Commons Sitting of 8 May 1854

MINUTES.
PUBLIC BILLS.—1.° Chimney Sweepers; Manning the Navy; Navy Pay, &c.
3° County Court Extension Act Amendment; Boundary Survey (Ireland).

PUBLIC BUSINESS—ORDERS OF THE DAY.
LORD JOHN RUSSELLthen, in accordance with what he understood to be the general feeling of the House, moved that Government Orders of the Day have precedence of other Orders on Thursdays during the remainder of the Session.
Motion made, and Question proposed—
"That Government Orders of the Day have precedence of other Orders on Thursdays, during the remainder of the Session."
MR. FREWENthen moved the following Amendment:—That on Thursday, the 25th day of May, and on every alternate Thursday, Bills introduced by the Government, or any other Government business, shall have precedence of the other Orders of the Day till the end of the Session. He took this course because it seemed to him that the proposition made by the noble Lord was contrary to the general understanding which had been come to previous to the Easter recess. When the noble Lord moved that Orders of the Day should have precedence over Notices of Motion on Thursdays, he said distinctly that he did not wish to claim the Thursday nights for Government, but that independent Members, having charge of Bills, would then have an opportunity of bringing them forward. The consequence of this assur-
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ance was that two Bills introduced by private Members were set down for the two following Thursdays. He (Mr. Frewen) had one of these, which he was only prevented from bringing on before the recess by the noble Lord moving the adjournment of the House on Tuesday, instead of Wednesday or Thursday, as usual. It was not keeping good faith with hon. Members who had postponed their Bills in consequence of the assurance which the Government gave before Easter, if they were now to be thrown over. Looking back to what had been the practice in former years with respect to this point, he found that last year the House gave up the Thursdays after the Easter recess to the Government; but that in 1850, 1851, and 1852, the Government had only the alternate Thursdays. He believed that this would be sufficient for the Government, while it would give private Members an opportunity of pressing forward any Bills which they might have introduced.
Amendment proposed—
"To leave out from the word 'That,' to the end of the Question, in order to add the words, 'upon Thursday the 25th day of this instant May, and upon every alternate Thursday, Bills introduced by the Government, or any other Government business, shall have precedence of the other Orders of the Day till the end of the Session,'—instead thereof."
Question proposed, "That the words proposed be left out stand part of the Question."
MR. LOCKE KINGthought that if the Government were now to engross all the Thursdays to the end of the Session, it would be a despotic act and a very dangerous precedent. He hoped the noble Lord would respond to the appeal now made to him, and not insist on attempting this before the 25th of May.
THE MARQUESS OF BLANDFORDthought there was much justice in the argument of the hon. Member for Sussex (Mr. Frewen); and that when he came to consider the large amount of business which was in the hands of private Members, he considered there was a claim on the Government in their behalf; and he therefore hoped the noble Lord would not press his Motion.
MR. GOULBURNthought that a question of this nature ought not to be decided with reference to the position of individual Members, but should be controlled in regard to the public exigency; and when he considered what were the various subjects

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which the noble Lord had to bring before the House, especially in regard to Committees of Supply and of Ways and Means, be could not doubt that the noble Lord was justified in asking the extension of time which his very moderate proposition would afford him for conducting the public business.
MR. NEWDEGATEshould have viewed with no dissatisfaction the proposition of the noble Lord had he perceived that there was a disposition upon the part of the independent Members of that House to impede the business of the Government. So far from that being the case, however, he believed he was justified in saying that never had there been exhibited upon the part of those Members a more decided wish to do all in their power to facilitate that business. Besides, the period of the Session was not so far advanced as to render the Motion of the noble Lord by any means necessary. He (Mr. Newdegate) had often seen as great an amount of business stand upon the order paper at the end of the month of June as was placed upon it at the present comparatively early period of the Session; nor did he think that the course which had been taken by the noble Lord last week, with respect to the railway Bills, was such as ought to encourage the House to accede to a proposition which would enable the noble Lord to confuse the order of business upon the paper as he pleased. The Committee appointed to consider the mode of conducting the business of the House had not yet made its Report, and he thought it would be well if the House were to wait until an opportunity of discussing the recommendations of that Report should have been afforded. He believed the noble Lord did not look with satisfaction upon the notice with respect to the nomination of the Committee to inquire into the position of conventual establishments, which stood upon the paper for Thursday week. He should inform the noble Lord, however, that those who were in favour of the appointment of that Committee would be prepared to take a definite course, and he believed that so far from the public business being accelerated by the means to which the minority had resorted is order to get rid of the discussion upon that question, it would be to no inconsiderable extent impeded.
MR. V. SCULLYsupported the original Motion.
MR. HUMEthought considerable injustice would be done to those hon. Mem-
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bers who had Motions and Bills coming on upon the next two Thursdays, and he felt, therefore, that whatever arrangement might be made with reference to other parties, those who had Motions and Bills already on the paper for those two days ought to be allowed to bring them forward. He, for one, was willing to afford to the Government as much time as possible for bringing forward its measures, so that it should have no excuse for neglecting the public interest. Now, on those nights when private business only stood upon the paper he did not perceive that there was any very strong disposition upon the part of hon. Members to attend; and it was better, therefore, that those nights should to a certain extent be at the disposal of Ministers, upon whom the great burden of the public business devolved.
LORD JOHN RUSSELLreminded hon. Members that this was not a question between Orders of the Day and Notices of Motion, but between certain Orders of the Day and other Orders of the Day. The reason why he made the present Motion was, that hitherto, although after Easter Orders of the Day had been fixed for Thursdays, very much on the ground of the delay which had taken place in different Sessions respecting measures, the consequence had been, that in the middle of the month of August the House had often found themselves with business that took up twelve or fifteen hours a day. He considered that a very great evil and disadvantage, as at that time only a small portion of the House was left to attend to them; and it would be desirable, if possible, not to follow the inconvenient precedents of former days. With regard to the Bills of private Members, it had been understood, when the present arrangement was made, that subjects of which the discussion was not finished on Wednesdays, might stand over to Thursdays, but, by what he considered a great abuse, hon. Gentlemen had taken possession of Thursdays, as if they were Wednesdays, so that Government would have no advantage unless they had all the Thursdays to themselves. Members were aware that, besides the functions of Government in presenting the Estimates and other branches of public business which none but Government could conduct, there were many other questions of considerable importance on which the House wished that some discussion should take place left in the hands of Ministers. It was therefore most desirable

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that the House should give the Government power to fix the days on which such business should be conducted, and to have precedence on those days which were appointed for Orders of the Day. If Government were to have only two days in the week, it was quite impossible that they could bring on measures of importance, or that they could do four-fifths of the business with only two-fifths of the time.
MR. SPOONERthought it only fair that the proposition of the noble Lord should not have a retrospective effect, and that notices already on the books should be exempted from its operation.
MR. DISRAELIhoped the noble Lord would consider the suggestion made by the hon. Member for North Warwickshire. The existing arrangement had been proposed by the noble Lord himself, and was acceded to without discussion, and when Ministers came forward on the 8th of May and talked of the pressure of public business and the necessity of having greater facilities for its transaction, they should consider what would have been their position if they had gone on with the great measures they announced in the Speech from the Throne on the opening of the Session—he alluded to the Reform Bill and others which had disappeared in the same mysterious manner. Certainly, the noble Lord could not have expected to carry through his measures and at the same time transact the whole mass of public business without having had some definite plan of operations resolved upon in his own mind; but now he bad got rid of all those encumbrances, and the only difficulties he had encountered in obtaining supplies appeared to have been devised by his own Colleagues. He did not, therefore, consider it at all unreasonable to expect that the noble Lord would comply with the appeal that had been made to him by the hon. Member for North Warwickshire, which seemed to him a very fair and reasonable one.
MR. COBDENsaid, there were two questions before them: one, whether Government should have precedence on Thursdays from that time; the other, whether Members who had got notices on the book should be guided or not by the existing rules of the House. It would be a special hardship if Members who had notices on the paper should be deprived, by an ex post facto vote of the House, of the opportunity of bringing under its notice the subjects to which they referred.
SIR GEORGE GREYsaid, hon. Members would find, on examination, that Wednesdays were more open in the present Session than they had ever been; but instead of subjects being put down for that day, the Thursdays had been taken up. They would gain very little by making Thursday an Order day for the advancement of public business unless they gave the Government the complete command of the day.
MR. HENLEYsaid, that really so small a concession appeared to be asked from the Government that he hoped the noble Lord would not drive the House to the necessity of dividing upon it.
LORD JOHN RUSSELLsaid, that if the House were determined that the business of the Session should be carried into August instead of terminating earlier, of course he had no choice. He would consent to make his Motion "on and after Thursday, the 25th of May," protesting at the same time, however, that the Session would be thereby unnecessarily prolonged.
Amendment and Motion, by leave, withdrawn.
Ordered—
"That Government Orders of the Day have precedence of other Orders on all Thursdays, after the 20th day of this instant May, during the remainder of the Session,"

ROMAN CATHOLIC SAILORS—QUESTION.
MR. BOWYERasked the First Lord of the Admiralty whether Roman Catholic sailors were to be compelled to attend Protestant religious worship?
SIR JAMES GRAHAMsaid, that the question which had just been put to him by the hon. and learned Gentleman was one which in various shapes bad repeatedly been put to him in the course of the present Session, and to which he had on each occasion endeavoured to give the most explicit answer. He should now repeat that answer, in the hope of making his meaning intelligible to all hon. Members. The naval regulations upon the subject were based upon Statute, and the first of those orders, which had existed for 100 years, was, that every Sunday divine service should be performed on board every ship of Her Majesty a according to the ritual of the Church of England. According to that regulation, the officers commanding those ships, and all persons serving on board them, should be "permitted"—that was the word—"permitted," and

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not "compelled." to attend such divine service. He had every reason to believe that the officers commanding Her Majesty's ships, in strict compliance with the terms of that regulation, did "permit" the attendance of Roman Catholic sailors, but did not compel it in violation of conscientious objections. At all events, that was the spirit of the regulation, and, as he had before stated to the House, he was not aware that up to the present time a single complaint had been made on the part of Catholic officers and sailors of the manner in which it had been carried out.

THE FINANCIAL STATEMENT—WAYS AND MEANS.
Order for Committee read.
House in Committee of Ways and Means, Mr. BOUVERIE in the Chair.
THE CHANCELLOR OF THE EXCHEQUER: Sir, towards the end of the month of February, Her Majesty's Government found it to be their duty to propose, and the House has been pleased to sanction, such an addition to the expenditure of the country as would necessarily entail an addition to its taxation. It was also the view of the Government that that addition to taxation—the necessity for which was then demonstrated—should be made in the form of doubling the first half-yearly payment of the income tax. At that period war had not been declared, and it was totally impossible for the Government to form any reasonable or trustworthy estimate of the expenses of the year upon a footing of war. It was also impossible for them to judge at what precise time even the calculations of probable outlay connected with a state of things happily so novel to most of us, would be completed; and, moreover, they had to consider that the passing of the income tax, and the doubling of the first half-yearly payment, was a measure requiring to be treated at a very early period of the Session, because the machinery of collection connected with that tax is so complex and laborious, and the time required in preparing it is so considerable, that, unless the House pass it at an early period of the Session, the tax is thrown greatly into arrear; and, in truth, if the financial statement had been materially delayed, many payments of money that ought to be subject to that tax might have escaped it altogether. Under these circumstances it was, and because the course was thought most constitutional, that on
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an early day of March I made an application to the House, on behalf of the Government, for such a sum as they then thought necessary; but they instructed me to state—and I followed the instruetion—that the demand then made on the representatives of the people was not a demand adequate to the requirements of a war—that it was that demand, and that demand only, which we knew had been entailed by the fact that we had sent an expedition to the East; and that in the event of the realisation of that calamity which at that time we all apprehended—in the event, namely, of a declaration of war, and of the continuance of that war—on which we now must, of course, calculate—it would be necessary for me again, on the part of the Government, to appeal to the House afresh, and to make an augmented demand on the resources of the country. Sir, that duty I now rise to discharge; but, before I discharge it, it is necessary, I think, for my own honour, and, I am sure, on account of the respect which I owe to this Committee, that I should advert to the accusations that have been made, industriously enough, occasionally within these walls, and sometimes elsewhere, to the effect, both that the Government is liable to great discredit for the manner in which it has dealt with the essential department of finance, and that, in particular, the person who is now addressing you is totally unfit to be entrusted, with the management of that department. Now, Sir, there are those who say that a period of war is not the time when questions of confidence should be entertained. To that I reply that even as regards an Administration, still more as regards a Minister, and most of all as regards a Minister of Finance, the period of war is the very last when that important trust should be committed to the hands of a man who has been discredited in the view of the House and of the country. It is, therefore, my duty to advert to those accusations; and I am sure that those who hear me—whether or not they agree in all the propositions which I may advance, and however largely it may be necessary for me to tax that patience which I know, from experience, to be unbounded—I am quite certain, I say, that the House will not grudge me the time necessary to make them masters of the facts as they have occurred; since, inasmuch as they are the persons ultimately responsible to the

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people for the management of the funds levied off their industry and their capital. I am bound, so far as I am concerned and as it is possible for me to do, to place in their hands all the information necessary to enable them to form a correct judgment on a matter so important. Sir, it has been stated, in the first instance—and although these matters are retrospective, yet they have a prospective bearing; and I hope the Committee will not deny me, on that account, the time necessary for stating and discussing them properly—it has been stated, in the first instance, that there has been gross mismanagement of the unfunded debt of the country. The particular allegations, Sir, are these:—It has been said, that in the spring of last year the rate of interest on Exchequer bills was rashly and unwisely lowered, with great discredit to those securities, and with an ultimate loss to the public, on account of a necessity thus caused of raising that rate of interest at a subsequent period to a higher sum than would otherwise have been required. That, Sir, undoubtedly is a very serious matter—because the unfunded debt of the country is of vital importance, at least in my view, in a time of war. It is then that you require to have the means of its rapid and easy extension. If you take care in ordinary times to maintain your credit in such a state that you can rapidly and easily extend your unfunded debt in a moment of need, it is perfectly plain that you may dispense, in the interest of the State, with the costly, but otherwise necessary practice, of keeping in hand, and lying idle, a great sum in the shape of an Exchequer balance. Now, I cannot pretend that what was done last spring with respect to the unfunded debt was hastily or thoughtlessly done. On the contrary, I say, it was deliberately and advisedly done; and I am desirous that the Committee should form its own judgment of this proceeding, because, as I said before, the House of Commons is the party who is ultimately responsible to the country, whose authority must ultimately regulate the conduct of finance. I go on, then, Sir, to state that the proceeding was founded on these two principles: in the first place, the public is entitled to borrow money in the market on the best terms which its credit will command; and in the second place, in order that the unfunded debt may be carried to the full height of its utility and power in difficult
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times, you ought to keep it within narrow limits in easy times. These, Sir, were the principles on which I thought it my duty to act. What was the state of things to which I had to apply them? A state of things had grown up in which the premium on Exchequer bills—a security running, according to usage, for twelve months only—amounted frequently to about double the whole interest of the twelve months' currency. What, then, was the effect of this, first, in regard to the holders, and secondly, in regard to the State? As regards the holders, so long as the Exchequer bills were constantly moving upwards, all was well; because a man bought at 50 s., and sold at 60 s.; or he bought at 60 s., and sold at 70 s., and kept his good-humour. But it was plain that that was a state of things which must come to an end. It was impossible that any state of things so irregular and so exceptionable could be continued. Nay, further, it must be evident that that immense amount of premium was adverse to the well-understood interests of the holders of those bills, inasmuch as the amount of the premium was in point of fact the measure of the risk they incurred. If I may explain my meaning, it is this. The man who buys his Exchequer bills at a premium of 5s. or 10 s. knows perfectly these three things:—first of all, that his interest is secure; secondly, that, at a given day, he can recover the principal in full; and thirdly, as a consequence, that the measure of his possible loss is 5s. or 10 s., or the amount of premium he has given for them. But if, on the other hand, he buys at 60 s. or 80 s., he knows, or he ought to know, that his loss may amount to 60 s. or 80 s., because the public are under no obligation to repay that premium, with which, in point of fact, they have nothing whatever to do. And though it may frequently be right to raise the rate of interest on current bills in order to keep them at par, it never can be right to adopt such a measure to keep them at a high premium. Therefore with an extravagant premium is directly connected an insecure condition of the holder. These are the principles of the proceeding, so far as holders are concerned. Now let me look at the case as regards the public. To allow your annual securities to float with a premium of 60 s. or 80 s. simply means, in practice, that you cannot redeem them at all. For, firstly, no man will tell me that it would be a safe operation for the coun-

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try to redeem the whole 8,000,000 l. or 9,000,000 l. which make up either of the two ordinary annual issues at one time. You cannot redeem the whole, because the amount is too large; and you cannot redeem a part, because, while you cannot make an arbitrary choice of one portion of the bills for redemption at par, Parliament would never endure the redemption of an annual security bearing, perhaps, 2½ per cent interest, by adding the premium and so virtually raising that interest to 5 or 6 per cent. What has been the consequence of this in the management of Exchequer bills? Let us look back to what has happened since the peace, and we shall find that since that period the principle upon which we have acted has been this:—when you could get out Exchequer bills at an easy rate of interest, you did so, and there you have let them remain. Times of difficulty came, and you were obliged to fund at a most disadvantageous rate of interest, and a great addition was thus made to the capital of the national debt. In 1819 you funded 27,000,000 l. of Exchequer bills at 5l. 5s. 9d. per cent; in 1821 you funded 7,000,000 l, at 4l. 19 s. 7d. per cent; in 1826 you funded 8,000,000 l. at 4l. 6s. 2d. per cent; and in 1830 you funded 3,000,000 l. at 4l. 1s. 9d. per cent. There have been only two occasions—namely, in the years 1839 and 1841—on which you have funded Exchequer bills since the peace, in which you have not entailed by that funding a permanent burden of from 4l. to 5l. per annum for every 100 l. of Exchequer bills upon yourself and posterity. On those two occasions—in 1839 and 1841—the operations were not indeed so disadvantageous as on other occasions, the rate in 1839 being 3l. 6s. per cent. upon 4,000,000 l. funded; and in 1841, 3l. 7s. 11 d. per cent upon 8,544,000 l. funded. But even these were high rates with reference to the rate of interest which you pay upon Exchequer bills in easy times, and they have entailed a very considerable addition to the capital of the public debt of the country. In short, in no single instance has the unfunded debt been reduced except when the public credit was low, and the price of the funds was below 90 l.. The consequence is, that you never funded 90 l. of Exchequer bills without increasing the aggregate national debt by at least 10 l., and sometimes 11 l. or 12 l. That, I think, is a bad system; and the Committee will observe that the principle upon which I stand is
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this—that in easy times you ought to endeavour to reduce the unfunded debt, because if you wait till difficult times, you have to do it at an enormous cost. I now come to the month of February, 1853, and I find the facts with regard to our proceedings in that year to be these:—the amount of Exchequer bills in currency at that time was 17,740,000 l. The interest was 1½d. per day, or 45 s. per annum, upon one portion of the bills payable in March, and 37 s. per annum upon the other portion, payable in June; but where the interest was 37 s. per annum, the premium upon the bills was no less than 55 s., and it had shortly before been considerably higher. Upon the 15th of February the March bills were advertised for exchange, and it was announced that the new bills were to bear interest at the rate of 1d. per day. Upon the 18th of February, in consequence of the advertisement, the premium upon those Exchequer bills had sunk to only 15 s. Now, I ask whether the operation that was performed was a justifiable operation or not? The exchange of bills followed in March, and then came the test whether the operation which had been performed was a justifiable operation for the public or not. If it was unjustifiable the remedy lay in the holder's hands, he could claim his money. If he did not choose to take his money, but preferred to leave it with the public, then the operation was just. how stand the facts? That advertisement for an exchange was issued on the 15th of February, and in the month of March the holders had the option of sending in their securities and getting their money. Not one person availed himself of that option. 9,000,000 l. of Exchequer bills were advertised in February at 1d. a day. The holders were naturally annoyed, and I regretted deeply that I could think of no other measure than that which my sense of public duty dictated. My duty was to borrow for the public at the best terms which the market afforded, and I have given you a demonstration that the market did afford those terms, because there were three weeks in which persons had an opportunity of getting their money in, and not a man availed himself of that opportunity. What was the condition of the Exchequer bills afterwards? As the year went on the condition on which the country got credit gradually altered. I find, however, that the very first day on which the word "discount" appears in any quo-

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tation of Exchequer bills was the 6th of May, when they were quoted as low as 1s. discount. Upon the 5th of May the Government for the first time made a purchase of Exchequer bills, and they were obliged to pay 2s. premium. We went on from time to time purchasing Exchequer bills, and never until the 5th of August were we able to effect the purchase of a single Exchequer bill at a discount: and then we got them at the discount of 1s. For six months, then, from the period when they were advertised at 1d. a day, it may be said with substantial truth that those bills never were at a discount in the market. What followed was this:—With the advance of summer and towards the approach of autumn the circumstances of the country materially changed; money grew scarce, the harvest was bad, the Bank raised its rates to 4½ and 5 per cent, and the bills were of course proportionately affected; they fell to a more considerable discount. On the 20th of September we bought at 5s. discount; subsequently there was a further fall, and in October the interest was raised to 2d. a day. I think, then, that so far as the question of the impropriety of the reduction of the rate of interest is concerned in itself, and apart from its consequences, I have disposed of that portion of the subject. I now come, therefore, to the other charge, as I understand it, that, in consequence of that reduction, we have had a violent reaction and have been obliged to raise the interest upon Exchequer bills to a rate unduly high. Well, but is the rate at this moment unduly high? At present they bear an interest of 2d. a day, or, in round numbers, about 3l per cent per annum. Is that unduly high, or is it not? What are the tests from which I am to derive the materials of an answer? I decline to take an answer from the mere unsupported and speculative opinions of an individual—because we have the means of ascertaining it by a comparison with positive standards. By what is unduly high I mean what is out of proportion with other transactions, and by a reasonable rate I mean that which is in due proportion to other transactions. I take this test. In the first place, I admit that at present money is tight—not in a very extraordinary degree, but it is decidedly above the average of all the years since the peace. Then, is the rate of interest upon Exchequer bills above the average of all the years since the peace? It is now 3l. per cent per annum;
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but the average interest on Exchequer bills of all the years since the peace is 3l. 5s. per cent per annum. Let me compare it, however, not with itself in former times, but with another description of security—I mean with the rate of discount at the Bank, and let us see what the proportion between the two has usually been. I have before me the rates of discount at the Bank since 1840, and I see no occasion since that year when the rate of discount at the Bank has been, as it now is and has been for six months, at 5 per cent on which the rate of interest on Exchequer bills has not been either 2d. or more than 2d. a day. From March, 1840, to June, 1842, the Bank rate of discount was 5 per cent, and the interest upon Exchequer bills was 2¼d. a day; in June, 1847, the Bank rate of discount was 5l. per cent, and the interest on Exchequer bills was 2d.; in December, 1847, the Bank rate of discount was 6l. per cent, and the interest on Exchequer bills was 3d.; in March, 1848, the Bank discount was 4l. per cent, and the interest on Exchequer bills was renewed at 2d.; and in May, 1854, the Bank rate of discount is 5l. per cent, and the interest upon Exchequer bills is 2d. So far, therefore, as the standard furnished by the Bank rate of discount is concerned, I apprehend you will agree with me that the rate of interest of 2d. a day, which you are at present paying upon Exchequer bills, is not an unreasonably high rate of interest. But I referred upon a former day, without wishing to dwell upon it in detail, to another test, and that is the relative effect which the same tightness of money has produced upon the interest of temporary Government securities in the only other country between which and this country any fair comparison can be drawn—namely, France. In France the annual rate of interest in April, 1853, upon its Exchequer bills, taking the average of the several descriptions or Bons du Trésor was 2¼ per cent; in April, 1854, it was 5 per cent. In England, on the other hand, in April, 1853, it was 1½ per cent; in April, 1854, it was 3 per cent. So that, while the rate bad increased in England by 100 per cent, it had increased in France by 122 per cent. Now, Sir, I have given you the tests of the comparative rates in France and England, and of the rate of discount of the Bank, and of the average rate of interest on Exchequer bills; and I ask you whether I have not demonstrated that

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at this moment you have got your Exchequer bills in the market at a very reasonable rate of interest, considering the circumstances of the times—a rate of interest which I think you will consider yet more reasonable when I tell you that at this rate it has been found practicable to sell some 1,100,000 l., or 1,200,000 l. of those Exchequer bills within the last few weeks, and to add them to the stock in the market, without bringing Exchequer bills to a discount? I apprehend, then, that I have pretty well answered the charge of having wasted the public resources in that respect. The first objection was, that the rate of interest was reduced too low in the beginning of the year, and, then, that it was raised too high in the latter part of the year; but I have shown that it was not too low in the first part according to the principles which I have laid down, and I think also I have shown that it was not too high in the latter part of the year. There is one other circumstance to which I ought further to have referred, and that is, that the period of an easy money market was the period for reducing the unfunded debt. Although in March there was no disposition on the part of the public to reduce the amount of the unfunded debt, because, as I have said, every farthing of it was sent in for renewal, yet in June, when money had become more scarce, 3,000,000 l. of Exchequer bills were sent in for cash, and a very great and sensible relief, I do not hesitate to say, was in that way effected, because that 3,000,000 l. did not cost one farthing to the State, and the public balances remained after that amount was withdrawn in a condition which as I think was perfectly safe and satisfactory. But, as it is said that the transaction with respect to Exchequer bills has in fact cost money to the public, I will just state how that really stands. The charge for interest upon Exchequer bills of 1853, payable in 1854, amounts to 342,000 l. Of course I include the bills that have been bought and cancelled by Government, because, were I to put them out of sight, they would only perplex the calculation. The gross charge amounts to 347,000 1.; but there is a deduction of 5,000 l. to be made on account of the premium that was realised in selling a portion of the bills at the time of the reissue, and this leaves a net charge to the public, therefore, of 342,000 l. Now, with that I must compare the charge as it would have been if I had done that which it is now said by
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some that I ought to have done in order to have saved the public money—that is, kept the rate of interest at 1¼d. instead of reducing it to 1d., and thus have avoided, as no doubt it would have done, the sending in of any bills for money in June. If I had done that—kept the rate of interest at 1¼d. instead of reducing it to 1d., and if, in consequence—which would have been the natural and certain consequence—3,128,000 1. had been exchanged for new bills in June, the charge would have been as follows:—On March bills, 175,000 1.; on June bills, 227,000 l.; making together, 402,000 l. The actual charge, however, has been 342,000 1., and the actual saving, therefore, has been 60,000 l. The right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli) adverted on a former night to my having said, in my financial statement last year, that I anticipated a saving of 65,000 l. on this operation of Exchequer bills. Now, I must say that, considering what have been the vicissitudes of the year, I am not so far from my mark in having come out with 60,000 l. Altogether, Sir, it is a matter of very little importance that reproaches should be cast on me or any individual Minister, but it is a matter of great importance to this Committee—it is a matter of great importance to the House of Commons—that they should have a clear view and a firm understanding of the principle on which the department of finance is to be managed. A Minister, and even the Government, as a whole, is unable to cope with the power of those who deal in the important commodity of money, and who, of course, justifiably, as well as naturally, seek to give a value to the commodity they vend; and it is impossible for the executive Government to do justice to the people of this country except on one condition, which one condition is, that it shall have the support of this House. Now, don't let it be said that this is a time of war, and that, therefore, the question of confidence in the management of your finance should not be raised. It being a time of war is the very reason why you should make up your minds as to whether your financial matters have been mismanaged or not. If you disapprove of what has been done, the sooner I know it the better; if you approve of it, I will continue to act on the same principle on which I have hitherto proceeded. As to the results of my attempt to get out

1423
Exchequer bills at a moderate rate of interest, I have shown that the operation has effected a saving of 60,000 l. on the unfunded debt. I have shown that the rate of interest now being paid is lower than that paid in the only country with which it is possible to draw a comparison, and that the rate we are now paying in a bad time is less than the average rate which has been paid in good and bad times taken together. So much for the matter of Exchequer bills.
Now, as to the question of who is responsible for these transactions. I trust that I have no disposition to evade the responsibility which belongs to my office in any case where it can properly be cast upon me. I am bound to remind the Committee that this matter of the unfunded debt is one for which the Finance Minister is peculiarly responsible. It is a matter which depends upon his discretion, I may say, alone. Of course, it is his duty to get the best advice he can with respect to any project which he meditates; but, having got it, he must make up his mind, and act according to the best of his judgment for the benefit of the community at large. I am responsible for what has been done. I do not disavow it. I do not seek to throw it upon another:—
"Me, me; adsum qui feci; in me convertite ferrum."
Sir, I am not about to enter at any length into an explanation of the scheme for the conversion of a portion of the public debt, but I cannot pass by the subject altogether; and here the charge, which has grown into goodly proportions during the course of the present year, is, that in spite of adverse circumstances—that in spite of the warnings of the wise—a scheme has been prosecuted by the Government which has resulted in heavy loss—a loss not fairly ascribable to the change of circumstances, to the existence of a war, and to deficient harvests, but to the character of the measure originally proposed. Sir, it is easy to pass retrospective judgments: but let us calmly examine the facts. And first the Committee, I am sure, will recollect that this was not a matter like that of the Exchequer bills—it was not a question of mere executive discretion—it was not a vote passed by the House of Commons as a mere affair of confidence. It is true there were many Members who wished to pass the measure as a matter of confidence, and who said, "Let the thing go,
1424
and, if it do not turn out well, we will hold the Finance Minister responsible;" it would probably have been well if their opinion had been followed; but there were other persons, including, more especially, the right hon. Member for Buckinghamshire and the hon. and learned Member for Suffolk (Sir F. Kelly), who claimed, and who exercised, their undoubted right of sifting and discussing the measure—who returned to the charge on frequent occasions, and took many divisions on it during its passage through the House. The actual opinions then expressed are ascertainable. What were the adverse auguries we now hear so much of? What warnings did we receive from those who now take much credit for their wisdom? What were the declarations at that time made? The right hon. Member for Buckinghamshire sometimes states that he is unwilling to quote Hansard; but, after all, when you mean to charge an opponent with inconsistency, the best course is to quote Hansard. If, by so doing, you do not make his case better, at all events you do not make it worse. And if you do not quote Hansard, you may sometimes quote something worse than is to be found in Hansard. On the 8th of April last year, the right hon. Gentleman the Member for Buckinghamshire rose to discuss my scheme, and said at the very first stage of it:—
"He thought it right, before this Resolution was agreed to, to warn the Committee that, from the alterations made in the Resolutions, from the admissions made by the right hon. Chancellor of the Exchequer, and from various other statements, this [the one creating the new stocks] was, in fact, the important Resolution. He wished the Committee to bear that in mind; and he protested against the supposition that, by allowing the Resolution to pass, he, for one, assented to it."—[3 Hansard, cxxv. 874.]
It was a misfortune for the right hon. Gentleman that he did not stop there. The Committee will recollect the maxim which inculcates the prudence of picking out faults and urging objections without assigning any reasons. Happy for the right hon. Gentleman would it have been if, on this occasion, he had acted upon that principle. His evil genius, however, led him on to state why he could not give his assent to the Resolution then under consideration:—
"If the Committee agreed to the conversion of the whole 500,000,000 l. under the second Resolution, he must remind the Committee that the profit to the country would but little exceed 500,000 l. a year; and they should well consider,

1425
whether for such an object as reducing the interest of the debt by 500,000 l. sterling, they would do right to fix the rate of interest at 2½ per cent for more than forty years. That was a most important point, which the Committee appeared to be disposing of in almost a formal manner, but it was a point to which they must give deliberate attention. The interest guaranteed was higher than he for one, thought would prevail during the next forty years."—[Ibid.]
[Mr. MALINS: Hear!] "Hear," says the hon. and learned Member for Wallingford; well, I have a word for him by-and-by. The right hon. Gentleman continued:—
"It was an enormous responsibility to undertake to make such an arrangement, and he trusted the Committee, when they came to discuss the subject on a future occasion, would think it their duty most carefully to consider whether they would assent to it."—[Ibid.]
Such were the objections taken by the right hon. Gentleman at the time of my announcing this scheme. He deemed it. was a wanton sacrifice of the public interest to the interests of the public creditor, a sacrifice the more ruinous inasmuch as it might naturally be expected that the whole 500,000,000 l. of three per cent. debt would be converted under the operation of the Act. It was not the right hon. Gentleman alone who took this view of the transaction. The matter is in the recollection of the Committee. Many objections were taken to the scheme, some of which were very good. One objection was justly taken by one of the hon. Members for Lambeth (Mr. Williams), in reference to the principle of making any addition to the capital of the debt. But I maintain that the chief objection, the only objection of a general character, taken to the scheme was on the ground that it was too favourable to the fundholder, inasmuch as it was grossly improvident to guarantee an interest of 2½ per cent for forty years. This was the point urged almost ad infinitum by the hon. and learned Member for Suffolk. Now, have these objections turned out to be valid? I think I can answer that question in the negative without fear of contradiction. What has turned out to be a valid objection to the scheme is this: that the necessity of paying off the non-assenting South Sea and other minor stockholders led to the withdrawal of the public balances to a greater extent than is convenient in time of war. Who took that objection? That is what I want to know. And now I come to the hon. and learned Member for Wallingford (Mr. Malins). The hon. and learned Member said the other
1426
night that he always foresaw that the plan would fail. What a pity that when the plan was under consideration he sat immovable on his bench. He was then perfectly silent. Why was he silent? It was not for want of the faculty of speech. I may even say—recollecting some occasions when we have received the most valuable assistance from him—that as his silence proceeded from no want of faculty of speech, so also was it not attributable to any indisposition to make use of it on fitting occasions. Nevertheless, the hon. and learned Gentleman remained perfectly silent. The really valid objections to the plan were not taken by any one person among those who found fault with it; and, although I stand here to say it, I was the only man who pressed it on the notice of the Committee that, in case the South Sea creditors should not assent, it would be necessary to pay them off out of the public balances. The right hon. Member for Buckinghamshire was the only other man who named the South Sea creditors, and he did so only in an incidental way, and for the purpose of saying, "I omit all allusion to the plan as far as relates to the conversion of the South Sea annuities." Now, however, a year has elapsed, and a great many Gentlemen are possessed with a most comfortable persuasion that they always disapproved of and objected to the plan, and that, if the Government had only been wise enough to have followed their advice, the inconveniences which have resulted would have been averted. This really is a good example of the way in which what historical students call mythical history arises. An event happens without attracting much notice; subsequently it excites interest; then people look back upon the time now passed and see things, not as they are or were, but through the haze of distance—they see them as they wish them to have been, and what they wish them to have been they believe that they were. Hence we now hear of the multitude of prophets and wise men who foretold the failure of my scheme, and how their warnings were disregarded. I grant that various persons disapproved of the plan, but not one of them foresaw the events that afterwards happened, and not one of them objected, on the ground now taken, and which is now made the subject of so much lamentation—no, not even the hon. and learned Member for Wallingford, whom I take to be the most respectable type of his class. All this is wholly fabulous—

1427
pure myth. But no doubt, irrespective of the opinions of the day, there were facts to which it was our duty to look. I do not want to state the case too high. It is easy for me to say that I regret at this moment that the scheme was brought forward. I do not admit that the scheme I brought forward has resulted in pecuniary loss—and it would be very easy to establish this point—but I think it has resulted in inconveniences of another kind, greater than any limited amount of pecuniary benefit with which it has been attended. I admit it, and I tell you, that if an error has been committed, be it small or great, I am the man on whom the blame ought to fall. At the same time, let us not exaggerate the case against ourselves. Looking back to it now—even after the unfortunate issue of the scheme—it is a matter of opinion and reasonable doubt whether it was not at the time a rational course to take. It is unnecessary to dwell upon the opinion of the Government as to the necessity of a general or permanent reduction in the rate of interest. The opinion of the Government has nothing in the world to do with the question. The question is, what was the the opinion and expectation of the public at the time with reference to the rate of interest upon money? What was the state of the case? In 1852 the bullion in the Bank coffers rose to a higher point than, I believe, was ever before reached, being close upon 22,000,000 l. The exact amount, on July 10, was 21,878,000 l. On the 8th of January, 1853, the bullion had decreased to 19,170,000 l. The right hon. Member for Buckinghamshire, in discussing this question on a former evening, quoted the amount of bullion in the Bank on the 9th of April, 1853, at 18,816,000 l., contrasting it with the very high amount existing a few months before, and gave it to be understood, or, at least, did not prevent it from being understood, that something in the nature of a continuous decline had taken place. Now, Sir, there is not the slightest doubt that a considerable decline in the amount of bullion in the Bank took place in the course of 1852, and the Bank raised the rate of interest upon discount from 2 to 2¼ per cent, and afterwards to 3 per cent. The amount of bullion, which had been 21,878,000 l. on the 10th of July, 1852, was reduced to 17,652,000 l. on the 26th of February, 1853. That, however, was not the time at which we
1428
made our proposal. We made it on the 8th of April; and on the following day the bullion in the Bank had risen to 18,816,000 l., being an increase of rather more than 1,000,000 l. in the four preceding weeks. The limited drain of bullion that occurred was at the time generally accounted for by reference to causes short-lived and local in their operation, such as the demand for gold coin in Australia, which occasioned it in a great degree, and the state of the exchanges in the East Indies and China, which occasioned it in a further degree. These were not permanent causes, and the Government were justified in supposing that they would soon cease to operate. Indeed on the 8th of April it appeared as if either they had ceased to operate or were counteracted and neutralised by other circumstances. Then, with respect to the harvest, the fact is, we have since seen corn at such a high price that we are apt to forget what it was then. True, at that time the prospect of the harvest was not the best, yet that it was not very gloomy is evident from the fact that the average price of corn, which had not varied much for a certain time, was 44 s. 10 d. What was the price of Consols? On the 7th of April Consols were 100½, and after the plan of Government was announced they rose ⅜. There could not be a more distinct proof that, in the opinion of the moneyed world, money was about to be cheaper, because the expectation of cheaper money is at the moment the cause of a rise in the funds. The minimum of the public balances in the Bank in the quarter immediately before had been not less than 4,940,000 l. That was the lowest point they had touched. Other operations in the nature of reductions were going on at the same time. I believe that a great conversion of debt undertaken in France was not, at that time, completed. Another great operation was going on, in the conversion and reduction of the debt of the East India Company from five to four per cent—an operation, moreover, which, up to the present moment, has met with the most perfect success. Again, the bonds of the East India Company have been put out since the month of May last year at a lower rate of interest than was ever experienced before. I say, let us keep these facts in view, in connection with the discussions in this House; and I really think I may venture to hope that I have given something like proof that these warnings of plain,

1429
palpable facts, that could not be misunderstood, and especially these warnings of sages who were all perfectly aware of what would take place, but who did not utter them, do partake of that mythical character which I have dared to impute to them.
Sir, I do not mean to dwell much upon a question of minor interest, namely, the pecuniary results of the operation, although it is a matter of considerable interest; but I may be permitted to say a few words upon them. The 8,000,000 l. have been supplied partly out of surplus income, partly out of balances which were unproductive. It is idle to say we paid off 8,000,000 l. at par, when 100 l. stock might be bought for 90 l. in the market, because our 8,000,000 l. could not have been so employed. As far as we found the money out of surplus income there was a loss, because that would have been invested in stock at rates below par. As far as we found it out of the balances there is a large gain, because those balances produced nothing; and the money we have lately proposed to raise is not, for the most part, to replace the balances, but to meet current charges in anticipation of the produce of taxes. Upon the whole, I think I could show that the operation has resulted in a saving of from 60,000 l. to 100,000 l. a year; a sum which I admit formed no adequate object for an operation of so serious a character.
But, Sir, as I have said, there is one other point connected with this conversion scheme upon which it is necessary that I should address a few observations to the Committee, because it is one of great importance at a moment when, in consequence of a change of circumstances, we certainly must have to meet great, and may have to meet unexpected, demands upon the public revenue. I have just now adverted to that which has turned out to be the only real objection to the conversion scheme—though it was an objection not anticipated by anybody—namely, the inconvenience of withdrawing from the Exchequer so large a sum of money as has been necessary in order to pay 8,000,000 l. to non-assenting stockholders. I must touch upon the question of the state of the public balances. And now, Sir, it is not only desirable for my own sake, and for the sake of the Government, but it is in my judgment most necessary for the public interests, that I should endeavour to dispel the mass of misapprehensions which have gathered round this part
1430
of the question. Some portion of them, I think, are already disposed of by what I stated on a former night; but, having now touched upon it, I hope to make a yet more complete clearance of them. Now, Sir, I think it will not be denied that I am correct when I say that the current belief both within and without these walls has been to the following effect:—that very large sums of money, in the nature of advances, or temporary loans, have been demanded by the Government from the Bank of England; that these demands have been in violation of the spirit of an agreement made between the Government and the Bank in 1844; that they have been made in the present instance without forethought, and without due notice being given to the Bank; that they have been made to the great detriment and inconvenience of trade; and that, moreover, though the loans may be regarded as a favour and an accommodation, yet that they have been taken from the Bank upon a very low rate of interest. Now, Sir, having mentioned the Bank of England, let me here dispel one serious misapprehension. If I say with respect to the Bank of England, that the demands have not been made upon it which are commonly supposed; that the compact of 1844 between the Government and the Bank has not been violated; that the rate of interest which the Government has paid for these advances has not been low; and that trade has not been inconvenienced by the acts of the Government, do not let it be understood for a moment that I intend to cast the slightest imputation upon the Bank. I apprehend that, although there ought always to be harmony and co-operation between the Government and the Bank, yet that at all times the Governor and Deputy Governor of the Bank, on the one side, arc the special guardians of the separate interests of the Bank, while the Chancellor of the Exchequer, on the other side, is the peculiar guardian of the interests of the public; and I say it is the duty of the Chancellor of the Exchequer, on the one side, as it is the duty of the Governor of the Bank on the other side, to assert in friendly argument together whatever they think the several interests of which they arc the special advocates require. I have the happiness to entertain the greatest respect for the present Deputy Governor of the Bank; the Governor of the Bank I have the pleasure and satisfaction of having long called my friend; and I am quite

1431
certain that we shall never be the worse friends because, when we discuss the subject of the public balances, the accommodation due to the public, and the remuneration due to the Bank, he may urge what appears to be for the interest of the Bank, and I may urge what appears to be for the interest of the public. I do not think that on that account we shall have one jot less of cordial satisfaction in co-operating together in every matter which concerns the public interests. In fact, those matters upon which I am now going to enter do not bear upon any demands made by me upon the Bank, nor upon any demands made by the Bank upon me. There has been no demand made by me upon the Bank which has not been satisfied. There has been no demand made by the Bank on me which has not been satisfied. They bear retrospectively upon the question what has been—they bear prospectively upon the question what should be, the right arrangement to make hereafter; but, as I declared on a former occasion, the Government ought never to ask of the Bank to sacrifice its separate interests to the interests of the public, and I am informed by my hon. Friend the Governor of the Bank that he has announced, in a recent meeting of the proprietors, that he has never, upon any occasion, received from me any such demand, but that, on the contrary, I have always recognised the perfect right—nay, the duty—of the Bank to consult its own interests, as those of an institution founded for the advantage of its proprietors, though likewise eminently useful and beneficial to the community. I hope, therefore, it will not be understood that I enter into this discussion with the slightest feeling in regard to the relations between the Government and the Bank. Now, Sir, I believe a noble Lord in another place, who holds an important financial office—I may say at once that I refer to Lord Monteagle—has been loudest in his complaints of the great amount of deficiency bills thrown upon the Bank. I confess I am surprised at the source from which those complaints proceed; because, if action may be taken as an illustration of opinion—which appears not an unfair principle to lay down—I should have thought the noble Lord, looking back to his career as a Chancellor of the Exchequer, would have had a very tender feeling on the subject of deficiency bills. My deficiency bills have been taken under extraordinary and pecu-
1432
liar circumstances, the result of an abortive operation; his deficiency bills were taken from year to year, under circumstances of an usual kind, with his eyes open, with a perfect knowledge of what he was about, and with no disturbing circumstances to contend against. I will state to the House what was the average amount of deficiency bills brought to charge in the four years during which the noble Lord filled the office of Chancellor of the Exchequer. My deficiency bills, upon the average of the last three quarters, have amounted to 3,540,000 l.; his deficiency bills the first year he was in office amounted to 4,287,000 l.; in the second year he improved them, and they amounted to 4,346,000 l.; in the third year he improved them still further, and they amounted to 5,380,000 l.; in the fourth year he again improved them, and they amounted to 5,455,000 l. if the noble Lord had happily for the country continued in the office of Chancellor of the Exchequer till the present day, what, Sir, do you think the amount of his deficiency bills would have been now? Perhaps it may be said—I hope it will not be said—that this was before the Act of 1844; that the issues of the Bank now are based upon a metallic foundation; that at that time the issues of the Bank were not based upon a metallic circulation, and that, consequently, deficiency bills were then mere creations of paper. I say, I hope that observation will not be made, because it really amounts to this—at present we pay our obligations in real money, but at that time we could pay them in money created ad libitum, without any reference to a real equivalent in gold. But I am not making a charge upon this subject; I am only expressing my surprise at the charge made against me by the noble Lord. And now, Sir, I beg to call the particular attention of the Committee to what I have described as the great misapprehensions which prevail respecting the advances demanded by the Government from the Bank upon deficiency bills. This is not the first time that notions of that kind have been abroad. The same fate, though perhaps with less of rigour, befell my right hon. Friend the Member for Halifax (Sir C. Wood), in the spring of 1847. At that period there was a very considerable difficulty as to trading accommodation. Money was much tighter than it is at the present time. Various hon. Gentlemen in this House—among others, the hon. Mem-

1433
ber for Montrose (Mr. Hume), the right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli), and the hon. Member for Huntingdon (Mr. T. Baring)—found great fault with my right hon. Friend, who was then Chancellor of the Exchequer, for having withdrawn from the Bank, in the form of a temporary loan, the money that was necessary for the accommodation of the trade of the country. That was the impression that prevailed, and the strongest proof of that impression I find contained in the declaration in this House of an hon. Friend of mine, of great commercial experience, one of the Members for the City of London, a man who, I believe, whatever his party connections may happen to be, never uttered a word in this House with respect to a question of finance under the influence of party feeling or party prejudice. Mr. Master-man, on the 10th of May, 1847, censured what he termed "the improper arrangements made by the Chancellor of the Exchequer," and declared it to be his opinion that—
"it was impossible for the Bank, under the existing Act, to come forward at those quarterly periods, to advance two or three millions on deficiency bills, and at the same time to do justice to the commercial community." [3 Hansard, xcii. 607.]
Having made that statement, he went on to make a Motion, which it is unnecessary for me to read to the Committee, but the purport of it was, that nothing would be so beneficial as an arrangement of this kind on the part of the Government, that when Government required advances upon deficiency bills, they should take them, not from the banking department, but from the issue department of the Bank—that such advances should be paper issues founded upon the national credit, and not founded on the metallic basis which we have adopted for our currency. [Mr. MALINS: Hear, hear!] That is cheered by the learned Member for Wallingford. It is a very plausible proposal indeed, and if the facts were rightly taken, I might join in the cheer; but the hon. Member for London was then, and the hon. and learned Member for Wallingford is now, labouring under the most complete and the most unfortunate delusion upon the subject. My right hon. Friend during that quarter never took one farthing out of the Bank of England; and if you please, you may see that fact demonstrated, to the satisfaction even of the hon. and learned
1434
Member for Wallingford, in returns which may be laid on the table of the House. It is perfectly true that my right hon. Friend took a great quantity of deficiency bills; but if you choose to take 1,000 l. by way of loan, from your banker, when you have 1,500 l. or 2,000 l. in his till, I hold that, so far from his being your creditor, you are his creditor. [Mr. MAIANS: Hear, hear!] So we are agreed upon that proposition. Very good; I am entirely satisfied. The hon. and learned Gentleman and I have made a compact across the table. From that point let us start together; and I venture to say that if he follows me to the end, we shall become the best possible friends at the close of the journey. My right hon. Friend the Member for Halifax, in the month of April, 1847, took deficiency bills to the amount of 2,475,000 l. and he liquidated his last bill on May 15, 1847; but the minimum excess of the public balances in the Bank on any day during that quarter over the advance in deficiency bills was 1,696,000 l.; and therefore I most respectfully submit that, instead of my right hon. Friend having taken accommodation from commerce, he was giving accommodation to commerce. He certainly was giving less accommodation to commerce than would have been the case if he had taken no deficiency bills; still, at the same time, he was giving accommodation to commerce, and the complaint made against him was neither more nor less than this, that he was claiming and exercising the right to make use of his own money. He made use of it with such a liberal and generous spirit that the smallest sum he left in the hands of the Bank on any one day was 1,696,000 l. But the question has been asked of me—"Why borrow from your banker when you have money of your own with him?" That is a question not so easy to answer as some may suppose. All I can say is, that such is the system which we find established; and though my notions with regard to these matters are very revolutionary, I have not yet reached such a pitch of boldness as to say that I have as yet objected altogether to borrowing from our banker, even though we may have money in his hands. But, Sir, I come now to my own delinquency, which is the most important of all, because I am held up, not as an occasional borrower—a man who borrowed only occasionally might be forgiven—but the right hon. Gentleman the Member for Buckinghamshire has repeatedly termed me in this House an

1435
"habitual borrower." It has been said, that the Finance Department, while it has been in my hands, has systematically borrowed from the Bank. My answer is, that I have borrowed in consequence of the large drain caused by the liquidation of minor stocks and by other circumstances; but I think I cannot fairly be called an "habitual" borrower, and for this reason—I have borrowed only once from the Bank. I am accused of borrowing during the last quarter. I can assure you, Sir, it was exactly a repetition of the case of my right hon. Friend the Member for Halifax. I was not indeed quite so liberal as he was; I was not able to leave quite so large a balance with the Bank as was left by my right hon. Friend; but though it was currently reported and believed that I was a borrower of 3,000,000 l. or 4,000,000 l. during the last quarter, I never bad one shilling. The amount of deficiency bills issued last quarter was 3,711,000 l.; and the amount actually brought to charge was 2,490,000 l. upon which 3,764 l. of interest was paid. Now mark—while we took these deficiency bills and paid that interest, the excess of deposits in the Bank over the advances for deficiency bills was never less than 1,160,000 l. So much for the case of the last quarter as regards the deficiency hills. And now, having stated that I have borrowed only once, and that I have had at all other times an excess of balance in the Bank, I hope the right hon. Gentleman the Member for Buckinghamshire will let me know, after that, how he construes the term "habitual borrower," which be has repeatedly applied to me in this House. Now, Sir, we conic to the April quarter, and here I am most desirous that no misapprehension should prevail. I believe I am correct in stating that when the public read the account of income and charge on the Consolidated Fund at the end of the last quarter, they saw stated at the close of that account as the amount of Exchequer bills which would probably be required to cover the deficiency on the Consolidated Fund the cum of 5,852,048 l.; and I believe the public were under the impression—nay, I may even go further and say that the great bulk of the Members of this House were likewise under the impression—that that was really the amount of a loan which I had contracted with the Bank, and which I was to retain until the incomings of the revenue enabled me to liquidate it. I say, then,
1436
that if such an impression does prevail, and if it is an unfounded impression, it is of the greatest importance to the public interests that it should be dispelled, and that the truth should be made known as to the strength and independence of the public Exchequer. It is of the greatest importance to the public interests that these sham, fictitious figures—I mean fictitious as arising out of a defective form of account—which are only calculated to mislead and deceive, not however intentionally, and to create alarm in the public mind, should have their right value put upon them. I do not mean to say that the account is not correct as it stands; but the figures are deceptive and fictitious, because the account is unwisely framed. If it is true that such loans are contracted, I cannot be surprised at the alarm that has been created in the public mind; if it is untrue, it is most desirable that the public should be undeceived on the subject. I have done what lay in my power to place the matter on a proper footing, and I shall continue my efforts in the same direction. As I have said, the deficiency of income and charge in April was stated in the quarterly returns at 5,852,048 l., to which should be added another sum of 240,000 l. (which had, by a mistake, been taken from the Bank in the form of Consolidated Fund Bills, and, therefore, did not appear in the quarterly account), making the total nominal amount of advance to be required from the Bank of England, 6,092,092 l. Now, the maximum amount issuable at one time, according to the usual practice, was 5,643,000 l., and the amount on which the public would have paid interest would have been 4,730,000 l. And this reminds me that it has been stated in another place that no change in the mode of issuing deficiency bills could have been required with a view to economy, because interest is only paid on the amount which is issued. I will let the Committee judge of the accuracy of that statement from the facts which I have already mentioned—namely, that in the last quarter, when we paid 3,764 l. for interest, we had not one shilling from the Bank, but the minimum balance we had there was 1,160,000 l. It is, therefore, for the Committee to form a judgment whether interest is charged upon real and substantial or upon nominal deficiency bills. But, as I have said, the amount which would have been brought to charge according to the existing practice in the present quarter would have been

1437
4,730,000 l. The maximum amount which has actually been brought to charge, in consequence of the mode of issue which has been adopted, is 3,048,000 l. Sir, I repeat I have been a borrower during the present quarter under peculiar and extraordinary circumstances; and the maximum excess of the Bank advances over the public balances during the present quarter has been 1,350,000 l. On a former night, anxious not to overstate the case, and not having at that period, although I had been working pretty hard, completely penetrated into the inscrutable mystery of deficiency bills, I was not aware of the exact particulars of the whole arrangement. I then stated that the cash advanced by the Bank amounted to 2,150,000 l.; but I stated the case very much against myself, because the maximum excess of the Bank advances, on the 19th of April, was only 1,350,000 l. The average debt of the Government to the Bank, from the 5th of April until last week, may have amounted to about 900,000 l.—the sum of 1,350,000 l. being the maximum debt—and I believe that at the present moment that debt is entirely extinct. Therefore, Sir, I think I have disposed of the charge made against me that I have been an habitual borrower from the Bank. I hope, also, I have disposed of the charge that I have been an enormous borrower, because it appears that, under very extraordinary and peculiar circumstances, the sum I have borrowed has been on an average 900,000 l., and that for a period of between four and five weeks. The fact is—and it is perfectly obvious—that the Bank is not complaining that we take 900,000 l. or 1,000,000 l. Those are altogether trivial sums, and would scarcely affect the accounts of that great institution one way or another. The real truth is, that the public has had occasion to withdraw a great mass of money from the coffers of the Bank; and the important question which you have to consider is, whether the public is or is not entitled to make use of its own deposits. The Bank, however, is not a complaining party; and I trust I have shown that the charges that have been made against me with respect to enormous and habitual borrowing are charges not founded on justice.
I ought, perhaps, to mention—in order to make that part of my case complete—that out of the petty sum of 1,350,000 l. the amount of no less than 830,000 l. is due to the rapid growth of the supply
1438
charges connected with the Navy and Ordnance Departments for the expedition to the East. In point of fact, therefore, but for these charges, the whole advances that the failure of these financial operations, which it is supposed have turned the country topsy-turvy, have rendered necessary would have been, for a fortnight, from 400,000 l. to 500,000 l. It has been said, however, that there has been some violation of an understanding between the Government and the Bank. Now, there could not possibly be a more gross error. When the right hon. Member for the University of Cambridge (Mr. Goulburn), along with the late Sir Robert Peel, made, in the year 1844, the arrangement which governs the relations between the Government and the Bank, they distinctly recorded in their correspondence the terms of that arrangement so far as deposits are concerned. What they contemplated was, the maintenance of "the usual amount" of deposits, which I need scarcely say means the usual amount of deficiency bills, for one is the correlative of the other. It was also agreed that if, on the one hand, the public balances should be increased beyond the usual amount, the Government were to have a claim upon the Bank for a share of the profits; but if, on the other hand, the balances should be diminished below what they commonly were, then the Bank was to be entitled to remuneration from the Government. Well, Sir, in order to ascertain what was meant by "the usual amount" of the advances, on deficiency bills, I thought perhaps the fairest manner would be to take the average amount in the two quarters immediately preceding the agreement of 1844. Were I to go further back, and test the "usual amount by the average of a larger number of quarters, the amount would be larger, and therefore still more in my favour. I will then assume the amount for the two quarters only to have been taken as the foundation of the compact; and it was an amount exceeding that which I have taken during the last two quarters, under extraordinary and peculiar circumstances of pressure; the average of those quarters was 4,714,000; the average of the two last has been 4,591,000 l. And now, Sir, with regard to notice. It has been charged against me that proper notice was not given to the Bank. It is supposed that the demand was suddenly made—that nothing was done by me to prepare the Bank authorities for what

1439
was coming. This is in reality the important point of the case. I see hon. Friends of mine present who are conversant with banking, and I venture to say before them that the suddenness of the demand is the most important part of the question. If the demand was foreseen it could be provided for, and if it was to be provided for at all the diminution of the resources of the Bank would be just the same whether you took away 3,000,000 l. deposits or called for 3,000,000 l. upon deficiency bills. The suddenness of the demand is, as I have said, an important clement of the question; but I have not to blame myself for a sudden demand, for I have in my hand a memorandum which I prepared on the 26th of July, 1853, and which I then put into the hands of the Governor of the Bank of England, and in that memorandum I pointed out that, as it was exceedingly probable the operations with regard to the minor stocks would fail, we might, on the 5th of January, demand deficiency bills to the amount of 3,300,000 l. That was, in fact, more than the amount which was actually taken. I trust, therefore, that as far as notice was concerned I was not unmindful of what was due to the Bank and to the great interests involved. It is proper, also, to state that, although the authorities of the Bank have since laboured under circumstances of some difficulty which could not then have been foreseen, at the period when my memorandum was delivered, not the slightest objection was made to my proposal; and as to the inconvenience that has arisen, it is that kind of inconvenience which will necessarily follow great and sudden changes in politics and in commerce. With respect, Sir, to the accommodation of trade, I believe I need not go deeply into that question, because trade has not been injured, and has not complained. Considering that we are now in a state of war, and that the harvest is said to have been one of the worst that has occurred since 1816, I do not think that a state of things in which, for the greater number of weeks in this year, the rate of discount in Lombard Street has been below 5 per cent is much to be complained of. I wish further to say one word upon the rate of interest, because an impression has prevailed that those enormous advances which I have shown you never existed were demanded from the Bank by the Government at rates of interest lower than the rates ruling in the market. That again is a total and entire
1440
delusion. The rate of interest, I grant, is apparently very low; but really it is not so. The usual form is, that the Chancellor of the Exchequer, before the end of the quarter, writes to the Governor of the Bank of England, and expresses his wish that the Court of Directors should provide whatever may be wanted on deficiency bills to meet the charges of the ensuing quarter. The interest last year was 1d. a day; it is now 2d. a day, or about 3 per cent—undoubtedly a very low rate of interest; but I think you will not consider it so low when you recollect that the Bank received in the last quarter nearly 4,000 l. as interest upon deficiency bills, while there was no real advance at all, inasmuch as the minimum of the excess of the public balances over the Bank advances was 1,160,000 l. Now, if the trouble of keeping the public accounts is not worth the profit they yield, undoubtedly the Bank is entitled to extra remuneration; but, taking the Exchequer and dividend accounts together, I will venture to say, with respect to the rate of interest we are now paying for the present quarter, that although the nominal rate is 3 per cent per annum, the real rate we are paying upon the excess of the balances advanced to us by the Bank varies from day to day between 4 and 5 per cent, according to the issue of deficiency bills as that issue has been regulated by me, and that, if the issue of deficiency bills had been regulated in the ordinary manner, the rate of interest would have been from 6 to 7 per cent. I do not call that an immoderately low rate of interest for the public to pay upon deficiency bills; at all events, it disposes, I think, of the notion that the Bank has been called upon to sacrifice its interests by taking from the Government a too low rate of interest. Now, Sir, the question arises, whence is it that all these delusions have arisen? Why is it that the public is so completely in the dark with respect to the issue of deficiency bills? Why is it this House, too, seems so completely in the dark, for many hon. Members have been under the impression that we have contracted these great loans of 3,000,000 l., 4,000,000 l., 5,000,000 l., or 6,000,000 l. Nay, we have higher authority on this subject than that of any ordinary Member of the House. Many will recollect the speech of the hon. Member for Peterborough (Mr. Thomson Hankey), a gentleman who was himself Governor of the Bank last year, in which he

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declared, in his place in this House, and he was believed by the right hon. Gentleman the Member for Buckinghamshire and several others, that we should be obliged to demand from the Bank in the present quarter an advance of 4,500,000 l., and that he did not think even that sum would be sufficient to meet the emergency. That was the belief of a most intelligent gentleman, who has only just relinquished the high office of Governor of the Bank of England. The hon. Gentleman believed that we should want 4,500,000 l., but, as I have informed the Committee, the advances we have required have never reached one-third of that amount. The hon. Gentleman was deluded, and why? Because we have a fictitious statement of accounts—a statement of accounts written and made out as if for the purpose of mystery. There are a class of people who think mystery in finance one of the greatest virtues. That is not an opinion which I entertain, but I am not sure that it may not be held, to some degree, by the present Comptroller of the Exchequer. Lord Grey, also, it appears, was somewhat indignant upon the subject of the alteration in the mode of issuing deficiency bills; and when I mention the name of that noble Earl I must say that I never can refer to him except in terms accordant with the sincere respect I entertain for his character, his abilities, and his patriotism. Lord Grey is stated to have said that the object or the effect of the change in the mode of issuing deficiency bills has been to blind the public. Now, there is a very short answer to that statement. The effect of the change could not possibly be to blind the public, for the public was, unfortunately, stone-blind already. It was impossible for the public to be more blind than they were, for they believed that 6,000,000 l. were to be advanced where the advance of only about 1,000,0001. was required, and that 3,000,000 l. were to be demanded when none was demanded at all. I admit, Sir, that I have altered the mode of issuing deficiency bills. I have done so by endeavouring to place it upon precisely the same principle which is applied to the issue of money for all other public purposes. We have in this case to consider two questions. One of them is a question of policy, and that question we must keep carefully separate from the other. The question of policy is whether it is right that you should have in your coffers, at the end of each quarter, a sum sufficient to meet the whole charge
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that is becoming due, or whether you should trust for part of that charge to the income of the ensuing quarter? That is a most important question of policy, which I do not wish at this moment to prejudge. On the present occasion the question for our consideration is simply this—whether, supposing we have not got in our coffers a sum sufficient to meet all the Consolidated Fund charges at the beginning of the quarter, we should on the first day of each quarter create an unnecessary debt, in order to create a needless credit to the abstract amount of those charges, totally independent, not only of the improbability, but of the impossibility, of their having to be met at the commencement of the quarter. Now, it should be remembered, that the public has a scale of transactions so large that they are able to equalise their accounts in a manner that would be impracticable in the case of more limited transactions. I may state to the Committee what is the established practice. Suppose there are a great number of bills coming from different quarters, and falling due upon a given day—it is not the practice to issue at the commencement of that day the whole money required to meet all these bills; first, because it is very well known from experience what is a safe margin, and what claims are likely to be sent in; and, secondly, because, although it never did happen, yet if it should chance that more claims than had been anticipated were sent in, it would be perfectly easy to make a fresh issue. Such is the case with regard to deficiency bills. These bills are issued for large amounts, for example, of 50,000 l. each, to the Bank, to be held by the Bank. You may by such means create a credit of 5,000,000 l. in five minutes; but why, if you have a sum of 6,000,000 l. to pay on different days throughout the quarter, should you issue at the beginning of each quarter deficiency bills to the full amount of the Consolidated Fund charges that are coming due? You must then have more than you will require, because those charges are never all made at the beginning of the quarter, and to the extent of your surplus deficiency bills you will have created an unnecessary loan, upon which the public must pay interest from the first. Common sense, common reason, and common practice are all opposed to such a system. As I have already said, I now speak of what was done with reference to the April dividends.

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As respects the law applicable to those dividends, I do not believe it to be subject to any reasonable doubt. With reference to the July dividends, a question has arisen which we at the Treasury do not think a very serious one, but it is one which will require some consideration—whether the law in its present form, under the Loan Acts, combined with the Deficiency Bills Act—whether the law requires us to adhere to the very mischievous and expensive, and, let me add, more than expensive—the delusive practice of making a large issue, and creating an immense unnecessary credit. I am about to take the opinion of the law officers of the Crown on that point. Unless their opinion is favourable, I shall not, of course, think myself justified in introducing that reformation, after having agreed to take their opinion; but my present impression is, that my course will be to come to this House and to request you to interfere, so as to place the course of proceeding on a reasonable footing. As to the April dividends, the Act of 1844 did not require that practice to be followed; and after consulting the legal advisers of the department, we had no doubt as to the law of the case, so far as regards those dividends.
Sir, though this matter is one of great importance, I am aware of the dryness of it. I will not enter further into it. I am greatly indebted to the Committee for the patience with which they have heard me, although there is much more that I could say upon the subject; and if I do not say it, I must only beg the Committee to believe that it is from no disposition on my part to reserve anything; but because the clock admonishes me that I have occupied a considerable time already, and there is much yet that is before me. Assisted by the patience and indulgence of the Committee, I have now gone through those charges brought against the Government of mismanagement with respect to the unfunded debt, of reckless disregard to the warnings both of fact and of intelligent persons with respect to the scheme for the conversion of the debt, and of some mystical operations contrived for the purpose of blinding the public with respect to the mode of charging the deficiency bills; and I venture to hope I have so far explained those matters, and my own conduct with respect to them, that I may now proceed at once, without prejudice or discredit in their opinion, to explain the views which the Government entertain
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with regard to the measures demanded by the exigencies of the public service.
The Committee will be kind enough to revert to the words with which I opened my address. As they will recollect, I referred to what took place on the 6th of March, and to the temporary provision then made for the purpose of meeting the expenses that had been incurred by the Government in sending an expedition to the East. I will not, Sir, at this period, travel again over the ground which I then occupied; but I will take that day as my starting point, and will proceed to explain our further views and proposals, only reminding you of these facts, that there was on the 6th of March an excess on the Estimates of 4,307,000 l.; that in this 4,307,000 l. was included a sum of 1,250,000 l., taken for extraordinary expenses of the war; that the ordinary revenue of the country was unequal, by a sum of 2,840,000 l., to meet the charges that had been incurred by the Estimates, and the sum estimated for extraordinaries; whereas, if there had been no increase in the Estimates, we should have had, in lieu of that deficiency of 2,840,000 l., a surplus of 1,666,000 l. The Government then asked, and the House agreed to grant, half a year's double income tax, which it was anticipated would yield us 3,307,000 l.; and having added that sum to the amount of revenue estimated, it showed a total revenue of 56,656,000 l. against a total estimated expenditure of 56,189,000 l., or a surplus of 467,000 l. Since that time, Sir, new Estimates have been framed, and my Colleagues, as well as myself, can assure the House that we have lost no time either in framing those Estimates, in endeavouring to calculate the probable scale of the war expenditure, or of bringing those Estimates, when framed, under the consideration of the House. They have been submitted to you on the part of the Naval Department, the Army, and the Ordnance. For the Navy, Government asks for an additional vote of 4,550,000 l., a sum required for its own charges and the services it performs on behalf of the other great departments. The charge for the Army is 300,000 l. The charge for the Ordnance is 640,000 l. In my first financial statement it will be recollected that I estimated for the militia the sum of 500,000 l. Since then it has been announced in this House that Her Majesty's Government proposes to take

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power, and to act on that power, of embodying a portion of the militia—probably 15,000 men—and the expense of that operation will require an additional sum of 500,000 l. for the militia expenditure for the year, or 1,000,000 l. altogether, though adding only 500,000 l. to the new or supplemental Estimates. Putting together the items of the supplementary Estimates we now ask for—4,550,000 l. for the Navy, 300,000 l. for the Army, 640,000 l. for the Ordnance, and 500,000 l. for the Militia, and we find a total of 6,000,000 l. to provide for. But, Sir, in time of war, in proportion to the increase of our known charges, we must also make provision for the increase of charges unknown; and although 1,250,000 l. appeared sufficient in the month of March, when it was possible the expedition sent to the East might return to our shores without having drawn the sword, now it is different. Blood has been shed—operations have been performed—and the only rational view is to presume we must snake provision for a war expenditure for the year. Therefore, besides all the services, which are estimated for in strict Parliamentary phrase, I put 850,000 l. to the 1,250,000 l. already adverted to, and the total is 2,100,000 l. for which we shall probably ask for a vote of credit. The exact form and amount of the Vote are not yet determined upon, and it may be convenient to wait a little longer before determining them; but I wish the Committee to understand that the Government will ask for a sum not less than 2,100,000 l., to be applicable at the discretion of the Government, to services which may arise in the course of the war. I beg the Committee to keep apart from the question we are now discussing another question, and a very important question—namely, whether cash ought not to be placed at the command of the Government, over and above the sums I have named. That is altogether a distinct question, and one on which I shall presently touch. I am now speaking of the amount of Votes we propose to ask of Parliament, as at present advised and using the best information in our power; and the result is, we ask the Committee to make a provision, which I hope will be adequate for the expenses of the year—a provision in addition to that already granted of 6,850,000 l. The view taken by the Government, and the conviction at which they have arrived, are, that this sum of 6,850,000 l. ought to be
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provided by an addition to the taxation of the country. They have thought it their duty carefully to consider what were the items upon which an increase of taxation might most justly and fairly be levied; and, in the first instance, the mind of every man who hears me will no doubt have outrun the course of my observations with respect to one great portion of those items. I may, therefore, do best, first of all, to state that we propose to execute that intention which we formed contingently some time ago—namely, that in case of the necessity arising for further demands upon the country for means to meet the expenses occasioned by the war, we ought to look first to repeating on the income tax that operation which we have already applied to the first half-year's payment. I see the right hon. Gentleman the Member for Lincolnshire (Mr. Christopher) smiles at my proposal: there cannot be a better omen of success, for I presume I may anticipate, from that cordial and genial smile, that I shall have his support. The income tax, as it stood under the law of 1853, was estimated to yield 6,275,000 l. The Resolution adopted by this Committee in March, 1854, added to it 3,307,000 l., making a total of 9,582,000 l. The second half-yearly payment of the income tax, which we propose to add to the first, will not amount precisely to the same sum, because the first half-year includes a somewhat greater amount of arrears; but we estimate it at 3,250,000 1., which, added to the previous sum of 9,582,000 l., will raise the total produce of the income tax for the year 1854–55 to very nearly the sum of 13,000,000 l.—that is to say, to 12,832,000 l. We propose, then, to double the income tax; and what 1 have described thus far is the fulfilment of an intention with regard to which the mind of almost every man who hears me had probably anticipated the policy of the Government. But Her Majesty's Government are of opinion that it is their duty, having now entered into war, to place the finances of the country for that war—so far as it is within their command to do it—on a firm and stable footing, by an adherence to former precedent; and although, so long as we had the slightest hope, the faintest imagination, that the expenditure might be temporary, we adopted in our war Estimates the constitutional course of limiting our demands both to the smallest sum and to the shortest time, yet when we come to make provision for a war in actual progress,

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we think it our duty to ask you to enable us to make that provision as it was made in former times, when your forefathers were called on to struggle for objects of national duty, national character, and national interests, and when they granted augmentations of the taxes which were to subsist during the period of that war. We, therefore, shall ask the Committee to grant the augmentation of the income tax now proposed—that is, the augmentation from 7d. to 14 d. in the pound for the period of the war. It is not my intention to ask the House to come to any decision on the subject in the Resolution that will be proposed. According to precedent, the proper course will be to affirm in the Resolution the propriety of the increase, and the limit of time, if our proposal is adopted, will be made on the subsequent introduction of the Bill. In the Bill, therefore, we shall employ terms as nearly as possible corresponding with the terms employed on former occasions. The effect of these will be to place at the disposal of the Government, for services to be approved by Parliament, the income tax at the rate of 1s. 2d. in the pound for the period of the war—of course retaining the distinction of the fivepenny rate), which will only be raised to 10 d.) in the case of incomes from 100 l. to 150 l. a year. We shall also propose in conformity—as far as we are able to preserve that conformity—with the intimation of last year, that in the event—of which God grant the realisation—in the event of the termination of the war, pending the operation of the income tax Act of 1853, the augmented income tax shall cease, and we shall fall back on the precise terms of the income tax as they were adjusted in the measure of last year.
The Committee will see that I have now arrived at the point when thus much will be obvious to them—that the total provision to be made by means of new taxes, after so applying the surplus of 1,660,000 l., which remains over to us from the former year, will equal about 10,000,000 l. I have stated to the Committee our intentions about the income tax, which brings us to this point—that we propose to make provision from that source for about two-thirds of the entire expenditure. Then arises the question from whence further ways and means are to be drawn. That is a question which, of course, we have been called on most carefully to consider. There are those who think of the
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income tax so highly, that they would be willing to see it carried to a very considerably greater percentage than we propose—for instance, to a percentage of 10 per cent—without entering on the question of any other augmentation of taxes. Sir, the Government, aware of the value of the income tax for the purposes of war, and having shown themselves, I think, not indisposed to avail themselves of it as an instrument for fulfilling those purposes, yet are not inclined to push the doctrine of the expediency of the income tax to so extreme a point. We do not think it is just in principle that the class or classes whose incomes range from 100 l. to 150 l. a year and upwards, should bear the whole expenditure of a war entered into for national purposes. The income tax may fall very lightly on gentlemen of great wealth, and it does fall lightly upon them; but we cannot think of opening the general question of a graduated income tax. The same firm intention to keep the finances of the country apart—if we can keep them apart—from every dangerous and disorganising question which forbad us last year from entering on what we believed the visionary and mischievous scheme of attempting to apportion a tax to the value of different interests in income—that same principle forbids any attempt to apportion the rate of taxation to all the different and varying classes of income according to their amounts. That then being so, and looking to the bearing of the income tax on men with 100 l. a year, and men with 150 l. a year, and men with 200 l. a year, and men with 300 l. a year—upon many of those persons with wives and families to support, and with the character and position of men of education and refinement to sustain—and seeing that we cannot deny the severity of the burden already brought to bear on them, we do not feel it to be consistent with a sense of public duty to propose that they should be the exclusive bearers of such burdens. Neither are there any other direct taxes which the Government are prepared at the present moment to augment. So far as the assessed taxes are concerned—if you call those direct taxes, which is an appellation of doubtful propriety—it is obvious that we should entirely risk the new system of the assessed taxes, which the Committee will recollect was entirely re-constructed by the measure of last year, if we were to meddle with it at the present moment; because while in that year we greatly

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reduced and simplified the rate of taxation, we brought within its sweep a great number of persons and objects previously exempt. We invited those persons to fix their establishments between October, 1853, and April, 1854, according to the certain rates of tax which were to be levied in 1854–55; and it would be as if we had drawn them into a trap, and, as I said before, would endanger the continuance of the measure, and cause the risk of a reintroduction of the vicious system of exemptions, if we increased the assessed taxes under present circumstances. Neither are there any other direct taxes which we propose to increase.
There are several of the indirect taxes to which I will advert, and which have been under the consideration of the Government; but, in briefly stating the intentions of the Government, I will first take those articles on which we do not propose at the present time any change. Now, in the first place, there is one subject which primâ facie has great attractions, and which almost forces itself on the consideration of a Minister of Finance, driven to his wits' end for means of enlarging the resources of the country; that is an alteration of the rates of postage; because an alteration of the rate of postage is attended by this strong recommendation, that the whole increase realised would give a net increase, while the expenditure would probably be even diminished. But, Sir, the Government are not disposed to propose any such alteration. They think that that scheme has been admirably successful—that it has contributed, in a degree which hardly any one could be sanguine enough to anticipate, to the comforts of the people—that it is a great civilising and humanising agent—that its moral advantages are not less striking than its economical recommendations—and I am bound to say that in a fiscal point of view it has answered every expectation which could be rationally formed of it; for while in the year 1840 the net proceeds of postage revenue were 447,000 l., in 1847 they had risen to 845,000 l., and in 1853 they had risen to 1,104,000 l. It may be recollected that in the year of the Great Exhibition, the sudden addition to the postage of the country was so enormous, that a reaction in the revenue was expected in the next year; but any one who looks over the annual lists can scarcely detect which was the year of the Great Exhibition, so rapid and yet so steady has
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been the growth of receipts under this most desirable and most advantageous system. The doubling of postage, unless it were extended to the district posts, would not bring in more than 600,000 l. a year; and if extended to the district posts would not be more than 750,000 l.; so that, under the present circumstances, the Government are decidedly of opinion that it would not be wise to attempt any change in respect to postage, except such changes as may tend further to extend and augment the accommodation which it affords to the public. They have lately succeeded in making one arrangement which, indeed, would render any interference with the law at this moment peculiarly unseasonable. A most valuable public servant, a man of unimpeached honour, of great assiduity, and of excellent abilities, who was Secretary to the Post Office at the time this change was adopted, and has continued Secretary until the present time, I mean Colonel Maberley, now retires from office to another post in the public service with the full confidence and approbation of all under whom he has served. But, without disparagement to any one, it will be obvious to the Committee that there is a great advantage in placing the development of the postage-system under the immediate care and superintendence of the gentleman who has the happiness of thinking that he stands recorded before the world, and that his name will be handed down to posterity, as the author of that system. Mr. Rowland Hill has, within the last few weeks, assumed the office of Secretary to the Post Office; and if we have seen that system extend and multiply its benefits with great rapidity heretofore, yet from the parental fondness for the system, which we may well presume, and from the great ability of that gentleman, we are justified in anticipating for the future, other circumstances remaining propitious, a still more rapid increase than the country has either seen or supposed possible.
Sir, something has been said out of doors on the subject of reimposing the taxes remitted last year. I do not know that it is necessary for me to refer to the subject of the soap duties; but if I do refer to it, I need not detain the Committee by discussing it. Government do not intend to propose their reimposition. It is dangerous to indulge in abstract or even general declarations; but I entertain the hope that nothing but the last ex-

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tremity will ever induce the representatives of the people of this country to replace the fetters of Excise restriction upon any trade in cases where they have been once removed. The emancipation of trade we are persuaded will rapidly produce national benefits far outweighing the loss of revenue, and we do not propose, therefore, to interfere with the operation of measures which we are persuaded are so beneficial to the community at large. Another case which I will likewise refer to—because it was dealt with last year, and because it falls within the objections made by some, that revenue was then unduly sacrificed—is the case of the tea duties. We cannot, on the whole, think it compatible with our duty to propose any change at the present moment in the scale of duties which were imposed on tea by the measures of last year. The Committee will recollect that the case is a peculiar one. It was determined to lower the heavy duty payable on tea, not by a single stroke, but by a succession of falls, until it should arrive at the level of a shilling. To attempt any alteration in a duty like that is to interfere, not with a particular rate, but with a complex process of reductions. We ought, too, especially to bear in mind the bearing of the tea duty in England on China. It is not like an article grown for all the markets in the world. The tea of China is grown, I may say, for England. I do not mean to say that it is grown entirely and exclusively for England; a large portion of it goes to the United States, and a trifling portion to the Continent; but much more than one-half—two-thirds—perhaps of all the tea grown in China is grown for and exported to our market. Now, the object of the measures taken last year was to encourage the adoption of steps in China which would lead to a great increase in the available quantity of tea grown and prepared there for export. Those measures would necessarily extend over a series of years, and, if we were to interfere with them for the sake of supplying a want which I trust may yet possibly be only short-lived, we should run the risk of doing damage to the expectations which may be entertained with reference to the increased supplies which it might be possible to obtain thence. Without, therefore, asking or giving any pledge for future years, I hope the Committee will approve of our intention not to include any alteration of last year's scale of tea duties in our present proposals. There
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is one other subject which may occur to the Committee, and that is the tobacco duty. With regard to that duty, the Government have been driven to the same conclusion, that it was impossible for them wisely to interfere with the present arrangements. The tobacco duty as it is, is really a wonderful achievement. You are levying 5,000,000 l. from an article by a duty at the rate of something like 1,200 per cent on the value; the proceeds amount to 5,000,000 l. of money, and the revenue is improving progressively from year to year. This is a wonderful state of things, and is, I think, one of the cases in which the Government will act wisely in following the maxim, "Let well alone." If we were to tamper with that duty I do not think we should get a larger sum from it, and we might run the risk of breaking down the revenue altogether and enabling the smuggler to get the upper band. We are all alive to the moral disadvantages of smuggling, and I do not think there would be a disposition to do anything which should give it a stimulus. And, moreover, if there could be one opportunity more unfortunate than another for augmenting these duties, it would be the precise moment when, as my right hon. Friend the First Lord of the Admiralty has already informed you, he has found it necessary to withdraw a considerable portion of the best men of the coastguard for the service of the Crown in the Navy.
These, then, are the principal points which the Government have considered, and with respect to which they have come to a negative conclusion—and, by the whispers and the buzz around me I readily perceive that the Committee does not feel so much interest in our negative as it does in our positive conclusions. We are now coming, then, to the point. [Cheers.] Very well, Sir: I now come to the positive conclusions. We have stated that we think it necessary to go to the consumers for the further supply which is required for the public service, and we shall endeavour to do that in the form which will least interfere with trade, which will least interfere with the innocent enjoyments of the people, and least with consumption—which will, in fact, cause the smallest deduction from the comforts, the advantages, and the enjoyments of the people, as compared with the amount of revenue which it is necessary to raise for the purposes of the State. On the 6th of March last I adverted to the

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operations of the measures of last year, and so far from receding from any of those measures, I believe that I evinced a disposition even to extend one of them still further—the augmentation of the duty on spirits in Scotland and Ireland. In Scotland that augmentation was, I think, eminently agreeable by the state of public opinion; it was received by the whole country with those genial smiles with which the right hon. Gentleman the Member for Lincolnshire just now greeted my announcement of the doubled income tax. There is no fear in Scotland as regards the smuggler, and I would beg the Committee to recollect that the ultimate equalisation of all spirit duties in Great Britain, which may involve some reduction in England, but which must obviously involve some increase in Scotland, is a great object of fiscal policy, irrespective of the immediate needs of the Exchequer. That being so, we propose to repeat the same increase of 1s. per gallon on spirits in Scotland which we imposed last year, and instead of 4s. 8d., as it now stands, it will, if the Committee approve the plan of the Government, be 5s. 8d. With respect to Ireland the success of the measure of last year was most complete. There were apprehensions on the subject of smuggling; but so far were we from calling smuggling into existence or into undue activity by the augmentation of the duty, that the augmentation not only did not throw back or prevent the increase of consumption, but, whereas I estimated the increase of revenue from the addition of the 8d. duty at 198,000 l., the actual yield was 213,000 l. We propose, therefore, again to apply the same modicum of 8d. per gallon by way of augmentation upon the duty at present levied on spirits in Ireland. Allowing, then, for the reduction in consumption which I think may be expected—in Ireland 250,000 gallons, and in Scotland 380,000 gallons—as there is a downward progress in the consumption of spirits in that country which must be taken into account, arising from other than fiscal causes—the result of this measure will be a gain of 450,000 l. to the Exchequer.
In my statement, Sir, of the 6th of March I adverted to a subject—knotty and vexed—one which has for long years been among the standing problems of Chancellors of the Exchequer and Secretaries of the Treasury—I mean the refining of sugar in bond. That is a matter very full of difficulties, and I gave a pro-
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mise, in the month of March, that after Easter the intentions of the Government with respect to it should be announced. The Committee is aware of the grievance complained of by the sugar refiners, and by certain classes of producers, upon which it is not necessary for me at this moment to do more than to touch very slightly. It is a grievance arising out of the incidence of an equal inward duty, with an equal drawback outwards, upon the many qualities of raw sugar which are very unequal in the yield of refined sugar, and which, therefore, when they have received the drawback, have been subjected (assuming that they have been bought at prices proportioned to their qualities) to very different fiscal burdens, and do not therefore, so to speak, start fair in the foreign market. It is absolutely necessary to make some alteration in the present system; and several plans are open to us for that purpose. One is, that all refining of sugar should be carried on in bond. But we are reluctant to make that proposal, because it would apply restrictions and prevent the expansion of trade and enterprise by the application of fetters which are objectionable in their character. It would create, in fact, a new sort of excise. Another project is to allow nothing but open refining. But here we do not escape the difficulty arising from the unequal operation of equal duties upon unequal qualities, and we should likewise be withdrawing, without equivalent, a privilege long ago granted and enjoyed under the existing law. There is another plan—allowing parties at their own option either to refine in bond or to refine a duty-paid article. But this plan would not get rid of several of the evils now existing, and there is another objection to it—that it would cause very considerable loss to the revenue. Upon the whole, the Government have been brought to the conclusion, that the best plan for them to adopt is a plan of classification of the sugars—the introduction, that is to say, with reference to all sugars of a distinction of qualities which at present applies only to foreign sugars. Thus, by the law at present in force, British sugar, which is of a quality not equal to white clayed, is subject to a duty of 10 s.; if under the quality of refilled it pays 11 s. 8d., and, if of the quality of refined, it pays 13 s. 4d. per cwt; but foreign sugar, while it pays 12 s. when under the quality of brown clayed, pays 13 s. if under the quality of white clayed,

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14s. if under refined, and 17 s. 4d. if of the quality of refined. Upon the 5th of July next the duty is to be altered, and, as the law now stands, all sugars, irrespective of origin, being not equal to white clayed, would, after the 5th of July, be subject to a duty of 10 s. per cwt. The grievance of the refiner, or of the producer to whom the refiner could not pay a fair price for his sugar, would then come fully into force; and I am bound to say there is much in that grievance, both to the refiner and to the grower, and that there should be some discrimination of duty in favour of sugars of a very low description. Therefore, the Committee will see that in some sense the readjustment of the sugar duties is forced upon the Government. How, then, was this to be done? It was clear to us that it was impossible to ask the Committee to make any sacrifice of revenue, under present circumstances, upon the sugar duties; but if we lowered the sugar duties upon a certain class, and that produced a less revenue, it followed that we should be driven to raise the duties on other classes of sugar, and, in point of fact, in some form or other, there must be at least a partial increase of the sugar duties. There is another consideration which has induced Her Majesty's Government to make a proposal on the subject of the sugar duties—and it is this. This is an article on which we can ask you to increase the means of the Treasury without adding to the price paid by the consumer—I mean now, at present, paid by the consumer; I do not mean the price he would have to pay supposing the alterations which have been provided for by the present law should take effect. It is withholding a boon not yet enjoyed—not withdrawing a boon, the actual enjoyment of which he has already attained. In point of fact, it is rather an improvement of his position; because you will agree with me it is the foreign duty which at present regulates the price, and not the British duty. The foreign duty upon all sugars not equal to white clayed in quality is at present 13 s. per cwt. We propose that by an immediate resolution it shall be fixed at 12 s., without any regard to origin—that is to say, that that duty shall be incident upon all sugars alike, I mean to say upon all sugars of whatever country. In point of fact, we propose to antedate, by a period of about eight weeks, the equalisation of he sugar duties; and it will, accordingly, be my duty to
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ask the Committee, in conformity with former usage, to give their formal assent to this Resolution to-night, in order that to-morrow this increase of duty may come into operation. The scale of duties, as it is now proposed for all sugars without respect to origin, will therefore stand thus:—For all sugars not equal to brown cloyed, 11 s. per cwt.; for all sugars equal to brown clayed, but not equal to white clayed, 12 s.; for all sugars equal to white clayed, but not equal to refined, 14 s. if refined, the duty will then be 16 s. per cwt. The corresponding duty on molasses will be 4s. 6d. per gallon. The gain which I anticipate from the application of this scale to the sugar duties—a scale, I must again remind the Committee, not involving an increase on the duties as they stand at present, but involving an increase on them as they would stand after the month of July next, of from 1s. 6d. to 2s. per cwt.—the gain will be 700,000 l., which, added to the gain of 450,000 l. from the increase of the spirit duties in Scotland and Ireland, will amount to the sum of 1,150,000 l. Gentlemen will therefore see that I have now got the sum of 3,250,000 l. from the income tax, 450,000 l. from the spirit duties, and 700,000 l. from the sugar duties, amounting in all to 4,400,000 l. But the amount of charge for which I have stated it is necessary to provide is 6,850,000 l. It will therefore be seen that we have yet a considerable step to take before we attain the full amount; and we propose to take that step by an augmentation of the duty on malt. Her Majesty's Government are convinced that this, in combination with the increase in the spirit duties, and also combined with the moderate increase, if so it is to be called, or modification rather, of the sugar duties, is the fairest mode in which they can give effect to the principle on which they propose to act—namely, that the war—although you may fairly call upon the wealthy classes in the country for a large proportion of its expenses, yet, as it is undertaken, not for any one class in particular, but for the national interests and the national honour—is one, the expense of which ought to be fairly distributed among the different classes of the community. We think, in this view, that the article of malt is one which commends itself to your consideration. It is an article of almost universal consumption. It competes at present with other articles, such as wines and spirits, which are much more highly taxed, and

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which I hope always will be more highly taxed; but at present they are taxed out of all proportion to malt. It is, too, an article from which we shall certainly (setting aeide contingencies of harvest) get nearly the whole amount of duty that we expect—it is an article on which we can collect that duty without any additional expense—it is an article on which the duty can be collected without any additional restraint of any kind—and it is an article which, to sum up all, appears to us fairly to combine, irrespective of the consideration of what has been done in former times—all the features of a tax which, as unfortunately we have our choice to make, ought to determine our choice. I cannot, how. ever, altogether decline the task of looking to what was done in former times; though in doing so it is necessary to guard against a fallacy which we may easily fall into; for it will not do to take the duty on malt as it now stands, and to compare it simply with the malt duty in former periods. For the Committee must remember that, though at former periods that tax was apparently lower, yet in reality it was a great deal higher, because malt stood then in graceful combination—they were like two beautiful sisters—with the beer duty, and the beer duty was at the time of its abolition equivalent to an additional duty of no less than 3s. 9d. per bushel on malt. Sir, in order to show you the effect of the beer duty upon the malt duty, I will give you the rates of this tax as it stood in former times, in combination with the beer duty. In 1801 the duty or. malt was 1s. 4¼d. per bushel, but you must add to that the beer duty, which was 8s. per barrel; and the double duties really amounted to a tax of 4s. 4¼d. per bushel of malt. In 1802 the malt duty was raised to 2s. 5d. per bushel, and adding the beer duty, which was also raised to 9s. 5d. per barrel, it was equivalent to 5s. 11¼d. per bushel. In 1804 the duty was further raised to 4s. 5¾d. per bushel; the beer duty was also raised to 10 s. per barrel, so that the effective duty on malt was raised to no less than 8s. 2¾d. per bushel. In 1816, and after the peace—remember this was a war duty—the tax was reduced to 2s. 5d., but the beer duty was continued at 10 s., and the effective duty on malt in 1816 was 6s. 2d. per bushel. In 1819, that is to say, during the peace—and this is a precedent which I have not to propose to you to follow—the malt tax was raised to 3s. 7¼d., which, with the addition of the
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beer duty, made a tax of 7s. 44¼d. in time of peace. In 1822 the tax was reduced to 2s. 7d., but the beer duty remained at its former figure, so that the effective duty was 6s. 4d. per bushel. In 1830 the malt tax remained at 2s. 7d., while the beer duty, which was then equivalent to more than half of the whole, was taken off. The tax has remained at that point ever since, with the exception of the slight additional duty of five per cent under the measure of 1840, making the duty a small fraction more than 2s. 8½d. per bushel. The proposal of the Government, then, is to raise the tax from what we will call, in round numbers, 2s. 9d. to 4s., which will place it at a lower rate than it stood before 1801—at a much lower rate than it stood in 1802—less by one half than the rate at which it stood during the whole period of the great struggle tithe war from 1804 to 1816, which was 8s. 2¾d. The consumption of malt in this country is estimated at 40,000,000 of bushels. That quantity of bushels, at the rate of duty proposed, would add 2,580,000 l. to the Exchequer. I propose to deduct five per cent, or 130,000 l.—not, I believe, an unreasonable deduction—which I believe to be sufficient for any diminution that may take place in the consumption; the net product would then be about 2,450,000 l. to be received from the malt duties. Adding this sum to the sum of 450,000 l. from the spirit duties, and the sum of 700,000 l. from the sugar duties, and the sum of 3,250,000 l. from the income tax, which I have already enumerated, and it brings us to the sum of 6,850,000 l., which is the exact amount we propose to ask from the House of Commons.
Sir, it will now be perceived, to sum up this part of the case, that the taxes granted on the 6th of March amounted to 3,307,000 l.—the taxes we now propose amount to 6,850,000 l., making a gross amount of taxation asked from you during the present year of 10,157,000 l. And if these taxes are set, as perhaps they reasonably may be, against the proposals of the remissions of taxation which were enacted, indeed, in 1853, but which were only to take effect in 1854, amounting in all to 1,474,000 l., the net augmentation of the burdens of the country will amount to 8,687,000 l. If again you look to the distribution of these burdens, you will find that the increased income tax amounts to 6,557,000 l.:—that is, about two-thirds of the whole additional burden is raised by

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one single direct tax upon the wealthier classes, while the other one-third it is proposed to raise by indirect taxation, affecting, I will not say any particular class, but the whole consuming classes of the people, and therefore in the main affecting all classes alike. Still farther adhering to precedent, what we propose is this; as we ask that this increased income tax should be continued during the war, so we propose to ask also for the malt duty during the whole war; but we propose to ask that the spirit duty should be continued without any limitation, because it is an advance towards a permanent fiscal improvement. The increase on the sugar duties we also ask with a view to the continuance of the war, but without fixing any precise point at which the limitation of time should be placed, because that requires the consideration of several points of minute detail, which may fairly be postponed till the proper time arrives.
Now, Sir, this is the provision which the Government proposes to make with respect to the expenditure now before us.
There is yet another point on which it is absolutely necessary that I should state the views of the Government; and it grows out of this consideration, that we have arrived at a state of things at which it is impossible to form the same calculations, with regard to the condition of the Exchequer, and as to the immediate supply of cash, which it was easy and safe to form in former times. In former times the actual expenses of the war did not gather rapidly upon the Exchequer; but there was a rapid and constant accumulation of debt in every imaginable form, and that altogether irrespective of the funded debt. Now, through an improvement in the system of keeping our accounts, we hope to be able, in a greater degree than formerly, to pay our way; we trust that it may be possible from year to year to state to the country the actual condition of the public finances. But I think the Committee will agree with me that, in entering into the first year of a war, it may be well for us to take an ample command of cash. We, therefore, have already asked you to give us power to expend the sum of 2,100,000 l., in addition to the estimates we have laid before you, and for extraordinary purposes; but we do not think it right to take even that as a limit. To give us a command of cash, we also propose to take from you, if you will give it us, still larger powers of raising money in case of need, subject of course to our responsibility and to the approbation
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of Parliament with regard to the application of the money. I must therefore go a little out of or rather beyond the ordinary course of financial statement to present to the Committee a view of what I may call the interim provision, which we propose to make. It must all along be borne in mind that even though the Committee should give us—as I trust you will—the taxes we ask for, yet the amount of those taxes cannot be wholly realised within the year. And there are other special causes which render it necessary that we should have a command of cash at a period like the present. I may refer, for instance, to the money that is held in deposit from the saving-banks; and from the great changes that may occur in the value of money—I do not refer to panics, for I believe there is at present no danger whatever of any panic—but a great change in the value of money from an increase of demand may cause the withdrawal of deposits, which would entail considerable expense, if we were obliged to meet it by a sale of stock at a time when the funds were low. Again, the declining state of trade and a consequent decline in the receipts from the ordinary sources of revenue might be another cause which would render it necessary to have a command of cash. Undoubtedly, nothing can be more satisfactory than the state of trade at present; but, at the same time, it would be presumptuous to assume as a matter of course that its elasticity and vigour are to continue altogether unimpaired during a period of war. It is possible that from some weak part of the revenue there may be a diminution; or, on the other hand, there may be such a rapid growth of the war expenditure as completely to outrun all that we reckoned upon. Of course, the limited amount of the public balances at the present moment is a further reason why you should exercise a vigilant and even jealous watchfulness over this portion of the arrangements proposed by Government. The object for which I now make this statement to you is not so much a question of actual or even probable expenditure as it is to create means which you may expend in case of need, with the approbation of Parliament, or on the responsibility of the Government, subject to the approbation of Parliament. We have asked you, in the way of a permanent annual provision of taxation—that is "permanent" with reference to the duration of the war as contra-distinguished

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from the cash operations of the year—for the sum of 6,850,000 l. But out of that sum of 6,850,000 l., I do not expect to receive in cash, before the 5th of April, 1855, more than something like the folowing sums;—namely, 220,000 l. from the income tax, 400,000 l. from the spirit duties, 620,000 l. from the sugar duties, and 1,600,000 l. from the malt duties—making a total of 2,840,000 l., which is the greatest amount out of the taxes for which we now ask that we expect to have actually at our command before the 5th of April next. Therefore, deducting that sum of 2,840,000 l. from the sum of 6,850,000 l., it is plain that on the 5th of April, 1855, we shall be in arrear to the amount of no less than 4,000,000 l. Now, that is a sum which Government ought to have ample means of raising, and even perhaps something more. The best medium of raising that money, according to the view of the Government, is through the medium of temporary securities. Those temporary securities might be issued in the usual form of Exchequer bills; but we propose to issue them in a form which was first mentioned, or at least proposed to the House with a practical view last year; and though circumstances did not favour the introduction or the extensive sale of the particular form of the security then proposed, still it was, I believe, generally considered that they were a very convenient and desirable species of security—I mean Exchequer bonds.
And here, Sir, I must remark that two different sets of charges have been brought against the Government in general, and against myself in particular, which are of a most gratuitous—I might even go further and say, of a most foolish character. It has been stated that after having pledged ourselves, on the 6th of March last, that we would ask for no loan, we gave notice on the 21st April that we intended to have a loan. No doubt that would have been a most serious and damaging accusation to bring against any Government, if there had happened to be one word of truth in it. But, Sir, that slight and unimportant element of truth is totally wanting to this statement. We never pledged ourselves to Parliament in March that there should be no loan; and yet, again, there was no loan on the 21st April. What was said on the 6th March I stated with the authority of my Colleagues. What I then said under their instructions was this—that while they conceived it to be impossible
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that they should commit themselves by any pledge or by any abstract declaration, they felt strongly that it was the duty and the policy of the country to make in the first instance a great effort from its own resources, and that effort we recommended the country to make; but we never attempted to bind our own discretion or the discretion of Parliament by any pledge of an abstract character with reference to a loan. Again, what appeared on the 21st April was no loan; but a provision for the temporary raising of money; and if those who spoke of it as a loan would but have had the patience to wait, and to waive all discussion till the matter was fairly before Parliament, they would have known that it was our intention to take power, if we found that we had raised more money in this way than we actually needed, to employ it, as far as might be convenient, in the redemption of certain other public securities. It is a totally different operation from a loan; the question we had to consider was simply what would be, all things considered, the most convenient form of making a temporary or interim provision for the public expenses, in anticipation of the proceeds of taxes granted, but not actually received. By a loan is commonly understood, in this country, the sale of a perpetual annuity, redeemable only at the pleasure of the borrower, and on certain terms; or what is commonly called the creation of stock. If you tell me that all borrowing of money, whether for a time or for a permanence, is a loan, then I reply that, if such operations be loans, it is quite plain there was no pledge on the 6th of March not to make a loan, for on that day I asked for power to raise a million and three-quarters by Exchequer bills, in anticipation of the proceeds of the doubled income tax. But such is not the meaning of the word as commonly understood. In the very notice we issued, though the operation contemplated was to the extent of 6,000,000 l. of money, yet capitalists were also invited to send in Exchequer bills as well as money, and that circumstance alone might have proved that the operation was of a totally different character from a loan. Sir, that proposition with regard to Exchequer bonds was to invite tenders to the amount of 2,000,000 l. of Exchequer bonds, to be liquidated at par in 1858; 2,000,000 l. more to be liquidated at par in 1859; and a third 2,000,000 l. of bonds, to be liquidated at par in 1860. Of these bonds only a very

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limited portion has been taken. On the 2nd of May, when the tenders were sent in, it appeared that 1,370,000 l. was the whole amount for which tenders were given. There was no question and no quarrel with regard to the rate of interest, because the sealed price fixed for the first class bonds was 98 l. 15 s., and for the others in proportion; and four-fifths of the amount tendered, or 1,113,000 l., was offered either at the sealed price or within 2s. or 3s. of it. But the full amount of tenders was not sent in; the lists still remain open, and at the present time I believe—although I cannot state it with perfect minuteness—the state of the case is this—the whole of bonds A have been taken, except a small amount; of bonds B and C no quantity worth mention has been taken, and an arrangement will be made with the few parties who have tendered for them to release them from their contracts. Now, the question may fairly be asked, what is the cause that these Exchequer bonds have not been taken? It cannot be that they were at a rate of interest too low, because the capitalists of this country are quite accustomed to lend money at a low rate of interest, compensating themselves by a diminution in their tenders of the principal sums, and nothing is more common than that they should lend their money with that understanding, at a rate of interest so low as 3 per cent. The cause of the failure is a cause which may be mentioned without the slightest scruple, without the smallest doubt, and without the smallest occasion of reproach to any one. The practice obtaining in all former wars has been not to make any effort to meet even their first charges from the annual resources of the country; on the contrary, our Parliaments and statesmen have on these occasions at once borrowed largely and added to the funds, and the fortunes then made on the stocks have been so gigantic, that the opening of a war has been a period no less distinguished for the opportunities it afforded to contractors than for the opportunities it afforded to heroes. It offered to heroes an opportunity for ensuring an immortality of renown, and it afforded to contractors an opportunity for erecting colossal fortunes. I am not surprised, therefore, that there was a decided disapproval of the determination of the Government to avoid the example of former times, which was followed by Mr. Pitt, in 1793, and rather to adhere to the wiser
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policy which he was inclined to pursue at a later period, a policy which would not lead to the creation of enormous amount of stocks, entailing upon posterity millions, tens of million, aye, hundreds of millions of debt, for which no equivalent whatever, scarcely even the slightest consideration was ever received in hard money, but which, if liquidated at all, must now be liquidated in hard cash. It was hardly to be expected that this determination of ours should be a popular announcement; and so long as this matter rests on the will of the Chancellor of the Exchequer or of the First Lord of the Treasury, it is not to be expected that they should be able to charm or subdue their powerful antagonists. But, in my opinion, this determination ought not to rest with the Executive Government—it ought to rest with this House. We ask the House, therefore, to decide upon our policy. Let the House declare, by an intelligible vote upon the proposals of the Government, its opinion upon the policy to be pursued, and having made choice between the two courses proposed to it—the one to follow the old system of loans, the other to make reasonable efforts to raise the expenditure, in the first instance, at least, from the current resources of the country, and to reserve the system of loans for a future period of real and urgent necessity for resorting to such a course. When the House shall, by an intelligible vote, have pronounced its opinion upon this subject, then it will no longer be the opinion of the Chancellor of the Exchequer or his proposals, it will be the opinion of the House; and then capitalists, who were perfectly entitled, as I freely grant it, to set small store by any opinion or intuition of mine, will cease to cherish the expectation of operations founded upon the old system. The proposition I have now to make, Sir, is in conformity with these principles. It is to this effect: that you should give us interim funds, and that command of cash which will afford us such a margin for our expenditure as we ought to have. We propose to take authority both to confirm the contracts entered into with respect to bonds A, and to issue, at the discretion of the Lords of the Treasury, the other two series of bonds for 2,000,000 l. each, either now or at some future period; we propose also to take the alternative power of issuing 2,000,000 l. of Exchequer bills, and as many more Exchequer bills as will make up any sum which shall be wanting from the failure of any part of

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the 4,000,000 l., of Exchequer bonds. At first sight these resolutions may appear to give us a command of 6,000,000 l. But it will not be quite so much, because a sum amounting to some hundred thousand pounds—500,000 l. or 600,000 l.—has already been sent in for the bonds in the shape of Exchequer bills, and is not, therefore, an effective addition to cash. The effective addition to cash is in round numbers 5,500,000 l., and that will be made applicable either to services approved by Parliament, or to the liquidation of public securities. Perhaps it may be agreeable to the Committee that I should now state to them, in a few words, what is not a financial estimate nor a tax estimate, but a cash estimate—an estimate of the cash which will be at our command between April the 5th, 1854, and April the 5th, 1855. Out of the new taxes you are now asked to vote, we expect to get, before the 5th of Apri1, 1855, 2,840,000 l. and the Exchequer bonds and Exchequer bills now asked for may amount, as I have said, to 5,500,000 l. Adding these two items, which amount to 8,340,000 l., to the sum of 58,406,000 l., you have a total provision of 66,746,000 l., with a probable amount to charge of 63,039,000 l. The margin taken, therefore, will reach to 3,707,000 l., or, to be secure, say 3,500,000 l. I shall refer you first to the charges we have to meet. The expenditure of the country, for which you provided on the 6th of March last, was 56,189,000 l.; the new estimates amount to 6,850,000 l.; making a total estimated expenditure of 63,039,000 l. In this I include a sum for expenditure not estimated of 2,100,000 l. Then the ordinary revenue of the year 1854–5 was estimated at 53,349,000 l.; which, by the produce of the first half-year's double income tax—3,307,000 l.—was raised to 56,656,000 l. You then voted 1,750,000 l. Exchequer bills, (of which 1,250,000 l. have been since issued), which makes a total amount of 58,406,000 l. To this add 2,840,000 l. for taxes, and 5,500,000 l. for Exchequer bonds or bills, and the result is 66,746,000 l. This estimate, I beg to remind the Committee, is something entirely different from the estimate of the produce of the various taxes—it is the estimate of a cash account which I ask Parliament for the means to realise, and the surplus of which will be applicable to any purposes which Parliament may think fit.
I have now, Sir, stated the bulk of my
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propositions, and I ought next to acquaint the Committee with the order in which I propose to take them. I shall ask the Committee to do, on the present occasion, that which, without prejudice to a subsequent vote, or to the views of any individual Member of this House, has been done on all former occasions, namely, to grant to us, with respect to the taxes upon articles of consumption, the formal sanction of the Resolution in Committee, so as to enable us to raise the charge on the goods at once, and thereby prevent evasion of the duty. I have said that has been done upon all former occasions; but I ought, with some reproach to myself, to except the case of the Irish spirit duty in the Budget of last year; for, in the multitude of subjects with which I had then to deal, I omitted to place the Resolution in your hands, and a day's delay was the consequence. I don't think, under the circumstances, that any harm was done; for, in point of fact, the revenue officers, anticipating that the usual course would he followed, had already proceeded to raise the charge upon the various commodities. That, however, is a resource which I should not like to trust to on all occasions; and, as the question involved is a question of a good many hundred thousand pounds, I am sure the Committee will approve of our taking the usual course of requesting a vote upon those portions of taxation which affect consumable articles. In that case it will be my duty to ask for an immediate vote—but without the slightest prejudice to the future discussion of the respective subjects—upon the excise duty on spirits, the Excise duty on malt, the Excise duty on sugar, the Customs' duty on sugar, and the Customs' duty on spirits, and likewise on Exchequer bonds, so far as relates to the completion of contracts into which the Government has already entered. With regard to such contracts, it has been the uniform practice for the House, out of consideration for the parties, immediately to pronounce its opinion.
But while asking the Committee for this vote, I cannot forget that, in the opinion of some persons, the Government are deeply censurable, and even disqualified from making any proposition whatever in relation to finance. The charge to which I am now about to refer relates, and my answer will relate not to me individually so much as to the Government at large. The charge against myself personally is, that of dispersing the balances accumulated at

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the Bank, and of mismanaging the various matters connected with the public credit; it does not relate to what I may call the administration of permanent or legislative finance. But the charge against the Government at large is one against its permanent administration of finance; for it is said that we have wantonly sacrificed by our measures of last year, great branches of the public revenue, and deprived the country of valuable resources which it ought to have possessed at the commencement of a war; and this, too, when, though Parliament was not aware that a war was likely to take place, yet Government must have been aware how nearly and certainly it was impending. ["Hear, hear!"] Perhaps those cheers are meant to indicate an affirmation of the charge. At any rate, the charge was made; but it was made in the most inconsistent terms, and I am somewhat anxious to see the efforts that will be made to piece them together; because, while the right hon. Member for Droitwich (Sir John Pakington) who made the charge, asserts not only that the war must have been anticipated but that it could not possibly have been avoided, his right hon. Friend the Member for Buckinghamshire (Mr. Disraeli) asserts that nothing could be easier than to have avoided it, and that, in point of fact, if it had not been for one single man the Government could not have helped avoiding it. But, Sir, the charge resolves itself into neither more nor less than this, that we believed a great European Sovereign would act in conformity with his pledges, and in conformity with his interest; and he has placed himself in a position which we are equally at a loss to reconcile with his pledges and with his interest—a position in which he sees the whole moral strength of Europe—aye, Sir, and in a few weeks, it may even be in a few days, I believe he will see nearly the whole physical strength of Europe arrayed against him. Sir, it is not necessary for me to enter into the question of what the Government might have foreseen on this subject. It is a matter of weight and moment, such that it ought to be dealt with, if at all, in a separate discussion. But what I want to touch upon is the absurd charge brought against the Government, that by the measures of last year they needlessly surrendered any branch of the public revenue. Never was there a charge more utterly devoid of truth. What was the state of the country when we took office? Did we find the revenue of the
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country in a state in which it was open to us to let it alone if we pleased? What, in particular, was the condition of the income tax at that moment? Was the renewal of the income tax a matter of form, a matter of course? Year after year it had been made the subject of discussion whether it should be continued or not. The opinion which Mr. Pitt thought was dangerous, and which Sir Robert Peel thought was impracticable, and which the right hon. Member for the University of Cambridge (Mr. Goulburn) thought was visionary—that opinion had obtained so much currency and vogue, that the renewal of the income tax, with reconstructing, or, as it was then called, "differentiating" it, was deemed almost impossible. Is that true or is it not? How did the right hon. Gentleman opposite (Mr. Disraeli), my predecessor in office, deal with the subject? The right hon. Gentleman thought it consistent with the duty be owed to Her Majesty as one of Her responsible advisers to propose that this differentiation, deemed impossible by every Minister who had had to deal with the enactment and framing of the tax, should take place without having prepared any plan on which to proceed. He promised to do that which Mr. Pitt could not do, which Sir Robert Peel could not do, and which even he himself did not know how to do. He told us he proposed to fix the rate on Schedule A at 7d., on Schedule Cat 7d., on Schedules D and E at 5¼.; but when my right hon. Friend the First Lord of the Admiralty (Sir J. Graham) and the right hon. Member for Portsmouth (Sir F. Baring) and other hon. Gentlemen in this House, showed the intolerable absurdities the right hon. Gentleman must commit in the attempt to redeem that pledge, the right hon. Gentleman said he had not had time to look at the schedules. The meaning of that was, that be had not had time to form a plan, or even to ascertain if that was practicable which Mr. Pitt and Sir R. Peel had pronounced to be impracticable, but which the right hon. Gentleman had promised, without bestowing a thought on the mode of performing it, nevertheless to perform. Well, Sir, this was the great fact that confronted us when we came into office—the income tax was dead and gone—the Act had expired on the 5th of April—when our financial proposals were made, and, so far from having a surplus, we had a deficiency of 4,700,000 l. to confront. With regard to the income-tax, the renewal of that tax

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was no matter of course, no matter of form, for it will well be remembered that the wish and intention of a large majority of the House was, that we should not renew the income tax, except on condition of reconstructing it. We, from the very first day we entered office, set ourselves to the most serious consideration of the subject; we obtained every aid in our power, we discussed it again and again, we turned it over and over, placing it in every possible light in which it could be placed before the House; and at length we came to that conclusion to which Mr. Pitt had come, and to which Sir Robert Peel had come—the conclusion that it was impossible to reconstruct the income tax so as to frame a measure which Parliament might in justice, or, I should say, even in decency, pass into law. I see now before me one hon. Member, who, after having been of an opposite opinion, stated in this House that further examination had taught him that the question could not be settled in that manner. But, then, we said, "we distinguish between the feelings which have led to the desire for reconstruction of the income tax, and the practicability of the particular form in which that policy was put." We said, "What you feel is this, that property pays too little and intelligence pays too much; we have inquired into the nature of the income tax, and find we cannot redress that inequality in it, but we will find another mode to make compensation for it." Sir, we found that other mode of redressing the inequalities of the income tax in the succession tax. And then, we came forward with this mode of redressing the unequal measure of burden, of which there had been such complaints, between intelligence and property, instead of being applauded for our efforts, we encountered the most bitter opposition from the right hon. Gentleman opposite and his party—I beg pardon for the use of the word, it escaped me without my intending it—but I must say that we certainly encountered from the right hon. Gentleman opposite the most stout and sturdy opposition. For the last month such has been the course of the discussion about the finance measures of 1853, that a man who knew nothing of the proceedings of Parliament in 1853, or who listened only to the statements of those hon. Gentlemen who have been busy on the subject, would suppose we had been discussing during the whole of that Session, nothing in the world but the conversion of minor
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stocks. They quite forgot the forty divisions upon the twenty or thirty nights during which we were inviting the House to effect great financial improvements, which were resolutely opposed by the right hon. Gentleman and his party. We were inviting the House to rescue and restore the income tax, to redeem it from that state of weakness, from that state of discredit, and from that state of danger to the public, into which that powerful engine of finance had been cast, and to place it again in a condition, in which alone it ought to be whenever you have it, or if you have it at all, in which it might be available for the purposes of war, as well as of peace; and by your aid we were enabled to place it in such a position, and so to deal with it that it might prove competent to bear the augmentation now proposed, that enables you now to prepare for the arrival of war, and to take up a strong position in respect to it. We were enabled by your aid to pass the Succession Duty Bill; a measure most difficult in its details, although most moderate in its provisions, a measure that seemed to press upon individuals, but which was adjusted principally by abating something of extreme claims upon all sides; but at the same time, a measure the passing of which I do not hesitate to say, while it adds enormously to the stability and permanence of your finances has likewise added not less to the political stability of the country. These things were done. The Customs, too, were reformed; the soap ditties were abolished; the reformation of the stamp duties, admirably commenced some time before by my right hon. Friend (Sir C. Wood), was continued; the assessed taxes were reconstructed, and reduced from complexity and anomaly and injustice to a system of rates simple, uniform, and moderate. By your aid, by your generous confidence, and by the no less unequivocal approval of the community at large, those things were done; and now we have come to a time when it is supposed that only the conversion of minor stocks was our employment in 1853; and when the measures of last year are referred to as an abandonment of income. No, Sir, the real abandonment of the income of the country is by the men who propose to carry into effect impracticable plans without having considered the ways and the means by which such measures are to be carried out. This is the real abandonment of the income of the country. Upon the contrary, I say we induced you, and

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you readily followed in our earnest efforts, to effect these changes; and you consequently left the finances of the country in a condition—on the eve of a war, on the very threshold of a great struggle—so satisfactory, that the surplus upon the revenue of the year, after all these "improvident" operations, amounted to no less than 3,500,000 l. This, Sir, was the result of the conduct of the Government; and now I ask what other charges have we to answer? We shall be told that the burdens which we are about to lay on the country ought not to be met by taxation, but ought to be met by a loan. Sir, if I might venture to speculate upon the conduct of this Committee, I think upon the whole it will be felt, if you are to examine to a general adjustment and distribution of the burdens which we propose, it will be found that the general distribution is not an unfair one. We have called upon the wealthy, or the comparatively wealthy, to bear two-thirds of the expense; we have divided the other third among the entire community, and we have chosen articles on which the additional taxation will inflict the least mischief, and the least inconvenience, in proportion to the revenue to be produced. I do not think that upon the details of those taxes it will be possible to induce the Committee to entertain much doubt. But there may be those who will strike at the root of the whole plan. There may be those who think, as is thought, no doubt, by many gentlemen associated with what is called the "money-power"—I do not mean Gentlemen in this House—for Gentlemen in this House, there is no question, will perform the duty which appertains to them as representatives of the people, and be governed entirely by considerations of public policy;—but there may be gentlemen who will talk of the great inconvenience that attaches to this tax or that tax, of its great unpopularity, raising a cry which may always be raised with regard to questions between one tax and another, and urging the weighty objections, some real and some unreal, but yet plausible and telling, that can be made against all taxes. I do not in the slightest degree doubt that there may be Gentlemen here, as elsewhere, who may say, "Abandon altogether your new-fangled financial notions, and let us fall back upon the comfortable and familiar expedient of a loan." But I beg the Committee will recollect that if there is any man in this country who, be-
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yond any other, except, perhaps, the capitalist, as regards the matter of feeling and personal comfort—if there is any one man in this country, who beyond every other has an interest in recommending recourse to a loan—it is the individual who has the honour to fill the office of Chancellor of the Exchequer. His office is one which any man may be thankful to hold at a time when his occupation is to deal with those expanding resources which a wise policy has developed, and to distribute what may well be called the bounty of the Legislature, because it results, under God, from the wisdom of Parliament, among the various classes of the community. But that happy function is wofully changed when there comes a period of war. It is not only a losing office, but it is a miserable and a wretched office, to be constantly engaged in inventing the means of carrying on the war by imposing fresh taxes upon the earnings of the people. Every good motive, and every bad motive, combated only by the desire of the approval of honourable men, and by conscientious rectitude—every motive of comfort, of facility, and of security, spring forward in his mind to induce a Chancellor of the Exchequer to be the very first man to recommend a loan. What was it that conferred upon Mr. Pitt the title of the "heaven-born Minister?" Was not that name invented a little further eastward? It might not be difficult to trace the designation to its source; my noble Friend's historical research might furnish us with its origin; but I have understood that that name came from the City of London, and came from the City of London at the time when Pitt embarked this country in the unhappy policy of meeting the expenditure of a revolutionary war even from the first by loan, loan, loan. This topic is so important that, notwithstanding the demand which I have already made upon your time, I must ask you—and it is the last request which I shall make to-night—to go back with me for a little while to the period of that revolutionary war. On a former occasion I referred to the dicta of political economists, and I referred to the moral considerations, and to the lessons of common experience, which seemed to recommend and render expedient some efforts to meet the first expenses of the war by means of taxes; but there is something that is stronger than my moral speculations, or than the philosophic calculations of political reasoners and experimentalists; and that something

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is to be found in the warnings of history. If, after the records which your own history has left to you, you will not make an attempt, at least for a reasonable time and within reasonable limits, to avoid the repetition of similar errors, you are not worthy of the people you represent. Here, Sir, is the War Budget of 1792, and what did Mr. Pitt do with regard to the first operations of the war? Mr. Pitt proposed a plan involving an excess of charge over ways and means of 4,500,000 l., that is, taking the income of the country on the one side, and taking the charge connected with the first operations of the war as well as the ordinary expenditure on the other. This was all the expense he proposed to incur; this was the beginning. Mr. Pitt, like other men, had his errors; and the country is still smarting for them. But I cannot refer even to the errors of so great a man without avowing my respect and veneration for his memory. [A Laugh.] Sir, I am under no obligation to profess such a sentiment; it is our right and duty to read the characters of public men in the light of history; but I say simply, because it is the truth, that I look with sincere and profound respect upon the political character and the genius of Mr. Pitt. Let the hon. Member for White haven have the patience to wait until he has heard me through. I will invite him to join me in sharing his veneration for Mr. Pitt by imitating, as I ask this Committee to imitate, his later and wiser policy. But at present I am speaking of Mr. Pitt's errors at the commencement of the war in 1793. He had heard then, no doubt, all those plausibilities we hear now in great abundance, such as "Oh, the war is all for the benefit of posterity, and why should not posterity pay for it?" He therefore made a charge of 4,500,000 l., not by attempting to fill his Exchequer with the proceeds of taxes, but by sending into the City and asking for a loan of 6,000,000 l. at 75 l. Well, he very easily accomplished his desire. There was no unpopularity; quite the contrary. Great skill, much praise; great effect, everybody well satisfied. Admirable finance! Why, I must be as blind as a mole not to see that my personal interest would lie, and the interest of Government would have lain in our availing ourselves of this means to do what? to get the wheel into the rut. But I must remind you that, though it is easy to get the wheel into the rut, it requires great and persevering efforts to
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get it out again. Mr. Pitt proposed a loan of 6,000,000 l. with a sinking fund as usual, and at an interest of 4 per cent, amounting to 240,000 l.; and, in order to meet that charge, he imposed new taxes to the amount of 287,000 l. This was the first effort of the country in the revolutionary war. And then he used these words:—"Such were the large and ample provisions with which he would supply the exigencies of the country in her present emergency,"—namely, the additional taxation of 287,000 l. only, but with the limitation of the taxation purchased at the expense of a loan of 6,000,000 l. You may, perhaps, say:—"Well, in the first year no very great mischief was done." Mr. Pitt thought he should get that loan at 4 per cent, but he had to pay 4l. 3s. 4d. per cent even on the 4,500,000 l. of the first year. What was the second step in 1794? In 1794 Mr. Pitt borrowed 11,000,000 l., paying for it not 4l. 3s. 4d. but 4l. 10 s. 9d. per cent. In 1795 he borrowed 18,000,000 l., at 4l. 15 s. 8d. per cent. In 1796 he borrowed 25,500,000 l., for which he paid 4l. 14 s. 9d. and 4l. 12 s. 2d. per cent. In 1797 he borrowed 32,500,000 l., for which he paid 5l. 14 s. 3d. and 6l. 6s. 10 d. per cent. Surely he deserved popularity. Surely for this he was a heaven-born Minister. Again, in 1798, Mr. Pitt borrowed 17,000,000 l. at 6l. 4s. 9d. per cent. Such were the fatal effects of the series of measures upon which he had entered, that in order to obtain those 17,000,000 l., independently of annuities separately created, he added 34,000,000 l. to the capital of the national debt. In fact, the financial operations of those six years, unsuccessful and ineffective as they were in respect to the war, gave him a sum of no more than 108,500,000 l., but they added nearly 200,000,000 l. to the capital of the national debt. My wish is to lay fully open this part of the case before you, and it is for you to decide whether you will follow a similar course or whether you will not.
But I said, Sir, that I had a veneration for the memory of Mr. Pitt. So I have; and now I will show you what Mr. Pitt did when he became sensible of the errors he had committed in the first instance; he saw ruin gathering on the country; he perceived the rapid absorption of its resources; and what did he do? He determined to make a manful and a gallant effort to retrieve it. In 1797 he made his first effort in this

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respect by proposing to raise 7,000,000 l. by assessed taxes. The plan broke down—other plans, it seems, break down occasionally, besides those of the present day—and, instead of 7,000,000 l. he only got 4,000,000 l. In the year 1798, not daunted by that failure, he proposed to raise 10,000,000 l. by means of the income tax; and from that time onwards his career was one series of continued and almost convulsive efforts to recover his ground, to extricate the country from the frightful consequences of the former laxity, and to provide against a recurrence of similar evils in future. As to the amount of these evils, I believe I should not be stating them too high if I were to say that upon the list of your national debt, as it stands at this moment, there is not less than 250,000,000 l. of money for which the nation never received one halfpenny—that is, the mere offerings sacrificed to capital and thrown in as bonus, by way of inducement to subscribe, but which did not sensibly reduce the rate of annual charge upon the amount of money borrowed. I do not believe that 250,000,000 l. is an extravagant estimate of the amount of burden caused to the country by the enormous errors which were then and in earlier times committed. The sinking fund established by Mr. Pitt was another form of mischief. By means of the sinking fund you were continually buying up stock at 3, 4, or 5 per cent below the rate at which you were simultaneously creating stock in order to find the money to make the purchase. You were buying stock to reduce it at 60, and creating it again sometimes as high as at 68. Thus, what the "heaven-born policy" did was to re-establish the patient by putting a seton into the body; for this process was nothing but a perpetual drain upon the resources of the country, in addition to the other sad circumstances of the times. But that later effort of Mr. Pitt was one that ought to be placed upon record, for perpetual praise, because when he saw what had happened through rushing, at the first pressure, to obtain relief by means of a loan he strove with all his might to repair the mischief. He saw what lamentable results had been produced through a want of moral courage not in himself only, but in the country—for undoubtedly it was not his fault only; he only represented the public sentiment of the country in what he did at that time; it was the error of the nation, and God knows the nation
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has suffered enough for it ever since. When Mr. Pitt proposed the income tax, he said:—
"Gentlemen will recollect that in the debates upon the subject of the assessed taxes last Session two fundamental principles were established as the rule by which we should be guided in providing for the supplies for the service of the year. These were, first, to reduce the total amount to be at present raised by a loan; and next, as far as it was not reducible, to reduce it to such a limit that no more loans should be raised than a temporary tax should defray within a limited time."
And therefore Mr. Pitt, after six years of war, and in the midst of the exhaustion which it produced, proposed to add no less than about 40 per cent to the revenue of the country, with a view, if he could, of putting a stop to the further imposition of any permanent burdens upon the country. He proposed partly to raise the supplies within the year, and he proposed to raise the remainder by borrowing a certain amount, to be paid off, as he calculated, within a limited number of years. That was a great and a gallant proposal on the part of Mr. Pitt. I hope the hon. Member opposite will join me in paying this tribute of respect to that most important measure by showing that he is now prepared to act with us in support of a similar policy. The King's speech at the close of the Session, of 1798–9, referred emphatically to that policy. His Majesty said, addressing the House of Commons:—
"Gentlemen of the House of Commons,—The unusual sacrifices which you have made in the present moment, on behalf of my subjects, are wisely calculated to meet effectually the exigencies of this great crisis. They have at the same time given additional security to public credit, by establishing a system of finance beneficial alike to yourselves and to posterity; and the cheerfulness with which these heavy burdens are supported evinces at once the good sense, the loyalty, and the public spirit of the people."
In Mr. Pitt's speech, in 1799, he too referred to this policy, and he said:—
"I am sure that the various circumstances of these statements must confirm in Gentlemen's minds the inestimable advantages that the public will derive from an adequate provision being made to answer the exigencies of each year. It must fill the mind of every man with satisfaction to contemplate so pleasing a prospect, that should the war be lengthened to ever so distant a period, we shall have within our power the means of carrying it on with vigour, if our expenses shall not exceed the sums at which they are now estimated, and if we adhere to the system of borrowing no more than shall be answered by the taxes already existing."

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The proposal of Mr. Pitt, in. 1798, was at once to raise the stun of 10,000,000 l. towards meeting the expenditure of the war; but he did more than this. Between the years 1797 and 1799 the revenue had increased 12,500,000 l.; for in the period between those years it rose from 23,100,000 l., in 1797, to 35,600,000 l., in 1799. Still the excess of expenditure continued to grow; it was not possible to keep it down by these efforts. But subsequently, in 1803, the revenue got up to 38;600,000 l.; and in 1805, the last year of Mr. Pitt's life, it reached to no less an amount than 50,900,000 l., a further increase of 12,300,000 l., having been effected with a view to meeting the expenses of the war and keeping down the accumulation of debt. In 1806, Lord Lansdowne was Chancellor of the Exchequer, and the full income tax of 10 per cent was enacted. The revenue was raised from 50,900,000 l., in 1805, to 59,300,0001., in 1807, being an increase of 8,400,000 l.; and from 1806 to 1816, the revenue was never below 60,000,000 l., whilst sometimes it passed 70,000,000 l. a year. Such were the ideas that Englishmen, and Scotchmen, and Irishmen, entertained, in those days, of the efforts that they ought to make, by themselves and from their own resources, for the purpose of defraying the expenditure upon what they thought a just and necessary war. Very singularly it has been shown, by an eminent and an able political economist, Mr. M'Culloch, that in point of fact the whole real accumulation of our permanent debt is due to the errors of the earlier part of the war. Between the year 1806 (and this is a most important fact) and the year 1816, such were the noble and manful efforts of the country to do its duty, that the sums then raised were not only amply sufficient to pay the expenses of the civil government of the country, but also the whole outlay required by the war in those great and glorious years, and the interest of the debt as the debt stood before 1793; the charge, however, on the accumulations between 1793 and 1806—some of which were still accumulating at compound interest—they were never able to overtake.
These, then, Sir, were the convictions which Mr. Pitt, and the successors of Mr. Pitt, entertained of their duty to the. country; this was the idea which they had of their obligations to posterity. Do you suppose that in those days, when the Duke of Wellington was crowning the
1478
British Armies with fresh laurels from year to year, your fathers did not think they were fighting for the advantage of posterity—that they did not think they were fighting for our advantage, for we were posterity to them, when they made such efforts to meet those tremendous charges by sacrifices of their Own? And now, I ask, do you revere the really great acts of Mr. Pitt? I ask you, are you worthy descendants of those who did these noble acts? If so, while claiming to judge and to canvass you can yet honour your fathers for their manly courage and for the far-sighted views which led them to make the sacrifices that were asked and obtained for them in 1798. Well, then, Sir, if in 1798, when Mr. Pitt proposed the income tax to your predecessors, they consented, and consented without a murmur, to make sacrifices—what is our case now? Why, we are enjoying the fruits of forty years of peace, and abatement of taxation carried to a marvellous extent. Our burdens have been reduced, by the merciful continuance of peace during these forty years, by an enormous amount. Now comes the first demand—now comes the first pressure—now comes the time that will show of what mettle you are made. Sir, we do not ask you—God forbid we should—to enter into any engagements, or to bind yourselves by any abstract Resolutions. We only ask you to take the step now put before you. The petition we make to you is to give us the means of carrying on a just and necessary war by an addition to the taxation of the country reaching to the sum of 10,000,000 l. We say, Sir, that that is not an unreasonable effort to make. We have laid our policy before you; we have defended ourselves against the charges and the imputations that have been thrown upon us. And surely we ask for nothing unreasonable when we refer you back to the standard of 1798? Why can you not do that in 1854 which your fathers did in 1798? Can you not do now what Mr. Pitt and the English of that day could do then? What were their means as compared with ours? Their population was only half the population of the present day; the imports were one-quarter of the imports of the present day; the export trade of the country was not one-third of that of the present day—for where they had an export trade amounting to more than 33,000,000 l., you have now an export

1479
trade of 98,000,000 l.; and such is the indomitable vigour, and such the wonderful elasticity of our trade, that, even under the disadvantage of a bad harvest, and under the pressure of an European war, the exports from day to day, and almost from hour to hour, are increasing—nay, the very last papers laid on the table within forty-eight hours show that within the first three months of the year there is an increase of 1,000,000 l. in your exports to foreign countries.
The right hon. Gentleman concluded: Such, Sir, is our case. It is on these grounds that we make our appeal to you. I am satisfied that you will consider it both a just and a reasonable appeal. We leave it in your hands with confidence, being perfectly convinced that the Parliament and the people of this country will grudge no effort and withhold no sacrifice which honour and duty may demand.
MR. DISRAELI: I cannot consent to the passing of the Resolutions without a more distinct arrangement than has at present been made for the future discussion of the general question. We have had tonight a very large proposition made by Her Majesty's Ministers, involving a considerable amount of annual taxation upon the country. Indeed, some of the taxation proposed is to be much more than annual—it is to be of a permanent character. We have also had a plan proposed of an "interim" finance, which will require great consideration. In almost every instance that I am aware of, when a great scheme of taxation has been brought before the consideration of the House, a fair opportunity has been given for the country to consider it. I, therefore, think it most unreasonable, after a statement of several hours long from the Chancellor of the Exchequer, that the House of Commons should be called upon to give its decisions upon the measures which have been submitted to it. I shall, consequently, feel it to be my duty to oppose our proceeding at present with the business before us, and to call upon the Government to fix a day upon which we may take into consideration the whole scheme that has been submitted to us—
THE CHANCELLOR OF THE EXCHEQUERthought he must have failed to express his meaning properly, if it was supposed he intended to proceed immediately in any manner that would commit the judgment of Parliament. It had, however, always been usual with respect to
1480
levying duties upon articles of consumption to pursue a particular course, which was dictated by obvious motives of convenience—it was this, that the House should pass such Resolutions at once; and he believed that at no period in our history had a contrary course been pursued, with the single exception of the case of his own blunder, which he had already mentioned, with regard to spirits in 1853. If authority was not at once given to the revenue officers to raise the charges upon the whole stock in bond, pretty nearly a whole year's receipt would be entirely lost. It was, therefore, material that hon. Gentlemen should understand this. By agreeing to these Resolutions now, no Gentleman would be committed by the preliminary Motion; they would still have the opportunity of discussion; but the passing of the Resolution, with regard to the spirits, was a matter of practical convenience and importance.
MR. DISRAELIthought that the right hon. Gentleman had evaded the question. There was no doubt that precedents could be shown in favour of the immediately passing of a certain class of Votes, and he (Mr. Disraeli) would lyre found no difficulty in consenting to this, had the Chancellor of the Exchequer, at the same time that he had asked them to pass the Resolutions, stated when the House would be afforded the opportunity of fully discussing the matter.
THE CHANCELLOR OF THE EXCHEQUERagreed with the right hon. Gentleman, and he proposed now to take the first class of Votes, relating to spirits, malt, and sugar; and, although there was no such extreme necessity as regarded the Exchequer bonds and bills, still it always had been the practice of the House to pass such Votes, and he hoped the House would adopt such a mode of proceeding on the present occasion.
MR. DISRAELIrepeated that these Resolutions would involve considerable discussion.
LORD JOHN RUSSELLsaid, the right hon. Gentleman might fix any time for the discussion that he thought fit.
MR. DISRAELI: This day week, then. Will that suit the convenience of the noble Lord?
LORD JOHN RUSSELL: Perfectly. Then let it be this day week.
MR. T. BARINGcould not allow these Resolutions to pass without calling the attention of the Chancellor of the Exchequer

1481
to the fact, that an agreement had been made with the colonial growers of sugar, by which the equalisation of the sugar duties was not to take place until the 5th of July. He had not the Resolution before him to which the House was now asked to assent, but he understood that the right hon. Gentleman the Chancellor of the Exchequer proposed that the equalisation should take place from to-morrow. Now, would that be consistent with the agreement which had been come to with the colonial interest, which was that there should be no equalisation of the duty before the 5th of July? By the Resolution of the right hon. Gentleman, as he understood it—and he should be set right if he gave an incorrect interpretation of it—the lowest duty to be paid on sugar from to-morrow was to be 11 s. per cwt. At present colonial sugar paid 10 s. per cwt., and foreign sugar paid 12 s.; and the Resolution raised the duty on colonial sugar 1s. per cwt., and reduced the duty upon foreign sugar by the same amount. If this were so, he thought the colonial interest would have great reason to complain.
THE CHANCELLOR OF THE EXCHEQUERwas understood to admit that there was certainly some force in the observations which the hon. Gentleman had made, and that the point had been overlooked in the exigency of preparing the Resolutions. He should be prepared, however, to make such arrangements as he hoped would be satisfactory, and remove all just ground of complaint.
MR. T. BARINGasked whether this did not suggest to the right hon. Gentleman the desirableness of some pause between the laying of such Resolutions on the table of the House and their adoption?
THE CHANCELLOR OF THE EXCHEQUERsaid, that such a pause would be going against the uniform course of precedent, would give extensive facilities for evasion, and would introduce utter confusion into the collection of the revenue.
MR. HUMEhad never known duties upon spirits, and upon other articles of that kind, proposed without the Resolutions being immediately agreed to, because the duties took effect from the very day that the Resolutions were passed. But the right hon. Gentleman had very truly stated that their assent to those Resolutions did not at all fetter the future discretion of the House; for he had him-
1482
self known instances in which money had been collected by the officers of the revenue immediately upon such Resolutions being thus formally agreed to, and afterwards returned to the parties in consequence of the final sanction of Parliament not having been obtained. He thought, therefore, that the passing of the Resolutions with respect to malt and spirits would be perfectly correct; but as there was an Act of Parliament existing which provided that the present sugar duties should remain until the 5th of July, ho entertained very great doubt whether they were not prevented from interfering with these duties until that time.
MR. E. BALLtrusted that the House would pause before it sanctioned so considerable an addition to the malt duty as that which was now proposed. He should have thought that the fact which the right hon. Gentleman had stated, that the last harvest had been the worst that had been known in this country since the year 1816, would have induced him to consider kindly the position in which the farmer was placed, and to regard him as one of the first parties in the country entitled to claim his consideration. Last year he (Mr. Ball) had brought forward a Motion to abate the duty upom malt which the farmer himself consumed, and he believed that but for a manœuver;, he should have accomplished that object. He had been considering the propriety of renewing that Motion this Session, and he had only decided to abandon it because he had thought that, as the country was about to enter upon war, it was useless to expect the Chancellor of the Exchequer to make any abatement of taxation. Now, however, that it was proposed to increase the malt tax, he thought that the question had assumed altogether a different aspect. He thought it most cruel and injurious that the farmers should be the portion of the community now called upon to bear the greatest part of the burden of taxation. The position of the trading interests, as shown from the Board of Trade returns, from which it appeared that the exports of the country during the last three months had exceeded those of the corresponding period of last year, ought also to have had some weight in influencing the right hon. Gentleman's decision. He did not know what the feeling of hon. Members generally might be; but if he were supported by the House, he would not consent to passing a Resolution by

1483
which the duty on malt would be so greatly increased. He had hoped, by lowering the duty, to gain a great moral advantage, by preventing people from going to the beer-houses; and he could not but think the proposition to raise the duty would be hurtful both to the farmer and to the morality of the community at large.
THE CHANCELLOR OF THE EXCHEQUERsaid, perhaps the best mode of meeting the demand of the hon. Gentleman opposite (Mr. Baring) would be to move an addition (15 per cent) to the duties, both upon foreign and colonial sugars, for the period between this and the 5th of July, and to allow the modification proposed by the Resolution now before the House to take effect from this latter date.
MR. HUMEexpressed a doubt whether this would not be a breach of faith.
MR. VANCEattributed the success of the measure adopted last year of imposing an additional duty upon Irish spirits, to the unfavourable state of the harvest, and expressed his conviction that if the harvest this year should be a full one, there would be a large diminution of the duty. It was the practice of the Irish barley-growers, when the price of grain was high, to sell it, instead of distilling it; but if, as he hoped would be the case, barley should now become cheap, they would resort to their old practice of distillation; and the distillers, who were licensed by the Crown, and who paid duty to the Crown, would be placed at extreme disadvantage. This had been found to be the case, looking at the history of the spirit duties during a great number of years; and, if they pushed the duty too high, illicit distillation would be sure to be carried on to a very great extent, unless it happened to be a year of very high prices.
MR. BENTINCKexpressed his concurrence in the observations of the hon. Gentleman the Member for Cambridgeshire, upon that part of the propositions of the Chancellor of the Exchequer which had reference to the malt tax. A more unjust and monstrous proposition was never made in that House. He would not go into the details of the question, but he would take the right hon. Gentleman on his showing. The right hon. Gentleman had said that he wished that all classes of the community should bear their fair share of the expenses of war, undertaken for the general good. That was a perfectly fair state-
1484
ment; but how did the right hon. Gentleman propose to act upon it? He proposed to raise 6,800,000 l., out of which he proposed to take 2,450,000 l., not only from one class, but from a very small class of the community—a class, too, which had not been particularly favoured by the Legislature of late years. Recent financial measures had been characterised by the most determined and malignant hostility to the agricultural interest; and he trusted that the House would not consent to what might be most justly stigmatised as a measure of spoliation.
MR. W. WILLIAMSsaid, he intended to propose, either as a Resolution or as an Amendment to the Resolutions of the Chancellor of the Exchequer, that the succession duties should be paid at the end of six months after the succession, instead of, as at present, within four years and a half. He should also propose that the same probate duty should be paid upon succession to real as upon succession to personal estate; and that the probate and legacy duties should be imposed upon corporate and ecclesiastical property in the same proportion as upon property of all other descriptions. The adoption of this proposition would place the Chancellor of the Exchequer in possession of 3,000,000 l. in the course of the next twelve months in aid of the expenses of the war.
MR. CRAUFURDcalled the attention of the House to the mode in which the spirit duties were levied in Scotland. The present system operated most injuriously in the case of the malt distillers, who had been obliged—in the constituency which he himself represented—to discontinue distillation during the present month instead of going on as had been usual until July. The malt distillers would be quite content if the duty of 5s. 4d. per gallon were levied entirely upon the spirit itself; but the practice now adopted, of charging 4s. 8d. per gallon on the spirit, and 8d. per gallon on the malt, was a practice very much to their disadvantage as compared with the distillers from raw grain.
Resolved—
"1. That, towards raising the Supply granted to Her Majesty, on and after the 8th day of May, 1854, in lieu of the countervailing duties now chargeable under any Act or Acts in force on spirits of the nature or quality of plain British spirits manufactured or distilled in the islands of Guernsey, Jersey, Alderney, and Sark, respectively, and imported from any of the said islands into Scotland or Ireland, there shall be charged and paid the following countervailing duties; that to say—

1485
"For and upon every gallon of such last-mentioned spirits of the strength of hydrometer proof; imported into Scotland, the sum of 6s. 10 d.; and for and upon every gallon of such last-mentioned spirits of the like strength imported into Ireland, the sum of. 5s. 2d.; and so in proportion for any greater or less degree of strength, or any greater or less quantity of such spirits imported into Scotland and Ireland respectively."
Resolved—
"2. That, towards raising. the Supply granted to Her Majesty, in lieu of the respective duties of

SCHEDULE (A.)

Articles enumerated.

Countervailing Duties.

For every Gallon thereof removed.

From Scotland to England

From Ireland. to England.

From Ireland to Scotland.

£

s.

d.

£

s.

d.

£

s.

d.

Ether

0

5

5

0

9

7

0

4

2

Sweet Spirits of Nitre

0

3

3

0

5

9

0

2

6

Camphorated Spirits

Lavender Water and other Perfumes, being Spirits scented with Essential Oils, Flowers, or other Ingredients

Compound Spirits of Lavender

Spirits of Rosemary

Spirits of Ammonia

Sal Volatile

Friar's Balsam

Compound Tincture of Benzoin

Tincture of Assafœtida

Tincture of Castor

Tincture of Kino

Tincture of Guiacum

Tincture of Myrrh

Tincture of Ginger

Spirit Varnishes

Other Tinctures and Medicated Spirits

0

2

2

0

3

10

0

1

8

Made Wines

0

0

3¼

0

0

5½

0

0

2½

Resolved—
"3. That there shall be made, allowed, and paid for or in respect of the several goods and commodities hereinafter described or mentioned, the several Allowances and Drawbacks of Excise respectively hereinafter specified and set forth." [They are then set forth at length.]
On the Resolution relative to the Malt Duties,
MR. BUCKprotested against it, as hostile to the landed interest.
MR. SPOONERhoped that, in agreeing to this Resolution, he should not be supposed to agree in the policy of raising the expenditure of the year within the year. He thought the Chancellor of the Exchequer ought to raise a loan. ["Oh!"] It was easy to say "Oh," but the Chancellor of the Exchequer would be compelled to do it, and under much worse circumstances.
Excise now payable under any Act or Acts in force upon the several mixtures, compounds, preparations, and commodities mentioned and described in the Schedule (A) hereto annexed, on the removal of the same respectively as hereinafter mentioned, there shall be raised, levied, collected and paid upon the said several mixtures, compounds, preparations, and commodities which on or after the 8th day of May, 1854, shall be removed from Scotland or Ireland to England, or from Ireland to Scotland, the several sums of money and duties of Excise respectively inserted, described and set forth in the said Schedule."
He believed it would be sound policy to raise a loan.
LORD JOHN RUSSELLsaid, that the whole question, as well as particular Votes, might be raised when the subject again came on for discussion. if Parliament should refuse to confirm the Resolution the money raised would be returned to those who had paid the increased duties.
MR. SPOONER: Yes, but the consumer will suffer. The price of these articles will be raised to-morrow, and you cannot return the money to him.
Resolved—
"4. That, towards raising the Supply granted to Her Majesty, there shall be charged, raised, levied, collected, and paid, upon the several goods and commodities hereinafter mentioned and described, the several duties of Excise respectively specified and get forth (that is to say)—
MALT.
"For and upon every bushel Imperial standard measure, and so in proportion for any greater or less quantity of malt, which after the 8th day of May, 1854, shall be made in any part of the United Kingdom of Great Britain and Ireland, from barley or any other corn or grain (except malt made for home consumption in Scotland and Ireland respectively from bear or bigg only), or which after the said day shall be brought from Scotland into England or Ireland without a certificate from the proper officer that it hath paid the full duty of Excise imposed thereon by law, or which after the said day shall be brought from Ireland into England or Scotland without such certificate, the duty of 4s. in lieu of all other duties of Excise now payable under any Act or Acts now in force.
"And for and upon every bushel Imperial standard measure, and so on in proportion for any greater or less quantity of malt which after the said day shall be made from bear or bigg only in Scotland and Ireland respectively, the duty of 3s. ld., in lieu of all such other duties of Excise as aforesaid.
"And for and upon every bushel of malt, whether ground or unground, belonging to any maltster, or maker of malt, dealer in or seller or retailer or roaster of malt, brewer, distiller, or vinegar maker, and which on the 8th day of May, 1854, shall be either in his custody or possession, or in the custody or possession of any other person in trust for him, or for his use, benefit, or account, in England, Scotland, or Ireland, the following additional duty over and above all other duties of Excise paid or payable thereon under any Act or Acts now in force (that is to say), an additional duty after the rate of 1s. 3½d. per bushel.
Provided always, that if such last-mentioned malt shall be in Scotland or Ireland, and shall have been made for home consumption there from bear or bigg only, then an additional duty after the rate of 1s. per bushel only.
Resolved—
"5. That, towards raising the Supply granted to Her Majesty, there shall be charged and paid on the articles under mentioned, imported into Scotland or Ireland on or after the 8th day of May, 1854, the duties of Customs hereinafter specified, in lieu of the duties now chargeable thereon.
"Spirits or Strong Waters—For every gallon of such spirits or strong waters of any strength not exceeding the strength of proof by Sykes's hydrometer, and so in proportion for any greater or less strength than the strength of proof, and for any greater or less quantity than a gallon, viz., spirits or strong waters, the produce of any British possession in America, or the Island of Mauritius, not being sweetened spirits or spirits mixed with any article, so that the degree of strength thereof cannot be exactly ascertained by such hydrometer.

Duty per Gallon.

Rum—

If imported into Scotland

£0

6

0

If imported into Ireland

0

4

4

Spirits other than Rum—

If imported into Scotland

0

6

0

If imported into Ireland

0

4

4

Rum—The produce of any British possession within the limits of the East India Company's Charter, in regard to which the conditions of the Act 4 Vic. c. 8, have, or shall have, been fulfilled, not being sweetened spirits, or spirits so mixed as aforesaid.

If imported into Scotland

£0

6

0

if imported into Ireland

0

4

4

Rum Shrub, however sweetened—The produce of and imported from, such possessions qualified as aforesaid, or of or from any British possession in America or the Island of Mauritius.

If imported into Scotland

£0

6

0

If imported into Ireland

0

4

4

Resolved—
"6. That, towards raising the Supply granted to Her Majesty, there shall be raised, levied, collected, and paid on and after the 9th day of May, 1854, an additional duty after the rate of fifteen pounds per centum upon the produce and amount of the duties of Customs upon Sugar, which are now due and payable to Her Majesty, and are collected in the United Kingdom under the management and direction of the Commissioners of Her Majesty's Customs."
Resolutions to be reported To-morrow, at half after Four o'clock.
THE CHANCELLOR OF THE EXCHEQUERsaid, the Resolutions with respect to the income tax and the stamp duties might of course stand over; but with respect to the Exchequer bonds he trusted the house would not object to take the first, which authorised the completion of the contract for the sum of 2,000,000 l., for the whole, or nearly the whole, of which the tenders had been received, and those which related to the payment of the interest, and to the instalments by which the amount should be paid up. He proposed to drop for the present evening the Resolutions which related to the other series of bonds, and to the issue of Exchequer bills.
MR. DISRAELIhad understood the right hon. Gentleman to say that he would not press these Resolutions to-night. It would lead to a very long discussion—a discussion in which the merits of the scheme on other points would be involved, and would involve very great inconvenience.
LORD JOHN RUSSELLapprehended that it would give a very bad impression out of doors if, the Chancellor of the Exchequer having entered upon a contract, the House were to refuse to agree to the Resolutions. If the House were not prepared to sanction a contract of this nature, it would be injurious to the public service, and a departure from all precedent.
MR. DISRAELIsaid, that if this Resolution were to be passed without re-

1489
ference to the rest of the scheme of the Chancellor of the Exchequer, he should feel it his duty to propose some words by way of amendment, which, while agreeing to the Resolution now before the House, would not sanction it as a general practice. At the same time, as connected with the taxes which the right hon. Gentleman had proposed, it might have another aspect. They were not, however, coming to that point at present; but it seemed to him that if the House were asked to sanction this Resolution by itself, it was asked to sanction the raising of a loan by a process which he thought was very false in principle. He did not think the suggestion of possible injury to the public credit, from the postponement of the Resolution for the present, was entitled to any great weight. No one supposed that public credit would be injured by the course which he proposed. It might as well be argued that they were doing an injury to public credit, because they did not at once vote all the taxes for which the right hon. Gentleman had asked to-night, although they had agreed to vote a supply to Her Majesty. It was quite certain that if the Government pressed this question it would lead to a very long discussion, and perhaps an adjourned debate, and would very materially invite general discussion, which the noble Lord had expressed his willingness should take place.
MR. GLYNsaid, an immediate decision was necessary, as money had been paid into the Bank of England to the account of the bonds that morning.
MR. HUMEwished to know what authority the Chancellor of the Exchequer had to raise a loan in that way, without first coming to Parliament for authority to do so? He agreed that it would be better not to go into the discussion now; but he was himself disposed to think that a better mode of raising money might have been adopted than that which had been adopted in this instance, without the knowledge or sanction of Parliament.
SIR CHARLES WOODsaid, the invariable practice, when loans were to be raised, was that which had been adopted in this case. The Chancellor of the Exchequer and the First Lord of the Treasury called for tenders, and upon those tenders entered into contracts, subject to the subsequent sanction of Parliament. It was quite incorrect to say that the authority of Parliament was, or ever had been, given beforehand.
MR. SPOONERsaid, he should like to hear whether the first instalment of a loan had ever been received before Parliament had sanctioned it.
THE CHANCELLOR OF THE EXCHEQUERsaid, he did not think that the question of deposit was important, because it did not affect the contract. The practice had been to ask for deposit, and also to take a deposit—he could not say whether uniformly as to the latter—before the vote of Parliament. Undoubtedly, the Government had always hitherto proceeded, in matters of this kind, to take the first steps upon its own responsibility; and, having made a contract on its own responsibility, had brought that contract to Parliament for its adoption or rejection. Parliament was perfectly free, if it thought fit, to reject the contract; but the uniform and invariable practice of Parliament had been to adopt it, or reject it, there and then. Parliament had never admitted the principle of allowing a contract of that kind to remain in suspense. It had uniformly given its vote at the first moment upon which the contract had been stated to it; and the only point upon which there had been a deviation from the practice had been this, that upon the present occasion papers making Members acquainted with the Resolutions to be moved, had been circulated in the course of the day; whereas upon every previous occasion the Chancellor of the Exchequer had brought them down with him, and they were for the first time brought under the knowledge of the House in his speech. The vote of the House was then given upon them. That had been the course which Parliament had invariably taken, and he thought it ought not to be lightly departed from. It was open to the House to censure the Government if they thought the Government had gone wrong; they were perfectly free to reject the Resolution, if they pleased; but they were bound, according to the practice, to accept or reject it without postponement of the debate.
MR. HUMEsaid, without disputing the power of the First Lord of the Treasury and the Chancellor of the Exchequer to call for tenders, he must say that he had never heard of any payment being made, on any such contract, until the sanction of Parliament had been obtained. The rule had been to advertise the tenders, and to open the tenders in the presence of those who had in their hands the price which the Government were willing to give. The

1491
tenders given in were afterwards published. He understood that this practice had now been departed from. To this hour the public did not know what tenders had been given in or who had tendered. Publicity in these cases was of great importance, and when they deviated from the general rule they were sure to go wrong.
THE CHANCELLOR OF THE EXCHEQUERthen moved the first Resolution, authorising the issue of the Exchequer bonds in series A.
MR. DISRAELIwould move that the Resolution be postponed. The precedent quoted by the President of the India Board (Sir C. Wood) did not apply to the present case, for there existed the great difference noticed by the hon. Member for Montrose. In the case of the loan of 1847, there was no departure from the proper course, as the Minister did not take any step till he had received the authority of Parliament.
SIR CHARLES WOODsaid, he had just been informed by the Comptroller of the National Debt (Sir A. Spearman) that the usual practice was to pay the deposit on signing the contract. When Lord Monteagle, when Chancellor of the Exchequer, contracted a loan, Exchequer bills were sent in with the tenders, and there was no case in which money was not paid on signing the contract.
MR. DISRAELIdid not press the fact of the deposit. He did not rest his objection on that; but there was no identity or analogy between the usual instances of raising money on loans, and the present case. In this case the Minister not only tries to raise the money, but agrees to pay it off on a certain day; and has to come forward and propose taxes to enable him to carry out his engagements, as the right hon. Gentleman has done. The consequence was, they were called on to sanction a Resolution at that moment which pledged them to the whole scheme. He thought that the system of raising money by loan, and fixing a day on which it was to be repaid, was a most dangerous one, which the House ought not to sanction with the precipitation that was now proposed. He felt it his duty not to agree to a vote which would sanction this; but as he did not wish to create embarrassment, he would only ask to have the question postponed until the House had an opportunity of considering the whole question.
THE CHANCELLOR OF THE EXCHEQUERrose to reply to the question of the
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hon. Member for Montrose, as to the deviation from the former practice. There was a difficulty in ascertaining what the former practice had been, for it was a strange fact that there was no record in the Treasury, or in any other Government Department, of the mode of conducting these matters. They were entirely dependant on the memory of official persons. The hon. Gentleman was right in saying that the usual practice had been to open the tenders in the presence of the parties; but in this case, as tenders were invited for sums as low as 1,000 l., great inconvenience must have ensued if all the parties had been invited to be present. The tenders were therefore opened in the presence of the Governor and Deputy Governor of the Bank, and the result was communicated to the parties the next morning. He had no intention to take the matter out of the control of the House. The contract was made on his own responsibility and that of the First Lord of the Treasury. The parties who tendered had taken the risk on themselves, as the House was in no way bound to ratify the contract. But he should say that there was no instance on record in which the House had declined to give judgment, on the proposal of the Minister, the moment it was laid before them, and he trusted the House would not now depart from the usual course.
MR. T. BARINGwould not throw any impediment in the way; but he must say that he thought the right hon. Gentleman might, without any injury to the public service, have adopted the ordinary course of proceeding, and have taken the sense of the House. If that had been done, in the course of the discussion some suggestions might have been thrown out which would have facilitated the operations of the Government. The right hon. Gentleman was fond of referring to the precedent of France, but he had taken the opposite course to that pursued there; the French Government had raised a loan by public subscription, but they had first obtained the sanction of the Legislative Body. The right hon. Gentleman had adopted a different view as to his responsibility, and had consulted the public first and the House afterwards, and he was sorry to say his success had been as different. The loan in France was most successful.
THE CHANCELLOR OF THE EXCHEQUERdid not propose to ask the sanction

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of any portion of the contract on which the deposit had not been paid; there was a small residue, not taken up, but he would not enter into any new contract under the present Resolution.
MR. HILDYARDbegged the House to consider whether by passing this mere formal vote they did not exclude themselves as to the merits. The right hon. Gentleman admitted that they were not bound to accede to the terms made by Government; therefore a vote sanctioning them could not be a mere formal vote. He must confess that even if the precedents were as stated, he thought it was time to establish a precedent to the contrary. The parties who had paid their deposits that morning would not be prejudiced, for if the House ratified the terms, of course the vote would refer back to the time.
LORD JOHN RUSSELLsaid, it was quite wrong to imagine that the question then before the House went at all to the merits of the manner in which the money was proposed to be raised. The House might be of opinion that the mode was a bad one; but that was a different question from the formal one, whether they would depart from all former precedent, and not give effect to a contract made by the Minister especially authorised for that purpose. It might be a question whether it would be expedient for the House to depart on this occasion from all former precedents—a mode of procedure against which he earnestly protested as being both unnecessary and dangerous. If they would agree to the Resolution, they would have an opportunity to discuss the merits on Monday. He would propose that the Resolution should be reported at half-past four to-morrow. The Chancellor of the Exchequer would then introduce the Bills founded on them, and on Monday the whole plan of the Government would be brought under the consideration of the House. It would be very inconvenient to enter into the merits of the Resolution at that moment.
MR. DISRAELIassented to the proposed arrangement.
SIR HENRY WILLOUGHBYthought the Committee was placed in a difficult position by the course adopted by the Chancellor of the Exchequer, who on the 11th of April had told them that he did not intend to propose any addition to the unfunded debt. He thought the House ought to have had an opportunity of expressing its opinion on this new scheme of raising
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money on Exchequer bonds to be repaid at short periods, before the Chancellor had proposed his plan.
Resolved—
1 "That, towards raising the Supply granted to Her Majesty, the Commissioners of Her Majesty's Treasury be authorised to issue Exchequer Bonds bearing interest at 3l. 10 s. per centum per annum, to be paid off at par on 8th May 1858, for any sums not exceeding in the whole 2,000,000 l., which may have been subscribed for at a price not less than 98 l. 15 s. per centum to be paid in Exchequer Bills at par or in money at 100 l. 1s. for every 100 l. so subscribed."
Resolved—
2. "That the interest for all such Exchequer Bonds shall be payable half-yearly, and shall be charged upon and issued out of the growing produce of the Consolidated Fund of the United Kingdom."
Resolved—
3. "That such parties as have subscribed for any such Exchequer Bonds, and shall have made a deposit of 10 1. per centum on the 8th May instant, and shall pay the further instalments in completion of the price at the following times, viz.—
30 l. per centum on the 9th June next;
20 l. per centum on the 11th July next;
20 l. per centum on the 8th September next;
And the remaining 20 l. on the 17th October next, shall, on completing such payments be entitled to the Bonds for which they have severally subscribed; and that interest at the rate of 3l. 10 s. per centum per annum, from the day of payment up to the respective days on which the instalments fall due, shall be paid to such parties as shall desire to pay the instalments at an earlier period."
Resolutions to be reported on Monday next.
Committee to sit again on Wednesday.
House resumed.

MANNING THE NAVY BILL.
SIR JAMES GRAHAMin moving for leave to bring in a Bill for the Encouragement of Seamen, and the more effectual manning of Her Majesty's Navy during the present war, said, that the high-sounding title of the Bill might have excited feelings of expectation on the part of the House which he feared would meet with disappointment. This, however, was the invariable title of the Prize Act introduced at the commencement of war. The Bill was limited to the duration of the war, and was exactly similar to all former Prize Acts, with this exception—that the scale of distribution of prize money was that announced in Her Majesty's Proclamation, giving a much larger share to the common men, and a much smaller one to the admirals and superior officers. There was also

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a new provision rendered necessary by the fact that we now had a maritime ally, and that it was, of course, requisite to make provision for prizes taken by joint capture. With regard to the second Bill, that was of a more permanent character.
SIR GEORGE PECHELLhoped the right hon. Gentleman would give his attention to the subject of bounties.
After a few remarks from Mr. OTWAY and Sir G. TYLER,
CAPTAIN SCOBELLwas disappointed at the Bill not being so comprehensive as its title seemed to indicate, but approved the arrangements that were to be made with regard to prize money.
Leave given; Bill ordered to be brought in by Sir James Graham, Mr. Osborne, and Mr. Cowper.
Bill read 1°.
The House adjourned at a quarter before Twelve o'clock.