The Chancellor of the Exchequer
moved the order of the day for the House to resolve itself into a Committee of the whole House, to consider of the Finances of Great Britain; and that the several Accounts of the National Debt and of the produce of the Consolidated Fund and War Taxes, be referred to the said Committee. The House having resolved itself into a Committee, Mr. Hawthorne in the chair,
The Chancellor of the Exchequer
addressed him to the following effect:
Mr. Hawthorne; after the long and laborious attention which for several nights past the House has bestowed on a subject of the greatest importance, I should be unwilling to bring under its consideration any question likely to lead to a considerable length of discussion; but whatever 1079 differences of opinion may hereafter arise upon the important subject to which I wish to direct its attention, I flatter myself that the course of proceeding which it is my intention to suggest, will meet with general concurrence. It is not my intention this evening to call for the decision of the Committee upon any question which I may propose, but having explained my general view of the subject as clearly as may be able, to recommend that the further discussion should be adjourned to a future day, when the House may come to a decision with further information and more mature judgment. On another point I equally anticipate the general approbation of the Committee, namely, in bringing under consideration the intended measures of Finance, before any of the pecuniary arrangements of the year are concluded, in order that all parties who may enter into any agreements with the government may form their bargains with a full knowledge of all the circumstances of the case, and that the scrupulous good faith and plain dealing in Pecuniary transactions which has been so long the honour of this country may be strictly observed.
Towards the close of the last session of parliament, a discussion took place upon the national finances, in which it appeared to be the general sentiment that some new measures were necessary, and in which I took the liberty to suggest several for the consideration of those gentlemen who were present. They were principally designed to support public credit, and relieve that depression which then appeared to weigh down our financial exertions; but since that time a great change has taken place. Six months have elapsed, the most eventful and extraordinary which the history of Europe has, perhaps, ever recorded; and which have placed our public credit and our national security on a basis of solidity which it might then have been deemed presumptuous to have contemplated. At that time, the issue of the important contest which was opening in the north of Europe was, to say the least, hazardous and doubtful. A general impression, indeed, rather prevailed, that either by arms or negociation, France would prevail against Russia, and would achieve what still was wanting for the subjugation of the continent of Europe. It is impossible to contemplate the events which followed without a mixture of admiration and horror; of admiration for the 1080 heroic virtues which have been displayed, and of horror for the extent of human misery which has been endured; in which I can by no means forget the miserable, though merited, and necessary destruction of so many myriads of the invading army. But from this struggle between insatiable, unprincipled, and remorseless ambition on the one side, and hardy, stubborn, though untutored, patriotism on the other, which has spread devastation over the extensive regions of the north, have followed consequences the most important, and hopes the most satisfactory to the cause of suffering humanity.
It may be recollected that at the time to which I am alluding, though our discussion in a great degree turned upon the means of supporting Public Credit, and I pointed out some of those measures which, in case of extreme emergency, might be resorted to, and in which I expressed my confidence that the spirit and firmness of the nation would, in such a case, readily acquiesce; yet I stated my opinion, that there existed no immediate necessity for their adoption, and undoubtedly the necessity of resorting to measures of great severity is much lessened by the events which have since occurred. The measures which I then particularly pointed out, as likely to be proposed in the present session, were the adoption of some more efficacious plan for the Redemption of the Land Tax, and the provision of an increased proportion of Sinking Fund for so much of the loan of each year as might exceed the sum applicable to the redemption of the debt. To both these measures I now wish to call the attention of the Committee.
Early in the summer the Redemption of the Land Tax was referred to the consideration of two noblemen, to whose labours on this important subject the public have already been greatly indebted; I mean the Lords Commissioners for the Redemption of Ecclesiastical Land Tax, lord Auckland and lord Glenbervie. These noblemen, whose diligence and ability cannot be too highly praised, have made a Report on the subject to the Treasury, which, by order of the House, has been laid upon its table, and referred to this Committee. Among many just remarks contained in that Report, on which it is intended to found a Bill, which I shall shortly have the honour to submit to the House, there is one leading principle on which I chiefly depend for success; that 1081 of simplifying the mode of the Redemption of the Land Tax, and freeing it from tedious and troublesome formalities. It is proposed that upon a simple notice to the collector of the Land Tax, the form of which will be printed and distributed at the time of the collection, any person desirous of redeeming the charge upon him, by a temporary increase of the amount of his assessment, shall be entitled, after the payment for a certain number of years of an assessment, double or treble, at his option, of that which he now pays, to be finally and totally discharged from the Land Tax, as if he had contracted for, and redeemed it in the usual manner. By these means all formalities will be avoided, all journies and trouble will be spared, and the party paying at his own home to the collector, whose periodical visits he expects, will find himself relieved from the charge now borne by him, by a succession of payments so moderate as at no time to be felt as a burden. I cannot but look forward with considerable expectation of success to the execution of a plan so simple, and apparently so inviting.
The second measure, which appeared when I mentioned it last year to be received with general approbation, is that of an increased Sinking Fund on that part of the loan of every year which exceeds the amount of the Sinking Fund already existing at that time. The proportion which I mean to recommend is one half of the interest of such excess of the loan beyond the Sinking Fund. I prefer a proportion of interest, to one founded on the capital stock created, because it adapts itself more fairly to the different funds in which the loan may be raised, and corresponds more accurately with the sum of money actually borrowed.
I wish also to submit to the Committee a measure which on former occasions I have recommended to the House, that of providing by an annual grant to the Commissioners for the reduction of the National Debt, some counterbalance to the great increase of the unfunded debt in Exchequer Bills. I wish to see the principle of Act of 1792, that at the creation of every debt, means should be provided for its ultimate redemption, applied not only to the funded debt, but to so much of the unfunded as partakes of a permanent nature. Considerable sums have at various times been raised, and some of them as early as the year 1795, upon Exchequer Bills which have been 1082 renewed from year to year, and may now be considered as a permanent addition to the public debt, although no provision has yet been made for their redemption. I should therefore propose that an annual grant of one-percent. should be made on the amount of all unprovided Exchequer Bills outstanding on the 5th of January in each year. The amount will of course vary in proportion as Exchequer Bills may be funded or discharged, and therefore this part of the sum destined for the redemption of debt, will be more conveniently provided by a grant upon the annual supplies, than by any permanent appropriation. Its effect however will be the same, and it will in future become nearly indifferent with respect to the redemption of debt, whether any sum which may be raised for the public service shall be immediately funded, or remain for a considerable length of time in the shape of Exchequer Bills annually renewed.
In addition to the measures which I have on other occasions suggested to the House, it is now my intention to propose to their consideration one which more immediately belongs to the extensive system with which I wish to combine these separate measures. That system, the outlines of which I shall presently have occasion to state, will involve the repeal of so much of the Sinking Fund Act of 1802, as directs that the whole Sinking Fund then existing shall continue to accumulate at compound interest till the total redemption of the whole funded debt then remaining unredeemed. It will appear to the Committee a natural and equitable consequence of this repeal that the sum of about 870,000l. which would in that year have been appropriated to the Sinking Fund, if the Act in question had not passed, should now be granted to it. This will place the public creditor in the same situation in which he would have stood, if a different provision from the customary mode of redemption had not been adopted in that year, and will enable the public to make a different arrangement more suited to the circumstances of the present time, with due regard not only to the legal claims, but to the fair expectations of the stockholder.
This brings me naturally to the principal object to which I wish to direct the attention of the Committee this day. In what I have already stated I may appear to have had the support of public credit, and the interest of the stockholder principally, if not exclusively, in view; but be- 1083 fore I conclude, I hope to satisfy the Committee that the other classes of our fellow-subjects have had at least an equal share in my attention. I must beg leave to preface my explanation of the system I am about to recommend by a few general remarks on the redemption of public debt. We are apt to consider this subject, (if I may so express myself), too arithmetically; we compute that a certain annual sum will at compound interest redeem a given amount of debt, within a certain number of years, but we forget the great considerations of policy and public economy which this operation involves. We do not consider that it disposes of the fortunes of thousands of individuals; that it requires the transfer of a mass of property, amounting perhaps to a fifth part of the whole capital of the country, if estimated according to the returns to the Property Tax, from an employment in which it has been vested by the proprietors, to the manifest advantage of the public, into other modes of occupation, it is an experiment which, as far as my knowledge extends, has never been tried on a great scale. The present elector of Saxony, it is true, discharged the debt which his predecessors had accumulated upon that country; but neither the amount of the sum, nor the circumstances of the electorate of Saxony can form any precedent for this wealthy and powerful kingdom. While war continues and loans are annually contracted exceeding the amount of the Sinking Fund, that amount, however great, can only be considered as an advantage; but whenever peace may take place, it will soon be found that there is a point beyond which the annual redemption of debt cannot be carried, without great public inconvenience. This is no new argument in the House: my noble friend the marquis of Lansdowne urged it with great force and eloquence in opening his Plan of Finance in 1807. He observed that the mischief of an excessive Sinking Fund overloading the money market with a super-abundance of capital, exceeding the means of employment, would be not inferior and somewhat similar to that of a national bankruptcy. Whenever there fore the Sinking Fund has reached that point beyond which it cannot be employed with advantage in time of peace, it seems to be wise to think of setting bounds to its further accumulation, and certainly unwise to exhaust the national resources by an augmentation of taxes for its further 1084 increase. Whether the Sinking Fund has now reached that point, it belongs not to me to decide, and I wish the most cautious and deliberate wisdom of parliament to be applied to the decision. But it may unquestionably be said, that the Sinking Fund has now reached an extent of which the history of no country affords an example. In no country has the experiment of an annual repayment of twelve millions, or any thing like it, been tried. This at least is obvious, that the present arrangements of the Sinking Fund require revision. As the law now stands it will accumulate to above thirty, possibly to above forty millions, and will be at once reduced to twenty or even to twelve. Whatever may be thought of the effects of its greatest amount, it is undeniable that such a revulsion must be pernicious. If the larger sum be not too great the smaller must be far too little. But I perfectly agree with lord Lansdowne, and all the great authorities which have treated of this subject, that the plan of employing thirty or forty millions in the purchase of stock in time of peace is perfectly impracticable and visionary. A change must therefore be made at some time; and if so, is it not wiser to make it while the inconvenience is still at a distance, than when it is actually pressing, and when any corrective may be opposed, with an appearance of justice, by the individual interests which may be affected by it at the moment? On this account, I think it becomes the House now to pause, and take a deliberate view of the situation of the country, with respect to the repayment of its debt. But other circumstances concur to point out the present as a proper time for some revision of our system. By the original Sinking Fund Act of 1786, provision had been made that when the Fund should have accumulated to the amount of four millions per annum, its further accumulation should cease, and the sums purchased from that time be discharged and made applicable to the public service. Had not that Plan been varied by the Act of 1802, the public would before this time have received relief, from the operation of the Sinking Fund; though only to the limited extent of the interest of four millions a year; for the calculations which were made of its progress fixed the period at which it would have reached its highest amount, between the year 1808, and the year 1812, and the average rate of interest at which its operations have been 1085 conducted prove in fact that it would before this time have accomplished that object. It seems natural to look for some relief from the Sinking Fund at the period at which it would actually have been obtained, if the constitution of the Fund had not been varied. But there is another circumstance still more striking in our present situation. When the Sinking Fund was established in 1786, the total amount of debt was about 240 millions, and the redemption of such a sum appeared, if not utterly hopeless, at least placed at a very remote distance. But great as the difficulty then appeared, the firmness and perseverance of the nation, pursuing this important object with undeviating steadiness, have at length completely surmounted it; and I have the pleasure to refer the Committee to accounts upon their table, which prove that a sum equal to the total capital of the debt existing in 1786 has been redeemed. I mean, Sir, that the sums purchased by the commissioners, or transferred to them, exceed the amount of the debt existing in 1786; for this is the only mode in which the redemption of the old debt can ever be ascertained, the new loans having been contracted in old funds, and no distinction kept up between the earlier and later creditors of the public. If any further circumstance could be wanting to prove that the people of this country have at the present time the fairest title to any relief which can be afforded, consistently with the exact observance of public faith, and due attention to permanent security, it will be found in the extraordinary exertions they have made to prevent the accumulation of public debt. Instead of shifting the burden from themselves, and throwing it upon posterity, they have nobly and manfully supported the load of increasing difficulties which the vicissitudes of this eventful contest have thrown upon them. To prevent the increase of public debt, they have actually paid upwards of 200 millions in war taxes, a sum which considerably exceeds the real value of the debt existing in 1786. The public have therefore a right to claim the merit of having doubly redeemed the original debt; first by its actual repayment, and secondly, by the anticipated payment of a still greater sum which would otherwise have been added to it.
But whatever claims the public may now have on these grounds for relief, and with whatever immediate advantage it might be 1086 attended, it becomes us most anxiously to inquire what are the claims of public faith which we owe to the stockholders, and what the conditions on which the public debt has been contracted.
The debt contracted previously to 1792 was raised without any condition of repayment whatever, the government being bound only to the punctual payment of the interest, and left to consult its own discretion or convenience with respect to the discharge of the principal. This debt however I contend is now wholly discharged; and that which now exists has been contracted since the passing of the Act of 1792, and subject to its provisions. Under these the stockholder has perhaps no strict right, as he has voluntarily subscribed his stock into the old funds, which bore no conditions of redemption, but he has undoubtedly a just expectation that the terms of redemption pointed out in that act will be adhered to.
Those terms are, that provision shall be made for the repayment of the capital of all debts subsequently contracted, within 45 years from its creation; either by the specific appropriation of one percent, upon such capital, or in any other mode which parliament may think fit. That this is the true interpretation of the Act, I affirm on the authority of the declarations and conduct of its illustrious author, Mr. Pitt; and of the resolutions and acts of the legislature itself. Of Mr. Pitt's sentiments, I can mention a very remarkable instance-It must be generally recollected by those gentlemen who eleven years ago were members of the House, that Mr. Pitt strongly supported the Sinking Fund Act of 1802, but it is not perhaps generally known that he was the original proposer of that Act. I speak this from my own perfect knowledge, and there are other living witnesses, and I believe, written documents, in proof of it. The Act originated in a suggestion of Mr. Pitt to lord Sid-mouth, then Chancellor of the Exchequer, and his first suggestion went to this extent, that not only no Sinking Fund should be provided upon the sums funded in that year, but that after reserving so much of the Sinking Fund as should be sufficient on calculation to redeem the whole debt at par, within 45 years, the surplus, then amounting to above a million, should be applied to the public service. After much discussion between Mr. Pitt and lord Sid-mouth, at which I had the honour to assist, the proposition was reduced to the more 1087 limited form in which it received the sanction of parliament.
There could not be a more decisive declaration of Mr. Pitt's opinion of the true construction of the Act, and it was no less clearly shown by his public conduct on other and even prior occasions. In contracting several loans in 1798, 1799 and 1800, on the credit of the Income Tax, he made no provision for the immediate repayment of the principal, but proposed to discharge it by the continuation of the Income Tax in time of peace, so long as might be necessary. This shews that he viewed the provision for repayment within 45 years rather with regard to probability and practice, than to that extreme nicety and rigour which is sometimes insisted on: for it was clearly possible that the war might outlast 45 years, and in that case no provision whatever would have been made for the redemption; but Mr. Pitt, viewing the subject as a wise and great statesman, according to the probabilities of human affairs, thought it sufficient to make such provision as any reasonable and practical man would think adequate to its purpose; not looking to such cases as, though mathematically true, approached the extreme verge of possibility.
With respect to the resolutions of parliament, I shall beg to refer to the first of those passed by this House on the 18th of May 1802, and lately read at our table. On these Resolutions an Act was founded, which, as well as the Acts which established the loans to which I have just referred, clearly evinces the opinion of the legislature that the Act of 1792 merely required that provision should be made for the redemption of debt within 45 years from its creation, leaving to the discretion of parliament both the mode to be applied in specific cases, and any subsequent variation of that mode which, within the limits prescribed, it may think proper to adopt.
I shall now attempt to explain to the Committee how it appears to me that some immediate relief may be afforded to the public, without the smallest infringement of the provisions of the Act of 1792, which I have detailed. Neither the Act of 1786 nor that of 1792 contains any provision as to the mode in which the debt, when purchased, shall be cancelled or discharged, so as to relieve the charge upon the Consolidated Fund. There are two modes in which this discharge might be carried into effect. The first would be 1088 that, supposing any number of successive loans to be contracted, a proportion of Sinking Fund should, according to the present practice, be attached to each, and should continue to accumulate at compound interest until the whole of such loan should be discharged by its exclusive operation, and thus that, the redemption of each should be separately and independently effected. This is understood to be the mode established by law under the operation of the Act of 1792, in some degree varied by that of 1802, but remaining in force as to all loans contracted subsequently to the latter of those years. It is evident however that, as the funds are intermingled and consolidated, the stock created for any particular portion of debt cannot be distinguished, and the purchases are made indiscriminately. Any separate loan can therefore no otherwise be redeemed than by purchasing, with the Sinking Fund attached to it, an amount of stock equal to that which was created in consequence of such loan.
The other mode, which would have been equally consonant to the spirit of the Act of 1792, would have been to direct that the debt first contracted shall be deemed to be first paid off, and that the Sinking Fund created in respect of any subsequent loan shall be first applied to the discharge of any prior loan then remaining unredeemed, while the operation of the percentage created for those earlier loans should be continued for the redemption of those subsequently contracted. By this means the loan first contracted would be discharged at an earlier period, and the funds charged with the payment of its interest become applicable to the public service. Thus in the event of a long war, a considerable resource might accrue during the course of the war itself, as every successive loan would contribute to accelerate the redemption of those previously existing, and the total amount of charge to be borne by the public, in respect of the public debt, would be reduced to a narrower compass than in the other mode, in which a greater number of loans would be co-existing. At the same time the ultimate discharge of the whole debt would be rather accelerated than retarded. The advantages of this mode of operation did not perhaps present themselves to Mr. Pitt when framing the arrangements of the Sinking Fund, in the prospect of a continuance of peace, and with a very remote view of the ultimate redemption of 1089 the debt, nor would it have been easily made applicable to the large mass then existing, and for the redemption of which no provision had before been made. But the circumstances of the present time afford a most advantageous opportunity of establishing a plan which would in the first instance have been preferable. It is now only necessary to declare that an amount of stock equal to the whole of the debt existing in 1786 has been redeemed, and that in like manner whenever an amount of stock equal to the capital and charge of any loan raised since 1792 shall be redeemed, in its proper order of sucession such loan shall be deemed and taken to be redeemed and satisfied. Every part of the system will then fall at once into its proper place; and we shall proceed with the future redemption with all the advantages which could have been derived from the original adoption of the mode of successive instead of simultaneous redemption. Instead of waiting till the purchase of the whole of the debt consolidated in 1802 shall be completed, that part of it which existed previously to 1792 will be considered as already redeemed, and the subsequent loans will follow in succession whenever equal portions of stock shall have been purchased. It is satisfactory to observe that by a gradual and equable progress we shall still have the power of effecting the complete repayment of the debt more speedily than by the present course. I do not pronounce whether it will be wise to persevere to that extent. It will be for parliament to judge when the proper time arrives, which is yet at a considerable distance: but we are doing our duly to posterity not only scrupulously but liberally, while we not only much more than satisfy the provisions of the Act of 1792, which requires the redemption of the debt within 45 years, but actually anticipate that course of redemption which is now provided. The tables which will be put into the hands of gentlemen will shew that the means are provided by the proposed plan of effecting the total repayment of the existing debt from four to ten years, and that of the future debt which may be incurred according to the various suppositions assumed from 14 to 37 years, sooner than by the laws now in force. This statement is sufficient to shew how amply the proposed plan is capable of satisfying the most sanguine expectations of the nation with respect to the final dis- 1090 charge of its debts, as well as the fair claims of those who look to the execution of the Act of 1792 as the means of supporting the value of the public funds. I have mentioned the result of such calculations as are intended to be communicated to the House; other cases may be supposed by which the result may be varied in degree but not in general effect.
I have thus far attempted to explain the intended system to the Committee, and to recommend it by its general and intrinsic advantages without displaying the immediate benefits of its adoption. Yet they are such as must be highly satisfactory to parliament, and of the greatest importance in the present situation of the country.
The immediate result of this system, simple as it may appear, and really is, will be equal to a subsidy of above one hundred millions. For four years to come, we may on the supposition of the continuance of war, hope to be obliged to impose no other taxes than such as are required to furnish those additions to the Sinking Fund which I pointed out in the early part of my statement. I need not dwell upon the advantages of such a relief, I need not explain its effects in raising the spirits and animating the exertions of the nation. I need not enlarge on the confidence it must give to our allies, and the despondency it is calculated to impress on our enemies. But that which in my view renders it peculiarly valuable is, that it is so far from being purchased by an accumulation of burdens on the succeeding years, that though its advantages may be very different in degree, according to the different cases supposed, yet it will in all, for several years to come, produce a very considerable diminution of charge.
Such are the general principles of the plan to which I beg to call the most serious attention of the Committee, but not at present to press for its judgment. That it is free from objections I cannot hope, but I trust that parliament will on mature consideration, be convinced, as I am myself conscientiously persuaded, that they are such as bear no proportion to its advantages. I can at least acquit myself of having hastily and rashly determined on a measure of this magnitude and importance. It has for many months been the subject of my most anxious meditations, and of repeated and detailed discussions with those whom I thought most capable of guiding my judgment: and I submit it to the Committee not without great 1091 anxiety, but with the confidence naturally flowing from the most sincere conviction.
I am fully aware that in proposing any change in a system so justly revered, and Considered as the firmest hope of the nation, I am incurring a great responsibility. I feel the full weight of this responsibility, but I also feel that I ought not to shrink from it, in the prospect of performing a great public service. Many a gallant and Worthy man has laid down his life to achieve a much less important service to his country than that of providing at such a moment the supplies necessary, during four years, for the contest in which we are engaged. In the hope of procuring this benefit to the public, I am willing to risk, what many, to whom life is dearer than it is to me, have valued beyond their lives—I mean that reputation and public confidence which they have sought, and in some degree acquired by a long course of faithful though imperfect service to the public. I am aware that my reputation is staked upon this plan; but God forbid that my reputation, or that of any man should be placed for a moment in competition with the great public interests which are concerned. I only wish the House to deliberate maturely, and to decide wisely. Such information as has appeared to me necessary to enable gentlemen to take a complete view of the plan, will be put into their hands, and if any further information should be desired I shall most readily lend my assistance to furnish it.
I shall now read the Resolutions which I am about to propose, in order to put the Committee in possession of their contents, and then offer the first to the Chairman, that the discussion may be regularly opened, and when those gentlemen who may be disposed to deliver their sentiments have stated such observations as occur to them, I shall, after giving such explanations as the case may require, move that the Chairman shall report progress, with a view to the adjournment of further debate on the subject till Monday seven night.
The right hon. gentleman then read the Resolutions, as follow:
I. "That the total capital of the Funded Debt of Great Britain, on the 5th January 1786, was 238,231,248l. 5s. 2¾d.; that provision was made for the gradual reduction thereof, by an Act passed in the same year; and that further provision has been made by several Acts since passed, 1092 for the more effectual reduction of the said debt, and of the public debt since contracted.
2. "That by virtue of the said Acts, the sum of 238,350,143l. 18s. 1d. exceeding the said sum of 238,231,248l. 5s. 2¾d., by 118,895l. I2s. 10¼d; had, on or before the 1st March 1813, been actually purchased by the Commissioners, for the reduction of the National Debt, or transferred to the said Commissioners, for the redemption of Land Tax, or for the purchase of Life Annuities.
3. "That it is expedient now to declare, that a sum of capital stock, equal to the total capital of the Public Debt existing on the said 5th January 1786, hath been purchased or transferred as aforesaid; and so soon as further sums of the public debt shall have been so purchased or transferred, making, in the whole, an amount of annual charge of the public debt so purchased or transferred, equal to the whole annual charge of the public debt existing on the said 5th day of January 1786; to declare further, that an amount of public debt, equal to the whole capital and charge of the public debt existing on the said 5th day of January 1786, hath been satisfied and discharged; and that, in like manner, an amount of public debt equal to the capital and charge of every loan contracted since the said 5th January 1786 shall, successively and in its proper order, be deemed and declared to be wholly satisfied and discharged, when and as soon as a further amount of capital stock, not less than the capital of such loan, and producing an interest equal to the dividends thereupon, shall be so redeemed or transferred
4. "That, after such declaration as aforesaid, the capital stock purchased by the said Commissioners, and standing in their names in the books of the Governor and Company of the Bank of England and of the South Sea Company, shall from time to time be cancelled, as if the same had been transferred for the redemption of the Land Tax; at such times, and in such proportions, not exceeding the amount of debt so declared to be satisfied and dis- 1093 charged (after reserving thereout any sum or sums necessary to make provision for the payment of all life annuities chargeable thereupon) as shall be directed by any Act or Acts of parliament to be passed for such purpose: in order to make provision for the charge of any loan or loans thereafter to be contracted, upon the same funds or securities as are chargeable with the said stock, so declared to be satisfied and redeemed.
5. "That, in order more effectually to secure the redemption of the public debt, conformably to the provisions of the Act of the 32d George 3, cap. 55, it is expedient to enact that all sums granted for the reduction thereof, by the several Acts aforesaid, should be further continued and made applicable to the reduction of all public debt, now existing, or which may be hereafter contracted during the present war.
6. "That, in order to carry into effect the provisions of the Acts of the 32nd and 42nd of the King, for redeeming every part of the national debt within the period of 45 years from the time of its creation, it is also expedient that, in future, whenever the amount of the sum to be raised, by loan, or by any other addition to the public funded debt, shall in any year exceed the sum estimated to be applicable in the same year to the reduction of the public debt, an annual sum, equal to one half of the interest of the excess of the said loan or other addition, beyond the sum so estimated to be applicable, shall be set apart out of the monies composing the consolidated fund of Great Britain, and shall be issued at the receipt of the Exchequer, to the Governor and Company of the Bank of England, to be by them placed to the account of the Commissioners for the Reduction of the National Debt; and upon the remainder of such loan or other addition, the annual sum of one per cent. on the capital thereof, according to the provisions of the said Act of the 32nd year of his present Majesty.
7. "That, in order to prevent the increase of the Public Debt by means of Exchequer Bills annually renewed, it is 1094 expedient that, on the 5th January in every year, an account be taken of all Exchequer Bills outstanding and charged upon funds not deemed capable of making good the same, within one year from such 5th of January, and that a sum equal to one percent, thereupon be granted out of the supplies of such year, to the said Commissioners for the Reduction of the National Debt.
8. "That it is expedient that so much of the Act passed in the 42nd year of the reign of his present Majesty (42 Geo. 3, cap. 71,) as directs that all monies whatever, which shall be placed from time to time to the account of the said Commissioners, by virtue of either of the therein recited Acts (except so far as the same are hereby repealed) or by virtue of this Act, shall and are hereby appropriated, and shall accumulate in manner directed by the said Acts, for the reduction of the National Debt of Great Britain; and shall be from time to time applied by the said Commissioners, pursuant to the directions, and under and according to the restrictions and provisions of the said therein recited Acts; either in payment for the redemption or in the purchase of the several redeemable Public Annuities of Great Britain, until the whole of the perpetual Redeemable Annuities, now charged upon the Public Funds of Great Britain, including such charge as has arisen, or may arise, on any loan made in Great Britain, before the passing of this Act; and also such charge as shall arise by any annuities, interests, and dividends, payable in consequence of any loans made chargeable on the Consolidated Fund, by an Act passed in this session of parliament, intituled, An Act for repealing the duties on income, for the effectual collection of arrears of the said duties, and accounting for the same, and for charging the annuities specifically charged thereon upon the Consolidated Fund of Great Britain shall have been completely redeemed or purchased, should be repealed.
9. "That it is expedient to make provision, that an annual sum of 867,963l. 1095 being equal to one percent, on the capital stock created in respect of several loans raised by virtue of divers Acts passed in the 38th, 39th, 39th, and 10th, and 42nd years of his present Majesty, and for the interest and charges of which provision was made in the said 42nd year of his Majesty, shall be set apart out of the monies composing the Consolidated Fund of Great Britain, and shall be issued at the receipt of the Exchequer, to the Governor and Company of the Bank of England, to be by them issued to the Commissioners for the Reduction of the National Debt.
10. "That it is expedient to make further provision for the more effectual and speedy redemption of the Land Tax."
§ Mr. Huskisson
said, that he for one acceded to the postponement of the discussion upon the plan of his right hon. friend until a future day; and as he did not understand that plan, he should, for the present, carefully abstain from any comment upon it further than this; that it appeared to him, upon the face of it, to be the most important change in the financial arrangements of the country that had ever been proposed in the course of a long and eventful war. His right hon. friend had said, in the course of his speech, that Mr. Pitt had always looked to this practical effect; but though he could not see what that might be, he could not shut his eyes to the fact which had been stated by his right hon. friend in the last session, that the finances of the country were labouring;" a state of things, which he earnestly hoped the present plan might be effectual in remedying, He was well aware of the difficult situation in which his right hon. friend was placed; he should look at the proposed plan in the spirit of candour, and if he troubled the House more at length at a future period, it would not be until he had made himself acquainted with all the details.
§ Mr. Tierney
rose to assure the Committee, that he shared most sincerely the sentiments just uttered by the last speaker, and that he would enter into the discussion with the same motives. To him this was no party question; and he professed himself ready to give the right hon. gentleman every assistance in his power, 1096 in the arduous task which had devolved upon him. At the same time, he was compelled to own, that the plan just proposed by the right hon. gentleman had somewhat surprised him: he had been indeed led to expect an extensive and new plan of finance; but considering how often the right hon. gentleman had recommended the most strenuous efforts, in order to raise the supplies within the year, he had expected to be called upon to support him in the unpopular measure of raising new taxes; but instead of that, he found himself called upon to support the right hon. gentleman in letting loose 20 millions, for the support of the current expences, out of the fund accumulated to discharge the arrears of anterior expenditure. It appeared to him that the right hon. gentleman intended to do away altogether the Act of 1802, by which the Sinking Fund was consolidated; that right hon. gentleman would do him the justice to acknowledge that he had opposed that Act, foreseeing that the wants of the country might one day or other make it inconvenient. That moment had now come; but we were not thereby authorised to wrest from the creditor of the state, from those men who had purchased stock since that Consolidation Act, the additional security which it gave them. According to Mr. Pitt's plan of the Sinking Fund, every stockholder could know as well as the minister himself, the time at which the funds he held in his hands would become redeemable, and he knew also that the Sinking Fund was not to be touched until its revenue exceeded the sum of four millions. The Consolidation Act of 1802, gave additional advantages to the lenders, inasmuch as by it they knew that the Sinking Fund could not be touched, until, by the accumulation of interest, the whole of the debt should be extinguished. Purchases in the stocks had been made in consequence of those favourable terms, and to break them now would appear to him bordering on a breach of public faith. Another disadvantage which appeared to him to attend that plan, was the want of stability in the system, for the one per cent, applicable to the redemption of Exchequer Bills, and the additional per cent, on the new loans, specifically applicable likewise to their gradual discharge, were to be provided for by a yearly grant. He considered that anticipation of a probable vote of the House of Commons, as too precarious and slender to form the 1097 basis of public credit. Besides, that percentage not being raised by taxes, would be considered in no other light but as an increase of the loans, and thus we should be undoing with one hand what we attempted to do with the other. He would not, however, make any objection to the plan at present, and would only say one word more as to the Sinking Fund. The right hon. gentleman had stated that the amount of that fund was to that of the National Debt as one to forty-four; and that, of course, even with the supplies he intended to draw from that source, the public creditor would still be in a better situation, than after the passing of the Sinking Fund Consolidation Act, for, in 1802, that proportion was as one to seventy-seven. But the right hon. gentleman had forgotten to advert to the price of stocks, which must be taken into consideration, as greatly altering the proportion, and which were considerably higher at the former period than at present. He would not now discuss the question, but reserve it for future consideration. That the right hon. gentleman meant honestly and fairly, he had no doubt; but he could not help thinking that his financial reputation, which he truly represented to be as dear to him as his life, was in considerable jeopardy. He hoped, however, that he would have a good deliverance; for no man, he thought, could stand in a more awkward situation at the bar of the financial tribunal. He hoped that no other proceedings would be instituted on the subject before Monday se'nnight. Indeed, was he not aware that, from a sense of public necessity, the right hon. gentleman could not further delay to submit his plan to the House, he would himself have proposed a more remote day, and, in the mean time, have moved for a select committee, to take the state of the finances of the country into consideration, and report their opinion to the House; for it appeared to him difficult that the House should pronounce on such a complicated subject without some such previous enquiry. If this plan were carried into effect, it struck him that there would be nothing to meet the expences of a peace but the annual taxes, namely, those on land and malt, and the Consolidated Fund. What proportion these resources would bear to the expence and exigencies of such a peace as, he was afraid, they were likely to make, was worthy of the consideration of the legislature, before they acceded to a scheme, 1098 which would impair the Sinking Fund. It was pleasant to say, that, for four years, there would be no necessity for additional taxes; that 7 millions would be saved from the Sinking Fund, and that taxes to that amount would, at the expiration of that time, be to the good. But he did not know this. In fact, the measure might so disgust persons (who were now ready to come forward with pecuniary assistance to the state) with parliamentary proceedings on this subject, that when they wanted their aid, at a future period, they would not be able to procure it. He would now sit down, assuring the right hon. gentleman, that in the retirement of his closet he would endeavour to divest himself of any feeling of hostility towards the plan which had been submitted; and would study it, till his better judgment should either convince him of the propriety of giving it his most cordial support, or of opposing it, as prejudicial to the credit of the country.
§ Mr. Giddy
said, the plan proposed was, essentially, nothing more than calling on the Sinking Fund to bear the expences of the year. The best effects, moral and political, had been produced by the establishment of that fund, which, he was afraid, the right hon. gentleman's system would diminish, by altering and impairing it. The right hon. gentleman seemed to think that we might now have recourse to that fund, which would be the means of rendering additional taxation unnecessary for some years; and that, at a future period, those taxes might be resorted to for the public service. He was afraid, that those who entertained such an opinion would be deceived. For, after the public had been exempted for some years from additional burdens, he doubted whether any minister would be found hardy enough, under such circumstances, to propose an enlarged system of taxation. He would abstain from farther observation at that time, and conclude with saying, that he never had heard a plan proposed which had given him so much pain.
The Chancellor of the Exchequer
said, that the leading objection of the right hon. gentleman (Mr. Tierney) was, that the plan now proposed would overturn the system of 1802, an objection coming rather oddly from that right hon. gentleman, who had constantly expressed his disapprobation of that, system, and contended that it was inconvenient and impracticable., He now, however, argued that the 1099 stockholder had a right to look to the continuance of that system, and to complain if it should be altered. He the Chancellor of the Exchequer) thought, on the other hand, that the stockholder might, with some appearance of justice, have complained of the system of 1802, at the time when it was established, because it introduced a change, which might then have appeared unfavourable to his interests. No complaint was however made; the stockholder acquiesced with cheerfulness and confidence in the wisdom of parliament. But it appeared to him impossible that he could make any complaint now, when the intended change would restore him to that situation in which he would have been placed, if all the loans had been raised in the ordinary manner, and the Act of 1802 had not taken place. It was now proposed to appropriate 870,000l. a year immediately to the Sinking Fund, and such a grant was of much more value than the speculation of a possible remote advantage.
The right hon. gentleman had stated that the money market would be set afloat, and that in the worst way, not by any fixed and permanent plan. In fact, the plan, when once established, would be as fixed and permanent as any other; and perhaps less liable to variation than the present plan, which was generally allowed to require some revision. "Every stock-bolder," said the right hon. gentleman, "knew as well as Mr. Pitt when the Sinking Fund under the Act of 1786 would be limited." Every stockholder will, under the proposed system, know as well as the minister what the amount of the Sinking Fund in every year will be, and may form his speculations with as much certainty as upon the plan now existing or any other. All such speculations must be in their nature uncertain, because the prices of stock will be varied by circumstances which cannot be foreseen; but they may, under the proposed plan, be entered into with as much security as their own nature admits of. He trusted that the right hon. gentleman would, when he should come to examine the plan more maturely, find that many of his objections rested upon a misconception of it. With respect to the time when it should be taken into consideration, he could see no necessity for postponing the consideration of it beyond Monday se'nnight. In the interval any gentleman who might not be satisfied with the information which would be put 1100 into his hands, might call for any further documents which he might think necessary; and he (the Chancellor of the Exchequer) would be happy to assist in procuring any information which might be desired. If it should then appear to be absolutely necessary that a longer period should be given for consideration, he should not object to it; for he was as much impressed with the magnitude of the subject as any gentleman, and he should feel more regret than any, if the House should come to a hasty decision, because he should feel himself involved in a deeper responsibility. But it certainly appeared to him, perhaps from having given the plan so much previous consideration, that a few days would be sufficient to enable gentlemen to make themselves masters of it. To him it was particularly recommended by the consideration that it was equally applicable to all the various circumstances to which we could with probability look forward. It was not limited to a particular amount of expenditure; it was not confined to a state of war or of peace, but would adapt itself to every change of situation. He had already pointed out its effects in time of war, but had omitted to mention its operation in time of peace. In that event he considered its advantages as even greater than in time of war, and superior to whatever had been attempted in any measure which had been proposed to parliament. It afforded an opportunity of keeping at the constant disposal of parliament the means of funding a large sum, to the extent, if required, of 100 millions or more, as a resource eventually to be applied in case of the renewal of hostilities. This was such a treasure as had never been possessed either by this country, or by any other; and could not fail to impress upon every foreign power, a just sense of the value of the friendship of this country, and of the danger of provoking its hostility.
With respect to any constitutional jealousy which might be naturally excited on the first mention of such a fund, it should be recollected that it in no way freed the crown from the control of parliament; that it was a treasure strictly parliamentary, and which could only be touched by the authority of the legislature.
He wished only to add one word with regard to the anxiety expressed by the right hon. gentleman for the consolidated fund. He begged to assure him that the effect of the proposed plan could only be 1101 to strengthen the consolidated fund and not to impair it. He felt as strongly impressed as the right hon. gentleman with the importance of supporting the consolidated fund; and he appealed to him whether he had not, in measures in which he had been engaged, proved his anxiety on this subject more strongly than the right hon. gentleman himself ever had an opportunity of doing.
did not think it possible to go at all into argument on this subject, with the imperfect information which was then before the House. But the mere stating of the case comprised circumstances which shocked persons who were anxious for the firm state of public credit, and for the fair situation of the finances of the country. They could not hear those circumstances stated, without expressing regret and surprise. He felt considerable alarm at the progress this plan was likely to make; at the same time he must observe on the subject of interfering with the Sinking Fund, that a period might come, when it would be necessary to interfere with it, even if the new system had not been introduced. The circumstance of the Sinking Fund letting loose twenty millions at once, at the disposal of government, rendered some regulation on the subject necessary; but there was a great difference between that regulation which went to strengthen the fund, and that which would have the effect of weakening it. In making any alteration, they must necessarily look to the state of Europe and of the world at the time the alteration was proposed. They must consider whether their finances had been productive in that year, or whether the national expenditure had been diminished. They must examine, whether, for a year or two, the expenditure had not been greatly increased, and whether, in addition to this, they did not find, from the price of the public funds, that there was a difficulty in raising the supplies, by way of loan, in preference to taxes. Perhaps, on a review of these circumstances, they might consider the present an unfavourable period for touching the Sinking Fund at all. He thought it was desirable that the public should be apprised of the nature of the plan; its discussion, in his opinion, could create no immediate effect on public credit. What the measure itself would produce in two or three years, was another thing. As it was intended that, in the present year, taxes to the amount of 870,000l. should be ap- 1102 propriated to the Sinking Fund, it would, of course, be rather increased than diminished. Setting aside the complicated statement of figures, the real difference consisted in the variation between the amount of taxes under the new plan, viz. 750,000l. and 1,700,000l. which was called for the charges, &c. under the old plan. The new system would not create an immediate effect; but he called on those who were the guardians of the public finances in that House, to consider its operation very seriously. For his own part he should come to the discussion with a calm and deliberate mind; and he was sure, political differences being laid aside, the House would have but one object in view—the safety and security of the country.
observed, that whatever were the merits or demerits of the plan, he thought no expressions should have been made use of, tending to create an immediate effect on public credit. In this point of view, the hon. gentleman who had just sat down had, in his opinion, placed the question on its true grounds, and corrected the doubts which had been thrown out, in' speeches made that evening—he was convinced that those by whom they were delivered, had no intention of producing any unpleasant feeling in the public mind; but still what had been observed, if it had gone out to the world, unaccompanied by the statement of the hon. gentleman, who spoke last, that no immediate effect would be produced, might have done mischief.
§ Sir John Newport,
without any declared opposition on his part to the plan, thought! it became the duty of the committee to: examine, in the most minute manner, the resolutions, with respect both to their immediate and futue operration on the financial system of the country.
§ Mr. H. Thornton
noticed two objections: first, that by this proposed plan the amount! of the Sinking Fund would eventually be diminished, and the funds consequently reduced: second, he hoped that no unfair impression would go abroad. His own general opinion was, that it was better to pass a prospective measure of this description than to adopt it suddenly. It was not enough to look at it as it might affect taxation, but its future operation on the stock market it was equally important to attend to. Another point was, how far it was consistent with the public faith pledged in 1792, and the Act of Parliament upon 1103 which those who lent their money to the state relied for redemption at a particular period. The other main objection that occurred to him was, the effect which the precedent might have in affecting the confidence of the creditor in future. At present he would not enter farther into the subject, but reserve himself for a more minute enquiry.
The Chancellor of the Exchequer
observed, that his hon. friend was greatly mistaken in supposing that the Sinking Fund would ever be reduced 7 millions below its present amount. The greatest diminution would in fact be only about two millions, which would take place, in the course of about four years, after which the Sinking Fund would again gradually accumulate. He again contended that the plan was perfectly consistent with good faith towards the public creditor. Any idea to the contrary could only arise, as most of the objections made that evening had done, from a misconception of the plan. The faith pledged to the public creditor was that of an adherence to the Act of 1792, to which the proposed plan was strictly conformable. That act required that provision should be made for the redemption of the debt, within 45 years; the different plans of Mr. Pitt, of lord Sidmouth, and of lord Lansdowne, were all founded on that basis. The plan now submitted to the committee not only strictly complied with this condition, but actually made provision, for the redemption of the debt within a shorter time than the laws now in force. It was therefore capable of performing more than the stockholder had a right to look to, or the public to expect.
But in considering the case of the stockholder it was impossible for him to overlook that great and numerous body of the stockholders to whom a respite of four years from increasing taxation would be more valuable than to almost any other class in the community; they comprised that body of annuitants who drew a limited income from the funds, which formed their sole subsistence. They had not, like most other classes of men, the means of increasing their income by their industry, or of giving an additional value to their properly. On such persons every addition of taxation fell with unmitigated severity, and to such the relief to be obtained from the proposed system would be most seasonable and salutary. He trusted and believed that it would be so received and 1104 felt, and that the blessings of thousands of widows and orphans would be poured down, not upon him for suggesting the plan, but upon parliament for sanctioning it.
Some conversation then took place across the table as to the repetition now of the arguments employed on the question of the Sinking Fund in 1802. The Chancellor of the Exchequer admitted that the stockholder, after a lapse of thirty years, would be benefited, but until that period arrived his condition would be worse after the adoption of this plan than before it.
§ Mr. Tierney
lamented that he should not live to enjoy any of the fruits of this noble scheme, since the advantages were postponed to so remote a period. The right hon. gentleman might be content with this distant view of the promised land, but for his part, he had rather experience some immediate benefits.
The Chancellor of the Exchequer
referred to the inconvenience that might result from paying off the whole of the national debt: it would be little better than a national bankruptcy; and illustrated it by referring to the case of the elector of Saxony, who had been petitioned by a vast number of persons to continue to them the public security for money they could not otherwise dispose of.
The Chairman then reported progress, and it was ordered that the Report be taken into further consideration on the 15th.