dangers I am about to point out, and be free from most of the objections I am about to state. In the view of the subject I am now taking, I forbear to enter on detailed observations upon the tables on which the calculations are made; the most superficial inspection, however, of the one marked N. (See Appendix) would satisfy any one of the danger of the plan being adopted without further investigation, which would have been still more apparent if that table had been continued a few years more. The noble lord seems to have fallen into three considerable errors respecting his plan; and to have given no weight whatever to the important consideration of what provision it may be necessary to make for our peace establishment although he mentions it. I allude 1st, to the assumption that each loan will be paid off in 14 years, by its accompanying Sinking Fund at 5 per cent. 2d. That the War Taxes will be sufficiently productive in peace to do what is required of them. 3d. That our War Expences will be kept so low as 38,000,000 l. As to the first, the noble lord proceeds on an expectation that the 3 per cents will be stationary at 60 l. without considering that the sums so raised may, and
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in all probability will be paid off with the same stock at 80 l. 90 l. or at par. There can be no doubt but that the redemption of the debt is much more likely to be retarded by such rise, than it is to be accelerated by future loans being made at a lower rate of interest, in consequence of the increased value of the stock. These objections struck me very forcibly on the noble lord opening his plan, as I observed to a learned friend near me; and on the best and most mature reflection I have since been able to bestow on the subject, I am strongly confirmed in them. I cannot express myself too strongly respecting a continuance of the part of the War Taxes I have alluded to for an indefinite term, according as the price of stocks may be, under a firm and clear conviction founded on experience, that with the exception of those on goods and shipping, and on malt, (to which I have objections of a different nature) the taxes at their present rates would so lessen the lawful consumption of most of the articles on which they are levied, as to reduce the old duties on the same to at least as great an extent as the amount of the War Taxes; if I am right in that, the revenue would of course profit nothing by a continuation of the latter, but would Probably sustain a loss. —Tea—the war duty on which produces nearly 2,000,000 l. When Mr. Pitt came into office, the duties, according to the rate and to the value, were about 85 l. per cent. on the value. The legal consumption was then 4,313,000 pounds on an average of ten years, which much exceeds former accompts. The duty was lowered in 1784, to 12 l. 10s. on the value, and gradually raised in Mr. Pitt's time to 40 l. per cent. on the higher priced teas, under which the consumption got up to an average in the ten years to 1806, to about 20,000,000 lbs.: here then is an increase of more than 15,000,000 lbs. Supposing the average value of the tea sold by the Company to be 4s. a pound, the duty, which is now 95 l. per cent. including the War Tax of 45 l. on the present consumption, would be about 3,800,000 l.; if that very high amount should reduce the consumption in peace to any thing like what it was before the Commutation Act, it was evident the revenue would sustain a loss by a continuation of the War Tax. There are indeed other considerations respecting this duty, deeply affecting our manufactures and navigation, as well as the interests of the East India Company; the Custom-house value

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only of British manufactures exported to China from 1773 to 1784, was 110,000 l. which from 1785 to 1805 was on the average 680,000 l. and on the average of the last five years more than 1,000,000 l. And the shipping from China, which from 1774 to 1784 was only 5256 tons, increased to an average of 18,555 tons.—Of Tobacco I shall only observe that the war tax of 6d. a lb. will afford great encouragement to the smuggler in peace; the consumption of which has been nearly doubled since 1786.—Rum—When Mr. Pitt came into office, the duty was 6s. 6d. a gallon, which in 1784 was lowered to 4s. 8d. and that not succeeding, it was farther reduced in 1786 to 4s. The legal consumption then was 842,000 gallons, and on on average of ten years 1,342,000 gallons, but got up on an average of ten years to 1806, to 2,441,000 gallons. The duty is now 11s. 0½d. of which 3s. 5½d. is a War Tax, leaving 6s. 11d. permanent.—Brandy—When Mr. Pitt came into office the duty Was 9s. 6¾d. a gallon, which was reduced in 1807, to 5s.; the consumption then was 754,000 gallons, and on an average of ten years 611,965 gallons, but increased to an average of 1,580,000 gallons,on the average of ten years to 1806. The duty is now 13s. 8½d. of which 4s. 2½d is a War Tax, leaving 8s. 5d. permanent. If therefore the War Taxes on these two articles should be allowed to expire with the war, the remaining duty on the former would be something higher than when the consumption was the lowest, and on the latter would be within 1s. a gallon. It is therefore clear, without going into a minute calculation, that in both rum and brandy the revenue would lose considerably by a continuation of the War Tax in peace, if the consumption should be reduced to any thing like what it was previous to the reduction of the duties. It was indeed frequently urged to Mr. Pitt that he would not be able to continue the whole of the permanent duty in peace, and he always admitted the possibility of its being found necessary, to reduce even that.—British Spirits—Another productive article, the duty on which has always borne a proportion to that on foreign spirits, would necessarily be given up if the War Tax on foreign spirits should be allowed to expire.—Goods and Wares—Under this head, by much the most productive article is sugar;—it was understood the merchants and planters had assurances the duty should ex
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pire with the war, on its having been made evident that a continuance of it in peace would be ruinous to them, from a certainty that the price of the article would, as in former instances, fall much lower than the saving by insurance and freight.—Cotton Wool, as a raw material, is a manufacture, in which we are in some branches rivalled on the Continent, cannot certainly bear a tax in peace.—Wine—The whole duty in this article is permanent, but Mr. Pitt considered the last 20 l. a ton as a War Tax; and therefore, did not apply it to pay the interest of any Loan. The duty before the consolidation in 1787, was 47 l. 9s. to London—it was then reduced to 31 l. 10s.—and the quantity retained for consumption was in 1786, 14,626 tons, and on an average of ten years 13,932 tons; rose to an average of 25,571 tons in ten years, to 1806.—Goods and Shipping—I come next to the duty which is likely, beyond all comparison, to be attended with the most pernicious and extensive consequences on a return of peace to our revenue, navigation, commerce, and manufactures. The effects which must inevitably be produced by it that it is utterly inconceiveable to me how they have escaped the noble lord. This is a duty, (a most productive one now) of from 1l. to 4l. per cent. on all British, goods and manufactures exported, according to the different parts of the world to which they were sent (except cotton goods), and a tonnage duty on ships from 6d, to 3s. a ton, varying also according to the different parts of the wor1d to which they shall be bound. The pledge given that it should not be continued was under a clear conviction that it would be highly impolitic to do so. During such a naval war as the present, while we have nearly the exclusive supply of foreigners with our manufactures, no considerable risk is incurred by the duty, but immediately on the return of peace, other countries will come, as we well know, in very close competition with us, and the same with respect to the navigation.—In the reign of Charles II. when the subject of political economy was little understood, a duty was imposed on our exports; but so early as the reign of king William, the duty on woollens was taken off, and in 1722 the whole were repealed [refer to the preambles of the 11th and 12th W. 3d. ch. 20, and the 8th Geo. 1. ch. 15, reciting the importance of taking off the duties to the manufacturing and commercial interests of

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the country]. In the year preceding the general repeal in 1722, the value of our exports from England was 4,500,000 l. which was the average of the four years preceding, In 1722 they rose to 5,293,000 l. and the average of the four succeeding years was 5,070,000 l. The value is now, not less from England, than 22,000,000 l. I state from England only, and on the Custom house value, because we have no accounts of the exports from Scotland in the former period. With such experience before us, if danger were not self evident, it would surely be an extraordinary dereliction of our duty if we should continue this impost in time of peace. The ship owners we know are already alarmed, and have taken measures for calling the attention of ministers, or parliament, to the importance of the subject; nor can it be doubted, but that the manufacturers in almost every branch, as well as the merchants who export the goods, will do the same.—There remains then only the Malt Duty; the produce of which will perhaps not be effected by the return of peace: but, let me call the attention of the Committee to the circumstances attending this; previously to the war of 1793, the whole duty on the article was 1s. 3¾d. a bushel. In 1791, a further duty of 3d. was imposed (among other articles) to continue for 3 years to pay off the debt of 3,000,000 l. incurred for the Spanish armament, but it was so loudly and universally complained of, and found so oppressive, as to induce a repeal of it at the end of the first year. Mr. Addington added 1s d. 3¼d. a bushel permanent; and the war duty is 2s. making a total of 4s. 4d. exceeding the duty before the war by 3s.—when in 1792, it was thought 3d. was oppressive. Is it then too much by ask of the committee to pause before they decide to leave such a pressure, which bears principally on the middling and lower classes of society, while it is understood, that the whole of the Income Tax, by which the higher orders are principally affected, is to cease on a peace? it would be fair at least to let the latter share the burthen; 1l. per cent. on that would be about equal to half the Malt Duty.—I have now gone through the whole of the War Taxes; and if I am not very much deceived myself on the subject, I must have convinced the committee of the impolicy of continuing in peace all but the last, and the positive injustice of that. The noble lord stated with
810
exultation that the permanent taxes, which were only 10,200,000 l. in 1784, had been increased to 32,000,000 l. in 1806; it was natural for him to do so, and I am rejoiced he has discovered that the resources of the country are not in that dilapidated state, they were represented to be in when his. colleagues came into office: The merits, of my late right hon. friend in being the chief instrument to bring them up to that sum, will appear most conspicuous when it is adverted to, that the taxes were so judiciously selected as to admit of the manufactures, commerce, and navigation of the country, nearly keeping pace with the increase of our burthens, instead of being at all depressed by them. It will be sufficient to state that the value of the British manufactures exported from Great Britain in that year, ending January 1784, was 10,409,000 l.; and in 1805, was 25,004,000 l. It was not however exclusively by the imposition of Taxes that Mr. Pitt improved the Revenue, but by a constant and watchful care: proposing the lowering and raising duties, as he thought advisable from time to time;

The Revenue 1781, the first year of his Administration was

10,194,000

Taxes of 1784 and 1785 were

938,000

Cained by the Consolidation in 1787, turning Fractions into Integers, Wood and Cambric

85,000

Taxes imposed in 1789

60,000

11,277,000

And the Produce of the same Taxes in the year ending January 1803, was

15,433,000

Leaving a clear gain by improved management of

4,156,000

Of which total, Spirits, Wine, Tobacco, and Post Horse duty, amounted to

1,165,000

If I had no other reasons to offer against putting out of our power the war taxes, I should think I have said enough to induce the committee not to decide hastily in favour of a measure which cannot be effected without our doing so; but I wish further to press on their consideration, that any substitutes for those it may be found necessary should expire, will not be within our grasp. I allude to the necessity of looking to a provision for our peace establishment; it is observed indeed in a paper circulated by ministers, "how far some parts of the War Taxes are of a description to remain in force after the war; and what may be the provision to be made hereafter for a peace establishment; probably much larger than

811
in former periods of peace, are considerations which at present need not be anticipated!!" Are we than to shut our eyes against a situation which (however hopeless the present prospect is) we may be in within a-year or two? Are we now entirely to exclude from our deliberations the prudence of divesting ourselves of all power over taxes which we may want for our peace establishment, if we shall find by enforcing existing regulations and enacting new ones we can hereafter even continue any part of them? However difficult it may be to ascertain the exact amount of that establishment, no one will doubt for a moment but that it must be infinitely larger than the former one. I will state one lower than I am sure his majesty's ministers can entertain the remotest hope of its being reduced to, and opposite to it the means we have to provide for it.

CHARGE

Interest of Debt

27,466,000

Annual Contribution to Sinking Fund

1,200,000

Charges on Consolidated Fund as in 1805, probably some increase

1,338,000

30,004,000

Interest on Exchequer Bills; it will be much more

300,000

Miscellaneous Services; they will certainly be more

350,000

ARMY.—Two-thirds Lord Sid-mouth's Peace Establishment, adding nothing for Mr. Windham's Plans

7,400,000

NAVY.—Two-thirds of Lord Sid-mouth's Peace Establishment, adding nothing for Lord Howick's increase of Pay

4,864,000

ORDNANCE.—The Peace Vote in 1802 was 919,000 l.

500,000

MILITIA AND VOLUNTEERS.—Very difficult to form any Estimate of; I will suppose so very small an amount as

300,000

Barrack Establishment, &c.

Charge

43,718,000

INCOME.

Produce of Taxes stated by Lord H. Petty at 32,000,000 l. I will state at

33,000,000

Land Tax unredeemed, and Tax on Pensions

1,400,000

Malt

550,000

Lottery

450,000

Imprests

100,000

Income

35,500,000

Deficiency

8,218,000

This statement leaves a deficiency of more than 8 millions. Will not the providing for that on a peace (if nothing shall be
812
done towards it in mean time) furnish sufficient employment for the wisest application of any means without the additional task being imposed on us of finding substitutes for taxes we are now about to appropriate? Sir, exclusively of the mistakes and oversights already noticed, there is still one more which must have a considerable influence on the plan before us; I mean estimating the future war expenditure so low as 38,677,000 l. or that of 1806, to which sum it is reduced by excluding subsidies to the amount of 1,500,000 l and the sum requisite for the Loyalty Loan, as if there had not been in almost every year of war extra expences beyond those sums; such charges will be found to have amounted in an average of the last twelve years to 2,744,000 l.; on an average of the last seven years to 3,934,000 l.; and in the last year to 5,188,000 l. The noble lord wiil hardly tell us that a determination has been taken to give no more subsidies to princes on the continent, however tempting the occasion may be, notwithstanding the communication made to the French minister in the late Negociation, of the opinion entertained by our ministers of the rashness and folly of further coalition to reduce the power of France. A moderate and reasonable allowance for unforeseen expences will unavoidably increase the Supplementary Loans, and will compel necessarily the imposing taxes to a considerably larger amount than the noble lord has led us to expect. If on the degree of consideration we are allowed time for all the circumstances I have alluded to, it shall be thought expedient to decide now on pledging a part of the War Taxes, let gentlemen weigh well in their minds, whether, reflecting on all the disadvantages and objections I have stated to the collection of those under the management of the Customs and Excise, it may not be desirable rather to avail ourselves of the Income Tax to a limited amount. I am aware of the unpopularity of that; notwithstanding which, under all the disadvantage of offering suggestions to government, I am willing to take a full share of; for I sincerely believe that every man who spends a reasonable part of his income, will, at the end of the year, pay less in that shape than by any taxes on consumption. My entreaty to the noble lord however is, not that he will relinquish his plan, nor even that he will at present make any alteration in the detail of it; I beseech him only to limit the experi-

813
ment to the present year; it will answer all his purposes completely and effectually, and will afford him and his majesty's other ministers opportunity to consider it more fully themselves, and to advise with others, as well as to the public to understand it better than they do now. With that entreaty I shall close what I mean to trouble the committee with; observing only, that I am persuaded what is well intended by the noble lord as a relief to the people at present, will prove out of all proportion more mischievous to the permanent prosperity of the country. My anxiety for her prosperity is undiminished, which cannot be felt more warmly by the noble lord or by his friends at the treasury, than it is by me.
Lord Henry Petty said, he should have felt, considerable reluctance in addressing the house before they had gone into a committee, as the right hon. gent.'s opposition to the Speaker's leaving the chair had it been persisted in, would have compelled him to advance in support of his motion, the same arguments with which he had already troubled the house, and thereby have involved him in an unpleasant repetition, that must have been to him extremely painful, as it could not have been to the house otherwise than irksome. He should begin with answering, the earnest injunction that had been imposed on him by the right hon. gent. in the conclusion of his speech. He would assure that right hon. gent. that if he could be brought to think that delay in this instance could possibly be productive of any one serious good effect, or even that it Would not be productive of material inconvenience, he should be extremely happy to meet his wishes, and should be the last person to press it to a speedy conclusion. And here he should take occasion to remark upon a mistake that had too generally gone abroad; it had been said that he had bound himself as responsible for any future contingencies that might in a greater or less degree affect his plan. One of the principal merits of that plan he took to be, that while it looked prospectively to futurity, it did not go to impose any inconvenient restrictions; with respect to the future, it was proposed that the War Taxes to the amount of 1,200,000 l. should be mortgaged, and he was at a loss to conceive how any mischief could result from that plan that could for a moment weigh against the great and paramount advantage of a year's repose to the country from the burthens of
814
additional taxation. The right hon. gent. had commented with some force upon the state of the war duties, but nothing had fallen from the right hon. gent. of which he had not been before apprized, and which had not made upon his mind a due impression. He admitted the difficulty of raising the War Taxes in time of peace, but begged leave to deprecate and protest against the opinion that what had been raised as necessary to support the prosecution of war, should, when that war was over, continue to be levied and rendered permanent in a peace establishment. At a season when events might arise which it was not in man to anticipate or predetermine on, a representative value for a certain portion of taxes had been suggested. He would ask the right honourable gentleman what substitute could be found for the plan? How could the same relief be afforded by a system which would every year make a great addition to the permanent taxes? He would shew it was impossible to stop taxation otherwise than by mortgaging the war taxes. When the war taxes could no longer be available, those permanent taxes the right hon. gent now recommended might be substituted:
"Like you, Sir John! That we can do when all the rest is gone."
If the war taxes would not be productive in the same amount in time of peace, some of them would be, and a considerable part of the charge at least, might be continued on each article. What had been mortgaged, would besides be successively falling in; and if one tax must be given up, another might be substituted. He looked with confidence to the industry of a body of able officers as those of the revenue were, in preventing smuggling, particularly when encouraged by an improved system of reward, making them participate in the benefit of seizure, which they did not at present. The vessels and implements of the smugglers should be destroyed, and fines imposed upon the persons upon whom those vessels and implements should be found. By these means, if not altogether extinguished, the evil would be greatly checked. With a view to this object, a large peace establishment would be highly beneficial: and if chargeable in one view, it would be economical in another, as it would be the means of improving the revenue, which would go to defray its expences. These were the grounds of his hope, and he held forth

815
only a hope, that this plan would answer the ends proposed. Here he would take occasion to give some explanation with respect to the property tax, which he was supposed to have pledged himself to repeal. That was not the nature of his pledge, but that the means for repealing it would exist, and that parliament would be free to consider the propriety of applying them. His own opinion was inclined to concur with that of the right hon. gent., that a small portion of the property tax would be less burthensome than those taxes on consumption, which, though less immediately felt, were ultimately more burthensome and less productive, as being charged with a profit by every person through whose hands the article passed, and diminished in a similar succession by every hand employed in the collection. The propriety of the continuance of such a small property tax, would, however, remain to be regulated by the public feeling, and the public convenience at the time. He agreed with him as to the difficulty of continuing the war taxes. One thing however the right hon. gent. was mistaken in. There were no war taxes on foreign goods for exportation. He allowed it was impossible to calculate precisely on the redemption of the mortgaged taxes in 14 years. But from a moderate calculation that would be the period of redemption. If from the rise of stocks, the sinking fund upon these war loans should be slower in operation, it would be larger in amount; there would then be only 4 per cent. for interest, and 6 for sinking fund. There would be besides a great advantage in the terms of future loans, so that what would be lost in one way would be gained in another, and as the whole was to be comprehended in one general account, a rise in the funds would be upon the whole beneficial. As to the objection made by the noble lord and the right hon. gent. opposite, and made elsewhere also, that this system of borrowing money at compound interest was attended with double expence, that was true; but the charge was more than compensated by the comparative benefits that would be afforded by preventing the exhausting of the country, and by renovating and invigorating its resources. If the country was in that state, as the right hon. gent. opposite argued, that the increase of taxation would diminish the consumption and the produce of the tax, we were in that situation, that a perseverance in the
816
old system would wear away from under our feet the ground upon which we stood, it was absolutely necessary to adopt some plan to prevent additional taxation, and this was the only plan that would answer that object. The best mode of judging the merits of this plan was to compare it with that of the noble lord opposite (Castlereagh). It was objected to this plan, that it went to legislate for the future; that it assumed a certain amount of expenditure, and that too low an amount, without taking into the calculation, the means of judging of the real amount of the wants that would be provided for. Nothing was more futile than this objection, as the plan would lend itself to any increase of expenditure that might arise. The only two ways in which it could fail to afford alleviation were these: first, if the war taxes should fail during the war; if that should be the case, it would not be the consequence of this plan more than any other. The failure would be in the nature of the tax itself, and would happen under any one plan as well as another. But if from any cause any of the present war taxes should fail, the house would tax other articles so as to keep up the present amount of revenue from the war taxes. Thus the plan did no more than we were liable to under the present system. As to the other point, that an increased expenditure was to be looked for, he took the actual state of our expenditure only as a secure foundation to reason upon. With respect to expeditions to the continent, or subsidies, there were no data to go upon. All he meant was, to shew the facility of providing for the present common expenditure to any length of time; but he should be sorry in doing so to adopt any plan of a nature to preclude the house from accommodating the basis of that plan to any circumstances that might arise. Any plan not so applicable would be a very unfit basis for a system of finance. He did not like to assume at random an amount of contingent expences, or an increase of common expences, which would afford room only for reasoning as fallacious as its foundation. He had shewn that the falling in of annuities after those applied to the deferred stock would prevent the necessity of having recourse to any taxes for 3 years; in the subsequent seven years 292,000 l. a year would be wanted; in the next ten years nothing. Supposing an expenditure of two millions for the continent, the foundation of the

817
plan would not be undermined, nor its firmness shaken. The only consequence would be, that from the increase of the war loans by this demand, the war taxes would be applicable in an inferior proportion to the supplementary loans. There would be 3 years still exempt from taxation by the falling in of annuities. In the subsequent 7 years 505,000 l. annually would be wanted instead of 292,000 l. to be raised by new taxes. In the five following years no taxes would be wanted, and in the last five years of the series only 330,000 l. Thus, in the constant succession of the war taxes, and the relief from all further taxation for three years, the plan would be obviously beneficial, and only a moderate increase of taxes would be necessary in some parts of the period. He stated thus much to shew that he did not assume to legislate for the future without going on firm ground.—He was next to come more immediately to the plan proposed by the noble lord in his resolutions. These resolutions divided themselves into three points. The first and sixth related to the comparative effect of the present system and proposed plan; and the ninth and tenth adopting the vices, as they had been termed, of his plan, were intended to shew, that the same means of relief would be afforded by the existing system as by the new plan. But the noble lord had assumed as a right, on his part, of the public to take from the sinking fund without giving any equivalent to the stockholders. He agreed with his right hon friend (Mr. Tierney), that the sinking fund was first created not for the interest of the stockholder, but of the public. It was a boon in 1786, granted by Mr. Pitt to the stockholders; but, what was the situation of the stockholders who had since lent their capital on the credit of that fund? The house should pause before it should touch that sacred ground. The noble lord, with his plan, interposed between the public and public creditor, by proposing to take the excesses of the sinking fund after the year 1816, and without giving any equivalent to the stockholder. The effect of the noble lord's plan on the redemption of the public debt would be, that ninety millions would, at the end of the period, remain unredeemed, and the whole would not be paid till the year 1832; whereas, by the new plan, the whole would be redeemed in 1826. The noble lord's plan, therefore, would retard the redemption of the debt eight years;
818
"Anxious the public debt to pay, "Like prudent Fabius, by delay,"
the noble lord took all that could retard the redemption of the debt, and left out all that could accelerate it. The plan of the noble lord proposed to take the excesses of the sinking fund between 1816 and 1826, in which period only they could accrue, and as it would be necessary for him to provide for the loans of the year between the present year and the year 1816, an amount of 6,947,000 l. would be necessary. If this sum were not provided by new taxes, it must by ruinous loans, and if ultimately to be provided for out of the excesses of the sinking fund in the last period, it would anticipate these excesses, and render them unavailable when they should accrue. As to what had been said relative to a future peace establishment, he had only to observe that that subject had not been excluded from the view of his majesty's ministers. The means of providing for that establishment would exist in a higher degree than at the close of the late war; certainly in a much higher degree than at the close of the American war, when the right hon. gent. opposite (Mr. Rose) admitted that the public revenue was wholly insufficient. In 1786, the peace establishment was five millions, and the revenue, exclusive of the additional taxes, amounted only to between three and four millions, which improvement was a consequence of the growing prosperity of the country. At the close of the late war, Mr. Addington, though burthened with fifty-six millions charged upon the income tax, by one stroke of manly and vigorous financial policy, relieved the country from the income tax, and funded the debt charged upon it, providing at the same time for the interest, and sinking fund upon it. On the next peace there would be an amount of seven millions, arising out of the annual taxes, the surplus of the consolidated fund, and the produce of the lottery, applicable to the establishment; and, as after the year 1810, considerable sums would be set free in each year, any small sum that might be necessary to fill up the peace establishment might be appropriated from them. He should not say what might be the amount of the peace establishment, for that would depend on the state of France, and of Europe; but he could look with confidence to the resources of the country to supply ample means for providing for such an establishment. He complained that the noble lord in calculating the comparative effect of the new plan, had given an unfair view of the

819
question by stating, as he had truly done, the amount of the debt created, but witholding the effect of the sinking fund for its redemption. As to the plan of the noble lord, contained in his eighth resolution, for keeping the sinking fund stationary when it should amount to an equality with the loan, and for adding the interest of the sum borrowed to the amount of the loan in each year, whilst the interest, and sinking fund upon that interest, was to be defrayed out of the consolidated fund, to be afterwards replaced out of the excesses of the sinking fund, he considered that as the most ruinous system that could be devised. The sum to be provided in the first year would be small; but without troubling the committee with the intermediate accumulation, he should state, that before the excesses should accrue in 1816, the sum to be provided in the year would be eleven millions, the aggregate sums borrowed would be one hundred and forty-eight or nine millions, and the charge upon the consolidated fund would be five hundred thousand pounds. Such a system would be much more ruinous than this plan of supplementary loans. The general result of the two plans would be, that by the noble lord's plan the amount of the debt created would be, in 1826, 273,560,531 l. with a sinking fund of 8,960,987 l.; and by the new plan, the amount of the debt would be 304,884,442 l. with a sinking fund of 19,368,000 l. So that with a small increase of the public debt, there would be more than double the amount of the sinking fund. As to the other plan of the noble lord, it departed from the principle of giving immediate relief to the country, by providing that we should go on as at present, till the sinking fund should equal the amount of the loan. To this he had a fundamental objection, because it proposed to lay on 730,000 l. taxes annually, till the sinking fund should reach the assumed limit, at a time when it was universally agreed, that all taxation should be avoided. This plan did not include the possibility of an increase of expenditure, which would overturn the foundation upon which it rested. An increase of expenditure would create an increasing debt, whilst the sinking fund would be stationary.—Having proceeded somewhat further in the discussion of the comparative merits of the system he had the honour to bring forward, and that recommended by the opposite side of the house, the noble lord dilated upon the benefits which his system promised to produce. Among other ad
820
vantages, he stated that it was peculiarly calculated to occasion that which was most important in a country like this, namely, to keep up the price of stocks. If they were inclined to advance, this system would serve to promote that advance; and, on the other hand, if they were upon the decline, this system was of such a nature as must operate and counteract that tendency. Indeed, the effects of this system upon the stocks had been already experienced. The happiest omen of its character had been manifested in the rise of stocks, even within the period that had elapsed since its original proposition. It was, in fact, evident that it served to encourage the confidence, and confirm the hopes of that most intelligent body of men, the monied interest, who were not to be deceived by imposing schemes or fallacious calculations—who were not likely to attach themselves to any project, the ruinous tendency of which was, according to the gentlemen on the opposite bench, perfectly obvious. Another effect of this system would be to keep down the price of provisions, or at least prevent those fluctuations in prices which so mischievously tended to depreciate the value of money. For as it precluded additional taxation, it must naturally serve to promote the end of placing provisions and other articles affected by taxation, on terms more easily within the reach of Government and the people. The noble lord concluded with observing that those two important effects pleaded most powerfully for the adoption of the system he had the honour to submit to their consideration.
Lord Castlereagh intended to compress in as small compass as possible, the observations he had to make upon the subject before the committee. As to what had been said of the objection imputed to him and his right hon. friend (Mr. Rose), that the new plan was to legislate for the future he had only to state that they did not contend that any enactment on this subject would preclude parliament from taking such measures as would hereafter be deemed necessary. They had only contended that parliament should not involve itself in a measure which it would have hereafter to alter or abandon. There was but one sentiment on all sides of the house with respect to the expediency of relieving the country from taxation. There was something coercive in the language of the noble lord respecting the sinking fund. If he understood the noble lord, he had said that the sinking

821
fund was not to be touched, unless by a kind of bargain with the stockholder, who was to have his quid pro quo from the public. But he wished to be informed what quid pro quo was to be given to the stockholder when the noble lord came to take the excesses of the sinking fund. The principle laid down by the noble lord on this subject could not be acted upon, and he would be obliged to abandon it. Parliament had unquestionably a right to exercise its discretion respecting a sinking fund; but here he begged to state, that he should not wish for any measure to be adopted that would prove injurious to the public creditor, and he contended that the interest of the public creditor would be best consulted by the adoption of either of his suggestions than by the plan proposed by the noble lord. If the sinking fund was to be touched at all, it would in either of the cases suggested by him be touched in a manner less liable to objection than in the manner proposed in the new plan. The excesses as calculated on in the new plan would be available both in war and in peace, and at the disposal of the minister, whereas according to his plan the excesses could only be taken during war, when loans would be necessary. His plan would afford a greater principle of limitation on the discretion of parliament respecting these excesses; besides, the interest of the stockholder was materially concerned in keeping up the value of capital in the market, and it would be impossible to effect that, when in the last period a loan of thirty-two millions annually would be raised, nay of forty or fifty millions, in consequence of the rise of stores, the depreciation of money, and an increase of expenditure. Small loans with a small sinking fund, would be much more beneficial to the stockholder than a loan of that amount with a sinking fund of twenty seven millions. The noble lord had that night, in express terms, admitted that his, system was founded upon a principle of raising money upon a compound interest, though he contended for the advantage of a compound benefit. But he had no doubt, that the noble lord upon reflection, would perceive how unwise a principle that was. The noble lord proposed to borrow money to pay the interest of his war loans, as well as the interest upon that interest. What would be the effect of such a statement going forth to Europe? and he could not see any other view in bringing forward the plan at present, but to exhibit it to Europe. There were good calculators, he wished the noble lord to recol
822
lect, in Europe, and particularly in that part of it with which we were at present at issue, and they could not fail to discover the fallacy of a system built upon compound loans and compound interest, a system which must inevitably lead to bankruptcy. There was only one authority upon which the noble lord could justify such a system, and he thanked God, that his late right hon. friend afforded no such authority. There had been but one person who, as a public man, could declare to a nation that he would provide for the expences of a war, and for the interest of the debt incurred, by loan without taxes. That man was Mr. Necker; and he trusted the example was one which the noble lord would not be ambitious to imitate. After the difficulties experienced last year with respect to taxes, and the gloomy representations which had been made, without foundation, as it appeared to him, of the finances of the country, it was somewhat extraordinary to have this plan proposed for raising above four hundred millions upon a fund of two millions and fifty-one thousand pounds. The noble lord seemed to have found the philosopher's stone, and certainly it would appear to Europe, as if there was conjuring in it. But from the effect of his plan, it would appear that the noble lord had discovered the negative philosopher's stone, which his right hon. friend (Mr. Tierney) would explain to him—the power of spending money without creating resources. He here begged leave to repeat, that the noble lord's system would increase the public debt ninety millions; and contended, that there was a most striking difference between its effect, and that of the pure operation of the present system, or of either of the plans which he had himself suggested. The amount of debt under the noble lord's system, at the end of fourteen years, would be 429,386,000 l. the amount of debt under his suggestion, 369,955,000 l. which would give an increase of debt of 59,000,000 l. The sinking fund, in the former case, would be 27,000,000 l. in the latter 11,140,000 l. the war taxes however, would be completely bound in the former case, and be completely free in the latter, and allowing for the reduction by amount of excesses, it would be brought within a fraction of same proportion to the debt under the noble lord's plan, as the sinking fund would bear to the debt under his present suggestion. The noble lord had said that the whole of the war taxes would be pledged, yet on the return of peace it would be open to determine what taxes

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might be substituted for any part of them. The consequence would be, that the whole amount would be to be laid on in a period of peace, when the energies and zeal of a period of war would be relaxed, in the place of being gradually laid on as the occasion may require; and the minister of the day would be placed in the situation of devising means for raising the whole at once, amounting to eight or nine millions, instead of having the twenty-one millions of war taxes at his disposal. There would be ten millions two hundred thousand pounds of the war taxes made permanent, and there would consequently remain but 10,800,000 l. to be successively set free. Against such a doctrine he entered his protest. As to the plan he had suggested, he had thought that by the explanation he had given, he had saved the noble lord the trouble of making an attack upon his own principles. The whole of what the noble lord had said on that head, went to prove, that it would be more dangerous to act upon his principles for nine years, than for twenty years. His plan went on the ground of a nine years expenditure; and certainly, with the same funds, would add much less to the debt, than the supplementary loans of the noble lord. He agreed that he could not go on further without fresh taxes, but if a peace should take place at the end of that period, or before, no new taxes would be necessary. The system of double loans and compound interest of the noble lord would only lead to bankruptcy and ruin, and certainly would bear no comparison either with the present system or either of the suggestions which he had the honour to make by way of modification of the noble lord's plan.
Mr.Giles declared that he would not have risen at that late hour, but that he saw one general error pervade the whole system of the noble lord (Castlereagh), which he thought it was incumbent on him to state to the noble lord and the house. If he proved the existence of this one fundamental error throughout the whole of the noble lord's statement, he thought that that might in itself be sufficient to induce the house to reject those calculations which had so much of fallacy in their foundation. The noble lord proposed a loan of eleven millions, for twenty years, without ever mentioning, or taking into his consideration, according to the calculations in his own papers, the accumulating interest for that period. The sum borrowed would amount to 220 millions; the interest to accumulate on the different sums so borrowed would be twenty-three years for
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the first sum of eleven millions, nineteen for the second, and so on in proportion. This would amount to something upwards of 144,000,000 l. of interest, in the whole, at the end of the time stated. The noble lord had stated, that the interest, according to his calculation, would amount to only the sum of 14,656,000 l. or something thereabouts. This immense difference arose from his mistake in not having taken any idea of the accumulating interest along with him as he proceeded. The plan of his noble friend (lord Henry Petty) whilst his calculations were fair and correct, had also this advantage over that of the noble lord (Castlereagh), that at the expiration of the term proposed, it would leave the sinking fund entirely free and unfettered as to its future operation.
Lord Castlereagh insisted that the error was not his; he had taken the statement from the tables C, F, and G, of the chancellor of the exchequer's plan.
Mr. Giles observed, that was where the noble lord was in error. He only took a view of part of the amount of interest, whereas if he had looked into table L, he would have found that it summed up the whole.
Mr. Davies Giddy highly applauded the plan of the noble lord (H. Petty). He had made some calculations upon the subject himself, and had taken some time to consider the plan which that noble lord had laid before the house; and he found that it united all the physical and moral powers that were necessary for the attainment of the object which he had in view. It was with arithmetical calculations as with the machinery used in mechanics; the operating power must be proportioned to the weight or sum which it has to raise. On this principle he found the noble lord's system to be correct in all its parts with making only the necessary allowance for any thing that might hereafter accidentally impede the operations of the machinery. It also possessed the moral power of exciting the confidence and energy of the people.—The resolutions were then read and agreed to. The house resumed, and the report was ordered to be received on Wednesday next.