Commons Sitting of 6 March 1854

MINUTES.
NEW MEMBER SWORN.—For Louth, Chichester Samuel Fortescue, Esq.
PUBLIC BILLS.—2° Church Building Acts Continuance.
Reported.—Valuation (Ireland); Commons Inclosure.

RUSSIA AND THE PORTE—ULTIMATUM OF THE TWO POWERS—QUESTION.
MR. LAYARD: I wish, Sir, to ask a question of the noble Lord the Member for the City of London, and I think it will be for the interest of the country that I should receive a clear and explicit answer. The noble Lord, on Friday evening, stated that a certain new proposal has been made to the Emperor of Russia—in other words, that he has been given until the beginning of May to evacuate the Principalities. The noble Lord also stated that on the 27th of April he should be prepared to bring forward the Reform Bill, supposing, in the meanwhile, the Eastern affair should be settled in consequence of the proposal which has been made to the Emperor of Russia. What I wish to ask is this—whether, in the event of the Emperor of Russia withdrawing his forces from the Principalities, we are to consider he would thereby be placed in the same position as he was before the commencement of the war? I wish to know also whether, in the event supposed, the old treaties are still to be in force, and whether the relations between Russia and Turkey, and between Russia and the European Powers, are to be precisely on the same footing as they were before the commencement of hostilities.
LORD JOHN RUSSELL: Sir, the hon. Gentleman has somewhat misunderstood what I said on Friday evening. With respect to his question, I have to state that the proposal which has been made to the Emperor of Russia has no reference to the treaties between Russia and Turkey. We consider that the occupation of the Principalities belonging to the Sultan is a wrongful occupation, and we therefore ask the Emperor of Russia to evacuate those Principalities by the 30th of April, but if he accedes to that request of ours, that would by no means be conclusive as to the war between Russia and Turkey. It could not at all include any question affecting the treaties between Russia and Turkey. The decision of that

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question would follow, and would of course be a matter of negotiation totally separate from any demands of ours.
MR. LAYARD: The noble Lord has not answered my question. It is, whether there is a definite proposal which enables the Emperor of Russia to resume the negotiations which existed at the time when you gave him so many days to accept certain proposals that were made to him, in consequence of the Conference at Vienna, and of certain proceedings which took place at Constantinople? If so, we shall return to the status quo ante bellum.
LORD JOHN RUSSELL: I do not know that I can give any further explanation to the hon. Gentleman. What we propose is, that the Principalities should be evacuated. If the Emperor of Russia were to consent to that request, and were to evacuate the Principalities, of course it would then be open to him and the Sultan to negotiate afresh, and it would be equally open to the four Powers to mediate and take part in those renewed negotiations.
MR. LAYARD: I beg to give notice that I shall take an early opportunity of bringing this question, in a definite shape, before the House.

THE FINANCIAL STATEMENT—THE BUDGET.
The House having resolved itself into a Committee of Ways and Means,
THE CHANCELLOR OF THE EXCHEQUERsaid: With reference, Sir, to the gravity of the circumstances in which the country is at present placed, it has been the opinion of Her Majesty's Government that they would best discharge their duty to this House by submitting to it at this unusually early period of the Session the financial statement for the year, and an explanation of those measures which they think it requisite to adopt in order to meet the exigencies of the public service. If, Sir, in any other respect my position is one far less agreeable than that which I had the honour to occupy upon the last similar occasion, at least I can promise the Committee that it will not be necessary for me to make the same extravagant demand upon their patience to-night which formerly it was my misfortune to do. But Her Majesty's Government have thought that it was wise to take this early period of submitting these questions to the Committee—first of all, because in that manner we most fully recognise the title of the House of Commons to be made aware of the views
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of the Government with reference to the mode of meeting an unusually large expenditure; next, because we believe it well that foreign countries should see that the earnestness of the nation in the course upon which it has embarked may be measured by the promptitude with which the country proceeds to supply the means necessary for carrying out that course; and, lastly, because it is but fair and just to the people of England, upon whose opinions and convictions the course of Her Majesty's Government must ultimately depend, that they should be made practically aware that the measures we have adopted, and are about to adopt, under the gravest conviction of duty, are measures which must necessarily entail the disagreeable consequences of a serious addition to the public burdens. Now, the first part, which is also the most satisfactory portion of the task which I have to perform, is, that I should exhibit to the Committee, in comparison with the estimates which I made last April, the present actual state of the revenue and expenditure of the country. In speaking, however, of the actual state of the public income and expenditure, the Committee will please to recollect that we have not yet actually reached the close of the financial year, and, therefore, although the figures which I shall state to you, including as they do the actual accounts for about eleven months of the year, may be relied upon as substantially accurate, yet with respect to the remaining month they are only in the nature of an estimate, and they may not exactly correspond with the accounts, when they come to be made up previous to presentation to you. On the 18th of last April, I ventured to estimate the income of the country as follows:—The Customs revenue was taken at 20,680,000 l. That was the estimated receipt, without, of course, any allowance at that time for the reduction about to be made. The actual receipts of the Customs duties, notwithstanding the reductions which have been made, to which I will presently more particularly allude, have been 20,600,000 l. The Excise, which was estimated at 14,640,000 l., without any allowance being made for the repeal of the soap duty—notwithstanding the repeal of that duty—has realised the sum of 15,107,000 l. The Stamp duties were estimated at 6,700,000 l.; and, although under that head relief has been given to the public upon several material points, still, instead of producing,

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as was expected, 6,700,000 l., they have realised 6,960,000 l. I estimated the revenue under the head of "Taxes" at 3,250,000 l.; it has produced 3,178,000 l. But that difference, small though it is, does not indicate even that small diminution in taxable subjects.
MR. DISRAELI: Is that the return for the twelve months?
THE CHANCELLOR OF THE EXCHEQUER: It is for the twelve months, and is made up of eleven months' accounts, and of one month estimated. That small diminution to which I have adverted is to be accounted for simply by the fact that the year which ended April 5, 1853, was the first year in which the new form of house duty had attained its full operation, and, in consequence, in respect of that year, the Exchequer was credited with a considerable amount of arrears carried over from the former year. For the present year no such credit is taken, and the apparent deficiency may be therefore accounted for upon that ground. The income tax, which was estimated at 5,550,000 l., will realise 5,700,000 l. The Post Office revenue, which was taken at 900,000 l., will produce 1,042,000 l. The income for Crown lands almost exactly corresponds with the sum estimated last year. The estimate was 390,000 l.; the statement I have now to make shows that the receipts under that head amount to 391,000 l. Miscellaneous receipts, which were taken at 320,000 l., have reached 503,000 l.; and the receipts for old stores, taken at 460,000 l. last April, have amounted to 481,000 l. On the 18th of last April, I was asked by the hon. Member for Montrose (Mr. Hume) what saving to the public revenue would probably result from the measures which were then in progress with respect to the reduction and conversion of a portion of the debt. I stated, in reply, that it was hardly possible to name the sum with respect to the accounts of the then current year, but that I thought the saving by the measure might safely, and in the worst event, be taken at 100,000 l. I will not, however, now deviate from the general course of my statement, but will revert to that subject at a later period.
I will now present to you some of the various items of the estimates as they were made last April, and of the joint account and estimate for the present year, which I am now enabled to submit to the Committee. The estimated revenue last April was 52,990,000 l. The accounts which I
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now present to you, together with the estimate for the remaining month not included in the account, is 54,025,000 l.; so that there is an improvement upon the estimate of the 18th of April last of no less than 1,035,000 l. Upon the other hand, the expenditure for which the Committee provided during the last Session of Parliament has not reached its utmost limit. The expenditure, as then estimated, reached the amount of 52,183,000 l.; the expenditure for the twelve months, as I take it now, although it has been materially swollen by measures connected with pending military operations, will not, I think, go beyond 51,171,000 l. So that while the income of the year stands at 1,035,000 l. more than that which was estimated, the expenditure stands at 1,012,000 l. less than was anticipated. And, so far as we are able to estimate the actual excess of income over expenditure for the year, which will, however, only be definitively known when the account is struck after the 5th of April, I should be disposed, according to present appearances, to place the overplus at the present time at 2,854,000 l.
Now, as the last year was not an ordinary year, and was one in which Parliament adopted conclusions of great importance with respect to a variety of financial measures, I think the Committee will expect of me that I should state to it more particularly, but at the same time as succinctly as I can, the results of the most important of these measures. I adverted just now to the case of the Customs duties. Now, the total amount of Customs duties which were repealed in the last Session by the House of Commons may be stated in round numbers at 1,500,000 l. I do not include in that estimate the reduction of duties which were enacted in the last Session, but which have not yet taken effect, but I confine myself strictly to those reductions of Customs duties which took immediate effect, and they, as I have said, amounted in round numbers to 1,500,000 l. The exact amount, after allowing for a sum of 16,000 l. of augmentation, due chiefly to the alteration of the duty on spirits, is 1,483,000 l. Now, there have been some circumstances affecting a portion of the Customs duties so unfavourably, that I cannot avoid alluding to them, in particular as respects the case of one branch of the Customs duties, which, although not of first-rate importance, is nevertheless not inconsiderable; I allude to the revenue derived from currants. I may say it is not so

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much lowered as that it has been almost annihilated. That simple article of consumption, as it appears to us, yielded in 1851–2, a sum of 342,000 l.; in 1852–3, it yielded 271,000 l.; and in 1853–4, it produced but 113,000 l. The revenue derived from this article is about one-third what it was three years ago, not owing either to diminished disposition, or diminished capacity on the part of the public to consume, but due to the great contraction of the supply in consequence of the disastrous blight which had affected the vines in the East. But although this has been the case, and although the measure relating to the tea duty has been brought to an issue under circumstances far from favourable, still, when we look minutely and exactly at the case of the Customs revenue, it is found to stand thus:—The reductions of duty, as I have stated, which took effect in the years 1853–4, were 1,483,000 l. The receipts from Customs duties in 1852–3, were 20,396,000 l.; in 1853–4, the receipts from Customs duties were 20,600,000 l., showing an increase of 204,000 l. in the actual receipts, after a remission of duties to the amount of 1,483,000 l.
With respect to the tea duties, I hope the Committee, notwithstanding the unfavourable circumstances which have occurred, and the state of disturbance which has been prolonged in China—I hope, I say, the Committee does not repent of the large and liberal measure which it adopted last year upon this subject. Last year the House of Commons gave assent to an immediate reduction of the tea duty, amounting to 4½d. in the pound. The amount of relief afforded to the consumer by that reduction has been not less than 950,000 l. in the year. I estimated, however, that from the nature of the consumption, and the elasticity which it was expected the article would show, that the whole loss to the revenue against the relief of 950,000 l. would be a sum of 366,000 l. Now, I think the Committee will see that it is a satisfactory result that the loss to the revenue is no greater than that which at the time I estimated it to be. I took it at 366,000 l.; the loss which I have now to state is 375,000 l. The Committee must bear in mind that an actual increase has taken place within the last two years in the low price of teas, which I shall be quite safe in putting at not less than from 4d. to 5d. per lb. It is, perhaps, more, so that, in fact, the whole of what we have given away in duty has been absorbed by the augmenta-
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tion in the increased cost of the article. But do not let us suppose that, upon that account, the repeal of the duty has been useless to the consumer. On the contrary, I venture to say that there never was a time at which it was more important that you should have remitted the duty. What we are suffering from is not an abstraction of the duty from the Exchequer to be enjoyed by the trader who comes between the producer and consumer, but from a real scarcity of supply, owing to the state of affairs in China. But the effect of your remission of duty was this, that it drew to England, as compared with other countries, a much larger proportion of tea than we should otherwise have had. And if it be true, as it undoubtedly is, that the public must now pay very nearly the same price for their tea as they did two years ago, still, if you had not remitted the duty, the public would not only have had to pay that price and the whole amount of duty besides, but very considerably more.
There is another article upon which the duty was reduced, with respect to which I think the Committee would like to know the results which have taken place. I refer to what is known as the New Penny Receipt Stamps, not confined, however, to receipts, but likewise including drafts. A good deal of interest was attached to the transaction, and I am happy to say that the results have been satisfactory beyond my expectations. The state of the law previous to the change of the last year was indeed very defective, and there are still various points which it will be my duty to propose to the House to amend. For that purpose I hope to submit a Bill very shortly which will have the effect of rendering the law more clear and more consistent than it is at present, and which will, at the same time, be beneficial to the Exchequer. But, with respect to the alteration of last year, the case stands thus—when we reduced the stamps chargeable upon receipts from a scale fluctuating between 3d. and 10 s. to an uniform duty of one 1d., the estimate gross loss for the full year was stated at 155,000 l. The one-half of that sum I ventured to assume would be recovered even during the first year, and I therefore only charged myself with a loss of 74,000 l. But the change only took effect on the 10th of October, and therefore I must halve that amount. Observing the same proportion, I could only expect, in order to fulfil my estimate, a net loss of 37,000 l. under the

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head of receipt stamps. The law took effect, as I have said, on the 10th of October, and very great difficulty was found, notwithstanding the utmost exertions of the Board of Revenue Department, in supplying the demand which sprung up from all quarters, and which bore no proportion to the previous consumption with respect to numbers; because, under the operation of the old law affecting stamp receipts, disobedience had become the rule and obedience the exception. But, with respect to the new state of things, I am happy to say that obedience is the rule, and disobedience is the exception. But notwithstanding the very great reduction made in the amount of duty payable from a tariff ranging from 3d. to 10 s. to a uniform rate of one penny, for the six months commencing 10th October, 1853, and ending 5th April, 1854, instead of a falling off of 37,000 l., there has been, so far as I am at present able to state, an improvement of 36,000 l. The actual receipts into the Exchequer under this head for the six months, commencing on the 10th October, 1852, and ending the 5th April, 1853, were 88,898 l.; while the actual receipts for five, and the estimated receipts for one month, making together the six months ending the 5th of April, 1854, are 124,637 l., showing an excess of 35,739 l.
Now, the Committee will likewise wish to know what, as far as I am in a condition to state, has been the result of the various measures adopted by this House during the last Session for the extension and augmentation of taxes. First, I will allude to that vexed subject—the Irish Income Tax. The collection of the income tax I should say has been delayed by a variety of circumstances, and this collection must always be later on the occasion of an Act which causes new assessments to be made, because new assessments create new appeals. The extension of the income tax to Ireland has been in some degree the cause of delay; and the extension of the tax downwards to a new class of persons, having incomes of between 150 l. and 100 l. necessarily brought forward a great mass of business altogether novel, and necessarily caused a considerable number of appeals, in reference to that class with which formerly we had nothing to do, and thereby had so much postponed the collection of the tax that at one period during the past quarter the Exchequer actually received a sum under that head of income less by 770,000 l. than it had received in the pre-
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vious quarter. That, however, has nothing to do with the productiveness of the tax, it is simply with reference to the duty of collecting; but it goes to account in some degree for that lowness of the public balances which has, during the last few weeks, been the subject of universal remark. The state of the case with respect to the Irish income tax is this:—I estimated that tax would yield for the year 460,000 l. after making every deduction, and speaking only of the net profit to the Exchequer. The result has been as nearly as possible the very figures I have named with at the same time a slight alteration upon the right side of the estimate. The net proceeds of the income tax for Ireland will be, as far as I am enabled to calculate, 480,000 l. The half of that could of course only be received during the present year, and something less perhaps than that amount will have been received by the 5th of April. The tax, however, has fully answered the expectations which were formed at the time when it was proposed to Parliament. Then with respect to another kind of extension of the tax downwards in Great Britain to persons with incomes of from 150 l. to 100 l. a year, I am not yet in a condition to state, as the assessments have not been clearly and fully separated from the others, the precise result of that portion of the measure. But I am in a condition to state that the tax will yield to the Exchequer at least as much as I ventured to calculate upon obtaining from it, namely, at the rate of at least 250,000 l. a year.
Another measure, with respect to which I have to give information to the Committee, is the augmentation of the spirit duty in Scotland. The result of that measure also has to me been perfectly satisfactory; for though there is an apparent defalcation from the amount of increase which I ventured to anticipate, this defalcation may fairly be explained by causes entirely apart from the augmentation of the tax, and especially apart from any suspicion on the subject of increased illicit distillation. I estimated, in April, 1853, that the addition to an annual income from the 1s. per gallon which was added to the spirit duty in Scotland would be equal to a sum of 278,000 l. on the year. As I now estimate the produce of that additional tax it will be, not 278,000 l., but only 209,000 l. in the year. But it will be within the knowledge of all gentlemen connected with Scotland, and of many who are not so acquainted with the country, that a very

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strong religious sentiment has set in—if I may use the expression—against the great consumption of spirits. That state of public opinion led, during the past year, to the enactment by this House of a restrictive law on the subject. A Bill, not introduced by the Government, but, at the same time, not disapproved of by them, by its restrictive enactments greatly narrowing the means of selling spirits, led of necessity to a diminution in the consumption. This diminution in the consumption has so far affected the revenue derived from spirits in Scotland that, instead of 278,000 l., the amount received, as I have just stated, has been only 209,000 l. But I have the utmost satisfaction in stating that there is not so much as a breath of suspicion that any part of that diminution is connected with the revival of illicit distillation. We then come to a measure regarded as more critical in its character, namely, the augmentation of the spirit duty in Ireland. The result of that measure has been altogether satisfactory; and, so far has it been from causing any general revival of illicit distillation, as far as we are yet enabled to judge from experience of nearly a twelvemonth, on the contrary, the Excise revenue has even exceeded somewhat the amount which I then ventured to anticipate. The amount for which I took credit, as an addition to the income of the country in consequence of the augmentation of the Irish spirit duty, was 198,000 l.; the actual increase under the head of Irish spirits, so far as I am now enabled to state it, will not be less than 213,000 l. I should also state that, in taking the sum of 213,000 l. as the increased revenue from Irish spirits, I have made allowance for extra expenditure connected with establishments which it was thought prudent, under the circumstances, to incur, but which expenditure it will, I trust, in future years, be found practicable to reduce again.
There remains but one other among these retrospective subjects to which I need refer, and upon that I have very little to say—it is the item of the Succession duty. So far as regards the ultimate probable yield of that measure, I have no reason to depart from the conjectural estimate which I made last year when bringing forward the subject. But the effect of the postponements which it was thought but fair and equitable to allow in the payment of the tax has been such as greatly to reduce the new tax in the course of the
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financial year now expiring. In certain cases, also, of the Legacy duty, we relaxed this relief upon points such as affinity and leaseholds, and the deductions from the proceeds of the Legacy duty under these heads have almost overtaken all that we have yet reaped from the Succession duty. Even looking forward to next year—from April 1864 to April, 1855—I do not venture to anticipate more than 500,000 l. from that tax. With regard, however, to the ultimate results, I believe they will be very much as I then ventured to conjecture them. I am bound to say that all that has occurred under the operations of the law has convinced me that those very florid and sanguine views which some Gentlemen, when the tax was brought forward, ventured to submit, promising us 3,000,000 l., 4,000,000 l., 5,000,000 l., and even more, as the net proceeds of that tax, are, indeed, altogether of a visionary character. This, then, is the state of the case as regards the twelve months now nearly expired; and I think the Committee will be of opinion that the whole of the facts combine to show that the finances of the country are on a sound and solid basis.
We have now, Sir, to look forward, and to frame the Estimates for the year which commences on the 6th of next April, and those Estimates must, of course, be framed with a due regard to the altered circumstances of the country, to some contraction of trade, to a great augmentation, I grieve to say, of the cost of almost every important article of subsistence. Keeping those important points in view, and making, not certainly any large, but, at the same time, some moderate allowance with reference to them, I venture to submit to the Committee the following estimate of the probable revenue of the year 1854–5:—I take the Customs duties—and here, as well as under other heads, I allow for those reductions of taxes which will take effect under laws already in force—I take the Customs at 20,175,000 l.; the Excise at 14,595,000 l.; the Stamps at 7,090,000 l.; the Taxes at 3,015,000 l.; the Income Tax at 6,275,000 l.; the Post Office at 1,200,000 l.; the Crown lands and land revenues at 259,000 l.; old stores, 420,000 l.; and the Miscellaneous, 320,000 l. The total sum anticipated for the year 1854–5 will, therefore, be 53,349,000 l.
Now, Sir, looking forward to the expenditure of the year, I need not tell the Committee I enter upon details far less satisfactory than those which I have thus far

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given. The first head, however, is one in which there is a considerable reduction. The charge for the funded debt for 1854–5 I take only at 27,000,000 l. The actual charge for the twelve months ending the 5th of January, 1854, was 27,570,000 l. There is a difference, therefore, of 570,000 l. in favour of the country. The larger part of that difference—a sum of 312,000 l.—is due to the operation of the Act passed by this House in the year 1844, upon the recommendation of my right hon. Friend the Member for the University of Cambridge (Mr. Goulburn); and of the residue, namely, 258,000 l., almost the whole is due to the liquidation under the Act of last year of certain minor stocks, known as South Sea Stocks, Annuities, and some other funds. There is not a net saving to that amount, but that is the amount of diminution on the charges of the funded debt. The charge upon the unfunded debt I think it wise, under the circumstances of the country and of the money market, to take at an amount which I trust will be sufficient. I take that estimate at 546,000 l.; the charges on the Consolidated Fund at 2,460,000 l.; the Army at 6,857,000 l.; the Navy at 7,488,000 l.; the Ordnance at 3,846,000 l.; the Commissariat at 645,000 l.; the Miscellaneous Estimates at 4,775,000 l.; the Militia, the same as last year, at 530,000 l.; and the Packet Service, the only estimate which shows, I think, a diminution on the amount voted last year, and which shows a diminution of 8,000 l., at 792,000 l.
Then, Sir, it is necessary I should state to the Committee some amount of money which, without attempting at the present moment to determine what shall be its technical appellation, or under what form it shall be voted, I may describe as a provision for the extraordinary military expenditure connected with the expedition to the East. It is extremely difficult to form anything which can be called an estimate of that expenditure. I am bound to remind the Committee that war is a disturber, as of other things more serious, so likewise of financial computations and the regularity of our financial proceedings. We have thought it right, in deference to the House—that it may well understand the nature of the obligations it is contracting—to make known at the earliest possible moment what we propose with reference to provision for the wants of the public service; but it is quite impossible for us to undertake to say at this moment
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that the provision we now propose, and which we propose after due deliberation and the best exercise of our judgment, shall be a provision adequate, and neither too great nor too small, for the exigencies and wants of the whole year. It is of necessity, therefore, an indefinite sum for which we ask, with reference to the expense of this expedition to the East. Now, upon what principle shall we attempt to calculate that sum? Upon this principle—that it is our duty not to remove the public expenditure of the country, and especially not to remove the war expenditure, from the control of the House of Commons. If we were to ask you to place in our hands, as the proceeds of the taxes of the country, a very large sum of money to be applied to the purposes of the war, amounting to several millions, you might, I think, very justly say, "Wait until the necessity has arisen; Parliament is not about to separate in the month of March; it is in your power to make a further proposal in the month of June or July, if the circumstances of the country and the state of Europe should then seem to warrant such a proposal." We are about to act on that principle, and to ask only for such an amount, which, though it may seem large to some Gentlemen, we feel convinced is the smallest by which, under the most favourable circumstances, we can hope to see those gallant forces now leaving our shores brought back after the completion of the object for which they are sent. Taking those forces in round numbers at 25,000 men, we propose to ask the Committee to vote a sum of money for the purpose of extraordinary military service at the rate of 50 l. per head, or a sum of 1,250,000 l. Inserting, therefore, that amount in the estimate of expenditure which I have ventured to give to the Committee, the total amount of estimated expenditure, including that sum of 1,250,000 l., is 56,189,000 l. The estimated revenue, as I have already stated to the Committee, is 53,349,000 l. And, therefore, there is a deficiency upon the estimate of revenue for the year 1854–5, as compared with the estimate of expenditure, amounting to no less a sum than 2,840,000 l. Now, Sir, that estimated excess of expenditure above income, does not represent the whole cost of the war. Had it not been for the measures in which we are engaged, and which we deemed necessary for the honour and welfare of the country, we should not only have been

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spared representing to you this deficiency, but we should have been in a condition to promise you a surplus.
I will just now state concisely to the Committee how the account would stand but for the augmentation of the Estimates rendered necessary by the demands of the public service. As compared with the estimate of last year, the excess, or rather the increase—for the word "excess" is equivocal—the increase upon the Army is 832,000 l.; the increase upon the Navy, 1,253,000 l.; the increase upon the Ordnance, 793,000 l.; the increase upon the Commissariat, 88,000 l.; the increase upon the Miscellaneous is 299,000 l. There is a small diminution, as I have already mentioned, upon the Packet Service of 8,000 l., but there is an increase under the head of military extraordinary expenses of 1,050,000 l. I stated the cost of the expedition to the East—or rather, not the cost, but the sum we are about to ask of the Committee on account of its cost—to be 1,250,000 l. But last year there was an expenditure of 200,000 l. on account of the Kafir war; and, therefore, the balance under the head of military extraordinary expenses is an increase of 1,050,000 l. With the small deduction I have mentioned, that shows a total excess in the Estimates of the present year over last year of 4,307,000 l. The estimate of expenditure which I presented to you in April, 1853, and I refer to it now in order to enable the Committee to judge what would have been our position in the absence of disturbing circumstances, was 52,183,000 l. The estimated revenue which I now look for for the year 1854–5 is 53,349,000 l. So that if our expenditure, according to estimate, had continued the same as it was twelve months ago, instead of a deficiency of 2,840,000 l., I should have been able to present to you a surplus of 1,166,000 l., in addition to the saving of the funded debt to which I have already referred, and which I may state in round numbers at 500,000 l.; so that there would have been, in fact, a fund to apply to fresh and further remissions of taxes of 1,666,000 l. Adding that surplus, which there would have been, in the absence of disturbing circumstances, to the deficiency I have now to present, the total difference on the account against the Exchequer amounts to no less than 4,506,000 l. Well, then, Sir, that is the total difference against the Exchequer, and the total sum for which we have to provide, without taking the
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surplus into account at all, is 2,840,000 l. Under these circumstances it will be for the Committee to consider in what manner this deficiency shall be made up.
Now, Sir, in the first place, I trust that the Committee will not consent to make up any portion of this deficiency by interfering with those reductions of taxation which have acquired the force of law, although they have not yet taken actual effect. The amount of those reductions is considerable. They reach for the year 1854–5, in round numbers, 1,500,000 l. There is also upon the soap duties, on which there was a small receipt at the commencement of last year, a loss of 140,000 l. And while I am touching on the soap duties, it may be as well to state to the Committee, to show that reduction of establishment does not always unduly lag behind reduction of taxation—it may be as well to state to you, in consequence of the change with respect to the soap duties, and in consequence of the change in system with respect to the post-horse duty, which this House was pleased to adopt last year, there has been a reduction on the establishment of the Inland Revenue Department, amounting to no less than 30,000 l. a year. It was thought proper to place a portion of the staff to watch the effect of the spirit duty, but the permanent reduction, distinct from that temporary arrangement, reaches the considerable sum of 30,000 l. a year. There is a loss upon soap, which I may call the residue of the duty on soap, of 140,000 l. The reduction of 4d. per lb. on the duty on tea, which will take effect on the 5th of April next, will cause a loss to the revenue of 950,000 l. The amount of relief given by the charges on the assessed taxes, which will likewise take effect on the 5th of April, will be 344,000 l., and the measure devised last year by my noble Friend the Postmaster General, for the purpose of effecting a most beneficial change in colonial postage, will occasion a reduction of 40,000 l. The whole amount of relief from taxes now in force, which the public will enjoy between the 5th of April, 1854, and the 5th of April, 1855, in consequence of the measures you adopted last year, and the votes you came to, reaches the sum of 1,474,000 l. Note also, that what you would recover if you were to retrace your steps is 1,002,000 l. But, as I have said already, I will not attempt to argue that question, for I feel well persuaded, whatever other course you may think it proper to adopt, you will not retrace the steps you entered

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on last year, so far, at least, as the present measures and the demands of the present exigency are concerned. I must now express my hope that the Committee, if it is determined not to withdraw the boons which last year it promised, and which it cannot withdraw without serious disturbance to trade, and great discomfort to a multitude of individuals—I must express my hope that the Committee will support the Government in standing by those branches of public revenue which exist and are available. We do not think it consistent with our public duty, in the present state of Europe, under existing circumstances at home and abroad, and with such figures as I have now laid before you, to propose to you to part with any branch or any sensible part of any branch of existing public revenue.
Well, then, Sir, if money must be had, is it to be had by increasing duties on other articles? If you are determined not to repeal the laws of last year, and if you are likewise determined not to part with any income you now have, would it be right, do you think, at the present moment to increase the rates of duty on articles of consumption in the branches of Customs and Excise, or to replace those duties, or any of those duties, which during recent years you have abolished? I cannot doubt the answer of the Committee will be in the negative. The answer of the Government is, that we ought not to take that course. But, at the same time, while I give that answer on my own behalf and on the part of my colleagues, with the clearest conviction of its justice, it is impossible, I think, to put out of view the contingencies which must necessarily attend upon the prolongation of the war on which we have now entered. I cannot, so far as the views of the Government are concerned, hold out to this Committee any reasonable expectation that if, which God forbid! the struggle we are now entering upon should be prolonged for years, it would be in our power to secure for all those articles which have recently been relieved from duty, a continuance—a permanent continuance of that immunity. I fear, Sir, all we can say with respect to those objects of indirect taxation, as compared with those of direct taxation, is that which the Cyclops said to Ulysses, when he gave the promise of this privilege, that he would devour him the last. This is a matter which the Committee cannot put out of view. I speak strongly, and with the clearest conviction; but we cannot and
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do not advise you to add one farthing to the indirect taxation of the country. There is another proposition to which I anticipate the ready assent of the Committee. We have entered on a great struggle; but we have entered upon it under favourable circumstances. We have proposed to you to make great efforts, and you have nobly and cheerfully backed our proposition. You have already by vote added very nearly 40,000 men to the establishments of the country; and, taking into view the changes which have actually taken effect in the return of soldiers from the Colonies, and the reductions which might be made, in the present state of Ireland, in the amount of the constabulary force there, but which are not made in order to render our military forces disposable to the utmost possible extent, it is not too much to say the virtual addition to our forces by sea and land, as compared with the number twelve months ago, nearly reaches 50,000 men. This, Sir, looks like an intention of carrying on war with vigour. The wish and hope of the Government is, that it may be said with regard to this war—that it may be truly said of the people of England—what was not, perhaps, so truly said by a courtier and great poet, Dryden, of King Charles II.—
"He without fear a dangerous war pursues,
Which without rashness he began before."
That, we trust, will be the motto of the people of England; and we have the advantage that the sentiments of Europe, and, I trust, the might of Europe, are with us. These circumstances, although I am not sanguine—although it would be the wildest presumption in any man to pretend to say, when the ravages of war have once begun, where and at what point they will be stayed—yet these circumstances, I say, justify us in cherishing the hope that possibly this may not be a prolonged struggle. I will not go further than the modest epithet I have used, that possibly this may not be a prolonged struggle. But, as long as that possibility remains, the Committee will agree with me in thinking it not wise, in the endeavour to supply the wants of the country, to do it by a series of measures which shall worry different classes and different interests, different trades and different industries, disturbing everybody's calculations and operations, adding 100,000 l. to income here, 200,000 l. there, and 300,000 l. somewhere else. I am sure the Committee will agree with the Government, that

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is not the course which the present exigency requires. And whatever we do, I take it further for granted, that we are to endeavour to do it with a minimum disturbance to trade and industry. But there is one great question which it is impossible for me to pass by without notice. Is it right that we should ourselves make a resolute endeavour to meet the charges of this coming war, or would it be just, would it be manly, would it be worthy of the wealth and power of England, that we should charge those burthens upon our posterity? I am convinced, Sir, that at the present moment there is, both in this House and throughout the country, a strong opinion that to resort to the money market for a loan would be a course not required by our necessities, and therefore unworthy of our character. Sir, it may be that the demand I am now about to make upon the Committee—God grant it may be otherwise!—but it may prove, it is but the first of such a series of demands. I, therefore, do not speak simply, I frankly own, with respect to the present occasion. It is impossible for the Government—it is impossible for this House—it is impossible for the country to give any absolute pledge or to record any immovable resolution that the expenses of the war shall be borne by additions to taxation; but yet it is possible for us to do this—to put a stout heart upon the matter, and to determine that so long as those burthens are compatible with the principle, and so long as the supply necessary for the service of the year can be raised within the year, so long we will not resort to any systems of loans. I wish earnestly and emphatically to dwell upon this subject, because we are only upon the threshold of a war, and because I feel this, that if any small amount of inconvenience were to induce us to deviate from the course I have just presumed to state, we should not be acting worthy of ourselves or of our country. Sir, the reasons against resorting to the money market, the reasons against charging these expenses upon posterity, are too many and too grave to allow us to follow that course. I do not presume to lay down laws for other countries. There is no country, however, which has played so deeply at this dangerous game as England has done—there is no country which has mortgaged the industry of future generations to so fearful an amount. If I am told that there are conveniences, and no doubt there are five hundred conveniences, in having three per
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cent stock, into which men can buy, and out of which they can sell, I grant there are such, but I think you have ample scope for all these conveniences as long as you have 750,000,000 l. of Consols. Sir, as there are economical reasons, so there are moral reasons, both of which, I trust, will induce this country, and induce this House, as long as it is possible, to maintain the policy—the sound and honest policy—of providing supplies for the wars in which we engage. It may be very well for other States to pursue a different course. It is not for us to lay down rules for them. Take, for instance, the example of America—America without debt—America with a standing surplus; nothing could be more unusual—nothing could be more intelligible—than the way in which, when she annexes portions of territory to her own, at the cost of a war, she raises a loan to defray the expenses of that war, because, according to every rational principle of taxation, she knows what she has to deal with. She does not enter into English politics and calculation. She reckons upon her expenditure exceeding her means for two or three years, but she knows that it will be overtaken by the standing surplus of her income above her expenditure; and consequently, she avoids, and very wisely avoids, disturbing her system of taxation in order to meet a passing change, with reference to the cost of such war. The same doctrine, no doubt, applies to other countries. Take, for instance, our great and powerful neighbour, France, The debt of France, although it is considerable, is not to be compared for a moment to the debt of England. Indeed, I am sorry to say, such is our sad preeminence in respect to public debt, that I believe we far exceed, not only any one country, but all the countries of the world put together, in the amount of our debt. Any man who has had to do with the administration of the finances of the country, must feel how many sore evils it has given rise to—how many grievous burthens you are compelled to keep upon the people, because of the demands of the enormous, almost overpowering maw of our debt—how many good works you are obliged to defer, or if commenced brought to a stand—how you are obliged to narrow, and pare, and cut down the assistance you are desirous of offering to civilised and honest pursuits, because of the immense and crushing weight of this great, permanent, and standing debt. Sir, we should incur a great and serious responsibility were we

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voluntarily to add to the amount of that debt, and I am convinced that the Committee is not prepared at the present time to make an addition to that burthen, and I trust they will not be prepared at any time to take a course so pregnant with evil to the interests of the country. Sir, the principle has been supported by political economists of the greatest reputation. These are the words of Mr. Mill:—
"If capital taken in loans is abstracted from funds either engaged in production or destined to be employed in it, their diversion from that purpose is equivalent to taking the amount from the wages of the labouring classes."
And no doubt, without at all endeavouring to entangle the Committee in abstract arguments of political economy, I believe there is much truth in the allegations of those who say that if you raise war supplies by new taxes, you make each man take his share for himself out of the surplus of his income over his expenditure; but if, on the contrary, you go into the market for a loan, you act directly and to the full extent upon that portion of capital which is immediately available for the promotion of trade. In the one case, you get a large portion of what you want out of a superfluity of capital; in the other case—though I do not mean to say that circuitously the same effect would not ultimately be produced in each case—you go directly to that fountainhead where money is supplied, upon which in a great degree the activity of trade and the cheapness of productions must depend. But, Sir, in a less scientific point of view, I beg the Committee to listen to what Mr. M'Culloch says on this important subject in his work on taxation. He discusses the immense waste that attends upon all borrowed expenditure, and inquires into the best mode of meeting that calamity. He says:—
"There are no means whatever by which the profusion and waste occasioned by a war can be counteracted, except by the industry and economy of individuals; and to make these virtues be practised, individuals should be made fully sensible of the influence of war expenditure over their own private fortunes. The radical defect of the borrowing system consists in its deceiving the public on this point, and in its making no sudden encroachments on their comforts. Its approaches are gradual and almost unperceived. It requires only small immediate sacrifices, but it never relinquishes what it has once gained, while the necessity for fresh sacrifices, arising from their own ambition, injustice, and folly, as well as from those of their neighbours, continues as great as ever. Such a system is essentially delusive and treacherous. It occasions the imposition of tax after tax, hardly one of which is ever again repealed, so that
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before the public are awakened from their trance, and made aware of their actual condition, their property and industry are probably encumbered with a much larger permanent payment on account of the interest of the public debt than would have been required, had they submitted to it at once, to defray the expenses of the war."
Sir, I confess that that reason is perfectly sound and satisfactory, and that, irrespective of other considerations, it is perfectly true to say of the system of raising funds necessary for wars by loans, that it practises wholesale systematic continued deception upon the people. Under such a system the people do not really know what they are doing. The consequences are adjourned into a far future. What is desirable is that they should know the price they are called upon to pay for the benefits they expect, or the sacrifices they think fit to make in order that that which they do they may do on intelligent and reasonable grounds, not deluding themselves at the cost of bequeathing a charge on posterity. Sir, I do not hesitate to say that it seems to me, that if the economical and political reasons are strong for the adoption of that policy, not less strong are the moral reasons. The expenses of a war are the moral check which it has pleased the Almighty to impose upon the ambition and the lust of conquest that are inherent in so many nations. There is pomp and circumstance, there is glory and excitement about war, which, notwithstanding the miseries it entails, invests it with charms in the eyes of the community, and tends to blind men to those evils to a fearful and dangerous degree. The necessity of meeting from year to year the expenditure which it entails is a salutary and a wholesome check, making them feel what they are about, and making them measure the cost of the benefit upon which they may calculate. It is by these means that they may be led and brought to address themselves to a war policy as rational and intelligent beings, and may be induced to keep their eye well fixed both upon the necessity of the war into which they are about to enter, and their determination of availing themselves of the first and earliest prospects of concluding an honourable peace.
Well, Sir, having stated under their various heads what it is the Government cannot recommend the Committee to do, and what it is we feel convinced the Committee will not do, there cannot, I think, be much doubt remaining on the mind of any man as to that which the Government will propose, nor, I think, as to that to

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which the Committee will approve. Sir, when, in the month of April last, in discussing the subject of the income tax, I referred to the immense results which directly and indirectly it had achieved at that time—to the immense direct addition which it made to the resources of the Exchequer, and to the indirect and collateral effect which it appears to have had in invigorating the whole of our financial system—and when I ventured to state to the Committee that this was the great engine which you must look to use in the event of European necessities, I had not a shade of serious apprehension as to the earliness of the period at which I was to call upon the Committee to give effect to those views. But it is true that you have here a mighty engine—an engine which you may use to an extent almost equal—I will not say almost equal, but to an extent equal to a great part of what any war can demand, and an engine which is well equal, and more than equal, to the issue to which we now propose to apply it. Sir, the estimated receipts from the income tax at the present rate for the next year I have taken at 6,275,000 l. In that sum is included a small amount of arrears properly belonging to the present year—perhaps from 100,000 l. to 150,000 l.—but which will not have been levied before the 5th of April, and which we hope to overtake in the next year. The proposal which the Government will make has in view the repairing the deficiency upon the income, as compared with the expenditure, according to my estimate amounting to 2,840,000 l., and likewise of providing that moderate margin which, upon the Estimates, it is the wisdom as well as the pleasure of this House usually to provide. I propose, Sir, then, on the part of Her Majesty's Government, that we should increase the income tax by one-half, and should levy the whole addition for and in respect of the first moiety of the year—in other words, that we should double the income tax for half a year. Now, Sir, it may, perhaps, be thought, that our more obvious course of proceeding would have been to raise the rate of income tax by a smaller amount for the whole year. But I have already stated to the Committee that in the circumstances in which we now stand it is impossible for us to form a reasonable estimate of what will be the future cost of the warlike operations, upon the scale on which they are now contemplated, in the event of the contest being prolonged
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throughout the year. I wish the Committee, therefore, distinctly to understand that we cannot guarantee that the funds for which we now ask will suffice to carry on the active operations of war during twelve months, and, therefore, not being able to look forward to so long a period, we have thought it best to propose that the addition which it is now intended to make to the charge should be an addition to be levied off the income of the country, in respect only of the first portion of the year. Several reasons justify this course. The effect of that scheme will be as follows:—In the first place, that it is the only measure by which it will be in our power to raise the whole additional sum required within the year. The Committee will please to bear in mind that the levying of direct taxation is always six or nine months in arrear of the period to which the tax applies. When you enact an increased duty upon spirits, from the moment you have voted the duty the tax takes effect, and perhaps within a week or a fortnight, or a few weeks at any rate, some of the proceeds will find their way into the Exchequer. But when you enact an increase of the income tax, that increase begins to be chargeable for a period, which period commences on the 6th of April, and there cannot be any money levied under the authority of such a vote of yours until the quarter between the 10th of October and the 5th of January. It is, therefore, only by laying the increase of the tax upon the first moiety of the year that we can possibly levy it within the year. But, Sir, that is not the only reason that has impelled us to the course we have resolved upon. I have already stated to you that we think it our duty to levy upon the space I have mentioned, and to leave the question unprejudiced as to the further augmentation of taxes, in case the war expenditure should unhappily require it. If, therefore, I were now to propose to double the income tax for the whole year—to raise the rate of the income tax for the whole year—I must necessarily do one of two things, either of which would be highly objectionable. On the one hand, if the Government asked you to give us a very large increase of the income tax for the whole year, then we should ask for a legal authority to levy an amount of money which it is possible we may not require. But, if, on the other hand, we ask you to levy the income tax for the whole year, but to give us an amount only sufficient

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to cover the present deficiency, then we should be in the difficulty that we might very probably be compelled to come to you again, and ask you again to alter the vote of the income tax in respect of the first moiety of the year, which you have already altered once. Therefore, Sir, the course which I recommend is much the simplest course; it is a course which will give the fullest effect to the principle of levying the tax within the year, and will at the same time most fully preserve the control of the House of Control, that the proposal which I make should take the form which I have given it, namely, the form of doubling the income tax for the half year. The form of the enactment will be very simple—that the rate of income tax (I am not using the technical language of the Resolution), that the rate of income tax, granted by the authority of the Act of last Session shall be raised from 7d. to 10½d. in the pound; and that the whole of the moiety so added to the tax shall be so leviable in respect of the year in the first half-year. Sir, I will now state what will be the fiscal results of that proposed addition to the income tax. As I have before stated, irrespective of any change in the law, the income tax from April, 1854, to April, 1855, would yield the sum of 6,275,000 l. The moiety of that sum of 6,275,000 l. would be 3,137,500 l. But, then, in the case of the income tax, the expenses of collection vary inversely as in the case of indirect taxes. By increasing the amount of indirect taxation, you generally increase the expense of collection. In the case of the income tax, if you increase the tax you diminish the percentage of the cost of collection. The reason is obvious, the sources of supply are not diminished; the assessments are the same; the taxpayers are the same, and you collect the larger amount at the same cost as the smaller. It is true that some part of the expenses of raising the tax being defrayed by percentage, there would be of course a certain augmentation in those expenses; but upon the whole, the effect is, that by adding a moiety to the tax you add somewhat more than a moiety to the amount actually raised. The proceeds of the tax, as I have taken it, would amount to 3,307,000 l. If you add that sum to the 6,275,000 l. which I have already estimated as the proceeds of the tax under the present mode, you will find that it gives for the whole produce of the tax, from April, 1854, to April, 1855,
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the sum of 9,582,000 l. Now, Sir, it is a very simple matter to rectify the general balance of income and expenditure. As I stated before, the income for the year 1854–5 I estimated at 53,349,000 l. I now propose to augment that income by an addition to the income tax which will yield 3,307,000 l., so that the total income of the country, if it should please the Committee and the House to adopt that proposal, will be 56,656,000 l. The expenditure, on the other hand, as estimated, stands at 56,189,000 l. So that there will be, by way of provision for the services of the year, a sum amounting to the whole estimated expenditure, and likewise a small surplus in hand, of 467,000 l. The Committee will perhaps allow me to restate briefly the objects I purpose effecting by the arrangement which I have endeavoured to explain. They are simply these:—First, to raise the whole sum required within the year; secondly, to avoid all risk of again disturbing the rate of the income tax for the first moiety of the year; and, thirdly, to confine the demand of increased taxation strictly to the services which we have in hand. Sir, I have stated to the Committee that the Government are not of opinion that it would be compatible with their duty to propose, under the present circumstances of the country, to surrender or sensibly to impair any branch of the present revenue.
There are various subjects that have been discussed, and in which portions of the public or the entire public may feel a deep interest, and some of which it would have been my pleasure and satisfaction to have submitted to this Committee, had the circumstances of the country permitted me to take such a course. But, as matters now stand, we feel it our duty to hold by the revenue as it at present exists. But there is one change which is a matter of interest to the commercial community, and to which it is right that I should advert, because it is a change which, while it may afford, upon the whole, I trust not an inconsiderable relief to those, or some of those, whom it affects, yet it will not, I think, be attended with loss to the Exchequer. I refer to the case of stamps which are chargeable upon bills of exchange. I need not detail to the Committee the state of the law with regard to that very important subject. It has been placed clearly before the public in consequence of one or more cases which have recently been brought before the courts

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of law. Suffice it to say that it is most unsatisfactory, and demands the adoption of some altered provision. We have thought fit up to the present time to charge bills of exchange drawn at home with a stamp duty, and to exempt all bills which are drawn abroad. Although they come into this country—although they are negotiated in this country—although they act as instruments of credit and circulate in this country—yet they circulate free of stamp duty. This is not the policy of other States. France has applied—and, so far as I can discern, has rationally applied—a uniform system of stamp to all bills of exchange, whether they are home drawn or whether they are foreign drawn. But this is not by any means an abstract question. As the matter now stands we have reason to believe that the law is evaded, and that the Exchequer is defrauded by dishonest persons, who, when drawing bills at home for purely domestic purposes, date those bills abroad, and thereby escape the stamp duty. But the evil that is sustained by the Exchequer is a very small part of the mischief. The serious part of it is this—that those bills get into circulation—that they are discounted by one person and another, and thus pass from hand to hand. They come into circulation with foreign dates and foreign places printed upon them, and get into the hands of persons who cannot possibly know anything of their origin, and these persons, if they have occcasion to sue the acceptor of such bills, find that in law the security is good for nothing. It is impossible to leave the law in such a state as that without seriously impairing the tone of credit in the great mercantile circles of this country. There is another reason why it is most desirable to alter this law, and that is the extreme inequality and the extreme impolicy of the present stamp duties on bills of exchange. The law is constructed upon the principle of laying upon small bills of exchange an almost prohibitory amount of duty, whilst upon bills of large amounts it lays a duty that is scarcely sensible at all; so that, while persons who deal with large sums of money scarcely feel the bill stamp, the person who uses capital in very small amounts is almost entirely precluded from the use of this convenient machinery for credit. A bill of the amount of less than 20 l.—that is, a bill of between 5l. and 20 l.—is liable to pay a stamp duty of 1s. 6d., and, supposing it to be a bill for 12 l. 10 s., and its duration to be for two months, that amounts
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to the rate of 12 s. per cent for the two months, or 3l. 12 s. 6d. per cent per annum. The effect of the bill stamp upon bills of that amount is about double the rate of interest that a person would have to pay for the money. If he pays at the rate of 3l. 12 s. 6d. for the stamp, and three or four per cent for the money, he is using money that costs him six or seven per cent. As you move upwards the amount of the burden becomes less and less, but it is a serious burden; it is a burden of more than one per cent per annum until you pass bills of 100 l. each. That is hardly reconcilable with justice to those whose credit may be perfectly good—whose business may be as sound as that of the wealthiest house in London—who may be as prudent as any banker or capitalist in the country, and who yet may be precluded from availing themselves of this most valuable resource. The proposal that will be made is this: I propose to adopt an ad valorem scale, in lieu of the present scale, at the rate of 3d. for each 25 l., or 1s. for each 100 l. upon short bills; and at the rate of 4d. for each 25 l.; and 1s. 4d. for each 100 l. on long bills. I propose to carry out the scale with varying intervals; the whole measure shall be laid before the Committee in the form of a Resolution in the course of a few days, and I propose to carry the scale upwards to 5,000 l. I do not know that it is worth while to carry it any further. I propose to abolish altogether the distinction that now exists between home-drawn and foreign-drawn bills, and to make them pay precisely the same rate of stamp duty. I also propose, for the convenience of the community—and a very great convenience I believe it will be—not to adopt the system which is enforced in some foreign countries of impressing stamps. The effect of that system is, that the holder of the bill before he can issue it is obliged to carry it to the public office, where he must have it stamped, and then he may issue it. Instead of taking him to the public office, we propose to take the public office to him, by permitting and, indeed, requiring him to use that simple invention, the adhesive stamp. Those stamps people can keep by them, and there will therefore be no obstruction whatever to the course of trade by the adoption of this proposition. It is important, with regard to the convenience of a large class of persons, to consider the time that may be occupied in the preparation of dies for this purpose. The time so occupied is always considerable, especially because it is not

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within the competence of the revenue department, compatible with law, to make those dies until they can be made under full legal authority. Every exertion shall be made to expedite that process; but I do not expect that this change in stamps upon bills of exchange will take effect until the 5th of July in the present year. If it can be done at an earlier date, with such notice to the parties as is convenient, it shall be done, but, as I am at present advised, I am doubtful whether it can be accomplished previous to the date I have mentioned. I will now briefly state to the Committee how this change will affect this branch of the revenue. The revenue for the year ending upon April the 5th, 1853, from stamps upon bills of exchange amounted to 555,000 l. As near as we can tell the average rate of the present duty—although it is most unequally distributed—it is 1s. 6d. per cent; we propose to equalise it at the rate of 1s. per cent. I may say generally that the effect of this change will be to lower the rate of duty upon all bills of exchange of amounts less than 1,000 l., and to raise it somewhat in amount upon those above 1,000 l. Estimating, then, the future income at the rate of 1s., instead of 1s. 6d. per cent would give a revenue of 434,000 l.; but I have no doubt that the effect of this law—as it will make a system applicable to small amounts of money which hitherto almost entirely, but not quite, has been inapplicable to them—will be to draw a good deal of capital into action in this form, which hitherto has been dormant; and I consequently anticipate that a considerable accession to the revenue will take place from the issue of a larger number of stamps upon bills of exchange for small amounts. From that source I anticipate an increase of 60,000 l.; I will allow 50,000 l. for the proceeds of the stamps on foreign bills of exchange, and these sums added together will give a total revenue of 544,000 l., which is within a trifling sum—a sum of 11,000 l.—of the revenue at present derived from that source.
There is only one other subject on which I have to trouble the Committee; it is one that does not require me fortunately to trouble them at any length. I shall lay upon the table to-night a Resolution, having reference to the income tax, and intending to give effect to the proposal I have stated, but I have also given notice on the Votes that I intend to ask the House of Commons to-night for a Vote of 1,750,000 l. of Exchequer bills, and this Vote will require from me a few words of
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explanation. The Committee are aware that the balances in the Exchequer are low at the present moment. I must confess that I do not think that that is an unfortunate circumstance, taken in conjunction with the occurrences that are going on, and the demands that are made upon us. I am afraid that if there had been 4,000,000 l. or 5,000,000 l. in the Exchequer over and above what was required for the public service, there might have been a strong temptation to say, "we will raise money by taxes for the war expenditure when it is wanted, but here are those balances, that are lying perfectly idle; let us apply them in the first place." Whether that temptation would have been a strong one or would have been a weak one, it has, however, been removed; and at present the balances are in such a condition, that although we could have gone on perfectly well supposing no extraordinary demands had been made upon us for military expenditure, yet in consequence of those demands they would require somewhat to be replenished. We shall ask for an addition to the income of the country amply sufficient to cover the deficiencies that are now estimated; but I also think that we shall not realise the income derivable from that addition of revenue until towards Christmas. While, on the other hand, the expenditure for which we have to provide, or at least a large portion of it, is an expenditure that must be felt in the next quarter, or in the following quarter. We therefore thought it prudent—and I think the Committee will have no doubt of the prudence of it—to ask for power, to be exercised in case of need, to make a moderate issue of Exchequer bills. At the same time I think it is very important to remove misapprehension on the subject, because there is a natural jealousy about making additions to the unfunded debt. I must confess that, if it were compatible with other objects, I think it should be the great object of a sound financial policy to effect a reduction of that debt. I am therefore perfectly desirous that the Committee should understand, when the authority has been given to raise 1,750,000 l. by Exchequer bills, that I now ask that as an authority that will only be exercised to such an extent as may be found convenient for the public service. I do not expect that it will be found necessary to exercise that power to the full extent, but probably it may be necessary to exercise it in part; but if it should be exercised to the full extent, and if every

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farthing I ask for authority to issue should be issued in consequence, I wish the Committee to understand that the unfunded debt after the full exercise of that power will only stand at the point it stood at twelve months ago. At that period the unfunded debt amounted in round numbers to 17,750,000 l.; at the present moment the unfunded debt amounts in round numbers to 16,000,000 l.—large purchases of Exchequer bills having been effected from various sources, chiefly by the National Debt Commissioners, during the last year, and 400,000 l. having been exchanged for permanent Exchequer bonds. That being so, I simply propose to take power to fill up the margin which I have already created, and I will make in no case any addition, except, perhaps, to the extent of 10,000 l. or 20,000 l. to the amount of the unfunded debt, in consequence of the measure I now propose.
I do not think, Sir, the Committee have any reason to be dissatisfied with the state of the public credit as indicated by the condition of the unfunded debt. It is quite true that it has been found necessary to make a great increase in the rate of interest upon Exchequer bills. At present the rate of interest upon Exchequer bills is 2d. a day, that is, in round numbers, 3 per cent per annum; at this time last year, or, at least, a little later, the interest on Exchequer bills was only at the rate of 1d. a day, or 1½ per cent per annum. It has doubled in the interval, owing to the great pressure upon the money market. But the increase of interest has not been confined to this country—the same increase has taken place in France. In France twelve months ago the Bons de Trésor, which correspond to our Exchequer bills at short dates, bore 1½ per cent interest—they now bear 3 per cent; the long bills in France were twelve months ago at 3 per cent, and they are now, I believe, at 5½ per cent; and the Exchequer bills that are floating in this country have, until within the last two or three days, carried a premium of from 19 s. to 22 s., being at the rate of 3 per cent per annum. These Exchequer bills that I now ask the Committee to authorise the Government to issue are in reality what the other Exchequer bills falsely purport to be, that is, they are Supply Exchequer bills. The mass of unfunded debt still goes by the name of Supply Exchequer bills, though they have no connection with supply at all. They constitute a debt permanent in itself, but
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the obligations of which are renewable from year to year. When under a regular Sessional Act you issue authority to raise so many millions on Exchequer bills, you do so not to pay them when they become due, but to replace them with other Exchequer bills. But these are Exchequer bills of a different class; they will be issued in anticipation of supplies for which you shall have given authority; and when the supplies shall come in, and when the Exchequer bills shall have run for their appointed term, they will be paid out of the supplies when they are realised, and no more will be heard of them. That is the case with respect to the Exchequer bills, but they are connected with a subject to which I adverted when I commenced what I had to say, on which some information is due from me to the Committee. You will no doubt desire to know the situation in which the public financially stand with relation to an operation, abortive in respect to its main parts, which was last year attempted on the public debt. The Committee are aware that the commutation of stocks which it was proposed to effect succeeded only to an insignificant extent. The whole amount of new security created in consequence of the commutation, was about 3,500,000 l.; but of the main stock that was to be compulsorily paid off, unless commuted under the Act of last Session, 8,000,000 l. have been, or will be, presented for payment; and the public balances, which, as I have said, are low, whereas twelve months ago they were high, have been employed in paying off those minor stocks, and will be employed in paying off what remains to be liquidated from them on the 5th of April, together with supplying what will be necessary for another useful operation, namely, the liquidation of a debt that was charged some time ago upon the landed revenues of the Crown. It is not possible for me to give the Committee a precise and accurate statement of the cost upon the one hand, and the saving upon the other, connected with these operations. I can present to you the saving, but I cannot precisely present to you the set-off against that saving. The saving stands as follows:—Annual diminution of charge by stocks paid off in June, 1853, 186,000 l.; annual diminution of charge by stocks to be paid off in April next, 63,000 l. The saving effected by the liquidation of the debt charged upon the land revenues of the Crown which was paid off out of the public balances is 27,000 l.; the

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savings effected by the extinction of various minor charges in the details of those operations is 9,000 l.; and the total saving is 285,000 l.; but, mainly in consequence of the large drain upon the public balances, it has been necessary to apply the sinking fund money, which would otherwise be available for the purchase of stock, to a considerable extent towards the redemption of deficiency bills. I think that 2,300,000 l. has been already applied in that manner, and a further sum will be so applied, so that the Committee and the country must take, as a set-off against the saving I have shown, the amount of dividend payable upon the stocks which would otherwise have been extinguished. It is impossible to say to what amount that saving would have reached; but so far as the application of those surpluses have at present gone, or can now be foreseen, it would amount to about 102,000 l. I think it is possible that it may be necessary to make a further similar application to the extent of from 1,500,000 l. to 2,000,000 l.; and, if so, I ought to add 50,000 l. to the 102,000 l. as a set-off against the saving by the extinction of stocks. If, therefore, I take it at 152,000 l., that will leave a total net and permanent saving, in consequence of the employment of the public balances, under the Act of last year, of 133,000 l. per annum. I stated last year, that I thought, however unfavourably circumstances might go, there could not be much less than a permanent saving of 100,000 l. a year. And so far as I am able to correct that statement by experience at this time, I shall now put it down at 133,000 l.
The proposition I have made involving some considerations of policy that require a great deal of reference to detail, has led me into a statement of considerable length; but the Committee will, I know, comprehend that they are capable of being summed up in a few words. Setting aside the collateral measure respecting the bill stamps, and some other questions of great interest to various classes—such as the question with respect to the refining of sugar, upon which I propose to declare the intentions of the Government on some day after Easter. Setting aside those secondary and collateral points, my proposal is this:—I would propose simply in the first place, that you agree to double the first half-year's payment of the income tax in respect to the year 1854–5; and that you should make provision for the interval that
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must elapse before the tax is actually levied, by the issue of Exchequer bills, which issue is to be within the amount of 1,750,000 l., and which Exchequer bills, if issued, will be paid out of the growing produce of the revenue. We have sought, Sir, in this proposal to meet the obligations which were, as we thought, attached to us as a Government. We have sought to make a competent provision for the immediate exigencies of the country; and for carrying out the operations that are in prospect with vigour. We have sought also to leave the House of Commons the greatest possible control over the public expenditure, and have placed ourselves in such a position, that if the operations of the war should be prolonged, it will be necessary for us again to come before you, and ask you further to enlarge the resources of the Exchequer. If that necessity shall arise, Sir, we shall come again with the same confidence with which we now make our demand; and we are satisfied that it will be the opinion of Parliament that in thus proposing a measure which is adequate for the needs which have been made the subject of reasonable calculation, and in leaving for a future period of the Session any measure that may be required for further needs then emerging, we have taken the course that is most agreeable to our own position and duties as the Ministers in a constitutional country, which is most for the interest of the people of this country, and which we are satisfied will not tend to any forfeiture of the approval or confidence of the House of Commons. Sir, I now propose to put the Resolution with respect to the Exchequer bills. With respect to the income tax Resolution, I propose that the Committee of Ways and Means shall sit again, for the purpose of receiving it, on Monday next.
The Resolution that 1,750,000 l. Exchequer bills be voted having been read by the Chairman,
MR. E. BALLsaid, that in reference to the proposed increased income tax, payable in April, he thought it unfair that the whole increase should be made payable in the first half-year. Supposing a tradesman, or a merchant, had returned his income last year at 2,000 l., he would have to pay the increased rate in April of the present year, when, in fact, his income might have fallen to 1,000 l.
THE CHANCELLOR OF THE EXCHEQUERsaid, he was not sure that the hon. Gentleman was precisely aware of the mode in which the income tax assess-

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ment was levied. Every assessment was made annually, but the tax was levied in two moieties. The assessment would remain precisely the same, and it would be levied upon precisely the same basis as at present, only that it would be 10½d., instead of 7d.—and 7d. instead of 5d.—due in respect of the whole year, not to be paid in two equal payments of 5¼d., but in one payment of 7d., and the next of 3½d.
MR. HUMEsaid, he thought the Committee must have heard with great satisfaction the statement of the right hon. Gentleman, who had laid the facts before them with great clearness. He would only remark on the speech of the right hon. Gentleman as another step in the removal of indirect taxation, and he should refer to it by and by as a ground for a further reduction of indirect taxation which would not entail any loss of revenue, while it would confer great benefits both on consumers and producers. As to the expenditure proposed he would say nothing, as he was willing to adopt the statements of the Government, who, he believed, had acted wisely in proposing an addition for the year only, leaving the wants of the ensuing year to be dealt with in the next Session of Parliament. He had hoped that the Government intended to levy the property tax upon incomes of a lower amount even than at present. He was clearly of opinion that all real property should be charged, and that all incomes down to 50 l. or 60 l. a year should be brought within the scope of the tax. He hoped the Government would reconsider that proposition. He wished to make a remark upon the eagerness which people had displayed in behalf of our going to war. Before that house had had an opportunity of calculating the expense or estimating the other evils which would attend the struggle, meetings of corporate bodies were held in different towns, and resolutions of a strong character passed, for the purpose of urging upon the Government the propriety and duty of precipitating a sanguinary contest. It was only fair that persons in those towns who were thus anxious for war, and who clamoured for it without any adequate knowledge of the circumstances, and who were utterly incapable of forming a sound opinion upon it, should be called upon to pay towards defraying the expenses of the war. With the exception he had mentioned, he considered the steps indicated by the right hon. Gentleman the Chancellor of the Ex-
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chequer perfectly satisfactory. He congratulated the right hon. Gentleman upon his proposal to relieve the community by equalising the duties upon bills of exchange; but there was another tax which he (Mr. Hume) regretted had not been attended to, the tax upon insurances of all kinds. He could prove that, in consequence of the present duty on insurances, not one-third of the property of this country that ought to be insured was in that condition. The duty was a tax upon prudence and frugality; it ought to be as light as possible, in order that the principle of insurance might be generally taken advantage of, so that the working man might insure even his tools against danger, and that at the least every householder might participate in its benefits. The difficulty of insurance ought to be mitigated as much as possible. At present a man had to pay 1s. 6d. for the insurance and 3s. for a Crown duty, which made the tax a very heavy one. He trusted his right hon. Friend would take this matter also into his consideration at the earliest convenient period. In a system of taxation, wherever exceptions were made, injustice was perpetrated. There were exceptions, for example, made in behalf of a certain class of property which was not liable to the payment of the insurance duties. He did not see the justice of inflicting an impost upon manufacturers' property and exempting the property of agriculturists. On the same wise principle that the Chancellor of the Exchequer was about to apply to bills of exchange—namely, the uniform rate—he (Mr. Hume) called upon him to remedy the evils that existed with regard to life and fire insurances. He would not, at that time, allude to other duties, such as that on paper, which, he contended, might be remitted without a loss to the revenue; but he certainly wished this particular tax modified, as its continuance in its present form discouraged persons from insuring their property, and, of course, subjected them to a large amount of unnecessary risk. He also wished, before sitting down, to suggest that the Government should apply taxation in such a way, as to extend it, as far as possible, to all real property, no matter how small in value.
SIR HENRY WILLOUGHBYsaid, he hoped the right hon. Gentleman would afford some explanation to the Committee with regard to the Resolution on the table, namely, for the issue of 1,750,000 l. in Exchequer bills. The right hon. Gentleman

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said, that there would be a surplus of about 2,854,000 l. on the year 1853; and the question he (Sir H. Willoughby) wished to put was, had we increased the national debt in the year 1853—had any new three per cent. stock been created? He asked this question, because from a paper on the table of the House, it appeared that 1,274,000 l. of fresh stock had been created, 383,000 l. of it in May last, and 891,000 l. in the autumn of that year. That was a very important circumstance, because it was perfectly illusory to talk of surpluses if the national debt was being increased. Again, the debt had been increased without that house being aware of it; and he called upon the hon. Member for Montrose (Mr. Hume) to observe the manner in which the increase had taken place. The Commissioners for the Reduction of the National Debt had last year authorised a certain sum of money belonging to the savings banks, amounting to nearly 1,200,000 l., to be invested in Exchequer bills. He trusted that the Committee would mark that fact. At the time when the right hon. Gentleman most unwisely reduced the interest on these bills to 1d. per day, the premium fell, and they became very nearly at a discount. The effect of the measure was to shake the confidence of holders of this species of security; but the fact was, that the 1,200,000 l. to which he had referred, had been converted into Exchequer bills; and what was the process by which it was done? A clause in an Act of Parliament, the 4th Will. IV. sect. 25, gave the Commissioners for the Reduction of the National Debt a power of changing the savings-bank money from Exchequer bills into stock, and vice versâ; and then there was a power of increasing the debt, according to the number of Exchequer bills that were held. The consequence was this, that 1,200,000 l. of the three per cent. stock had been created in the year 1853. What, therefore, was the use of that House granting any more Exchequer bills; for they would have just the same thing done over again, and the same result attained, through the tortuous process which he had stated? He quite agreed in the proposal to defray the expenses of the war by the votes granted in each year; but what he objected to was, the creation of additions to the debt such as he had described, by an indirect and unconstitutional process, and without the knowledge of the House of Commons, thereby involv-
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ing the whole financial operations of the country in mystery. If they wanted to increase the debt, let it be done directly and openly. This point went to the very root of the right hon. Gentleman's financial statement, and it ought therefore to receive full explanation. The right hon. Gentleman the Member for the University of Cambridge (Mr. Goulburn) had years ago pointed out the enormous evil which transactions of this nature inflicted on the savings banks. He would now abstain from entering into other questions touched upon by the Chancellor of the Exchequer, because he would have other opportunities of expressing his opinions upon them.
MR. W. WILLIAMSsaid, he gave the Chancellor of the Exchequer every credit for the means he had suggested for raising the necessary surplus for carrying on the impending war, but he must remark that the course pursued by the right hon. Gentleman was very different to that pursued by Mr. Pitt at the commencement of the last war. In the latter case the levying of taxes for the purposes of carrying on the war was postponed for between four and five years, and the consequence was, that between 100,000,000 l. and 200,000,000 l. were added to the national debt, which the people of the present day and their posterity had to pay. In the year 1797, before the war taxes were laid on, 34,000,000 l. were borrowed, though only 17,000,000 l. were actually received. He (Mr. Williams) should not have risen to address the Committee on the present occasion, if it had not been to remind the right hon. Gentleman that he had promised last Session to extend the legacy duty to tithes, and he (Mr. Williams) expected that proposition would have been carried into effect now. He had also understood the right hon. Gentleman to propose to extend the probate duty to real property; and, had those two points been brought forward now as part of the Budget, he believed nearly all the increase proposed in the income tax might have been dispensed with. In the absence, however, of extended legacy and probate duties, he highly approved the course pursued by the right hon. Gentleman in raising the addition required in the revenue by an increase of the income tax, instead of interfering with the reductions made upon important articles of consumption in the Budget of last year.
MR. HENLEYsaid, he did not rise to offer any observations upon the general features of the right hon. Gentleman's

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plan, but merely to draw the attention of the Committee to one portion of it only, that referring to the issue of 1,750,000 l. in Exchequer bills. The right hon. Gentleman had laid down the proposition that it was of great advantage to a Chancellor of the Exchequer to have no money in his pocket at a time when he expected a heavy demand for it. Now, well knowing in what financial school the right hon. Gentleman had studied, he (Mr. Henley) confessed that he was rather staggered at the remark, for he had a clear recollection that when the late Sir Robert Peel took the management of the finances of the country in the dilapidated state in which they were handed over to him in 1841, by Gentlemen some of whom were now sitting on the Treasury bench, if there was one point upon which the right hon. Gentleman laid greater stress than another, it was, that the Government should keep a balance in the Exchequer, in order to render them not only independent of circumstances, but also independent of the Bank of England. He had a perfect recollection of the stress that great statesman laid upon this point, and the efforts he made, with the right hon. Gentleman the Member for the University of Cambridge (Mr. Goulburn) as his Chancellor of the Exchequer, to put the Exchequer balances in a satisfactory state in this respect. What was the position in which we now stood? For reasons which seemed good to the right hon. Gentleman, the balances in the Exchequer had been cut down to what he had termed an inconvenient amount. That was his own confession, and to remedy this state of things he asked the Committee to grant him first a temporary supply—it remained to be seen whether that would be temporary or permanent—by the issue of Exchequer bills to be paid off when the money came in at Christmas next. Of course he (Mr. Henley) did not understand how the balances in the Exchequer would be affected by the process; but in the meantime the expenditure would be going on pari passu with the issue, consequently the surpluses in the Exchequer could not be expected to differ very much from what they were at present. Be that as it might, however, it appeared that on account of the low point to which the finances were brought, and the small balance remaining in the Exchequer, the country was now to be punished by having to pay a double income tax on the half year. [The CHANCELLOR of the EXCHEQUER intimated dis-
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sent.] The right hon. Gentleman shook his head. But he (Mr. Henley) took it that if the receipts came in in the ordinary way, the balances remaining in the Exchequer would have tided him over that period without having to issue 1,750,000 l. in Exchequer bills, and require the country to pay two half-years' income tax in one, for that was what the right hon. Gentleman's proposition really amounted to. Last year the right hon. Gentleman complained that he was so overwhelmed with the money he had in the Exchequer that it was absolutely necessary to resort to some extraordinary means to get rid of it. Well, he had succeeded in getting rid of it, and what was the result? Neither more nor less than this—he proposed to issue Exchequer bills to the amount of 1,750,000 l., and the community would have to pay by next Christmas an amount of income tax that ought to have been spread over another half-year. If they proceeded in this course, therefore, he apprehended the country would continuously feel the evils and inconveniences which were attendant upon the operation of cutting down the balances in the Exchequer. With regard to the general propositions of the right hon. Gentleman, some of his statements were undoubtedly sound. The right hon. Gentleman had said that those classes who had urged the Government to go to war ought to sustain the pressure of the increased expenditure. That was a very sound principle, but he did not think the right hon. Gentleman in his scheme had consistently adhered to it, because the extra taxation which it was proposed to impose would fall on a limited number of individuals, and the result would be, that those parties who had been most clamorous for the war would in no sense have to bear their fair share of its burdens.
MR. GLYNsaid, he must remind the right hon. Gentleman (Mr. Henley) that the Exchequer balances to which he had referred had been applied to reducing the floating debt, and what was now asked for was simply that a portion of that floating debt should be revived. He could see no good whatever in keeping large balances on hand; it obstructed commerce while it diminished the currency; but, on the other hand, a great saving was effected to the country by reducing the interest payable on the floating debt. His object, however, in rising was not so much to comment upon the observations of the right hon. Gentleman opposite, as to direct attention

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to the operation of the Currency Act of 1844. It should not be forgotten that we were about to engage in a long and arduous contest for the first time under the operation of that Act, and he must confess, he for one did not feel quite secure, in this state of things. He was perfectly aware that the resources of the country were larger now than probably they ever were at any previous time; but, nevertheless, he could not help feeling that the operation of that Act upon the commerce of the country, combined with the obvious drains which must be made upon the resources of this country for foreign purposes, was a state of things which should be looked to with some degree of apprehension. By that Act a limit was put upon the currency of the country, or, in other words, the issues of the Bank of England were restricted to a particular amount, while large issues which before had been at the disposal of the joint-stock and country banks were altogether withdrawn from the use of the country. By the operation of that Act the circulation of the country banks was fixed at a certain amount, and a very considerable reduction had taken place in the amount of those fixed issues—namely, about 700,000 l. Now, as the machinery of the Act provided the mode by which this reduction might be replaced, he could not see any reason why the Government should not avail itself of the opportunity which it now had of replacing this 700,000 l.—a very large sum in connection with fixed issues—thereby increasing that amount not to the Bank of England, but to the public treasury. He would not detain the Committee any longer, but he hoped that the right hon. Gentleman would turn his attention to this point, which presented a means by which he might assist his finances rather than otherwise.
MR. VANCEsaid, that as one of the merchants of that House, he objected to the operation which would result from the right hon. Gentleman's proposition with regard to Exchequer bills. That operation would fall, by his legislation, heavily upon one class of holders, and that class the one not best able to bear the loss. No doubt the Chancellor of the Exchequer was aware that the drawer of a bill of exchange had the entire profit of the original transaction, and those parties among whom it circulated afterwards had perhaps a small rate of interest upon the discount—or a small commission. Now,
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in Ireland with regard to bills of exchange that rule was observed—the drawer paid for the stamp, and among all other parties the bill circulated without any charge, except the ordinary charge of transfer. But take, for instance, bills of the North American Colonies. Bills from those countries circulated very largely in England. They were unstamped, and it would be a rather dangerous measure for this country to attempt to stamp them—an attempt of that kind conjoined with others had dissolved the union between themselves and the United States. The bills came from the Colonies to an agent in England, to make payments of any kind, and they were placed to the credit of the merchant, and passed through his hands without any profit. The merchant received and opened the letter, and he was forced to go to the Stamp Office and get it stamped, while the original drawer was exempt. The hon. Gentleman who had last spoken was, no doubt, well aware of the nature of these transactions, and, he was sure, would bear him out that it was unfair to place the taxation of this kind upon one class of holders of bills. Then, with regard to the proposition of ad valorem duty upon bills of exchange—the drawer of a small bill of exchange was a retail dealer, while the drawer of a large bill was most likely a Liverpool broker, who transferred large quantities of merchandise for perhaps only one-half per cent commission. He regretted that any additional taxation should be placed on the transfer of these commodities in gross, which would affect them, and he trusted that, before these propositions were pressed upon the Committee, they would be reconsidered by the right hon. Gentleman, and that he would take the opinions of the mercantile communities upon them.
MR. MALINSsaid, the question which the right hon. Gentleman had propounded was one of the gravest that could be placed before that House. It was, whether they should borrow money to carry on the war, or whether it would be a wise and prudent course to pay their way as they went on. He quite concurred that it was wise to pursue the latter course. But the right hon. Gentleman had proposed to raise the income tax from 7d. to 10½d. in the pound; and, in order to procure the money, he had proposed to raise the whole additional increase in the first half-year. In that he should concur, also, if it affected himself only, or those persons who could meet the

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demand made upon them; but when he remembered what a numerous class were those who saw the approach of the tax-gatherer with dread, he would suggest to the right hon. Gentleman whether it would not be wiser to ask for half the increase in the first half year, and the other half in the second. It would make the burden easier to those who were scarcely able to bear it; and it would not inconvenience the Government, as the right hon. Gentleman had stated that he intended to issue Exchequer bills in anticipation of the supply. He trusted that the suggestions thrown out by the hon. Member for Kendall (Mr. Glyn), and those which he had brought to his notice, would receive that attention which the gravity of the subject demanded. He would ask the right hon. Gentleman, who was entering on a war which would cost so vast a sum, whether he was prepared to carry on that war with a restricted currency? By the repeal of the Act of 1844 the country was saved from a national bankruptcy. [Cries of "No, no."] Hon. Members might say no, no; but then it was a fact that the reserved notes in the Bank of England had fallen to 900,000 l., and the discount had risen to 8 per cent. Commercial men from all parts waited on the Chancellor of the Exchequer of that day and other Ministers, and pointed out the fact that, unless something were done, the most disastrous state of things would inevitably ensue. The country was saved by the repeal of the Act of 1844, therefore, for what else was the letter of the Chancellor of the Exchequer, empowering the Bank to make an alteration in the law, but a repeal? for it authorised the Bank of England to act in defiance of that measure. Unless the danger had been most imminent, how could they justify themselves for having taken such a step? They were now entering upon a war, the termination of which nobody could foretell. It would be impossible to carry on the war with vigour unless the finances of the nation were in a healthy state. He said he was sure he was speaking the sentiments of a large portion of the community when he said that they were ready and most cheerfully willing to grant the supplies necessary to carry on the war with vigour; but they required that the war should be prosecuted with vigour and brought to a speedy termination. It had been thought that the energies of the Government had not corresponded with the energies of the nation, and he would therefore recommend Her
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Majesty's Ministers to prosecute the war with a determination to bring it quickly to an end. He expressed the hope that the Government would pay attention to these subjects, and that they would not find themselves in 1855 in the same position as the Ministry of 1847 were, after disregarding the warnings which were given to them in time to prevent it. There was one other subject on which, however, he (Mr. Malins) had been anticipated by the hon. Member for Kendal—namely, the amount of issue available under the Act of 1844. Beyond 14,000,000 l. there was no issue except it was based upon an equal amount of gold in the Bank cellars. There were now about 16,000,000 l. of gold in the Bank; which, added to the 14,000,000 l., gave an available circulation of 30,000,000 l. The actual circulation, however, was only 23,000,000 l., leaving 7,000,000 l. of reserve notes in the hands of the Bank. It was on these reserve notes, or unemployed balances, that the prosperity of the country under Sir Robert Peel's Bill mainly depended, These reserves were lately 10,000,000 l., with discount ruling at 2½ per cent. At this moment they were 7,000,000 l., with discount at 4½ per cent. It was a principle of Sir Robert Peel's Bill that the Government had the power of increasing the number of notes authorised to be issued by the Bank of England; and as 700,000 l. of country notes had been withdrawn from circulation, he put it to the right hon. Gentleman whether this deficiency should not be at once supplied by an increased issue on the part of the Bank of England?
MR. W. BROWNsaid, he very much agreed with the sentiments which had fallen from the hon. and learned Gentleman (Mr. Malins) as to the serious loss and inconvenience which were occasioned to the country by the Act for restricting the currency. They all knew very well that at the time when the order of the 26th October, 1847, was issued, giving to the Bank of England a discretionary power to discount bills, many large houses were on the eve, if not of bankruptcy, at all events of serious damage. They knew very well that orders were suspended, that the trade of the country was paralysed, while the 6,000,000 l. or 7,000,000 l. locked up in the Bank deposits might as well have been thrown into the ocean. He hoped that the Chancellor of the Exchequer, in entering upon this war, would do so with the determination to remove all these restrictions on

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the currency, which tended to fetter trade and commerce. Having expressed his views at some length on a former occasion, he would not trouble the Committee further at present than to express his strong dislike and disapprobation of a Bill which had proved so injurious to the commerce of the country.
MR. G. A. HAMILTONsaid, he wished to say a few words on the very large sum of money belonging to savings banks which had been invested by the Commissioners of the National Debt in the purchase of the Exchequer bills. He thought, from the papers which had been laid before the House, that this was rather a new practice, for, more than a year previous to the 5th of May, 1853, no purchase had been made by the Commissioners of the National Debt of Exchequer bills, but all the investments had been purchases of stock. But just at the period when Exchequer bills were beginning to decline, it appeared to have become the object of the Commissioners and of the Chancellor of the Exchequer to keep up the credit of these bills, and, accordingly, they purchased them with the deposits of the savings banks, which they afterwards cancelled and converted into stock. Now, what his hon. Friend (Sir H. Willoughby) wanted was, to know whether these bills had been cancelled and converted into stock; and if so, how much had been added to the national debt?
THE CHANCELLOR OF THE EXCHEQUER: Sir, I did not overlook the question put to me by the hon. Baronet the Member for Evesham (Sir H. Willoughby), but I thought it would be more convenient to the Committee if, instead of rising again and again to answer questions, I were to wait to hear the opinions of other hon. Gentlemen, and answer the various points once for all. Before I answer that question now, allow me to direct my attention first to the observations of other hon. Members. The hon. Member for Lambeth (Mr. W. Williams) stated that I made a promise last Session that I would this year apply the probate duty to land and the succession tax to tithes. Sir, I am not conscious of having made such promise with regard to the question of a succession duty on tithes; that question was carefully examined last year, and the Government came to the conclusion that the old succession tax, in a modern form, was still applicable to tithes. But the proper time for the discussion of that question will come when I introduce
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a Bill, which I fully intend to do, for the application of the succession tax to corporations. At the same time, I did not advert to that Bill in my statement, because, in a financial point of view, the result of such a tax will be extremely narrow. With regard to the probate duty on land, I am sorry to say that the state of our finances will not allow me to open up the whole question of that duty, but I must now state that I never was authorised by the Government of which I am a Member to make any such promise. I am not aware that I ever did make it, and therefore I think I may fairly say that I never did make such a promise. With regard to the remarks of the right hon. Member for Oxfordshire (Mr. Henley), he says that I hold a doctrine contrary to that of Sir Robert Peel with respect to the state of the public balances. Now, Sir Robert Peel issued his doctrine with respect to the state of the public balances at a time when deficiency bills were charged against the public to the extent of between 8,000,000 l. and 9,000,000 l. But when they had not reached an inconvenient height, and were only 2,000,000 l. or 3,000,000 l., the circumstances are very different. With respect to trade and circulation and public economy, the really wise course with regard to public balances and deficiency bills is a middle course. It would not be wise to go on increasing deficiency bills to an indefinite amount, or to such an amount as 8,000,000 l. or 9,000,000 l., but as long as they do not exceed 2,000,000 l. or 3,000,000 l., no inconvenience is caused. It is, I maintain, much better to create deficiency bills to a moderate amount—of course, taking care that it is a moderate amount—and it is upon that principle I have acted. Hon. Gentlemen mistake much if they suppose that a high state of public credit is at any time entirely owing to the state of our public balances. That may have something to do with it; but the real secret of a high state of national credit is this—to keep our revenue above our expenditure. As long as you do that, I will answer for it that the public credit cannot be in a bad state, and I venture to ask the Committee whether the public credit could be better tested than it is now, when we have the price of 91 for our three per cents, at a time when we are about to enter into a European war? The hon. Member for Kendal (Mr. Glyn) has adverted to the decrease in the issues of private banks and consequent extinction of a portion of their

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circulation, and other hon. Members have entered into a still larger field, so that we are threatened, if we do not take special care, to be involved in a financial discussion upon the operation of the Bank Act. Sir, it is early in the day to enter upon such a discussion with reference to this war. It appears, indeed, that the Emperor of Russia has already set hon. Gentlemen an example of "striking the fetters off currency;" but I trust that in no point of view is his example one which will readily be followed in this country. But the question—which is undoubtedly worth considering—relates to the issues of private banks. Sir, I believe that the Government has not the power of moving in this matter without the concurrence of the Bank of England; and the Bank of England, unfortunately, has never been in a condition to make it for the interest of that corporation to give its concurrence. Circumstances may undoubtedly arise which may make it for the interest of the Bank to do so, and that power may be usefully retained as a reserve power. The hon. Member for Dublin (Mr. Vance) has made some reference to the measure I propose with respect to foreign bills of exchange. Perhaps it would be better that I should ask the hon. Gentleman to wait till my measure is laid upon the table. As far as I was able to follow his observations, I do not much differ from them, and when the hon. Member sees the Bill, which I hope will be printed in two or three days, I trust he will find that it is not obnoxious to the objections he has urged. With respect to the observations which were made by the hon. and learned Member for Wallingford (Mr. Malins), and also, I think, by the right hon. Member for Oxfordshire (Mr. Henley), on the hardship of people being called upon to pay double income tax within the first six months, I can assure the hon. Members that the reason they assigned for that measure is not the true one. The state of the public balances did not enter into my mind, or into the mind of the Government, in making the arrangement. But the real reason why we ask for a double income tax during the first six months of the year is this—that for twelve months, from the 5th of April next, we cannot tell what the state of our expenditure may be. We propose this plan because we feel it probable that if we are engaged in active warlike operations for a whole year, we may again be compelled to come before Parliament for supplies. I believe that
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we have made provision for the first six months of the year, therefore let us raise the supplies for the first six months of the year. That is our principle, and it has nothing whatever to do with the balances. And now, Sir, for the question that was put to me by the hon. Baronet the Member for Evesham (Sir H. Willoughby) and which was followed up by the hon. Member for the University of Dublin (Mr. G. A. Hamilton). The hon. Baronet asks me whether the forms of law were gone through in the purchase of Exchequer bills with the money in the savings banks, and in their subsequent conversion to stock. Sir, undoubtedly they were. The forms of proceedings were complied with, which charge the whole proceedings upon the responsibility of the officers of the National Debt Office, and that being so, the operation takes effect invariably as a matter of course. Sir, the power which is given to the Chancellor of the Exchequer as the chief of these Commissioners is this—he may, if he please, apply the money in his hands to the reduction either of the funded or the unfunded debt. If he applies it to reduce the unfunded debt, then the Commissioners hold a given number of Exchequer bills; but these Exchequer bills, in the course of time, run through their period of service; and when that arrives, then the Chancellor of the Exchequer must make provision for their exchange into some permanent security. Now, the hon. Baronet the Member for Evesham asks me if that is not an addition to the national debt? [Sir H. WILLOUGHBY: The funded debt.] I mean the funded debt when I speak of the national debt. Sir, that is a question which the hon. Baronet is quite as competent to answer as I am. The Commissioners for the National Debt stand in this singular predicament, that while they are debtors to the trustees of the savings banks, they are creditors to the nation. The nation pays a large sum to the Commissioners of the National Debt, which they are bound to dispose of in investments. An amount of stock to the public credit is thus created and put to the credit of the national debt, and the dividends are payable to them, which also they are bound to reinvest according to law. Under these circumstances, it is for the hon. Baronet himself to say whether that is an addition to the national debt or not. With regard to the process pursued, I agree with the hon. Baronet that it is an extremely complicated one,

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and very difficult for Members of this House to understand; and I shall be very glad if I shall be able to suggest a simplification of the process. But I would advise the Commissioners of the National Debt to employ the money entrusted to them at all times in such a way as shall be most advantageous at the time to the public interest. The hon. Member for the University of Dublin says that this is not a usual way of employing the savings banks' money. That is very true, because the circumstances under which the money was so employed are not usual. The Committee must recollect the position of the Chancellor of the Exchequer with respect to Exchequer bills. Circumstances may arise in which he is bound to raise the rate of currency of those bills; but if he does so, he must raise the rate of currency upon the whole, and for the whole remaining period of the twelve months which the bills have to run. That is a very serious matter, involving, perhaps, the sum of 200,000 l. of the public money. If he thinks that the circumstances of the country are such as to justify the increase, it is undoubtedly his duty to do so. But if, on the other hand, the circumstances are of a doubtful or equivocal kind, with a probability that the pressure may pass away in six weeks or two months; and if he has any reason to expect that to be the case, it will then be his duty to be careful how he raises the interest of the money for the whole year. But it is equally his duty to make some provision to prevent the holders of Exchequer bills from parting with their securities at a discount, which would be a hardship upon the holders, and would not be advisable for the credit of the bills themselves. Under such circumstances, the Chancellor of the Exchequer will best use the advances in his hands by employing them to relieve the pressure on Exchequer bills. The Committee will doubtless remember the state of the weather last year, and the prospects of the harvest, which were gloomy, though it was not clear that there might not be a change in the months of June and July, so as to have produced an abundant harvest. So also in the political circumstances of the country there was great uncertainty. One day there appeared a prospect of war, another day hopes were held out of a pacification, and even at the close of the last Session Her Majesty was advised to congratulate the country on the prospect of a speedy and amicable termination of the
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existing differences, and if the harvest had been good there would have been no necessity for increasing the rate of interest of Exchequer bills at all. It was my duty, however, to make some provision for the intermediate time. We, therefore, made purchases of Exchequer bills, and those purchases were made according to law. The complaint of the hon. Baronet that the system is complex is one in which I entirely agree with him, and I should be very glad if I were able to simplify it.
MR. J. O'CONNELLsaid, he did not rise to argue that Ireland should not be called upon to contribute to the power of the Crown, the dignity of the empire, and the cause of civilisation itself he might say, in the coming struggle. He would only ask whether it was wise in the Chancellor of the Exchequer to try another turn of the screw on Ireland before he had seen the result of the first? He was not now about to enter into the justice or injustice of the tax which was laid on last year, though if he had been in Parliament on that occasion he believed he could have demonstrated that its imposition was a breach of the articles of Union. But, though the tax had been imposed by the right hon. Gentleman, they were yet to see whether there would not be upon the whole year a diminution in the amount of indirect taxation in consequence of the direct taxation that had been imposed. He feared that it would affect the gross amount of taxation, though they might raise the estimated sum on this individual tax. He did not mean to question the proposition that Ireland ought to bear her share in the impending war. He thought Ireland had already shown a disposition to support the honour of Her Majesty, by so many of her young population flocking into the Army. He only meant to suggest that it might have been better in the present emergency to have tried indirect rather than direct taxation in Ireland. That could have been done by another increase on the duty on spirits, which he believed would have realised nearly the same sum. He should be happy if the right hon. the Chancellor of the Exchequer would reconsider this point; but he must add that Ireland was quite ready to support the honour of the empire in the approaching struggle.
SIR HENRY WILLOUGHBYsaid, the point to which he wished to draw the attention of the Committee was this, whether the money in the savings banks

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should be made an engine for creating debt. There was another point he had to complain of—that though by law the Commissioners of the National Debt ought to act as a Commission—though it was provided that ten should be a quorum, and that a record should be kept of all their proceedings, yet in practice the right hon. Gentleman himself was the sole Commission; and he must say that a more dangerous system could not exist than that the Chancellor of the Exchequer, whether through the medium of the savings banks, or in any other way, should be allowed to meddle with the national debt. It was clearly against the intention of the law—and this point he must press upon the attention of the Committee—that there did exist a power of creating debt over which the House of Commons had no control, and which, however they might talk of a surplus, prevented them from ever having a surplus at all. [The CHANCELLOR of the EXCHEQUER: No, no!] But it was so. The same practice had been resorted to in 1834 and 1835, and he (Sir H. Willoughby) then went thoroughly into the question, and he firmly believed that the savings banks funds sustained a loss of nearly 2,000,000 l. He had been led to believe that the system had been put an end to, but it now reappeared. He hoped the right hon. Gentleman would put the whole system of managing the national debt upon a more intelligible footing. He did not care who was made responsible if he only knew who the responsible person was.
MR. HUMEsaid, if he had been in the situation of the right hon. Gentleman the Chancellor of the Exchequer he would have done the very same thing, but he would have done it publicly. There was nothing to prevent the right hon. Gentleman from applying a portion of the balances of the unfunded instead of the funded debt. He had done so—he ought to have done it publicly—if he had, nothing would have been said about it. He must say they were promised on the last occasion, when the funds of the savings banks were applied in this way, and when there was a very great loss, amounting to very nearly 2,000,000 l., they were assured by the then Chancellor of the Exchequer that the practice would never be repeated.
MR. W. WILLIAMSsaid, that in former times this power had been abused to an enormous extent. What was required to be done by that House was this, to take from the Chancellor of the Exche-
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quer the power of converting the money of the savings banks into Exchequer bills, and then of reconverting them into the funded debt. He recollected that in 1840 and 1841, when the expenditure exceeded the revenue by a very large amount, that practice was carried on to the extent of 3,000,000 l. The Chancellor of the Exchequer of that day—the right hon. Baronet near him (Sir F. Baring)—when urged on the subject, said he was not prepared to defend the giving a Chancellor of the Exchequer power to act in the manner that he was doing, but the power being invested in him by law, he exercised it because it was the most economical way of making up the deficiency. The right hon. Gentleman the Chancellor of the Exchequer had already made many reforms in the mode of managing the finances, and he hoped that, among others, he would effect this reform of withdrawing the power to increase the debt without the authority of Parliament.
COLONEL SIBTHORPsaid, he would again assert that the coming war was attributable to the gross mismanagement of Her Majesty's Government. He always should vote against the imposition of the income tax in a time of peace, but when war was inevitable no one was a more determined advocate than he was of the policy that the war should be carried on with the greatest possible amount of vigour that could be adopted, though he very much doubted that such conduct would be pursued on the part of Her Majesty's Government. Though he would not vote for an income tax in a time of peace, his opinion was that the country would be ready, if war took place, to come forward and contribute towards that amount of taxation which might be necessary, in order to inflict suitable chastisement on its enemies. He considered too much encouragement was given to foreigners in this country. If the Government had adhered to indirect taxation, he was certain the country would be better satisfied. Sure he was that the reductions which had taken place on soap and other articles had not tended to remove the burthens which the working man laboured under. He had heard it stated the other day that, though farmers were giving 15 s. and 18 s. a week to their labourers, the labourers were no better off than before; for those who used to pay 6d. per pound for currants for their pudding now paid 1s. per pound. The labourer might receive high wages, but he

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was no richer than when his wages were low. So with all the attempts of the Government of the day to please that class of persons who would only be pleased by the removal of taxation which relieved themselves—to please flatterers, and those who sat behind them and who gave their support from selfish motives—they had failed with the body of the people—
"Rusticus expectat dum defluat amnis."
He dissented to the proposition for increasing the income tax for more reasons than one, because he could not help thinking, though the right hon. Gentleman talked of half a year, that it would be imposed for three years next, and after that for three years more, and so on. It was his sincere opinion that no confidence ought to be placed in what fell from the right hon. Gentleman the Chancellor of the Exchequer. He doubted whether there was any surplus at all. In fact he thought it was a piece of humbug throughout.
SIR FRANCIS BARING: I wish, Sir, as allusion has been made to transactions in which I was engaged in 1841, to say one or two words upon this subject, not with any view of entering upon any discussion as to the measures adopted in 1841, but to draw a distinction, which has not been made very clear to the Committee, between two modes of proceeding. In the one case you purchase in the usual way an amount of Exchequer bills, and after a time they are converted into the funded debt. In that case you make no increase of the public debt of the country—you merely transfer the unfunded to the funded debt—in many cases, with extreme advantage. It is a justifiable thing, and I hope the House of Commons will never take that power from the Chancellor of the Exchequer. When the savings banks have money in hand, and you must do either the one or the other, you have a right, in the discretion of your chief Finance Minister, to apply it to the unfunded, rather than, in the first instance, to the funded debt. But there is another transaction, which is a very different one—you may bring up deficiency bills, and then turn them into funded debt. That was what I did, and the effect of it certainly was to increase the public debt. I had a precedent for it. I never said it was not open to objection, and perhaps it might be wise to take that power away from the Chancellor of the Exchequer. I defended the measure at the time, on the ground of
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the necessity of the case; I thought it was advisable under the circumstances. But I think it would not be wise to take away the power which the Chancellor of the Exchequer now has—a wise and proper power—of converting the unfunded into the funded debt, which has repeatedly been done, and to my knowledge has never been done without advantage to the public service. I believe that the right hon. Gentleman the Chancellor of the Exchequer has tried his hand at both modes——
THE CHANCELLOR OF THE EXCHEQUER: No, never with deficiency bills.
SIR FRANCIS BARING: I thought it had been so. With regard to the surplus being invested in the sinking fund, I believe that he is justified in so doing; but I believe that in no case ought it to be done, either with regard to the savings banks or the surplus, without that House calling for an explanation.
THE CHANCELLOR OF THE EXCHEQUER: I am anxious not to be misunderstood. I have not invested any of the money of the saving banks in deficiency bills. It is true that I hold some savings banks' money in Consolidated Funds, but there has not been the increase of a farthing to the national debt.
MR. DISRAELI: Sir, I collect from the Chancellor of the Exchequer that 1,200,000 l. has been invested in Exchequer bills, afterwards cancelled, and that the Exchequer bills now moved for will make up the existing sum to the former amount. But from a return in the paper before me, No. 1, moved for by the Secretary to the Treasury, it appears that the Exchequer bills were 17,495,000 l. I think there is some error here, which the figures of the right hon. Gentleman hardly explain. [The CHANCELLOR of the EXCHEQUER here handed a paper across the table to the right hon. Gentleman.] I have no doubt that this sum led to the misconception of the hon. Baronet the Member for Evesham (Sir H. Willoughby). I quite agree with the right hon. Baronet the Member for Portsmouth (Sir F. Baring) as to the two modes of investing public funds in Exchequer bills; and I am glad that the Chancellor of the Exchequer has called the attention of the Committee to the difference that exists between investing the money of the savings banks in deficiency bills and the accruing revenue. I think the last mode quite legitimate. With regard to the general statement which we have heard to-night, whatever my opinion

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may be as to the war in which we are about to engage—and certainly its importance is never diminished by anything that takes place with regard to it in this House, or by any allusion made to it by Her Majesty's Government—though every day convinces me more and more that it is a war which might have been avoided, still I believe that it is a just and necessary war in the circumstances in which we now find ourselves, and that we have only one duty under these circumstances, and that is, to give Her Majesty our hearty support in the struggle in which she is about to embark. Therefore I offer no opposition to the Vote which the Minister on his responsibility has thought it his duty to propose to us, in order to carry on the war with vigour, and with the success which I hope it may receive. But while I say that, I must protest—anxious as I am that the supplies for the year should be raised from the revenue of the year—I must protest against the principle laid down by the right hon. Gentleman, that direct taxation—if this contest is to be prolonged—is to be the only source from which our supplies are to be raised. If this struggle should be continued, and if the right hon. Gentleman should succeed in raising the necessary supplies within the year, he will indeed be a fortunate Minister. I cannot anticipate that this will be other than a prolonged contest, and therefore I think we ought to say that direct taxation shall not be the only source by which this prolonged contest is to be carried on. I do not say that the limits of direct taxation have been reached, for we know very well that there have been wars when the property and income taxes were at higher rates than those we at present pay. Nor am I prepared to say that there is any limit at which the taxation of the country can be fixed if we are engaged in a contest on which our very existence as a nation depends. But the Committee must remember that there has been a very considerable addition to the direct taxation of the country of late years, and also an equally great diminution of indirect taxation. Every one feels that the weight of direct taxation has been recently and very considerably increased, and every one must admit—to whatever party in politics or to whatever school of political economy he may belong, every one must admit that the diminution of indirect taxation during the last ten years has been such as to sur-
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prise the most sanguine votary of the direct school.
Sir, the hon. Gentleman the Member for Montrose has complimented the Chancellor of the Exchequer on the clear and able statement he has made to-night. Sir, the Chancellor of the Exchequer is used to compliments for his able statements, and no man deserves them better. But I am bound to say, having listened with much interest and great attention to all that fell from his lips, that, although I found one portion of his statement very clear, there was another portion which appeared to me involved in an obscurity which does not become a financial statement—least of all a financial statement made at this moment, and under the circumstances in which the right hon. Gentleman has addressed the Committee to-night. Now, Sir, so far as the right hon. Gentleman's general balance sheet is concerned, nothing could have been more perspicuous, and, so far as concerns the remedies which the right hon. Gentleman has proposed in order to supply the deficiencies which may occur, nothing could be more plain. He gave us our expenditure and our income with a clearness which no man could misconceive, and he announced to us the remedy by which he proposed to supply an anticipated deficiency—a simple and a powerful one—in language which no man can misapprehend. Objections may be taken, no doubt—and I reserve to myself the right to make those objections upon another occasion—to the mode in which the increased income tax is to be levied; but I admit that our revenue and our expenditure, and the means by which an increased expenditure is to be met, were placed before the Committee and the country in a manner which cannot be misunderstood. When, however, I come to the second part of the right hon. Gentleman's statement—that which relates to the actual state of our finances and of our money in hand—I confess I do not experience the same satisfaction or discover the same perspicuity. The right hon. Gentleman, anticipating, probably, the objection, has favoured the Committee with what I will not call an invective, but with an unfriendly criticism against large balances in the public Exchequer. Now, Sir, there may be, no doubt, two opinions on the amount of treasure which you should have at command; but, Sir, as one of that school who have been educated to believe that an ample and sufficient balance in the Exchequer is an

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important feature of finance and necessary to the public security, I feel it my duty to express to the Committee my belief that the present state of our balances is not satisfactory, and may lead to danger and embarrassment. The Committee, I am sure, will feel on reflection that this is not a matter of indifference, even in ordinary times; but in times of exigency, when the country may be called on suddenly to make unforeseen exertions, I do hold it to be most unsound that we should encourage the idea that the Minister of Finance should live from hand to mouth, and meet the engagements of the country by stretching a credit which at all times should be treated with delicacy and reserve.
Now, Sir, when the late Government quitted office, or immediately after that period, on the 3rd January, 1853, the balances in the Exchequer were nearly 9,000,000 l. One year afterwards, in January, 1854—exactly one year after we left office—the balances in the Exchequer were reduced one-half. Now, Sir, the right hon. Gentleman may say, "What of that? If I employ the public money for the advantage of the public, why should you criticise my conduct—why should you cavil at my policy?" Now, Sir, if the right hon. Gentleman can prove that he has conducted his affairs with necessary prudence—if he can show that he has employed the public money for the public benefit, the question falls, and perhaps the right hon. Gentleman may obtain a verdict in his favour, even from those who, abstractedly, are in favour of large balances. But I want to test the question, and, in order to do this, I want to know what are the balances at the present moment, and what are the engagements which the right hon. Gentleman has to meet at the end of the financial year—on the 5th of April next, just one month from the present time. Now, Sir, I think that is testing the question fairly for the right hon. Gentleman. Now, Sir, I can, of course, only estimate the balances in the Exchequer at the present moment by referring to the return of those balances at the parallel period of the preceding year. And, referring to the parallel period of the preceding year, there ought to be in the Exchequer something like 10,000,000 l. sterling—I mean, of course, on the 5th of April next. I anticipate, however, that the actual balance in the Exchequer on that day will be about 3,000,000 l. sterling. I do not myself see any reason to believe that the
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balances of the Exchequer on the 5th of April can be more than 3,000,000 l. Now, what are the liabilities of the right hon. Gentleman the Chancellor of the Exchequer about that period? He has, first of all, to provide for the payment of the dividends upon the public debt. I cannot precisely give you their amount, but I should say that it certainly cannot be less than 6,500,000 l.—it may be 7,000,000 l., I will take it, however, at 6,500,000 l. The right hon. Gentleman has, at the same time, to complete his conversion scheme—or rather to meet the consequences of a conversion scheme which did not succeed, to the amount of 2,000,000 l. more—making altogether 8,500,000 l.; and he has, of course, many demands upon him of an increased amount for the service of the country, which he will have to meet. He must have, I should think, upon a moderate estimate, something like between 9,000,000 l. and 10,000,000 l., which he may probably have to meet on or about the 5th of April. Now, he has to meet that with a sum of 3,000,000 l. Well, then, I want to know how he means to carry on the business of the country. The right hon. Gentleman will say, probably, "What is the use of having large balances? I can borrow money; I can take an amount on deficiency bills that will be sufficient to carry me on." The right hon. Gentleman, in the quarter which is now expiring—the quarter from January to April—as will be seen by a paper on the table which I moved for—has only been able to carry on his affairs by means of deficiency bills to the amount of 4,000,000 l. sterling. The right hon. Gentleman may tell you that 4,000,000 l. sterling, according to his views, is not an immoderate amount, and that it is better to carry on the business of the Government with deficiency bills to that extent, than to amass the public treasure in the Exchequer. The right hon. Gentleman says that the deficiency bills of which Sir Robert Peel complained were a great deal more than that—that they amounted to 6,000,000 l. or 8,000,000 l. Well, be it so; but will the deficiency bills which the right hon. Gentleman will find necessary in the coming quarter—will they be less than 6,000,000 l.? And is the Committee of opinion that at any time the Chancellor of the Exchequer should have deficiency bills to the amount of 6,000,000 l.? Especially is the Committee of opinion that the finances of the country should be con-

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ducted in such a way at such a moment, when the Chancellor of the Exchequer himself comes down and tells you that it is impossible for him to form an estimate because this is an extraordinary time, and extraordinary demands will be made upon you?
Now, Sir, I say it would be of very great importance, at this moment, that there should be an ample, and more than an ample balance in the Exchequer. But instead of it being a question between a proper balance and an improper balance—between that which is ample and that which is excessive—it is now a question whether you will have a balance or a large deficiency. And in fact you have at this moment—looking forward to the completion of the financial year—instead of having any balance at all in your Exchequer, you have an enormous deficiency. Well, now, Sir, is that a state of affairs which is desirable? Is it desirable at any time? Above all things, is it desirable in a state of war? These are questions which cannot be evaded. You may to-night say, "We have nothing to divide about; and, therefore, we will let the Resolutions pass." But you may rely upon it—and especially if these events occur on which we now count—you will find this weakness of your finances perpetually betraying you—perpetually destroying all the fine combinations of the Chancellor of the Exchequer. Let the Committee inquire how this has come to pass. You had recently an ample balance in your Exchequer. In a time of peace—in a time of low prices and of commercial prosperity, you had an ample balance. Now we are on the eve, I will not say of disaster and distress, but of those contingencies which portend disaster and distress—where is that balance now? Where is the balance which you prepared for yourselves in times of prosperity and peace? Why is it not at your service at this moment? That is what I want to know. If from the natural course of events you had found yourselves in this position, and from the natural course of events had had this low state of your Exchequer, you might have said that, having, from circumstances which you could neither foresee nor provide for, difficulties and dangers to encounter, there was nothing to be done now but to bestir yourselves to face the danger, and to place yourselves in a better position. I could then have understood you. But you had that large balance—you had a fund which would
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have met the exigencies of the country in a moment of imperial danger like this; and that fund does not exist. Why does it not exist? Nothing has been said on that point in the financial statement which we have heard this evening. Now, Sir, that great balance has disappeared, because the right hon. Gentleman a year ago chose to take a course in monetary affairs which the circumstances of the times did not warrant, and which he followed in opposition to the best authorities who could possibly advise a man, even a man so gifted as the present Chancellor of the Exchequer. The right hon. Gentleman dealt with your resources in a manner which has ultimately deprived you of the command of this capital in two ways. His object was to reduce the rate of interest paid upon the public securities, funded and unfunded, and he began by dealing with and reducing the interest on Exchequer bills. I think it was about the 8th of February last year, that the right hon. Gentleman reduced the rate of interest on Exchequer bills to 1½ per cent. For six weeks before the right hon. Gentleman took that step, every indication which generally influences, and should have governed a gentleman in the position of the Chancellor of the Exchequer, had intimated that the value of money was rising. I will not refer to papers, because I wish not to weary the Committee, and I am sure that if I make any mistake in a figure, the right hon. Gentleman will correct me: I believe that the price of Consols at the time Lord Derby left office, was something like 101. That would be about the end of December. Parliament met again in February. Consols had been continually declining, and I think at that time they must have been 99½; perhaps even 2 per cent lower than they had been. [The CHANCELLOR of the EXCHEQUER: Hear, hear!] I have the return here, if the right hon. Gentleman doubts my statement. At the time Lord Derby left office, Consols were 101⅛, and Exchequer bills were from 69 s. to 72 s. premium. When Parliament met, Consols had sunk from 101⅛ to 99¼, and the premium upon Exchequer bills from 69 s. and 72 s. to 55 s. and 59 s. Now I say, Sir, that these were very significant symptoms; and yet, notwithstanding these indications, the right hon. Gentleman commenced a campaign which was to be signalised by a vast reduction of the public debt of the country. Did he receive no warning from

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this House? Men whom we look upon as authorities in these matters rose and entreated the right hon. Gentleman to pause. The hon. Member for Westmoreland (Alderman Thompson)—whom I have unfortunately not seen among us this Session, and whose absence I deplore—he whom all sides respect for his commercial and financial knowledge, particularly addressed himself to the right hon. Gentleman, and told him that the moment was inopportune—that money was in active demand—and that it was at that time ½ per cent dearer than it had been five months before. The right hon. Gentleman, however, persisted in his plans, and carried them. I will not dwell upon the consequence at any length. The Committee will recollect that the interest on Exchequer bills, the prices of which I have just quoted to them, which at the commencement of the year were from 67 s. to 70 s. premium, and which, when Parliament met, had gradually declined, was reduced by the right hon. Gentleman to 1½ per cent—that on the 5th of May they were only at 2s. premium, that on the 26th of May they were at par, and that on the 26th of September they were at 10 s. discount. The right hon. Gentleman in the interval had made his financial statement, and had estimated that by the reduction of interest on Exchequer bills he would have made, I think, an annual saving, in round numbers, of 65,000 l. It appears by one of the returns for which I recently moved, and which are now lying on the table, that the loss by that reduction of interest is something like 36,000 l., making on the whole, as far as the financial statement of the right hon. Gentleman is concerned, a difference of 100,000 l. Now, that is a brief account of the dealing of the right hon. Gentleman with Exchequer bills, so far as the reduction of interest is concerned.
But the right hon. Gentleman followed this reduction of interest upon Exchequer bills by a much larger enterprise, one which he announced to the House as the herald of other measures, which would, or might ultimately, greatly affect the interest of the whole national debt. I allude to the plan of the right hon. Gentleman for converting what he styled certain "patriarchal" stocks. Now, it is of great importance that the Committee should recollect that it is by this plan of conversion that the country was mainly deprived of that balance in the Exchequer, which nothing
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that I have heard to-night convinces me would not be a great benefit to the country. Well, Sir, were warnings wanting to the right hon. Gentleman on that occasion? He advanced, be it remembered, with only the smaller part of his great scheme; and what was that? It was to convert a number of small stocks, amounting in the aggregate, in round figures, to very little short of 10,000,000 l. sterling. I shall say nothing of the scheme by which the conversion of these stocks was to be carried into effect. It consisted of three plans, all of which were diametrically opposed to each other. One of these plans was founded upon the principle that the amount of the public debt should be diminished; the second, upon the principle that the amount of that debt should be increased; and by the third, in the case of the Exchequer bonds, I believe, if Parliament had not interfered, the increase on the unfunded debt might have been almost illimitable. Yet the right hon. Gentleman brought forward his plan with a confidence in its merits and its success which conviction only could have imparted; for he even promised that when the time for conversion arrived, means should be taken to prevent the evil consequences of the sudden rush of the applicants which was anticipated upon that occasion. Well, I say, was the right hon. Gentleman without warning, upon that occasion, of the evil consequences of the injudicious course which he was pursuing? I will not quote words that might have fallen from myself, or of any Gentleman on these benches, which might probably be depreciated, as the words of an opponent—although even the words of an opponent may sometimes be listened to with profit—but I will refer to the language of a Gentleman who stands deservedly among the highest authorities in this House upon monetary and commercial affairs, and whom both sides agree in looking on as one of the most valuable Members of this assembly—I allude to the hon. Member for Huntingdon (Mr. T. Baring). That hon. Member took a very active part in opposing the propositions of the Chancellor of the Exchequer, and upon the 22nd of April stated his opinion to the House as follows:—
"He (Mr. Baring) did not feel sure that that latter operation was not a hazardous one; and he could not help thinking that the right hon. Gentleman might in the month of June find it very difficult to maintain that low rate of interest on his Exchequer bills. He need not remind the right hon. Gentleman that, if his present pro-

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posal should not prove to be successful, it would be much better it had never been made; for it would then have the effect of needlessly unsettling men's minds, and giving a stimulus to all kinds of schemes which no one could regret more than the right hon. Gentleman himself"—[3 Hansard, cxxvi. 335.]
These were the warning words that came from a Gentleman of great authority, and, certainly, however firm in his political opinions, one whose advice is never influenced by the acerbity of party feeling. Well, Sir, this Bill for the conversion of these "patriarchal stocks" was read a third time in this House on the 27th of April, after an ineffectual, but on one occasion a vigorous, opposition. On the 3rd of May it was read a third time in the House of Peers, where it was also opposed by a great authority on finance, who had been a Chancellor of the Exchequer himself, and who certainly had no sympathy with the opinions professed on this side of the House—I mean Lord Monteagle. Well, Sir, I shall say nothing, or shall say very little, of the unbusiness-like way in which this Bill was drawn. The fact is that, although it was described by the leader of the House, whom I do not see in his place, as of such vital importance that he deprecated all criticism upon it, it was drawn and carried, I will not say with such indecent haste, but with such inconsiderate hurry, that after it had passed it was found there was a vital error, an omission in it. What was that? Why, it was found that in case any of the holders of the stock proposed to be converted dissented from the scheme of conversion, no machinery was provided by which those dissenting might be paid the amount of their capital, and the result was that, on the very eve of the prorogation, another Bill was introduced, to empower the Treasury to pay them off out of the Consolidated Fund. It was this Bill—passed at a morning sitting with perhaps only twenty Members present, and almost upon the last day of the Session—it was this Bill, thus introduced and carried through to remedy the omissions of what ought to have been a more mature measure—it was this rash, and hurried, and fatal piece of legislation that deprived you of your Exchequer balances—which has grievously bled the Consolidated Fund—which, in time of war, has left you to scramble through the first quarter of this year, with deficiency bills amounting to nearly 4,000,000 l. sterling—and which, as far as I can form an opinion—and I only give my opinion in order to elicit informa-
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tion, for it is the interest of all men to elicit information in such matters—it will upon the 5th of April, with a balance of 3,000,000 l., leave the right hon. Gentleman to encounter demands amounting to nearly 10,000,000 l. sterling, if not more. And all this in a time of war which, night after night, every Minister rises and prepares us to believe promises to be one of great severity and of longer duration than anticipated when the subject was first brought under our notice for discussion. Sir, it was said the other night, with regard to the diplomatic correspondence on the table, that it was no use criticising the past—that the country was in danger—and that, under these circumstances, whether mistakes had or had not been made, we must stand by those errors, if they were errors, and must pull altogether, only looking to the future. Sir, I am not making these observations for the sake of criticising the past. If they had had no reference to the future, I should not have uttered a word. I would not have trespassed on the time of the Committee. I moved for the returns which are now upon the table at the beginning of the Session, because I thought the information those returns would give upon a most important subject was information which this House ought to possess; and I might at a proper season, but not on such a night as this, have called attention to them, and have asked for some explanations. I only allude to the subject at this moment because I am persuaded that if you neglect the opportunity of this financial statement—if you sanction by your approval the course which has been pursued—if you do not interfere to prevent its being permanently adopted, you will even in the course of this year find yourselves in a position of considerable inconvenience, and even of great monetary embarrassment. Well then, I say, let the right hon. Gentleman come forward upon this second part of the financial question with the same frankness as he has done with respect to the first. He says that there will be a deficiency; the nation is about to enter into a war, and there must be increased expenditure; the Government must have means to carry on the war with vigour, and the House of Commons must be ready and prepared to support Ministers with ample resources to put the revenue into a healthy state. Would it not be better that the right hon. Gentleman should also ask us to put the Ex-

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chequer in a healthy state at the same time? Why does he not come forward and say, "I have attempted to reduce the interest upon the public debt; I have not succeeded as I intended; but who can deny that the object was a good one and worthy the attention of Parliament? Whether I have succeeded or not, it is one of the objects, certainly, which a Chancellor of the Exchequer ought always to have in contemplation. I have for the present been baffled by circumstances which I could not foresee. I grant even that I have omitted contingencies which others might have calculated beforehand. I appeal confidently to the generosity of the House as to my endeavour and its result. There will be a loss upon the winding up of these transactions. I have reduced the public debt by diminishing the balances in the Exchequer; replace the amount which has been so withdrawn, I do not ask you to increase it; and then I shall have the Exchequer, as well as the revenue, in a healthy state; and shall have those balances available which I think the public exigencies at a moment like the present demand. That is the course which I think the Chancellor of the Exchequer ought to pursue. I don't think the Chancellor of the Exchequer ought to have avoided putting fairly before the Committee the consequences of his unsuccessful schemes for the reduction of the interest upon the funded and unfunded debt of the country. I think it would have been better if he bad with candour admitted that he had been disappointed in the results of his efforts, and had appealed to the House—and I am sure he would not have appealed to it in vain—to make good to the Exchequer the amount which has been withdrawn from it to the extent to which the public debt has been reduced. Who can doubt that he would have obtained the sanction of this House to such a proposition? The right hon. Gentleman will have upon the 5th of April next diminished the public debt to the amount of nearly 8,000,000 l. sterling, and I think he is entitled to have that amount, or as much as he requires of it, restored. At a moment like this he should have asked us not only to vote taxes to put the revenue into a healthy state, but also to give such a vote as would put the Exchequer in a healthy state; for depend upon it whatever may be your balance of income over expenditure, however you may wake a surplus upon paper, if your Exche-
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quer is not right you will continually be in a position of embarrassment and difficulty. Now, the right hon. Gentleman must raise deficiency bills for the quarter from the 5th of April to the 5th of July. Now, I should like to know if the right hon. Gentleman has formed—but of course he has—an estimate of the amount of deficiency bills which will be necessary for carrying on the public service from April to July? Can he form any estimate of what will be required if any of those exigencies to which he has alluded, and which may occur from the country being in a state of war, should happen to occur within that time? It is impossible to guard against such exigencies. From month to month, from week to week, events may happen which may require, so to speak, a large balance at your banker's. These deficiency bills must be paid for. I have no doubt the right hon. Gentleman finds the Bank of England indulgent; but the indulgence of the Bank of England will be exhausted if he continues to keep a very small balance in their hands. They will not like to lend 5,000,000 l. or 6,000,000 l. at less than the ordinary rate of interest, if you only leave with them a balance of not more than 1,000,000 l. or 1,500,000 l. The Bank of England sooner or later must charge you the market rate of interest, and I want to know what the market rate of interest is likely to be in the course of time. We are now involved in circumstances the result of which it is impossible for any human being to foresee. Suppose you have a long continental war, and a great drain of the precious metals; are you going then to sanction the attempt to carry on the service of the country by the systematic aid of deficiency bills, and not by real balances in the Exchequer? I can only say, that a great responsibility will devolve upon this House and upon the country if they should give their sanction and approbation to such a system as that. I shall not go into the question of the causes which induced the Chancellor of the Exchequer to enter upon the course he did with respect to his attempt to reduce the interest either upon Exchequer bills or upon funds. I shall reserve my right to consider his pleas, if any should be offered. My object now is to impress upon the Committee and upon the country the great importance of refusing their sanction to a system of conducting the finances of this country which I believe to be unsound, and which, if persevered in, must end

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in embarrassment and difficulty to the right hon. Gentleman himself. I guard myself by saying that I deny altogether the validity of any pleas which may be brought forward by the right hon. Gentleman, founded upon the state of the harvest, the accident of war, or any circumstances of that character. I will not now enter into any considerations of that kind. It would turn the discussion into a mere personal controversy in reference to the Minister, whereas I wish to keep it solely to this point—this business-like point—does the country, and does Parliament, approve of reducing the balances in the Exchequer to such a degree that the Chancellor of the Exchequer must systematically depend upon deficiency bills to a great amount for carrying on the business of the country? I mean by a great amount many millions—I mean 6,000,000 l., for that a sum of 4,000,000 l. will be required is a fact which we already have in evidence. If the Committee of Ways and Means does not approve of that course, let them not censure the Chancellor of the Exchequer; but let them tell him to-night that, with the same willingness and the same unanimity with which they are prepared to support the imposition of new taxes, in order to have a sufficient revenue, they are prepared to replace those balances in the national Exchequer, which have been imperilled by, perhaps, his injudicious but certainly his well-meant scheme, and let them distinctly announce to him that it is the opinion of the Committee of Ways and Means that the Chancellor of the Exchequer should not habitually borrow money.
The CHANCELLOR OF THE EXCHEQUER: Sir, the right hon. Gentleman who has just sat down complains that upon some recent occasions liberty has been denied him to discuss the results of our past transactions. Now, I am sure, Sir, I have been no party to the denial of that opportunity. So far as I am concerned, the right hon. Gentleman is perfectly welcome to enter at any time into a discussion of all our transactions, past, present, and to come; and as he appears to have a peculiar fondness for the discussion of matters of finance, on which he is always interesting, I assure him he will always find me ready to engage with him in that interesting pursuit, so long as he is ready to return to the charge, and so long as the Committee will have patience enough to listen to us. The right hon. Gentleman has complained of me to-night
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of a want of frankness and openness; for he says, I did not state to the Committee the exact condition of the public balances. Now, I am in the recollection of the Committee as to whether I did or did not state the exact condition of the public balances in the Exchequer. I stated them distinctly. I distinctly stated that twelve months ago the public balances were high, and that now they were low; and, having stated that they were low, I went on to tell the Committee how the money had been disposed of. Such was the charge of the right hon. Gentleman. But I will not enter into any question of personal charges. I will rather go to the discussion of those transactions of the last year in our financial policy to which the right hon. Gentleman has thought proper to refer. The right hon. Gentleman says that, with great imprudence, I reduced, in the early part of last year, the rate of interest upon Exchequer bills; that I anticipated from the reduction a saving of 65,000 l. a year; but that, instead of that amount of annual saving, the result of my proceedings has been a loss of 36.000 l. during the year upon Exchequer bills. Such is the statement which the right hon. Gentleman has made. Well, Sir, it appears to me in the first place that, supposing I were to admit the facts of the right hon. Gentleman, which I am not quite content to do as he puts them, his charge would resolve itself into just this—that I unfortunately was not endowed with the gift of prophecy—that I did not know in the month of March what would be the state of trade—the state of the harvest—and the state of Europe in the following month of September. I am not gifted with the power of foretelling events, and the charge resolves itself into just this. The right hon. Gentleman, however, says that these things have had nothing to do with the matter. Nothing to do with the matter! These things nothing to do with the rate of interest upon Exchequer bills! They have everything to do with it; and if the right hon. Gentleman will investigate the papers on the table relative to the acts of the Government, let him also investigate some other papers to which he has, or might have, access, and ask himself what was the state of all these things between those two periods—the condition of trade, the state of the money market, the prospects of the harvest, and the position of Europe—at the beginning of last year and the later period to which he has referred. I

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think, Sir, if he enters upon this investigation he will not be long in discovering that these things have some effect upon the rate of interest upon Exchequer bills. What was the state of the bullion in the Bank of England in January, and what was its condition in September? What was the state of the public balances in January? What in October? What was the price of corn in January? What in October and November? What was the rate of discount in the market in the month of January? What in the month of September? What was the rate of discount charged by the Bank of England at the commencement of last year, I do not exactly remember—I am quoting from memory; but I believe I am correct in saying that it was 2½ per cent. [An hon. Member: 2 per cent.] Well, certainly it was not more than 2½. But what was it in September? Why, Sir, in September it had advanced to 5 per cent. Yet the right hon. Gentleman, forsooth, wishes to make me responsible for the increase in the rate of interest upon Exchequer bills. There are causes for it for which I cannot be accountable, though he did not think proper to prefer them.
MR. DISRAELI: I mentioned some of those causes.
THE CHANCELLOR OF THE EXCHEQUER: You made no allusion whatever to the rate of discount.
MR. DISRAELI: I alluded to the fall in Consols.
THE CHANCELLOR OF THE EXCHEQUER: To the fall in Consols! The right hon. Gentleman shall hear more upon that subject by-and-by; but I repeat that he made no reference whatever, in the whole of his speech, to the rate of discount charged by the Bank, but only to the state of the public balances kept in the Bank. He simply referred to the rise in the rate of interest upon Exchequer bills, and charged upon me the additional expense which was thereby entailed upon the country. So much for the right hon. Gentleman's candour. But, Sir, the right hon. Gentleman is not correct in his facts. I do not know where he got his figures from; but this I can tell him, that he is not correct in his facts. The right hon. Gentleman is not quite right in saying I said there was no loss at all in consequence of what I did with the rate of interest on Exchequer bills, nor does he give us altogether a true and correct representation of the causes of the decreased rate of pre-
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miums upon those Exchequer bills. After telling us what was the rate of premium upon Exchequer bills before the interest was reduced, instead of giving us the rate of premium upon them just after the interest was reduced, when it would have been a fair presumption that the reduction was operating, and that nothing else was operating, the right hon. Gentleman passes on to the month of May. But the reduction was announced in the middle of February. The right hon. Gentleman says that in February the premium was down to 2s. So it was. Other causes were then in operation. But my justification with regard to the reduction in the rate of interest is this—that no mere annual security ought to bear a high premium. It is an absurdity upon the face of it that a mere annual security which bears a premium of 45 s., should be found at a premium of 60 s.; for if the holder is paid off at par, at the end of the twelve months, he gets 15 s. less than no interest at all. It also makes it impossible to attempt to redeem those Exchequer bills at a time when your balances in the Bank will best enable you; and for these, if there were no other reasons, I consider it wise, with respect to this portion of unfunded debt, to bring them to something like a reasonable premium. I am extremely sorry I did not bring with me an account which I had prepared of the prices of Exchequer bills after the reduction. I can, however, state the result generally. If I had the paper, I believe the right hon. Gentleman would find that for two months after the reduction the premium on Exchequer bills ranged between 10 s. and 20 s.; and I say it was impossible at that time to have had them in a better state. Then the right hon. Gentleman says there had been a loss of 36,000 l. by my reduction of the interest to 1d. a day. Now what does the right hon. Gentleman mean by that statement? He means to make me responsible for the circumstances which rendered it necessary to reduce the interest, quite forgetting that these circumstances would throw some little light upon the subject. Certainly he refers to the case of France; but he quite forgets to mention that the Chancellor of the Exchequer there had gone through precisely the same process, and that, whereas they were formerly paying 1½ per cent only, they were now paying 3 per cent interest. But the right hon. Gentleman asserts that there has been a loss of 36,000 l. in consequence of my

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reduction. I shall be glad if that statement can be explained. To me I confess it is a perfect mystery. I beg also to say that it is not only a mystery, but it is an error. The right hon. Gentleman, though he may not be aware of it, is completely in error. The reduction of the rate of interest upon Exchequer bills to 1d. per day, notwithstanding the unfavourable circumstances of the autumn, and notwithstanding the doubling of the interest which these unfavourable circumstances brought about, will have produced an actual saving in the interest on the bills in 1854 compared with those of 1853. In the years 1852–53 the interest was 367,000 l.; but the interest on those which will be payable in 1853–54 will be only 347,000 l. I therefore fling back the statement of the right hon. Gentleman as to there having been a loss such as he describes, and I tell him he is in error. I tell him that if there had been an increase, nothing could be more absurd than to charge it upon me; and that so far from there having been an increase there has been a decrease of 20,000 l.
Then the right hon. Gentleman said the Chancellor of the Exchequer had operated upon much too large a scale, and that he had warnings of every kind from wise men on all sides of this House against the rash course he was taking; and the right hon. Gentleman, saying he was too modest to quote anything he had said himself, quoted the hon. Member for Westmoreland (Mr. Ald. Thompson). He also quoted the hon. Gentleman the Member for Huntingdon (Mr. T. Baring). Now, I am bound to give credit, and I do give every credit, to the judgment of the hon. Member for Huntingdon and to every other hon. Member when his judgment turns out to be right, as it did in this case. I am bound to say that the hon. Member for Huntingdon expressed from the first an opinion at variance with mine, and that his opinion turned out to be correct. The right hon. Gentleman spoke, however, as if I had acted contrary to the whole course of public opinion, both in and out of this House. But what were the facts? Why, the whole course of the criticisms of the right hon. Gentleman and his Friends at that time, were against the terms I was offering to the public creditor; they declared over and over again that they were too good for the public creditor, and against the interests of the public. ["Hear, hear!"] Was no such opinion expressed in this
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House? Why, whom do I see opposite; I see the fidus Achates of the right hon. Gentleman, the hon. and learned Member for East Suffolk (Sir F. Kelly), who recreated his powerful mind with all manner of facts and fancies as to the bargain I was proposing. Did he not enjoy the confidence and possess the sympathy of the right hon. Gentleman? Did he not fairly exhaust the English vocabulary, and drag out of it every epithet which its resources could furnish, in order to reprehend me for the extravagant, the monstrous, the lavish, the wasteful, the utterly incredible project of offering a guarantee of 2½ per cent for forty years. Do not, however, let me lay all the responsibility of the course then taken upon the shoulders of the hon. and learned Gentleman the Member for East Suffolk. To do him justice, I must say he never shrunk from his opinions, though I differed from him at the time; and the House will do me the justice to remember that I never held out any great expectation of immediate results. But what was done by the right hon. Gentleman himself? What did he say? Did he tell me that the scheme would fail, because the public creditor would not accept it? No, Sir! He says this was not a simple error of mine, but that it was an error in defiance of all advice and all warning given in the course of the discussion. And how does he make out that case? He says that in December the price of Consols was 101¼. This was when Lord Derby's Government went out. Consols, he says, went down directly afterwards 1½ per cent; and I thought it was great modesty on the part of the right hon. Gentleman that he did not attempt, at this period, to join together cause and effect, and to state at once that the fall took place because Lord Derby's Government were out. I am sorry, however, to say that this very plain statement of the right hon. Gentleman is susceptible of an easy explanation, to which I am under the necessity of begging his attention for a short time. His case was this—in the month of December the price of 100 Consols was 101¼; and in the month of February, when Parliament met, the price of Consols was 99 and a fraction; that consequently, was a decrease of full 1½ per cent. Now, did it never occur to the right hon. Gentleman to ask himself whether anything had happened in the meantime to account for that decrease? I am sure it ought to have done. He quotes the price of Consols at the end of December at 101¼;

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but what happened on the 5th of January to the holders of Consols? Why, upon the 5th of January they received 1l. 10 s., the half-yearly interest, the precise amount, or nearly so, by which the price had fallen. There was, however, a great deal of discussion in this House about the probability of the permanent lowness of the rate of interest. I need not remind the Committee, because the Committee must well remember them, of the positive opinions on this subject of the hon. and learned Member for East Suffolk. I was never bold enough to give any opinion upon that subject. When I brought forward my proposal I did not venture to found it upon anything so unstable as any opinions of my own as to the permanent rate of interest. I have never been bold enough to give any opinion upon that subject, and I founded it upon the fact that there appeared to be a state of public feeling which would secure such an amount of agreement upon the plan as would make the experiment worth trying. Any Gentleman who will read the statement I made at the time will find that that is their scope and strain. But the right hon. Gentleman who now comes forward to show up my weakness and frailties, has he never dealt with this subject of the permanent lowness of the rate of interest? Yes, Sir, he dealt with it in the month of December, 1852. In that month of December he spoke of increasing and confirming the credit of this country in consequence of the discovery of gold. He said—
"But, Sir, although the rate of profit depends upon the rate of wages, that is not the only element in this great question. There is another element still more important in its solution, and that is the rate of interest.* * * I maintain that it has not only given activity to commerce, but that it has influenced the commercial operations of this country to an extent which no other article could have exercised. I say that the discovery of gold, considering the currency which we possess, has established credit in this country in a manner which no political economist could ever have imagined. I say that it has increased and confirmed credit in this country, and that that increase and confirmation of credit has, of course, proportionably increased the employment of the people. It would seem to be mere blind and obstinate prejudice to shut oar eyes to that conclusion. But there is another question to be considered in regard to our prosperity at this moment, and that is, will the present low rate of interest last? I hope it will. My opinion is—though it is, perhaps, imprudent in me now to volunteer it—my opinion is, that whatever imprudences may occur—and I need not say that I deprecate them, but, notwithstanding some imprudences—the present rate of interest will mainly continue."—[3 Hansard, cxxiii. 878.]
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Such were the vaticinations of the right hon. Gentleman in December, 1852—of him who reproaches me in this House to-night, for not having foreseen what would happen six or eight months before it occurred, and for not thinking the state of politics anything; and what will be thought of him who, considering me responsible for reducing the rate of interest, prophesied himself that the then low rate of interest was to be "mainly permanent." That was before the fall of 1½ per cent in Consols. But, Sir, I am now about to quote some language used by the right hon. Gentleman at another time, in the midst of the very discussions on this particular Bill of mine for the conversion of stock, finding fault with me—for what? Not for disturbing the money market with experiments which must prove abortive, not for proposing a scheme calculated to meet the difficulty of the case in my view, though he might not agree with me; but still, upon the old doctrine that the rate of interest was too high. What was the speech of the right hon. Gentleman? He gave a long display of all the magnificent reductions in the interest of the national debt, from Walpole downwards, and said that all our reductions amounted only to the contemptible sum of some 600,000 l., upon 500,000,000 l. of debt. This was the argument of the right hon. Gentleman; but it went upon the doctrine—the very opposite and contradictory doctrine to that which he has broached to-night—the doctrine that the terms offered were both extravagant to the public creditor and unjust to the nation. He said:—
"If the Committee agreed to the conversion of the whole 500,000,000 l., under the second Resolution, he must remind the Committee that the profit to the country would but little exceed 550,000 l. a year; and they should well consider whether, for such an object as reducing the interest of the debt by 500,000 l. sterling, they would do right to fix the rate of interest at 2½ per cent for more than forty years."—[3 Hansard, cxxv. 874.]
It was too bad a bargain for the public to fix the rate of interest at 2½ per cent and given them a guarantee of forty years. That was the opinion of the right hon. Gentleman—that is his opinion still. Very well; if it is so, let us know how the matter stands. If he holds to that opinion, let him enjoy it; but if he thinks that 2½ per cent was too high a rate of interest, with the guarantee of forty years, do not let him now find fault with me for having done wrong to the stockholder by offering those

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terms. This statement was made on the 8th of April, long after the fall in Consols. The right hon. Gentleman says, the Bill for the conversion of stock was passed in such breathless haste, that a great error was committed in it—that it was found the parties could not get their money, and that the new Bill was pushed through with only twenty Members in this House. The right hon. Gentleman surely has been indulging to a great extent in the powerful faculty of his imagination. He may be right; it is not for me to dispute what he asserts so confidently; but all I can say is, that the whole of that strange assertion is entirely new to me. I am not aware that, in consequence of the haste with which the Bill was passed, an error was committed, which rendered another Bill necessary, in order that the stockholders might be enabled to receive their money. That was no such thing. The amended Bill, to which the right hon. Gentleman refers, was a Bill for an entirely different purpose. It was introduced to meet the case of a particular set of persons who were holders of portions of South Sea Stock, with regard to whom it was found that their peculiar case did not come within the provisions of the former Act, so as to give them an option. It appears, therefore, that the right hon. Gentleman has reckoned entirely without his host, and that he has been under some species of hallucination when he has made statements to the Committee in relation to what has actually taken place. The right hon. Gentleman has said, that it was my duty to state openly and frankly to the Committee that I had not succeeded in effecting the objects which I had in view; and he accuses me of not having spoken with sufficient openness on the subject. Now, I am in the recollection of the Committee, and, if I mistake not, I characterised my scheme as abortive. The right hon. Gentleman said, "Why not make a full confession?" Well, Sir, I have made a full confession. I told the House so at the close of the last Session. My conscience, therefore, is clear as to this charge of the right hon. Gentleman. But, upon the other hand, I tell the Committee that so far from there being a loss upon other parts of the plan, when the transactions are wound up there will be a profit; but though it is impossible to state with precise and rigid accuracy the profit and loss upon the transactions, I have the means of stating that the profit will be about 132,000 l. a year. No doubt
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that is a very contemptible sum in the estimation of the right hon. Gentleman, who thinks 600,000 l. upon 500,000,000 l. of debt not a sufficient saving to induce the Chancellor of the Exchequer to give a guarantee of forty years. I do not pretend to put myself upon a par with the right hon. Gentleman, but I do humbly venture to think that it is better to have a profit of 132,000 l. a year than none at all.
Then we come to the state of the public balances. Here so many fancies spring up in the mind and brain of the right hon. Gentleman, that it must be perfectly extraordinary to see one so possessed with bugbears and delusions. The right hon. Gentleman has got it into his head that the public credit is in an unsound state; he is not satisfied with the price of the three per cents being at 91 in a time of war—a state of public credit unexampled and unparalleled in history. The right hon. Gentleman has laid great stress upon the amount actually in the Exchequer, and has recommended that you should borrow 8,000,000 l. It was a marvel to me and to some Gentlemen near me, what the right hon. Gentleman would do. He was to vindicate the liberty of debate, and he left out of consideration the reasons which had operated upon me in the production of my plans; and by and by he recommends to me a loan of 8,000,000 l. of money. I admit that if I had accepted the proposal of the right hon. Gentleman I should have had a loss upon my transactions. But, let me ask, for what purpose is it necessary to have this loan? We do not want it. Nobody wants it. The Bank do not want it, and there is no pressure on the money market. At the same time, I am bound to add, that I do not understand the arithmetical calculation upon which the right hon. Gentleman recommends us to take this loan of 8,000,000 l. He estimates the anticipated balances on 5th of April at 3,000,000 l. I have the misfortune to differ from him here, for I estimate them at 4,000,000 l. He estimates the demand upon the Bank at 10,000,000 l. Here again it is my misfortune to differ from the right hon. Gentleman, for I estimate it at less. And he is still more wrong in another point, either in his addition or subtraction, whichever it may be, for if the right hon. Gentleman's calculations were correct—that the balances amounted to 3,000,000 l., and the demand in the Exchequer to 10,000,000 l.—I should

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have thought that a loan of 7,000,000 l., if any loan were necessary, would have met the exigencies of the case. But let that pass. The real question is this—Are the public balances in such a state as to be in the slightest degree injurious to the credit of the country? I say they are not. The right hon. Gentleman asks what will be the amount of the deficiency bills for which we shall have to draw upon the Bank in the course of the month of April? Only to-day I made a memorandum upon this subject; but, anticipating that the question would turn upon the financial measures of the year rather than have assumed a retrospective character, I left it behind. But I am very near the mark when I say that the demand for deficiency bills upon the Bank during the next quarter, to be chargeable to the public revenue, will be from 4,000,000 l. to 4,500,000 l; and I have not the slightest reason to suppose that the accommodation will be anything but convenient to the Bank. If, however, it should not be convenient to the Bank, the power which I shall ask from the House of Commons, to issue a certain amount of Exchequer bills, keeping within the margin of the unfunded debt as it stood last year, will enable me to reduce the amount of the demand. This is the simple state of things. If you ask me whether 4,500,000 l. of deficiency bills is an amount which the Government ought to be taking from the Bank, quarter after quarter, I say "No." I think it is too much. But if, on the other hand, you ask me whether it is an amount which, if taken only at a particular period, will give the slightest shake to public credit, I answer, unhesitatingly, "No." When I listened to the winding up of the right hon. Gentleman's outpouring, to the close of all this "sound and fury," I found there was nothing left, because he stated the question to be really this—whether it is safe and right, in circumstances of emergency, or in any circumstances whatever, for a Government to be under the necessity of making permanently a really large demand for advances upon the Bank. I understand him to say that by these large advances he means 6,000,000 l. There is no such demand going to be made. The demand that is to be made is a demand that can be reduced according to the convenience of the Bank; and the right hon. Gentleman ought to know that leaving the deficiency bills within a limit is an operation by no means disadvantageous or dis-
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agreeable to the Bank. It is an operation which the Bank, as a banking corporation, considers to fall within its banking business. The right hon. Gentleman, however, seems to be labouring under considerable confusion in another respect, for he says, "You go on asking for deficiency bills at a rate that must raise the rate of interest on money." He seems to think we are about to ask for less than is worth while—[Mr. DISRAELI: Less profitable.] The Bank do not think it a bad transaction; and I hope and believe there is no Government which would go to the Bank and ask for money upon deficiency bills at less than their fair market value. The right hon. Gentleman will recollect that these bills are the subject of loans, at rates that are alike on no two days. They run out gradually day by day, and run in again day by day; and the transaction suits the convenience of the Bank. Bill-brokers will be found to lend money, for short periods, at 1 or 1½ per cent. Why? Because there is a convenience to all parties. These loans are the brokers' deficiency bills; and this is precisely the basis of the transaction between the Government and the Bank. I do not think that it is necessary for me to trespass any longer upon the time of the Committee; but I hope that I have shown that the transactions which have been the subject of discussion were not the rash transactions the right hon. Gentleman described them to be. Instead of a loss to the country, I hope I have shown that there has been a positive gain. I have, I trust, shown, that the scheme was not hurried too hastily through the House, or in opposition to repeated warning, and that the opposition to the measure was based on entirely contradictory considerations. One hon. Gentleman opposed it has being a hardship to the stockholder, while others thought that the public creditor would not accept the terms proposed. With regard to the condition of the public balances, and the suggestion of the right hon. Gentleman to raise a loan of 8,000,000 l., the effect would be to saddle posterity with an unnecessary burden. I can assure the right hon. Gentleman that the public balances will take very good care of themselves, and a very few weeks will show whether the opinion of the right hon. Gentleman or whether my own is correct. There are, however, certain to be many opportunities which the right hon. Gentleman will have of reviving a discussion upon this subject, and I can

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assure him that whenever he shall think fit to do so I shall be always ready and willing to meet him.
MR. DISRAELI: Sir, the right hon. Gentleman, in the conclusion of his observations, has just touched upon what is the real question. The right hon. Gentleman says that the state of the public balances is satisfactory, and if he can prove that, there is no use in talking any longer upon the subject; but I believe that the state of the public balances is most unsatisfactory. I believe that the present is not a proper state for the balances in the Exchequer to be in when we are embarking in war, and when the Chancellor of the Exchequer, according to his own statement, requires 4,500,000 l. of deficiency bills. The real point is this—do the Committee of Ways and Means think, in the present state of the country, embarked as we are in what may be a protracted and expensive war, that the balances in the Exchequer ought to be in such a state that habitually the Finance Minister should be obliged to have recourse to deficiency bills to the extent of 4,500,000 l. for the quarter? This is the real point. The right hon. Gentleman says I have not taken into consideration the various circumstances which led to the failure of his plan. I did take them into consideration; but the right hon. Gentleman entirely misapprehended what I said. I said I objected to his pursuing his plan at a time when the price of funds was falling and the Bank was raising its rate of interest. I complained that he was lowering the rate of interest upon public securities when the Bank was raising its rate of interest on private securities. The right hon. Gentleman says that my estimated calculation of the balances in the Exchequer, and of the amount which will be required to meet the demands of the quarter, is incorrect. Well, Sir, the 5th of April is not very distant, and we will leave the decision as to who is right, until that day. There is another point upon which the right hon. Gentleman dwelt, and that is, with reference to the Bill brought in to extricate the Government from the mistake they had made. Upon that point, too, I reiterate my statement which the right hon. Gentleman did not in fact impugn. He may divert for a moment the attention of the Committee from an important question by lively criticisms upon isolated topics, but this subject of the state of the Exchequer is one which must constantly occur and recur, and even in the present
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Session proposals will be made in consequence of the state of the balances. I repeat it, that the present is not a proper state for our Exchequer to be in, especially in a time of war; it is not proper that the Chancellor of the Exchequer, in such a time, should be habitually carrying on public business by deficiency bills to the amount of 4,500,000 l. That is the real point before the Committee. The right hon. Gentleman certainly misunderstood me when he said I proposed a loan of 8,000,000 l. What I said was that the right hon. Gentleman appeared to have paid 8,000,000 l. out of the Exchequer, and I expressed my opinion that the Committee would be perfectly willing to give him every assistance he could wish within that limit in order to enable him to carry on the business of the country upon real balances in the Exchequer, and not by habitually borrowing money from the Bank of England. The right hon. Gentleman says he has no difficulty in borrowing money from the Bank. All I can say is, that, if he can borrow money on these terms, with the slight balances which he keeps there, it must be a source of great satisfaction to him; and if the Bank would carry us through the war on that system, it will be much less expensive than was anticipated. The right hon. Gentleman also finds fault with my estimate of the loss occasioned by his dealings in Exchequer bills. All I can say is, that I took that loss from his own return. I find there, under the head of reduction these items, first, 37,970 l. 15 s. l0 d., then another item of 7,605 l. 19 s. 7d., and a small item which has to be added in of 5l. 3s. 4d., which makes in all a reduction in the interest of Exchequer bills amounting to 45,581 l. 18 s. 9d. Then on the other side there is an increase in the interest, first, of 67,524 l. 5s. 10 d., and then of 14,955 l. 15 s., which, in all, makes an increase of 82,480 l. 0s. 10 d. Then I deduct from this loss of 82,480 l. 0s. 10 d. the gain of 45,581 l. 18 s. 9d., which gives a balance of 36,898 l. 2s. 1d. of loss; and yet the right hon. Gentleman has returned three times to the charge upon this authority.
THE CHANCELLOR OF THE EXCHEQUER: Sir, I rise merely to put the right hon. Gentleman right as to a matter of fact; to his general observations I shall not now reply. The right hon. Gentleman says that I was wrong in stating that there was a saving of 20,000 l., and he quotes my own return to show that, on the con-

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trary, there was a loss of 36,000 l. I am sorry to say there was certainly an error in my stating that there was a saving of 20,000 l.; but the error was that I understated that saving. I take this, Sir, from the printed paper before me; and here, again, Sir, I am sorry the right hon. Gentleman and I do not agree in our ideas of addition. I have not added it up myself, but I have had it added up, and I find that the column of increase amounts to 82,480 l., while the column of reduction amounts to 120,000 l.
MR. DISRAELI: What is your first item in the column?
THE CHANCELLOR OF THE EXCHEQUER: 35,030 l.
MR DISRAELI: Ah! that is the reduction which I made while I was in office, when I lowered the interest from l½d. to 1¼d.; you are surely not entitled to that.
THE CHANCELLOR OF THE EXCHEQUER: I do not know, Sir, what the right hon. Gentleman means. What I state is simply this, that the right hon. Gentleman is mistaken in saying that there was a loss of 36,000 l. upon the Exchequer bill transaction in 1853. And the plain statement I make is, that the whole charge which will have to be paid by the country during 1854, in respect to Exchequer bills, is less either by 20,000 l., or by a larger sum than 20,000 l., than the whole charge that was paid by the country on that account in the year 1853. Now, I hope that is explicit—the right hon. Gentleman hears it; it is in his power to scrutinise it, and, if it is true, I trust he will admit that he has been wrong in charging me with creating a loss.
MR. DISRAELI: Sir, in justice to myself, I must repeat to the Committee what I stated just now across the table to the right hon. Gentleman. The right hon. Gentleman has quoted the figures, for his justification, from a return obtained by me, entitled:—
"A Statement of the several alterations made since the 1st of January, 1852, in the rate of interest of Exchequer bills, specifying the nature of such alteration, and the amount of the reduction or increase of interest, with the date thereof."
And I, according to the right hon. Gentleman, having accused him of pursuing a certain course with respect to these Exchequer bills—that of reducing the interest on them, by which a considerable loss was incurred—the right hon. Gentleman, upon that, challenges the accuracy of my figures,
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and sums up a column of reductions, which, he says, amounts to 120,000 l. Now, the first item of these reductions is one of 35,000 l. on a sum of 9,238,700 l. of Exchequer bills, part of a larger sum of 17,742,800 l., the interest of which was, on the 10th of June, 1852, reduced from 1½d. to 1¼d., by which step this saving of 35,000 l. was produced. Now, Sir, as I happened then to hold the office which the right hon. Gentleman now so worthily fills, I certainly did not consider that the right hon. Gentleman was entitled to take to himself the saving thus effected, and to make use of it in diminution of the loss which he himself has caused.
THE CHANCELLOR OF THE EXCHEQUER: I can assure the right hon. Gentleman that the case shall be treated simply upon the merits of the alterations proposed under my sanction, and that no attempt shall be made to deprive him of the credit which is justly his due.
MR. G. A. HAMILTONsaid, the statement made by the right hon. Chancellor of the Exchequer, to the effect that his second Bill of last Session was not rendered necessary by reason of any omission in the first, was incorrect. The right hon. Gentleman would find, on referring to the 8th and 9th clauses of the second Bill, that they related to two most important points which were overlooked in the first Bill.
THE CHANCELLOR OF THE EXCHEQUERsaid, the clauses in the second Bill, referred to by the hon. Gentleman, were introduced without his consent, and against the opinion of the law officers of the Crown, who thought they were unnecessary.
SIR FITZROY KELLYsaid, he would not at that hour enter upon the numerous and very important points which had been dealt with in the speech of the right hon. Gentleman the Chancellor of the Exchequer that evening. He should have been glad to have postponed until another time all discussion upon the important measure of last Session relative to South Sea Stock, but the right hon. Gentleman had thought fit to allude to what had fallen from him in the debates on the subject during the last Session. Before he adverted to the comparatively unimportant consideration of whether he was right or wrong in the view he took, he would call the attention of the Committee to the measure itself, and the view the right hon. Gentleman himself took of it; his views as to its probable consequences, and by which the public were induced to act upon

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t, when it became the law of the land—he should be glad to know from the right hon. Gentleman distinctly whether the State was a gainer or loser, and if so, to what amount in the transaction he referred to? The effect of the measure was to pay off and discharge a sum amounting to about 8,000,000 l. of South Sea Stock. He wished to ask at what cost to the public that was paid off, inasmuch as the holders of stock, to the amount of 8,000,000 l. sterling, required to be paid off at par, 100 l. sterling for every 100 l. stock. As that sum of 8,000,000 l. was now partly paid off, and would be completely paid off in April next, and as the payment was made at a time when stock was worth from 90 l. to 92 l. only, it was evident that there was a clear loss to the State of between 700,000 l. and 800,000 l. sterling. When the right hon. Gentleman next addressed the House, he hoped he would be good enough to state the price of stock when the payment was made in January last, and the price it was likely to be in April next. He was satisfied the right hon. Gentleman would find that there would be a loss of at least eight or ten per cent, the Government and the public being, as he had just stated, the worse by some 700,000 l. or 800,000 l. He admitted that the right hon. Gentleman did not anticipate that in twelve months the public funds would fall eight or ten per cent. It would be as well, however, when he assumed that tone of confidence which he sometimes addressed to that side of the House, if he had on that occasion listened to the warning, not of so humble an individual as himself, but of his hon. Friend the Member for Huntingdon (Mr. T. Baring), the right hon. Gentleman the Member for Portsmouth (Sir F. Baring), and others who differed from him. He could not but think that, if the right hon. Gentleman had listened to those warnings, and had stayed his hand, the country would have been in a better position, for thus far the speculations of the right hon. Gentleman had been one of unmitigated loss. He came now to the more important matter—the creation of new stock, substituted for the South Sea Stock about to be discharged; and here, indeed, he could compliment the right hon. Gentleman with the saving, although not what he had anticipated. Really, when the right hon. Gentleman talked of prophecies as to the future condition of the money market, he hoped he was not acting unfairly in reminding
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the right hon. Gentleman that he had calculated on saving to the State at least 100,000 l. a year in the interest of the public debt. The result of the measure of the right hon. Gentleman, by which such unfortunate persons as relied on his representations accepted one or other of his three equivalents for their stock, was this—that none of the equivalent stocks came into the market at all, except where holders were compelled by severe necessity to convert stock into money, and that then the prices were 75 l., 80 l., and 82 l.; so that every holder of the "equivalent" stocks lost 18 l., 20 l., or 25 l. per cent on every 100 l. And as to the saving to the Government effected by the measure, it amounted to this—the interest on 3,000,000 l. stock was reduced from 90,000 l. to 75,000 l., the difference between three per cent and two and a-half per cent, and the saving would be just 15,000 l. a year. Such were the measures against which he (Sir F. Kelly) and his Friends had vainly struggled last Session. By one measure the Government had lost 800,000 l., and by the other saved 15,000 l., at the sacrifice, in many instances, of the whole fortunes of those who had relied on their financial scheme. The right hon. Gentleman had referred to some opinions of his, expressed last Session, but had shown neither candour nor accuracy. The question had been as to the creation of the three new kinds of stock, and he (Sir F. Kelly) had argued that their value could not be predicated until experience had tested it, and that it was impracticable to attempt to settle it for forty years to come; and he had also said that if the three-and-a-half per cent stock guaranteed for forty years was an equivalent to 100 l. at par, then the two-and-a-half per cent stock was far beyond the equivalent value, and was an improvident bargain for the public. And in order to show the impracticability of settling the value of these stocks for forty years to come, he had referred to the history of finance for forty years past, and in that view only had he alluded to the rate of interest. His only object in the observations which he had made on this or any former occasion on the subject, was, that these transactions between the State and the public should be such as to secure to the Government that confidence which he believed had been shaken, if not subverted, by the measures of the right hon. Gentleman.
MR. HILDYARDsaid, he hoped the

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Government would give the country an assurance that they would avoid the errors committed by the Governments who had the management of the last war—that of engaging to grant subsidies to foreign Powers. He was under no apprehension that any of their present allies would accept a farthing in the shape of subsidy, but there were other allies whose financial state unhappily was not in the most favourable position. He hoped Her Majesty's Government would assure the Committee that under no circumstances would they subsidise Austria. Now, the state of Austrian finance was well known; and it would be satisfactory if the Government would intimate that under no circumstances whatever would they subsidise any European nation. There was one part of the observations of the Chancellor of the Exchequer of extreme importance. The right hon. Gentleman had said that the Bank of England was in a condition to assist him, and at the same time to take care of itself. No doubt the Bank could and would assist the Government if the condition of the balances in the Exchequer required it; but, if the Government drew largely on the Bank, its power of assisting private parties would be greatly crippled. An hon. Member (Mr. Glyn) had talked of the "restrictions" in the Act of 1844, which would have been a very irrelevant topic had there not been an apprehension that the assistance the Government might require from the Bank might bring into operation that restriction of its resources—that most injudicious measure. It would be most unfortunate if the result of the recourse had by the Government to the Bank should be to restrict its powers of giving to the commercial world such assistance as there was every probability might in future be required.
MR. DRUMMONDsaid, he would just hint that, among all the "ways and means" to which the Government might look for the purpose of carrying on the war, that House would firmly set itself against that of which they had had some hints that night—somewhat ambiguous and dark, no doubt—but yet to those who looked backward to former times full of most dangerous promise. He referred to the allusions which had been made to a paper currency, to tampering with the currency as a means of creating new resources. Hon. Gentlemen might talk about it as they liked, but when they found hon. Members connected with banking interests
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speaking about the extension of the currency and the tightness of the money market, they might depend upon it it meant nothing more than this, resorting to "the little shilling." Your paper currency was nothing more nor less than a fraud committed upon the public for the sake of the Government. It had been said that Russia had greatly increased its paper currency; all he hoped was that the example of Russia would not be followed by this country. Hon. Members were frequently in the habit of talking of journeymen and labourers being led away in consequence of not being sufficiently versed in political economy, and entering upon strikes for the purpose of raising the value of their labour, or sharing in the profits of the capitalists. If the appointment of a professor of political economy to that House were made, it would not, in his opinion, be altogether useless. Hon. Gentlemen alluded to the amount of money in circulation, as if it was really natural wealth, whereas they had yet to be made sensible of this, that the taxes which they had been voting to-night were nothing more than a transfer of a certain amount of corn, or beef, or mutton, from the pockets of the taxpayer into the coffers of the Chancellor of the Exchequer, and that money, be it plentiful or scarce, was nothing more than the agent by which that operation took place; and if money was scarce, the issue of a paper currency would not lighten the burdens of the people one iota, although it might enable the Government of the country to cheat the House of Commons and everybody else.
COLONEL DUNNEsaid, the Chancellor of the Exchequer had stated that the Irish income tax would realise 480,000 l., but it was not shown how he had arrived at this result; and as much of the tax was, before the Act extending the tax to Ireland, paid on Irish income in this country upon which it was now to be paid in Ireland, he suspected that this was included in the calculations of the Government.
THE CHANCELLOR OF THE EXCHEQUERsaid, that allowance had been made on account of it.
Resolution agreed to.
Resolved—
"That, towards making good the Supply granted to Her Majesty, the Commissioners of Her Majesty's Treasury shall be authorised to raise any sum of money, not exceeding 1,750,000 l. sterling, by the issue of Exchequer Bills."
House resumed.

CHURCH BUILDING ACTS CONTINUANCE BILL.
Order for Second Reading read.
Motion made, and Question proposed, "That the Bill be now read a second time."
MR. HADFIELDsaid, this Bill proposed to continue the Church Commissioners for ten years longer. The Commission began in 1818; 1,500,000 l. was voted for church building, and the Commission had existed thirty-six years. He wished to know for what earthly purpose these Commissioners could be wanted for ten years more? He begged to move that the Bill be read a second time that day six months.
Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day six months."
MR. WALPOLEsaid, he wished to call the attention of the Government to the confused and utterly unintelligible condition of these Acts. He hoped that, before Government asked the House to continue them for ten years, they would make an attempt to consolidate them into one Act. Without assenting to the proposition of the hon. Member (Mr. Hadfield) that the Bill should be read a second time that day six months, he trusted that the Government would seriously consider the propriety of consolidating the existing Acts.
MR. SIDNEY HERBERTsaid, he must admit that these Acts were in a very confused and unsatisfactory state. Attempts to consolidate them had frequently been made, and submitted to successive Home Secretaries, but so difficult was the task, that it had never been accomplished. In the meanwhile it was necessary to reenact these Acts, as the Commissioners had a good deal of money to distribute that had been left in their hands.
MR. HENLEYsaid, the statement just made rendered the case irresistible that the Bill should be postponed. The right hon. Gentleman said the task of consolidation had been so difficult that consecutive Secretaries of State had given it up in despair. If that was so, the proper course would be to suspend the continuance of the Commission till the labour of consolidation could be effected.
MR. BOUVERIEsaid, that these Acts were in a state of almost inextricable con-
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fusion was not to be denied. So much was this the case that it was all but impossible to say what the law was, and the best thing that could be done would be to consolidate all the Acts into one Statute. He would therefore suggest that the Bill should be postponed till that day week or that day fortnight.
MR. FITZROYsaid, he thought there was very little chance indeed of these Acts being consolidated in a fortnight. There were no fewer than eighteen Acts of Parliament on this subject, and, though different attempts had been made to consolidate them, they had all failed. The Secretary to the Commission would not undertake the attempt at consolidation for any money that could be offered him. In the meantime the duties of the Commission had become of a permanent nature, especially with respect to the division of parishes, the assignment of new districts and the like, and, therefore, it was important that the Acts should be perpetuated for a certain time. Not less than four-fifths of their income were derived from individual subscriptions, and these subscriptions had been very useful in the completion and erection of churches. The number of churches built amounted to 538, while there were in the course of erection 95, making a total of 633; and there was a balance of 20,000 l. in their hands. He hoped, therefore, the House would consent to read the Bill a second time.
MR. MUNTZsaid, he thought the Bill should be postponed for the Session, to enable the Government to bring in a measure of consolidation.
MR. VERNON SMITHsaid, every succeeding speech in behalf of the Bill made it appear the more necessary not to read it a second time. The hon. Under Secretary for the Home Department told them that so inextricable was the confusion of these Bills that they could not be consolidated; and yet, in these circumstances, he asked them to reappoint this Commission for ten years. Let him propose some shorter time—say twelve months—and endeavour in the meantime to consolidate the law.
MR. DISRAELI: I would recommend that the law officers he permitted to try their hands at this Bill; and, in the meantime, that we should have the continuance for one year. I should like to see what they could make of it; and this seems to me to be the course which, upon the whole, we had better follow.
MR. FITZROYsaid, he would postpone the Bill till Friday, when the noble Lord the Home Secretary would be present to state his views if the hon. Member for Sheffield (Mr. Hadfield) would withdraw his Motion.
MR. WILSON PATTENthought the proposition of the right hon. Gentleman (Mr. Disraeli) a very reasonable one—namely, that the Bill should be passed for one year only.
Question put—"That the word 'now' stand part of the Question."
The House divided:—Ayes 70; Noes 59: Majority 11.
Main question put, and agreed to.
Mr. WALPOLEsaid, he would press on the Government, before the Bill was read a second time, to consider the question of consolidation. The feeling on his side of the House was that the Bill should be continued for a short time to allow of that consolidation taking place.
MR. FITZROYsaid, the practical course would be to allow the Bill to be read a second time now, and to insert the words "one year" in Committee.
Bill read 2°.

VALUATION (IRELAND) BILL.
Order for Committee read; House in Committee.
Clause 1 (Repeal of Acts).
MR. J. O'CONNELLsaid, he objected to the Bill, on the ground that it would unnecessarily extend county burdens to the towns of Ireland, and he should move that the clause be omitted.
SIR JOHN YOUNGsaid, that two years ago a Valuation Act was passed, the object of which was to establish an uniform valuation of all tenements throughout Ireland, upon a fixed basis, for the purpose of all taxation. That Act exempted from the valuation houses under the value of 5l., and the consequence was that 15,000 proprietors of houses, who had not been exempted before, obtained exemption, and 3,000 l. of the valuation was thrown upon the proprietors of the higher class of houses. The object of this clause was to abolish that exemption, which led persons to speculate in the building of small cottages, for which, in consequence of the exemption, the landlords got a higher rent than they could otherwise obtain. The object of this Bill was to establish an uniform valuation for all the taxes, and he hoped the clause would re-
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ceive the assent of the Committee. He had no objection, however, to refer to the Committee appointed to consider the subject of the Grand Jury Laws the question whether the exemptions from grand jury cess should continue or not.
MR. POTTERsaid, it was of great importance to encourage the building of houses in Ireland, and, as he believed this Bill would have a contrary effect, he should offer it all the opposition in his power.
MR. F. SCULLYsaid, he objected to the clause, on the ground that it was unjust to impose a tax upon occupants of the lowest class of houses in the towns, who were now exempted from the poor rate, and who, he thought, should also be exempted from the county cess. He hoped the Government would reconsider the question, and would either omit this clause altogether, or require that the county cess, in the case of houses under the value of 5l., should be paid by the landlords by whom the poor rate was now paid.
MR. LUCASsaid, that the effect of the first clause of the present Bill was to remove an exemption, which the right hon. Gentleman the Secretary for Ireland had no objection to refer to a Committee; and if they pronounced an opinion hostile to the clause, then he would have to introduce some measure to get rid of that which he was to-night seeking to have enacted. He would therefore suggest that when the result of the Bill was matter of doubt, and when the Government had not made up their minds on the subject, it would be a satire on legislation to pass the Bill, under such circumstances, in its present form.
MR. J. BALLsaid, that all acquainted with the subject of local taxation knew that that which was paramount to everything else was a consolidation of the local rates. To have a different system of exemptions in the different rates could not but be disadvantageous, and he considered, therefore, that agreeing to the second reading of the Bill, and allowing the Committee on the Grand Jury Laws to take it up from that point, and say whether the law required alteration, was a consistent and intelligent mode of dealing with the subject.
MR. GROGANsaid, he most thoroughly and cordially supported the Bill. It was one to which the Dublin corporation, after the most mature deliberation, gave its complete assent. The exemption, he contended, would only have the effect of re-

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leasing one class of houses from taxation, to impose additional taxation upon others.
MR. J. D. FITZGERALDsaid, he considered that the Bill, as a Valuation Bill, was an excellent one; but some of his hon. Friends had conceived—and he thought not without justice—that the effect of the Bill would be to repeal an existing law that exempted tenements under 5l. from taxation. If this were so, then it ought to be declared, but if it were intended by implication to expose to taxation a large class who had hitherto been exempt, he should oppose the Bill.
SIR DENHAM NORREYSsaid, he concurred in the opinion that the Bill would, in an indirect manner, introduce a system of taxation on those who had hitherto been exempt. It would have the effect of throwing off a portion of the taxation from the rich and placing it on the poor.
MR. NAPIERsaid, he wished to explain to the Committee that the clause merely repealed certain provisions of former Acts of Parliament. At the time of the passing of one of these Acts he remembered very well warning the House that in consequence of some of its clauses it would create confusion. The exemption, about which so much had been said, he could assure hon. Gentlemen ought never to have been introduced into the Act, which was one for the general valuation of Ireland, and the object of the clause now before them was simply to remove from it the exemption provision. As the law stood, however, that provision would be ultimately left quite untouched, for the power of exemption was contained in an Act by itself. The truth was this, that if a house were not rated it would bring an increased rent. He thought that the question of exemption should be discussed in a separate manner.
Motion made, and Question put, "That the Clause stand part of the Bill."
House divided:—Ayes 79; Noes 25: Majority 54.
Clause agreed to, as was also Clause 2.
Clause 3.
MR. J. D. FITZGERALDsaid, he proposed to add, at the end of this clause, a proviso, to the effect that nothing contained therein should be deemed to make liable to Grand Jury rates any houses rated at, or under, the value of 5l., and which were exempted from the Grand Jury Cess, in pursuance of the Statute 6 & 7 Vict. c. 32.
SIR JOHN YOUNGsaid, he thought
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this addition would make the Bill a very cumbrous one. A Committee would shortly sit to consider the whole Irish Grand Jury system, and he thought there was not the slightest possibility of this Bill being passed before the decision of that Committee were known.
MR. M'CANNsaid, he would not object to 5l. houses being rated, but he thought the whole burden ought not to be borne by the occupier. He could not see why the owner should not bear a share.
MR. MAGUIREsaid, he thought the right hon. Gentleman (Sir J. Young) ought to postpone the Bill till the House should be in possession of the decision of the Committee of which he spoke. If he persevered in the Bill, he would, no doubt, get a number of Gentlemen to support him at the Chairman's call, neither knowing nor caring what they did. ["Order, order!"] Yes, he would distinctly repeat it again and again—a number of Gentlemen would come in from the lobbies, the dining-room and smoking-room, and would vote for the Government without caring one single farthing how far it affected, or did not affect, the people of Ireland. He would tell the right hon. Gentleman that he had not dealt fairly with the Irish people; he smuggled a Bill into the House at a late hour; no explanations were given; for himself he had no knowledge of the second reading; and now he wished to carry it by the force of his majority. Let the decision of the Grand Juries' Committee be waited for, at all events; he should be willing to abide by it; but it was unfair to make people liable by means of what appeared a discreditable trick.
SIR JOHN YOUNGsaid, the hon. Gentleman used to-night the same latitude of assertion he generally allowed himself. He said the House had been taken advantage of. But the Bill had been regularly introduced and explained ten days ago. On Wednesday he had consulted for an hour and a half with fourteen or fifteen of the Irish Members upon the subject, when it had been agreed that the question should be referred to the Committee on the Grand Jury Bill. And yet this was conduct which a Member for Ireland considered himself entitled to characterise as a discreditable trick.
MR. MAGUIREsaid, he really had not meant to say, and had not said, what the right hon. Gentleman imputed to him. He had only said that the proceeding looked like a trick. And, again, his

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remarks, whatever they were, applied to the system, and not at all to the individual.
MR. LUCASsaid, it was quite unnecessary for the right hon. Gentleman the Secretary for Ireland to divide the Committee upon this Amendment, for he had expressly said himself that he did not intend to settle the question of exemption at present, but to leave it over for a future occasion. He did not think there could be any valid objection to the words in the Amendment being allowed to stand part of the clause.
Question put, "That those words be there added."
The Committee divided:—Ayes 26; Noes 74: Majority 48.
Clause agreed to.
MR. J. O'CONNELLsaid, he must make another appeal to the Chief Secretary for Ireland in favour of a postponement of the Bill. It was clearly against the feeling of the Irish Members present, and then it should be considered that a number of the Irish Members were absent.
SIR JOHN YOUNGsaid, he could not admit that twenty-four or twenty-six constituted a majority of the Irish Members, more particularly when he remembered that, at a meeting of Irish representatives to whom he submitted the provisions of the Bill, only one Gentleman expressed a dissentient feeling. Then, as for postponing the measure out of consideration to a portion of the Irish Members, were they to have no consideration for the two decisions of that House in favour of it, by very large majorities. There was nothing in the remaining clauses to afford occasion for discussion.
MR. G. A. HAMILTONsaid, that it was extremely important to pass a Valuation Bill, and he hoped, therefore, that no obstruction would be interposed in the way of the passing of the Bill.
MR. KIRKsaid, the principal effect of the Bill would be, that every sum of money which should be laid out upon buildings would immediately be made liable to the poor rate; but he would not object to that, if the rule applied to land, which in the next clause was exempted from the tax.
SIR JOHN YOUNGsaid, the question of buildings being taxed, and land made exempt, was considered a difficult one; but as it had been discussed by the Poor Law Committee, and had been considered
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as settled, he should not think fit to disturb it.
Remaining clauses agreed to.
House resumed.
The House adjourned at One o'clock.