WAYS AND MEANS—THE INCOME TAX.

HC Deb 21 March 1854 vol 131 cc1079-177

Resolution reported. That, towards raising the Supply granted to Her Majesty, there shall be charged and raised for the year commencing on the 6th day of April, 1854, for and in respect of all property, profits, and gains, chargeable in or for the said year, with the Rates and Duties granted by the Act 16 and 17 Vic. c. 34, additional Rates and Duties, amounting to one moiety of the whole of the Duties which by virtue of the said Act shall be charged and assessed, or shall become payable under any Contract of Composition, or otherwise, in respect of such property, profits, and gains respectively, for the said year; and that the whole amount of the said additional Duties shall be collected and paid with, and over and above, the first moiety of the Duties assessed or charged by virtue of the said Act for the year aforesaid.

Resolution read a second time.

SIR HENRY WILLOUGHBY

said, he rose to move the Amendment of which he had given notice—namely, the omission of certain words in the latter part of the Resolution. He intended to have moved his Amendment on the previous evening, but he was accidentally absent at the proper time for submitting it to the consideration of the Committee of Ways and Means. He thought it right, in drawing the attention of the House to the subject under consideration, to state that he entertained considerable doubts whether a sufficient case had been made out for the imposition of a double income tax this year at all. The object of his Amendment was simply to provide that, whatever might be the amount of the fresh tax to be raised in the ensuing year, it should be extended over the whole year, and that the whole of the increase should not be collected in the first half-year. The entire amount to be raised by this tax was calculated by the right hon. Gentleman the Chancellor of the Exchequer at 9,412,000l. Now the House should bear in mind that when this country was engaged in the severest of wars with which she was visited—in 1807—the whole amount of the income tax that then existed barely came up to 10,000,000l.; and when it was at its greatest height, in 1816, it only amounted to 15,500,000l. The effect produced on those parties who were made liable to that tax was shown by the circumstance of a most important petition having been presented to that House, upon the injustice and inequality of the tax. That petition was signed by 22,000 of the chief bankers and merchants of the metropolis. It was therein stated that there were 11,000 surcharges made, and 3,000 appeals set aside. The immediate repeal of the tax was then insisted upon; and when it was given up all the documents connected with it were ordered to be destroyed, so that no record of the tax should remain. Where, he asked, was the case made out for collecting this in- crease in the tax in the first half-year? There was a surplus upon the first quarter of the year of 800,000l.; and, in order to meet any inconvenience to which the Chancellor of the Exchequer might be subjected for the collection of this tax, the House had granted him 1,750,000l. of Exchequer bills. According to the statement made by the Chancellor of the Exchequer on the introduction of his Budget, there did not appear to be any urgent necessity for the increase of the income tax at this moment. He stated that the amount required for the year would be 56,189,000l., and he calculated his ways and means at 53,390,000l. Last year the right hon. Gentleman calculated the income of the year at 52,990,000l. He very wisely took care to be on the right side, and it turned out that the amount actually realised was 54,025,000l. He thought the right hon. Gentleman might safely take the next year's income at 54,000,000l., particularly as the succession tax would come into play; and taking into consideration the 1,750,000l. Exchequer bills, he thought it quite clear that no such financial pressure existed as ought to prevent the House from agreeing to his proposition. There would not have been a shadow of a claim for this increase of the income tax if something had not occurred to reduce enormously the balances in the Exchequer. The reduction, in point of fact, amounted to something like one-half. It was necessary that the House should understand the position of the national finances, in order to enable them to see whether the increase of this odious, inquisitorial, and obnoxious tax was justifiable. He did not think that there was an hon. Member in that House, with the exception of those connected with the Government, who could state what had been the practical effect of the attempted conversion of stock last year on the finances of the country. What had been the effect of the right hon. Gentleman's measure for the attempted conversion of the three per cents into stock? It was quite clear that the right hon. Gentleman had stated last year, when proposing his financial measure, that, if anybody wanted the cash, nothing was more convenient than to pay it. Now, he (Sir H. Willoughby) believed that that observation was only true to a small extent. It was quite evident that the right hon. Gentleman did not imagine that such a mass of claims would have been made upon him. The right hon. Gentleman did certainly pay a large sum out of the balance in the Exchequer—he believed to the extent of 4,500,000l. What was the consequence? Of course the Consolidated Fund had a large burden thrown on it. And how did the right hon. Gentleman meet this burden? He was obliged to have recourse to the surplus income of the country, and to call upon the Commissioners of the National Debt to supply him with deficiency bills. It was quite clear that the surplus revenue of the country was laid hold of, which in law should have been applied towards the cancelling of the national debt. The effect of this injurious measure was the giving 100l. for what was not worth more than 91l., instead of cancelling 100l. three per cent stock for 91l., so that the nation lost both ways. It appeared to him that that was the necessary consequence of the right hon. Gentleman's financial proposition of last year. The House would bear in mind that the right hon. Gentleman not only dealt with the unfunded debt, but he reduced the interest upon Exchequer bills from a penny a day to a halfpenny. Now the holders of these bills considered that this measure of the Chancellor of the Exchequer was very unfair. A large quantity of those bills were thrown back upon the right hon. Gentleman, to the amount of 3,128,000l. He wished to ask the right hon. Gentleman whether he meant to deal with the savings banks money? He denied the right of the Commissioners themselves to deal with the money of the savings banks for any purpose irrespective of the savings banks. He would ask the right hon. Gentleman again whether he did not, in June and October, actually sell 778,000l. of the three per cent stock and savings banks money, for the purpose of making certain changes in finance, quite irrespective of the savings banks themselves? Did not the right hon. Gentleman lay hold of 1,200,000l. of the savings banks money for the purpose of paying the Exchequer bills and of converting them into new three per cent stock? If they referred to the balance-sheet they would see it stated that the increase to the funded debt was nil. That was no doubt true in one sense, but not true in another. By meddling with the savings banks money he believed a fresh debt had been created, without the knowledge of that House, to the extent of 1,220,000l. of three per cent stock. It was too much to borrow on the one side and to create a permanent debt on the other. Now, by what authority had the right hon. Gentleman done so? The law placed the savings banks money under the control of Commissioners, one of whom was the right hon. Gentleman the Speaker, certain of our Judges, the Master of the Rolls, and the Accountant General. He (Sir H. Willoughby) wished to know whether this act had been done by their authority; and whether the right hon. Gentleman (the Chancellor of the Exchequer) had really authority to take upon himself the responsibility of these financial measures? He could not consider anything more dangerous than that the whole of the savings banks in the kingdom, with a capital of 33,000,000l., should be at the beck and under the control of the Chancellor of the Exchequer of the day; because, if he had the power of converting 1,200,000l. of their money to a permanent debt, he could equally convert millions. The noble Lord the Member for the City of London had admitted that this tax was oppressive and inquisitorial. It was only last year the House had been informed by the Chancellor of the Exchequer of his scheme for the gradual abolition of the tax. The words were hardly out of his mouth when they were told by the same right hon. Gentleman that he should increase the tax. Now if they were going to make the tax permanent, they ought to consider it in all its bearings. It was utterly impossible for the Government to carry public opinion with them, in pressing this tax in its present shape. If you were going to have a national war, and if you meant to throw the burden of this tax upon Schedules A, B, and C, it would amount to something like confiscation. Last year the Chancellor of the Exchequer was kind enough to write a letter to a Birmingham clerk, in which he referred to the tax in a manner that reflected much credit upon him, and comforted his correspondent with the prospect of cheaper provisions. How would the right hon. Gentleman address this unfortunate clerk in the present year? He would be compelled to inform him, that because provisions were excessively dear and coals very scarce, he proposed to double the income tax upon the poor clerk. When the late Sir Robert Peel was proposing the imposition of the income tax, that right hon. Baronet said that the reduction which he was at the same time making in the general tariff of the country would be somewhat equivalent to it. The late Mr. Charles Buller said, in reply to the observation, that he had looked over the schedule of duties, and he found that the greatest reduction of duties was made in drugs, so that he supposed it was intended that unfortunate clerks were to make up for the impost by the consumption of physic. But was the land, with its many other burdens, to bear also this increased tax? The last burden thrown upon the land was the succession tax, which would press heavily upon it. The poor corn-grower, and every man who received his 100l. a-year from the land, would be compelled to bear this additional tax. Let the House consider the peculiar burdens of the land. There was the land tax, the tithes, the county rate, and the poor rate. It had also impending over it the Bill of the Chief Commissioner of Poor Laws, which, if passed into a law, would place a tax upon the land for all "the miseries which flesh is heir to." He said, then, that this was no time to press an additional tax upon the occupiers of land. There was one other class to which he would refer—an important class—which illustrated the inequality of the tax. It arises under Schedule C. The right hon. Gentleman had evinced a peculiar love for inflicting this tax upon what were called Long Annuitants. Unfortunately, those annuitants were now very short; they would expire in 1860. Now, to place the same tax upon those annuitants as was placed upon the holders of permanent property, was, in his opinion, nothing short of confiscation. He therefore pressed the House to assent to his proposition, which, if carried, would have the effect of lightening the burden which the right hon. Gentleman proposed to place upon the people.

MR. FITZSTEPHEN FRENCH

, in seconding the Amendment, said, he wished to call the attention of the House to the great hardship which the tax would inflict upon a certain class of individuals. He did not desire to exempt Ireland from a fair proportion of the burdens which Parliament might think it necessary to impose upon the United Kingdom. But it should not be forgotten that the Chancellor of the Exchequer had last year imposed the income tax upon Ireland, along with an increased spirit duty. And in addition the legacy duty upon land was introduced for the first time. Now all this was contrary to the pledge that had been given by two Cabinet Ministers. It was admitted by the right hon. Member for Wells (Mr. Hayter), that a communication had been made to the Irish Members with the sanction of the present Ministers, that if they would assist them in throwing out the Budget of the right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli), no income tax of any kind would be imposed upon Ireland. Everybody must remember the solemn warning that was given by the present President of the Board of Control (Sir C. Wood) to the Irish Members not to listen to Mr. Disraeli's propositions, or the sharp end of the wedge, in the way of taxation in Ireland, would be let in, to be followed by heavier burdens. The noble Lord the Member for the City of London (Lord John Russell) declared that, in the position in which Ireland was placed, reeling from the effects of famine, it was his opinion that she was utterly unable to pay this tax. Nothwithstanding those facts, the Chancellor of the Exchequer, supported by those two Cabinet Ministers to whom he had referred, now called upon the House to double the tax. The Chancellor of the Exchequer had last year stated, that he thought that the removal of the Consolidated Annuity Tax from Ireland was nearly equivalent to the income tax upon that country. Now, those annuities amounted, according to the right hon. Gentleman's calculation, to 245,000l., but it was proved that that amount must be diminished by 175,000l., and the revenue from the income tax on that country approached nearly 500,000l. In respect to the consolidated annuities, it appeared from the Report of the Lords' Committee, that a sum of 140,000l. a year, for a certain number of years, would pay off this tax entirely. Had but forty-seven Irish Members who voted for the Budget of the right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli), afterwards gone across the House and voted for the Budget of the right hon. Gentleman (Mr. Gladstone), that Budget would, he believed, have fallen to the ground. He had a right, therefore, to question the justice of the course which had been adopted by the right hon. Gentleman. Over and over again had the House been reminded of the arrangement that was entered into between England and Ireland at the time of the Union—that arrangement being that a certain proportion of Imperial taxation should be borne by the people of Ireland; but, owing to the majorities which the English Minister commanded in that House, that proportion had not been maintained, but considerably exceeded; and although Committees upon the subject had been twice asked, yet twice had they been refused. As the proposition of the Chancellor of the Exchequer again raised the question, he (Mr. F. French) thought the right hon. Gentleman was bound to submit it to revision, especially under the peculiar circumstances in which Ireland was now placed, the right hon. Gentleman being engaged in collecting new taxes in that country at the same moment that he was preparing to increase them.

Amendment proposed to be made to the Resolution, by leaving out the words "the said year" to the end of the Resolution.

Question proposed, "That the words proposed to be left out stand part of the Resolution."

MR. THOMSON HANKEY

said, he was not disposed to dissent from the hon. Baronet (Sir H. Willoughby) when he spoke of the inequality with which the income tax was levied, and, if any public body had a right to express their opinions with regard to that inequality, it was the particular body to which he had the honour to belong (the Bank of England, we understood), as being the largest holders of annuities in the country, and taxed to a certain extent on the return of their capital, as well as on the return of their income. As the hon. Gentleman who had moved the Amendment had touched not merely upon the particular topic to which that Amendment referred, but also upon the general financial measures of the Chancellor of the Exchequer, he hoped that the House would permit him to offer a few observations on the same subject. He had learned with considerable surprise the statement made in that House that it was a subject for congratulation that the balances in the Bank of England were so small. He might somewhat over-state the fact when he said that the House of Commons was congratulated; but he believed he was correct in saying that it was stated to the House that the Government considered it a fortunate circumstance that there was so little money at their command in the Bank, and that the reason for this opinion was that the House would be more ready to vote the taxes which were so urgently called for by the present necessities of the country. After the readiness with which the Estimates for the year had been voted by the House, it was certainly most unnecessary to offer such a congratulation, and to lead the House to think that in the opinion of the Government the measure of the Chancellor of the Exchequer, which was the cause of the reduction of the public balances, was a fortunate and advantageous measure on that account. He was ready to contend that the reduction in the public balances was owing to an error in judgment on the part of the right hon. Gentleman the Chancellor of the Exchequer, in anticipating the investment of the surplus money. The public balances in the Bank of England could arise in no other way than from the surplus income of the country, and Acts of Parliament had already defined and prescribed the mode by which that surplus was to be appropriated. The Chancellor of the Exchequer had no power whatever to touch the balances in the Bank, unless in strict accordance with the directions of the Acts of Parliament, and those enactments clearly stated that they must be appropriated to the reduction of the national debt. If the right hon. Gentleman had followed the course which was adopted by his predecessors, he would have waited until the balances had accrued, and at the ordinary period, when they must necessarily be invested in stock, he would have purchased stock in reduction of the public debt. Had the right hon. Gentleman taken that course, instead of having reduced the debt by the purchase of stock at 100l., he would have been enabled to reduce it by the purchase of stock at a price varying from 90 to 95 per cent. With regard to the measure proposed by the Chancellor of the Exchequer last year, the right hon. Gentleman pledged himself to redeem a large proportion of the national debt at par, and the right hon. Gentleman was well aware that he could derive the means of effecting that object from two sources only—either he must use the balances in the Bank of England, which would then be certainly at his command, because it would be in conformity with existing Acts of Parliament, or he must raise money for the purpose by means of additional loans. He (Mr. Hankey) quite concurred in the propriety of the course which the right hon. Gentleman adopted when he determined to pay off the debt by making use of the balances in the Bank rather than by raising additional loans. In March last the right hon. Gentleman reduced the rate of interest on Exchequer bills to 1d. per cent per diem, and he (Mr. Hankey) confessed that he thought the measure was an erroneous one at the time. The right hon. Gentleman had certainly been advised by many gentlemen who were competent to form an opinion that the measure subjected him to this hazard—that he would change the investments which were now largely made in Exchequer bills, and create a fresh class of holders, for the existing holders would not continue to hold Exchequer bills which bore so low a rate of interest. But at that moment the right hon. Gentleman was so much alarmed at the large extent of the balance in the Bank, that he thought he could not do better than anticipate the promise to pay off a certain amount of Exchequer bills—at all events, he took a step which he was quite aware would involve the risk of having to pay off a considerable amount of the Exchequer bills which were at that period in the market. He believed the right hon. Gentleman was then of opinion that there was too large an amount of Exchequer bills in the market, and was quite prepared to meet this case by paying off a proportion of them, and by that means enhance the value of the proportion outstanding. But he reduced the rate of interest at that moment injudiciously; because it was at the very period when individuals who were most largely concerned in monetary transactions in the City were beginning to take the alarm. They saw that the rate of interest was rising. They saw that the employment of capital was going on to an undue extent. They saw that there was a tendency to an increase in the value of money, and this at the very period when the Chancellor of the Exchequer announced that he was about to reduce the rate of interest on Exchequer bills. The consequence of that was, that the premium on Exchequer bills, which had been as high as 60s. or 70s., fell, and no small degree of uneasiness was created in consequence, in the mind of the Chancellor of the Exchequer. [Cheers.] He begged hon. Members who cheered that statement to remember that at times when there was no alarm respecting foreign politics, nor any general rise in prices, nor an undue investment of capital in the City of London—it was no uncommon thing for Exchequer bills, which were a certain security for the repayment of the capital, to bear a high price, whilst stock was constantly varying, and rising and falling in value. That, Exchequer bills should have borne at the time, what hon. Members might deem to be an undue price, was not, therefore, a fair criterion by which to judge of the value of money. The result of that measure, however, was, that Ex- chequer bills fell to par, and he believed they would have gone far below that, if the Chancellor of the Exchequer had not been obliged to come in himself, and prop up the market by the purchase of Exchequer bills; and he (Mr. Hankey) thought it was evidence of an unwise system of legislation when it was known that the markets were influenced, and solely influenced, by the operations of the Government, which prevented ordinary transactions being effected with any parties in those markets in which the public were accustomed to deal. The result of all the right hon. Gentleman's great conversion schemes was, that he had certainly paid off a considerable amount of national debt; but then he had paid it off mainly out of balances which would otherwise have been appropriated equally to the reduction of the debt, and he had paid it off at a price which had, in fact, entailed a serious loss on the country. There was one point connected with the Bank of England to which he wished to advert, and that was, whether it was expedient for the Chancellor of the Exchequer to be borrowing money on deficiency bills. He had understood the right hon. Gentleman to state that he did not think it was prudent to be constantly and regularly borrowing money of the Bank of England on deficiency bills. But if he (Mr. Hankey) were not mistaken, the right hon. Gentleman; on a previous occasion, had also stated to the House that when he did borrow money in that way, it was the source of no loss or inconvenience to the Bank of England; on the contrary, that it was as advantageous to the Bank to lend money upon deficiency bills as it was convenient to the Government, from time to time, to borrow money in that way. With the greatest possible deference to the judgment and abilities of the right hon. Gentleman, he felt bound to express an entirely different opinion. He ventured to say that it was not a matter of indifference to the Bank of England whether the Chancellor of the Exchequer so arranged his accounts as to be necessarily a borrower of money on deficiency bills. At a time when money was plentiful, and a surplus seeking employment was in the hands of the Bank, it might be an extremely convenient thing for the Bank to employ a certain amount of its deposits in that way; but that was a totally different thing from the necessity of lending money to the Chancellor of the Exchequer at a period when he was obliged to come down and ask the Bank for that accommodation Nor did he (Mr. Hankey) see that the right hon. Gentleman was justified in expecting the Bank to lend money on that species of security at a lower rate of interest than they could obtain by employing their money in other ways, and on equally good securities. If he did so, then the House would admit that he was, to a certain degree, laying himself under an obligation to the Bank of England. He did not wish to enter a protest against any arrangement that might be made between the Bank and the Chancellor of the Exchequer. The value of the accounts of the Government to the Bank must be known to everybody; and it was the bounden duty of the Bank to be ready at all times, if they could do so with justice to their proprietary, to assist and accommodate one of their best customers. But let it be clearly understood when it was an accommodation. Let it not be said that that which was really an accommodation was a matter of indifference, and that the Chancellor of the Exchequer was perfectly independent of the Bank. He contended that the Chancellor of the Exchequer had, in consequence of the reduction which had taken place in the balances, placed himself under an obligation to go to the Bank of England. The balances at the Bank were now extremely low. The right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli) had, on a previous occasion, been corrected by the Chancellor of the Exchequer in the estimate which he had formed of the amount of the balance which there would be in April next; but he was inclined to differ from the Chancellor of the Exchequer, and to think that he would be compelled in April next to come to the Bank of England to borrow money or to raise an additional loan; for he would have payments to make, and would not have sufficient funds at his command, as he would have had if he had pursued the ordinary course of leaving sufficient balances in the Exchequer. The right hon. Gentleman stated that he should require to borrow about 4,500,000l. Now, he doubted if that sum would be sufficient to meet the emergencies of the case, but, be that as it might, it would not be fair to ask the Bank of England to lend money at the rate of interest now borne by Exchequer bills—about 3 per cent, he believed—when they could get, on security as good as that of deficiency bills, 5 per cent. He was not pre- pared to admit that the Chancellor of the Exchequer would be wrong in paying even that increased rate of interest, because, if he did not procure the money from the Bank, he would have to go elsewhere. The right hon. Gentleman had adduced as an instance that these advances on the part of the Bank were not disadvantageous, that large sums of money were lent for very short periods at so low a rate of interest as 1 per cent; but that was not, he thought, putting the case fairly before the House. He hoped that no remark which he had made would lead the House to suppose that there was any unwillingness on the part of the Bank to enter into any financial arrangements; but he had offered these observations because there were at present strong indications of a rise in the value of money, and, that being the case, it was surely not expedient that the Chancellor of the Exchequer should run himself too bare in his banking account at the present moment. He thought that the hon. Baronet had rather grounded his Motion for amending the Resolution respecting the income tax on the presumption that the Chancellor of the Exchequer had quite ample margin enough when he obtained permission from the House to issue an additional amount of 1,700,000l. Exchequer bills. He (Mr. Hankey) differed from that view, and did not think that the Chancellor of the Exchequer had overstated his requirements. He greatly feared that the right hon. Gentleman had understated them, and, in his opinion, the right hon. Gentleman would have done well to ask the House for permission to raise 3,000,000l. or 4,000,000l. by Exchequer bills, if he wanted an additional amount in aid of the coming-in revenue, rather than to limit himself to what appeared to him (Mr. Hankey) a paltry amount, as the extreme limit of the power of borrowing at the present moment. On a former evening the hon. Member for Kendal (Mr. Glyn) asked the Chancellor of the Exchequer whether it would not now be judicious to grant to the Bank of England the power of increasing its paper issues in excess of the 14,000,000l. already allowed, considering the deficit of the paper money formerly issued by the country banks. He (Mr. Hankey) gathered from what fell from the Chancellor of the Exchequer in reply that, though time present was not, perhaps, the proper moment to grant such permission, yet the time might not be far distant when such a proposition would be deserving of consideration. Now, he (Mr. Hankey) hoped that the time was very far distant when the Bank of England would be enabled to increase its issues in that way; for such a proceeding would add nothing to the stability of this country, or rather, it would derogate from the stability of the country, and from the character of certainty which now attached to the currency in consequence of the Act of 1844. He remembered reading, not long ago, a statement of the comparative condition of the currency in France and England by an able writer, who, comparing the currency to a pyramid, described the difference between the currency in France and the currency in England to be, that the base of the former was metal, with a superstructure of paper; and, on the other hand, the base of the latter was paper, with a superstructure of metal. The writer attributed to this difference many of the evils which had afflicted this country through fluctuations in trade and depreciations of currency, while in France, during periods of terror and revolution, the currency had maintained a comparatively firm and steady character. He hoped, then, that the Government would not attempt to tamper with time currency, if he might use the expression, or think it possible that any good could be done in the event of any commercial crisis in this country by issuing an additional 500,000l. of paper, in lieu of 500,000l. of gold. Could such a measure possibly add anything to the stability of our trade or commerce? Surely the hon. Member for Kendal could not complain that there was not a sufficiency of gold in the world; and if there were sufficient capital in this country to buy that gold, he (Mr. Hankey) contended that the more gold there was in our currency, and the less we depended on paper, the greater security the country would have, and commerce and trade would become less liable to fluctuations. He learnt with considerable regret that the hon. Member for Kendal entertained the opinion that the Bank of England could not go on safely under the Act of 1844 in the event of war. He (Mr. Hankey) had no such apprehension. He entertained no fear that the Bank of England, if properly managed, would not be able to maintain itself in any crisis that might occur in this country. But if the Bank of England were so mismanaged as to render necessary a recourse to objectionable expedients, much as he valued that institution, he would rather see it made the sacrifice, than that anything should be done to substitute paper money for the gold basis of our currency. With respect to the proposition respecting the income tax, he had no wish to throw the smallest difficulty in the way of the Chancellor of the Exchequer; and he differed from the hon. Mover of the Amendment, because he thought the Chancellor of the Exchequer wanted at the present moment more than he asked, rather than less.

MR. W. WILLIAMS

said, the Chancellor of the Exchequer was placed in this unfortunate position—he could not serve the public and the Bank of England at one and the same time; and he thought the right hon. Gentleman had acted wisely and in strict conformity with his duty in preferring the interest of the public to the interest of the Bank. With regard to the reduction effected by the right hon. Gentleman in the interest on Exchequer bills, he must assent that that was a measure which was perfectly justified at the time it was adopted by the state of the money market. The hon. Member for Peterborough (Mr. Hankey) himself admitted that Exchequer bills bore a premium of from 60s. to 70s., which was equal to from one-and-a-half to two years' interest on those bills at that very time. And who were the holders of Exchequer bills? Notoriously the Bank of England. They were the principal holders at all times, and no doubt it was felt to be most inconvenient to that establishment to have such a reduction made. The hon. Member complained bitterly of the reduction which had taken place in the public deposits. For that Act, too, the Chancellor of the Exchequer had a perfect justification. Unfortunately, however, the right hon. Gentleman and the Government had not been able to foresee the subsequent failure of the harvest and the war now impending, the effect of which had been to completely derange the money market. It should be recollected that, for the last few years, the balances at the Bank of England had exceeded the amount necessary for the payment of the dividends, and that state of things, though no doubt beneficial to the Bank of England, occasioned a waste of the public money. The Chancellor of the Exchequer, then, was right to prefer the interests of the public to the interests of the Bank of England, when placed in circumstances which required him make his election between the two. The hon. Gentleman (Mr. Hankey) held out the threat that if the Chancellor of the Exchequer went to the Bank of England for deficiency bills, he would have to pay a heavy interest. Why the Chancellor of the Exchequer could raise any amount he liked without going to the Bank; and, if he did go there, the Bank, which lent nothing but its paper notes, would be very glad to have him for a customer. He considered the observations of the hon. Gentleman most uncalled for and injudicious, and perfectly at variance with the able speech he made in seconding the Address on the first night of the Session.

MR. SPOONER

wished the hon. Member for Kendal (Mr. Glyn) had been present, as he would no doubt have satisfactorily answered the observations of the hon. Gentleman the Member for Peterborough (Mr. Thomson Hankey) better than he (Mr. Spooner) could pretend to do The hon. Member for Kendal was a member of one of the most respectable firms in the City of London—a firm doing the largest banking business, perhaps, in the City—and he was, therefore, most intimately acquainted with the subject. He (Mr. Spooner) at all events would take his opinion in preference to that of the hon. Member for Peterborough. The hon. Member had stated that there was no reason to fear that the Bank of England would have any cause to apply for an alteration in the Act of 1844. No other practical man, however, was of that opinion. It was evident to every person at all acquainted with the question of the currency that the Government could not carry on the war if the Act of 1844 was to remain in full force. By the operation of that Act the Bank of England was limited to issue its notes on three sorts of investments. First, there were the 11,000,000l. representing the debt borrowed by the Government from the Bank; secondly, 3,000,000l. of other floating securities, making 14,000,000l., on the security of which the Bank was to issue its notes; and, thirdly, it was empowered to issue on gold deposited; so that actually, as the gold was drawn out of the country, the Bank was bound to limit its issues accordingly. Now it was known, not merely theoretically, but practically, to be impossible to go on under the Act of 1844. What took place in 1847? Then, when every interest in the land was in a state of alarm, and houses of the first respectability failed, a mere hint from the Government that the Bank of England would be indemnified if it did not strictly abide by the law served to restore confi- dence, and at the same time proved the impossibility of the Act of 1844 maintaining itself against any extraordinary pressure. He inferred from an expression used by Sir Robert Peel in 1844, to the effect that the bullion on which notes were issued was liable to be influenced by the exchanges, that that right hon. Gentleman contemplated the possibility of the notes issued on securities being released from the necessity of being paid in gold. After stating the nature of the credits upon which the issues were made, on the 20th Of May, 1844, he said:—"This last is to be liable to the influence of the exchanges." Why did he particularise the last, and not the others? It was known that the bullion in the Bank was liable to the influences of the exchanges, and that the 14,000,000l. on which the permanent issue was based was likewise liable to them. He (Mr. Spooner) therefore believed that Sir Robert Peel meant when the proper time should arrive, and the necessity occurred, the restriction should be removed. He (Mr. Spooner) believed the time was now come when, if they were to carry on the war, they must be ready to take such measures as would call out the energies and capital of the nation without cramping them by limiting the circulating medium by the quantity of metal that happened to be in the Bank of England. There were few men in the House who had so vivid a recollection as he (Mr. Spooner) of what had taken place in regard to Bank restriction upon the issues in the course of the last war. He had watched the whole transaction step by step, and few people now understood, how in one year the country was enabled to raise 130,000.000l. in the shape of loans and taxes. He would not say the application of that money was right or that it was wrong, or that it was just or unjust to run the country into this expense. The country on the present occasion would be called on to raise large sums, and, what was more to the purpose, large quantities of gold would be drawn out of the country to defray the expenses of the war by neighbouring nations. The evidence of Mr. Rothschild before the Committee of 1818 went to show that England was the focus where all bullion centred, and from whence consequently, all bullion was distributed. This was the case in the former war. The bullion was completely drained from the country; and how was the country enabled to raise 130,000,000l. in one year? Why, because the money so raised was first spent in the country—that was the secret of the case with which the means were contributed. The fact was, when a loan was announced, the great merchants and bankers entered into contracts with the Government to take it; and when the terms on which it was taken became known, then came out an advertisement on the part of the Bank that scrip and ononium—the words, he had no doubt, were scarcely known to many hon. Members—would be taken. This meant that those who took those loans having agreed to pay them up in a year and a half, the moment the 10 per cent deposit was lodged upon the scrip, the Bank of England made all the further advances until the last, when the party then owning the scrip had to take it up from the Bank. But how was that done? It was done in this manner:—The Bank of England made its notes and paid the Government with them. The money so paid was spent in defraying the expenses of the war; so that it was at once made, spent, and paid in the country. The scrip then became capital and thus got into a great many new hands before the last call came, and the country was enabled to meet the loan. He would venture to say, that no one could controvert these facts, although very few had made themselves masters of them, and he was sure that an hon. Friend near him (Mr. Freshfield) would bear him out in what he stated. His (Mr. Spooner's) argument did not go to the extent that this should be done in the present instance; but it did go to the length that, as the existing system was one which cramped every energy of the Government, as well as trammelled every commercial transaction, the Government would find itself check-mated very soon if it depended upon the operation of the Act of 1844, to furnish the resources for carrying on the war. He knew it was the fashion to throw ridicule on what was termed the "Birmingham school," but very few knew what the Birmingham school was. The foundation of the Birmingham school was an entire agreement with the late Mr. Horner, who in the years 1810 and 1811 called upon the House of Commons to declare that there had been a great depreciation of the currency; that it was necessary to stop it; and that if they did not, they could never return to the metallic standard of value. He remembered Mr. Sharpe, who understood the question well, supporting the view taken by Mr. Horner, when that Gentleman was met by the late Mr. Perceval, the then Chancellor of the Exchequer and First Lord of the Treasury, who, not being able to cope with the argument fairly, endeavoured to destroy its force by turning it into ridicule. The Birmingham school agreed, as he had before said, with Mr. Horner, that there had been a great depreciation of the currency; that there had been great mismanagement of the currency; and that they had created a debt of 400,000,000l. in a currency ate depreciation of 15 per cent. Mr. Horner at that time warned the Government of it, and told them to meet it, and to restore the currency to its right position, telling them that if they did not do it then, the time would soon come when it would be impossible for them to do it. But the Government went on in spite of that warning, and soon after brought the depreciation from 15 per cent to 22 and 23 per cent, and the debt was raised from 400,000,000l. to 800,000,000l.—[Laughter.]—He hoped he was not trespassing on the patience of the House. He was about to say that the Government neglected the warning given them, and went on to the year 1819, when they attempted to do that which they never effectually had done, and which had been the cause of all those changes and all those differences between a state of great prosperity and of great adversity, and of all those fluctuations of which they had since had reason to complain. In 1819 they endeavoured to carry into effect a standard of value which they found totally impossible to maintain. No doubt he should be told to look at what had recently taken place, and it would be said, "See the abundance of gold that has come into the country!" But the gold mines had not been discovered in 1819, and no idea was at that time entertained that gold would have been brought into the country in such abundance. The effect of the measure of 1819, therefore, was at the time to double every man's debt, and to halve every man's property. From the year 1819 to the period when gold was discovered, it would be found that all those fluctuations of which the country complained had arisen from gold leaving the country, and the Bank of England being obliged to restrict its circulation, and thus to bring the prices of all articles of manufacture down to a level with prices of the Continent, thereby sacrificing 30 to 40 per cent of the property of the manufacturers and merchants of this country. The gold was then brought back again; and then came sudden and short periods of prosperity, to be succeeded by equally sudden periods of adversity, till they arrived at the crowning point—that of free trade, which was to let into this country all sorts of products, manufactured and otherwise, without paying any of those taxes to which their own produce and manufactures were exposed. If it had not been for the large quantity of gold which had been providentially discovered, the whole free-trade system would have been broken up years ago. Well, in what state were they now? They had had such an enormous importation of gold that some people believed they would soon arrive at a new era, and that the question to be considered would be, whether it would not be necessary to do that in favour of the creditor which they had steadily refused to do in favour of the debtor. They had made the debtor pay in appreciated value, and when an adjustment was asked for in his behalf it was refused; but now that the adjustment was required on behalf of the creditor, they talked about its equity and fairness. But their delusion was now over. The great question, however, was this—in their present condition they would find it impossible to raise a sum of money to carry on this war. He did not say this to discourage them. On the contrary, he only did it to warn them against acceding to the advice of the hon. Member for Peterborough. They had better meet this question at once; for the drain of gold would otherwise continue, and there would be a reduction in the notes of the Bank of England in consequence. So that when they wanted to borrow three or four millions, they would be unable to do so, for the Bank would be compelled to restrict the issue of its notes to the proportion of bullion it possessed. It might be said that he held extraordinary doctrines on that point, but he could not hear the statement which had been made to them by a Bank Director, and let them—deceived by it—go on until they would find it impossible to raise the means of carrying on this war. He knew how dangerous it was for any individual in that House to hazard anything like a plan, for no one could suggest one which would be free from imperfections, and upon these imperfections its opponents would work. He would venture, however, from a sense of duty, to propose to them a plan, for he believed that the country was at that moment in imminent danger. He said, let them do at once that which Sir Robert Peel, as he had before stated, seemed to have in his mind with regard to the notes issued on security. Let that be done at once; let the notes so issued under the Act of 1844 be made legal tender; let it be the basis of the circulating medium. This would prevent the circulation in this country from being influenced by the rate of exchange, or the efflux of gold. He believed that this could be done, for he knew that the Bank of England was properly managed, and that it was capable of carrying out the objects required. If, however, the Government did not make some regulation soon, it would certainly find itself unable to raise money to carry on the war. He would go further than this, however, and say, let the Bank of England purchase as much gold as they could, and give notes in its stead, such notes not payable for a certain time; for they might rest assured that, in time of war, every nation concerned in that war would be calling on them for money and assistance. There would then be some security for retaining bullion when every country in the world was drawing on this country. It may be asked why lock up the gold, and circulate notes? He would answer, because the gold, if put into circulation, would be drawn out of the country; and by the law as it now stands, for every thousand pounds so drawn out the Bank would be obliged to withdraw 1,000l. of notes, thus lessening the circulation 2,000l. A system of this kind would be found of very great advantage, and it would afford great accommodation to persons engaged in extensive commercial speculations. When, however, there was an alteration of value occurring every few weeks, he defied any man to carry on his business with anything like certainty. This scheme might seem very crude, and might be ridiculed; but he would run that risk, for he was honestly convinced that he was right. The danger was so imminent, that he could not, as a Member of that House, shrink from expressing his opinion on it. He represented a large mixed constituency of agricultural and of mercantile and manufacturing interests, and he should be an unworthy representative indeed, if any fear of ridicule should make him refrain from expressing boldly an opinion which he had formed, not that day, or yesterday, or without a practical knowledge of the business. He gave that opinion from an accurate examination he had made of all the great changes in the currency during the last half century. He felt quite confident that he was right, and he could venture to say that the time was not far distant when due weight would be given to the opinion he then held. With respect to the Motion of the hon. Member for Evesham, he (Mr. Spooner) was inclined to vote for that Motion; but he would not pledge himself to that course until he had heard what the Chancellor of the Exchequer should say on the subject. His ground of support, however, would be different from any that had been mentioned. He would vote for it on the ground that the proposal of the Government was not fair dealing with the country. That proposal was to add 50 per cent to the property tax for a half-year; but no one who was not wilfully blind could fail to see that it was really a doubling of the tax, as the Chancellor of the Exchequer would no doubt come down again in the course of the Session, and ask to obtain it for the next half-year. He (Mr. Spooner) therefore protested against the doubling of the tax while it remained in its present cruel, tyrannical, and unjust form. He objected to it because direct taxation would break down under the Government, and because indirect taxation was inevitable if the war was to be carried on. It was Hume, he believed, who said that if millions were to be raised, the millions must pay them. And he (Mr. Spooner) would never consent to the same rate of income tax being imposed on all classes, thus taxing one man's necessaries, and another man's luxuries. He (Mr. Spooner) objected to the question involved in the Resolution of the Chancellor of the Exchequer, though it was one popular with that House, namely, that the necessary supplies for the war should be raised in the current year. He did not think it would be possible without the aid of a loan; and he did not see why the Chancellor of the Exchequer should not go into the market, where he could make one on reasonable terms, as well as foreign Powers. It was well known that a list was open in the City for the French loan; the Chancellor of the Exchequer would surely be able to effect a loan upon still better terms. This would be better than applying for the expenses of the war in the year, as it would afford capitalists the means of employing their money at home which was now forced abroad. There was, he (Mr. Spooner) was in- formed, to be another loan for Turkey, that made the matter still worse. He called on the right hon. Gentleman, therefore, not to be gulled by the hon. Member for Peterborough, but to remember 1847, when everything was on the point of shipwreck until the Act of 1844 was practically repealed, an Act which Sir R. Peel himself subsequently admitted had failed in that difficulty. It was the system, and not the administration of the system, that brought this difficulty upon the country; and he therefore called upon the right hon. Gentleman to give it his serious attention. He (the Chancellor of the Exchequer), however much he may now disagree with what no doubt were thought ultra notions on his (Mr. Spooner's) part, will find out ere long that he will be obliged to modify the Act of 1844. The Emperor of Russia was a very clever man, and understands our financial policy, and no doubt his hopes of success are partly grounded upon that system breaking down. He (Mr. Spooner) called, therefore, upon the right hon. Gentleman to act in time, and to prove to the Emperor that his hopes on that ground were fallacious.

MR. HUME

said, the opinions which the hon. Member for North Warwickshire (Mr. Spooner) had expressed in the early part of his speech were in accordance with those which he had been known to profess for the last thirty-five years; but the House was not now discussing the question of the currency, or he should have been ready to confute some of the hon. Gentleman's opinions, and prove the fallaciousness of his arguments. The only point on which he agreed with the hon. Member was that the Act of 1844 placed a most mischievous restriction upon the Bank; but that was only one part of the hon. Member's speech. He had paid considerable attention to the subject which the hon. Member for Peterborough (Mr. Hankey) had brought under the notice of the House, and he was bound to say, in justice to the Chancellor of the Exchequer, that, instead of blaming him for having reduced the interest on Exchequer bills, he thought he was perfectly justified in doing so at the period when the reduction took place. It did unfortunately happen, however, that a change occurred in the affairs of the country which altered the value of money and which destroyed the necessity for the reduction; but the Chancellor of the Exchequer was not to blame for that. With regard to the question of balances, he confessed he never could understand why 7,000,000l., 8,000,000l., or even 9,000,000l. sterling should be kept lying idle in the Exchequer; he could see no reason why the balances should not be made available for the public service whenever it was practicable. True, when Sir Robert Peel came into office some years ago, on finding that instead of a surplus, he had a deficiency to make up, he dwelt upon the importance of keeping a balance in the Exchequer; and, with the aid of the income tax, the balance was ultimately brought up to 5,500,000l.; but the Chancellor of the Exchequer should not be deterred from making use of the balances whenever the state of the market was such as to make it advantageous for the State that he should do so. Unfortunately, in the present instance, shortly after the proposed conversion of the South Sea Stock, a change took place in the market value of the three per cents; but here, again, the Chancellor of the Exchequer could not be blamed for that. If the hon. Gentleman (Mr. Hankey) referred to the evidence given before the Committee of 1848, he would find that nothing but a violation of the Act of 1844 would have saved the country. And what became of an Act which they were obliged to violate? Excepting three Bank Directors, he believed all the witnesses examined before the Committee appointed to inquire into the working of the Act in 1848 were opposed to it, and it was only by accident that the Committee was prevented from reporting against it. At a time when we were taking credit for the removal of restrictions on commerce, it was most inconsistent to limit the medium of all exchange money. As to the Motion before the House, it appeared to be very unimportant. The Chancellor of the Exchequer proposed to raise by the income tax 7d. in the pound in the first half of the year, and 3½d. in the second; and the object of the hon. Baronet's Motion was to have the sums divided equally between the two half-years. Really, this was a matter scarcely worth discussing. For his part, he had little doubt that when the public business should be further advanced the House would be called upon to double the tax for the second half-year also, and then the uniformity which the hon. Baronet desired would be established. The hon. Baronet (Sir H. Willoughby) seemed to apprehend that, if the measure should be carried into effect in the way proposed by the right hon. Gentleman, it would leave him in posses- sion of too large a balance. Generally speaking, he (Mr. Hume) objected to a Chancellor of the Exchequer having too much money at command, because it was apt to induce extravagance; but he was not indisposed on the eve of war to leave the right hon. Gentleman a considerable margin to work upon. Under the circumstances of the case, he hoped that the hon. Baronet would not feel it necessary to divide the House on the Motion.

MR. WILKINSON

said, he did not see what the Bank Restriction Act of 1844 had to do with the present debate. At any rate he hoped the Chancellor of the Exchequer would not follow the advice that was tendered to him by the hon. Member for North Warwickshire (Mr. Spooner). A good deal had been said about the abortive attempts of the Chancellor of the Exchequer for the conversion of stocks last year. But the real question was whether, at the time those attempts were made, the right hon. Gentleman was justified in expecting a reduction in the interest of money. Now, in his opinion, the circumstances then occurring indicated a rise rather than a fall of interest. They had just embarked in free trade, they had opened their ports to all the world, they were in the receipt of large profits, and on large profits, as everybody knew, the rate of interest mainly depended. But it was expected that the large importation of gold would reduce the rate of interest. In his opinion that importation was calculated to have precisely the contrary effect. When gold came into a country it raised prices: that was all it could do. It could not render capital more abundant, but it excited speculation, it gave a spur to trade, it stimulated capital; and in all these cases it raised the interest of money. He did not say the right hon. Gentleman was not justified in using the balances—the question was, what use he made of them. He had paid off 8,000,000l. of the public debt at par, when their price at the present moment was 91. This operation had, therefore, cost the country between 700,000l. and 800,000l. He agreed, however, with the right hon. Gentleman's plan now—to raise the supplies within the year, and not to have recourse to a loan. With regard to the question before the House, he did not think there was much use in discussing it. If they raised the first half of the tax in the first half-year, the right hon. Gentleman would not come for a second half unless it were wanted. If it were wanted he would come for it, whether the first half had been raised or no.

MR. CAYLEY

said, he differed with the hon. Gentleman who had just sat down in thinking that the Act of 1844 had no relation to the present question. The whole scope of the hon. Member for North Warwickshire's argument, and also the speech of the hon. Member for Montrose, was to show the injurious effects of the Act of 1844 on commerce, and therefore on the sources of taxation, whenever circumstances called it into actual operation. He (Mr. Cayley) was on the Committee of 1848, appointed to inquire into the causes of the disasters of 1847. The hon. Gentleman (Mr. Hankey) also said, that Act had very little to do with the question before the House. He (Mr. Cayley) would show him his mistake. The hon. Gentleman went on very effectively to describe the results of the free Californian and Australian importation of gold, showing that it had opened the apertures and invigorated all departments of commerce. If this were so, then he begged to ask the hon. Gentleman what would be the effect of reversing the operation, namely, of a deportation of gold? Would it not cripple commerce, and tend to induce commercial pressure like that of 1847? What was there peculiar in the year 1847 to produce the panic that occurred? The harvest was not bad in England, but it was in Ireland—there was a drain of gold, which, acting on the rate of discount and the facilities of accommodation, very soon produced general commercial pressure. It was this drain, together with corn merchants' failures, in August, that, operating on the very natural fears of the commercial body under the Bank Act of 1844, induced the panic which ensued in October, 1847. On that panic, as he had said, he was one of the Committee which sat in judgment in 1848, and the result of the inquiry was to establish the fact that the loss to the industry of the country produced by the panic was fully 250,000,000l. If, therefore, anything should arise now to produce even half the result of 1847, what would be the effect of increasing taxation? Why, taxation would be increased by Act of Parliament, but the Exchequer might lose more by commercial distress than it would gain by increased taxation. The same circumstances were at work now as in 1847—there was pressure occasioned by the drain of gold. If war went on, gold must be had. The Army, the Navy, the Com- missariat, must be paid in gold. If foreign loans were raised, they would no doubt be raised materially, directly or indirectly, in our market, and our gold must go out of the country. And if our gold should go, where would be the means of additional taxation? Every country removed from barbarism must have for commercial dealings a legal tender. Our legal tender was gold, and if gold went out of the country commercial transactions must be first crippled, and finally stopped; and it must be recollected that out of commercial transactions the means for the payment of taxation came. Was this, then, not a question to be discussed at this moment? Or could there, on a question of increasing the resources of the Exchequer, be a more important question than any matter which affected the facilities of commerce, since it was from commerce and its transactions that the Exchequer had to be replenished, including in that category agriculture and trade? The consequence of not dealing at once with the Act of 1844 would be this. In proportion as money became dear, more produce must be sold to realise a certain amount of gold, the medium in which taxation was due, and by that means we came to pay, perhaps, twice as much to the Exchequer as when money had been cheaper. Now the Act of 1844 had the effect of producing constant oscillations in the value of money; because that law insisted on the circulation of the Bank of England being governed rigidly by the state of the foreign exchanges, i. e. by the influx and efflux of gold. On this fugitive basis was our commercial prosperity based. Of the whole number of witnesses heard by the Committee in 1848, only four were in favour of the Act. These were Mr. Jones Loyd and Mr. Cotton, Governor of the Bank of England in 1844, and the Governor and Deputy Governor in 1845. All the commercial witnesses were united against that Act. No doubt to make money dear might be very lucrative for the moneyed interest, as was proved by the rise in the value of money in 1847. He had no more doubt than that he stood in that House that the right hon. Gentleman the Chancellor of the Exchequer would have to suspend the operation of the Act of 1844 if the war continued, although Californian and Australian gold might delay that necessity. His only doubt was, whether the right hon. Gentleman would do this in time, before losses took place such as those that were so bitterly deplored in 1848. He was glad to see that the countenance of the right hon. Gentleman on this subject did not wear that smile of ridicule and flippancy which some Chancellors of the Exchequer had occasionally worn, when it had been discussed on some previous occasions, but that he rather assumed that serious air befitting its extreme gravity. He hoped the right hon. Gentleman would take warning, by the opinions expressed that evening, and interpose in time to save the commercial interest from incalculable losses. If the right hon. Gentleman had no heart to pity them, let at least his self-interest prevail in favour of his own Exchequer, for if the war and the Act alike continued, he might find his Exchequer impoverished, rather than enriched, even though he should come down to that House month after month in order to increase the taxation of the country. If the hon. Gentleman (Sir H. Willoughby) pressed his Motion to a division, he should vote against it, because he did not like to stop the Estimates when on the eve of war; for, however shilly-shally our negotiations had been, no doubt we were now on the eve of war; and he trusted, under existing circumstances, the House of Commons, on all sides, would go hand in hand with Her Majesty's Government, and go even before the Government, in insisting on carrying on the war with all the vigour and promptitude in their power. He had hoped some mention would have been made in the debate of the important papers lately laid on the table (the secret negotiations). He would not trespass on the attention of the House at present by referring to them, as he perceived by the Speaker's significant hint, he should be out of order, but he would say, if war was really intended, he trusted it would not be carried on in the vacillating obsequious manner of the negotiations, and as disclosed in those papers, but that the whole of our energies would be concentrated to bring it to a speedy issue. But be the issue speedy or not, he was sure of this, so long as it continued, that, however powerful an enemy we might find in Russia, there would be found no enemy so inimical and deadly to us as the Bank Restriction Act of 1844.

MR. LAING

said, the hon. Gentleman who had just sat down had pointed out the injury which the commercial interests of the country sustained from a drain of gold. But the great evil of that drain in former times was, that while it was going on, no steps were taken to check speculation by a rise in the rate of discount, and when that step was at last taken, its action was so violent and often so capricious, that the commercial interests sustained great loss and injury. But the great merit of the Act of 1844 was, that it supplied what might be called a self-acting check, by raising the rate of discount as the gold went out of the country. That was certainly the course which the Bank of England had taken within the last twelve months; and the conduct of the Directors in raising the rate of discount from 2½ to 5 per cent, while the stock of bullion was still considerable, had, in all probability, saved the country from the panic of 1847. He hoped, therefore, that the Government would not tamper with the measure which had been introduced by a statesman of such distinguished ability as the late Sir Robert Peel, and whose wisdom had been confirmed by all the practical experience they had since had. He would not extend this discursive debate by entering on the question of currency, but he would advert to a consideration more immediately affecting the Motion before the house, which was, as it seemed to him, a weighty argument in favour of the Chancellor of the Exchequer's proposal for immediately levying the income tax. It was important that the balance in the Exchequer should be immediately increased beyond its present amount by fresh taxation, not only for political considerations, but also on account of the commercial interests of the country; for, by the present Bank Act, the amount of accommodation at the disposal of the Bank of England was limited, and if that balance ran so low as to oblige the State to resort to the Bank for a larger amount of accommodation than usual, they would, in effect, put the screw upon the commercial interests of the country in a most oppressive manner. This was a question of peculiar importance at the present moment, because the balance had been reduced lower than was desirable in consequence of the abortive measure which had been passed with regard to the conversion of the stocks. He fully admitted that the measure had been abortive, and even productive of injurious consequences; but, at the same time, having fully approved of it when it was proposed, and being desirous of sharing the responsibility which Government had incurred by its introduction, he believed that it was founded upon sound principles, and that, judging from the in- formation before them at the time, there was every probability that it would have been beneficial. He was confirmed in this opinion, that in all probability a large amount of public benefit would have been obtained by the operation of that measure, when he considered the high prices which had been maintained by Consols in the face of the deficient harvests in many parts of Europe and of the present political difficulties; and he was anxious that no blame should attach to the principle of the measure, so as to prevent its being acted upon hereafter under more favourable circumstances. The only chance they would have of reducing the interest of the national debt would be by carrying out the principle of the measure in more favourable times, and getting rid of the long period of notice that was now necessary before they could carry on any operations on a large scale. The effect of the extraordinary discoveries of gold, although it might not be to lower the rate of interest immediately, would be to produce alternate adversity and prosperity—to make money sometimes dear and sometimes cheap; and the period would at last arrive when the rate of interest in this country would be lower than it had hitherto been. With regard to the proposal before the House of levying the funds necessary for the conduct of the war by means of an increase of the income tax, he thought that was the most judicious and popular measure that could be adopted, and that any attempt to raise them by indirect taxation, by repealing what had been done during the last six years, would have had a prejudicial effect in drying up the springs of the prosperity of the country. Although he perfectly agreed with the position that we should, as far as possible, avoid loans and levy the sums which had to be expended year by year, he would modify it by saying that direct taxation ought to be relied on as far as possible; that indirect taxation ought to be resorted to only in extreme necessity; and that even if such a necessity arose, it might be more desirable to raise an additional amount by some scheme of short terminable annuities. He would give his hearty support to the proposal of the Government, and he believed they would have the support of the House and of the country in carrying on a just, honourable, and necessary war.

MR. MALINS

said, the right hon. Gentleman the Chancellor of the Exchequer had recently informed them, on the intro- duction of his Budget, that he did not intend to lay on any new taxes; but he had closed his statement by asking the House to double the income tax. This scheme he (Mr. Maims) would have no objection to if the war were to be a short one, but if, on the contrary, the war were likely to be a prolonged one, then he held with the opinion expressed in the Amendment of the hon. Baronet (Sir H. Willoughby) that the burden of the income tax should be put into two equal payments. He deprecated any augmentation of the income tax, as there was no impost which caused a larger amount of suffering and inconvenience. He did not speak the sentiments of his own side of the House merely, but of the Whigs on the other side. When Sir Robert Peel brought in his income tax of 7d. in the pound for the very limited period of three years, the noble Lord the Member for the City of London (Lord J. Russell) stated that he would oppose the measure in all its stages. How little faith might the country now have in public men when they found the noble Lord and his Colleagues bringing in a measure to double this very income tax which they had formerly so strenuously opposed! Considering the opposition this tax had met with from hon. Gentlemen opposite, it must very much tend to shake the confidence of the public in public men when they found the strongest opponents of the tax now taking every opportunity to increase its amount. When the right hon. Gentleman (Mr. Gladstone) had stated that the tax could not be got rid of before 1860, there was general rejoicing in the House that a prospect existed of getting rid of this obnoxious impost. And just when this prospect, occurred, and land was beginning to be seen, how much must it disappoint the public to find that the Budget of the right hon. Gentleman was based on an increase of this—to use the terms of hon. Gentlemen opposite—detestable tax. Considering that the hope of termination had been held out to the country, and considering that this was an obnoxious tax, what a hopeless prospect was it for the people now that the right hon. Gentleman had just given an intimation that the tax was likely to be permanent, and that it was probable he would have to come to the House for an additional 3½d. this year. It was a melancholy prospect to see that Whig party, now united with the Peel party, having recourse to an income tax for carrying on the war—they having previously so opposed such a tax. If it had been merely a question of the continuance of the tax for six months, he should not have offered the least objection, but it had been intimated to them that they must look forward to the doubling of that tax, and the country was now called on to pay it, to the extent of between 9,000,000l. and 10,000,000l. It was of the highest importance, when they were about to embark in a great war, that they should not take a narrow view of the question of taxation, in order to see how the war could be carried on with the smallest suffering to the public. The right hon. Gentleman seemed to think that it would be possible to carry on the war by raising the means by direct taxation every year. He believed that there were limits to direct taxation, and that the right hon. Gentleman would be greatly disappointed if he expected to be able to raise the necessary means by direct taxation alone. It was said by hon. Gentlemen opposite that they would not have recourse to indirect taxation, because that would be to tax industry. Did they suppose that by direct taxation industry was not taxed. He agreed with the hon. Member for North Warwickshire (Mr. Spooner), that one of their most formidable enemies in the war would be the Bank Restriction Act of 1844. If that Act were really understood, he believed that the country would not allow it to remain in force for six months. He was surprised to hear the hon. Member for Wick (Mr. Laing) express the opinions which he had done as to the supply and deficiency of money. The question of the supply of gold was the question that would either unmake or make this country if the present law remained in force. The amount of money was made by that Act to depend, in the first place, on an imaginary amount of 14,000,000l. plus the amount of gold in the Bank. According to the Gazette of Friday last the amount of gold in the Bank at present was 15,000,000l. The Bank, therefore, had the power of issuing notes to the amount of 29,000,000l. Every one of those notes was convertible into gold, and yet the Bank had only 15,000,000l. of gold in its coffers. By a return he found that in January, 1853, the gold in the Bank amounted to more than 20,527,000l. The notes at that period were, therefore, to the amount of 34,500,000l. The public had in hand notes to the extent of 22,000,000l., and there was left a reserve unemployed in the Bank of 11,960,000l. By the return of Saturday last the notes issued were 29,000,000l. The public had in hand 21,500,000l., leaving 7,500,000l. notes unemployed and in reserve. But last year the amount of gold in the Bank had diminished to the extent of 5,000,000l., and it was quite clear that a drain of gold had commenced. The return in last Friday's Gazette showed a decrease of more than 500,000l. in the amount of the previous week, and of more than 1,500,000l. during the last fourteen days. If this had been the decrease in time of peace, what must they not expect in time of war, and what would be their position if there should be another diminution of 5,000,000l. in another year? If the amount of gold should go down to 10,000,000l., the Bank would only be able to issue notes to the amount of 24,000,000l. The public had in hand about 22,000,000l., and the result would be, as in 1847, the reserve would be reduced to 2,000,000l. What would then be their position and what would then be the rate of discount if the war continued? The right hon. Gentleman opposite, or at least those sitting behind him, seemed to think that this was a subject for derision. He had to remind the right hon. Gentleman that in the Committee of 1848 only four of the witnesses supported the Act of 1844. Returning to the state of the gold in the Bank at different periods, he found that in September, 1839, it was as low as 2,816,000l.; in 1840, 4,560,000l.; and in 1841 that it never exceeded 5,000,000l. It was very fortunate for the Act of 1844 that the gold discoveries in California and Australia had taken place; for had it not been for those discoveries the Act, in its operation, would have brought the business of the country to a dead stand. Again, he asked, what would be their position if the gold in the Bank should undergo a further reduction of 5,000,000l.? In that case the notes would have to be reduced to 22,000,000l., and there would be no reserve. In October, 1847, the gold in the Bank was reduced to 8,000,000l.; the circulation was 22,000,000l., the reserve having been 1,500,000l. What was the result? The Act of 1844 came to a dead lock; and the right hon. Gentleman himself, in the debate in October, 1847, having expressed his disappointment that the Act had not checked the crisis, consented to the appointment of the Committee. The hon. Member for London (Mr. Masterman) told them that he had informed the noble Lord (Lord John Russell) on that occasion, that he was unable to see upon what principle 14,000,000l. had been fixed upon as the precise amount of the circulation without reference to the quantity of gold. Commercial men now apprehended a drain of gold and a diminution of the reserve, and they foresaw the difficulties which would surround them in such a state of things in obtaining discounts from the Bank. The right hon. Gentleman opposite would himself be their most formidable competitor, and would have to pay the same rate as they would for any accommodation he might receive. He was one of those who had taken an unfavourable view of the financial plans brought forward last year by the right hon. Gentleman. They seemed now to be all but condemned; and even the right hon. Gentleman himself had made use of the remarkable expression that they were an "abortive attempt." He confessed that he was always at a loss to understand on what principle the public could be expected to take the reduced securities when the right hon. Gentleman himself had told them that they were safe in the possession of their three per cent stock. The paying off the smaller stocks to the extent of between 9,000,000l. and 10,000,000l. had cost the country something like 900,000l.; for these securities had been paid off at par, and were now worth in the market not more than 91. The right hon. Gentleman might have been actuated by praiseworthy motives, but his scheme was a mistake. He hoped the right hon. Gentleman would learn from that failure that his financial schemes were not necessarily sound because supported by a majority, and that, unless something were done to relieve the commercial world from the effects of the Act of 1844, it would be impossible for the commerce of the country to be carried on successfully, especially during a period of war. He had no wish to destroy the metallic basis of the circulation, but he would suggest that the restrictions of the Act should be modified, if not taken away. The letter of the 25th of October, 1847, authorised the Bank to go beyond the limits imposed by the Act, and he believed that, in the then paralysed state of trade, if the Act had not been illegally suspended, it would have led to national bankruptcy and the stoppage of the Bank. They might therefore be prepared, if the drain of gold should continue, to adopt a similar course, and give a discretion to the Government and the Bank to do away with the restrictions of that Act. No sooner was that letter issued than the hoarding ceased, and notes were brought out. On the 23rd November following the Government, finding that the crisis had passed, requested the Governor of the Bank no longer to act on that letter. In two years from that date the amount of gold increased to 16,000,000l.; the reserve, from 1,500,000l., increased to 11,000,000l.; and all this was attributed to the illegal, unlawful, unwarranted repeal in a time of emergency of the Act of 1844. Were they to be told that in a great commercial country like this, about to engage in a war of which no one could see the end, that their time should be given to a Reform Bill or to an Oaths Bill in preference to a measure which would give some security for commercial credit? Whatever difference of opinion might exist as to the cause of that war, they on that side were determined to assist in the vigorous prosecution of it; but on a subject of so much importance as the commercial credit of the country he hoped right hon. Gentlemen opposite would take warning from past sufferings, and, profiting by experience, would adopt such prudent measures of precaution as would prevent the recurrence of similar sufferings.

SIR FRANCIS BARING

said, he thought that those who had watched the financial discussion of that evening must have observed that, from some cause or other, the subject legitimately before them had formed very little part of that discussion. That, however, he thought, was not any exception to the general rule. The House had heard a great deal about the Bank Act and about the transactions of the Chancellor of the Exchequer with regard to Exchequer bills and other proceedings; but that which was the legitimate subject of discussion—the Budget and the proposition of the hon. Member for Evesham (Sir H. Willoughby)—had formed the least part of the debate. With regard to all those points he hoped he should not trouble the House at any great length. With respect to the two first he should be very short in his remarks. If the hon. and learned Gentleman who had just sat down supposed that they on that side were disposed to treat the subject of the Bank Act lightly he was much mistaken. If Gentlemen on the other side were really of opinion that the Act was likely to cripple our resources in case of war—one hon. Mem- ber had actually said that he believed the Emperor of Russia relied on that Act in his future proceedings—it would be much better if they were to bring the subject forward separately, so that it might be fairly discussed, and not be allowed to swamp every financial debate that might arise in that House. With regard to the Exchequer bills transactions and the other points alluded to by the hon. Member for Evesham, they were in the predicament that the subject had not been discussed in Committee, and consequently they had never heard the explanation of the Chancellor of the Exchequer of what he had done. Until they heard that explanation it would be impossible for any Gentleman fairly to express an opinion upon it. He was quite sure that the Chancellor of the Exchequer, when he spoke, would state frankly what he had done, and would address himself to those points which were fairly the objects of inquiry and explanation. One observation on that point he must make. They must remember that, after all, the Chancellor of the Exchequer—no matter what might be his majority—could not command the seasons; and if they found that a bad season and an approaching war had placed him in difficulties, they must not scan with too nice an eye the proceedings which he had taken without anticipating those difficulties. In his opinion, the observations which had fallen from his right hon. Friend the Chancellor of the Exchequer, with reference to the question of the public balances, had not been correctly understood. If his right hon. Friend had meant to state that he did not deem it to be his duty to keep any balances in the Exchequer beyond those which he considered as necessary for the purpose of carrying on with efficiency the public service, undoubtedly to a statement of that kind no fair objection could be taken. If, however, the right hon. Gentleman had argued, which he (Sir F. Baring) did not believe to be the case, that it was of advantage to the country to have small balances in the Exchequer, he must candidly say, that in adopting that line of argument he could by no means concur. There could be no doubt that by keeping certain sums of money lying uselessly in the Bank, the interest upon those sums was lost to the public. But that was a narrow view to take of the question, because it was advisable, nay, almost indispensable, that there should be always, if possible, resources at hand in order to meet with ad- vantage difficulties which might at any moment present themselves, and which it was not in the power of any Minister to foresee. It was infinitely more desirable that the country should be prepared to encounter those difficulties by paying away a trifling sum in the shape of interest than that we should find, when danger menaced the State, that our position was rendered more critical than it otherwise would be by the low scale of the public balances. It had been his own fate to administer the finances of his country at a period when the balances in the Exchequer were low; he had found that difficulties had then gathered around him which he could by no means have anticipated, and that he had no reason to congratulate himself upon the position in which the public balances happened to be placed. It was his firm conviction that his right hon. Friend, too, would find his position far more comfortable than it really was if his balances were larger at the present moment. That such was not the case was not, however, to be attributed to any fault of his right hon. Friend in dealing with the finances of the country; and, having said thus much upon a subject which was not under their consideration, he should proceed to advert to the proposition with which the House was, in reality, called upon to deal. The hon. and learned Gentleman who had just sat down seemed to be of opinion that those who had opposed the first imposition of an income tax in 1841 were guilty of a gross inconsistency in voting for the increase of that tax under existing circumstances. Now he (Sir F. Baring) had voted against the tax in 1841, because he believed that it ought to be regarded only as a war tax, and that it was by no means desirable that it should be made a permanent burden upon the country. We were now, however, entering upon a great contest, and the tax which, in 1841, had been designated by his right hon. Friend as the best weapon in the armoury of the Exchequer to meet a great emergency, might, with advantage, be employed. The efficiency of that weapon might, and he believed it had been, impaired, in consequence of its having been used in times of peace. But be that as it might, he held that the right hon. Gentleman the Chancellor of the Exchequer, in making an addition to the income tax in the present crisis of our affairs, had, looking at the financial means within his grasp, made the most advantageous arrangement for the country which it was possible for him to effect under the present circumstances. His right hon. Friend had to provide for the expenditure which was to be incurred during the ensuing six months, and by the aid of an income tax, which might be doubled without increasing the establishment now in existence for the purposes of its collection, a less sum of money would be drawn from the public than if recourse were to be had in the present emergency to a new tax, or to an addition to any of those other taxes which were actually in force. No indirect taxation could be increased or diminished without involving more or less in the change the interests of a considerable body of merchants and traders; while in the case of the income tax there was this advantage—that in dealing with it as the Chancellor of the Exchequer proposed, the trade and commerce of the country would be in no degree disturbed. In fact it was an addition to the taxation of the country which disturbed nothing except the tempers of those who had to pay it. Concurring, as he did, thus far in the wisdom of the course which his right hon. Friend had adopted, he was by no means prepared to advocate the course by which it might be sought to confine taxation to one source of revenue only, in the event—as too probably would be the case—of an increase of the burdens of the country being rendered absolutely necessary. He did not think that those burdens ought to be laid exclusively upon any particular class or person, nor did he believe that his right hon. Friend was prepared to insist upon the expediency of adopting any such policy. Having stated his approval of the proposition of his right hon. Friend the Chancellor of the Exchequer, he should next lay before the House the reasons why he felt himself obliged to dissent from that of his hon. Friend the Member for Evesham (Sir H. Willoughby). Now, it being a matter essential to the due administration of the public service that a certain amount of taxes, should be levied within the next six months, his hon. Friend proposed to delay the payment of those taxes for a period extending beyond that time. The Chancellor of the Exchequer had asked the House to grant a certain amount of Exchequer bills. It was evident, therefore, that he stood in need of money, and yet his hon. Friend had taken a course which, if the House were to sanction its adoption, would obstruct the Chancellor of the Exchequer in obtaining the end which he had in view. He did not see that any advantage could result from the proposal of his hon. Friend, and therefore he felt bound to oppose it; while to the measure of his right hon. Friend near him he considered it to be his duty to give his most cordial support.

SIR FITZROY KELLY

said, he concurred in opinion with those hon. Members who had preceded him, that there was something in the present state of the finances of the country which made it natural that they should desire some—he might say much—explanation, from the right hon. Gentleman the Chancellor of the Exchequer; and it was in the hope of receiving that explanation at this early period of the financial year—when, however, they were called upon to take the first step towards meeting the exigencies of the times—that he took that opportunity of entreating the attention of the House to some few not unimportant considerations affecting the financial condition of the country. They were now called upon at once to double the income tax for the approaching half-year. Now, he should not stop to consider the question whether, if the danger which confronts us had been met with that promptitude and energy with which the nation, as one man, had now risen to support the Ministers of the Crown, we might not have altogether averted the evil impending over us. It was undeniable that we were now on the verge of a war—it might be a great, costly, and lasting war—and he could not but think that it behoved us at once to look our difficulties in the face, and to prepare to meet the danger with which we were threatened in such a manner as to bring the struggle to an end with credit and success. He should not, then, advert to the question whether the payment of the additional income tax should be made in one or two instalments, because he would have ample opportunity of discussing that point when the Bill was before the House. But he thought he was fairly entitled to remind the right hon. Gentleman of what passed in the last Session of Parliament with respect to the tax which was now about to be doubled. Her Majesty's present Government then reversed the policy of the Government of Lord Derby, in spite of the opposition and remonstrances of those on that side of the House; and, against the declared wish of numerous classes of the people, they persisted in enacting—and succeeded in doing so by large majorities—the income tax ungraduated, unmitigated, with all its inequalities and oppressive severities. Those who occupied the Opposition benches hoped that at any rate they would on that point have had the assistance of those supporters of the Government who had consistently waged war against every Government which had brought forward an income tax without graduation. However, whether they were induced to waive their opposition by the promise of a Reform Bill, or by the representations of the Ministry that the income tax, if passed in an unaltered form, would be only of temporary duration, it was the fact that the Government had no reason to complain of any opposition on their part, and the whole of the financial propositions of the right hon. Gentleman were passed by large majorities. A year had since elapsed, and what was the position in which we now found ourselves? When we looked back to the 5th of January of last year, the beginning of the first quarter of the year, and of the last quarter of the financial year, and considered what was the state of the public treasury, and how far we were prepared to meet the exigencies of the times, we were startled by the unprecedented fact that the balance in the Exchequer was now lower by 4,300,000l. than it was at the corresponding period of 1853; and that it was lower in amount than it had been at the corresponding period of any one of the past six years. This, too, at a time when we needed to avail ourselves of all the resources of the country to meet the exigencies of our position. He certainly thought that the House had a right to expect from the Ministers the most explicit statement—looking to the financial and political history of the last year—of the reasons and the justification of this most alarming deficiency in our resources. It had not arisen from any failure in the expectations which the right hon. Gentleman the Chancellor of the Exchequer had formed with respect to the amount of the revenue for the past year; for, according to the statement which he made to the House a few nights ago, that had more than realised his estimates, and there was now an actual surplus of revenue over expenditure of no less than 2,800,000l. How came it, then, that after the financial proposition which the Government made last year had been readily accepted by that House, and after the most sanguine expectations of the right hon. Gentleman as to their result had been more than realised, he was now obliged, when war was on the point of breaking out, to take up no less a sum than 3,700,000l. on deficiency bills? In order to answer that question, he must call their attention to some of the financial transactions of the past year. Some twelve months ago, Her Majesty's Ministers conceived the design of paying off a sum of between 9,000,000l. and 10,000,000l. of South Sea and other stocks. The project was an excellent one; and had it been executed with the most ordinary foresight, and with the necessary precautions, it must, looking to the circumstances of the times, have been eminently successful, and have been productive of great advantage to the country. We were then—or at all events we believed ourselves to be—in a state of profound peace; the funds were at par—indeed he believed that on the very night when the Chancellor of the Exchequer brought forward his proposals, Consols actually stood at 101; and nothing could have been easier than to devise means to carry out the project in such a manner as neither to have injured the holders of stock, nor to have prejudiced in the slightest degree the financial interests of the country. But at this unhappy moment the demon of speculation entered into the minds of Her Majesty's Ministers, and impelled them headlong on a series of measures that resulted in the first place in a dead loss to the country of 720,000l., at a moment when we could least afford it, and when, in fact, we required every shilling we could get to meet the exigencies of the occasion. In the second place, Her Majesty's Government pledged the faith of Parliament to the payment of about 9,500,000l. of money in the early part of the present year, without having the foresight to provide one shilling towards the sum requisite for that purpose. The result was that, having been called upon to pay 8,000,000l. of money, without having a shilling properly applicable to the purpose, the Exchequer had been reduced to its present impoverished state just at the moment when it ought to have been well filled. Her Majesty's Government proposed, as he had said, to pay off 9,500,000l. of three stocks, under the Act creating which it was necessary to give the holders the option of being paid 100l. in money for each 100l. of stock. Now, there was one mode of effecting this operation, a mode for which the Government had a precedent in the successful measure carried into effect in 1844 by the right hon. Gentleman the Member for the University of Cambridge (Mr. Goulburn). The time at which Her Majesty's Ministers took these measures was most favourable to such an operation. They might have made some addition to the three and a quarter per cent stock already in existence. If they had done so the utmost cost to the Government would have been two additional half-year's dividends at a quarter per cent; and the holders of the stock would have been more than satisfied for the paying off of their stock. Instead of doing so, however, the Government thought proper to speculate in the creation of new stocks, instead of providing for the paying off of the old ones, either in the way he had described, or by a loan which might then have been obtained on the most favourable terms, without the addition of one shilling to the capital of the national debt. With the assent of Parliament they gave the requisite notices by which they bound themselves to the payment of between 9,000,000l. and 10,000,000l. of money in the early part of the present year, without providing themselves with money for the purpose; but trusting entirely to the commutation which they held out to the owners of the old stocks, whom they hoped to induce to take one or other of the three new stocks they had created. They did this notwithstanding that some of the most eminent members of the mercantile community in that House urged upon their attention the impossibility of success in the wild and vague scheme which they had taken up. It was unnecessary for him now to say that those warnings and remonstrances proved to be well founded, and that the scheme entirely failed; and the result was, that the notices having been given, the Government was bound to pay between 9,000,000l. and 10,000,000l., for which no provision had been made, for they had been of opinion that not only would these three new stocks be accepted to the amount of 9,000,000l. or 10,000,000l., but to the extent of 19,000,000l. more by the holders of three per cent stock. With that scheme before them, and without preparation for payment, the Government obtained the consent of Parliament to their Bill. But the scheme of the new stocks entirely failed. In a later period of the Session, in consequence of some errors in the Bill, upon which he would not now dwell, it became necessary for the Chancellor of the Exchequer to apply again to Parliament, and thus again to bring under their consideration the measure which had already been so amply discussed in the month of April. The subject was again debated, and the Government were again, on the 28th of July, warned of the fatal consequences of the course they were taking—consequences which the progress of events had rendered still more evident than at an earlier period. Those who then opposed the measure did not then know that war was imminent, for all information on this point was withheld by the Government; but they did know that since the month of April, when the measure was first introduced, the funds had fallen from 101 to 98. At that moment there was a loss of three per cent on the 9,000,000l. or 10,000,000l. of stock; but the loss was confined to that. Nothing could have been easier than for the Government to have then effected a loan for 9,000,000l. or 10,000,000l., or to have created three and a quarter per cent stock to the requisite amount. Had they taken either of these courses there would have been no substantial loss to the Government, or, indeed, to any one except the few unfortunate persons whom they had induced to take some portion of the new stock. But, again, the Government abstained from making any preparation to meet the demands they had contracted to satisfy in the early part of the present year; and, again, reliance was placed on the voluntary commutations into the new stocks of that which they intended to abolish. What was the consequence of that course of proceeding? The state of the case was different from what it was in the previous month of April. The three new stocks had been created; and we had experience where before they had only speculation and conjecture. The true value of these new stocks was known, and was pressed on the attention of Ministers. But the failure of this scheme was imputed by the right hon. Gentleman, not to the spirit of speculation with which the Government had been actuated, but to the various political circumstances which had occasioned a fall in the funds—to anything, in fact, but the real cause. It was the assertion of all the Ministers of the Crown who spoke on this subject, that those three new stocks were of one and the same value, and that 100l. stock was then of the value of 100l. sterling. But the funds fell from 100 to 98; and if those three stocks were all of the same value, they would then have been of the value of 98; and therefore the same events which had driven down the three and a half per cents to 98, would have driven those three stocks down likewise. While, however, the three stocks were now at 91, the two and a half per cent stock—the only one which had ever been regularly bought and sold in the market—sold the other day at 85; and the three and a half per cents were now worth 78, and the Exchequer bonds were 75. The holders of Exchequer bonds were losers to the extent of 25 per cent, if contrasted with the 100l., the money the holders were entitled to be paid on the surrender of their stocks, and they were losers of 19 per cent, as contrasted with the price of three and a half per cent at the present moment. If Exchequer bonds were really worth 100l. when the Chancellor of the Exchequer held they were, and if the two and a half per cents had then been issued, those bonds would have been worth 110l.; and if the 100,000,000l., as suggested, had been commuted into two and a half per cent stock, there would have been a loss to the Government of no less than 10,000,000l. In April the first Act was passed, and no provision was made for any payment of a portion of this large sum. July arrived, but still no provision was made. It appeared that 6,000,000l. had already been paid by Government, and 2,000,000l. were to be paid in April next. He now called upon the Government to explain to the House from what source they had derived the 6,000,000l., and whence they were to derive the 2,000,000l. to be paid on the 5th of April. The right hon. Gentleman found, when the month of January had arrived, that he must trespass on the balance in the Exchequer, in order to make good his payment, and the balance in the Exchequer was reduced from upwards of 8,000,000l. to between 4,000,000l. and 5,000,000l. The Government borrowed upwards of 4,000,000l. to make the payments for which they had made no provision, and borrowed 3,700,000l. on deficiency bills. He (Sir F. Kelly) thought it was incumbent on every finance Minister of the Crown to maintain a considerable balance in the Exchequer, so as to be able to meet sudden contingencies, but the Chancellor of the Exchequer had not, he was sorry to say, acted upon this principle. It appeared from the returns which had been laid on the table of the House, that in the month of June, 1848, the amount of balance in the Exchequer was 8,457,691l.—that on every 5th of January since that year it had exceeded 8,000,000l.; in one year it had exceeded 9,000,000l., and in another 10.000,000l. The average balance during the last six years in the Exchequer was 8,796,821l., the balance on the 5th of January last was 4,485,229l., making a difference between the balance in 1848 of 3,972,462l., and between the average balance during six years and that on the 5th of January last of 4,311,592l., and within some five months afterwards the sum of 3,700,000l. was borrowed by the Government to meet the deficiency. At the outset of, it might be, a costly and a lasting war, he called on the Chancellor of the Exchequer to say whether he (Sir F. Kelly) was right in supposing that the demand of 6,000,000l. had been made out of the Exchequer, and that the Exchequer had thus been impoverished to that extent. If he (Sir F. Kelly) was wrong in that supposition, he should rejoice to be corrected; but if he was right, he hoped Her Majesty's Government would be able to satisfy the House that, after that very large sum had been taken out of the Exchequer, at a moment when we could so ill afford to part with it, our resources were still equal to the emergency of the occasion.

MR. GEACH

said, he entirely disagreed with the opinion which had been expressed by the hon. and learned Member for Wallingford (Mr. Malins) as to the operation of the Bill of 1844. He found that, in the year 1848, a Committee was appointed by the House, of which Sir Robert Peel himself was a Member. There was then a general concurrence of opinion expressed by the witnesses examined by the Committee, that there were other and primary causes of the distress which then, unhappily, prevailed. The bad harvests, the deficiency in the potato crop, and the general deficiency of food at that time—the extraordinary amount of capital withdrawn from the usual channels of commerce and applied to railroads—and, in addition to all these matters, a vast increase of trade—these were the causes which, in different degrees, in different parts of the country, produced those difficulties and that effect which had been ascribed to the Bill of 1844. He had had the good fortune of residing for about twenty-five years in the same town as the hon. Member for North Warwickshire (Mr. Spooner), and during that period he had often had the advantage of hearing his opinions upon the subject of the currency. The hon. Member had repeatedly predicted ruin to the country, and seemed always afraid that calamities would result from the currency laws; but he (Mr. Geach) was happy to say that all the hon. Member's predictions had been falsified. With regard to the Bill of 1844, he believed that as much benefit had resulted from the operation of it as from any other measure to which Sir Robert Peel gave the aid of his great talent to carry into effect. The interruption to the working of that Bill in 1847 was, in his opinion, one of those circumstances which showed most strongly that the operation of the Bill had been a benefit to the country, and the House, he thought, would agree with him when they recollected what the state of things was before the passing of the Bill, and he believed that, if no such law had been in existence, the difficulties of 1847 would have been to a much greater extent, and would have gone on until the same distressing occurrences would have taken place as in the year 1825. As to the Amendment proposed by the hon. Gentleman the Member for Evesham (Sir H. Willoughby), he should oppose it, as he cordially concurred with that part of the arrangement of the Chancellor of the Exchequer which at once called for the payment of the extra amount of income tax in the first half of the year. It was, he thought, a wise measure, seeing that it was necessary to increase taxation. There had been in no part of the country a dissatisfaction expressed at the proposition which the Chancellor of the Exchequer had made for his demand upon the pockets of the people.

MR. DISRAELI

Sir, we have two questions before us to-night. One the Report of the Resolution for the increase of the income tax; the other the Amendment of my hon. Friend the Member for Evesham (Sir H. Willoughby), with respect to the operation and the mode of levying the amount which the House is asked to vote on that Resolution. With regard to the first Motion—namely, whether we shall greatly increase the taxation of the country, and that that increase shall be occasioned by an increase of the income tax—that appears to me to be a question which we can hardly decide without entering into the policy which has given occasion to such a request on the part of Her Majesty's Government. But it appears to me that, an occasion like the present, when, if I do not mistake the forms of the House, we cannot very strictly leave the limits of the question which has been started by my hon. Friend, and when, I believe, with the exception of the Chancellor of the Exchequer, and perhaps a solitary Colleague, no Member of the Government is present, is scarcely a convenient period to enter into a discussion on those important events which must have occupied, and must still occupy, the attention of every hon. Gentleman in this House, and which are the cause of this extraordinary demand on their purses and on the purses of their constituents. I must remind the House that, when this project was laid before us, we were informed by Her Majesty's Government that we were virtually on the eve of a war, and that the causes of that contingency were to be explained in certain State papers which Her Majesty had graciously ordered to be placed on the table. It was from the study of these documents that we were to feel convinced that Her Majesty had been well advised to increase her armaments; and, on that honourable understanding, the House at once expressed their determination to support their Sovereign and her Ministers in the demands which they might make. But I must remind the House that within—I cannot say a few days, for it is almost within a few hours—other documents connected with these important transactions have also been placed upon the table; and, to say the least, with respect to the additional, and the most important as well as additional, information to that which we already possessed, as to the reasons which have placed the country in the perilous position in which we now find it, it was not in our power to consider those documents when we listened first to the financial plans of the Minister. These financial plans of the Minister, when they were a fortnight ago proposed for our consideration and acceptance, were founded on a necessity which, so far as the House of Commons was concerned, was only explicable by the papers which were placed on the table on the first day of the Session. But an important supplement to those papers has appeared since that statement—and, in fact, has appeared only within the last forty-eight hours—and no one can have read that important supplement without feeling that its perusal must give rise to new considerations, which could not have been open to us when we first listened to the reasons of the Minister for those extraordinary demands for increased taxation; no hon. Member can have perused that important supplement without being convinced that it has given a very new aspect to the circumstances which we supposed were entirely placed before us at the opening of Parliament, and that a fresh consideration must necessarily be given to this new matter thus unexpectedly brought under our notice. I say this, Sir, because I wish to guard myself, in the course I am taking to-night, from any approval of the proposition brought forward by Her Majesty's Ministers. It is impossible that we can bring ourselves to approve of a proposition for greatly increasing the direct taxation of the country, unless we have a clear case of necessity proved to us. I say we have not a clear case of necessity proved to us at present, when we have two sets of papers before us which convey to our minds different and distinct impressions. Nor can I forget, Sir, that it is not to the liberality or generous confidence of Her Majesty's Government that we are indebted for this additional and more important portion of the information. It is, I will not say to accident, but to circumstances of a very rare, if not of an unprecedented character, that the House of Commons is indebted for being acquainted with the real causes of the war in which we were invited to embark some weeks ago, upon a very different statement from that which will probably ultimately be substantiated, and upon which we were asked greatly to increase the burdens of the country. I am sure that hon. Members on both sides of the House must feel that this is a subject which requires discussion, which it cannot receive upon the present opportunity; they must feel that, before we ultimately sanction the increase of our taxation, we must require from our Ministers a more clear account of the causes which have brought about the present state of affairs, and that Parliament must much more formally, much more decidedly, and I will say even more solemnly, sanction that policy and that increased taxation than it has heretofore done. So far, therefore, as the main project is concerned, I shall treat all these stages of the proceedings as merely preliminary and formal, and I guard myself from in any way or in any degree approving of the proposition which the Chancellor of the Exchequer brought forward. I will not yet admit that there is any necessity fur increased taxation, for this simple reason, that I am utterly at a loss to know whether we are going to war or not, and, if we are, for what purpose it is that we are going to war. I do not now want to invite discussion on the subject; all that I wish is, that the Chancellor of the Exchequer or any other Minister shall not say, upon a subsequent occasion, such as the second reading of the Bill on the Income Tax, that I am precluded from objecting to the policy which this proposal wishes to bring into action. I rose to-night because there were one or two points connected with the financial policy of the right hon. Gentleman respecting which, on a former occasion, there had been some discrepancy of opinion and statement between him and myself in this House. Perhaps the House will recollect that upon the evening that he made his financial statement, and after it was made, there was some conversational discussion in the Committee between the right hon. Gentleman and myself upon matters of fact, upon which there was a considerable difference between us. But they were subjects which could not be settled without reference to authentic documents not then at hand. The right hon. Gentleman, upon a subsequent occasion, in a Committee of Supply—upon the Wednesday following, I think—took the opportunity of making a fresh statement upon one of the points of controversy; but, as the right hon. Gentleman rose very shortly before the House, as it was Wednesday morning, was necessarily obliged to adjourn, and as it was impossible for me to reply to the right hon. Gentleman upon that occasion without entirely stopping the course of public business, I expressed to the right hon. Gentleman that I dissented from his statement, but that I would not, of course, at that moment intrude myself upon the Committee. It was then within a few minutes of six o'clock, and it was distinctly understood between us that upon a subsequent occasion I should notice the observations which he then made. Now, when the right hon. Gentleman made his financial statement, upon which I at the time offered no observations, so far as his main proposition of increasing the taxation of the country was concerned, reserving to myself the right of so doing upon a fit opportunity—which unfortunately has not yet happened—I did make some observations upon what I thought was a very important feature of our financial condition. I thought it my duty to call the attention of the Committee of Ways and Means to a subject which attracted much of the public attention, and occupied that evening a great portion of the time of the House—namely, the state of the public balances in the Exchequer. I felt it my duty to remind the Committee upon that occasion, that, when the Government of Lord Derby quitted office at the beginning of January, 1853, they left a balance in the Exchequer of nearly 9,000,000l., and that, at the commencement of the present year of 1854, the balance of nearly 9,000,000l. was reduced to the sum of about 4,400,000l. I pointed out then to the Committee the great inconvenience and possible injury to the public service of such a state of balances in the public Exchequer. I said, that, so far as I could form an opinion at the time when I was speaking, which must have been somewhat about the beginning of this month, the balances in the Exchequer were not more than 1,500,000l., and that it was possible that, by the end of the financial year which is now impending (the 5th of April) the balances might be increased to 3,000,000l., which I thought, myself, a liberal estimate. I have heard to-night from the high authority of a Gentleman who is a political supporter of the Chancellor of the Exchequer, and who recently filled, and filled with great efficiency, the high post of Governor of the Bank, that in his opinion I rather understated my case. I said then, "If upon the 5th of April you have 3,000,000l. balance in the Exchequer, and upon that day or about it you have to pay between 6,000,000l. and 7,000,000l. interest upon the national debt, have to meet upwards of 2,000,000l. more of your South Sea payments, and have also to supply the usual expenditure of the country, it appears to me that you are in a position of extreme difficulty—that even in ordinary times it would be a perilous and imprudent one, but that in times like the present, times of war and times of financial difficulty consequent upon war, your position is not only wanting in prudence, but may even be perilous." I think that every Gentleman must feel, whatever may be his views, that it is a subject well deserving the attention of the House of Commons. I think that every Gentleman must feel that a great change in the management of our financial policy is a feature which demands attention and requires considerable reflection. Not with any intention to dwell upon the financial schemes of the right hon. Gentle- man—which, indeed, upon that occasion I dwelt upon much more lightly and with much less detail than I might have done—but merely to explain the reasons why that great metamorphosis had occurred, why that burdened Treasury had suddenly been placed in the position of being sustained by actual loans from the Bank, as is proved by the returns upon our table, I touched upon the causes of that great change—upon the causes which had converted a balance, in January, 1853, of nearly 9,000,000l., into a balance, in 1854, of 4,400,000l. I said that the cause was the dealing—as I thought, the injudicious dealing—of the right hon. Gentleman with the interest of the unfunded and of the funded debt. I said that I could trace to attempts of his, which I thought unauthorised, and which certainly have been unsuccessful, to deal with the funded and unfunded debt, the present state of the balances in our Exchequer; and that, therefore, to those operations ultimately must be attributed the inconvenience and injury which might possibly accrue from that state of affairs. Now, Sir, I said upon that occasion, dealing first of all with the reduction of the duty upon the unfunded debt or Exchequer bills, that the right hon. Gentleman, when, in February, 1853, he resolved to reduce the interest upon the unfunded debt, took a course which was quite unauthorised; that there were many indications at that time which should have told the right hon. Gentleman that he was embarking in a dangerous enterprise; and that I was sure that in resolving to pursue it he was, in fact, acting against the advice of the best authorities upon subjects of this description. I might have gone into much detail to prove that position; but, wishing to avoid it, and not having at hand at that time the information in an official or authentic form, which was necessary to substantiate that statement, which I thought would be unquestioned, I said from memory that the price of the public funds at the time might have been an indication to the right hon. Gentleman that a change was occurring in the value of money. I said that, at the beginning of February—on the 8th I think—when he reduced the interest on Exchequer bills, there had been a continuous—not to say a considerable—fall in the price of the funds in the interval which had occurred from the retirement of Lord Derby from the Government, and from the moment which the right hon. Gentle- man had chosen to reduce the interest upon Exchequer bills, which had already been once reduced by his predecessor. I said that even six weeks did not elapse between the time when we left office, and until the right hon. Gentleman advertised the reduction of the interest upon Exchequer bills, before there had been that continuous depreciation in the value of the three per cent Consols, which alone ought to have made a prudent man hesitate before he contemplated a reduction of the interest upon the unfunded debt. But at the same time I begged the House to remark that I did not pledge myself accurately to the details of the numbers, but that the fall might be nearly described by numbers such as these:—That the three per cents, in December, when we left office, were 101⅛, and that the three per cent Consols at the time the right hon. Gentleman reduced the interest on the unfunded debt—namely, on the 8th of February—were about 99¾. That was the statement that I made, and which I dare say is fresh in the memory of hon. Gentlemen who now listen to me. Well, and what was the answer of the Chancellor of the Exchequer? The right hon. Gentleman the Chancellor of the Exchequer seemed quite offended that I had presumed to speak of the state of the balances in the Exchequer. He treated it quite as if I had made a personal attack upon him, but I am not aware that either in my matter or my manner there was anything to give rise to that suspicion. It seemed, however, to the right hon. Gentleman that my noticing the state of the balances was a personal offence to him. What I stated was, there had been a continuous, not to say considerable, fall in the public funds from the time that Lord Derby's Government left office until the time that the right hon. Gentleman reduced the interest on the Exchequer bills, and I said that this fall was a fall of 1½ per cent in the three per cents between December and February. Why, the Chancellor of the Exchequer was not contented with denying that fall in the three per cents [The CHANCELLOR of the EXCHEQUER here made an observation which was inaudible.] I will tell you what the right hon. Gentleman said. He said, "There was a fall of per cent in Consols, but I can explain it; it is susceptible of easy explanation. Is the right hon. Gentleman (Mr. Disraeli) ignorant that a particular process is going on in the three per cents between December and February—that a person holding 100l. stock receives at that period 1l. 10s. interest, which is exactly the 1½ per cent which describes his continual fall in the funds?" There is not a Gentleman who heard the Chancellor of the Exchequer who must not recollect that statement; there is not a Gentleman who can forget that happy retort of the right hon. Gentleman, that triumphant repartee, or the enthusiastic cheers which the right hon. Gentleman received from the Friends around him. Why, Sir, I should have shrunk into the ground had it not been for the single circumstance that I happened to know that I was exactly right. I have here the authoritative and official statement of the price of the three per cent Consols in December and at the beginning of February. The right hon. Gentleman the Chancellor of the Exchequer, in answer to my statement that there had been a continuous fall in the price of Consols to the amount of 1½ per cent, explained that fall, as I have said, by stating that it was occasioned by the payment of the dividend; and that, of course, as there was a payment of 1½ per cent in January, that would explain the reason why the price in February was 1½ per cent. less than in December—that the price was virtually the same, because the dividend was deducted. Now, what was I to do in order to ascertain whether my statement was correct or not? Why, I must obtain from the highest authority the price of Consols in December, ex dividend, and the price of Consols in February. Every Gentleman will agree that that was the proper way. Well, I have got that. I have got the price of Consols upon the day—the unfortunate day, I believe—on which I resigned the seals of office. I have got the price of Consols ex dividend, on the 27th of December, and the price of Consols on the 8th of February, the day on which the Chancellor of the Exchequer reduced the interest on the unfunded debt. It appears that the price of Consols ex dividend on the 27th of December was 101 and that the price of Consols on the 8th of February, ex dividend, was 99¼, so that the fall in the three per cents Consols, from the day on which Lord Derby resigned office to the day when the right hon. Gentleman announced the reduction of interest on the unfunded debt, was not 1½ per cent, and which fall the right hon. Gentleman explained by the payment of the dividend, but was really 1¾ per cent. But, besides the official returns, I have a return here from a quarter not official, but which in these days is as well informed as any public office in the kingdom, the Times newspaper. Here I find in the Times of the 27th of December, 1852, in the City article, written on Monday evening:— There was not much business in the English funds to-day, and, although the market opened with firmness, the closing prices show a decline. Consols were first quoted at 101 ex dividend, and they left off at 100¾ to⅞. Then on January 3, 1853, I find:— The English funds remain without the slightest variation. Consols for the opening were quoted 100½ to ⅝ ex dividend throughout the day. In fact, Consols had been sick throughout the whole week, and had been on a continuous decline. On the 7th of January the Times City article said:— The English funds opened this morning at the lower prices of yesterday, and experienced a further decline of an eighth upon an announcement to which I am going to allude presently. The first quotation of Consols for money was 100¼ to ⅜, and they closed at 100⅛ to ¼. And so they went on falling, until we find them, by the official list upon the 5th of February, 1853, as low as 99⅛, a fall of 1¾. Now, let the House recollect, because they will sympathise with me, that this is the only opportunity that I have had for more than a fortnight to notice that extraordinary statement of the Chancellor of the Exchequer—which the right hon. Gentleman said was not a statement—and to show that that fall in the price of Consols between December and February, was not really occasioned by the payment of the dividend. The right hon. Gentleman, in replying to me, was happy and affluent in unnecessary taunts. He said I had remarked that the funds had fallen 1½ per cent after the Government of Lord Derby resigned office, and he wondered why my modesty did not induce me to connect cause and effect, and to tell the House that it was in consequence of the resignation of Lord Derby's Government that the fall in Consols had taken place. Well, Sir, I have some modesty, I hope. I am not prepared to say that it was absolutely in consequence of the retirement of Lord Derby's Government that that fall of 1½ per cent took place. But this I have no hesitation in saying—that if the country had been in the least aware of what the retirement of Lord Derby's Government would lead to—if it had been possible to imagine what has occurred during the last twelve months—and the position in which we are now placed, I have no doubt that a fall of 1½ per cent would have been but a moderate and modest estimate of what the opinion of the public would have been; and the present state of the funds is, I think, rather germane to that point. But when the Chancellor of the Exchequer turns round and uses unseemly and discourteous taunts—and not only uses unseemly and discourteous taunts, but, as I have shown, makes statements which are quite unauthorised—when he attempts to twist a reference to the price of the funds into a perversion for an unworthy object which served his purpose that evening, I beg to ask whether the state of the public funds was the only test that, as a prudent and cautious administrator of our finance, he ought to have observed? I say that it was not the conduct of a wise and prudent man not to condescend to notice a fall of 1½ per cent in the interval before advertising the reduction in the interest on Exchequer bills; but were there no other symptoms that ought to have made him pause, and which would thus have prevented him from coming forward now and saying that he was the victim of circumstances that could not be foreseen? Why, on the 7th of January a significant circumstance took place. On that day, when the Consols were "very sick," this occurred, which was the alleged cause of that sickness—there was an announcement of a rise in the rate of discount by the Bank. The rate of discount had, up to that moment, remained unaltered since the 22nd of April, 1852; but it was raised from 2 per cent to 2½ per cent on the 7th of January. Well, was not that a significant symptom? Was that a sign to be disregarded? Was not that a circumstance to be considered in connection with the price of the public funds? But is that all? The Bank of England raised the rate of discount from 2 to 2½ per cent on the 7th of January, while the Chancellor of the Exchequer was maturing his great schemes for reducing the interest on the unfunded debt. What did the Bank of England do in the course of that same month? In the same month, upon the 23rd of January, the Directors of the Bank of England met again, and again raised the rate of discount from 2½ per cent to 3. Twice in the same month did these gentlemen meet in the Bank parlour, after the rate of dis- count had been unchanged for nearly twelve months, and on each occasion they resolved to change the rate, by raising it. Were these symptoms that ought to have been disregarded? And in the face of facts like these—in the face of continual depreciation in the funds of 1¾ per cent—in the face of two rises in the rate of discount in the course of a single month—is the Chancellor of the Exchequer to turn round upon me, and to treat it as a matter of impertinence that I even alluded to the fact that there were symptoms in the state of the money market at that time which a wise man would not have disregarded, who was attempting to deal with so vast, so momentous a subject as the interest due to the public creditor? But is even that all? I will not touch upon the subject of Exchequer bills, because I know that that is a subject upon which the right hon. Gentleman, with all his powers of self-control, hardly so much as keeps his temper, which a public man ought to do. Still, I think he ought to recollect that if the premium upon Exchequer bills was in December so enormous as to alarm so warm a supporter of the right hon. Gentleman as the Member for Lambeth (Mr. Williams)—if the premium upon Exchequer bills was 70s. in December, it had declined to 55s. at the very moment when the right hon. Gentleman was determining to reduce the interest upon them. It does seem to me the strangest thing for a Chancellor of the Exchequer, finding that the premium upon Exchequer bills had fallen from 70s. in December to 55s. in February, to say that the best thing to be done is to reduce the interest upon those bills; and it really does require one to be initiated into the mysteries of that high finance, of which we hear so much, before we can sufficiently appreciate the adroitness of this step. It is perfectly open to financiers of the school of the hon. Member for Lambeth to say that because Exchequer bills are at 70s. premium you must immediately proceed to reduce the interest, and, if possible, to cancel so dangerous an instrument; but, as he has been, I believe, told to-night, and ought to have known long ago, the premium upon Exchequer bills and the interest upon Exchequer bills are no tests of the real rate of interest which money commands, because it is notorious that in moments of exigency, when money is most precious and the rate of interest is high, men will sometimes seek an investment in Exchequer bills, because they are doubtful how the future may turn out, and they know that they can thus command their capital whenever they may require it. I say, Sir, without going into the question whether 70s. is a premium too high for Exchequer bills to range at or not, which may be a question for controversy, I do say that a Chancellor of the Exchequer who commences a reduction of the interest on the unfunded debt at a time when there has been a fall of 15s. in the premium in the course of six weeks may be a most able—may ultimately become a most successful—but is, in my opinion, a most daring, Chancellor of the Exchequer. Well, Sir, the right hon. Gentleman was indignant, the other night, after his financial statement, because I made this passing observation—that I thought there were symptoms, at the time when he commenced reducing the interest on the unfunded debt, which would have made a cautious man pause. I think I have shown the House that there were such symptoms; and I think I have shown that the statement which I made as to the fall of the three per cent Consols was not that ignorant and unauthorised statement which the Chancellor of the Exchequer wished to have it understood I was endeavouring to palm upon the House, and which his immediate supporters so readily but so rashly proclaimed it. I think if, as I have shown the rate of interest was raised in the Bank parlour twice in the same month, that was rather an important, a repeated symptom, which ought not to have been disregarded; and if the premium upon Exchequer bills had rapidly fallen, that was another symptom and another sign which ought not to have been overlooked. But, Sir, after all, we come to graver circumstances, and to other causes than these, which ought to have made a prudent man hesitate before embarking in that singular campaign with which the Chancellor of the Exchequer opened his career as a Minister of Finance, and to which I have not yet alluded. What was it that made Consols fall? What was it that made the premium upon Exchequer bills decline? What was it that induced the cautious but alarmed Directors of the Bank to meet twice in one month, after the rate of interest had been fixed and calm for nearly a year, and to raise the rate of discount? That is the question. Why, Sir, it was the gravest of all symptoms. It was the symptom which ought always to occupy the attention of a Minister of Finance, and which should not be neglected by any man in this country at all interested in the industry of its people and the state of its credit. It was the state of the bullion in the Bank—it was the rapid, sudden, and considerable efflux of the precious metals, which produced all these symptoms—superficial symptoms, I admit, but still symptoms which ought not to have been neglected by any one filling the high position of Chancellor of the Exchequer, and acquainted with the real state of things as regarded the bullion in the Bank. Remember, I am speaking of this because it is a subject upon which the right hon. Gentleman challenged my propriety for stating that there were circumstances at the commencement of the year 1853 which ought to have made him pause in the course which he was taking of reducing the interest upon the unfunded debt. Here, then, is a return which shows that on the 3rd of December, 1852, the stock of bullion in the Bank was 22,206,000l. Now, bear in mind those numbers when I ask what it was upon the 4th of February, a few days before the Minister of Finance made that startling announcement to the commercial and manufacturing world, that he was going to reduce the interest on the unfunded debt. I will not bring in many figures, but I will repeat these, because the fact is one which ought to be firmly fixed in everybody's recollection. On the 3rd of December, 1852, the stock of bullion in the Bank was 22,206,000l.; on the 4th of February, 1853, it had fallen to 19,000,000l. There had been in that short but memorable period, an efflux of the precious metals to an extent exceeding 3,000,000l. Well, Sir, should that have made a Chancellor of the Exchequer hesitate before he commenced a series of operations which, beginning with reducing, mind you, the interest on the unfunded debt, was to terminate in a reduction of the interest on the whole funded debt of the country? I ask the House of Commons—I ask Gentlemen on both sides of the House—having been taunted, and more than taunted, because I ventured to say that there were symptoms at the time which I thought should have made the Chancellor of the Exchequer hesitate before he reduced the interest on the unfunded debt—I ask the House of Commons now, after the statement I have now made from these authentic documents, whether they think that I was justified in the opinion I then expressed—whether, if I am to blame at all, they do not rather blame me for not having expressed myself in stronger language—whether they think, for that is the real point, the Chancellor of the Exchequer ought to have chosen such a time for tampering with the interest on the unfunded debt of the country—a time when Consols had fallen to the extent of 1¾ per cent—when there was a diminution of the bullion in the Bank to the amount of more than 3,000,000l.—when there was a fall of 15s. in the premium upon Exchequer bills, and when the rate of discount at the Bank of England had been twice elevated within an interval of less than three weeks? What rhetoric, what sophistry, can overcome the force of facts like these? Sir, having alluded to the policy or the impolicy of the course pursued by the right hon. Gentleman in reducing the interest on the unfunded debt, I adverted—naturally, I think, in discussing the policy of the right hon. Gentleman, but almost incidentally—I adverted to the loss which had been occasioned by this hasty, precipitate, and unfortunate enterprise in which the right hon. Gentleman had embarked. Was there any harm in that? The right hon. Gentleman last year brought forward a great Budget. One of the items in that Budget was the amount to be saved by this reduction of the interest on the unfunded debt. He gave as an estimate of his savings—[The CHANCELLOR of the EXCHEQUER made an observation which was inaudible.] I do not much mind being interrupted; it enables one to take breath, and sometimes to collect one's thoughts; but I think that the right hon. Gentleman, who, though he is sometimes an unfortunate financier, is a most accomplished orator, and never at a loss for a phrase or a repartee, might—though I do not complain—spare his observations for his reply. I was under the impression that the right hon. Gentleman told us that he anticipated a saving from reducing the interest on the unfunded debt of 65,000l. That is upon my memory, and I think I recollect it accurately. But I happened, as was the most natural thing in the world, the accounts being upon the table, and the returns having been moved for by myself—I referred to the papers themselves, and I said that the anticipated profit of 65,000l. had really become a loss of 36,000l., and that this made a difference of 100,000l. upon the general financial statement of 1853. Well, this led to an immense controversy. The right hon. Gentleman said it was no such thing; and with an amenity which the House will remember, he took my own return and threw it over the table to me and said in a very graceful manner, "You cannot correct your own figures; here is a proof that you know nothing at all about it." Well, Sir, I naturally yielded to the Chancellor of the Exchequer when he said I did not know my own figures, I am not now about to weary the House with figures, for I dare say I shall be able to make the matter tolerably clear without it. I take the financial statement, No. 66, which is one of the numerous returns which I have been obliged to trouble the Government for this year. In page 2 of that statement—I have no doubt hon. Gentlemen have the paper, and those who have not will probably take the statement as authentic, particularly as I was not so very inaccurate about the price of Consols—in page 2 of that statement there are columns showing what has been the gain and what has been the loss upon the operations of the Government in Exchequer bills, the loss appearing, of course, under the head of "increase" (of interest), and the gain under the head of "reduction." Under the head of increase there are only two items—one of 67,524l. 5s. 10d., and another of 14,955l. 15s.—making together rather less than 82,500l.; on the side of reduction there are a great many items, making up in the whole rather more than 85,000l.; and then if you took these two columns merely, and looked at the figures in them, you would say there had been a gain of 3,000l. That was the answer of the right hon. Gentleman. But I asked the right hon. Gentleman to look at the column of profits and to tell me the date of the first item—which I believe is the most important item—which was an item of more than 35,000l. That item was found to be dated the 10th of June, 1853, and, as it happened to represent the profit occasioned by a reduction of the rate of interest which I had the responsibility of making, I thought I might claim the credit of it. The right hon. Gentleman said at first that I had not the smallest right to do so. He, however, did not insist upon that, and in the end, I believe, he did not object to my taking credit for that 35,000l. There are six other items entered as profit on the reduction of interest, but which are really imaginary estimates of the saving effected by the paying off of Exchequer bills which were at the time cancelled under circumstances to which I shall presently advert, and not reissued, and as of course no interest was paid the right hon. Gentleman said he had a right to place that as profit. But how were these Exchequer bills paid off? They were paid off out of the balances in the Exchequer, and these balances in the Exchequer were afterwards obliged to be replaced by deficiency bills, on which the right hon. Gentleman paid interest; he cannot take credit, therefore, for the saving of interest on Exchequer bills, unless he tells us how much interest he has paid on deficiency bills—and as it was probably not less than the interest on Exchequer bills, I put one against the other. Therefore, leaving out these estimated savings and the item of 35,000l. to which I have already referred, instead of a gain of 65,000l., there is, in fact, a loss of something more than 36,000l. I do not mean to say that when we are doubling the income tax these are very considerable items; but in matters of finance it is just as well to be exact, No doubt, with a Minister of Finance of splendid ability, it may be a matter of no consequence whether you have a balance in the Exchequer or not. With his exuberant resources, he will always be able to meet whatever emergency may arise; but if his genius can find out no other resource than to double a tax which is already felt to be most onerous, there is a gloomy and a grinding future for this country. But, Sir, I have been contradicted on another point. The right hon. Gentleman having contradicted me upon the point, I am obliged to trouble the House with an appeal to a book to which I very seldom apply except in my own library. I am unwilling to weary the House with quotations; it is the right hon. Gentleman, who, notwithstanding his lively temperament, occasionally takes refuge in this book to convict his opponents upon points of no importance, who now forces me to refer to Hansard. The right hon. Gentleman said that he made no estimate of gain upon Exchequer bills; he said that I was unauthorised to make a statement to that effect. But in the corrected report of the right hon. Gentleman's celebrated speech, he says:— I am not at present in a condition to lay the estimate on the table, or to state exactly what the amount will be; but I venture to anticipate that, at any rate for the first year, we may be able to effect a saving on it of not less than 75,000l. There will also be a saving on the charge for Exchequer bills, owing to the diminution of interest, amounting to about 65,000l. Now, that is exactly the sum I mentioned. I do not say this subject is vast. It is not so important as the first subject which I treated of—whether it was wise and prudent in the right hon. Gentleman to commence a great experiment upon the credit of the country, under the circumstances which existed in the year 1853. But, Sir, though it is not so important, the House will recollect that these are circumstances, that these are statements, the accuracy of which has been challenged. The House will recollect that the right hon. Gentleman has absolutely placed the savings in the reduction of interest upon the unfunded debt effected by the Government, of which I was a Member, to his own credit, and that because I reminded him that he was not entitled to do so he treated me with scarcely Parliamentary courtesy. It is, therefore, necessary that I should put the case clearly before the House. On the Wednesday following his recent financial statement, when the right hon. Gentleman came down to the House, after the conversation in Committee of Ways and Means, he said there had been some misapprehension or confusion upon the subject, and that it was important the matter should be set right. Although I listened to his statement, I could not reply to it; but the right hon. Gentleman, with a courtesy one does not always experience, and at which, therefore, one is the more surprised, gave me, not a return upon the table, but gave me personally in the House, a statement which he said would render the matter completely clear. I will read to the House the right hon. Gentleman's own statement, and a very significant statement it is, not at all from the trifling sum which might be saved or lost by an operation which might be judicious or injudicious upon the interest of the unfunded debt, but because it really touches a larger and a more important point, at which I am now arriving. The right hon. Gentleman's statement is a very simple one, which anybody who runs may read, and it will completely explain the mysterious documents supplied by the Treasury by which hon. Gentlemen might be misled. Here is a return which, though I might have moved for it, I value because it is the manuscript of the right hon. Gentleman, and he says it settles the whole business. This return involves a most important matter, which every hon. Gentleman, whatever may be his politics, ought well to consider. It is a return of the Exchequer bills paid off in March and June of the years 1853 and 1854. Now, those of 1852 were paid off in 1853, those of 1853 in 1854. Here is the principal and interest of the Exchequer bills issued in March and June, 1852, and paid off in 1853, and for which I am responsible. The amount of them is 17,742,000l.; the interest paid upon them was 367,000l. Then come the bills issued in March and June, 1853, and paid off in 1854. The interest on them was but 347,000l.; and the right hon. Gentleman the Chancellor of the Exchequer says directly, There is your answer; there is a saving of 20,000l. He says, "I don't go into returns moved for by a political opponent, and therefore drawn up to suit his convenience. I take a large and comprehensive view. I will have the transactions of the whole two years placed before the House, and here they are. The Exchequer bills in your year must be compared with those of mine; the amount of interest must be compared. The Exchequer bills in your year of office cost 367,000l.; in the last year they cost 347,000l. There is a saving of 20,000l., and that is your answer." But now let us come to an analysis. There is not the slightest doubt that the interest of Exchequer bills in the one year and in the other was not the same. I invite the attention of the hon. Member for Lambeth (Mr. Williams) to this subject. I know it is one that daily and nightly engages his attention, and that no one rejoices more in details, and especially in details of Exchequer bills, than the hon. Member. Sir, it is perfectly true that there exists a difference. It is perfectly true that the interest of Exchequer bills in 1852–3 was 367,000l., and that the interest last year was 347,000l. There was certainly 20,000l. less interest paid last year than in the preceding year; but what was the amount of Exchequer bills issued last year? The amount of Exchequer bills issued in the year 1852–3 was 17,700,000l.; in 1853–4 it was 16,000,000l. It is very true that you paid 20,000l. more for your interest upon the 17,700,000l. than you did upon your 16,000,000l., but what interest were you paying all the time upon the 1,700,000l. of Exchequer bills which are not accounted for in the second year? How comes it that in the second year the Exchequer bills have sunk down to 16,000,000l.—that between the two years there is a difference of 1,700,000l. in the amount? I will tell you. Two-thirds of that 1,700,000l. were paid off from the Consolidated Fund, and the amount so paid was supplied by deficiency bills paying interest, and between 400,000l. and 500,000l. was paid off in Exchequer bonds. Do you think Exchequer bonds are not paying interest? Why, then, is a return just laid upon the table of the House of Lords, which contains, among other things, a statement of the amount of interest paid upon Exchequer bonds—a subject which, I believe, is peculiarly interesting to Lord Monteagle. The interest paid upon Exchequer bonds, if I may trust my memory, is between 11,000l. and 12,000l. per annum. You must, then, deduct from the amount saved the interest of the Exchequer bonds, and the amount paid upon the remaining portion of the 1,700,000l. supplied by deficiency bills, and what will become of the saving of 20,000l. in the comparison of the two years? I should like to know whether the Chancellor of the Exchequer would not get off well if the loss upon his Exchequer bills were as low as I have placed it at, namely, 36.000l.? When I called the attention of the House to the state of the balances in the Exchequer, I adverted to the two causes which, I believed, had brought about a condition of affairs so dangerous to this country. One of them is the dealing with the interest of the unfunded debt by the Chancellor of the Exchequer; the other is his dealing with the interest of the funded debt. I now wish very briefly to touch upon the second of these points. I refer to this subject because the statements I have made and the views I have expressed have been controverted as far as fact is concerned, and utterly rejected as far as opinion is concerned. We must remember that there was a cause for these menacing circumstances, which, in my opinion, ought to have induced the Chancellor of the Exchequer not to reduce the interest upon the unfunded debt. It was not a secret—at least, it is not a secret now, for it is avowed. A year or a year and a half ago a man might have been supposed to be professing some heterodox and unpopular opinion if he had said that over-trading was the cause; but it is perfectly well known now—it is recognised and admitted by every person of authority on such subjects—it has been admitted and stated to-night by a Gentleman who was recently the Governor of the Bank of England, that there was extensive over-trading, that over-trading occasioned the efflux of bullion, and that the efflux of bullion affected the rate of discount, the price of Consols, and the premium upon Exchequer bills. Now, the Chancellor of the Exchequer disregarded the possible circumstance of over-trading. That cause was defied. The Chancellor of the Exchequer probably did not believe that it existed. Confident in the resources of the country, and in the success of the commercial changes with which he was intimately connected, he defied or disbelieved the existence of this over-trading, which occasioned the disagreeable circumstances that commenced the year 1853. Well, had anything happened besides this suspicion or certainty of over-trading, to have made the Chancellor of the Exchequer more prudent when, at a later period, he commenced his much greater speculation—namely, that of dealing with the interest of the funded debt? Over-trading, the effects of over-speculation—of what may be called a surplus investment—had made themselves unmistakeably felt at the commencement of the year 1853. As the year advanced there was another circumstance which made men grave. We heard early in the spring that there was the prospect of a bad harvest. ["Hear!"] Is there any hon. Gentleman in this House who did not hear that? The seed-time had been most unpropitious; the consequences were unusually fatal. In addition, then, to the over-speculation which had already fatally developed itself in its effect upon the efflux of bullion; you had the prospect of a bad harvest. Was that a circumstance that should make a man grave? Was that a contingency that should make a Minister of Finance provident? I grant much to a distinguished free trader. I have often heard the Member for Montrose (Mr. Hume), express his anxiety that he might live long enough to see the day when England should not grow a grain of wheat, and I know there are many others who share his opinion, but I think the Chancellor of the Exchequer would scarcely go so far as that. If, besides a great efflux of bullion occasioned by adverse exchanges, the Chancellor of the Exchequer were told there was a prospect of a bad harvest, the probability is that he would say, "Well, so far as Exchequer bills are concerned, I am in for it, but we know the worst. We have a large balance in the Exchequer, which is a great blessing to a Minister of Finance. But we have more than that—we have the means of raising the interest upon Exchequer bills, and I do not suppose this will be any great stumbling-block to a Minister." The Chancellor of the Exchequer, however, having over-speculation and possible famine in the vista, boldly went to work, and in the spring produced a great measure. I have been long enough in this House to hear of "large and comprehensive measures" very often; and I remember the right hon. Baronet the First Lord of the Admiralty saying that he always suspected large and comprehensive measures. I have lived to see him a Member of an Administration distinguished above all Administrations for its "large and comprehensive measures"—I have lived to see him a Member of an Administration whose Minister of Finance proposed ostentatiously, amid the enthusiasm of the House of Commons and the acclamations of the nation, greatly to reduce the interest of the whole national debt. That was to be the ultimate consequence—the final result—of the elaborate, the ingenious, but the somewhat unintelligible project that was introduced to us on the 18th of April. The Minister of Finance had such confidence in himself and in his resources—a confidence which, despite his mischances, I confess personally I admire—that he determined, notwithstanding the efflux of bullion, notwithstanding the fall in the prices of public securities, notwithstanding the menace, or more than menace, of a bad harvest, which might have aggravated in its consequences all the symptoms which had previously warned him—he determined to embark in this enormous, this portentous affair. Was there nothing else to warn the Chancellor of the Exchequer besides the state of the Exchanges, besides the proceedings of the Bank Directors, and besides the visages of the farmers of England, at the moment when he was about to embark in an undertaking of such immensity and of such possible danger? Why, Sir, I cannot fancy that the Chancellor of the Exchequer, who is unrivalled for attention to the affairs of his office—a public man who does his duty to his country, and who devotes himself with extreme ardour and assiduity to the labours of his department—I cannot fancy that the Chancellor of the Exchequer at that time omitted to perform any one of those duties the omission of which might be unpardonable. As a Minister of the Crown, and as a Member of the Cabinet, it was his duty to become acquainted with every despatch upon foreign affairs which arrives in this country. I make every excuse for the Chancellor of the Exchequer in dealing with affairs which do not exactly come under his department. I make every admission in his favour, and treat him with a fairness with which he has never treated me. I have, myself, rather a weakness for foreign politics. I love to read a despatch, and when I was in office I often read despatches which did not concern my own department. But I can quite exonerate the Chancellor of the Exchequer from the tedious and unprofitable task of reading or of "pottering" over the blue books which were placed on our table at the commencement of the Session by the gracious command of Her Majesty, and which one of her chief Ministers treated with what I, in my inexperience, thought unpardonable derision, but which I now find was most deserved mockery. I can easily conceive that the Chancellor of the Exchequer, with his great ideas and his great position, full of genius and energy, and determined to pay off the national debt, was quite resolved not to waste his anxious hours in reading those two volumes which have recently been placed on our table in order to delude public opinion. Therefore, making that liberal allowance for the Chancellor of the Exchequer, I say that the Chancellor of the Exchequer was fully justified in not "pottering" over these blue books. But were there no other documents the perusal of which might have become most salutary to the Chancellor of the Exchequer which arrived at that time? I want to know from any Gentlemen here, who may be future Chancellors of the Exchequer, what would have been their feelings if they had read the despatches from the Ambassador of the Queen at St. Petersburg, marked "secret and confidential," and suggesting a partition of the Turkish empire? It would have told them this at once—that if, upon reflection, this Government did not agree with it, the ingenious proposer was resolved to have his way in one mode or the other, and that most certainly he would have recourse to force. I want to know whether the right hon. Gentleman opposite read those despatches. To believe, however, that the right hon. Gentleman did not read those despatches is to believe that he is unworthy of the confidence of his Royal Mistress. The right hon. Gentleman must have read them, for even the state of bullion at the Bank would not prevent him from devoting some moments of the day to a perusal of these startling measures. To believe that he was ignorant of the contents of these State papers is to believe the right hon. Gentleman utterly unworthy of his position; but, to believe that, having read them, with the certainty that there had been over-trading, with more than the imminence of a bad harvest, and with grimvisaged war before him in the vista of coming years, he could come forward with the projects of last year to deal with the interest of the unfunded debt of the country, is the most marvellous conception that ever yet occurred to the adventurous spirit of a Minister of Finance. Why, Sir, I say the right hon. Gentleman owes a grievous responsibility to the House upon this subject. We must have explanations upon it from the right hon. Gentleman, for it is not now in the position in which it was last year. The right hon. Gentleman cannot come forward now with the reasons and excuses of last year. Let him come forward and tell us why he defied over-speculation, which the Directors of the Bank had recognised, and let him come forward and tell us why he neglected the imminence of a bad harvest. He may come forward and give us his version of these circumstances, but he cannot come forward and tell us that the possible, or even the probable contingency of war was not an element that had occurred to him. I ask the House of Commons, then, deciding upon the character which the right hon. Gentleman arrogates to himself, which he will not allow me to make an idle comment upon even in a conversation and even in Committee—I ask the House and the country whether a Minister of Finance, with such evidences of over-speculation in the country as were proved by the circumstances, of January to which I have referred—whether with the evidence which as Minister of Finance he ought to have possessed as to the probable state of the harvest, and, above all, whether in possession of that dark secret which has now been made clear and open to us all, was he justified in the course he took? Was he a prudent or a provident man? I want to know whether you think that he was a judicious man, and that it was a prudent course for the right hon. Gentleman to take when in the possession of that knowledge which no one but himself and his Colleagues could possess—which no critic in the House of Commons could even have suspected? I want to know if, in the possession of the facts I have referred to, it is your opinion that the right hon. Gentleman ought to have brought forward those vast schemes which have involved us, in their partial and mitigated failure, in great perplexities and embarrassment, but which scheme, as Lord Monteagle said in another place—fortunately, was not successful—for had it succeeded, it would have placed the affairs of this country in such a state as the imagination of no man can picture, and have involved us in such responsibilities and engagements as would have thrown us back ten years of progress? That is a state of affairs which the House can now judge of with some advantage. Now, Sir, what was the scheme of the Chancellor of the Exchequer? I am not going to say a single word on the great scheme of the right hon. Gentleman. The great scheme of the right hon. Gentleman has been touched upon often, and I make only one remark upon it—that I think that if there had not been over-speculation, if there had not been famine, and if there had not been war, that larger scheme of conversion of the right hon. Gentleman must have failed. There was a radical defect in it which secured its failure, and which my hon. and learned Friend the Member for Suffolk (Sir F. Kelly) has placed clearly before the House to-night and upon previous occasions. It is not doubted, I believe, by any person that that scheme must have failed irrespective of all circumstances which might affect any common financial scheme. If you had had an influx of bullion and a most abundant harvest—if you had had, instead of the war in which you are now engaged, that perpetual peace which the Members for the West Riding and for Manchester prophesied, I say that great scheme of conversion must have failed, because it was founded upon fallacious calculations. There was, however, a portion of that scheme of a much more rigid, absolute, and common-place character, which did depend on circumstances which affect credit. It was an engagement to pay off, speaking generally, a portion of the public debt to the amount of 10,000,000l. That was an undertaking which depended upon the weather, upon the harvest, upon the state of trade, upon the state of the bullion, upon the temper of Emperors and the resources of foreign nations. Now, Sir, what was the engagement which the right hon. Gentleman undertook under these circumstances? The right hon. Gentleman undertook—with perfect evidence before him that there was every cause in the distance which most disturbs the money market—he undertook to pay off at par 10,000,000l. of the national debt, having no resources whatever for that purpose. I want to know how has that ended? We have had an estimate to-night of the loss. The hon. and learned Member for Suffolk (Sir F. Kelly) has told us the loss is 720,000l. It is, perhaps, impossible accurately to tell what has been the loss on this forced attempt to convert 10,000,000l. of South Sea Stock, because the transaction is not yet finished. There is a certain degree of interest saved, of which the right hon. Gentleman will no doubt inform us—there is the interest on Exchequer bills, which you have instead of fixed balances. Put one against the other, and it is not at all impossible the loss at this moment is 700,000l. or 800,000l. I do myself believe that it cannot be much less than that. But I will not dwell on the amount of loss. What I think is of greater consequence, of vital consequence, of pressing importance, which cannot be too much urged on the attention of the House, because night after night it will recur, and, unless you meet it boldly, depend upon it you will be landed in financial disaster, is the effect of thus tampering with the interest of the funded and unfunded debt in the present state of your balances in the Exchequer. Now, Sir, I have adverted before to the state of these balances as far as they are concerned, and therefore I need not touch upon them now. The right hon. Gentleman delivered the other night some extraordinary opinions on the subject. I entirely differ from the right hon. Gentleman. The right hon. Gentleman the Member for Portsmouth (Sir F. Baring) has made a protest in favour of balances in the Exchequer to-night; we have heard, also, the opinion of a Gentleman who has been Governor of the Bank to the same effect; and I must say, in passing, that I was quite surprised that a Gentleman like the hon. Member for Lambeth should get up in his place, after the speech of the hon. Member for Peterborough (Mr. Thomson Hankey), and say he takes a Bank view of the questions. The old-fashioned Bank view of these questions was very well twenty years ago, before the Bank Charter Act was passed, and at that distant date when the Member for Lambeth commenced his financial studies, and formed his financial mind; but I can tell him this: that nowadays all that the Directors of the Bank of England want is, not to make a profit out of the Minister, but to have a Minister who will leave them alone. That is all that they require. Instead of taking a Bank view of questions, instead of viewing questions as to the interest of the Bank, instead of desiring to make a profit out of the Government, since the last charter, all the Directors wish is, that they should have a Minister who would leave them alone to carry on their business according to those commercial principles which the late Sir Robert Peel declared are the only principles which ought to govern the Bank. Well, I say we have had protests by the right hon. Member for Portsmouth; we have had indignant expressions of feeling from the Member for Peterborough on the subject of balances in the public treasury, and I cannot conceive that it is necessary to impress it more strongly on any one—unless indeed it be a Finance Minister without balances—and then I know that a man, as well as a fox who has lost his tail, has the privilege of the fable. But, I take it, the affairs of a nation are the same as the affairs of a private individual; and I will ask any Gentleman in this House, suppose he were about to embark in an expensive lawsuit, would or would he not prefer to have a balance at his banker's? We are about to embark in a very expensive struggle, and I want to know whether you think it for our advantage or not to have a balance at our banker's? Sir, we have heard a great deal in speeches of late about new, and philosophical, and enlightened principles of finance—that, being engaged in war, we are to raise the whole of the supplies for the expenses of the year by taxation within the year; and, Sir, that, no doubt, is a very fine sentiment, and if war does not last more than six months, I dare say we shall be able to maintain it. But, Sir, I am not so clear, when we come to practice, that we shall find it more than a sentiment. I am not, however, going to touch upon that question. If the right hon. Gentleman retains the conviction that, with his own resources and the resources of the country, such a result can be obtained, let it be so. What I want to impress upon the House and upon the country is a much more serious affair. It may be a very just—nay, I allow that it is just—it is possible it may be a practical thing—that you can raise in this country in the year all the supplies that are necessary to carry on the war. Well, Sir, it is a grand principle that this generation should bear the cost of its own achievements and not throw the burden of them on posterity. All that I can understand. But what is the state and the practice of our modern finances under the management of the right hon. Gentleman? The right hon. Gentleman is not only going to carry on the war—is not only going to defray the expenses of the year with the taxes of the year—he is not only going to guard posterity from the burden, but he is absolutely at the same time pursuing a system that is to defray the burden that was left to us by our predecessors. No two courses can be more contrary to each other than these two which the right hon. Gentleman lays down as the foundation of his system of finance, that we must scrupulously refrain from burdening posterity, and that at the same time we must be called on to make sacrifices to defray the debts which have been left to us by our predecessors. Why, Sir, no country can stand it; no country can at the same time reduce its old encumbrances and also bear the expense of a war entirely from its own resources. To me it is very doubtful—perhaps it is not a party opinion—in fact, it must be very doubtful to 24 Gentlemen out of every 25 in this House, whether, in a continued struggle, we can raise in one year the supplies necessary for the expenses of that year. That, I say, is very doubtful. It may be possible that, the amount of patriotism may be so great, the resources of the country so exuberant, that you can sustain the expenses of a protracted war out of the taxation of the year. I do not believe it, but certainly it is possible; but there is no man who can seriously tell us that you can carry on a war and raise supplies for its expense at the same time that you are paying off 10,000,000l. of old debt. Yet that is the position which the Chancellor of the Exchequer has placed us in. The right hon. Gentleman is working two systems exactly contrary to each other. He is coming forward animated by what is a sound principle for this country—that we should, if we embark in a war, not entail the cost of that war upon posterity. But at the same time, while he is asking us to make these unheard-of sacrifices—while he is appealing to us to accomplish this unprecedented act of patriotism, of virtue, of philanthropy—he is absolutely calling upon us to diminish the debt which our predecessors have left us. Turn it and twist it as you like, it is the most monstrous, the most impossible system of finance that ever was proposed. It has been an immense effort for Ministers to reduce the debt at all. Experience shows that whenever there has been a surplus, there have been a thou- sand applicants for it. It has been ever the popular opinion that you should diminish taxation and not debt. You have been obliged to pass a special law, which, whenever you reduce taxation, ensures a certain reduction of the debt every year. But now the Chancellor of the Exchequer comes forward and says:—"I will combine with my new system of finance the features of both systems. I will absolutely not burden posterity, but I will also defray the charges which our predecessors have left us." Now, in what can this system end? It will end in one of the largest loans that a Minister of Finance ever proposed in this House. The right hon. Gentleman taunted me the other night with wanting him to propose a loan. If the right hon. Gentleman had raised a loan in January, he could have raised it with much greater advantage than he would be able to raise it now. If he attempts to raise it now, he will raise it at a greater advantage than he will be able to do in July. He may put the question off for six months more—and I do not think he can postpone it longer—and he will then raise it at a still greater disadvantage. It is evident that the right hon. Gentleman has been, in a time of peace and prosperity, or of fancied peace and prosperity, tampering with the resources of the country; he must incur the cost of his conduct, and he must put himself in a sound position. You may rely upon it that, as certainly as I am now speaking here, he will be forced to raise a loan. There is no taxation—and he has tried it pretty strongly—that can extricate him from the position in which he has placed himself. Well, is it a wise thing that a financier should so manage, when he is left with a balance of 9,000,000l. in the Exchequer, that he should at the first moment of exigency be forced to raise a loan? The right hon. Gentleman said, the other night, that I held him responsible for raising the rate of interest which was occasioned by an acknowledged war and by a prospective bad harvest. That I deny. I do not blame the right hon. Gentleman for raising the rate of Exchequer bills. That was inevitable. But, I certainly do say, that he ought to have foreseen the circumstances which would have prevented him from lowering the rate. The right hon. Gentleman urges one point which is a great fallacy. It may be found in the Book of Fallacies, by Bentham; and as the Members of the Government are disciples of Bentham and of Grote, they will be able to correct me if I am in error. The right hon. Gentleman says that it is very possible that he has made a mistake, but that I did the same, and, that, therefore, he is not to be blamed for it—he vindicates himself by accusing the person who charges him with an erroneous opinion. The right hon. Gentleman says, "It is all very well your charging me with making a mistake; but in December you yourself, occupying a responsible position, gave it as your opinion that the rate of interest which had not been raised at the Bank, would, on the whole, be maintained." The right hon. Gentleman thinks that is his vindication. Now, considering that the right hon. Gentleman is not a friend or follower of mine, I cannot see how any opinion of mine can be a vindication of his conduct. But a greater fallacy than any fallacy mentioned by Bentham is the right hon. Gentleman's mistaking the difference between conduct and opinion. It is very true that in December I gave it as my opinion that there were causes which had occasioned, and which would, upon the whole, maintain, a low rate of interest. Speaking generally—as you necessarily must do on such a subject—I cannot say that I see any great ground for changing that opinion. That opinion, although I am responsible for it in the House, and although I did not give it until after long thought, represented not merely my own view, but that of men who are second to none in this country for experience in monetary affairs. But it was an opinion, just the same as the opinion expressed by the right hon. Gentleman in April last to the Birmingham clerk, about low prices. The right hon. Gentleman then entertained the opinion that low prices were permanent. I am more charitable to the right hon. Gentleman than he is to me. I believe there is some ground for saying that, generally speaking, low prices will be maintained. But, whether the right hon. Gentleman was right in his view as to low prices, or I in my view of a low rate of interest, these were two opinions—they were mere opinions, right or wrong; and a public man who has to give an opinion every night for six months will perhaps often be in error. But I do not charge the right hon. Gentleman with having formed an erroneous opinion. What I say of the right hon. Gentleman is this—that his conduct has been injudicious—that, having the best information at his command— having before him all the circumstances which could have influenced the conduct of a prudent man—I care not what opinion he formed—he went and conducted himself improvidently, and in a manner detrimental to the public interests. I do not care for his opinion. I have no doubt that many of his opinions are worthy of attention, coming as they do from a man of his abilities; but, after all, opinion is opinion, and conduct is a fact, and his conduct is what I blame, because it was conduct in defiance of experience, and conduct, therefore, which ought not to be approved of by the House of Commons.

Sir, I have ventured to make these observations in vindication of the statement which I previously offered to the House, and which has been challenged and controverted. I know there is a retort to which I am open. I have heard it already during the Session, and, for aught I know, the right hon. Gentleman may jump up and use it again. He may, perhaps, get up and say, "Well, if that is your opinion, why do you not come forward boldly and propose a vote of want of confidence in Her Majesty's Ministers?" ["Hear, hear!"] The hon. Member who cries "hear" is well practised in cheering, and his voice is no doubt gratefully listened to. I remember that the noble Lord opposite called the attention of the House the other night to the retort made by the right hon. Baronet the Member for Morpeth (Sir George Grey), in answer to the remarks of my right hon. Friend near me, the Member for Droitwich (Sir J. Pakington). The noble Lord called attention to that retort as a proof of remarkable acuteness and profundity of thought on the part of the right hon. Gentleman. I always listen to anything which falls from the right hon. Member for Morpeth with attention; but I confess I did not find that his retort contained that profundity of thought or originality of expression with justified the solemn tones of the noble Lord, because I believe the same retort has already been made six times during the present Session, and probably not less than six hundred times in this and other Parliaments. But, Sir, there are good reasons why we should offer our free criticisms on the conduct of the Ministry, or a branch of the Ministry, without being answered as we were by the noble Lord and the right hon. Baronet the First Lord of the Admiralty (Sir J. Graham). They said, "Why do you not come forward and propose a vote of no confidence?" There is very good reason why we do not. There is no necessity for proposing a vote of no confidence in the present Administration. It is a useless ceremony. It is quite unnecessary, in my mind, to waste the time of the House of Commons, and to have protracted debates on this question. Here is the leader of the House, here is the experienced Minister the First Lord of the Admiralty, here are their valuable and valiant allies, at present unattached, but who still have all the authority of ex-Ministers—here are all these men, who have repeatedly and systematically during this Session endeavoured to stop all debate and discussion by saying, "If you don't agree with our policy and criticise our conduct, we call upon you to propose a vote of no confidence." Now, I say this is preposterous, unconstitutional, and inconsistent with the simultaneous declarations of the same Ministers, that it is of the greatest importance at the present moment to show foreign nations there is unanimity in Parliament. But I do not rest the case on that plea; I say it is unnecessary for me to propose in this House any vote of want of confidence in the present Government, for this simple reason, that it is apparent, notorious, and proved to all that they have no confidence in each other. Let us look a little to the conduct of these Ministers. I shall treat them with fairness. I won't have recourse to little tests, but I will try them by great tests. I try them, not upon petty points brought forward for the purposes of a party struggle, but upon the broad grounds which, as Dr. Johnson said, a jury of people picked out from the passers-by at Charing Cross would adopt as tests whether the present Government have confidence in themselves. I will take the greatest subject first. I will take this question of peace or war. What confidence—what possible confidence—can we have in this Cabinet, who have involved us in the extraordinary position in which the country now finds itself? Is there a man among them who can tell us what we are going to war about? Is there a man among them who can tell us what, at this moment, is the object of their counsels? I will not quote a single person except themselves. Why, Sir, there is the noble Lord the Secretary of State for the Home Department, not now present—he has delivered his opinion upon this great subject of Turkish politics. He told us some few months ago, at the end of last Session (and really it is almost the only speech we have had with any frankness or spirit upon the subject)—he told us why we were going to war, and what we were going to war for. He said, "We are going to war because we believe the independence and integrity of Turkey are assailed, and because we believe the interests of England are involved in maintaining the independence and integrity of Turkey. We mean by independence and integrity," said the noble Lord, "we mean facts. It is our opinion that there is as much vitality in Turkey as there is in other countries that are our allies, competitors, or rivals." The noble Lord said more than that. He said, "Not only do I believe Turkey independent, but I believe it absolutely progressive. Give it a fair trial, and its maintenance is easy; and that maintenance is most important for the interests of England, the cause of freedom, and the civilisation of the world." He went on to speak of the high impulses which should induce us to support at this moment the independence and integrity of Turkey. And loud cheers followed the speech of the noble Lord. Well, Sir, what happened a short time after that? There was a right hon. Gentleman whose conduct I have had occasion to criticise this evening, and whom I little thought when I first rose I should have to notice with regard to another subject—he went about the country, and paid a visit to a great commercial community, the city of Manchester, at a time when there was great depression in the country owing to the state of the affairs of Turkey, and when men of resolute minds began to think that that was occurring which might prove fatal to the supremacy of this country, and be most prejudicial to the cause of justice, of truth, and of freedom. What did the right hon. Gentleman say on that occasion? Did he agree with the Secretary of State? Not at all. He said, "Things look very bad, but what can you expect? You must prepare yourselves for the worst. The independence and integrity of Turkey, which people talk about, are not facts—they are phantasies and phantoms. You must not confound the independence and integrity of Turkey with the independence and integrity of other European States." In fact, the right hon. Gentleman quibbled away completely the independence and integrity of Turkey, and, in short, seemed to be paving the way for that scheme of partition we have recently heard of. This was the course of proceeding adopted by the Minister of Finance who is now going to double the income tax in order to support the independence and integrity of Turkey. I am challenged to propose a vote of no confidence in the Government. Why, Sir, the noble Secretary of State in the other House of Parliament told us the other night what we were going to fight for, and I was grateful to a Member of Her Majesty's Government for being frank. He said, "We are going to fight for the rights of the Christian subjects of the Porte. That is our cause. We are resolved, and we shall stipulate, that there shall be equality of rights and privileges between the Christian subjects and all other subjects of the Porte." I believe loud cheers followed that speech also. What happened the next day? The noble Lord the Secretary of State in this House (Lord Palmerston), who is supposed to have some knowledge of our foreign policy, said in the most distinct way, and in tones that he knew would re-echo through all Europe, that he did not imagine for a moment that any man would entertain the idea of our obtaining equal privileges for the Christian subjects of the Sultan—that to insist upon such a thing would be acting as badly as the Emperor of Russia himself—and that if we obtained an equality of privileges between the different subjects of the Sultan, we should put an end to the Turkish empire. And yet, Sir, while those Gentlemen have no confidence in their mutual opinions, I am to be taunted and told it is my duty to propose that the House of Commons shall so stultify itself that we are absolutely to vote that we have no confidence in them! But is that all? The noble Lord the leader of this House likewise described the war in which we are going to embark. He described the war as a holy war, as a just war, a war for justice, for truth, and for public freedom—and in a manner which I admired, in a most solemn and fitting manner, invoked the name of the Most High upon that war. What happened the next night in another place? Why, Sir, the leader of the other House of Parliament told us, that he thought that war was not yet inevitable, and that in his opinion that war was accursed. Sir, if the war in which we are about to engage be a war of justice and truth, and if it be undertaken in support of the liberties of Europe—if it be a war undertaken to check the progress of a colossal despotism, and to advance the march of civilisation, it is not an accursed war. But if the war be not undertaken for these objects, then the noble Lord was not justified in counselling his Sovereign to embark in it. Such is your position upon the Turkish question—upon a question which we are told confidentially alone keeps you together as a Ministry. There are similar differences among these Gentlemen upon other subjects; but we are told when a nation is at war, its Government should not be disturbed! I would like to know how the war is to be carried on with efficiency and success by men who have not settled what the object of the war is. The war has been brought about by two opposite opinions in the Cabinet. Those conflicting opinions have led to all the vacillation, all the perplexity, all the fitfulness, all the timidity, and all the occasional violence, to which this question has given rise; and I must say, that if the noble Lord the leader of this House—I speak my solemn conviction—had remained Prime Minister of this country, or if the noble Lord the Secretary of State for the Home Department, who is not here, had been Minister of this country—or if Lord Derby had continued Minister of this country—nay, if Lord Aberdeen—I wish to state the case fairly—had been Minister of this country, with a sympathising Cabinet, there would have been no war. It is a coalition war. Rival opinions, contrary politics, and discordant systems have produced that vacillation and perplexity, that at last you are going to war with an opponent who does not want to fight, and whom you are unwilling to encounter. What a mess for a great country! And all brought about by such distinguished administrative ability! What, Sir, is a question about the interest on Exchequer bills compared to that? The financial faux pas and little escapades of the Chancellor of the Exchequer would soon have been forgotten, and even forgiven; for, after all, what is the failure of his conversion scheme compared to this duplication of the income tax, and to this terrible prospect of war, brought about by the combination of geniuses opposite me—and brought about absolutely by the amount of their talents and the discordancy of their opinions? And then they say, if we criticise their policy, we are bound immediately to come forward, and propose a vote of no confidence in them. I tell them again I will not propose a vote of no confidence in men who prove to me every hour that they have no confidence in each other.

Sir, I have tried them upon the Eastern question because it is the greatest of all questions—the question of peace or war; but there are others almost equally great, upon which they may be tested. Why do not you proceed with your Reform Bill? The question of Parliamentary reform seems at the first sight the only question which you could put in the same category with the questions of foreign policy. Peace or war—the disposition and distribution of political power—these are the great and august matters with which it becomes statesmen to deal. These are the policies upon the recommendation of which men gain the confidence of nations. It is the sympathy of the nation with the statesmen who have opinions upon those subjects which entitles them to hold their position. When you have enunciated a policy to a great community—when you have told them that you are about to prosecute a war with vigour in the vindication of important principles—when you can tell them that it is to secure peace at home by arrangements which will last—then the nation will rally round such a Minister. When a statesman declares that he has deeply considered the signs of the times, and has studied with the patient analysis which becomes a profound and disciplined mind the condition of the community—when he declares that the existing disposition of power is injurious to the permanent interests of the country, and that he is of opinion that a change should take place, and that classes who are not now enfranchised shall be called into a participation of political power—the man who says these things has a right to rally round him great crowds of his fellow men. But he must not say such things idly—he must not trifle with the public conviction and the public feeling upon such subjects. But when we know that this Cabinet is an incoherent council upon these subjects—when we know that upon such questions as peace or war, and the disposition and distribution of political power, there are not two men among them who have the same opinion, that there are not two men among them who have confidence in each other, I receive the cold taunt and frigid counsel that it becomes me, as the humble leader of a too indulgent party to propose a vote of no confidence in Her Majesty's Ministers, with the indifference which it de- serves. Sir, there are few tests so great as those I have mentioned—there are few so important—and yet there are some subjects that may be fairly classed with them—no man will say that the education of a nation is not a subject which may rank with the highest class of those that occupy the attention of a Minister. Well, Sir, our present statesmen founded their Ministry upon a pledge to bring forward a scheme of national education. Is there any mutual confidence among them upon the subject of national education? Why, Sir, I will take an illustration from only a small portion of that great theme—that which refers to the Universities. What happened the other night? We had the reform of the University of Oxford brought forward by the leader of this House. He turned round to his faithful and consistent supporters, the Dissenters of England. Their eyes were fixed upon him—their mouths were open. They hung upon his accents. Reform followed reform—change coursed after change—and at the end he turned round and said, "The most important and the most necessary of all reforms is, that you, the Dissenters of England, should share the advantages of them. I am faithful to you. My feelings towards you are the same as they were twenty years ago—but then my Colleague the Member for the University will not listen to your claims." Well, then, Sir, I ask, if that is the case, can there be any mutual confidence among the different Members of the Cabinet upon the subject of education? There may be fifty topics upon which we can prove a difference of opinion among Her Majesty's Ministers, but they are, in comparison with the great question of peace or war, the disposition and distribution of political power, and the education of the nation, so small and petty that I cannot condescend to touch them. There is only one other subject equal to those great themes—nay, I may say it is even more important than any of them. That is the Protestant cause. It is a subject which surely greatly interests the people of this country; it is a theme which has excited enthusiasm. What happened a short time ago? The noble Lord the leader of this House took an early opportunity after the formation of the Government of Lord Aberdeen to express his opinions in the House of Commons upon the present temper of the Papacy. The noble Lord is not a man who can be suspected of being a bigot; the noble Lord is not a man who can be accused of a narrow mind, or of being wanting in enlightened views; the noble Lord described what he considered the hostile and pernicious spirit of the Papacy at the present day; and he said of the Roman Catholic Church in this country, devoted to a foreign prince, that he believed that its progress was not favourable to the public liberty of this country. Well, what happened? Why, the noble Lord had hardly breathed these words when it was discovered that they had given offence to three Gentlemen who certainly cannot be described as the most eminent of his followers. What happened the next day? The present Prime Minister of England not only calls upon the noble Lord to explain his expressions, but writes a letter to the world to say—what?—that the opinions of the noble Lord on what I call the Protestant cause are not shared by many of his Colleagues. Yet you taunt me, night after night, because I do not propose a vote of want of confidence in you as a Government, when I show you that upon all these important topics, upon the question of peace or war, upon the question of the disposition and distribution of political power, upon national education, upon the Protestant cause, you are entirely at variance, and have no confidence whatever in each other. No, Sir, I shall not feel it my duty to make any such proposition. I ought to remember that we have a Motion before us on which we must decide. Everything which I have said has been strictly applicable to that Motion. Sir, I have shown you that the condition of your finances is such that I do not understand how the Chancellor of the Exchequer can possibly meet his engagements at the end of the financial year; and yet my hon. Friend the Member for Evesham (Sir H. Willoughby) asks me to increase his embarrassments. I think the proposition of my hon. Friend, viewed by itself, is a sound proposition. I think it an unprecedented thing to make a single levy of a tax at the beginning of the year; but as I look forward with great anxiety to the state of the right hon. Gentleman's finances, I must express great unwillingness to take any step, however slightly, to aggravate it. I trust my hon. Friend will hesitate before he asks the opinion of the House on the subject of his Amendment. ["Hear, hear!"] Do the hon. Gentlemen opposite wish me, then, to propose a vote of no confidence in the state of the finances of the Chancellor of the Exchequer. Well, then, I will, upon fair conditions, such as I am sure every Gentleman will approve of, accept the challenge; and I pledge myself to propose in this House a vote of want of confidence in her Majesty's present Advisers, the moment they give the country satisfactory proof that they have any confidence in themselves.

THE CHANCELLOR OF THE EXCHEQUER

Mr. Speaker, if there be now present any Gentlemen who, like myself, have sat in this House to hear this debate, since half-past five o'clock, I think they will admit that, at least, it has served one useful purpose, for it has illustrated more signally than any discussion that I can remember that truly English principle—freedom of debate. Sir, it being my duty on the part of the Government to notice the topics touched on by hon. Gentlemen in the course of the evening, I had thought of endeavouring to do so, but really it has occurred to me whether I should not shorten my labour if, instead of trying to enumerate the topics which have been detailed to-night, I should take the negative side of the question, and refer to those comparatively few questions which have not been matter of discussion. Why, Sir, we have had—and I will only mention a few of the principal questions which have been brought under the notice of the House in the course of the present debate. The right hon. Gentleman (Mr. Disraeli) says that the hour is still inconveniently early. I am afraid it would not do for me to act upon that assumption, but I have a certain duty to discharge—we have had a discussion to-night on the savings banks and the management of the great fund connected with them, on the constitution of the National Debt Commission, on the balances in the Exchequer, the interest on and policy with respect to Exchequer bills, on the relations of the Government with the Bank, on the proper rules to be adopted with respect to deficiency bills, on the plan for the conversion of the national debt, on the Bank Act of 1844, on the mode of establishing a currency free from the influence of foreign exchanges, on the comparative merits of direct and indirect taxation, on the foreign policy of the Government, and on the education of the country. And there is yet, Sir, one other subject which has been touched on rather slightly, I confess, but still I find here and there, there has been a faint allusion just perceptible to the Amendment of the hon. Baronet the Member for Evesham. The right hon. Gentleman who has just sat down has closed his speech with an allusion to that Amendment, and does not seem to like to challenge a vote of the House upon the financial propositions of the Government more than upon any others of their acts. But the right hon. Gentleman has, in the exercise of his undoubted right, thought fit to discuss at large the conduct of the Government; and here I may refer to the language of the right hon. Gentleman, when he charged me with having treated him with unseemly and discourteous taunts. Sir, I do not think that that was a just charge on the part of the right hon. Gentleman. In replying to the right hon. Gentleman on a former night, I did, as I shall to-night take the liberty of doing, use the legitimate freedom of debate; and I do not think that the right hon. Gentleman is the man, of all others, who has been sparing in his appeal to that freedom and that right, whether in reference to things or persons. But, Sir, if the right hon. Gentleman had cause to find fault with me for unseemly and discourteous taunts, arising out of the heat of debate or infirmity of temper, why did not the right hon. Gentleman do what any other man would have done, namely, rise in his place in this House and complain—if he did not think it right, Sir, to appeal to you—why did he not complain of it on the spot, why did he retain this grievance and this grudge in his bosom for a fortnight, to make use of it now forsooth in one of his thousand declamatory periods? Sir, I tell the right hon. Gentleman that if I have been guilty of such taunts I deeply regret it—I regret it with reference to him or to any other man, and I am sorry he did not give me an earlier opportunity of saying so, when I could tell whether or not there was any foundation for the charge. Having said thus much, I pass to graver matters.

Now, Sir, the right hon. Gentleman says that he guards himself against being supposed to approve of the financial propositions of the Government. Sir, there is not much occasion for the right hon. Gentleman to guard himself on that subject. I am not aware of any financial proposition—I might say of any proposition—but at any rate I am not aware of any financial proposition, great or small, that has been made by the present Government, which has had the good fortune to meet the approbation of the right hon. Gentleman; and with, I think, one exception, I am scarcely aware of any attempt to impose a tax upon the country which the right hon. Gentleman has not resisted, or of any attempt to remove a tax, and diminish the resources of the Exchequer, which the right hon. Gentleman has not supported. The right hon. Gentleman sometimes speaks of a new policy. Sir, until the time of the right hon. Gentleman, the subject of finance, during my recollection, has been dealt with in a manner somewhat distinct from that of general politics, because it has been felt that there is a tenderness in the subject of the public debt, and an importance in maintaining the resources of the Exchequer. The consequence of that conviction has been, until within the last twelve months, a general union, as a general rule, in maintaining the ways and means which are necessary to carry on the public service of the country. The right hon. Gentleman has thought fit to reverse that rule. The right hon. Gentleman will not support the Amendment of the hon. Baronet to-night, who, I know, has made his Motion entirely independently; but he still says that he reserves to himself the liberty of objecting to the financial propositions of the Government; and upon what does he found himself? He founds himself upon this most extraordinary reason, that he does not consider there is any necessity proved for an increase of taxation, for he says he does not know whether we are going to war, or for what we are going to war. Why, Sir, the right hon. Gentleman's ignorance for what we are going to war has nothing whatever to do with the necessity for an increase of taxation. He knows this; he knows that he has himself been a party to votes which have raised the estimated expenditure of the country 3,000,000l. above the estimated revenue; and having himself been a party to these votes, he yet says that he cannot undertake to admit that there is any necessity for increased taxation.

Well, Sir, the right hon. Gentleman is not contented with that more limited field of discussion upon which he entered in the earlier part of his speech, and in which I am bound to say he expatiated with a skill and a force that are rarely equalled in debate. The right hon. Gentleman, under the influence I think of some malignant spirit—I mean malignant as respects himself—must forsooth enter upon that most ill-omened discussion of the question of want of confidence in Her Majesty's Government. The right hon. Gentleman, who was not challenged at all in the matter, must go into a discussion of why he would not propose a vote of want of confidence in Her Majesty's Government. It is quite true, that the right hon. Gentleman is entitled without doubt to use his own discretion on that or any other subject. If he thinks it right not to move a vote of want of confidence in the Government, I have also a right to believe that he has good reasons from refraining from doing so; but whether he has good reasons or not—whether he chooses to move any such vote or not—I am perfectly at a loss to conceive what could have put it into his head to give such reasons as he has done to-night for abstaining from proposing a vote of want of confidence. Why, Sir, what reason could there be better than those he assigns, which should make him move such a vote? He says he will move a vote of want of confidence in the Government when he sees the slightest proof that the Government have confidence in themselves—have confidence in one another. Ought votes of want of confidence then to be spared, ought men to continue in office because they are so totally unfit to discharge public duties that even among themselves they do not exhibit a tolerable amount of agreement and mutual confidence? The right hon. Gentleman says Her Majesty's Government differ upon every vital question—that they differ about the Reform Bill—they differ about the Protestant Dissenters—they differ about the Protestant cause—they differ about their foreign policy—they differ, in short, about every question of interest. The right hon. Gentleman further says, that the head of the Government has no confidence in the Leader of the House of Commons, that the Leader of the House of Commons has no confidence in the head of the Government, that the Chancellor of the Exchequer has no confidence in any of his Colleagues, and none of his Colleagues have any confidence in him. That being the state of the case, and we, miserable and unworthy men, being here usurping the functions and aping the character of a Government, the right hon. Gentleman says, for these reasons, because you are so miserable, because you are so disunited, because you are so de- graded, I will at this great crisis of the fortunes of England, leave you in place, where you are to govern the destinies of Europe and the world. Why, Sir, I tell the right hon. Gentleman that, if I possessed his great powers of mind and oratory, and held his position in this House, I would rather have been silent altogether on such a subject, than, after having made such an argument, have conducted it to such a recreant conclusion.

Sir, notwithstanding the hour, I am afraid I must occupy, at any rate, about one-quarter of the time which the right hon. Gentleman has taken up, with some remarks in answer to those which he has made; and I shall go as directly as I can to two points on which he made charges against my own department. The right hon. Gentleman impugns the policy that I have felt it my duty to pursue in lowering, at an early period in the last year, the interest on Exchequer bills; and he says that there were circumstances that had then occurred that should have shown me the impropriety of that measure. How unfortunate it is, Sir, that those hon. Gentlemen, so wise after the fact, did not then take notice of the circumstances that had then occurred. They are now willing with retrospective finger to point them out. At the time those circumstances were not so visible, and the right hon. Gentleman knows perfectly well that, although on this subject, like many other subjects of discussion, he himself was not indisposed to take objection, yet he took no objection himself at that time. Sir, the right hon. Gentleman occupied a long period of time in investigating a matter of no moment whatever. He stated that I laid claim to a saving of 26,000l. on the reduction of interest on Exchequer bills. Why, Sir, what I stated was this. I said, at the time, that it was an incidental observation, scarcely touching the substance of the case. I stated that the actual payment on Exchequer bills would be less the present year by a certain sum than it was last year. But I mentioned that the number of Exchequer bills this year was reduced. And it has been in dressing out such a subject as this, and in drawing his conclusions from it, that the right hon. Gentleman has thought fit to spend the time of the House. Now, the amount of payments in the year is no test of the merits of any financial policy that a Chancellor of the Exchequer may adopt. Does the right hon. Gentleman mean to say or not that I am responsible for the state of things that change the money market, and make it desirable or necessary to raise the rate of interest on Exchequer bills? That really is the question. He says that there has been a loss, and that I said on the contrary that the sum payable on Exchequer bills would be less this year; but if the sum paid upon them were double, it would have nothing to do with this point—namely, the imprudence of lowering the rate of interest on them last spring. The right hon. Gentleman says that the state of the funds, the rate of Bank discounts, and the amount of bullion, all showed that the policy which I adopted was erroneous. Now, the funds at the time I effected the reduction were within a fraction of par; the Bank discount was 3 per cent, having risen from 2; and the amount of bullion in the Bank had risen from 22,000,000l. to 23,000,000l. The state of the funds, the discount at the Bank, and the quantity of bullion in the Bank, were, therefore, all excessively high; but, says the right hon. Gentleman, because discount afterwards became low, because the amount of bullion became reduced, and because the funds were lower than before, therefore, I was wrong in the early part of last spring, and under a very different state of things, to reduce the interest upon Exchequer bills. But, does the right hon. Gentleman mean to lay it down as a general principle that no financial operation aiming at a reduction of interest, ought ever to be tried under any circumstances excepting at the very moment which is the most favourable—not at a favourable, or even at a highly favourable moment, but at a moment absolutely more favourable than any other moment, either before or after it. Look at the consequence of the doctrine of the right hon. Gentleman. The Bank may raise and lower its rate of interest from week to week—it can do precisely as it pleases; but the Chancellor of the Exchequer, when he fixes the rate of interest on Exchequer bills, must fix it for twelve months at a time. How are you to ensure, when you determine the rate of interest on Exchequer bills, that the apex of favourable circumstances will be at a given time, and neither before nor after it. Now, I proceeded, with regard to Exchequer bills, upon deliberate conclusions, and, notwithstanding what the right hon. Gentleman has said, I contend that the measure was fully justified. I hope, if the right hon. Gentleman thinks it was not fully justified, that, instead of confining himself to discussions and declamations, which are convenient for occupying time, but which do not tend to any issue, however he may be indisposed to move a vote of want of confidence—I hope he will try, at any rate, to bring this matter to a fair issue.

Sir, I proceeded upon deliberative conviction, and I am bound to tell the right hon. Gentleman, what I have never said before, but in continuance of this discussion I am compelled to say it—that had the right hon. Gentleman himself, when he held the seals of the Chancellor of the Exchequer, been in any position of permanence as a Minister, using the word in the qualified sense which attaches to an ordinary Government in this country—he ought himself long before to have done that which I did; and he would have been guilty of a scandalous waste of the public funds if he had renewed Exchequer bills at the same high rate of interest as they bore in June, 1852. In June, 1852, Exchequer bills were at 75s., and they fell to 55s., and, therefore, the rate of interest was lowered. Now, what are Exchequer bills? They are bills running for twelve months. What interest did they bear at that time? The interest was at 1½d. per day, or 45s. as the interest for the whole of the year, which, after deducting income tax, came to 43s. Well, then, the premium on these bills—which you will recollect are redeemable at par at the expiration of the year—was more than equal to the whole interest, and yet the right hon. Gentleman says that that was not a state of things which called for my interference. Sir, I say it is the right of the public to borrow upon the best terms that it can; the necessary restraints of law place the public at great disadvantage in its dealings with the Bank and other parties; and on account of these great disadvantages, inherent in the nature of their position, it is still more the essential obligation of the Chancellor of the Exchequer to borrow for the public on the best terms that he can. Now, I say that the time I made the reduction to 1d. a day was the proper time for doing so, and I prove it by saying that I did it. The hon. Member for Peterborough (Mr. Thomson Hankey), with less attention to accuracy than I should have expected from his position, says that I reduced the interest to 1d., and the bills then fell to a discount. Well, was there anything that intervened between those events? Does the hon. Gentleman mean to say that they fell to a discount when I reduced the interest? Sir, the reduction of the interest was announced in the second week in February; and here are the prices of Exchequer bills on the business day of each month, and the 1st of June is the earliest of the days on which there is the slightest mention of a discount. Therefore, I say the hon. Member is seriously in error on this matter, because for three months after the reduction of the interest the Exchequer bills remained at a premium, and, therefore, the fair inference is, that when they came to a discount, the change took place on account of the increasing pressure on the money market, and not on account of the reduction. I propose to adopt what I think is a fair mode of dealing with this question.

The right hon. Gentleman (Mr. Disraeli), who was so large and full on such a multitude of points of perfect unimportance, which he dressed and decked out with a finery belonging to himself, passed over in total silence and oblivion these other matters that were not so convenient for him to notice. I made a reference when we discussed this subject before, which I think a fair reference, and one calculated to bring this question to an issue; because the charge made against me, if I understand it, is, that by an imprudent reduction in the rate of interest on Exchequer bills last spring, I caused a violent reaction and an increase of expense. Well, then, if that be the case, what I say is, that I will look to a neighbouring country. You say I produced a violent reaction—that I am now paying (and it is true) double the rate of interest that I was paying twelve months ago; and the reason you give—which is not true—is, that the reduction I made was too low. Well, now, what was the state of the case twelve months ago in France? Twelve months ago the rate of interest on one class of French Exchequer bills was 1½ per cent; and I think I may say, with all due respect, that it was not a hopeless case for the English Government to expect that their bills should float for longer dates, at the same rate of interest, with the Exchequer bills of the Government of France. You say I would not have required to double the rate of interest unless I had first reduced that rate of interest too low. Well, but look again at the case of France. The Exchequer bills, which were at the rate of 1½ per cent twelve months ago, only a few days ago were raised to 4½ per cent. So that while I have had to double the rate of interest on Exchequer bills, the French Government had to treble the rate of interest on their Exchequer bills. Now I shall trouble the right hon. Gentleman for an explanation of that fact, when he next sets himself to complain of my imprudent reduction as having doubled the rate of reduction on the rate of interest on the Exchequer bills. Sir, it is not necessary for me to enter at greater detail into these matters.

The right hon. Gentleman, also, spoke in the most alarming terms of the large amount that required to be paid on account of the formidable accumulation of deficiency bills. He said, it might be very true that we had saved some 10,000l. or 20,000l. on Exchequer bills; but what was that to the very serious loss which the country would sustain on the deficiency bills which that saving rendered necessary? Sir, I hold in my hand the returns of the deficiency bills for the three last quarters, being all that have yet been made up. The cost on deficiency bills for the first of these quarters was 62l.; for the second, 770l,; and for the third, 481l. A sum amounting to between 1,100l. and 1,200l. is the whole amount of charge caused by these tremendous and overwhelming deficiency bills. The right hon. Gentleman, I confess, sometimes appears to me, in the heat, or, at least, in the force which he brings to bear upon these discussions, to dilate upon these subjects in a manner which might tend to excite great alarm in the public mind. I remember, Sir, on former occasions, when questions relating to the public credit were discussed, it was done with great reserve. At a time when not more than 900,000l. remained as a balance in the Exchequer, to meet the demands of the next quarter-day, the fact was alluded to, indeed, but the allusion was made in grave and sober terms, by no means in those ornate orations which we are now accustomed to hear night after night; and I must confess that at first serious alarm entered my mind, when I heard, and admired while I heard, the brilliant oratory of the right hon. Gentleman; but at the same time serious apprehensions entered my mind, lest, knowing the high authority of the speaker, alarm should seize upon the public mind. I said, here is my predecessor in office telling the public that it is impossible for the Chancellor of the Exchequer to meet his engagements next quarter-day. Sir, that might have caused great alarm among gentlemen in the City. The last time when the right hon. Gentleman favoured us with these displays—I know not how it it may be to-morrow—but the last time he so favoured us was on the 6th of March. On the 7th, I was curious to know what was the effect of his speech, and I found that Consols, which on the 6th stood at from 90⅝ to 91, stood on the 7th at from 91 to 91⅝. After all the dark anticipations I had formed, Sir, I confess this proved to me no inconsiderable relief.

I come now, Sir, to the main questions on which the right hon. Gentleman has challenged me—the two main objects in his speech—one of which was the abortive action upon the funded debt, and the other the state of the balances in the Exchequer. Here the right hon. Gentleman marshalled against me a great array of premonitory sentences, and after a long accumulation of epithets, he wound up with the declaration that it was absolute madness—I think those were the words—absolute madness, to present any plan for the reduction of the interest on the national debt last March. But the right hon. Gentleman forgets that I referred him before to his own opinions. [Mr. DISRAELI intimated dissent.] No, he remembers that, but he forgets what the opinions were to which I did refer him. He comes down here in March, 1854, full of wisdom, after the fact. But he forgets what was the state of opinion in March and April, 1853. Sir, I was curious to know what was the state of public opinion at that time; what was its action upon the funds; what were the general sentiments among those interested in money matters; and those who will take the trouble to refer to that period will find that all who censured me on that occasion, censured me, not for what I attempted, but because I had secured too little for the public. I referred to that opinion expressed by the right hon. Gentleman; and he says, what a wretched thing is the argumentum ad hominem. But, Sir, I did not use it as an argumentum ad hominem. I used it, because at that time, in his objections, the right hon. Gentleman represented public opinion; and because he knows that public opinion has varied, therefore the right hon. Gentleman has also altered his tone. But the right hon. Gentleman did then make that objection. We did not hear a word then about the prospects of a bad harvest, or of the state of the funds, but the right hon. Gentleman went into a long and imposing detail of the state of the public debt. He showed how one Minister after another had reduced, some 1,000,000l., some 1,500,000l.; and what do you mean, he said, by your paltry reduction, which even at the outside cannot amount to more than 500,000l. a year? It will not do that he should say, what any of us may say, that we have learned something from the experience of the past. Oh, no, he says, all the facts were then in existence. But he entirely forgets to allude to the fact—though I reminded him of it the other night—that both he and his hon. and learned brother in finance beside him united in warning and censuring me, not because I proposed a reduction, but because that reduction was so insignificant.

Sir, I must now refer in a few words to the question of the balances in the Exchequer; and in doing so, I must refer to the speech of the hon. Member for Peterborough (Mr. Thomson Hankey). Far be it from me to complain of the speech of the hon. Gentleman. I regret that in subsequent allusions to the speech of the hon. Gentleman he was described by several Members as the Bank Director; not because I do not think that he is a most useful and worthy Bank Director, but lest the impression may be produced out of doors that he spoke in his official character of Bank Director, as the representative of that establishment. But, Sir, I think the House will see, from the speech of the hon. Gentleman, that the relations between the Bank of England and the financial department of this country, though of an intimate, are still of a most independent character; and I fear, moreover, the impression may be produced that the relations existing between him and me are not eminently favourable to the fortunate conducting of our financial affairs. Sir, I find no fault with the speech of the hon. Gentleman, but I think it may be inferred from what he said that I had recently been to the Bank more or less as a suppliant, asking for loans at less than their market value, and putting upon the Bank a pressure on the assumption that it was bound to have regard to the interests of the Exchequer apart from its own interests as a standing corporation. Sir, I disclaim any such intention or act; and, moreover, I think I may say, though I was not present at the meeting of the Bank proprietors held a few days ago, but I have been informed that a question was then put to the Governor of the Bank by one of the proprietors, who wished to know whether a proposition had been made which was favourable to the interests of Government, but which was at variance with the interests of the Bank, and the Governor, as I am informed, replied distinctly that he had received no such proposition. Sir, it is perfectly clear that the Government have no right to demand a pecuniary advantage of a single farthing in their transactions with the Bank. It is the business of the Bank to charge the Government—and it would be perfectly compatible with the most friendly relations between them to do so—the fair value for any accommodation which they may afford. Sir, the hon. Member for Peterborough also dwelt upon the deficiency bills in a manner which, I think, may cause serious public misapprehension. What is the state of the case? Is it a question of principle or of degree? Is it the opinion of this House that deficiency bills are an illegitimate means of meeting the public exigencies? If they think so, let those who think so repeal the Act of Parliament by which the power is committed to the Chancellor of the Exchequer to negotiate the issue of deficiency bills. I contend for directly the contrary. The Act was passed nearly forty years ago, and had been acted upon ever since. The hon. Gentleman quoted the state of the balances during the last six years; and it is true that they have been less during that time than during the thirty-seven years before. And why? Because, for the last six years the excess was the other way. The deficiency in the revenue was so great in 1841, the deficiency bills had attained such a height in combination with a deficient revenue, that they exercised a pernicious influence upon public credit. Is that a reason why we should not reserve a reasonable and a moderate amount of deficiency bills? What is the opposite doctrine? It is that the finance Minister ought to have a constant accumulation of money in the Bank throughout the quarter, beginning by low balances of 500,000l. or 1,000,000l., and running up at the end to 9,000,000l. or 10,000,000l. I do not believe that is a very good course to be taken, either for the trade of the country, for the Bank, or for the Government. You wait, then, to hear what is the opposite doctrine upon this subject. My doctrine is, as I have said, that a moderate and reasonable use of deficiency bills is not only compatible with the welfare of the country, and consistent with the maintenance of public credit, but that it is the most convenient for all parties. The hon. Member for Peterborough accedes to that doctrine; but then he says that the present amount of deficiency bills is an excessive amount. [Mr. THOMSON HANKEY: I did not say excessive.] I do not mean to quote the exact expression used by the hon. Member, but rather the effect of what he said; and, as I understood his meaning, it was that the Government had issued more deficiency bills than they ought. My own view of the amount of deficiency bills which will be brought to charge in the next quarter is that it will be from 4,000,000l. to 4,500,000l.; and, as I have said upon a former occasion, I consider this to be a larger amount than it is desirable to have permanently. I should say that if the amount called for permanently was 2,000,000l., or 2,500,000l., it would be a very good arrangement. Then, of course, it would be the duty of the Chancellor of the Exchequer to make use of such means as he has at command to reduce that amount from quarter to quarter; and it would be in his power, if the finances of the country are kept in a state of soundness, as I believe they will be by the care and wisdom of the House of Commons, to effect that purpose in three or four quarters. But I do not wish it to be understood by any means that the amount of deficiency bills now called for is either unprecedented or rare. If I look back to the years from 1840 to 1843, I find the amounts during that period commonly varied from 4,000,000l. as a minimum to 7,000,000l. and 8,000,000l. and even more. This, being combined with a deficit, is an impolitic, an undue, and a dangerous practice. But I will go further back. You seem to think that there can be no deficiency bills except as an indication of an unsound state of the revenue, of weakness in public credit, and of deranged trade. But I will take the years 1832, 1833, 1834, and 1835, to show the fallacy of that opinion, because every one of those years was prosperous; they were each a year of surplus revenue, of a sound state of public credit, and of a prosperous state of trade. In 1832 the smallest amount of deficiency brought to charge was 3,353,000l., and the largest 7,756,000l.; in 1833 the minimum was 4,880,000l., and the maximum 7,230.000l.; in 1834 the minimum was 4,480,000l., and the maximum 6,767,000l.; in 1835 the minimum was 3,590,000l., and the maximum was 6,500,000l. The average of the minimum was 3,878,000l.; the average of the maximum 6,967,000l. Is, then, 3,750,000l., which is about the total amount brought to charge in this quarter, to be considered an alarming amount, being less than the minimum of these sound and prosperous years? I think not. Sir, we must go to book upon these subjects. It will not do to declaim upon them in vague and amusing generalities. We must look at these things as practical men, and doing so, I say that the amount brought to charge is not an excessive amount.

The hon. and learned Member for Wallingford (Mr. Malins) has been pleased to say he will not be hard upon me, but that he wishes me to understand that matters of finance are very important and delicate operations. Sir, I am deeply indebted to the hon. and learned Gentleman for a lesson of a nature so far removed from my common education that I never could have hoped to have attained to its possession except through his kindness. There is, however, one point more, which appears to have been one that hit the fancy of the right hon. Gentleman the Member for Buckinghamshire. It was not a question of the argumentum ad hominem; but he said "these are opinions merely," and then he proceeded to draw a strong and glaring contrast between a man's opinions and his conduct. Opinions are nothing; conduct is everything. Then what is the use of opinions? I apprehend they are intended to have some influence. I take it for granted that the man who stands in my place where I now stand, occupying the office of Minister of Finance, and giving an opinion upon finance, is not to be allowed subsequently to evade the consequences of that opinion by saying that he did not act upon it. It was his opinion; and I will suppose it was his sincere opinion. If it was his sincere opinion it had the weight of his authority, and I am entitled to presume that when opportunity offered he would be prepared to act upon it. How can he evade the consequences of it?

I find myself, Sir, at a late hour (ten minutes to two o'clock) after such observations as I have thought it necessary to make to the House, in the position of having to deal with the hon. Baronet (Sir H. Willoughby). To that Motion I have not yet made the slightest allusion. In that respect I have followed the example of all who have gone before me—I have been equally vicious in principle, but I trust it will be allowed that I shall be more moderate in degree. In a very few sentences I will say why I cannot agree to the Motion—a Motion which has been made the battle-field for all sorts of subjects, though the hon. Baronet brought it forward in a straightforward way, and with a proper and earnest conviction that in doing so he was only doing his duty. It is impossible to accede to the Motion, because the object of the Government has been to reconcile together several purposes that might be considered in conflict with one another. We might have attempted to form an estimate of the year's expenditure. If we had done so—if we had taken a year's estimate of war expenditure—we must have asked the House for a very large sum; and if we had asked for a very large sum, we might have asked for a sum greatly beyond that which the exigencies of the war may require; for I will not pretend to say, looking at the powerful combinations that have been formed, that it is not impossible to bring the war to a close within a short time. We have thought it wise to take warning by the experience of our predecessors; and to come to this House and say, "We will leave the power in your hands by asking only sufficient for a limited term." We say, "You are going to sit for four or five months; and we will reserve to ourselves the opportunity and to you the power of considering towards the close of that period the appearance of public affairs, and the probable demand that will be made upon the Exchequer for expenditure on the war." But by taking the other course we must have asked for a sum that would have been deemed extravagant, and then we should have been told we were calling for money which we were not sure we should want. What did Mr. Pitt do? He brought in his Budget early in the year—the first year of the French war. He produced a Budget for the whole year; and he took for his extraordinary expenditure, 1,250,000l. For the period of a whole year no more was heard upon the subject; and in the next year Mr. Pitt informed the House that, besides having absorbed the 1,250,000l., he had laid out 6,000,000l.—that there had been extra expenses, unprovided for by the Votes of Parliament, amounting to about 5,000,000l. Sir, that would not be a satisfactory state of things for this House at this time of day. It was therefore, felt to be our duty to inform the House of the demands made upon us. In order that we might deal with the House in freedom and confidence, we put them in possession of our present wants, leaving it to the House to provide for future emergencies. It was, therefore, necessary to ask the House, as we are now doing, to make provision for six months' expenditure by six months' taxation. If we had asked for the expenses of six months' war upon twelve months' taxation, the hon. Baronet will see at once the position in which we should have been placed in relation to the great object of making the expenses of the year to be paid within the year. Much has been said tending to disparage the principle of raising the supplies for the year within the year; and words have been used which seemed to indicate an intention—perhaps not yet formed, but which may grow into substantive and distinct development—of endeavouring to induce the House to depart from that most sound principle. I do not intend now to discuss the obligations of the House in that respect. All I will say is this—that I trust the House will, both upon moral and prudential, as well as economical considerations, adhere, to the very utmost of its powers, and in the most rigid form, to this valuable principle of raising the supplies within the year. And I think I may venture to promise, on the part of the Government and of myself, that so long as there is upon the part of the House a disposition to do justice to the country in this respect, we at least shall be ready to fulfil our part.

COLONEL SIBTHORP

said, he had heard something about their being "economical and prudential," but though he had heard only the end of the right hon. Gentleman's able speech, he could say, after twenty-six years' experience in that House, that he never relied upon the speeches or promises of Chancellors of the Exchequer. He would, however, ask the right hon. Gentleman a question, namely whether incase of a war not taking place—though he would tell the right hon. Gentleman that he hoped it would, in order that they might give the Emperor of Russia a downright good licking, and, in addition, teach the Emperor of the French—upon whom he (Colonel Sibthorp) placed no reliance whatever—not to endeavour to "humbug" this country—he would ask the Chancellor of the Exchequer whether, in case of no war taking place, he would promise not to enforce the infliction upon the country of the double tax? He (Colonel Sibthorp) thought that a declaration of war ought to have taken place before that time, in order that the suspense and anxiety of many persons might have been relieved. He had never yet, nor would he, support an income tax in time of peace, but he would subscribe to it freely in time of war.

THE CHANCELLOR OF THE EXCHEQUER

said, that he was afraid he could not promise not to call for the additional income tax, even if there was no declaration of war, because this modicum of taxation would in fact be required to defray the expenses of the present expedition to the East.

Question put and agreed to.

Resolution agreed to.

Bill ordered to be brought in by Mr. Bouverie, Mr. Chancellor of the Exchequer, and Mr. Wilson.

The House adjourned at a quarter after Two o'clock.