§ House in a Committee of Ways and Means.
§ Lord Althorpsaid, that it was his intention to state to the House his view of the Expenditure and Revenue for the present year. He proposed to do so—first, by stating what the revenues of the year would be, then the expenditure, and lastly, what would be the balance of the account. The mode in which he would arrive at this result would be, by saying what the produce of last year was; what was the difference between last year and the current year, up to the present time; and what would be probably received for the last quarter of this year. The produce of the Customs for 1830 amounted to 17,640,000l. A decrease had taken place on the receipts of the year, that was up to the 24th of September, from the 1st of January, 1831, to the amount of 644,000l. This reduced the Customs for 1831 to 16,896,000l. I calculate (continued the noble Lord) that, there will be a further loss of 210,000l. upon coals, duties which will reduce the Customs to the 1030 amount of 16,686,000l. I expect, however, that the duties on cotton and on coals exported will yield an increase of 100,000l. making the whole estimated produce of the present year for the Customs 16,786,000l.; but, to keep entirely within bounds, I will take it at only 16,750,000l. That would allow for any falling off which might take place in the quarter yet to run. The produce of the Excise for 1830 was 18,644,000l. The decrease, up to the 24th of September is upwards of 1,000,000l. And I calculate that the further reduction on the quarter yet to run will amount to 400,000l., making the falling off in the whole year 1,901,000l. The estimated produce, then, of the Excise for this year will be 16,743,000l. To this, however, is to be added, 157,000 already received on account of the wine duties, making the probable receipts of the whole Excise for the year upwards of 16,900,000l.; but I will, in order to allow for accidents, take them at 16,800,000l. With respect to the falling off in the Customs, it will be necessary to bring under the notice of the House what is the amount of taxes that have been reduced, and what effect they have had on the revenues. The amount of taxes reduced in the two years 1830 and 1831, in the Customs is 1,120,000l., and in the Excise is 3,357,000l., making the whole amount 4,477,000l. But the revenue accruing from the Customs and Excise, which amounted in 1830 to 36,184,707l. will now amount to 33,550,000l. Thus the decrease, by a fair computation, instead of being 4,000,000l., has only been 2,634,000l. It would now be understood, that the Customs amount to 16,750,000l. The Excise amounts to 16,800,000l. The Stamps and Post-office duties, and the Miscellaneous branches of the revenue yielded nearly 14,000,000l., making the amount of the whole revenue 47,250,000l. He now came to the Expenditure. At this period Government knew better what was likely to be the expenditure than at an early period of the year. In the early part of the year, Government were obliged to make up the amount from estimates, but at the present time a very small proportion was made up from them. He could, in consequence, make a statement of the expenditure which might be perfectly relied on. It amounted, up to the 24th of September, to 35,222,641l. The expenditure from that time to the end of the, year would amount to 11,533,880l., 1031 thus making the whole expenditure for 1831, 46,7.56,521l. The surplus which would remain, after deducting the expenditure from the revenue would be just 493,479l. The expenditure, he found, for 1830, was 47,812,000l. He had examined the statements in every way that he could, and he was sure that he was not chargeable with any exaggeration. He had consulted those in the Treasury whom he believed to have had the most experience, and they told him, that he could with confidence rely on the general accuracy of the statements made. The whole effect of these would cause him, however, to make a few remarks, because it appeared, that comparing these with the statements of last February, the amount was rather larger than he stated at that time, notwithstanding the number of taxes he had been enabled to repeal. He would only state, that in February he made no allowance for the general increase in the revenues of the country, and the consequences of that increase. There were, however, two other circumstances relative to the mode in which he had disposed of the balance, to which he would wish to advert; the first was the state of the currency, in consequence of a question that was asked a few nights since by the hon. member for Oakhampton, respecting the circulating medium; and his present statement would be considered an answer to that statement. He wished most particularly, and it was desired by others as well as himself, to state the course which had been pursued by the Bank during the last year, in order to do away the suspicions and imputations thrown out that it had again been tampering with the currency. It was perfectly well known to the House that the exchange had for a long time been against this country. In consequence of this there must be a considerable draft upon the Bank, which was the pivot on which the circulating medium turned. The effect of this draft on the Bank produced a pressure on commerce, and persons engaged in commerce required bills to be discounted. If the Bank refused to discount them, the effect would be, to produce a great and unnecessary pressure upon commerce. The course which the Bank had pursued, had been, not to withhold the usual accommodation of discounting. It was essentially necessary that the Bank should not allow its securities to increase, because, if they did, while the drain remained upon 1032 them, they would be obliged to contract the circulating medium of the country, which, he need hardly add, would prove of the greatest injury. The Bank, very properly, had taken care that the securities had not increased in its hands; but as private securities had increased, it had brought, in proportion, to the market a certain proportion of Bank securities. The effect of this caused the drain to act on the circulating medium of this country gradually and fairly. The country had indeed felt the effects of the drain, but it had not been of that sudden character which in former times had produced great panics, and led to such disastrous consequences. He would then state his own course with respect to the employment of the surplus funds. At the commencement of each quarter, an average of the surplus four preceding quarters, was taken according to Act of Parliament, and that sum was to be applied to the reduction of the Debt in the succeeding quarter, if the revenue, at least, was not manifestly falling. The Act allowed the Commissioners for the reduction of the National Debt to apply the average surplus revenue to the purchase of Exchequer bills, or deficiency bills, as well as stock; and since the revenue had been diminished so much by the reduction of taxes, the surplus had been applied in the purchase of deficiency bills of the Bank. He had acted in this manner in order to diminish the number of securities in the hands of the Bank; and, although the plan was somewhat operose, the effect was, that the Debt was not reduced unless there was a real surplus of revenue. He did not feel it necessary to detain the House any longer, and he would only add, that there had been a falling off in the Customs in the present quarter, but from the reports he had received from the out-ports and the Treasury, he had every reason to hope that the diminution would not continue. He should move, that the sum of 1,800,000l. be granted out of the Consolidated Fund, in aid of the Ways and Means.
Mr. Goulburnhad looked forward with some anxiety to this statement of the noble Lord. If he had not been inclined before to make any remarks, he thought that the statement of the noble Lord fully justified him in making one or two observations. The noble Lord was satisfied to find himself at the close of the year with a surplus no larger than 493,000l.; a sum 1033 in no way sufficient to meet even the contingencies and expenses to which the Government was liable—a sum infinitely less than any former Parliament had required Ministers to retain—a sum, he must say, infinitely less than was required for the security and credit of the country. When they considered the many changes that had taken place—when they considered what the noble Lord himself had stated, he hardly knew what the House could think of the smallness of such a surplus. He wished that the noble Lord had explained to the Committee the sum total of the supplies voted for the year, so that a comparison might have been drawn between the amount actually voted, and the estimate of probable expenditure, as calculated by the noble Lord. A great hazard, he was of opinion, had been run with respect to the revenue, as Ministers had not taken into account what claims might be made upon them in a short time for the debts of the year, and whether they might not be made at an earlier period than usual. Such a hazard had been run, that the attention of the House should be called to it. Was it not essential that they should not be left, in times of peace, without resources to reduce the Debt, which, if not reduced, would come upon the country with greater weight, particularly if events should compel them to place the empire in a warlike attitude? It was the part of a prudent Government to look at events that might happen. He knew no more effectual way of crippling the power and resources of the country than that of avowing they were determined to make no efforts to reduce either the interest or the capital of that great debt, which was now accumulating, but which must some way or other be paid. During the time that he was Chancellor of the Exchequer, he induced the House of Commons to give their assent to the application of the surplus revenue to the reduction of the debt, and by that means relieved the country from a part of the burthen. He begged to draw the attention of the Committee to the state of the debt at the early part of 1828, and compare it with that of 1831. In 1828 the amount of the funded debt was 777,000,000l., and the annual interest 25,700,000l. In 1831 the funded was reduced to 757,000,000l., and the annual charge to 24,377,000l, making in three years a reduction in the principal of 20,000,000l., and of the charge 1,400,000l. 1034 He did not mean to state this was all clear advantage to the country, for during the time there had been an increase of the terminable annuities, but that in itself was a relief to the public, for it carried with it the annual application of a part of the interest paid to the extinction of that debt on which it was paid. This increase in the terminable annuities amounted to 686,000l., leaving a balance of about 700,000l. as an absolute relief to the country. There was another item in which great relief had followed from pursuing a principle different from that of the noble Lord; the interest on Exchequer bills was reduced to the extent of 270,000l., and between January 1828 and January 1831 there was a reduction of a million in the amount of Exchequer Bills. He had brought this subject before the House, because he was aware that the public attached much importance to the immediate reduction of taxation, without considering the ultimate benefits that might be derived from pursuing a course which involved some present sacrifice. He did not mean to undervalue reduction of taxation, provided it could be effected without crippling the national credit and prosperity. They must deal first with their debt, and apply the surplus revenue to reduce taxes; it was by pursuing that method last year he had recommended the reduction of taxes to the amount of 4,000,000l.; this reduction arose naturally from the funds already in hand, from the decrease of the public expenditure by about 3,500,000l., and allowed him the pleasure of saying to the House "You have funds in hand, and can reduce taxation in a mode most likely to benefit the community, and at the same time forward their permanent interest by reducing the debt." He would not enter into the argument whether the taxes reduced this session were those best calculated to relieve the various suffering interests of the country. He must be permitted to observe, however, that the noble Lord (the Chancellor of the Exchequer) had given up a revenue to the amount of 900,000l.; but as he had no command over that complicated machinery by which the coal tax was regulated—the people had not benefitted by the remission to a greater amount than 250,000l. With respect to the application of the surplus revenue, the noble Lord had not fairly and explicitly stated the nature of the Bill which he (Mr. Goulburn) had introduced. The object 1035 was, that you should apply to the reduction of the Debt the exact surplus over the expenditure. If that was to be carried on in the ordinary way, the Commissioners for the reduction of the National Debt must have waited till the 31st of December, and then applied the whole of the amount to the reduction of the Debt. To apply a large sum at one time, for that purpose, was, in his opinion, likely to produce great fluctuation. Parliament had, therefore, made a regulation that the surplus of each quarter should be employed. He did not think that it was proper to anticipate the revenue for the quarter, and employ it for a distinct purpose, as, although no augmentation of the expense had unexpectedly taken place, still such a circumstance was not unlikely to occur. It appeared to him that the only effect of the noble Lord's conduct in purchasing the deficiency bills, would be, to put into the pocket of the Bank the interest of so much of the coming in revenue as, by the purchase of the bills, lay in the hands of the Bank. A deficiency bill, which anticipated the quarter's revenue, was obliged to be taken up each succeeding quarter. By the purchase of Exchequer bills, the public obtained the interest which the Bank now had, and the coming in of the money relieved the public of the charge for the interest. The only object he had in view on the present occasion was, to call the serious attention of the House to the abandonment of the most important principle of attempting to discharge a part of the debt which had been incurred during the late war; and to enter his decided protest against a system of finance, which he feared would be found the parent of extravagance and ruin. This was his present object: but he must conclude by saying, that the revenue of the country presented certainly a pleasing aspect, as it showed them an additional example of the extent and power of the country, and gave them a hope, that if the circumstances of the State required assistance, they might look for it with confidence amongst the enterprising inhabitants of Great Britain.
Mr. Maberlysaid, he was surprised at the observation of the right hon. Gentleman, the Sinking Fund had been so notoriously fallacious, that the House, before the right hon. Gentleman resigned office, had determined that the Sinking Fund, for the future, should consist only 1036 of the surplus revenue and expenditure, In carrying this plan into execution, the right hon. Gentleman had, however, taken a retrospective instead of a prospective view. Had he at the beginning of a year estimated what the probable amount of the surplus would be, and at the end, when he found his anticipations realized, appropriated the money accordingly, he would have acted on sound principles, but he had acted otherwise, and when he quitted office, left an Act of Parliament behind him, which bound his successors to act as they had done. Therefore, if there was any error or mismanagement with respect to the deficiency bills, it was owing to the bad arrangements of the late Chancellor of the Exchequer. This difficulty he had foreseen and mentioned, and it admitted of no other remedy than an Act to repeal the former one. The right hon. Gentleman seemed to suppose the country would receive injury from the smallness of the surplus over the expenditure. He (Mr. Maberly) had always maintained, that it was better to relieve the country, heavily burthened with taxes as it was, by a reduction of these, than keep up a large Sinking Fund. The reduction of taxes, of which the right hon. Gentleman seemed so proud, as effected by the late Administration was the great cause of the smallness of the present Sinking Fund: he ought not to complain of the consequences of his own acts. He was ready to admit these acts were proper on the principle of relieving a country heavily taxed; but nothing could be more absurd, than to increase the funded debt, for the sake of having a larger Sinking Fund. He was decidedly of opinion the noble Lord had pursued the best course that had been left open to him.
§ Lord Althorpsaid, he had no doubt, the right hon. Gentleman would remember that he had stated, that although the surplus was very small at the beginning of the year, yet, that he did expect it would increase towards the end. He was ready to admit, that the amount of the surplus was not so large as was desirable. With respect to the Sinking Fund, he thought the right hon. Gentleman had acted perfectly right in taking a retrospective instead of a prospective view, as had been contended for by his hon. friend (Mr. Maberly). An estimate at the beginning of the year would be more likely to lead to error and difficulty than the 1037 mode of calculating the surplus at the end. The right hon. Gentleman defended the operation of the Sinking Fund, upon the ground that it enabled Ministers to reduce the amount of interest upon the different funds. He did not believe, that experience justified them in forming that opinion of it. However, without going into that question, he was ready to contend, that the best course to relieve the country was by a reduction of taxation. With respect to the alleged profit of the Bank, upon the purchase of deficiency bills, he would only say, that it might have been so if he had carried the purchase to an extreme. It was said, that he would have done better if he had purchased Exchequer bills. He would show the fallacy of this suggestion. Deficiency bills were sold at a par, but Exchequer bills must be purchased at a premium, unless the Bank were prepared to sell them to Government at a less price than they did to the public.
Mr. Humesaid, that the Sinking Fund was a mere delusion, and that it deceived the public. The statements of the Revenue which had appeared in The Gazette were delusive. They were all retrospective; but the public, from the manner in which they were put, conceived that they were prospective. He hoped that this practice would be abolished, and that all estimates in future would be prospective. This would lead the accounts to be made up in such a manner as any man might understand them. The right hon. Gentleman had stated, that the surplus which he maintained during the time he acted as Chancellor of the Exchequer, enabled him to reduce the amount of interest on the Public Funds. He believed, however, that was not the fact, and if a calculation was gone into, it would fully appear, that the maintenance of a Sinking Fund of 500.000l. or 3,000,000l. would not have the smallest effect in that respect. Reduction of taxation was infinitely more desirable than a large surplus. He was for keeping the Government as short as possible, and he considered a surplus of half a million amply sufficient. The only complaint he had to make upon the statement which the noble Lord had submitted to the House was, the great amount of expenditure. He had hoped the charge for this year would have been less than the last. He regretted, therefore, to find it greater; but with respect to the mode of 1038 applying the surplus, he, was decidedly of opinion that the noble Lord had adopted the wisest and most prudent course. The system of deficiency bills was not a new one, it was left as a legacy by preceding Governments, and it was beneficial to apply any surplus to taking up bills of that description.
Mr. Goulburnobserved, for Gentlemen who were acquainted with accounts as the hon. Members who had addressed the House on this subject were, he was surprised at their doctrines. They contended, that only the surplus of revenue over expenditure should be applied to the reduction of the Debt. Flow was that amount to be ascertained, otherwise than by taking the income and expenditure of the past year? but the hon. member for Abingdon, instead of pursuing this natural method, says, calculate your revenue and estimates for the coming year, deduct the probable amount of the one from the other, and you have—what? a chance surplus. He asked any man conversant with accounts which was the proper method? How could it be possible to calculate by anticipation what was to be the income and expense of a year to come? Did the House recollect the time when Lord Goderich, by pursuing such a course in the year 1827, calculated 2,000,000l. beyond his real resources? All experience showed that such a system, so far from producing accuracy, increased, in an incalculable degree, the probability of running into debt. He would leave his plans to speak for themselves by their result. During the few years he had been in office, he had managed to reduce very considerably the amount of the expenditure, and had decreased the amount of taxation by 4,000,000l. per annum.
Mr. Muberlysaid, he still maintained, that the system which he and his hon. friend, the member for Middlesex, advocated was the correct one. The right hon. Gentleman contended, that the only accurate mode of calculating a surplus was to take a retrospective view. By that account you certainly know the amount of the former year's surplus, but what had that to do with a prospective revenue? The only accurate and proper mode was, to make an estimate at the commencement of the year. As to the mode in which the surplus was to be aplied, he very much approved of the plan 1039 of the noble Lord. It was the deficiency bills anticipated the revenue. Supposing there should be a run upon the Bank, what would be done when the revenue had been anticipated?
§ Lord Althorpsupposed it was suspected that at the end of the year Government would be in a dilemma, and would call for money in Exchequer bills. Such would not be the case. In purchasing the deficiency bills he had only taken money out of one pocket to put into another.
Mr. Goulburnsaid, as the point at issue was one on which a difference of opinion existed among persons most acquainted with financial matters, he would pursue the subject no further at present. He, however, wished to ask at whose expense had a quantity of silver bullion been lately melted down at the Bank by order of the Government?
§ Lord Althorpreplied, that the balance of the actual melting would be borne by the Mint. The account of the transaction was, that it had been ascertained the amount of shillings was too great for circulation. A pound of silver contained sixty-two shillings; but the shillings he had alluded to did not possess their full weight, there being sixty-eight to the pound. Government learning that this bullion was to be disposed of, entered into a treaty for its purchase with the Bank, who had it in their possession, and the object was, to have it re-melted and circulated at its proper value: of course some expense would arise to the public, but also some benefit by carrying it into effect. The negotiations were not, however, all concluded.
Mr. Goulburnsaid, the propriety of the transaction hinged upon the question, whether the quantity of silver coin in circulation was too large for the demand.
§ Resolution agreed to. House resumed.