§ The House having resolved itself into a Committee on the Acts for the Reduction of the National Debt,
The Chancellor of the Exchequer
rose. He said, that the object he had at present in view, was to propose to them a series of resolutions, for the purpose, in the first place, of carrying into effect the recommendation of a committee of last year, which had considered the state of the public accounts. He was on this occasion inclined to flatter himself, that his resolutions were of a description not likely to be opposed. It was constantly admitted in the abstract, when the question was incidently discussed, that it was right, in a time of peace, to effect a reduction of the public debt, by applying to that purpose, whatever surplus existed of revenue over the current expenditure; but still it was often thought, that the attempt was useless, because the great variety of circumstances arising out of the change of things in the country, had a constant tendency to render that surplus of revenue more applicable to other urgent exigencies at the time—indeed, to make its application to the reduction, otherwise advisable, impracticable, and often tending to a destruction of that surplus itself. This constant fluctuation of circumstances, and wavering of opinions respecting them, was not, in his judgment, a sufficient reason for abstaining from fixing upon a principle for the reduction of the debt. The object was too important, to be laid aside, merely because difficulties in its execution had arisen, or might again exist. It was no 341 argument against the application of a principle, in theory admitted to be beneficial, to say, that the attainment of its advantages was practically difficult, and, the ultimate realization of them partial and uncertain. To say that they would not extract from a good principle some of the benefits of its operation, because all were unattainable, would be to neutralize every effort which had a tendency to amelioration, and to paralyze the energies of every country which looked forward to the attainment of progressive advantages. On general principles, therefore, he thought it quite clear the attempt ought to be made, without reference to ultimate contingencies. To refuse assent to the proposition, would be to urge an argument of despondency, and to say this—"If we cannot do all, we can do nothing." Such an argument, he was sure, would not be listened to for one moment. Let the committee see to what it would lead. He might apply it to the question of taxation. It might be said, "Why repeal any taxes, when, on a future occasion, a year or two hence at most, it will be necessary, perhaps, to re-impose them?" Such a mode of reasoning, if it deserved the name, would be scouted by parliament; and yet, in principle, it was the same as that which prevailed upon the subject of the reduction of the debt, when it was said, that the surplus revenue ought not to be so applied, merely because circumstances might arise to prevent the principle from being carried into effect. If, then, his opinion was, that it was not unfair or improper to make the attempt to act on the principle he recommended, there was undoubtedly, this inference always to be drawn—that though the mutability of human affairs, on the large scale of such a country as this, rendered prospective arrangements dubious, yet that, at all times, it was the imperative duty of the government to apply a steady and vigilant superintendence to every branch of the public expenditure, for the purpose of strengthening and maintaining the surplus of revenue, whatever it should be. It was always further to be understood, that the government should act upon a moderate and prudent, yet firm line of policy towards our external relations. That it was, on the one hand, the duty of government and of parliament to sustain, whilst, on the other, it was the duty of the people, in the event of an unjust 342 aggression requiring repression, or of national honour demanding vindication, to submit as long as possible to every sacrifice, for carrying into effect the application of surplus revenue to such an object as he had recommended. He thought, that in looking at this question, they ought to be as little as possible diverted from the attempt to establish a systematic plan, by the contemplation of any future contingencies. Whatever prospective gloom in the minds of some might arise, yet he thought it not unreasonable to hope, that the country had no reason to expect a recurrence of those difficulties which she had heretofore encountered. If they reviewed the events of the last thirty years, it was quite unreasonable to anticipate, that similar exertions and sacrifices would be required for a similar number of years in advance. When they considered the eventful occurrences which had followed so close upon Mr. Pitt's plan of a sinking fund, and defeated its due operation—when they reflected upon the rapid succession of astonishing events, which at that time baffled the calculations of the wisest, and defeated the anticipations of the most prudent, he thought they might reasonably reckon upon escaping a recurrence of the same extraordinary occurrences. He saw, therefore, no reason why they should not look forward to a steady application of a surplus of revenue to the reduction of the public debt—It might be desirable for them, on the present occasion, to see what was the actual situation of that debt—as compared with what it had been at the highest year of its amount. This was the more necessary, when they were told, that it was in vain to hope for any reduction of that debt, or of the burthens arising out of it, in the manner which had been pointed out. This argument was not, to the extent in which it was used, founded in fact. This was obvious from a comparison of the present amount with which it was in 1816, when it had reached its highest sum. This comparison would show, that during the seven years which had intervened since 1816, there had been, in point of fact, an actual diminution of debt; not to a very great extent, indeed, but still enough to show, that an actual reduction had been effected, which could not have taken place, unless by the application, by some means or other, of the surplus revenue. On the 5th of January 1816, the amount 343 of the funded unreduced debt was 816,311,940l.; the amount of the unfunded debt, the exchequer bills, Irish treasury bills, and ordnance debt, was 48,511,386l.; the charge upon both was 32,340,633l. The state of the same account, on the 5th Jan. 1823, was as follows: the amount of the funded debt was 796,530,144l.; of the unfunded, including all the items of what were technically called exchequer deficiency bills, 43,526,661l. The charge upon the first of these sums was 28,100,000l.; upon the second, 1,162,752l.; making a total of 29,262,752l. If they compared the amount, on the 5th Jan. 1816, and on the 5th Jan. 1823, they would find to demonstration, that in the funded debt, 19,701,796l. had been reduced; in the unfunded 4,984,725l.; making a total of 24,766,521l., or, to speak in round numbers, a reduction of 25,000,000l. which, upon an average for the seven years, amounted to 3,500,000l. each year. He could further state, that this reduction would have amounted to 10,000,000l. more, were it not for the conversion of the 5 per cents to the 4 per cents; an operation, the effect of which was to add to the unfunded debt 2,700,000l., and to the funded, 7,000,000l. Were it not for that financial operation, the reduction of debt since 1815 would have amounted to 35,000,000l., instead of 25,000,000l., being at the rate of five millions annually within that time, instead of 3½ millions.—If the committee would turn their attention to the charge on the debt (and that was undoubtedly the most awful part of this momentous subject, because it was the charge arising on the capital debt which occasioned the immediate pressure that was felt by the people), they would find that, owing partly to the application of surplus revenue where we had any, and partly to the effect produced by the measure of last year—a measure which he held to have been effected, and perhaps practicable only, by the state of public credit, and the determination which parliament had evinced to support it,—they would find, comparing the present charge of the two debts, the funded and unfunded, with what it was in the year 1816, that there was now a diminution exceeding 3,000,000l. Could any gentleman maintain that here was no encouragement for parliament to proceed as speedily and as vigorously as possible in a course, from which they had already derived the 344 most decided advantages? In alluding to the financial operation of which he had spoken, he must be allowed to say, that it was through that process, that the country had been able to diminish the public burthens by more than 3,000,000l. He was not, therefore, making a very unreasonable request, if he asked the country—if he asked that House—to continue to support a system that had been already productive of so much advantage. In this view it would be, that he should propose some resolutions to the House that night; and he thought he might venture confidently to assume, that the sinking fund, with which they would now start, amounted to 5,000,000l. He knew there might be some difficulty in stating that amount with perfect precision; and he might be asked, why he took it at 5,000,000l. exactly?—He did not mean to contend, that there was any particular charm in the number; but in matters of this kind, the difficulty he spoke of almost always occurred; so that whether he assumed the amount at 4,000,000l. or 2,000,000l. some doubt of the sort would always be to be encountered. Now, he proposed to take it at 5,000,000l., because that was about the average of the surplus or saving; and because it was in conformity to a resolution of the House, passed in the year 1819, that it was expedient to have a clear sinking fund of 5,000,000l. The object of that resolution related to the application of a certain amount to the reduction of debt: and the effect of the first resolution which he should now move would be, that this sum of 5,000,000l. should be appropriated to the same purpose. The way in which he should propose to accomplish this object, by a fresh course of proceeding, would be, by the repeal of all those parts of the sinking fund acts, which directed the payment of the particular sums that were now payable out of the consolidated fund, to the commissioners for the reduction of the national debt. All such passages of the acts he would move to repeal. The House were aware, probably, that under the existing law, the total amount annually paid over to those commissioners was about 15,000,000l. or 16,000,000l.; but he conceived, that as a great portion of this amount was at present either lent to the government, or diverted to other uses, it was unnecessary to continue such a complicated machinery; more especially if, under the new arrangement, they start- 345 ed with a clear sinking fund of 5,000,000l.—He should next propose to pay over these 5,000,000l. in quarterly portions to the commissioners for the reduction of the debt as they now existed. He should then propose, that so much of the interest of the debt as these 5,000,000l. would annually redeem, should also be paid over to the commissioners; in order to constitute that sort of principal, or capital, which Mr. Pitt originally contemplated. There were many reasons which made it very desirable, that the fund in question should, for a certain time, accumulate; and none were more obvious than those which had been suggested on a former evening by the hon. member for Taunton, (Mr. Baring), who thought that, "if they started immediately with a sinking fund of 5,000,000l., the reduction it would effect would be so small, that it would be infinitely wiser to allow it to accumulate, at interest, to a certain extent; that, when it had reached that point, the question of its application would assume a very different aspect; because, the annual interest might then be so far increased, as to make it advisable to give the public the full benefit of it, either for the reduction of taxes, or for any other purpose." This he had understood to be the effect of the hon. gentleman's observations on a former occasion. He should therefore say, that it was advisable to allow the interest of these 5,000,000l. to go on, regularly accumulating, until, in process of time, it should have reached an amount equal to one per cent on the total of the funded and unfunded debt taken together. The time by which this operation could be completed, could not, of course, be exactly calculated; because that must depend on one or two contingencies, particularly the price of the funds at the period when the commissioners should effect their purchases. It was obvious also, that if the revenue should continue to improve, then that proportion of the debt which was unfunded would diminish; and, precisely in proportion as the unfunded debt might diminish, so the period would be accelerated at which the capital equal to one per cent on the whole debt would be produced. When this should have taken place, he meant to propose, that it might be left open to the discretion of parliament to dispose of such capital, in the way that might to them appear most expedient; without now binding the commissioners to any par- 346 ticular pledge on the subject.—After the discussions which they had so recently had upon the subject, he was entitled to assume, that it was their general opinion, that it was wise and expedient for the country to possess a sinking fund, if she could have it. He was entitled to assume, that we had, undoubtedly, the means of reducing our debt; that we had the means of still further reducing it by this application of the sinking fund; and that 5,000,000l. was no unreasonable sum to appropriate to this purpose. He hoped, therefore, that the committee would acquiesce in the resolutions which he should propose; as he was convinced, that by so doing, they would confer an inestimable benefit upon the country. He was satisfied that such a measure was calculated, beyond any other means, to enable us to continue in that commanding station which we now occupied—a station which had excited, perhaps the envy, but which had attracted, in at least a corresponding degree, the admiration of surrounding nations.—The right hon. gentleman concluded with moving the first of the following Resolutions:
§ 1."That the payment of all sums of money which now are charged upon and issuable out of the consolidated fund of the united kingdom of Great Britain and Ireland, to the commissioners for the reduction of the national debt, shall upon and after the 5th of April 1823, cease and determine.
§ 2. "That all capital stock (save and except the capital stock arising from donations and bequests towards reducing the national debt), and all annuities for terms of years, which, on the 5th of April, 1823, shall stand in the names of the commissioners for the reduction of the national debt, in the books of the governor and company of the Bank of England, or of the South Sea company, or of the Bank of Ireland, either on account of the sinking fund, or for the purchase of life annuities, shall, from and after the 5th of April 1823, be cancelled in the books of the said Banks, and South Sea company respectively; and the interest or dividends, which would have been due and payable on the said capital stock or annuities upon and after the said 5th of April, shall cease to be issued from, or charged upon the said consolidated fund.
§ 3. "That upon the 5th of April 1823, or as soon after as the same can be prepared, an account shall be laid before 347 parliament, showing the total amount of the unredeemed funded debt and outstanding unfunded debt in exchequer bills unprovided for, of the united kingdom, on the said 5th of April; together with the annual charge attending the same; and there shall from thenceforth be set apart and issued, at the receipt of the exchequer of Great Britain and Ireland, out of the said consolidated fund, to be placed to the account of the commissioners for the reduction of the national debt, the annual sum of 5,000,000l. to be applied by them towards the reduction of the national debt of the united kingdom, and which said sum shall be charged upon the said consolidated fund, and issued by equal quarterly payments; the first quarterly payment to be charged upon the said consolidated fund on the 5th of April 1823.
§ 4. "That it is expedient that so much of two acts of the 53rd and 56th years of his late majesty, relating to the redemption of the national debt, as require that whenever an amount of capital funded debt of Great Britain and Ireland respectively should have been transferred to the said commissioners, as should be equal to the whole capital, and which should have produced an interest or yearly dividend equal in amount to the whole annual charge in perpetual annuities of each loan contracted since 1786, that a certificate and declaration thereof should be made by the said commissioners, and the amount of the public debt to which such certificate and declaration should relate, should from time to time be deemed to be wholly satisfied and discharged, and an equal amount of capital stock, standing in the names of the said commissioners, should be considered to be redeemed, and should from time to time be cancelled, should be repealed.
§ 5. "That no capital stock, or annuities for terms of years, which, after the 5th of April 1823, shall be placed in the names of the said commissioners, in the books of the Bank of England, or of the South Sea company, or of the Bank of Ireland, shall be cancelled (save and except the stock placed in their names for the redemption of the land tax), until the interest of the debt redeemed by the said commissioners, by the application of the said sum of 5,000,000l., and of the growing interest thereof, shall, together with the said sum, have accumulated to a sum the annual amount whereof shall 348 not be less than the one-hundredth part of the then existing unredeemed funded and ontstanding unfunded debt in exchequer bills unprovided for, of the united kingdom taken together; and that any capital stock or annuities for terms of years, which shall be placed in the names of the said commissioners on account of the sinking fund, or for the purchase of life annuities, after the said sinking fund shall amount to the one-hundredth part of the said unredeemed funded and unfunded debts as aforesaid, taken together, shall be liable to be cancelled at such times and in such manner as parliament shall from time to time direct.
§ 6. "That a new and separate account shall be raised and kept in the books of the governor and company of the Bank of England, of the sums already given by way of donation or bequest towards reducing the national debt, and of all sums which shall hereafter be given or bequeathed for the like purpose, and the interest or dividends which shall accrue on all stock arising there from shall be applied in the purchase of public annuities, composing the national debt, for the purpose of fulfilling the directions of the person or persons giving or bequeathing the same, and to no other purpose whatever.
§ 7. "That the annual expense of the establishment in Great Britain for the reduction of the national debt shall be charged upon the said consolidated fund.
§ 8. "That the expenses of the establishments necessary for carrying into execution an act of the 48th year of his late majesty, for enabling the commissioners of the national debt to grant life annuities, and of two acts of the 39th and 54th years of his said majesty, for the redemption of the land tax, shall be charged upon the said consolidated fund.
§ 9. "That it is expedient that the several acts for the reduction of the national debt, should be altered and amended."
§ Mr. Leycester
remonstrated against that callous feeling which could allow the House to listen patiently to such calculations as those which the right hon. gentleman had just submitted to them, instead of turning their attention to the best means of affording relief to the distresses of the country. The condition of the treasury was a secondary consideration in the present crisis. The purse of the people was the best treasury of the state. With respect to the sinking fund, even if it 349 were wise in its origin, it had become a folly, and was wholly inapplicable to the existing condition of things. What kind of policy was that which pressed still more heavily those, who were already sinking under the burthens imposed on them? What kind of policy was that, which pretended to pay off the capital of a debt, the mere interest of which it was found a matter of the greatest difficulty to defray? Were the landed gentlemen of England ready to acquiesce in their own degradation? Were they ready to fall down and worship that divinity, called the sinking fund? He imagined the proposition of the right hon. gentleman was occasioned by the present threatening attitude of France. But he warned the House against allowing a temporary motive to betray them into the adoption of a permanent evil. For himself, he should be at all times disposed to confide the vindication of the honour and dignity of the country, to that strong arm and sinew of war—the property tax.
entreated the attention of the House to a few statements, which might suffice to show the improvident manner in which the finances of the country had been administered, and the mischievous effects which had resulted, in consequence of the original institution of the sinking fund. Seventy years ago, the government borrowed money, at precisely 3l. per cent for every 100l. that was paid into the exchequer. Now, upon what principle did it happen, that although the credit of the country continued equal to what it was seventy years ago; we were borrowing money at 5l. per cent interest for every 100l. that went into the exchequer, and had otherwise engaged this country, for every 100l. to repay 166l.; that was, two-thirds per cent more than the amount that so found its way into the exchequer? These engagements we had contracted during war; but, now that peace had returned, we were, in effect, extracting from the people that money which they had never received, and from which, therefore, they had derived no sort of benefit. During the earliest of the periods to which he had adverted, when the government were borrowing money at so low a rate of interest, the amount contracted for did get into the exchequer; and that amount was repaid to the public creditor. From this whole-some practice we first departed, during the seven years war, when we ceased to borrow so advantageously; next, in the 350 American war, when we borrowed still less advantageously; and finally, in the last war, when we borrowed upon terms the worst of all. The last three years of the war furnished a striking exemplification of the enormous losses that this country had incurred by loans. In 1813, we borrowed 27 millions, for which we engaged to repay 45 millions. In 1814, we borrowed 24 millions, for which we engaged to pay 32 millions. In 1815, we borrowed 36 millions, for which we engaged to pay 66 millions. When the last sum was borrowed, it was funded at 54; a bonus to the contractors of 2l. 13s. 8d. reduced it to 51l. 6s. 4d. Thus, for every sum of 51l. 6s. 4d. paid into the exchequer, the country engaged to repay 100l., making the interest nearly 6 per cent. It was impossible, therefore, to say that public credit was as good now as it was seventy years ago, when a full hundred pounds was borrowed at 3 per cent. Governments were as much affected by borrowing on usurious principles as individuals were. The House had been referred to the conduct of other countries. The Americans since they had become free had borrowed certain sums at an interest of 6, 7, and 8 per cent. During the last war, the Americans, in 1812, borrowed money at 6 per cent, receiving the full 100l. into their treasury. In 1813, they borrowed money at 6 per cent, but were obliged to be content with receiving into their treasury only 90l. for every 100l. In 1814, the president was authorized to borrow more money. Finding, however, that he could not obtain it but at a rate to which he did not choose to accede, he issued exchequer bills, for the purpose of carrying on and terminating the war. France, under the influence of British bayonets, and Cossack lances, had entered into engagements which she could fulfil only by contracting large loans. And those she effected by paying the enormous interest of from 8 to 10 per cent; accompanied, as in our case, by the condition of a large increased repayment of the sum originally borrowed; which, in fact, swelled the interest up to 15 per cent. And yet, the House had been called upon to admire the financial conduct of France! Russia also had been quoted as worthy of admiration. Russia had a debt of 48 millions: upon 26 millions of which, she paid no interest at all. As for her good faith, indeed, the fact was, that she altogether ceased to pay the interest of her debt; nor did she resume 351 such payment until the government of the Netherlands and ourselves, with our usual liberality, engaged to pay half the interest in question. In the last three years of the last war, had we incurred a debt of 57,000,000l., owing to our system of borrowing—a debt, greater than the debt of Holland, America, and the Netherlands, put together. It was difficult for him to know how to act in the face of such absurdities. He found himself almost in a dilemma, as to deciding whether there ought now to be a sinking fund or not. The difficulty was this:—Was it better for the country to pay 50l., 60l., or 100l. per cent premium or increased debt, by taxes, or to leave for the present a higher rate of interest chargeable on the country? If they kept up the sinking fund, they raised the sum to be extracted from the people, but they diminished the interest payable on the debt; if they did away with the sinking fund, they diminished the amount to be so extracted, but raised the interest. Between these two evils, so preposterous was the absurdity of the case, that he hardly knew how to choose. Upon the whole, he considered that, under the burthens which were imposed upon the country, a low interest of money was, perhaps, the only thing that could enable our merchants and manufacturers to cope with the markets and productions of other countries. This appeared to him desirable also, on account of the landed interest; to whom he looked with peculiar anxiety, though they did not seem aware of their own danger. On these principles, he would give his support to the sinking fund. Upon the exorbitant engagements into which we had entered for the repayment of so much more than the monies we had borrowed, he had already given notice of his intention to submit a motion to the House; and he would take this opportunity of stating, that the ground of it would be his belief, that it was quite uncalled for by any principle of moral right or justice, for this House to adhere to such a system. By the sinking fund the debt had been increased at one end, as fast as it had been reduced at the other. The system was an entire delusion, which threatened the ruin of the country and the subversion of the throne; for of this he was persuaded, that if the aristocracy of the country were destroyed, the other institutions of the country could not stand. It was impossible we could fulfil our present engagements. The only ques- 352 tion, therefore, was, how the country could best be relieved from its awful situation. His proposition was this. We must consider what would have been just when the various parts of the debt were contracted; at what rate the fundholder ought at those times to have lent his money. We must consider to what interest he was at those times entitled, without reference to any increase of capital. That interest, without any increase of capital, ought to be allowed him. It ought to be calculated at compound interest; but the capital debt liable to be paid off ought to remain fixed. One great consequence of this arrangement would be, that it would entirely do away with stock-jobbing. No man would any longer keep large masses of money locked up in the city, for the purpose of speculating with it in the funds. The devices of such individuals, with whom no chancellor of the exchequer was able to compete, brought up as they were in selfish principles, would be at an end. The interests of the nation and of the permanent fundholder would be the same. His object, in fact, was to secure both the fundholder and the country from the evils of the present system of borrowing.
§ Mr. Hume
said, he had heard the statement which had been made by the chancellor of the exchequer, with considerable surprise, because it was in contradiction to documents which had been laid on the table of the House. He therefore hoped that the right hon. gentleman would, as early as possible, put the House in possession of a printed statement, which might be compared with other documents. It was impossible the House could come to a just conclusion with respect to the operations of the sinking fund, without referring to all the accounts which had been laid before parliament; and there were four or five different sets of those accounts, all differing from each other, as he should be able to prove, if the chancellor of the exchequer would consent to go into a committee upon the resolutions which he (Mr. Hume) submitted to the House last year, and which he intended again to propose. The chancellor of the exchequer was wrong in the calculation which he had made of the amount of debt redeemed by the operation of the sinking fund, from 1816 to the present time. The diminution of the debt, which the right hon. gentleman considered to be the result of the operation of the sinking 353 fund, was, in fact, occasioned by the falling in of terminable annuities. The chancellor of the exchequer had said, that the charge for the debt was less now than in 1817. He (Mr. H.) had not an opportunity of seeing the accounts for the present year, but he would show the House, that up to 1822, the charge, instead of being less, was actually more than it was in 1817. The amount of our income and expenditure, from the period of the junction of the two revenues of England and Ireland in 1817 to 1822, including every charge, except that of the sinking fund, was as follows:—
From this calculation it resulted, that there was an excess of income over expenditure to the amount of 7,528,869l. But, notwithstanding that excess of income, no less than 90,761,920l. had been raised during the five years from 1817 to 1822, to support a sinking of which sum 82,053,758l. had, it was said, been appropriated to the reduction of the debt. Although the debt had been reduced, by the falling in of terminable annuities, in the proportion of 211,222l. per annum, the amount charged in each year, for the interest and management, was as follows:—
Income. Expenditure. Year 1817 £.57,650,589 £.58,544,049 1818 59,667,941 57,872,428 1819 58,680,252 57,392,544 1820 59,769,680 57,476,755 1821 60,686,076 57,639,893 Total 296,454,538 288,925,669
showing an actual increase of 669,477l. since the year 1817.—The hon. gentleman then proceeded to argue, that an immense saving would have been effected if the government had imposed taxes to supply its wants, instead of having recourse to the ruinous system of loans. The actual amount of the revenue of Great Britain, derived from taxes, from the 5th of Jan. 1793, to the 5th of Jan. 1817, was 1,114,318,563l. and the expenditure for the same period, including the charge on the debt, as it stood prior to the 5th of Jan. 1793, and every other expense except the charge on the money borrowed since 1793, was 1,252,667,603l., being an excess of expenditure over income to the amount of 138,349,094l. In order to meet this excess, not less than 618,163,857l. 354 were raised by creating 879,289,943l. of nominal capital, and increasing the issue of exchequer bills to the amount of 33,289,800l. at an annual charge of 30,179,363l. Out of that sum of 618,163,857l., the commissioners for reducing the national debt had received 188,522,240l., with which they purchased stock, the dividend upon which amounted to 9,168,233l. By those operations, the government had occasioned an annual charge in perpetuity of no less than 21,006,130l., which would have been avoided if the sum of 138,349,040l. had been raised in taxes during the 24 years to the extent of six millions a year. Much had been said of the necessity of supporting a sinking fund, for the sake of maintaining public credit. He could not see the force of that argument. It was, in his opinion, impossible to draw a line of distinction between public and private credit: they both depended upon the same circumstance; namely, the punctual fulfilment of engagements. What had the public contracted to do? Why, to pay certain perpetual annuities; and, as long as they continued to pay those annuities, public credit would be maintained. The late chancellor of the exchequer had a most extraordinary idea of what constituted public credit. He thought that it consisted in a high rate of stock. With all due deference, he (Mr. Hume) was of opinion, that a high price of stock was injurious to the country. He would fearlessly appeal to the present chancellor of the exchequer, whether the means adopted by his predecessor for bolstering up the funds, had not been attended with unfortunate results. The excess of income over expenditure from 1817 to 1822, amounted, as he had before stated, to 7,528,869l. What did the late chancellor of the exchequer do, when he found himself in possession of that surplus? He sent the commissioners for the reduction of the national debt into the market, and they purchased stock to the following amount in the respective years:—in 1817, 13,696,991l.; in 1818, 14,562,932l.; 1819, 9,436,053l.; in 1820, 4,257,934l.; in 1821, 4,324,574l. Nothing could exhibit the absurdity of the sinking fund in a stronger light than these transactions. Although there existed only a nett surplus of 7,000,000l. during the five years he had mentioned, the chancellor of the exchequer had actually borrowed, by means of loans, 90,000,000l., out of which he 355 gave 80,000,000l. to the commissioners for the reduction of the national debt, to be expended in the purchase of stock, in order to keep up the price of the funds. The effect of so bolstering up the funds had been, to induce Englishmen to invest their capital in foreign securities; which he did not like to see. If the resolutions which had been proposed by the chancellor of the exchequer had for their object the keeping up of the sinking fund, he would oppose them at every step. The plan of the right hon. gentleman was, paying with one hand and borrowing with the other; whereas the uncertainty and additional expense of that mode might be avoided by cancelling the debt as the surplus accrued. The right hon. gentleman had laid great stress upon adhering to the resolution of 1819. What was that?—that the public credit of the country could not be effectually held up without a surplus of five millions as a sinking fund. But, was there that surplus? He had contended at the time, that no such surplus could exist without the addition of new taxes. He now asked, what was the result? The House had come to the abominable resolution to add three millions, by additional taxation, to make up this sum of five millions, which was to be called a surplus revenue and a sinking fund. He should never cease to object to a system founded as this was. It had been said, that there was a great advantage to the public creditor in this, that he was paid in a better currency than that in which the debt was, for the greater part, contracted. True it was; and he would here repeat his anxious wish, that good faith should be kept with the public creditor: but the chancellor of the exchequer went farther—he gave more than was required in justice to the other branches of the community; for he continued the depression upon those other branches, by keeping up a sinking fund of 5,000,000l., to be, as it were, a greater security. Now, he contended, that in fact it would afford no greater real security to the public creditor, while at the same time it would be greatly injurious to the other classes, and might be the means of injury to all, inasmuch as it would enable ministers to continue their system of enormous expenditure. But it might be asked—would he have no surplus? Yes. He would remit the 5,000,000l. in taxes, and still there would be left surplus of from 356 1,000,000l. to 1,500,000l.; and, besides, the revenue would improve in proportion as the burthens of the people were lightened. It was said on the repeal of the salt-tax, that a great part of the sum reduced would come back to the exchequer in another shape. It would be the same in the reduction of these 5,000,000l.: a considerable portion of the money would find its way back, in the increased consumption of various articles. He therefore called upon the House not to sanction the continuance of this surplus of 5,000,000l. under the delusive idea, that it was necessary to support public faith or strengthen public credit. As long as we were in a condition to pay the public creditor what was due to him, so long would public credit be supported. The credit of the country was never in a more flourishing condition, as far as confidence in its resources went, than in those years when we had, in effect, no surplus whatsoever. From the years 1793 to 1817 we were borrowing every year, had no real sinking fund, and yet, during the whole of that time, public credit was kept up in a manner which had never been exceeded.—The hon. member went on to contend, that it was a blind policy to go on imagining a surplus fund, while there was a deficiency of some millions in the consolidated fund—that it would be wrong to leave any surplus fund which might exist at the disposal of ministers, holding out to them a temptation to divert it from its original purpose. He would leave them nothing. The House had been too confiding already. He hoped, therefore, the chancellor of the exchequer would not press his plan. If they were to have a sinking fund at all, let it be a real one: but he maintained, that we wanted none—that the fund holder wanted no additional security; therefore, the sinking fund would be no relief to them, but the continuance of it would be a real oppression upon that large portion of the community already too much distressed, and who ought in justice to be relieved from their burdens by the amount of this sum. He contended, in reply to the argument of the hon. member for Taunton, that it would be equally unsound policy, to leave this sum as a kind of fund to be used in case of any sudden emergency. If it were to be so kept, how could it be called a fund for the reduction of debt? But, if it was for the reduction of debt, let it be so 357 applied in the proper form, and not allowed to accumulate in the hands of those who would be too ready to dispose of it in another manner. There were many ways of making the surplus applicable to the payment of debt—by cancelling stock, and by redeeming annuities; but, to lay it out in buying up at 80 what we sold at little more than 50, would be absolutely throwing away the public money. It would be the wisest course to let the whole surplus fund go at once to the remission of taxes, and to depend upon the resources of the country, which would thereby be much improved, in case of any future emergency. He trusted the House would go along with him in thinking it absurd to be paying with one band, and borrowing with the other; but if they did not concur with him in this, he hoped they would not consent to the plan of allowing the whole of the 3,000,000l. of sinking fund to remain.
In 1817 £.31,266,601 1818 31,551,751 1819 30,792,025 1820 31,252,612 1821 31,966,078
said, he agreed with the hon. member who had just sat down in many of his general observations, but he could not concur in the conclusions which he had drawn from some of them. He could not concur in the opinion, that when we continued to pay part of our debt by a sinking fund, we were going back. He would agree fully, that during the war, our sinking fund was kept up at a loss to the country; but how would this reasoning apply to a state of peace? But even in time of war, there were many who thought, and not without some appearance of reason, that public credit was better supported by a sinking fund, than it could be without it—who imagined, that it would be better maintained by borrowing 35 millions, leaving 5 as a sinking fund to pay the whole, than it would be by borrowing only 30 millions without having a sinking fund at all. He only mentioned this to show that the case was not so clear on the other side as the hon. member had represented it to be He (Mr. B.) admitted, that the sinking fund during the war was carried on at a loss; but not to the extent which the hon. member had described. He also concurred with the hon. member in thinking, that the system of borrowing with one hand to pay with another, was a had one; because, if he sold annuities or bills to buy other security, he not only did that, but he did it at a risk of loss; for, in creating a new kind of article, he must know that it was necessary to give an 358 encouragement to purchasers, and to offer terms by which he could not hope to gain much for the country. It would, therefore, be better to turn it over at once to the sinking fund. He trusted the chancellor of the exchequer would not follow the example of his predecessor (of whom, from the respect he entertained for his private character, he did not wish to speak harshly), of giving a fictitious appearance to our resources, and boasting of 5,000,000l. of surplus where he had only 3,000,000l. But, if we really had this surplus of 5,000,000l., it would be better not to use it in the way now proposed. He was sure the right hon. gentleman would not at present press this plan, if he were not unwilling to cast a slur on former measures by altering it; and no doubt he would hereafter feel obliged to the House, if a strong expression of their opinion, should induce him to depart from it.—He had gone thus far, in concurrence with some of the opinions of his hon. friend who spoke last; but when he came to the question of having a sinking fund or not, he differed widely from him. He denied that it was intended for the benefit of one class to the exclusion of any other. The House, he considered, were bound to do every thing for that most valuable portion of the community, who must stick by the country under all its circumstances. They should be considered, whether we had a surplus fund or not. But when gentlemen talked of allowing no surplus, or no sinking fund, he begged to ask, how it was they would conduct the finances of the country. Suppose they were to take away the 5,000,000l., or, as was asserted (and he concurred in the assertion), the 3,000,000l. of sinking fund. What relief could be afforded by that, upon their own showing? It was said by his right hon. friend (Mr. Tierney), and concurred in by almost every member who spoke on the subject, that there should be some surplus. Well, then, if they were to have a million, or a million and a half as a surplus, what could they effect by the remainder of the 3,000,000l. of which they spoke? What effectual relief could be given by the application of such a sum in the reduction of taxation? Suppose this sum were thus applied, and that a falling off should take place next year, or the year following, of four or five millions in the revenue, and in his view of affairs nothing was more likely. He did not wish to make any unpleasant 359 forebodings respecting our resources, as he knew the distrust with which, they were generally received by government, when they came from his side of the noose. He admitted, that our revenue was in a flourishing state at present; but, how did the increase arise? It arose from that, upon which a great deal of our commercial prosperity depended—the state of the currency. The alteration in that currency had diminished the price of most articles of consumption, while the rate of wages was, in many cases, nearly stationary, or at all events had not diminished in the same proportion. The tradesman, the mechanic, and the labourer, found themselves in a comparatively better situation; for he could not agree with his hon. friend (Mr. Ricardo), who, referring to the tables of Mr. Mushett, had stated, that the wages of labour had fallen in proportion to the prices of articles of consumption. He took it, then, to be the fact; and every one who had to deal with mechanics would find, that, in most of their, charges there was scarcely any diminution—that they had not descended to any thing like the level of the prices of food; and in some of the higher branches of the mechanical arts there had been no reduction at all. The result was, that those who lived by their labour in those arts had more money to spend in gin, beer, tobacco, and other excisable articles; but it would be found, that the income which arose from the operation of taxes on individuals of small fortune declined—that the assessed taxes were diminished. Suppose, then, that this did not continue, but that the prices of all the necessaries of life were to rise considerably in the course of a year or two—a circumstance by no means improbable—was it unreasonable to believe, that there might be a falling off of four or five millions in the revenue? Should that be the case, what would be the situation of the country, after having applied its sinking fund, as the hon. member, proposed? He would say, therefore, that the relief from such application of the sinking fund would not be, under the present circumstances, effectual for the removal of distress which was complained of—that it would be dangerous in the emergency he had contemplated, and fatal, if made at the expense of the credit of the country.—He took this view of the case with reference to our domestic situation; but it be viewed also in 360 conjunction with the present aspect of foreign affairs. He was one of those who sincerely hoped, that this country might keep at peace; but still, our circumstances were such as might render it necessary for us to make some naval display—to send, perhaps, a fleet to the Mediterranean, or elsewhere. He had no wish, by any remark of this kind, to provoke ministers to any step of the kind alluded to; but the House would see, that it was not at all improbable that such step might be taken. If it should be so, it would of course create a new demand upon our resources; and, with a chance of a falling off in our revenue, such as he had supposed, what would then be our situation? We should have recourse to new taxes, or to a loan. As to new taxes, to impose them on an occasion which might be only of a temporary nature, would be injudicious; because he believed it would be admitted on all hands, that nothing could be more injurious to a commercial country than an uncertainty and unsteadiness in taxation. If we laid on taxes one year which we might have to take off the next, it would, in fact, be holding out a temptation to one portion of the community to cheat the other. What other means were there of meeting the pressing exigency? He would say that there was—that of applying the sinking fund to one of its legitimate uses, by making it meet the exigency, and replacing it upon its usual footing when peace came round again. But, if recourse was had to borrowing, if a loan were contemplated, how could it be expected to be raised, when the only means of supporting the credit of the country had been removed, and that, too, at a time when its greatest operation could be expected in time of peace? If, in a time of peace, we were to make that "equitable adjustment" between the public debtor and creditor, or, as he would term it, that "convenient adjustment" of which we had lately heard so much it certain parts of the country, what might we not look for as its consequences? He did not impute any disposition to support such an adjustment to the hon. member for Aberdeen, for he had at all times found him an advocate for supporting public faith; but it was well known that such a doctrine had found advocates. If it were now to prevail, from whom could we ever afterwards attempt to borrow? To be sure, when 361 one saw the many glaring bubbles to which fools in every part of the country were sometimes found to lend their money, it was not unnatural to suppose that persons would be at all times found to lend something. Perhaps some old woman at Bath, secluded from the commercial world, and not in the habit of making such deep calculations as the hon. member for Aberdeen, might still be found ready to advance her money, relying upon the public faith, of the previous breach of which she would remain ignorant; but the great commercial and monied interest, from whom assistance might be sought in case of a loan, would naturally enough be unwilling to advance their capital where they had before them the example, that no reliance could be placed upon the security offered for its honest repayment. Setting aside, then, the moral atrocity of such an adjustment as he had alluded to, and the dishonest consequences to which it must lead, he would say again, that the most effectual means of supporting the public credit would be to pay willingly in time of peace, the debt which we had borrowed in time of war. Reverting to a new tax in case of emergency, the hon. member again contended, that it would be highly impolitic to impose a tax, in the anticipation of a danger which might blow over as soon as the tax was levied. In conclusion, he cautioned the House not to depart from the sound and steady principle of supporting public credit. He was anxious to support a real sinking fund, arising from a surplus revenue; but as to the right hon. gentleman's plan, of selling annuities for the purpose of purchasing stock, it was of too precarious a nature to be embraced by any man, woman, or child, in the country.
§ Mr. T. Wilson
observed, that after the very able manner in which the hon. member had proved the utility of a sinking fund, he would not trouble the House with any remarks on that subject. It was a most absurd position to assert, that we ought not to endeavour to pay off in peace, the debt we had contracted in war. How, in the name of God, could we do otherwise? Were we to set the example of breaking faith with the public creditor, when every country in Europe, at the close of the war, had taken steps to secure the payment of their debts. Were we less able, or were we to be less honest, than they. An hon. member said, that we 362 were paying 166l. for every 100l. we borrowed. This he denied. We had the option of redeeming or not. We were not in the situation of the Americans, who had contracted to pay a certain rate of interest for a specific time.
Mr. D. Gilbert
said, that when the sinking fund was invaded by a former chancellor of the exchequer, he had resisted the invasion of it with the same arguments which the hon. member for Portarlington had recently employed. Though the House did not then listen to them, with the attention which it had lately bestowed on the subject, still he had reminded it, that the sinking fund ought not to be attacked at all; because, if it was beneficial in its effects in time of war, it was likely to be still more so in time of peace. He was happy to hear from the present chancellor of the exchequer that the country was to have an efficient sinking fund of 5,000,000l. Sure he was, that if that fund was allowed to act, it would be productive of the best results to public credit. He trusted that, if circumstances should hereafter compel us to have recourse to a system of loans, the chancellor of the exchequer would provide a sinking fund of 1 per cent on the amount of every loan. Though he belonged to that class of the community which was suffering under the most severe distress, he must say, that to suppose a remission of two or three million of taxes capable of benefitting that class, as much as the continuance of them would benefit public credit, was to encourage a delusion.
Mr. Grey Bennet
said, he must oppose the continuance of any thing like a sinking fund in the present circumstances of the country. He was surprised to hear the hon. member assert, that a remission of taxation would afford the people no relief; and that to maintain the contrary doctrine was to encourage a delusion. Why, then, had the chancellor of the exchequer proposed to remit two million of taxes on a former evening? And why had the House hailed that proposition with so much rapture? Was it because the House considered it a delusion, or because it considered it a measure likely to produce beneficial consequences? He believed there were many persons who thought it was a delusion on the part of the right hon. gentleman, to say that he could not repeal a larger amount of taxes than that which he had promised to repeal; but he knew of nobody, except 363 the hon. member, who asserted, that the remission of taxation, even to that extent, would be productive of no benefit to the community. The chancellor of the exchequer had already remitted two million of taxes; and he (Mr. B.) wanted to obtain from him a remission of three million more. Now, though the hon. member might consider the remission of two million of taxes to be a delusion, surely he would not contend, that a remission of five million would be so too. He thought that the tax on candles and upon windows might be entirely repealed, seeing that they pressed most heavily on the poorer classes. Nay, he believed that the beer-tax, that onerous and scandalous tax which was imposed on the poor for the benefit of the rich, might be repealed without any danger to the revenue. The hon. member for Taunton had sneered at all attempts to obtain an equitable adjustment of contracts; and had said, that instead of an "equitable," it ought to be called a "convenient" adjustment. Now, he begged leave to remind that hon. member, that he, too, had once proposed a convenient adjustment of contracts by making silver a legal tender, and that he had proposed it, "to loosen the cord which was then too tight." He agreed with the hon. member at the time in the propriety of changing the standard to silver, nor did he mean to quarrel with him for that proposition at the present moment: all he wished to do was, to remind the hon. member, that if there was any thing dishonest in a "convenient" adjustment of contracts now, there was the same dishonesty in it formerly. The committee had been called upon to support this resolution, almost as if it were a matter of course. He trusted, however, that before gentlemen gave their consent to it, they would recollect, that if they did so, there was an end of any further remission of taxation; at least for this year. True it was, that a resolution like the present had received the support of the House one, two, and even three years ago; but that was no reason why it should receive it at present. It was said, that the interests of the stockholders must be protected. To that he would reply, that the country owed the stockholders no favour: the stockholders had not lent their money to it as a matter of indulgence; but because they thought that they could make the most of it by 364 so doing. He never heard of any loan that was made upon mere patriotic principles, except one, and that was the loyalty loan; and never did subscribers to any loan get so well paid as they had done for their loyalty. He contended, that as long as the stockholders received payment of their interest, all was done by the country that could legally be required of it. Any surplus of revenue that there might be, instead of going to support a sinking fund, ought to be employed in remitting taxation. If, however, there was to be a sinking fund, it ought to be employed in immediately cancelling debt, and ought not to be allowed to accumulate for any chancellor of the exchequer to grasp when he might think it convenient. At any rate, it ought not to be kept, as the hon. member for Taunton recommended, in the coffers of the treasury, either to discharge debt, or, if more convenient, to go to war with. Even if we had not a surplus of more than half a million, instead of having a surplus of five millions, justice to the country demanded that it should be employed in remitting taxation, and not in keeping up an inefficient and useless sinking fund.
§ Mr. John Smith
felt compelled to express his dissent from the doctrines of his hon. friend, who had spoken of public credit in terms of such derision. He believed the committee were perfectly clear in their ideas regarding public credit if they were not so, he would refer them to the excellent description which the hon. member for Taunton had given them of its effects on a former evening. The hon. member had informed the House, that there was a period during the war in which the government was obliged, from a want of public credit, to incur a heavy expense, which, under a better system, it might have avoided. If such was the case, was it not the bounden duty of the committee to support public credit, seeing that every thing which contributed to it tended to produce economy in the government? Admitting as he did the distress of the agricultural interest, he must still contend, that it was necessary to support the sinking fund. The agricultural interest, he maintained, would be the earliest sufferers, if there was any failure in public credit. What would be the consequence, if we, who had been the parents of the sinking fund system, should be the first to destroy, it? 365 Would it not immediately frighten the community? And if such would be its effects, would it be proper, when it was possible for our capitalists to obtain a high interest for their money by investing it in foreign funds, to shake that system? He thought not, and for that reason should support the resolutions.
§ Mr. Hume
was sorry that the system of sinking funds had ever been adopted in this country; and felt sure, that every country which followed our example, would, ere long, have the same reasons for repentance. From the facility of borrowing came a profusion of expenditure, and a total neglect of any thing like economy. Had it not been for the facility with which the government had obtained loans, whenever it wanted them, we should never have had such a wasteful expenditure of our resources.
was convinced, that the evils which had lately befallen one of the leading interests of the country were mainly attributable to the change in the currency. When he had proposed silver as a proper standard, he had done so, because he conceived it to be the best and most practicable standard to which the country could recur. Even now, he was of the same opinion, though he was aware that, after the standard had been fixed for so many years, it would be extremely inconvenient to change it again.
The first and second resolutions were agreed to. On the third resolution being put, Mr. Hume moved, as an amendment, "That in the opinion of the committee it is inexpedient, in the present circumstances of the country, to maintain the whole of the real sinking fund of three millions; and that it will afford an immediate relief to the country to repeal taxes to the amount of two millions thereof." Upon this amendment, the committee, after a short conversation, divided: For the Amendment, 39. For the Original Resolution, 110.
|List of the Minority.|
|Allan, J. H.||Ellice, E.|
|Bernal, Ralph||Glenarchy, vise.|
|Bright, H.||Grattan, J.|
|Calcraft, J.||Griffith, J. W.|
|Chamberlayne, W||Hamilton, lord A.|
|Creevey, T.||Hobhouse, J. C.|
|Craddock, col||Hume, J.|
|Davies, T.||James, W.|
|De Crespigny, sir W.||Lamb, hon. G.|
|Denman, T.||Lennard, T. B.|
|Dickinson, W.||Leycester, N.|
|Lushington, S.||Ricardo, D.|
|Maxwell, J.||Robarts, A. W.|
|Monck, J. B.||Robinson, sir G.|
|Moore, P.||Talbot, R. W.|
|O'Grady, S.||Tierney, G.|
|Pelham, J. C.||White, L.|
|Philips, G. H. jun.||Wood, M.|
|Poyntz, Wm. S.||TELLER.|
|Pryse, P.||Bennet, hon. H. G|
§ The remainder of the resolutions were then agreed to.