Commons Sitting of 22 May 1854

MINUTES.
PUBLIC BILLS.—1° Sheriff and Sheriff Clerk of Chancery (Scotland).
3° Customs Duties.

WAYS AND MEANS—EXCHEQUER BONDS.
On the question that Mr. Speaker do leave the Chair,
MR. T. BARINGsaid—I wish to explain the change it is necessary for me to make in the course I intended to pursue. I

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had understood from the noble Lord (Lord J. Russell), on the first introduction of the Resolutions of the Chancellor of the Exchequer, that the first Resolution which was adopted in Committee would be reported, and on that Report would follow any discussion that might apply to the general system of finance. I then gave notice that I should move an amendment upon bringing up the Report, but since that the noble Lord has changed the course of proceeding, and we are called upon to go into Committee before reporting the first Resolution. As I cannot, from the forms of the House, refer in the House to what passed in Committee, I will defer the Resolution of which I have given notice as an Amendment till we are in Committee, and probably till after hearing from the Chancellor of the Exchequer the reasons for the change in the Resolution which he has since introduced.
House in Committee.
THE CHANCELLOR OF THE EXCHEQUER: I do not rise, Sir, for the purpose of making any statement upon the subject of the merits of the Resolution in your hands, over and above the general statement which I have already made to the House upon that subject, but simply for the purpose of noticing what has fallen from the lion. Member for Huntingdon, who, I think, appears to be in error with regard to what was stated by my noble Friend as to the originally intended course of proceeding upon this matter. As far as the Government is concerned, there has been no change whatever in their intentions and announcements from the commencement; the only change that has occurred has occurred in consequence of suggestions made from the other side, and in deference to such suggestions as appeared to be reasonable. The proposals of the Government were twofold. In the first place they went to an enlargement of the permanent resources of the country—I should rather say of the Exchequer; and, in the second place, they went to make a temporary provision of the funds to supply the wants of the Exchequer during the interval before the new taxes could come into play. I cannot, therefore, understand how there can have been any misapprehension on the subject of the order of proceeding, because I was most careful to state, in introducing the whole matter to the House, that the order of proceeding would be this—we should in the first instance take votes upon all the new taxes,
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and then ask for votes with respect to what I will call the cash provision that was to be made, with this single exception, that, as certain contracts had been entered into, it was necessary to ask the assent of the Committee to, or at least the opinion of the Committee upon, these contracts without any delay. The Committee was pleased to give its opinion in favour of adhering to those contracts. That being so, there was no reason for departing in any particular whatever from the order of proceeding I had announced—namely, taking in the first instance decisive votes on the taxes, and then submitting to the House or the Committee the provision that must be made for the wants of the Treasury in the interval. On that principle it is that I have now moved that Mr. Speaker should leave the Chair, and that the opinion of the Committee should be taken upon the proposal that is made for raising money either by Exchequer bonds or Exchequer bills. The Resolution that has passed through Committee has reference rather to the contracts already made than to the general question of policy with regard to the raising of this money. It therefore appears to me that this order of proceeding is that which is most natural and conformable to the common sense of the case, and it certainly conforms with the announcement originally made by the Government.
Motion made, and Question proposed—
"That the Commissioners of her Majesty's Treasury be authorised to issue Exchequer Bonds bearing interest at the rate of 3l. 10 s, per centum per annum for any sums not exceeding in the whole 4,000,000 l., at any prices and on any terms determined upon by the said Commissioners, such Bonds to be paid off at par at the expiration of any period or periods not exceeding six years from the date of such Bonds."
MR. DISRAELI: This order of proceeding may be the most natural one under the circumstances, but it certainly is not the one which hon. Gentlemen on this side of the House understood to have been assented to. The House has seen to-night the great disadvantage of its having been induced without any discussion to pass this formal Resolution. There was a most distinct declaration on the part of the noble Lord that the Committee was clearly to understand that by the passing of the formal Resolution no person whatever was bound in any way, and the Chancellor of the Exchequer has now treated the formal passing of that Resolution in Committee as a sanction of the Resolution by the House. Now, with reference to the un-

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derstanding upon which we supposed this business was to be conducted, I can only say that, I did understand from the noble Lord most distinctly that the Report to the House of the Resolution then formally passed in Committee should be taken the first thing on this day week last, in order that the opinion of the House should be taken on the general financial scheme of the Government. Unfortunate circumstances prevented our then entering into the discussion, but I did certainly understand from the noble Lord that the Report of this formal Resolution was to be made last Monday, in order that the opinion of the House should be taken on the general statement of the Chancellor of the Exchequer. In proof of the accuracy of my impression I will recall to the recollection of the Committee that there was a second proposition made by the noble Lord. It was in consequence of our demurring to pass the formal Resolution in Committee that the noble Lord, who had intended originally to press the Report of the Resolution to the House, said, "Very well; under those circumstances we will put it off till Monday week, when the whole discussion on all the propositions will be taken on the Report of the first Resolution." I believe this is an accurate version of what occurred.
LORD JOHN RUSSELL: thought, Sir, it had been perfectly clear that, though I postponed the Report of the Resolution in order that the right hon. Gentleman might have an opportunity of stating his views with regard to the general proposition of my right hon. Friend the Chancellor of the Exchequer, yet that it was understood, either that the Report or the further Resolutions in Committee should be taken on the day when that debate came on. The right hon. Gentleman once, if not more than once, asked me which was to be taken first. It seemed to me that the more convenient order would be to take the Committee before the Report, and, when the right hon. Gentleman asked me which would be taken first, I answered that the Committee would come first. All that I engaged was that the Report should not be taken as a matter of form, but should be open to discussion.
MR. DISRAELI: My hon. Friend, the Member for Huntingdon (Mr. T. Baring) had given notice of his Amendment previously to the period to which the noble Lord refers, having been of the same impression as others upon this side of the
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House. I certainly am of opinion that the original engagement which the noble Lord entered into with the House has not been fulfilled.
THE CHANCELLOR OF THE EXCHEQUER: My noble Friend and the right hon. Gentleman are, I apprehend, entirely at issue as to what the original engagement was. In another of his observations the right hon. Gentleman has fallen into a serious error. He says, "We see from this the great inconvenience of allowing these to pass as formal Resolutions, being told that they would not in any way commit the House, and that the judgment of the House would be given at a future stage." That is an entire misapprehension so far as regards the point at issue. With respect to the taxing Resolutions, that is no doubt perfectly true. They were taken purely as a matter of form, to enable the revenue officers to proceed in such a way as to prevent evasion; but when we came to the Resolution relating to Exchequer bonds, neither I nor any one else connected with the Government ever represented that as a formal Resolution. I said that it was necessary, and conformable with all precedent, that we should have the immediate judgment of the House upon it. It was not a formal judgment, but we solicited it from the Committee in order that the parties with whom the Government had entered into contracts might be made at once aware whether it was the intention of the House to ratify or disapprove it.
MR. DISRAELI: That is the very point. The right hon. Gentleman has never had the judgment of the House upon it, but only of the Committee; and it was because I and other hon. Members assented to that Resolution that the postponement was originally proposed.
SIR HENRY WILLOUGHBY: I wish, Sir, to call the attention of the Committee to what appears to me to be a practical difficulty. I certainly understood that the whole question of the principle of the Budget was to have been discussed upon the Report; but the difficulty which occurs to me is this:—A resolution has been passed as regards the first 2,000,000 l. of Exchequer bonds, which stands second for the Report to-day; but there are three new Resolutions involving some important questions, which are now to be submitted for the first time to the Committee, and I ask, is it fair to call upon us to pass a judgment upon those Resolutions unless the right hon. Gentleman states what are the

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grounds upon which he calls for the extraordinary power of being entitled, whenever he pleases, any time within the next six years, to issue Exchequer bonds or Exchequer bills to the extent of 4,000,000 l., and at any terms which he is to fix at the time? This is a question of great importance, because it is utterly impossible to know why such extensive powers are required unless we have some information upon the subject from the Finance Minister, who is now in the position of initiating a new set of measures.
THE CHANCELLOR OF THE EXCHEQUER: Sir, as regards the general grounds upon which this proposition was founded, I did endeavour to state them upon a former occasion, and I certainly did not expect to hear the objection raised, that I had not stated them with sufficient fulness upon the occasion to which I refer. These Resolutions are general in their character, and are preparatory to a Bill. They do not contain everything that is to be provided in the Bill. On the contrary, there are various important provisions which must be inserted in the Bill, and which it is not the custom to comprise in the preliminary Resolutions, which are rather submitted for the purpose of raising the question in a broad and simple form. With respect to the limitation of time within which this money is to be raised, there is no occasion why the Government should ask power to raise money at any time within six years. It is intended to take powers applicable to the present financial year only, and when we come to the Bill, provisions will be inserted to that effect. In taking power to dispose of these bonds at any terms, I only follow the precedent which has been invariably adopted on these occasions.
MR. T. BARINGsaid, it certainly had been his impression that the understanding was that the first Resolution should be reported before they proceeded in Committee with the other Resolutions. That being so, he had framed his Amendment as applicable to the first Resolution, and to be taken upon the Report. He thought it more for the convenience of the Committee, however, that he should state now his objection to those Resolutions, and move in Committee the Amendment of which he had given notice, and which he had intended to have moved in the House. He could sincerely say, that he would very gladly have given a silent vote in favour of the financial plan of Her Majesty's Govern-
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ment, for he knew, and had seen, the difficulties with which every Chancellor of the Exchequer had to contend, even in times of peace. There had been difficulties in former years arising from the contraction of revenue, from commercial crises, or a famine in Ireland—events entirely beyond the foresight or control of the Government of the day. On the present occasion, whatever the difficulties with which the Chancellor of the Exchequer had had to contend, it appeared to him that they had arisen from the conduct of the finances during the past year, and that they had been the creation of the policy of Her Majesty's Government. It would appear, therefore, to be natural, when a remedy for those difficulties—novel and somewhat extraordinary—was being proposed, that it should have the full and attentive consideration of that House. At the same time, he himself should not have originated any Amendment, had it not been for the speech with which the introduction of these Resolutions had been accompanied—a speech, no doubt, of the greatest talent, and which even those who differed from the sentiments conveyed in it had heard with admiration. The right hon. Gentleman the Chancellor of the Exchequer told the House that the policy of the past was to be the policy of the present and of the future; he connected what had been done with what was to be done, and he called upon the House to give its approbation to that policy because it was to be prospective as well as retrospective. Thinking, as he (Mr. Baring) did, that those measures which had been adopted last year were ill-advised and wanting in prudence and caution, and had therefore been unsuccessful, he conceived that the Committee would be acting very wrongly to acquiesce in the declaration, that the principles which had guided the Government last year in finance were those which should be approved and maintained for the future. The Chancellor of the Exchequer had stated, with perfect fairness, that it was necessary, in order to judge of the merits or demerits of the past measures, to consider what was the position of affairs fifteen months ago. He perfectly agreed with the right hon. Gentleman in the justice of that proposition, and he would state the reasons why he thought that fifteen months ago the financial measures which were adopted by the Government were not judicious. In the first place, nothing could have been more favourable than the position of the Chan-

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cellor of the Exchequer fifteen months ago. With a surplus revenue, a considerable balance in the Exchequer, and prosperity and tranquillity at home, his position would seem to have been no very difficult one. The right hon. Gentleman had another great advantage. He belonged to the school of the late Sir Robert Peel and of the right hon. Gentleman the Member for the University of Cambridge (Mr. Goulburn), who had established a reputation among those who were connected with the employment of capital and the moneyed power in this country for prudence and great caution, and for almost complete success. But this was not all. The right hon. Gentleman had among his supporters several distinguished Members of that and the other House who had been Chancellors of the Exchequer; not the page merely, but the whole volume of the secret history of finance, lay open before him for the last fifty years; he had around him a bright constellation of departed Chancellors of the Exchequer, the light of whose experience might have sometimes served to guide him, and sometimes to warn him. There was every confidence, therefore, with a Minister of such ability, having at his call so much experience and prudence to guide him, that the course of the financial history of the past year would have been one, at any rate, without shocks and convulsions, if not one of complete prosperity.
In the allusions which he should have to make to the right hon. Gentleman he was sure the right hon. Gentleman would feel that he was not wanting in personal respect, but that he spoke of him as the organ of the Government, of which he was, unquestionably, one of the most distinguished ornaments. The right hon. Gentleman had said that they were wrong to suppose that there were no difficulties with which he had had to contend, for that he had had difficulties in regulating the taxation of the country, in continuing or increasing the income tax, and in introducing the succession tax. He (Mr. Baring) did not suppose, however, that there was any very close connection between those measures and the reduction of the rate of interest on Exchequer bills, or the scheme for the conversion of the minor stocks. No one, he was sure, would say that the right hon. Gentleman had gained a single vote for the income tax by reducing the interest upon Exchequer bills, or that
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he had weakened the Opposition to the succession duty by his conversion scheme. They were entirely to be kept distinct, except so far as any success in those financial measures might induce the House to pass leniently over failures. But there were dangers of a different description which should have deterred a prudent Minister from making any great changes of the kind that were effected. The right hon. Gentleman found that his predecessor had reduced the rate of interest upon Exchequer bills from 1½d. to l¼d., or from 2l. 5s. to 1l. 17 s. per cent. Subsequently to the period, however, when that measure passed in June, there had been a regular efflux of gold from the Bank of England, notwithstanding the purchases it had made. Between June and July there was a reduction of nearly 2,000,000 l. in the gold in the Bank, to which it must be added, to show the drain that had taken place, that the Bank had purchased upwards of 6,000,000 l., so that there had been a drain of 8,000,000 l. of gold during this period. It must then, to most people, have been evident, either that there was a great balance due from this country abroad, or that, notwithstanding the assistance which had been given by the import of gold from California and Australia, our engagements and liabilities had increased to such an extent as not to be overcome by that assistance; and there must have been anticipations of a contraction of the facilities of this country, of a rise in the rate of interest, and, perhaps, even of financial and commercial difficulties. The Bank of England, judging, he presumed, in that way raised the rate of interest from 2l. to 2l. 10 s. upon the 16th of January, 1853, and in a fortnight afterwards to 3l. per cent, This, one would have supposed, would have been a warning to the Finance Minister not to attempt to act in a manner contrary to what was the turn of interest at large in the market, and not to reduce the interest upon Exchequer bills when the rate elsewhere was rising. In the month of February, however, the right hon. Gentleman announced a reduction of interest—and that, not with any improvement in the circumstances of the country, for on the 12th of February the amount of gold showed a decrease of about 2,000,000 l., although since the 1st of January the Bank had purchased nearly 1,000,000 l. of gold. The right hon. Gentleman appeared, therefore, to have acted upon this conviction—either that he was right in supposing that

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the rate of interest was only temporary and must fall, or that he believed that by a reduction of the interest he would reduce the amount of Exchequer bills afloat. He (Mr. Baring) spoke with considerable hesitation upon the subject of the Exchequer-bill market. The right hon. Gentleman was a far better judge than he could be of it; at least, the right hon. Gentleman had lately had more to do with it, and had had more trouble with it; but he thought that the Exchequer-bill market was a most valuable resource for any Minister, because it afforded opportunities for obtaining money at a moderate rate, and below what he could obtain it for by loan. That was an advantage, however, which could only be continued and maintained by the continuance and maintenance of confidence in that market; and that confidence, he believed, was chiefly maintained by the conviction, on the part of Exchequer-bill holders, that the rate of interest would be sustained in some accordance with the general rate of interest, and that the Chancellor of the Exchequer would not act contrary to the course of events elsewhere, but would shape his operations according to the rate of interest abroad.
The great advantage of the Exchequer-bill market was, that it gave to the holders of those bills the temporary employment of their money, with the perfect security of receiving their principal at any time, with a fluctuating rate, no doubt, of premium, but with the conviction that they could always obtain their money whenever they wished to change their investment. In order to do that, however, it was evident that the holder should be certain to find some one who would take them off his hands—there must be confidence between them—and that could only be secured by the Government maintaining a fair rate of interest for those bills. The right hon. Gentleman said that he had evidently been quite right in what he had done, because in March the whole amount came in for conversion, and not for payment. He ventured, however, to differ from the right hon. Gentleman in that view. It must be borne in mind, in the first place, that there was always great confidence reposed in the Chancellor of the Exchequer—that he was thought to be a wiser man and a better judge of mercantile matters than others; and in the next place, there was a conviction—as there always had been—that, should the rate of interest be permanently low, the Chancellor of the Exchequer would
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raise it. They determined to hold on therefore till June, in the full belief that there would then be a rise in the rate of interest, and that the Exchequer bondholders would not be at a loss. When June came, and the decision was to be taken whether the rate of interest upon Exchequer bills was to be raised or lowered, the Chancellor of the Exchequer pursued the same course as he had taken before, and the rate of 1l. 17 s. was reduced to 1l. 10 s. The consequence of this was that not less than 3,000,000 l. of Exchequer bills came in for cash. They then fell to a discount, considerable purchases were made, and the interest was raised in October. Now, he asked the Committee to consider whether the withdrawal of 3,000,000 l. of Exchequer bills was not a proof that it was mismanagement to lower the rate of interest? But when he showed that the low price for those Exchequer bills had only been maintained by forced purchases on the part of the Government, then he thought it would be a still stronger evidence that without those purchases they would have fallen to a much lower discount than they had, and would have thus brought a further discredit upon the Exchequer-bill market. He found that between the 5th of May and the 26th of May 381,000 l. Exchequer bills were purchased by the savings banks money at 2s. premium down to par, and that between the 9th of July and the 26th of September 866,000 l. Exchequer bills were purchased at prices varying from 1s. premium down to 10 s. discount; and if this 1,247,000 l. of the savings banks money had not been employed in the purchase of Exchequer bills to what did the right hon. Gentleman think they would not have fallen? The use of this money was perfectly legal, but there was something unusual in the way in which that money was obtained, as between the 21st of June, 1853, and the 17th of February, 1854, 652,546 l. Stock of the funded debt belonging to the savings banks, was sold to buy Exchequer bills. The Chancellor of the Exchequer, therefore, began by selling the stock of the savings banks in order to prop and bolster up the Exchequer-bill market; and when he got the Exchequer bills into his hands, he converted them—as he had, no doubt, a legal right to do—into funded debt, thus adding 1,247,000 l. to that funded debt which he and other hon. Members who supported him, were so strongly of opinion ought not to be aug-

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mented. These were, undoubtedly, means which the law allowed to a Chancellor of the Exchequer, and they were means which he knew had been resorted to on former occasions, but never, he believed, without great reluctance, and all parties admitted that it was a step which should only be had recourse to under the greatest difficulties and pressure. But what was the nature of the emergency which rendered necessary this step on the part of the Chancellor of the Exchequer? It was his own measure of reducing the rate of the interest on the Exchequer bills that created the difficulty—that obliged the right hon. Gentleman, through the means of the savings banks, to purchase Exchequer bills, and this ended in the permanent addition of 1,247,000 l. to the debt of the country. He said, then, with perfect allowance, that if the Chancellor of the Exchequer was at liberty to use these means, they ought not to have been resorted to excepting on the greatest emergency—which emergency, if it did exist, had been created by the Government itself. The Government, therefore, were to blame for the emergency which had ended in what every one must deprecate—an increase in the national debt. The right hon. Gentleman had, however, said that he was perfectly satisfied with the results of this measure, which had been a saving to the country of 60,000 l., while Exchequer bills were at what he called a moderate rate of interest, and he established this moderate rate by reference to France and past times. With regard to the rate of interest in past times, the right hon. Gentleman knew—as did the Committee—that the rate of interest must depend on the state of the country and the amount of bills in existence, and the comparison of the rate of interest at one period could hardly be cited as a test with reference to another period. With regard to France—when he recollected what shocks public credit and private property had there received, he was surprised that the Chancellor of the Exchequer had drawn a parallel between England and France; and he hoped that the financial system of France was not to be the basis upon which the present Government would proceed. But in making such a comparison, the difference in price between the French three per cents and the three per cent Consols in this country ought not to be lost sight of. If there was any test that could be brought to bear—and he thought
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all tests as to the comparative cheapness or dearness of Exchequer bills were open to objection—it might be obtained by the comparison of the rates of interest on the funded and unfunded debts. Consols were lat par, their lowest point was 85, which gave 3l. 11 s., or an increase in the rate of interest of 11 s. The rate of interest on Exchequer bills was 1l. 17 s. This in, creased to 3l.; so that while there was only 11s. increase in the rate of interest on the funded debt, there was an increase of 1l. 3s. in the rate of the unfunded debt. How, then, could the right hon. Gentleman be so perfectly satisfied with the result of his measures, and that, too, at a time when there were only 17,000,000 l. of Exchequer bills out? The amount had been much greater in many previous years, and some time since there were not less than 43,000,000 l. of Exchequer bills at the same rate of interest as that now paid, namely, 2d. per day. There might, have been one reason which had actuated, the right hon. Gentleman in this measure—a wish to diminish the amount of the unfunded debt; his object might have been to have employed his balances in the reduction of the unfunded debt. He (Mr. Baring) doubted whether this was judicious, but by reducing the amount suddenly they alienated capital from being invested in that mode which would have remained permanent, and which, when required, did not come back so easily. If such were the wish of the right hon. Gentleman, he was by his own acts frustrated in it, for by his conversion scheme he had two employments for his balances—they were employed by the unfunded debt, and a large call was made upon them by the funded debt.
This brought him to another point on which the right hon. Gentleman seemed to congratulate the House, and to have apprehended censure. With regard to the conversion scheme, the same reasons could not be advanced for this that were for the reduction of interest; there was the general aspect of affairs, and he (Mr. Baring) believed that there was a great increase of the exercise of credit; and though great ease had been given by the arrival of gold, still this was only temporary—for the trade, enterprise, and industry of the country, had in proportion increased to the increase of gold; and whether there had been a good harvest, or whether the country were at peace or war, there would have been a drain which

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called for a contraction of facilities. When the Chancellor of the Exchequer proposed his measure, he said he thought things had very much changed; that there was an increase of gold in the Bank of not less than 1,000,000 l. since the month of February. But this was made up of purchases to that amount, and the increase did not therefore bring increased treasure into the Bank to that amount. There was, in fact, everything to prescribe caution, and he regretted that that caution had not been adopted. The right hon. the Chancellor of the Exchequer stated that the objections taken to his proposed conversion plan were not of such a nature as to deter him from attempting to carry them out. The fear expressed was that the right hon. Gentleman was giving too good terms, and that 2½ per cent for forty years was a disadvantageous bargain for the country. Though the Chancellor of the Exchequer said that the gradual decrease that was to take place in forty years was an advantageous bargain, he (Mr. Baring) could understand those who asserted that the bargain for forty years might be very improvident as regarded the future, though at the present time it seemed advantageous. The right hon. Gentleman said that the real and only objection to his financial scheme was one which was made by himself—namely, the inconvenience which would arise from the withdrawal of the public balances from the Bank. But when the right hon. Gentleman made that objection to his own project, he stated what was a truism just as much as if he had said that having 10,000,000 l. to pay, he would require 10,000,000 l. to pay it. What was the commutation scheme for, if not to avoid the necessity of payment by holding out to the public such temptations as would prevent them from sending in their demands? If he had told the right hon. Gentleman that he would have been inconvenienced by paying more than he had in hand, this was so evident that he wondered that the right hon. Gentleman should have prided himself upon being the only individual who had found it out. But did he say that he would be inconvenienced on the 29th of July, when he found the aspect of things favourable to the conversion scheme, and that the payment could be effected without pressure and with economy to the public? The right hon. Gentleman looked upon this scheme as favourable to the country, and
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such he (Mr. Baring) presumed he maintained it to be, as he stated that the operation had been effected without loss. It was difficult to conceive how there could be no loss in paying off at 100 when Consols subsequently fell to 85. Would anybody say that if we had employed that money in another way, and at another time, or if we had it at our disposal now, the result would not be more favourable to the public interests? How the right hon. Gentleman could say that there was no loss to the public in such an operation was a matter of wonder, which they would, no doubt, have explained. But were there no other reasons for not continuing that scheme? Was there nothing in the Exchequer-bill market which ought to have deterred the right hon. Gentleman? He had there 3,000,000 l. to pay. If he wanted to reduce his unfunded debt, and to pay this 3,000,000 l., and so keep Exchequer bills out of the market, surely he ought not to have involved the country in an operation which would create a further demand upon him for some 8,000,000 l. or 10,000,000 l. And, if there was one motive stronger than another, it was to be found in this, that when there was in hand one financial operation, it should have been completed before entering upon another. Besides, a measure of such importance, depending on circumstances and opinions, should not have been ventured upon, excepting when there was tranquillity at home and every possibility of maintenance of peace abroad. He was not one of those who taunted the Government for making every exertion to obtain peace, nor did he blame them for clinging to and hoping against hope for peace; but he did say that, if there was the slightest disturbing cause, or if there was the slightest speck of a cloud upon the political horizon, then the Government ought to have paused before proceeding with a measure which, by its failure, not only rendered the payment of large sums of money necessary, but deferred the object which the right hon. Gentleman professed to have so much at heart. It must be remembered that this failure was not a trifling matter; for, owing to it, the future attempts of the right hon. Gentleman or those of his successor would be met with increased difficulty.
Was there nothing, then, to alarm Her Majesty's Government in April, when this measure was produced? There was in the blue book a letter to Lord Clarendon from

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Sir Hamilton Seymour, which, while it states his reliance on the pacific intentions of the Emperor of Russia, yet said that there were movements of troops and operations in the south of Russia calculated to excite uneasiness. With this cause for uneasiness expressed by Lord Clarendon on the 5th of April, how could the Chancellor of the Exchequer come forward on the 10th of April with such a measure? The right hon. Gentleman had said this scheme had been effected without loss; but there was one item in these accounts of the employment of the sinking fund to the amount of 2,300,000 l. in the purchase and withdrawal of deficiency bills; but if this sum had been employed, as, according to every rule of common sense and reason, it ought to have been, in the extinction of past debt, if that had been done, he did not mean to say they would have gained by the operation, but they would have obtained their amount of national debt at a much cheaper price than they had paid for it. If the money had been so employed, they would have been saved from what the loss in this operation had involved them in, those shifts and difficulties which had wasted the balances in the Exchequer—the sums to be paid, part in deficiency bills in the ensuing, and part in Consolidated Fund's bills to be paid in the subsequent quarter; from the selling up the savings bank fund to purchase Exchequer bills, which had ended in an addition to the national debt, which they were all so anxious to save from increase. But the surplus revenue that might have prevented all this had been absorbed in meeting the wants of the Government created by their unwise and abortive policy. The right hon. Gentleman had told the House, however, that it was of the utmost importance that they should be aware of the principles which actuated the Government in their financial operations—that these were prospective as well as retrospective. He had almost told them that, whereas he did not regret what had been done, he should continue to act on the principles which had hitherto guided him. If such really were the intentions of the right hon. Gentleman, he (Mr. Baring) would ask the Committee whether, having seen the result of the application of those principles, they would now assent to a Resolution without one word of caution being uttered or expression being given to their opinion, that in past operations more prudence ought to have been exercised and that greater foresight ought to be adopted
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as regarded the future? There were other points which had not so much a retrospective as a prospective effect. One was of the greatest importance to the public service—a question as to the national security and faith. The right hon. Gentleman had stated that he took a different view from what had been taken in past times, with regard to balances at the Bank. He (Mr. Baring) desired not to say much as to the relation between the Bank of England and the Government, as the Bank acknowledged no organ but their governors; and in that House the Chancellor of the Exchequer was the only organ of their negotiations; he did not, therefore, wish to say anything on the principle which the right hon. Gentleman had laid down touching the balances in the Bank. There were two questions connected with these balances—the one was the amount of balance which the Chancellor of the Exchequer was to have in hand, whether any or to what extent (to meet liabilities as they fall due), derived not from the past but future income. The other was as to the application of the balances on all accounts for the payment of the dividends at the Bank of England. As he had said before, he did not wish to dwell long on this question of the Bank, which, as hon. Gentlemen knew, was governed by a Treasury Committee in which implicit confidence was placed, and by this cabinet the negotiations with the Government were carried on; but the tenor of these negotiations was not known to the directors until completed, and what he (Mr. Baring) said or knew upon this subject he gathered from reports in the newspapers and the speech of the right hon. Gentleman the Chancellor of the Exchequer. He might just say that he could not conceive that in any possible case the Chancellor of the Exchequer and the Bank of England should not go on in perfect harmony—their interests were so identical, they were both anxious for the maintenance of public credit and the assistance of private credit—so that he could not imagine that between a reasonable Chancellor of the Exchequer and a sensible governor of the Bank there could be a difference which could not be reconciled. The duties of the Bank of England were defined by law, and he was sure, in any legitimate object which the Government might wish to have carried out, that the Bank not only felt it their duty, but were desirous of granting the demands of the Government; and for this reason—that the Bank of England was a

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great creditor of the Government, and must desire, as every creditor did, unless he was a very Shylock, the prosperity of the debtors; and because the Bank of England ought not to be continued in its double capacity of an issue and banking department unless its operations were proved to be for the benefit of the country at large.
The right hon. Gentleman, as he understood him, contended for the issue of deficiency bills to meet the accounts of the dividend, and argued that it was not only a facility but an advantage that deficiency bills should be issued to meet that object. [The CHANCELLOR of the EXCHEQUER here intimated dissent.] If he was not mistaken, that was the tone of the right hon. Gentleman's argument, and that, so far from there being any objection to the issue of deficiency bills, he thought that they were a positive advantage, because they saved the necessity of drawing money away from the commercial community. Now, as to the disadvantage of drawing in the money from the commercial community for the payment of the interest, he thought it was greatly overrated. The correct principle was, that they ought to provide out of their previous income for the dividends which they had to pay. As a rule, the prudent course was, that when they had to pay the interest of debt they should pay it with money out of their own pocket; for, in reality, there was a loss to the country for having this money in the Bank of England at interest, while the fact of the Bank employing it commercially was not so great a benefit as was supposed. Then there was the great inconvenience that they might ask for this money from the Bank of England at a time when that money could not be forthcoming without serious restrictions on the facilities of trade; and there might be this disadvantage, that when it was of importance that public faith should be maintained, this advantage could not be afforded without restrictions on commerce; and he need not say how that would again recoil on the prosperity of the Exchequer. Moreover, he thought that if they wished to maintain the Act of 1844 they should not have recourse to large demands upon the Bank of England. The right hon. Gentleman had expressed the hope that such an expression would not be ventured upon, because it would amount in reality to this—that at present we paid our obligations in real money, while before the
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Act of 1844 we created money ad libitum, without reference to gold. Before 1844, from the resumption of cash payment, there was no default on the part of the Bank in the payment of gold, nor did it need Government to change an Act of Parliament; but there was then such a discretion used in the matter of the public balances that, when any demand was made upon the Bank, and it was considered advisable to make an increased issue of notes, the security that those notes would come back within a comparatively short period satisfied the Bank that it was at liberty to make the issue. To that extent the Bank was at greater liberty to accommodate Government than it was now; and he thought that the policy which the Chancellor of the Exchequer had laid down as that which he proposed to follow in future, namely, to look to deficiency bills, to an extent more or less large, to meet the quarterly dividends, was, as a principle—for he allowed there might be exceptions—one which it would be dangerous and impolitic to adopt. The other point at issue was this—to what extent the Chancellor of the Exchequer might rely upon aid from the balances upon all the accounts. The right hon. Gentleman said that he did not want so many deficiency bills as some people supposed, but he wanted a very much smaller amount; but the whole difference arose from the different mode of stating the accounts. If the Chancellor of the Exchequer stated that when he had 5,000,000 l. or 6,000,000 l. to pay the dividends, he did not require to have more than 1,000,000 l. or 2,000,000 l. in the Bank, and if he scraped together all the balances upon the other accounts, that explained why he figured with so few deficiency bills in comparison with others; but the system was open to very serious objections. Of course it might be found legal to take the balance from any one particular account and to apply it to the purposes of another, or to apply the balances of ten separate accounts to the payment of the interest upon the national debt; but was it wise or prudent to do so. It was to be hoped, for the sake of the public credit, and for the regularity of our system of finance, that some such rule as the following should be laid down:—That if the Bank of England should be called on by Government to pay a sum towards the amount of dividends for a particular day, on that day Government would be prepared with the sum necessary to discharge

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the payment. This was a principle which he thought it important that the House should keep in view. He asked whether the principles laid down by the right hon. Gentleman—extraordinary as they were—were the principles that were to form the basis of our financial policy?
He had troubled the House at too great length with what related to the past. He would now say a few words with reference to the present position of the finances of the country. The right hon. Gentleman, on the 6th of March, said there were three ways of meeting the wants which he had stated to the House. One was by a system of loans; another was by indirect taxation; and a third was by direct taxation. He adopted the last—namely, direct taxation; and told them that, if the war lasted for any lengthened period, he might also have recourse to indirect taxation; and, strong as his feeling would be against loans, yet eventually he might be forced even into that course. He shared with the right hon. Gentleman, as he was sure the Committee would also do, in his wish not to increase our national debt. So far as he was concerned, he was prepared to say that it was a reproach of every Minister in this country that a sufficiently large balance had not been kept to meet extraordinary exigencies, and to apply to the gradual extinction of the debt. He held that the gradual extinction of the debt during peace ought to have been a most prominent feature in the financial policy of every Government in this country, not a work of fits and starts, but the establishment of such a surplus as would have really promoted that object, and aided the Minister in times of emergency. The right hon. Gentleman bad the greatest reluctance to apply to loans; but the right hon. Gentleman had shown no great reluctance to increase the national debt, when doing so coincided with his own peculiar views. He had sanctioned it in the operation with regard to the savings banks, by which an increase of 1,247,000 l. had been made to the debt of the country; and when he proposed conversion scheme last year, was it not sufficiently plain that the effect of one of his options, at least, must be to add to the national debt of the country? He was not then so coy and chary upon the subject as he was now; and it was not from him, but from people out of doors as well as in that House, that the cry was heard, "You shall not increase the national debt." The right hon. Gentleman, however, selected
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direct taxation, and in that he was supported by the House. Now, his wants were greater, and again he came before the House. He was sure, however, they would agree with him that it would be in the highest degree impolitic to place the heavy charge of a war like the present on capital alone. The result would be to drive capital out of the country, and they must, therefore, have recourse also to indirect taxation. It was not for him either to censure or applaud the policy of Mr. Pitt, but the right hon. Gentleman had pointed to that policy, and told them to look at the imprudent course which Mr. Pitt had followed in raising by loans no less a sum than 180,000,000 l. in six years for the purpose of carrying on the war. But did the right hon. Gentleman think that in the then state of the country it would have been possible to raise that money by direct taxation without making the war unpopular and defeating the objects of the Government? Did he think that now, if we had to raise 30,000,000 l. or 40,000,000 l. annually, it could be done by direct taxation? They must meet these wants; but it was idle to tell the country that they could permanently do without appeals to national credit, and it was impolitic to say that the national credit was not able to meet any calls that could be made upon it. But the right hon. Gentleman said ho would not have recourse to a system of loans, and he had told them that the present plan of raising 6,000,000 l.—of which 2,000,000 l. had already been granted, so that 4,000,000 l. remained to be disposed of—that this sum of 6,000,000 l. was not a loan. Now, he (Mr. Baring) had always thought the great definition of a loan was "money lent, to be repaid or returned in some way or other;" and if the right hon. Gentleman borrowed money, whether for two or four or ten years, he held that it was an addition to the debt of the country, and to all intents and purposes a loan. The right hon. Gentleman said he borrowed it in anticipation of the incoming taxes; but why did he borrow for five or six years? If the scheme was like that of Exchequer bills, intended only to last till the six months' revenue came in, then a period might be fixed so far; but if they borrowed for four or six years, were they sure, just at the moment of entering into a war, that at the end of that four or six years, even if the war was not continued, the expenditure of their peace establishments would allow them to pay off this loan? It would be a

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loan to all intents and purposes, and would have to be repaid, for they would have no power of renewing it, the words of the Resolution which the right hon. Gentleman proposed laying it down distinctly that the different sums were to be paid off at the periods mentioned. Would the right hon. Gentleman tell them he was sure that in anticipating the revenue for four or six years the expenditure would come to such a point that he could pay off those sums? If he could not do this, did he not think it rash and dangerous to enforce upon any one who might then have to conduct the financial affairs of the country the payment of such sums as these? They all hoped that the right hon. Gentleman, if he continued to be Chancellor of the Exchequer during these four or six years, would find the means to meet these and all the other engagements of the country; but, though they hoped that either in his present office or in some other he might long remain in that House to be an ornament and a credit, and to devote his talents to the service of the country, yet it might be found that when these four or six years had passed by he would not be the Chancellor of the Exchequer who would be puzzled to pay this amount, and the unfortunate Chancellor of the Exchequer who was called on to do so might talk of the right hon. Gentleman as the right hon. Gentleman had very lately talked of Mr. Pitt. He might say, "He had great veneration for the name of the statesman who had imposed this duty on him; but he wished that he had not begun his war with these short ad interim bonds—that he was no doubt a great Chancellor of the Exchequer for little short loans which now embarrassed him so much. No doubt he was anxious to spare the burdens of the country, but he had, nevertheless, left behind him a very heavy load by making this loan, which, by the by, he said was no loan at all, though it obliged him to pay a large sum out of an empty Exchequer. Yet Mr. Gladstone was a great financier, for he made the House and the country believe that they were not borrowing at all, when at the same time he had borrowed 6,000,000 l."
The right hon. Gentleman said we had already Exchequer bills. Yes; but Exchequer bills were issued to meet the demands of the money market with the knowledge of those who took them of what was their true character. But this was a new thing. These new bonds were not like Exchequer
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bills; they were positively a new invention, and just the very things the right hon. Gentleman said were wanted at the present moment. Now, what they wanted was money, and what they must have, he took it, was money. He very much regretted that that want had been created by the abstraction of the balances of the Exchequer, and the application of those balances to other purposes, which, if they had existed, would have saved at this moment the Chancellor of the Exchequer from the necessity of such a scheme as the present. The right hon. Gentleman said it was not unfortunate that they were so taken; he (Mr. Baring) thought it was calamitous that they were not in the Exchequer at the present moment. What he understood was, that the right hon. Gentleman wanted something like 3,500,000 l. Taking his estimate of expenditure on the 6th of March, it was 56,189,000 l., and the additional expenditure estimated on the 8th of May, 6,850,000 l., made altogether a sum of 63,039,000 l. The receipts, estimated on the 6th of March, were 56,656,000 l.; and on the 8th of May 2,840,000 l, making together 59,496,000 l., thus leaving a deficiency of 3,543,000 l. The House had already given 2,000,000 l., which would leave 1,543,000 l. to be provided for. Now, in any circumstances but those in which the right hon. Gentleman had unfortunately placed the Exchequer-bill market, that money might have been easily provided through the Exchequer-bill market, without increasing the permanent national debt. His objection to the Chancellor of the Exchequer's scheme was, first and above all, because he had told them that the principle which he carried out last year was the principle he intended to follow out in this, and which appeared to be destitute of prudence and of caution; and, in the next place, because he thought that, if they did borrow, they were plainly bound to borrow on the plan that would be most adapted to their purpose. If they took a loan, let it actually be a loan. [The CHANCELLOR of the EXCHEQUER: Hear, hear.] The right hon. Gentleman cheered that expression; then he understood him to call this 4,000,000 l. a loan. The right hon. Gentleman had told them, first, that he would not make loans, and then he told them that this was not a loan. The right hon. Gentleman now said it was a loan; but then it was a loan with this great disadvantage—that he borrowed at 4 per cent, and yet was bound to pay at a certain time. In the Amendment

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which he proposed he said, "not under six years," because he had no wish to deprive the Government of any facilities that they might desire to have. He had fixed it for six years, but he should prefer it for six years at least, and that it should be payable afterwards at the option of the Government. Let it be to a time when they would have the windfall of 2,600,000 l. terminable annuities as some resource to pay some portion, if not all. He presumed the right hon. Gentleman would not have proposed a loan in Exchequer bonds unless he felt confident that the operation would be successful. Had the right hon. Gentleman any proof of that? He opened his subscription, and got only 600,000 l. to meet his wants; he reopened his subscription for another week, and got nearly the whole of the first 2,000,000 l. subscribed for, but the deposits were not paid upon the whole portion of the amount subscribed. Now, there could be no doubt that the same or a much larger sum could have been obtained in the ordinary way, without half the difficulty and annoyance. The right hon. Gentleman said he had to combat great opposition—he had to struggle with the moneyed power of this country, and that the moneyed power, in his opinion, had been constantly anxious for war, to make colossal fortunes, as heroes were anxious for war, in order to distinguish themselves. He (Mr. Baring) thought it might be allowed that, at some periods of our history, the bankers and capitalists of the City of London had rendered some service to the State. The right hon. Gentleman, however, considered them as vampires, who fed upon the vitals of the country. Mr. Pitt, the right hon. Gentleman continued, was only called "heaven-born" in the City because he made loans; and the right hon. Gentleman might be heaven-born on the same conditions. Well, but had it never occurred to the right hon. Gentleman that if the epithet of "heavenborn," which seemed to be very extraordinary as coming from the Stock Exchange, really had its origin there, it might be because Mr. Pitt had always been successful, and, perhaps, the right hon. Gentleman could not claim the term in that sense.
It had been his (Mr. Baring's) lot to have some dealings with those connected with the moneyed powers of this country, and he did not believe them to be so bad, so powerful, nor yet so useless as the right hon, Gentleman said. He had tried to
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excite an odium against the colossal and (as he called them) the gigantic fortunes which they had made. With what a pleasure, then, must the right hon. Gentleman have doubled their income tax, and with what a pride and satisfaction must the country know that there were colossal fortunes which could meet our increased taxation and expenditure! But these moneyed men were not so powerful as the right hon. Gentleman thought. They did but reflect public opinion; they were but the middle men who dealt between those who had large and those who had small dealings and wants; they were but the representatives of public opinion; and the reason why the right hon. Gentleman found they had not aided him was really because he had not given them anything which anybody wanted to buy. The right hon. Gentleman said, "I am afraid to make their fortunes by the financial operations of the Government." Why, those who had dissented from the right hon. Gentleman's plans were the men who had made their fortunes—those who had taken his money without taking his stock. "It is very strange," said the right hon. Gentleman, "that I can't get the moneyed men to act with me, because I give them what I think right in this matter." But what the right hon. Gentleman thought right these moneyed men did not. He thought, no doubt, that everything ought to have been as he wished it to be; and he (Mr. Baring) wished it had been so. But the right hon. Gentleman must recollect that public opinion was not to be forced, that forced operations were seldom successful, and, although he might say that all he did was for the best, yet the public dealers in stocks might take a different view of the subject, and might say, "You have not done exactly what you ought to do." "But," said the right hon. Gentleman, "I have done all I can do, and the matter is now in the hands of the House of Commons. The First Lord of the Treasury and the Chancellor of the Exchequer are very weak with the moneyed power, but if the House of Commons will pass a Resolution on the subject they must prevail." Well, he (Mr. Baring) had a great respect for the power of the House of Commons, and knew its authority was almost supreme and omnipotent; but there was one thing the House of Commons could not do, and that was—make a man buy what be did not want, invest his money in what he did not like, and feel confidence where distrust had been engendered. He asked the Commit-

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tee now to adopt his Amendment, for this reason—that he wanted the Government to speak plainly out what they wanted this power for, and to what extent they intended to exercise it. Was it to restore their balances in the Exchequer which they lost only last year, and which they said ought never to exist? Was it that they had under-estimated the expenses of the war? Let the Government tell the House at once what they wanted for the expenses of the war, and they had seen with what readiness the House would grant their wishes.
He was told that this was a vote of want of confidence. Why, in this way, anything might be distorted into a vote of want of confidence. The slightest censure, a mere hint, the faintest expression of apprehension for the future—all this might be taken to be a vote of want of confidence. But we had seen the most powerful Government beaten upon a Budget, and not consider it a vote of want of confidence. He believed it was under Lord Liverpool's Administration that the income tax was repealed against the opinion and wishes of the Government, and 13,000,000 l. were taken from the Ways and Means at the disposal of the Government. This was done, and yet the Government of Lord Liverpool went on; they did not look upon the vote as a vote of want of confidence. Later still, we had seen, under the Administration of the noble Lord (Lord J. Russell), two or three Budgets brought forward and taken back again. Yet this was not looked upon as a vote of want of confidence. He had voted for the taxes which had been proposed, not because there might not be very fair objections taken to them, but because he wished not to throw impediments in the way of the Government with regard to taxation; but his vote now was a want of confidence in the schemes which had been failures. It was a vote of want of confidence in measures which had been made abortive by the abortive manner in which they had been put forth. It was a vote of want of confidence in the idea that in four or six years they would be able to pay off this stock. It was a vote by which he called upon the Government to say what they really wanted. If they wanted a loan, let them have a loan, but on their own responsibility. If they wanted taxes, let them come boldly forward and propose taxes. But don't let them go on irritating the public credit, irritating the feeling out of doors, by these constant marring, meddling changes—these plans
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which excited distrust and got them so little money. The Government must not think they could play this game like any other game, and as one in which, when they had made a bad move, they could take it back and play it again. Financial mistakes were national misfortunes. Financial failures were great calamities, and a series of failures was fraught with danger to the credit of this country. It was a great power to possess this credit. The Government had called upon the energies of the people, had heavily taxed the resources of the country, and the people had responded to their call; but within their reach was a still more powerful arm—that of the national credit. This arm had achieved and could still achieve wonders; but while it was powerful, it was at the same time most sensitive. Under the guidance of a careful, a judicious, a prudent, an experienced hand, it could defy, uncrushed and uninjured, the heaviest assaults which could be made against it; but beneath the touch of a meddling, fidgetting, irritating pressure, it might shrink into impotence and close itself against its employment for purposes of national utility. He called on them, then, not to create loans, but he called on them to avoid this constant tampering with their balances—this constant attempt to do something new, something novel, something strange. It was with those feelings, and because he wished for himself to enter his protest against the continuance of this system, that he ventured to move as an Amendment the Resolution of which he had given notice.
Amendment proposed, to leave out from the word "That" to the end of the proposed Resolution, in order to add the words "it is not at present expedient to authorise any further issue of Exchequer Bonds, with the engagement of repayment within the next six years."
MR. J. WILSONsaid, he was at a loss to conceive what connection the hon. Gentleman who had moved the Amendment could find between the operations of last year and those now before the Committee. The hon. Member for Huntingdon had commented upon the state of the balances in the Bank, and upon what he termed the peculiar management of those balances; and, with the permission of the Committee, he (Mr. Wilson) would call their attention to the state of those balances at three particular periods—first, when they appeared upon the face of the account to be equal to the expenditure of

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the quarter; again, when they appeared to leave a considerable surplus; and, thirdly, when there appeared to be a considerable deficiency. In the month of October, 1850, there appeared upon the face of the accounts a surplus of 1,200,000 l. Now, although there appeared only this surplus, yet during the whole of that quarter, between the 11th of October and the following January, the minimum balance in the hands of the Bank for any one day was no less than 6,255,000 l.; so that, though the apparent surplus was only 1,200,000 l., the actual amount of cash in the Bank was 6,255,000 l. No hon. gentleman would, he thought, consider that the Chancellor of the Exchequer was justified in allowing so large a sum, for which the public had no use, to remain idle in the hands of the Bank. Well, then, he came to the period when the expenditure might be considered as about equal to the receipts. On the 10th of October, 1852, there was a surplus in the Bank of only 16,000 l. on the face of the account; yet, from the manner in which these accounts were kept, the minimum balance on any one day in that quarter in the Bank was 4,449,000 l. The next period he would select was the 5th of January, 1854, when there appeared a deficiency of no less than 3,711,000 l. Now, the minimum balance in the hands of the Bank, and in favour of the public, notwithstanding that apparent large deficiency, was no less than 1,483,000 l.; after deducting the amount of deficiency bills due on that day. The position in which the Chancellor of the Exchequer found the account in the Bank of England was that of the second period. At the commencement of last year the amount of money apparently on the face of the account was equal to the demands of the public, leaving neither deficiency nor excess; yet it was certain that the minimum balance of that quarter on any one day exceeded 4,000,000 l.The right hon. Gentleman the Chancellor of the Exchequer was perfectly justified in not allowing a high rate of interest on the unfunded debt while those large balances were lying unemployed in the Bank of England, and he reduced that interest.
He was quite ready to admit that, in reducing the interest from 1¼d. to 1d. a day on the March bills, his right hon. Friend had two objects in view: he contemplated the possibility of making a considerable reduction of the unfunded debt, because he considered persons might not
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be willing to renew at that reduced interest, and he had the satisfaction of knowing there must be a considerable amount of saving in the amount of interest between 1¼d. and 1d. a day. The hon. Gentleman (Mr. T. Baring) enlarged on the advantages of Exchequer bills for the investment of sums on which temporary interest was required. He quite admitted their great conveniences to the commercial public, but he put it to the hon. Gentleman whether Exchequer bills, kept in circulation at a premium of 80 s., as they were a short time before, or of 60 s., as they were at the moment of the reduction of interest, could be treated as safe security for investment? A person had much better run the risk of a fall of Consols, which were not so fluctuating as the premium of Exchequer bills, than pay a premium on Exchequer bills larger than the interest, which for a whole year he would receive. To render Exchequer bills useful for the purposes on which the hon. Member had laid so much stress, they must be kept by a graduated interest at a moderate premium, if not at par, because it was obvious if the public received an interest of 2¼ per cent, whilst the premium on Exchequer bills was 60 s., or 3 per cent, they paid a larger premium than the whole year's interest, and had to run the risk of a fall. He thought the Chancellor of the Exchequer would not have shown himself a vigilant guardian of the public interest had he been willing to renew the public debt at such a rate as would have afforded a premium of that nature in the market, and that with the large balances at his command—much larger than the public were aware of until it became the subject of investigation—he was bound in duty to endeavour to obtain for the public the best terms he could. The hon. Member for Huntingdon had argued as if the reduction of the rate of interest on Exchequer bills and the conversion of the South Sea Stocks were part and parcel of the same proposition. They were as distinct as two operations could be, not only distinct in their nature, but in their results; for as to one it perfectly succeeded, but as to the other, his right hon. Friend never attempted to say it succeeded. His right hon. Friend had never denied that the conversion scheme was a failure. Night after night he had acknowledged that defect; yet night after night hon. and right hon. Gentlemen opposite got up and repeated the same charges, as if the Chancellor of the Exchequer had plumed him-

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self on his great success. He acknowledged that the success of the Exchequer bills was destroyed by the failure of the conversion scheme, but, so far as the operation of the Exchequer bills stood alone, it was a perfect success. The objects were to reduce the rate of interest and to diminish the amount of the Exchequer bills. In both they succeeded. They succeeded in reducing the rate of interest to the lowest rate which had been known for the last half century, and in diminishing the amount of the unfunded debt by 3,000,000 l. That amount of reduction was perfectly convenient for the management of the finances of the country, and not at all exceeding the amount his right hon. Friend had anticipated; but it did so happen, for reasons which had been discussed at great length, the conversion scheme did not succeed, and being obliged to pay money in the month of January instead of giving new stock, they lost all the advantage of the Exchequer bill operation, and were compelled to reissue the 3,000,000 l. of Exchequer bills. If, however, they failed to reduce the unfunded debt, they did reduce the funded debt; and taking the whole amount of funded and unfunded debt, they did succeed in reducing the whole debt of the country. Now, the whole amount of debt which by the Government. operations had been reduced was no less than 11,375,000 l. and the saving of interest upon that amount of debt was 256,000 l. per annum. But then the hon. Gentleman said, "You have deprived yourself by that means of the opportunity of applying the excess of income over expenditure, the surplus standing over from one quarter to another, in the extinction of debt under the Sinking Fund Act." Well, the whole amount of debt which could have been reduced by such an employment of our surplus was under 3,000,000 l. a year, and therefore, supposing the Government had adopted the plan of the hon. Gentleman, they would have reduced the debt by 3,000,000 l. whereas, following out their own plans, they had reduced it by 11,375,000 l. But then, said the hon. Gentleman, the operation might have been effected on better terms, and that was the only point in which he could agree with the hon. Gentleman. It was quite true that if the Chancellor of the Exchequer had had this surplus from quarter to quarter to apply in the ordinary way, by going into the market and buying stock, he would to that extent have been
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able to purchase stock at a lower rate than he had done; but still that would have been only to the amount of 3,000,000 l., whereas the measures which the Government had adopted had operated to the amount of 11,375,000 l.; and the Chancellor of the Exchequer, in stating the sum total of the advantages which the country had gained by the measures of last year, had debited himself with no less a sum than 152,000 l. for the loss sustained in not being able to go into the market with this advantage; and therefore the observation of the hon. Gentleman, that they had made a gain of a loss, did not avail him so far as regarded the sum total of the advantages which the Government claimed for the measures which they had not taken.
Whether his right hon. Friend ought to have foreseen that which was beyond the power of other persons to see—whether in the month of March he ought to have foreseen the bad harvest, the war, and other contingencies which afterwards arose—had been the subject of so much discussion in that House, that he considered it would be a waste of time to do more than refer to it. [Mr. BARING: Hear, hear!] The hon. Gentleman cheered; then he would say this much. The merchants of the City of London were invariably the first to anticipate events which affected their interest. It did them great credit, and was the main cause of their success. He held in his hand an account of the amount of bills discounted by one establishment in each month of last year. In April the Bank rate of interest was 3 per cent, and in one single concern if the interest had continued for the year, the discount on bills would have been 125,000 l., but the sum charged was 288,000 l., and the difference of 163,000 l. was paid by the private merchants for the money they required, and for want of foresight of events which nobody could foresee. They, like the Chancellor of the Exchequer, were the creatures of circumstances, and must bow to events which affected the value of money, and therefore that the proposal of his right hon. Friend in April should not be successful in July—when the Bank interest was 5 per cent, when it was certain there would be a bad harvest, and large importations of grain would be required from abroad—was the common fate of everybody who had money transactions is this country; and if hon. Members opposite could discover these things beforehand,

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nobody would be more obliged to them than the merchants who had to govern their transactions by anticipating events to the best of their power. The hon. Gentleman had enlarged very much on the extravagant rate the Government had been obliged to pay on Exchequer bills in the latter end of the year, in consequence of the reduction of interest in the early part of the year. He believed any one who examined the relative rates of interest paid on Exchequer bills and the minimum rate of interest charged by the Bank of England, would be satisfied that 2d. a day towards the end of the year was not too high a rate, especially as it had become necessary to reissue the 3,000,000 l. of Exchequer bills, and no one knew better than the hon. Gentleman that an increase in the amount of floating debt must increase the rate of interest on that debt. The hon. Gentleman enlarged on the improvidence and almost the impropriety of applying the savings bank money for the purchase of Exchequer bills. The Government was bound to pay the depositors interest for that money, and the Chancellor of the Exchequer, as the manager of the financial affairs of the Government, was bound to apply it so as to obtain the greatest amount of interest for the public. They could not raise the interest on a portion of the Exchequer bills. They must raise it on the whole amount; and supposing that in the month of August there was a tendency to fall to a discount, it would have been a most improvident course, by raising the rate of interest in the month of August, to have paid the increased rate for the whole 17,000,000 l. His right hon. Friend thought it the more prudent course, the more provident and economical arrangement, having this savings bank money, and the right to use it, to use it so as to yield the greatest profit. He thought it more profitable to take a few Exchequer bills out of the market, and prevent the rise in the rate of interest until a subsequent period. By that means the rise in the rate of interest on Exchequer bills was postponed from August to October, and no doubt a great saving effected to the public.
The hon. Gentleman had also enlarged very much on the mode of keeping the balances in the Bank of England. He was the last person in the world to say that the Bank of England was not entitled to be treated with every due attention to its interests by the Government. At the same time, the Government were entitled
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to equal consideration from the Bank, and he believed no Chancellor of the Exchequer who had had anything to do with the Bank could complain—he was sure recently there had been no ground of complaint—of the manner in which lie was treated by the Bank. There were questions on which differences of opinion might arise between the Government and the Bank of England, and they asked that they might be discussed without supposing antagonism in principles or any disposition not to be on the best and most friendly terms. It was quite true that the Bank of England had had very large advantages, which were almost of a concealed character, because no account of them was exhibited. The Bank, under an Act of Parliament, received a large allowance for the conduct of the public debt. It was a matter of agreement between the Government of the day and the Bank, at the time the Bank Charter Act was renewed, and the amount settled was one which the most eminent men believed to be fair. If these matters were raised incidentally, the public should be aware of the advantages, direct or indirect, open or concealed, which the Bank enjoyed for the management of the public debt. According to the Act of 1844, and the correspondence between the Government of that day and the Bank directors, the profit of the circulation which was guaranteed on the Bank upon securities—that was on 14,000,000 l.—was 420,000 l.; from this there was to be deducted for the expenses 113,000 l., and for allowances made to the country banks 24,000 l.—in all, 137,000 l. to be deducted, leaving a net profit to the Bank of 283,000 l. a year. The Bank had formerly agreed to pay to the public for this privilege 120,000 l.; they proposed in 1844 to continue that payment, and the proposition was accepted by the Government of the day. They had also proposed to pay in lieu of stamps 60,000 l., thus making a sum of 180,000 l., which they had to pay to the public out of 283,000 l. of profit which they received, so far as regarded the circulation. The sum paid to the Bank for the management of the debt was 250,000 l., but, as they had to pay 180,000 l. to the public out of the profits of the circulation, that left an admitted payment of 70,000 l. to the Bank, so that, on the whole, there was an admitted net profit of the circulation of 103,000 l., an admitted payment of 70,000 l. for the management of the debt and a set-off of 180,000 l. due to the public, making a

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total admitted profit to the Bank of 353,000 l. This was entirely independent of the balances in the hands of the Bank, and also of the advantages derived from the bullion and the issue of notes above 14,000,000 l.; for though the principle of remuneration had always been to take the interest on the 14,000,000 l. of securities, from which notes were issued, the Bank had also a right to issue notes to any amount coinciding with the balance in their hands. This, it might be said, was only making use of their deposits; but he would ask what deposits? They were the deposits which the Bank received, simply because it possessed the monopoly of issuing notes over a given fixed amount, and, therefore, was the only institution in which gold could be lodged and bank-notes demanded at a given rate in exchange. Although, therefore, the circulation beyond 14,000,000 1. might be claimed by the Bank as an advantage arising from the deposit of bullion with them—not necessarily connected with the circulation, but which might have been deposited with them under any circumstances—yet there could be no doubt whatever, and he did not think it would be denied, that the monopoly given them by the Bank Act was the reason why so large an amount of business was transacted by them.
He would not wish to have it understood that he was complaining of the terms which the Government had made with the Bank of England. He did not think that this was the proper time to do so; and if the hon. Member (Mr. Baring) had not alluded to the question, the last thing that he should have done would have been to have alluded to it at all, because the terms were now fixed by Act of Parliament, and the Government had the power, on giving notice, to take steps to determine the arrangement. If the Government did not give notice, he did not think it was a question which it was necessary, on the part of the Government, to go into a discussion of in that House. He did not think, however, that he ought to have permitted the observations of the hon. Member to pass without some reply, and without pointing out the numerous advantages to the Bank which its connection with the Government secured to it. But now with respect to the balances, for the advantages which he had already referred to were altogether irrespective of those Which the Bank enjoyed as the depository of the Government balances. Now, if they
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were to look at the balances at all, he thought they were justified in looking at their aggregate amount. A private gentleman might have, for the sake of convenience, five or six different accounts with his banker. He might have one for his own particular drawings—one for his agent—one for a particular estate—and another for another estate; but surely a private gentleman so situated, speaking of the state of his account with his bankers, would do so with reference to the aggregate of his balances, and not with reference to the balance upon this or that particular account. He might have a balance of 100,000 l. upon the whole of the accounts, and yet upon that which was appropriated to his own private and particular drawing he might have nothing, or less than nothing. Surely no banker would have the hardihood to say—and no gentleman would think himself well used if it were said—that his account was overdrawn, although it might be literally true with respect to one particular account, while he might have a balance of 90,000 l. or 100,000 l. upon four or five others. Now, the Government had, for the sake of convenience, no fewer than sixty-nine accounts—including an Exchequer account—with the Bank of England. No doubt, if the question were raised, whether they were entitled to scrape together all their balances on a particular day, in order to pay the dividends, the answer must be that that was a thing which was never done, and which nobody had ever proposed. But what he contended was this, that although, for the sake of convenience, they kept these several accounts, yet if on a particular day they required an advance from the Bank, and the Bank or the public complained, the Government had a right to remind them that there were standing to the credit of the Government upon the whole of these accounts sums amounting in the aggregate to 3,000,000 l. or 4,0007000 l. A more flagrant fallacy was never attempted upon the public than that which was involved in the argument that they were injuring the public by drawing on the independent resources of the Bank, and so limiting its means of giving accommodation to commerce. Supposing, he would ask, that the Government account were withdrawn from the Bank of England, how would it then stand in its capacity to afford general accommodation to the trailing public? If it had not the public account, the Bank would have to

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depend on its own resources, and both the Bank and the commercial public would be deprived of the additional powers which must be derived from the holding of the various large balances, amounting in some cases, as he had shown—though there was an apparent deficiency on the face of the account—to 2,000,000 l. or 3,000,000 l. sterling.
After discussing these preliminary questions, the hon. Gentleman came at length, as he said, to the real question before the Committee. He had already stated that he did not exactly understand how the hon. Member had connected the one with the other, but as he had adopted that course, he had felt himself bound, in some degree, to follow the statement which he had made. The question, as he understood it, which was before the Committee and the country—and it was a question of great importance, at the outset of what might probably be a long and arduous war—was this:— Should they pay the expenses of that war from means raised within the year, or rely in some shape or other upon loans for the purpose of defraying these expenses? To the public mind, to the public press, certainly to the City of London, and to a very great extent to that House, he really believed that this presented itself as the real question which was at the bottom of all these discussions—would they make an effort to defray the expenses of this war, be they what they might, from the annual income of the country—or would they, as in past times, resort to loans for that purpose? In alluding to that question, the hon. Gentleman had alluded to the experience of Mr. Pitt, and had somewhat unnecessarily stated that Mr. Pitt never made any failures. Without entering into that question, he maintained that, as the successors of Mr. Pitt, the Government of the present day were bound to read his history and to take warnings by whatever failures he had made—failures which, he believed, were due more to the circumstances of the times than to the Minister, and to act on what really was the result of the experience of Mr. Pitt, which he himself was the first to acknowledge, and to put in force as far as he could. The hon. Gentleman seemed to think that Mr. Pitt and those who conducted the last war were placed under the absolute necessity of conducting it by loans, but he (Mr. Wilson) believed that there never was a greater mistake, that there never was a greater fallacy, and that it would not be difficult
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to show that, had Mr. Pitt started with-the same information that we had now, that had he had another Mr. Pitt with his experiences some fifty years before him, he might have conducted the war without increasing the debt which he found in 1793. The Financial Committee, over which Sir Henry Parnell presided, investigated this subject at great length. From the facts laid before that Committee, it appeared that while the public debt in 1793 was 244,440,000 l., in 1817 it had risen to 848,282,000 l., giving an increase of 603,812,000 l. This, too, was exclusive of the Sinking Fund. The charge upon the debt, in 1793, was 9,624,000 l.; in 1817 it had risen to 32,453,000 l., an increase of 22,829,000 l.—sufficient, as had been remarked, to bear the cost of the greatest war in which England had ever been engaged. The mistake which Mr. Pitt made was in making a wrong start. In the first seven years of the war, Mr. Pitt borrowed 110,000,000 l., on which the annual interest amounted to 5,500,000 l., and the Committee discovered that, if in 1793 he bad raised the taxation to the amount at which it stood in 1793, he would never have had occasion to increase the debt. In 1793, the net amount paid into the Exchequer for taxes was 15,000,000 l., and in 1799 it was 35,000,000 l., the increase during those years having been equal to 20,000,000 l. Had Mr. Pitt induced the public to submit in 1793 to the same increased taxation which lie persuaded them to accept in 1799, he need not have borrowed a single farthing, except for the purpose of making temporary provision by Exchequer bills until the taxes should have come in. That was a great lesson for the country, and it showed how by submitting to a small amount of taxation an avalanche of debt would be saved.
The Committee to which he had already referred instituted a very important investigation into a point of considerable interest. They wished to arrive at this fact—what additional amount of taxation per annum from 1793 to 1817 would have saved the country from any increase in the national debt. The return made by the Treasury showed in one column the amount of interest upon the debt as it stood in 1793, the whop amount of expenditure, including the war, and for all purposes, except the charge on the national debt, and then the net amount of taxes paid into the Exchequer each year. It appeared from that return that from

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1793 to 1817 the amount of the interest chargeable upon the national debt, had it remained the same as in 1793, would have been 9,500,000 l. a year, or 235,446,000 l. altogether; but the actural expenditure for all purposes, except the debt, had been 1,059,658,211 l. making a gross charge upon the two items of 1,295,104,211 l. The net taxes paid into the Exchequer during that period amounted to 1,143,777,928 l., leaving a deficiency of 151,326,283 l. spread over twenty-four years, or a deficiency only of 6,000,000 l. a year. Consequently, an average increased taxation of 6,000,000 l. a year would have saved the country the whole of the enormous debt which had been incurred. What, then, was the result? Instead of the 150,000,000 l. of which there was a deficiency, the property of the country was mortgaged for 603,842,000 l., leaving an excess of 452,515,717 l. over and above the actual expenditure, from the peculiar mode in which the war expenditure had been carried on. It must not be supposed that the sum of 452,000,000 l. was paid into the Exchequer, but it was 452,000,000 l. of stock created, which the country could not get rid of without paying off every shilling, and upon which interest was now paid. The result then was that, during the period referred to, 452,000,000 l. of national debt was incurred for which the country had never received one single farthing of benefit. If hon. Gentlemen would refer to the proceedings of Sir Henry Parnell's Committee, they would find that this enormous amount of debt bore a charge at the close of the war, in the shape of interest, of 17,450,000 l. Without that interest the national debt at the present moment would be considerably under 10,000,000 l. a year. The additional burden which had been thus thrown upon the country would not only have been sufficient to have laid double the amount of the railroads existing in the kingdom, but it would have liquidated the whole of the public debt as it stood at the commencement of the war in 1793, and have made all the existing railways into the bargain. But the Committee went further, and Sir Henry Parnell made another calculation. He said—
"Mr. Pitt made a great blunder at the commencement of the war; he discovered his error in 1798, and he made a noble effort to retrieve it. Though at first he failed, he was not daunted by the want of success; but, trying again, he was very successful ultimately."
So successful was he that, taking the pe-
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riod of the war from 1803 to its conclusion, in 1816, he was enabled by the measures of which he laid the foundation in 1798 and 1799, to keep the expenditure at such a rate as to leave the deficiency between the net income of the country and its total expenditure at 23,000,000 l., or at the rate of only 1,800,000 l. per annum. These statements showed the policy of pursuing that course, which he (Mr. Wilson) had not the slightest hesitation in believing Mr. Pitt would have followed had another war been entered into—namely, that of raising by increased taxation, as long as possible, the whole cost of the war.
He would now direct the attention of the House to the enormous rate at which the country had paid for the means of carrying on the war. The whole amount of the debt contracted from 1794 to 1817, including the sums raised for the Sinking Fund, was 879,289,000 l., of which the sum paid into the Exchequer amounted to 584,874,000 l., so that stocks were created to the amount of 294,415,000 l., and if to that was added the interest which was allowed en prompt payments, together with the discount allowed in a variety of ways, it might safely be said that, at the very lowest estimate, a debt had been created exceeding by more than 300,000,000 l. sterling the money paid into the Exchequer. The rate at which the money was procured was only 66 l. 8s. 9d. for every 100 l. of stock created, independent of heavy payments for discounts and commissions. His hon. Friend (Mr. Baring) said, Government came down to the House and told the country they were determined to carry on the war on the mere enlightened principle of paying the expenditure during each year, and then the first proposal they made was for a loan. Now, in the general acceptation of the word "loan," he could not agree that a proposal to anticipate the ordinary receipts was a loan. If it were to be found that Exchequer bonds could be disposed of upon the most favourable terms, then no doubt the public interest would be attended to, and they would be issued; but if, on the other hand, circumstances proved more favourable to the issue of Exchequer bills, in all prohability recourse would be had to Exchequer bills. He thought it right, however, that the discretion of issuing either Exchequer bonds or Exchequer bills should be left in the hands of his right hon. Friend the Chancellor of the Exchequer. His hon. Friend (Mr. Baring) said that, if Government undertook to pay

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off Exchequer bonds at a given date, it would be different from Exchequer bills. Now, the terms of an Exchequer bond were precisely the same as those of an Exchequer bill: an undertaking was given in the case of an Exchequer bill to pay it off twelve months after date, and it was always understood that if parties wished to effect an exchange, and were willing to accept the terms which Government would give, they could do so. His hon. Friend knew very well that the understanding at market was, that if the holder was willing to exchange on the terms offered by Government, it would be unusual for Government to refuse. Why an undertaking to pay Exchequer bonds at a period of three, four, or five years should be an operation involving a greater amount of liability upon Government than an undertaking to pay Exchequer bills, or how one could be a loan any more than the other, he was at a loss to understand. On the contrary, he believed that Exchequer bonds would be renewed with as great facility as Exchequer bills, inasmuch as, from the nature and character of the security, they were likely to become matters of investment for certain classes of persons, and he believed the holders would be only too glad to renew them on fair terms. Rather than have recourse to anything like loans in the ordinary acceptation of the term, he held that what the Government ought to do was to act like every private individual—namely, to borrow money when money was required upon the best tems, to pay the interest necessary at the time it became due, and always to leave themselves in a position to pay off the debt whenever they found it advantageous to do so. He believed it to be a wise policy to run any risk to pay the interest rather than tie themselves up by incurring a debt extending over an indefinite period. If the country wanted 100 l. let Government borrow 100 l., pay a certain rate of interest upon it, and, when they had done that, renew the bill if they required it renewed, or, if not, pay it off. He knew there was an impression abroad that Government could not borrow money on Exchequer bonds; that the country must pay an extravagant rate of interest or borrow on a nominal amount of stock. In 1815 a loan of 36,000,000 l. was contracted, for which 174 l. three per cents and 10 l. four per cents were given for every 100 l. of stock, and in the same year Exchequer bills were funded at 117 l., or 5l. 17 s. per cent, being only 4s. 8d. more
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than the loan taken at 184 l. of stock for 100 l. in money. In the case of the loan 5l. 12 s. 4d. per cent was paid for each 100 l., and an enormous amount of debt was created; but surely it was far better to pay the difference in the amount of interest than to create this enormous amount of nominal debt and leave so heavy a stone hanging upon the neck of the country as an encumbrance to this day. There were many proofs that by paying a moderate amount of interest any amount of money that might be required could be borrowed, and the entire control of the debt left in the hands of the Government, though he acknowledged that a great preference was given to the borrowing of money at an indefinite period. His hon. Friend (Mr. Baring) had referred to the feeling of gentlemen in the City with regard to the proposals of Government. He (Mr. Wilson) was not entitled to speak with much authority upon Stock Exchange matters, but it was his duty to watch the exchange with a considerable degree of vigilance, and he must say the operations which had taken place in the City for some months past had been such as fully warranted the observations made by his right hon. Friend the Chancellor of the Exchequer on a former evening, by the press, and by other persons since, that there had been among certain classes a strong effort to depress the financial operations of the Government. He did not wish to bring a charge against any one, but he must say that there were individuals and classes whose interest it was to depress the price of the public funds, and he believed it was pretty well known that there had been a large amount of speculation for that purpose going on. Government had been asked why, if they were going to raise the amount of the expenditure requisite for the war by taxes collected within each year, they now asked for power to issue 4,000,000 l. or 5,000,000 l. Exchequer bonds? [Mr. DisRAELI: 6,000,000 l.] The present Motion had reference to 4,000,000 l. only, and it must be remembered that new taxes were a long time coming in. If there was one thing more than another which led to the improvident proceedings of the last war, it was the want of money in hand. One mode in which it operated most disadvantageously was in placing Government under the necessity of making its contracts on long dated credits, in limiting the amount of competition, and in causing the contracts to be taken at very extravagant

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prices. They would effect a greater saving by enabling the Government to pay ready money for what they required than by any other means; but, of course, if the taxation should be ultimately sufficient to meet the expenditure, the money would only be used in anticipation of the taxes coming in. Sir Henry Parnell, in his work, had recommended, as important measures to be taken in the event of any future war a great reduction of the unfunded debt, leaving the Government a large margin for its operation; secondly, an income tax capable of considerable extension; and, thirdly, that there should be large balances at the disposal of the Government. These were the grounds upon which the proposal to-night was laid for power to issue either 4,000,000 l. of Exchequer bills or 4,000,000 l. of Exchequer bonds, as circumstances might require. Power was also asked for similar to that which had been given with regard to the 2,000,000 l. of Exchequer bonds already issued—namely, to exchange them for Exchequer bills, and so to reduce the amount of the unfunded debt. He hoped that House would set its face against loans of that permanent kind, based upon nominal capitals, which he had endeavoured to describe; he hoped, also, that there would be money enough placed in the hands of the Government to meet the ordinary current expenses which were necessarily attendant on war, without resorting to a system of long credits; and he hoped there would be no tampering with the currency. Be did not altogether agree with the observations of the hon. Gentleman on the subject of the Bank Charter of 1844. If there was one principle more fully established than another, it was this—that no advance which a banker could make in notes would it be improvident to make in gold, and that he would not be justified in making an advance in notes which he would not be justified in making in gold so long as the notes were convertible. Mr. Gurney and others admitted that the Bank Act of 1844 made no difference in the power of a banker to take notes up. The circulation of the country was determined by principles which no banker could control. No man would keep more money in his possession than he required for practical purposes, and if a banker issued more notes than were necessary, they would be returned in a short period, and he would be obliged to find gold for them. The Committee had before it the experience of the
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last war—an experience which showed not only the errors which had been committed, but the successful measures which were adopted; and if there was one thing more than another to which the country could look with pleasure, it was at the improvements which had taken place both in our military and naval service during the forty years in which England had been at peace. The Resolution before the Committee, and the Amendment of the hon. Gentleman, involved the whole question of enabling the Government to lay the foundation of a system of finance which he believed would be so beneficial in the conduct of a great war.
MR. MALINSsaid, if he had consulted his own convenience he should have refrained from addressing the Committee after the able and lucid speech of his hon. Friend the Member for Huntingdon (Mr. Baring); but having on a former occasion been accused by the Chancellor of the Exchequer of a misapprehension of the principles by which the right hon. Gentleman was actuated, he felt it due to himself to show that he was not so entirely mistaken as the right hon. Gentleman had supposed. But, before doing so, he wished to make a few remarks in reply to the observations of the hon. Gentleman who had just sat down. In the spring of 1853, there being a considerable balance in the Exchequer, and the interest of money being low, the Chancellor of the Exchequer became desirous of reducing the interest of the unfunded debt, and took that step which had been the subject of so much discussion—namely, the reduction of Exchequer bills from five farthings to a penny per day. It was admitted that great inconvenience had arisen from the adoption of that scheme, and that it had become necessary to pay off no less than 3,000,000 l. of debt; and although it was said it might have been successful if it had not been combined with the South Sea Annuities, there could be no doubt the two schemes together had produced much inconvenience. There was not only a difficulty in reconciling the recent speeches of individual Members opposite with their speeches on former occasions, but it was very difficult to reconcile the speech of one Member of the Government with the speeches of other Members of the Government. Only a fortnight ago the Chancellor of the Exchequer said that he would not contract a loan—that although he proposed to raise 6,000,000 l. by Exchequer bonds, it was not a loan. The hon. Gen-

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tleman who last addressed the Committee, admitted it to be a loan, differing very little in substance from the issuing of Exchequer bills. On the 6th of March the Chancellor of the Exchequer admitted that his scheme had been a failure—that it was an abortive scheme—and the right hon. Gentleman had so frequently made that admission, that he (Mr. Malins) had been inclined to regard the question as one which had gone by. But in his speech a fortnight ago the right hon. Gentleman did not admit that his scheme had resulted in a pecuniary loss; and certainly, of all the bold assertions made by the right hon. Gentleman, the assertion which he made on that occasion was the boldest and most unfounded. Now, what had been the course taken by the right hon. Gentleman? On the 8th of April last year, he made a proposal to reduce some small stocks, amounting to between 9,000,000 l. and 10,000,00 l. And what was his justification at that time? A fortnight ago the right hon. Gentleman said that on the 7th of April Consols were at 100½, and he took credit to himself that they actually rose ths after the scheme had been propounded. The interest of money then, as stated by the hon. Member opposite (Mr. Wilson) was 3 per cent. The right hon. Gentleman also drew the attention of the Committee to the amount of gold in the Bank of England, stating that on the 10th July, 1853, the amount was 21,878,000 l.; that in January it was 19,170,000 l.; and that on the 9th of April it was 18,816,000 l. Now the three per cents, in November, 1853, were at 10 l. and a fraction, and the right hon. Gentleman took credit to himself that the gold in the Bank of England had risen from 17,652,000 l. in February, to 18,816,000 l. in April. Consols were then 1 per cent lower than in the previous November. Now he would ask the Committee if that was a state of things which justified the Chancellor of the Exchequer in proposing to pay off 10,000,000 l. of debt at par, when Consols were only ½ per cent above par, to say nothing of the prospect of a war? There were indications in the state of the money market which showed that a more improvident act could not have been committed than the payment of that 10,000,000 l. at par. Now, although he (Mr. Malins) did not on the 8th of April, 1853, express an opinion as to the failure of the right hon. Gentleman's scheme, he fully concurred in opinion with those hon. Members who expressed that convic-
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tion, and he stated on a former occasion the grounds on which he had formed that opinion, and also said that; having been applied to by some persons for advice, be recommended them rather to take the money than the new funds offered by the right hon. Gentleman; and for this reason—that the right hon. Gentleman, in the very speech in which he proposed to pay off that debt at par, in which he proposed Exchequer bonds and three and a half per cent stock, and a two and a half per cent stock, held out the inducement to take by one of the schemes 2l. 17 s. 9d. and by the other 2l. 15 s. At that time the right hon. Gentleman was proposing to deal with 30,000,000 l. of stock by way of experiment, and he said, in language that could not be mistaken, that to lay it down as a large operation of a compulsory character was totally out of the question. Now, when the right hon. Gentleman told the holders of three per cent stock that they had a perpetual annuity of 3l. for every 100 l. and offered them 2l. 15 s. in lieu of that sum, he condemned his own scheme. The right hon. Gentleman, in his-speech on the 8th of April, 1853, anticipated that the three per cent stock would be redeemed, and fixed the 3rd of June as the day on which the public should determine which of the new stocks they would take, stating that he had not the least fear of seeing the scheme extensively adopted; and in making that statement no one could doubt that he expected not only to reduce the 10,000,000 l. absolutely, but the 30,000,000 l. which he took the power to reduce. But what was the fact? The 3rd of June came, and the three per cents went below par; they receded to 99, and shortly afterwards to 98, and they knew perfectly well that the public elected to take 1,100,000 l. or 1,200,000 l. of the Exchequer bonds, and in the aggregate about 2,500,000 l. of the new securities. A cuscussion took place in the House on the 5th of August, in which he (Mr. Malins) took part, and at that period it was perfectly apparent that the scheme was a total failure, and that the holders of those stocks, to the extent of 8,000,000 l. having elected to take their money, the Chancellor of the Exchequer was bound to provide the money to pay them. He could not retreat from his bargain; a regard for public faith required the fulfilment of his contract. But, as had been pointed out by the hon. Member for Huntingdon, the right hon. Gentleman, when he came down to the House on the

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8th of April, and proposed the conversion of those stocks, did not suppose he should be called upon to pay that 8,000,000 l.; he acted on the belief that the public would elect to take the new stock; and he (Mr. Malins) confessed that what surprised him most was, that the right hon. Gentleman having alleged, as one of his reasons for converting that 9,500,000 l. was, that it was inconvenient that the smaller stock should exist, he had yet proposed to replace them with three descriptions of stock of a smaller nature. During the discussion on the 5th of August the right hon. Gentleman was informed upon all sides of the House that it was apparent his scheme had failed, and he was told, most distinctly, that it became his duty to provide the means of paying that 8,000,000 l. of money, the three per cents at that period being 97 and a fraction; they were now 88. The right hon. Gentleman had hanging over him the liability of having, at the end of the year, to pay 8,000,000 l.. The 3rd of June arrived; he was disappointed in his views; his stocks were below par; he had taken the balance of his Exchequer at a period when he might fear the approach of that war which had since come upon us, and, in ordinary prudence, he should at once have furnished himself with the means of removing the difficulty under which he laboured. He (Mr. Malins) had no wish to dwell upon this subject in any other spirit than that manifested by the hon. Member for Huntingdon, and in the spirit which had shown itself on their side of the House. He merely treated it as a grave question affecting the finances of the country, and he could not avoid complaining that those finances, in the hands of the right hon. Gentleman, had been conducted with a want of prudence, a want of foresight, and a want of knowledge in such matters, which had been as discreditable as anything that had ever occurred in the financial history of this country. When he found that his expectations had been disappointed, it became his duty to have immediately armed himself with the power of supplying his deficiency; but, instead of that, he evinced a want of moral courage to come boldly forward and make that admission which he was obliged to make on the 6th of March, but which he had since retracted—that he was mistaken in his calculations, and had failed in his scheme. Had he come forward at that time and said, "Under the sanction of Parliament I made an experi-
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ment, and failed; I have 8,000,000 l. to pay, but I can't run the risk, in the present state of affairs, of paying it out of the balance in the Exchequer," the consequence would have been that at that period the money might have been supplied at the loss of 1½ per cent; and even had the funds been at 97½, it might have been supplied at a loss of 2½ per cent, as there would have been no difficulty in obtaining a loan. The right hon. Gentleman and the hon. Member who had last addressed the House had thought fit to claim great credit for having reduced the national debt; but anything more trifling, more inexpedient, or, in its results, fraught with greater mischief to the interests of the country than paying off the national debt out of these balances could not well be imagined. He came now to the consideration of the state of affairs between the prorogation of Parliament, on the 20th of August last, and its meeting in February. They all knew the state of suspense in which the country had been kept, and the anxiety which was felt by all classes of the community. Previously to the prorogation they had been assured that there was no danger of war, that the matter had been substantially settled, and that each hon. Gentleman might retire to his own home in the most perfect ease as far as the Eastern question was concerned. Upon that assurance Parliament separated, but the funds, which at first kept up tolerably well, had been going down ever since. In February the Parliament again met—the funds were then higher than they are now—and, on the 6th of March, the very earliest period he could do so, the right hon. Gentleman made his financial statement. On that occasion he was again reproached with not having armed himself with the power of paying off the dividend holders; he was told, and, as it turned out afterwards, with great accuracy, what the extent of the balances were, and what amount of deficiency bills he would require, and it was pointed out to him that it would be necessary to raise money by way of loan. But the right hon. Gentleman seemed to disdain the idea of a loan, although assured that if he did not have recourse to it then, when the funds were at 92, he would be obliged to do so very shortly, when they were much lower; he treated the notion with scorn, and led them to believe that the last thing they might expect would be to see him come forward and ask Parliament for power to raise

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money in that way. So matters went on, until a great proportion of the public were taken by surprise by a notice appearing in the newspapers to the effect that the right hon. Gentleman proposed to raise 6,000,000 l. by Exchequer bonds. Everybody regarded such a proceeding as a loan, until the Chancellor of the Exchequer came down and told them they were all under a delusion, and that, although he was going to get money at 3° per cent, it was not to be considered a loan. But the right hon. Member for Buckinghamshire (Mr. Disraeli) put the matter beyond all doubt, and how the Chancellor of the Exchequer could make out that borrowing 6,000,000 l., to be repaid at any period within six years, was not a loan was beyond his (Mr. Malins') comprehension, and, he believed, beyond the comprehension of the public in general. The Chancellor of the Exchequer stated, in the speech delivered by him a fortnight ago, that this money was wanted in consequence of the inconvenience caused by withdrawing from the Exchequer the 8,000,000 l. belonging to the non-assenting shareholders. And though he was deceived in his expectations that the bonds issued by him last year would bear a premium, because they were issued at a limited amount, yet he again on the present occasion fell into the same mistake, and was again undeceived by the failure of his scheme. But he (Mr. Malins) believed that that failure was entirely owing to the mistake which the right hon. Gentleman made in the mode by which he proposed to borrow the money. The right hon. Gentleman had been very eloquent in pointing out the mistakes of Mr. Pitt, and condemning him for borrowing on the average 72 l. 10 s. and granting 100 l. stock, and the hon. Secretary of the Treasury had followed at considerable length on the same subject, and yet it appeared they had acted on precisely the same principle, for the right hon. Gentleman had advertised that he was willing to receive 6,000,000 l. at 32 per cent when the funds were at 98¾—that is, he was to receive 98 l. 15 s. for every 100 l. he paid, giving a bonus that would render it equivalent to 4 per cent. He (Mr. Malins) should like to know in what the principle differed? If he could. not get money below 4 per cent, why did he not make the proposal to borrow 100 l. and pay 4 per cent. for it on Exchequer bonds, without any mystification? But that would have been too simple a process for the Chancellor of the Exchequer, al-
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though it would have been intelligible to the public; therefore he said, "I will borrow at 3l. 10 s.; I know I can't get the money at that rate, but I will give a bonus that will make it equivalent to 4 per cent." The Committee would bear in mind how unequivocally the right hon. Gentleman denied that his proposition of 1853 constituted any addition to the national debt. That consequence was first pointed out by the hon. and learned Gentleman the Member for East Suffolk (Sir F. Kelly), who said that by converting a stock of 100 l. at 3 per cent into 110 l. at 2l. 15 s. per cent, the right hon. Gentleman was, in point of fact, adding 10 per cent to the national debt; that if the process was to be carried out over the whole 30,000,000 l. on which it was proposed to operate with this scheme, it would increase the debt of 30,000,000 l. to 33,000,000 l.; and that if the whole three per cents were so dealt with, the capital would be not 500,000,000 l., but 550,000,000 l., so that, though the interest might be lowered, the capital would be increased. But, said the right hon. Gentleman, that was quite a mistake, for the nation was under no obligation to repay the capital; all the obligation the nation contracted was an obligation to pay a perpetual liability of 2l. 15 s. a year. Now, the answer to that was very obvious, and he had himself ventured to point out to the right hon. Gentleman that the measure of a debt was the mode by which one could get out of a debt—that the mode of getting out of the national debt at present was to pay 100 l. for what now costs the country 3l. a year l.that the new mode proposed by the Chancellor of the Exchequer was to pay 110 l. for what would then cost the country 2l. 15 s. a year, and that, therefore, there was a clear addition of 10 per cent to the national debt. The language of the right hon. Gentleman appeared so extraordinary on this point that he could hardly expect the Committee to credit his accuracy, and he would, therefore, refer to the exact words of the right hon. Gentleman. On the 8th of April, 1853, he found it reported in Hansard, that the Chancellor of the Exchequer, in reply to some observations by the hon. and gallant Member for St. Ives (Capt. Laffan), said—
"He thought that the hon. and gallant Member who had just addressed the Committee, as well as the hon. and learned Gentleman the Member for East Suffolk (Sir F. Kelly), and some other hon. Members, had overlooked the real nature of the national debt. They treated the debt as if it were a sum which certain creditors had a right

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to recover from the nation; but no such right existed. The nation had entered into no engagement, except an engagement to pay its creditors certain perpetual annuities, or to redeem these annuities on certain terms, if it should think fit. That was a totally different thing from being bound to pay off the capital which it had received."—[3 Hansard, cxxv. 872.]
The Committee saw the right hon. Gentleman entirely denied the principle that giving 110 l. stock for 100 l. stock was adding to the national debt; he (Mr. Malins) was much surprised at the doctrine, and he found he interposed, and was reported to have said—
"It was quite true that the liability of the nation was to pay a perpetual annuity of about 30,000,000 l., but England could only get out of debt by reclaiming this 30,000,000 l.; this 30,000,000 l. could only so be got rid of. When, therefore, the right hon. Gentleman the Chancellor of the Exchequer stated that England at this moment was not under an obligation to pay more than a perpetual annuity, and not indebted in any capital sum of money, though strictly and legally speaking he was right, practically his statement was most erroneous."—[3 Hansard, ib.]
The right hon. Gentleman proposed to issue the stock at a discount, and whether that discount were 25 s. or 25 l. made no difference—the principle was just the same, and equally violated. What ought to be the rule of a financier? "Borrow at par, and then you know what you are doing." When, therefore, he found the right hon. Gentleman proposing to create stock at 110 l. in lieu of 100 l. stock then existing, he did convict him of not having got out of the dark which he said Mr. Pitt lived in. Mr. Pitt, indeed, had excuses, for neither he nor the nation had that experience which they now had, and probably he would have found it impossible to raise money in any other way; but, if the right hon. Gentleman, having all the new lights of the present age, committed this error in 1853, with what grace, he asked, could he come down to the House and make comments in the tone he had done on the conduct of Mr. Pitt? He should surely first take care to see he was quite right himself. The right hon. Gentleman had accused him (Mr. Malins) of belonging to a class which he termed "myths." He did not complain of the term, but the description which the right hon. Gentleman gave of that class was this—"They see things as they would have wished them to have been; and what they wished them to have been they believe that they were." The right hon. Gentleman had done him the honour of
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saying that he considered him (Mr. Malins) to be about the most respectable member of this class. He thought, however, that the right hon. Gentleman was quite under a mistake, for he (Mr. Malins) would point out a much more respectable member of the class, and that was the Chancellor of the Exchequer himself. The right hon. Gentleman applied the term to him, because he (Mr. Malins) had ventured to express his belief that the right hon. Gentleman's scheme would fail. What, then, should they think of the right hon. Gentleman himself, who thought that scheme would succeed? The right hon. Gentleman, in April, 1853, after dwelling at great length upon the advantages of the plan he was proposing to the nation, concluded by saying, "For my own part, I have not the least fear of seeing it very extensively adopted." He (Mr. Malins) thought then, it would be admitted that the right hon. Gentleman had far higher claims than himself to be regarded as a distinguished member of the mythic class. The imprudence of the right hon. Gentleman's scheme had been pointed out to him by several hon. Members, and he had been told that, having exhausted his Treasury by paying off the dissentient stockholders, it was impossible that he could go on without a loan. So far as he could be judged from the demeanour of the Chancellor of the Exchequer on that occasion, he seemed to hold in great derision the idea of being driven to a loan. He (Mr. Malins) felt a strong conviction that such would be the case, and he thought the Chancellor of the Exchequer would do him the justice to say that upon this point he had not been entirely mistaken. He (Mr. Malins) was satisfied that, having exhausted the balances in the Exchequer by paying off dissentient stockholders, and having imposed new taxes which were not immediately available, the right hon. Gentleman could not go on without an advance of money, and, by whatever name such an advance might be called, the public would only look upon it as a loan. The scheme of the Chancellor of the Exchequer was admitted to have been abortive, and to have resulted in disappointment; but the right hon. Gentleman, when he proposed his supplemental Budget, came down to the House, and, in a tone of exultation, said everything he had proposed had worked satisfactorily, and that no pecuniary loss had been occasioned. Now, on the 6th of March he (Mr. Malins) expressed to the House his belief that the

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loss to the country from the Chancellor of the Exchequer's plan would not be less than 800,000 l. of capital or 60,000 l. a year interest, and he thought he could show that that estimate was correct. The three per cents were now somewhat higher than they were a month ago; they were now about 88; but the Chancellor of the Exchequer had paid off 8,000,000 l. of stock at par. That stock was now worth only 88, so that the right hon. Gentleman had undoubtedly lost 12 per cent upon 8,000,000 l. He (Mr. Malins) considered that for 10 per cent of that loss the Chancellor of the Exchequer was without any excuse, because he (Mr. Malins) took the liberty of warning the right hon. Gentleman on the 5th of August, that the time had arrived when he ought to arm himself with powers for paying off the dissentient stockholders, and the money required might then have been obtained on such terms that a saving of 10 per cent, or 800,000 l., would have been effected. Now, the present proposal of the Chancellor of the Exchequer was a scheme for raising 4,000,000 l. of money, being part of a sum of 6,000,000 l. proposed to be raised by what the right hon. Gentleman called 3½ per cent Exchequer bonds; but as a bonus was to be given, he (Mr. Malins) thought it could not be denied that this was practically a loan at 4 per cent. The Chancellor of the Exchequer, then, was borrowing 6,000,000 l. at 4 per cent, upon which the interest would be 240,000 l. a year. The interest of 6,000,000 l. at 3 per cent was 180,000 l.; and he (Mr. Malins) contended that the Chancellor of the Exchequer was now borrowing 6,000,000 l. of money at 4 per cent to pay off the same amount which had carried interest at only 3 per cent. The Secretary to the Treasury (Mr. Wilson) had said that the necessity for this loan arose entirely from the balances in the Exchequer having been applied to pay off the dissentient stockholders.
MR. J. WILSONbegged to assure the hon. and learned Member, that the necessity would not have arisen but for the war.
MR. MALINS: He did not consider that made the slightest difference in his argument, and he must contend that the necessity had been occasioned by the imprudence of the Chancellor of the Exchequer in parting with the 8,000,000 l. of balance. The hon. Gentleman opposite (Mr. Wilson) had claimed credit on the
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part of the Government for having reduced the capital of the national debt by 11,000,000 l.; but, although he could not follow the hon. Gentleman's figures, part of that 11,000,000 l. was undoubtedly the 8,000,000 l. to which he (Mr. Malins) had referred. It could not be denied that the Chancellor of the Exchequer had paid off that 8,000,000 l. out of what should have been the resources of the nation for carrying on the war; and the Secretary of the Treasury had told them that the loans now proposed were required because the revenue would not be immediately available. But if that were the reason for the proposal, the money should have been borrowed, not upon Exchequer bonds, but upon Exchequer bills, which would be paid when the revenue did come in. The truth was, however, that the necessity for borrowing this 6,000,000 l. upon Exchequer bonds had arisen solely from the abortive scheme which had rendered necessary the payment of 8,000,000 l. to dissentient stockholders. The Chancellor of the Exchequer might say, "I only borrow 6,000,000 l. to replace 8,000,000 l., and therefore you save the difference of 2,000,000 l."But although at the present moment the right hon. Gentleman did not propose to borrow more than 6,000,000 l., it was clear from what had fallen from him that he was from time to time applying to the Bank of England for accommodation, and in that way he might obtain the additional 2,000,000 l. In any point of view it was his firm belief that the financial operations of the Chancellor of the Exchequer had resulted in a serious loss to the country. If they looked to capital, the loss was from 800,000 l. to 1,000,000 l.; if they looked to interest, the loss would amount to 60,000 l. a year. The Chancellor of the Exchequer stated a fortnight ago that the country and the Committee were mistaken in supposing that he had had any accommodation from the Bank of England; for that, though he had had deficiency bills to a large amount, he had never received any accommodation from the Bank, but, on the contrary, had had a considerable balance in its hands; and the right hon. Gentleman pointed out that at the time when it was supposed he had obtained large accommodation from the Bank, he had a balance with the Bank of 1,696,000 l. He, therefore, argued that the hon. Member for London (Mr. Masterman) had been, and that he (Mr.

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Malis) was in a complete delusion upon that point. Now, if the right hon. Gentleman had said that he (Mr. Malins) alone was under a delusion on such subjects, he would not have been at all surprised; but when the Committee was told that the hon. Member for London, one of the most experienced bankers in England, was under such a delusion, he could not account for it. He believed that the delusion lay entirely with the right hon. Gentleman himself. The right hon. Gentleman would find that if a banker made a loan to a customer, although that customer might have a balance in the banker's hands, the moment the banker placed the loan to the customer's credit, he considered himself liable at any moment to have the customer's check presented for the whole amount. If, therefore, another customer applied for an advance, the banker might not be enabled to afford him accommodation in consequence of his existing liability. In the same manner, if the Chancellor of the Exchequer, having 1,000,000 l. in the hands of the Bank of England, required from it accommodation to the extent of 2,000,000 l., the Bank considered that the whole amount was at the disposal of the Government, and its power to afford accommodation to other customers was to that extent diminished. The Secretary to the Treasury had alluded, at considerable length, to the dealings of the Bank of England with the Government, and had contended that, in consequence of the great profits made by the Bank of England, and the advantages it enjoyed as the Government bank, it ought not to refuse to afford the Government any accommodation they might require. He (Mr. Malins) had no doubt, however, that the Bank thought there was a limit to the accommodation to be afforded to the Government as well as to any other customer. The Secretary to the Treasury seemed to admit that the Bank Charter Act of 1844 was altogether an unnecessary measure, because, he said, it had now become a canon of banking that no banker could force out more notes than the public required; for if they were forced out on one day, they would come back the next. Neither the Bank of England, then, nor any other bank, could force out more notes than the public required; but the practical error of the existing law was, that the Bank was not allowed to let the public have the notes they did require, however urgent the demand might be. If the
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Secretary to the Treasury was correct, it was impossible to conceive a more unnecessary law than the Bank Charter Act of 1844. Previously to the passing of that Act the Bank was left to exercise its discretion, and to judge what notes it could issue, and it issued such an amount as would not interfere with the regularity of its action; but the vice of the present system was that, although, at a particular crisis, the public might want a large amount of notes, the issue of notes by the Bank was restricted, and commercial operations were, consequently, curbed and fettered. He would not, however, longer detain the Committee, as he had now exhausted the topics upon which he had been challenged upon a former occasion. On all grounds, he trusted the Committee would be of opinion that the right hon. Gentleman's scheme had been founded in error, and that he was not entitled to the credit which he claimed. On the particular question he need add nothing to the able speech of the hon. Member for Huntingdon (Mr. T. Baring). It had been said, indeed, that the Exchequer bonds might, at the end of the period, be reissued like Exchequer bills. True; but upon what terms? If the war turned out to be one of long duration and of great expense, the three per cents could not be expected to remain at 88. Suppose, at the expiration of six years, they were down at 75, as they were in 1847; or suppose that, in 1860, when these bonds were redeemable, the three per cents were at 78. If the bonds were then reissued, a loss of 600,000 l. would be involved, in addition to the 800,000 l. by the South Sea Stock conversion scheme of last year. In other words, the Chancellor of the Exchequer would be obliged to borrow money at 4½ per cent to pay off a debt which bore only 4 per cent interest. Disguise it, then, as he might, the right hon. Gentleman was raising money by loan, and binding himself to repay 6,000,000 l, of debt at a period when the resources of the country might possibly be diminished by the demands of the war. Under such circumstances, he could not regard the right hon. Gentleman's principles of finance administration as sound, and he should vote for the Amendment.
MR. LAINGsaid, but little connection could be perceived between the speech which had just been delivered and the terms of the Amendment. The obvious meaning of the Amendment was, that it

721
would be dangerous to the Government to commit itself to the repayment of the principal sum beyond 2,000,000 l. which might be borrowed for a shorter period than six years. He could not concur in that opinion. With the highest appreciation of the commercial acuteness and experience of the hon. Member for Huntington (Mr. T. Baring), he could not help thinking that, had the hon. Member had the benefit of a little experience on a railway board, he would have avoided the fallacies—the absurdities, he was compelled to say—he had put forth before the Committee. In his own humble position as chairman of a railway company, and that company by no means the largest in the kingdom, he had frequently had to deal—and he had done so with perfect facility—with renewals of bonds for large amounts—certainly to a much greater amount than 6,000,000 l., which, it was said, would impose such a burden upon the resources of the country. Of course the same had occurred in other companies. By the last return he found that the aggregate floating debt of the railway companies amounted, at the end of the year 1852, to 64,064,666 l.; and at the present moment he thought he should under-estimate it if he stated it at 70,000,000 l. The average duration of the bonds or debentures under which this debt was secured was considerably under five years; probably the average duration did not exceed four years. But, taking it at five years, it would be found that these 70,000,000 l. involved a renewal of no less than 14,000,000 l. annually—a renewal which was effected in the open market by the railway interest. These operations had been effected, and were being effected now, even at the high market rate of interest, with the most perfect facility every day. How were these operations effected? By appealing to the great and numerous classes who sought investments at a rate of interest slightly superior to that afforded by the public funds. The average amount of the bonds so taken was about 1,500 l. a piece; and the classes of the community among whom they were thrown were those who looked for investments in mortgages upon land, a large and increasing number of trustees, widows, officers upon half-pay, and, to some extent, such investments were made by life assurance and other companies. The question was, whether the Government could feel the slightest apprehension
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in entering into competition with the railway companies, with a preferable security—a security which presented many advantages in facility of transfer—for such an insignificant sum as 2,000,000 l. It was idle to talk of the difficulty of raising the amount. It was perfectly evident that if they operated in 3 per cent Consols they could command better terms any moment. It was evident, also, that if they borrowed in a depreciated capital they would have to pay a less rate of interest. It was, therefore, a question of simple calculation. If the money was obtained in the 3 per cent Consols now, they must give 85 or 86 for it; in other words, 3½ per cent; on the other hand, if they chose to effect the loan in Exchequer bonds, it was equally clear they would have to pay neither more nor less than 4 per cent interest. Then the question was, was it, or was it not, desirable to pay the extra ½ per cent in the meantime, in order to avoid the risk of having to repay the 100 l. principal sum which had been borrowed at the rate of 85 l.? On this question he believed that the Chancellor of the Exchequer was exercising a wise and sound discretion in not imitating the ruinous example set in former wars, of borrowing in depreciated capital. So much for the principle of the measure. With regard to the details, he was bound to admit that they were open to seine objection. The principle, however, was perfectly sound; but the particular mode in which it was carried out was unfortunate. The Chancellor of the Exchequer, he was sure, must now feel that it would have been better at once to borrow at par and pay 4 per cent interest, rather than to offer ½ per cent less upon a depreciated amount. This mode of operation was unfortunate; and he also thought it unfortunate that three denominations of bonds should have been offered, because he had always found that the public most approved a definite operation. There was no force, however, in the objection of the hon. and learned Member (Mr. Malins), when he taunted the Chancellor of the Exchequer with having done that for which he had himself reproached the memory of Mr. Pitt. Mr. Pitt offered a permanent annuity; but in this case the loan was effected for a limited and definite period. The whole operation would be at an end in three or four years, and when it came to an end the nation would be in the same position as if it had paid 4 per cent for the accommodation, while no perma-

723
nent burden would be imposed upon posterity. The question, however, of these Exchequer bonds, it was evident, was bound up, as appeared from the speech of the hon. Member for Huntingdon, with a very different discussion. The discussion, in fact, amounted to neither more nor less than an impeachment of the whole financial policy of the Chancellor of the Exchequer; and the vote which the Committee was called upon to give was tantamount to a vote that he had so mismanaged their financial affairs in the past, that they had no confidence in his administration for the future; that they would rather risk all the evils attendant upon a disruption of the Ministry upon the very eve of a great war, than allow him to carry out his policy. This was the true issue presented to the Committee for its decision; and how, he asked, had it been attempted to support the proposition which it involved? By a retrospective view of the transactions of the past year. In this retrospective view the greatest stress had been laid upon the experiments made for the conversion of a certain portion of the national debt. This was an easy topic to find fault with, because it was admitted by the Chancellor of the Exchequer himself, that the experiment had been a failure. At the same time, as so much stress had been laid upon it, it was only fair to remind the Committee of the circumstances under which the experiment had been made, and of the extent to which it was carried. When it was made, the three per cents had ranged, for a very considerable period, above par. The great object of conversion had been carried through successfully in France. The period was one of great prosperity and of expanding trade, while the extraordinary discovery of gold appeared likely to effect a considerable change in the operations of the money market. He knew that on this last subject opinions were much divided in the City. The fact, however, was that the discovery of Australian gold, so far from having given relief, produced a contrary effect. There was a drain of sovereigns to purchase gold with. The exceptional state of things in China was another cause of disappointment. These two causes were apparently temporary in their operation. Without going further into the question, he would observe that the only thing we had to guide us in the nature of experience was the experience of America. Now the experience of America, with regard to the discovery of gold in California, led to this
724
result—that the influx of gold cheapened the rate of money in that country and raised the price of public securities. Now in April last year it was no unreasonable supposition—it was quite possible—that a similar state of things would result, and that we might have found ourselves in a period of great prosperity. Many persons also thought it was, to a small extent, an experiment. The great mistake of hon. Gentlemen opposite was that they did not keep distinctly in view that the measure then attempted was only attempted upon a limited scale, involving no great risk, and it was equally certain, in the eyes of all impartial observers, that the principle on which the experiment proceeded was one which, steadily pursued, must, under circumstances less unfavourable, gradually diminish the enormous amount of our national debt. With a view to an extensive operation upon the national debt two things were necessary—one was to break up the enormous amount of the three per cents, which required twelve months notice, into small and more manageable amounts; and the other was to establish a two and a half per cent stock, to serve as the barometer of public credit, and afford at the same time a security on which future Chancellors of the Exchequer might operate in attempting conversions to a larger amount. Here he came to the point in which he thought the Chancellor of the Exchequer would have done more wisely by taking a different course. He would have done more wisely, as soon as the failure of the scheme was ascertained, to have put up with the first loss and have closed the transaction by commuting the stocks of the dissentient holders into some other form of public security whilst the funds still ranged as high as 97 or 98. He did not deny, therefore, that the experiment had been a failure, and that a certain amount of loss had been the consequence; whilst, owing to the occurrence of war, a necessity had arisen for raising an additional sum of money, which sum had to be raised at a greater sacrifice than would be the case under the other mode of raising it at par. It remained, therefore, to be seen how far these circumstances were a justification of the sweeping censure which had been pronounced upon the Chancellor of the Exchequer. The only other point touched upon had been the balances in the Exchequer. It had been attempted to convert that into a question of principle which was only a

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question of detail. The finance of a country was just the same thing, though upon a larger scale, as the finance of an individual or a company. In all cases the question of the amount of the balance at the Bank was a question of discretion. It must not be kept so low as to impede public credit upon the one hand, and, on the other hand, it was useless to keep it at a large amount, because that involved a sacrifice of interest. He thought the balances had been run down too low by the failure of the conversion scheme; but he thought the Chancellor of the Exchequer was perfectly right in now coming forward for means to replenish those balances, and to keep them up to a respectable amount. He thought, however, that the proposition of the hon. Member opposite on the part of the Bank of England to separate the balances, was most unreasonable. As chairman of a railway company, he should never tolerate his banker, when he had a large balance in his hands on the construction account, charging interest upon any small accommodation he might require on another account. The balances must be looked upon as a whole. The nation was only one of the Bank's customers. Certainly, the nation ought to keep a respectable, and even a liberal balance with the Bank; and whether that balance was on one or more accounts was a matter of indifference. Such appeared to him the grounds upon which the Committee was asked to censure the whole financial policy of the Chancellor of the Exchequer. Before consenting to adopt such a course he must look at that policy as a whole, and ask himself whether—of course admitting that some errors had been committed—he could shut his eyes to the leading principles upon which the financial administration of the right hon. Gentleman had been based. Looking back upon his past administration, he could not dismiss from his recollection that, when he first entered that House, he found the right hon. Gentleman battling for the true principles of sound finance, in opposition to the right hon. Gentleman opposite (Mr. Disraeli); he found him combating for a bonâ fide surplus of income over expenditure; he found him afterwards, when in office, asserting the same principles; he found him, when proposing the continuance of the income tax, proposing remission of taxation upon articles affecting the working classes, and obtaining the means of doing so by imposing a system of direct
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taxation; he found him repealing the soap tax, and imposing the succession duties. And, corning to the present period, he found that a crisis had arisen which had disturbed his calculations. We were engaged in a great war, and a necessity had arisen of raising 10,000,000 l. more than had been anticipated. Two great evils were to be avoided in financial policy, at the commencement of the war: one was not to attempt to retrace the commercial policy which had produced such beneficial effects, and the other was not to have recourse to temporary expedients for raising money at a ruinous discount, for carrying on the contest. He cordially approved the policy adopted by the Chancellor of the Exchequer on both these points. Such were his convictions, and he believed they were the opinions of the great majority of that House. The moneyed interest, ho believed, was perfectly satisfied with the financial policy so boldly asserted by the Chancellor of the Exchequer; and he was certain it would be a great misfortune to the country if the Amendment, which in; volved a censure of this policy, were carried.
MR. CAIRNSsaid, when the right hon. Gentleman the Chancellor of the Exchequer submitted his proposition to the House, he made a just observation, he said that, although it was the duty of the Government to originate financial measures, it was for the House of Commons, after all, to decide upon the manner in which the resources of the country should be raised, and that upon it, and not on the Government, must ultimately rest the responsibility of the adoption of a financial policy. Very shortly after, however, a different language was used by another Member of the Cabinet, for, as soon as the discussion commenced which the Chancellor of the Exchequer had invited, the noble Lord the Member for the City of London (Lord J. Russell) rose, and, in words which conveyed a tone of taunt rather than of courtesy, accused Members who objected to the great financial scheme of want of sincerity, and laid down the new and startling proposition, that Members on both sides of the House having agreed to the war, they were not at liberty to object to the mode in which the Government proposed to raise the means for carrying it on. Of these two doctrines that of the Chancellor of the Exchequer was certainly the more reasonable; for it was not alone the right, but it was the bounden duty, of that House, as guardians of the public

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interest, to discuss the mode of raising money by taxation for any purposes whatever, and, when there was doubt or difficulty in the case, to express that doubt and that difficulty without heeding the reproaches cast upon them by the noble Lord. He (Mr. Cairns) mentioned this by way of protesting in anticipation against the imputations which might, and would, no doubt, be thrown upon those on his side of the House who were opposed to the plan of the Government in this matter. He yielded to no man in his desire to see the war carried out as became a great nation to a successful conclusion, or in his readiness to raise the resources which might be deemed necessary in a fit and proper manner; but he claimed also the right to perform his duty, and he felt bound to state openly and fairly whatever objections he might have to the mode of raising those resources proposed by the Government. He (Mr. Cairns) differed on two points from the propositions of the Chancellor of the Exchequer; he differed with him, first, as to the extent to which he proposed to make the resources of the year defray the expense of carrying on the war; and, in the second place, as to the mode of taxation proposed for the purpose of raising those resources. It was surprising that the question of the expediency of paying the expense of the war year by year had received so little discussion in that House. The Chancellor of the Exchequer had merely glanced at the question. The right hon. Gentleman indulged in considerable criticism upon the mode in which the resources for carrying on former wars had been raised, but he avoided any distinct enunciation of the principle on which the House should proceed. In dealing with this question, it was necessary to consider the position of those who had to pay taxes in the present year. Were they a permanent unchangeable body, with respect to whom it was immaterial whether they should pay a certain sum in one year, or have it spread over a series of years? They were a fluctuating body. A number of them would be changed before next year's taxation could be levied—a number of others would be removed from the sphere of taxation by death and other circumstances. To arrive at a fair conclusion on the subject, it was necessary to treat the tax-payers of the present year and the tax-payers of future years as different bodies. Could we be guided by analogy in this matter? He thought we might. In dealing with permanent as dis-
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tinguished from ephemeral charges, we did not place the tenant for life and the subsequent absolute owner of the property in the same category. In the case of permanent improvements, such as draining, a portion of the burden was imposed upon the life interest, and a portion was left to the person who would succeed to the property. Well, the Government would not say that the war in which, we had entered was not a necessary war—a war of salvage of the country, as it were—from which permanent improvement to the country was derivable. Who, then, were the persons who would be benefited by it? The persons now alive and paying taxes this year? No. On the contrary, those were the persons who would suffer most by the war. The persons who would most benefit by it were those who would come, perhaps, scores of years after us. Then, why should the persons who would suffer most by the war be called upon to bear all its expense? Before proceeding to raise the necessary supplies for carrying on the war by one mode or another, we ought to decide which was right in principle, and, having come to a decision, we should act upon it. So much with respect to principle; and now a few words on the question of convenience. What was the time at which the resources of a country were best able to bear an unusual and extraordinary strain? In a time of war mercantile transactions were paralysed and national resources crippled, and therefore an additional burden imposed at that time would be most irksome. The time at which a country was best able to bear an unusual burden was when war had ceased and commercial transactions had returned into their natural and wonted channels. If every person in the country held a fee-simple estate and was immortal, it would matter little whether he were called upon to pay a fixed sum at once or by instalments year by year. But seven-tenths of the tax-payers had no fee-simple estates—their means consisted of salaries or other ephemeral resources. To these persons it was not the same thing to pay 100 l. at once, or to pay it by instalments. He did not say whether Mr. Pitt had done the best thing that could be done for the country or not, but Mr. Pitt had not gone into the market and borrowed 100 l., and given the market value for what he received; he went into the market, and, in order to obtain money for which the persons of his own time should pay a low rate of interest,

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he threw upon posterity a burden greater in amount than the money which he actually received; for instance, when he obtained 100 l., he left us to pay 170 l. or 180 l. If he (Mr. Cairns) had to choose between paying the expenses of the war in one year and that process, he should certainly prefer the former alternative, but he did not understand why another course should not be adopted. Why should we not go into the market, borrow 100 l., give security for that amount, pay the market rate of interest for it, keep down the interest in this and succeeding years to that rate, and leave those who came after us to pay off the principal? This would be a fair mode of dividing the burden be this and succeeding ages; else an arrangement might be made to liquidate the whole loan in a given period, say twenty to twenty five years. He would now state his objections to the taxes by which the Chancellor of the Exchequer proposed to raise the money he required, the most important of which was the income tax. What was the history of that tax since the accession to office of the present Government? One of the first questions which had come under the consideration of the Government was, whether the tax could be adjusted so as to remove its inequalities; but they were unable to find a satisfactory mode of carrying that object into effect, and therefore, to avoid the necessity of an adjustment, they proposed it with three qualifications. The first of these qualifications was, that there should be a descending scale—that the tax should be reduced year by year; the second was, that it should come to an end in a certain number of years; and the third was, that, as a sort of compensation, the succession tax should be imposed. What had been the result? In the first place, there was an end of the diminishing scale; secondly, the tax would not be terminated in a fixed number of years; and, thirdly, the 7d. in the pound for which the succession tax had been considered as a compensation, had been increased by another 7d. in the pound, with regard to which there was no compensation, although it had all those incongruities which had. so long been complained of, and which every Government had been expected to remedy. Without attempting to be a judge upon matters of finance, he could not help protesting against the principle upon which the taxes by which the amount of revenue required was to be raised were to be im-
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posed. He could foresee, very plainly, the germs of the unpopularity of the tax, not in its irksomeness nor in its amount—for he had such confidence in the courage and energy of the people of this country in a cause which they considered just that he thought they would cheerfully bear any burden that might be imposed on them—but he could foresee it in the injustice of the tax, and he was afraid that this unpopularity would pass from the tax itself to the war which was the cause of it. We could not now judge of the feeling of the country on this matter, for it rose slowly upon matters of taxation, and even the opinion of this House had not been sufficiently formed upon the Chancellor of the Exchequer's scheme since it had been brought forward; but a time would come when a man who paid his 12 l. out of 200 l. a year would inquire upon what principle the tax was imposed, and, although the propositions of the Chancellor of the Exchequer might have been sanctioned by majorities of this House, and although ho might have succeeded in accomplishing the objects he had in view, he would also have done what he should be sorry to think the Government intended to do—he would have rendered a just war unpopular by means of an unjust tax.
MR. JOHN MACGREGORsaid, he thought, with regard to the expediency of borrowing money for a short period, that the same principle was applicable to the finances of the country as was applied to the finances of a person who paid ready money to his tradesmen instead of running into debt. He believed that if no war had occurred, and the harvest had been good, the anticipations of the Chancellor of the Exchequer as to the result of the measures he had proposed last year for the conversion of stock would have been realised; but, at any rate, if he had placed the finances of the country in peril, it was not in consequence of his having received no advice from a Parliamentum indoctum. He could not discover what ground there was for asserting that the right hon. Gentleman had entailed a loss of 10,000,000 l. upon the country, for the conversion he had effected would not, at the end of the war, add ls. to our debt or to our taxation. The proposals he had now made were moderate, although they had been met by factious opposition, and the Amendment before the Committee was nothing more nor less than a vote of want of confidence

731
in the measures of the Chancellor of the Exchequer, but he knew the country would support the principle of defraying the expenses of the war without entailing a burden upon posterity.
MR. THOMSON HANKEYsaid, he could not give a silent vote upon the Amendment of the hon. Member for Huntingdon (Mr. T. Baring), because, at the conclusion of his speech, the hon. Gentleman had made some remarks, from which he confessed that he most entirely differed, and, after listening to that speech with great attention, he was completely at a loss to understand the object he had in concluding with the Amendment which he had proposed. He would merely make an observation with respect to the Amendment, because he was anxious to avoid crippling the action of the Chancellor of the Exchequer by the expression of an opinion on the part of the Committee that the mode of borrowing money which he proposed to adopt on the present occasion was injurious or undesirable. He could not understand why Governments of this country should debar themselves from following that course which had been found expedient and advantageous by the largest class of borrowers in the kingdom, the railway interest—he meant the raising of money by loans for a limited period, a custom which had not only been found beneficial to that interest, having invariably been adopted by it, but which had also been adopted by almost every country with the exception of our own. He therefore rejoiced when he heard that the Chancellor of the Exchequer had determined on adopting a plan which he believed would be found, on the whole, to be most beneficial to the country. He cared not whether the Chancellor of the Exchequer would be afraid of renewing these debentures when they fell due, or what course he might adopt when the time arrived for the determination of that question, but he thought the right hon. Gentleman was wise in adopting the plan of borrowing for a short and limited time, and of replacing the loans he was about to raise out of an income which he proposed to derive from taxation, the imposition of which, as he understood, the Committee was not unwilling to sanction. As he had taken the liberty of expressing an opinion different from that of the right hon. Gentleman on a former occasion, he wished to state how entirely he concurred with him in thinking that the course he
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now proposed to adopt was a wise one, and he hoped the Committee would not throw any difficulties in the way of his carrying out his measures.
MR. DISRAELI: Mr. Bouverie—Sir, I did expect that some Member of Her Majesty's Government would have replied to the speech of my hon. Friend (Mr. Baring), a Member of the House on all subjects deserving the attention of a Government, and who to-night spoke upon one upon which he addressed us with all the influence which naturally results from his pursuits, his character, and his ability. I think I am not saying too much—though indeed the only fault of his eloquence is the rarity of Ids appeals, which we all regret—that on no occasion has he addressed either yourself or the Chair, when he has produced a greater effect, or more completely justified the step which he has taken. I should myself have willingly listened to the answer of the Government before I troubled the Committee; but, as the question is now called, I do not feel justified in giving on this Amendment a silent vote. An hon. Gentleman who has just addressed the Committee told us that it is not upon a mere Resolution moved in Committee that we have to decide, but that we have, indeed, to decide upon the whole financial policy of the Chancellor of the Exchequer. I was not myself disposed to view the question in that light, but at the same time I am not prepared to shrink from such a discussion if it is the mood of the Committee that we should enter into it. Sir, I conceive that the demand which the Chancellor of the Exchequer has made upon the Committee to-night has resulted from the system upon which he has conducted the finances. I am willing, therefore, to argue the case on the broadest grounds, and to take the decision of the Committee upon the more comprehensive issue. I think that the conduct of our finances by the right hon. Gentleman has been from the first erroneous, and I wish to give to the Committee, with as much brevity as I can, the reasons why I think the administration of the finances by the right hon. Gentleman has been erroneous, and has been, in consequence of those errors, injurious to the country.
Sir, I think that in the first year of the management of the finances by the right hon. Gentleman—management which has led to the Resolutions now before the Committee—it is not difficult to point out a variety of courses that he has pursued

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which he was not justified in taking. One advantage that we have in speaking upon these subjects now is, that that which a year ago was abstruse to the majority of hon. Members—which even a couple of months ago was not easy of immediate apprehension—has really, by frequent discussions, become so familiar to every Gentleman in this House that it is not necessary to dwell upon these points at that length which on previous occasions perhaps it was my duty to do. Now, the first error of the right hon. Gentleman has been touched upon to-night by the hon. Member for Huntingdon (Mr. Baring), and has been frequently referred to in the course of this discussion, and that is one which has been constantly brought before the consideration both of the House and of the Committee—namely, his lowering of the rate of interest upon Exchequer bills. The right hon. Gentleman has on several occasions, and in that speech in which I may say he introduced the Resolutions now under discussion, vindicated the course which he intended to take. I don't think that I am giving a partial opinion if I say that the vindication of the right hon. Gentleman of that step has not, I think, proved. satisfactory to this House or to the country. No doubt the observation of the right hon. Gentleman, that in the month of March Exchequer bills were sent in, not for payment, but for conversion, is a seeming vindication, as lie states, of the course that was taken. No doubt, on the first blush of the matter, that is an apparent answer to the charge that we had made. But really it is a superficial one, and has been noticed to-night by the hon. Member for Huntingdon, as might have been expected from a Gentleman of his experience and acquaintance with the subject. It is not immediately that the commercial community call on the Chancellor of the Exchequer to pay his bills in money; but although for a moment indulgence was extended to the right hon. Gentleman, the consequence of his conduct was apparent when, at a later but still not remote period, a large amount of the balances in the Exchequer were called for in the most inconvenient manner to defray the obligations resulting from his policy. Well, Sir,I shall not dwell upon another point, which I only notice that the Committee may bear it in its mind. It is a fact, not to be disputed, that the right hon. Gentleman did think it a wise course to reduce the interest upon public securities when the bankers were
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raising the interest upon private securities, and when every symptom which I think ought to have guided the right hon. Gentleman—such as the fall in the funds, which the right hon. Gentleman will no longer deny—the repeated rise of the rate of interest by the Bank—the fall in the premium on Ids own Exchequer bills—must all have warned him that a considerable change was taking place in the financial condition of the country. I think the reason given by the right hon. Gentleman the other night, which he drew from the course of the exchanges affected by our Indian trade, however good so far as it went, of a very limited and partial character. There is no doubt that the right hon. Gentleman, as well as other persons, was misled by the great increase in the production of the precious metals, in consequence of the discovery of gold in Australia and elsewhere, and that he did not give credit for that remarkable increase in our commercial transactions which was the consequence of that discovery, and which was an increase in greater proportion than the increase in those metals.
Sir, I am quite willing to share the blame of having formed an erroneous opinion on the same subject, of which the right hon. Gentleman of course has reminded me. I answered the right hon. Gentleman that it was my opinion—all opinion that I bad formed not carelessly, and in which I was fortified by high authorities; and the right hon. Gentleman said—"Of what use are opinions unless they are acted upon?" But although that was my opinion in the month of December, still I do think that in the month of February, if I had been aware that the funds had fallen 1° per cent—if I had been aware that the Bank had raised the rate of interest twice in the preceding month, and if I had been aware also of the great efflux of the precious metals—that whatever might be my theoretical opinions formed from study, and although I may have thought that they might have been, in the long run, justified by experience and the course of events—I should have had sufficient caution and prudence not to act then upon that opinion. Under the circumstances, in refusing so to act, I do not think I should have given any foundation for a belief that I was insincere in the doctrine I professed. Well, Sir, I consider this to have been the first great fault in the management of our finances in the year 1853—I mean the in-

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cautious dealing with the unfunded debt of the country. Sir, the second great mistake which the right hon. Gentleman, in my opinion, has made in the administration of our finances—I am sure he will pardon my going somewhat pedantically through this catalogue, but I am obliged now, from a circumstance which we all deplore, to answer in some degree a speech made by the right hon. Gentleman some time ago—I say the second great fault of the right hon. Gentleman in the administration of the finances in 1853, was that celebrated scheme of conversion which has occupied the attention of the country so much, and also that of the Committee this evening. The vastness of that scheme is sometimes forgotten, because circumstances permitted only a comparatively very minor portion of it being fulfilled, or rather, I should say, attempted to be fulfilled. The whole principles upon which that scheme of conversion, which might have been applied to the whole amount of the public debt, was calculated, were, in my mind, fallacious and contradictory. The right hon. Gentleman has reproached me and others, because, in the month of March, when he brought forward his conversion scheme, we warned him of the impolicy of this greater scheme, and dwelt little upon the inconvenience that might accrue from the failure of his minor project. Now, Sir, I do not shrink in the least from the opinion that I then gave, that it was extremely unwise to bind this country up in engagements which were to last forty years, ensuring the stipulation of a certain fixed rate of interest, whether it were 3 per cent, or 2° per cent. The principle of such an arrangement is one which, whatever may be the rate of interest ruling in this country at any time, ought not under any circumstances to be sanctioned. Sir, the right hon. Gentleman reproached us that we did not remind him of the inconvenience that might arise to the Treasury from the failure of the smaller portion of his conversion scheme, namely, the necessity of having to pay off the holders of South Sea Annuities. I think, however, that I may leave the vindication of hon. Gentlemen on this side of the House to the hon. and learned Member for Wallingford (Mr. Malins), who has laid before the Committee this evening such ample quotations of the warnings and prophecies given to the right hon. Gentleman, that, if I had no share in those predictions and those warnings, I may at least be proud
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of my colleagues and coadjutors for having been more apt and far-seeing than myself. But surely the right hon. Gentleman cannot pretend any longer, that on this subject he did not receive due caution from this side of the House. Well, that was the second great mistake of 1853. The first was with respect to his dealing with the unfunded debt; the second was with respect to his dealing with the funded debt. But there is a point for our consideration, when we have to estimate the prudence and calculate the caution of the right hon. Gentleman in these matters—there is one element of our consideration which, when we touched on the subject originally, was not in our possession.
Sir, when this subject was first discussed in this House this Session, I remember that on that very night before the financial debate took place, I had to address a question to the noble Lord the Leader of this House, with respect to a statement that had appeared that morning in an English newspaper of certain declarations made by the Emperor of Russia as to the information possessed by the Government of his intentions at a period far earlier than had been supposed by the House of Commons. That was on the very day, if I recollect right, when the financial discussion took place in this House, and the noble Lord promised that we should be put in possession of these documents. We argued the case of the management of the finances without the advantage of those documents. We argued the case of the management of the finances merely with the State Papers before us that had been laid upon the table. But it resulted from those documents subsequently presented to this House, that the right hon. Gentleman last year must have been impressed with, if not the certainty, the more than possibility of this country being engaged in hostilities, and in hostilities with a most powerful empire. Sir, it is possible that I might show that even in the earlier part of February (1853) the right hon. Gentleman ought not to have been blind to what was occurring; but I do not press that. The right hon. Gentleman had recently acceded to office—he had a great pressure upon him in his department—he might not at that moment have been so deeply impressed as, perhaps, he ought to have been with the alarming state of Europe; but a month afterwards the right hon. Gentleman must have taken his part in many Cabinet meetings in which the gravest discussion must have occurred

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upon the possibility, and the more than possibility, of a war with a Power of first-rate resources; and, I ask the Committee, is it of opinion that, under these circumstances, a hi mister of Finance should have come forward and proposed to this House to deal upon a large scale with a scheme of conversion which was to touch the greater part of the public debt of this country? The failure of the conversion scheme is no longer to be gauged by the depth and extent of the fallacy of the principles upon which it was founded; it was a great fault of statesmanship quite irrespective of errors of finance. And when the right hon. Gentleman turns round and taunts us now with not having given him sufficient warning—of not having been early enough in prophecy and prediction as to the inconvenience and injury of his course and conduct—I tell him that those taunts fall to the ground, because, if we had been completely silent, if we had not objected in any way to his measures, his fault depends upon circumstances quite independent and irrespective of the opinions of this House or of the country, because he should have formed his judgment and his opinions upon circumstances of the gravest import that were utterly unknown to this House or the country.
Well, Sir, I come next to the third fault—the third great financial error in the year 1853—of the right hon. Gentleman. His third great financial error is, at any rate, one which the hon. Gentleman who lately addressed us (Mr. Laing) cannot call a question of detail—it is not a question that concerns the interest upon an Exchequer bill—it is not one that concerns even the terms upon which you may effect the conversion of an annuity. It is, under the circumstances, the gravest error that a statesman—a financial statesman—can possibly commit; it is one which, in my opinion, has grievously injured the fortunes and resources of the country, and has mainly prepared those difficulties which I fear it is impossible to flatter ourselves we shall not have to contend with. The third great error of which I accuse the right hon. Gentleman in 1853, is that he came forward, and under circumstances which ought to have convinced him that war was more than imminent, proposed to the House of Commons a peace Budget. Now, I do not call the Budget of 1853 a peace Budget because the right hon. Gentleman proposed to repeal taxes. The right hon. Gentleman may tell me, as he has told us
738
before, that if he brought forward measures which immediately tended to diminish and reduce the resources of the country, he also proposed other measures which in due time would increase those resources, or would, at least, supply the deficiency which his measures might create. I may say, in passing, that I do not at all admit the justice of the observation of the right hon. Gentleman, which has been made more than once. If the right hon. Gentleman believed that there was a chance of this country being involved in war, it is no excuse for his destroying any source of revenue that he substituted an equivalent in its place, because the country might require, and probably will require, both sources of revenue. Therefore, I do not admit the argument that, because he proposed and carried more than one new tax, he was at all justified, with the information of which he must have been master, in proposing the repeal of other taxes. But I am not describing his Budget as a peace Budget because he repealed taxes; I call it a peace Budget, not merely because it proposed the repeal of taxes, but because the right hon. Gentleman, in order to induce the House and the country to embrace his policy, chalked out a financial future, which was all founded upon the further repeal of taxes. It is not merely that the right hon. Gentleman, addressing the House of Commons, who no more dreamt of war than they now dream of peace—it is not that the right hon. Gentleman then had the extreme rashness and precipitation to diminish the duties on tea by
one-half, but he more than intimated to the House that the wine duties would, in due time, and very speedily, be dealt with; and, indeed, I am greatly misinformed if even at the beginning of the war Her Majesty's Government were not then meditating and maturing a considerable reduction of the whole wine duties. Well, Sir, I do not object to the Chancellor of the Exchequer dealing even with the wine duties; but I say that a Chancellor of the Exchequer, in possession of information which ought to assure him that the peace of Europe is in imminent danger, who comes forward and proposes the repeal of taxes to a large amount, and intimates to the House of Commons that the policy he is pursuing will speedily lead to still greater remissions, cannot pretend that he was not proposing a peace Budget.
But I do not say that the right bon. Gen-

739
tleman proposed a peace Budget merely because he proposed the remission of taxes, or merely because he indicated a further remission of taxes which it was his intention to make, although I think that that is ample proof of my statement; but let me remind the Committee of the mode and mariner in which the right hon. Gentleman, according to his own account alone, induced the House of Commons to consent to the continuance and re-enactment of the income and property tax. If the right hon. Gentleman believed that there was a chance of war—if he was of opinion, after all the Cabinet Councils that he had attended, that the peace of Europe was in extreme danger, I ask, how can the right hon. Gentleman justify it to the country that he should have come forward and induced the House of Commons to consent to the continuance of the income tax upon specific conditions, those conditions being that it should gradually diminish, and at a certain date should entirely disappear—the funds intended to enable it to be extinguished being those to he supplied by the large amount of terminable annuities which at that period would fall in to the public advantage? I think it is hardly necessary, therefore, to give further proofs to the Committee that the Budget of 1853 was a Budget of pure peace. Now, was the right hon. Gentleman—a Minister of the Crown—cognisant of all the despatches of our foreign envoys, taking a leading part, no doubt, in our councils, acquainted with all circumstances which have since been made known to us—was the right hon. Gentleman—I ask this Committee, with no fear of what must be the verdict of all impartial men—was the right hon. Gentleman then justified in believing that peace was not endangered? What was the information then in the possession of the right hon. Gentleman? Why, he was in possession of information from those employed by himself and his Colleagues—by the servants of the Crown abroad—that our foe was at that moment making propositions to the Ottoman Porte to enter into an alliance hostile to England. The right hon. Gentleman knew that large armies were then prepared and assembled on the frontiers of Turkey, and that at that moment the opinion of men whose judgment ought to have guided us was, that the balance of power was in danger, and the political existence of Turkey was at stake. Well, Sir, considering that the Budget greatly diminished the re-
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sources of the country—considering that that Budget made the Government enter into engagements which would certainly lead to great disappointment if unfulfilled, and appeals were made for the imposition of new taxes; considering all this, I think a peace Budget in 1853 was a very great blunder on the part of the right hon. Gentleman. I hope the Committee will excuse me for a moment if I reproduce the statement of the right hon. Gentleman on this particular head. It is not agreeable to me at any time to vindicate the conduct of the late Government, but I hope the Committee will not think me obtrusive or egotistical if I answer a charge which has been specifically made. The right hon. Gentleman the other night dilated on the Budget of 1853, and in defence of that Budget said—
"See what a position the Government was in, in 1853, with regard to their finance. The income tax had ceased to exist. We had to propose its renewal under circumstances of extreme difficulty. The late Government had left that question in such a state, that our difficulty was extremely aggravated in that respect."
Now, Sir, in the first place, I do imagine that the late Government also had some difficulty on that head, for the late Government had found the income tax equally non-existent with the right hon. Gentleman. The late Government had to decide on a great question which at that time agitated the public mind, whether there should be a difference recognised in the assessment of precarious and permanent incomes. Now, I am not going to enter into that controversy now, which would alone take up the night, and which is no longer necessary; I would only remark, when the right hon. Gentleman talks of his difficulties, that the battle had been fought and the question decided upon this cardinal point before the right hon. Gentleman acceded to office. The vote on which the late Government quitted office decided it; and to pretend that the House of Commons, after having refused to recognise that principle, which they virtually did, could ever be an obstacle to the adoption by the right hon. Gentleman of the old system, is really an assumption which only the interval that has elapsed could have induced the right hon. Gentleman to indulge in. But the right hon. Gentleman upon that head, however, said something more. I have heard the insinuation from the right hon. Gentleman once before, at the end of a

741
heated debate of many days' continuance, and I had not thought it necessary particularly then to notice it. He said the late Government had decided on the question of the assessment to the income tax with out thought—that they had, without reflection or research, decided upon announcing that they would make a difference, establishing a difference in that respect which they had not matured; and the right hon. Gentleman complained, as I understood him, that I, as the organ of the late Government, had not placed on the table the schedules which we wished to carry. I beg to assure the right hon. Gentleman that he is greatly in error, and has, of course unintentionally, very greatly misrepresented the views and desires of those whose policy he has taken upon himself to expound. The question of whether a difference in the assessment to the income tax should be recognised between permanent and precarious incomes was most deeply considered by the late Government, and occupied repeated and protracted consultations. It was our opinion that that difference should be recognised; nor does any argument that have heard, I may say in passing, founded, if the details were true, on the supposed greater rate paid by Schedule A, appear to touch the principle involved. These facts, if they be facts, are arguments for another assessment of Schedule A; they are arguments for a net instead of a gross assessment; but they are no arguments why the difference between permanent and precarious incomes, if it be just, should not be recognised. "But," said the right hon. Gentleman, "the schedules were not placed on the table, in the income tax proposed by the late Government." The right hon. Gentleman might have learned from those persons who are authorities on the subject, and to whom he himself will be ready to how, that there is no precedent for the schedules of an income tax being placed on the table. It is against all precedent, and against all rule. The Committee will recollect that the income tax was never brought forward by the late Government in the House of Commons. I, as the organ of that Government, never had an opportunity of stating the reasons which had induced us to come to the result we recommended. It was clearly understood that until after Christmas the question would not be brought before the House; but there was a reason why we were obliged to announce the Resolutions, because it was
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a Committee of Ways and Means, and it was our duty to show how an adequate amount of Ways and Means might be furnished. Therefore, the Resolutions merely remained on the table in their usual form; and it was not until the final debate a right hon. Gentleman opposite entered at all into the schedules, and charged me with having omitted, in not producing the schedules, an important part of my duty; but this really is not the fact, because the regular practice is to lay, not the schedules, which the right hon. Gentleman talks about, but the Resolutions, upon the table. These Resolutions even the right hon. Gentleman will not deny were placed in all due formality and order before the House, and, therefore, the right hon. Gentleman has no right to visit us with that condemnation which he so evidently seems desirous, in this time of need, to fall back upon. I admit I did say, when charged with failing in my duty, that although it was not my duty to place these schedules before the House, and was against all rule, still I would not have shrunk from doing so had the House wished it, but the wish having only been expressed in one of the last nights of a lengthened debate, which required my constant attention, I had had no time to attend to the matter. I think I have some reason to complain of the unfair perversion of these words. And then the right hon. Gentleman denounces my false principles of finance which Mr. Pitt would never have recognised, and upon which the project of income tax proposed by the late Government was brought forward. It was, in fact, a graduated scale, according to the right hon. Gentleman; and be denounced it a few months afterwards, when bringing in his own plan of an income tax, in which there was positively a graduated scale of the most flagrant and the most perilous nature. We drew a distinction between incomes of a different character; but the right hon. Gentleman brought forward an income tax in which he made a different assessment on different amounts of property, thereby saying that the rich man shall pay a higher rate than the poor man, the most dangerous principle, to my mind, that can possibly be adopted. Every statesman—and no one more than the right hon. Gentleman—ought to know that this is a most dangerous precedent, and one which, while it has the appearance of fairness, is most injurious to the very class of persons it professes to

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benefit. I hope the Committee will excuse me for entering into these details. I had hoped the late Government was entombed in Hansard; but the right hon. Gentleman revived the question, and I cannot shrink from answering a charge which has been repeated by the right hon. Gentleman. There is only one point more on which I must touch. The right hon. Gentleman has often praised himself on account of the efficient income tax which he brought in. He said the income tax which I proposed would have brought in much less to the revenue, in consequence of my mode of assessment. He found it convenient to forget that while we admitted the principle, which I believe to be a just principle, that there should be a difference recognised between precarious and permanent incomes, and the recognition of which would have saved you from the succession duties—he found it convenient, I say, to forget that we destroyed, or greatly removed, that immense mass of exemptions which had risen up in the course of years, and that by increasing the area of direct taxation we should have raised exactly the same sum as the income tax of Sir Robert Peel; and we should not only have done that, but by increasing the area of direct taxation we gave you the security that property assessed to the income tax should only pay an income tax of 6 per cent, instead of 10 per cent, for that increased confiscation would have been the inevitable consequence if you had retained the old-constructed scheme.
I have now touched upon three grievous errors in the financial scheme of 1853, and I have done so because the right hon. Gentleman vindicated himself on these points, not in a tone of humility which would make me silent, but in the language of arrogance; and because, as I shall show, it is these errors which are the cause of our present difficulties. But these errors are not the only ones in the campaign of 1853. What was the fourth error? It was that reduction in the rate of interest which forced the right hon. Gentleman to pay off 3,000,000 l. of Exchequer bills out of the public balances. That I think to have been the fourth error. I wish to make the catalogue as brief as I can; but still I must go on. There was a fifth error—and I really flatter the right hon. Gentleman by endeavouring to number his errors. I think it was a great error that the right hon. Gentleman committed in tampering so recklessly with the funds of
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the savings banks as he did. I am aware that the right hon. Gentleman took no step which was not legal in that respect; but it was an inconsiderate use of the privileges of a Minister of Finance; he treated the a savins banks in a manner which must have damaged the credit of those invaluable institutions among those classes for whose especial benefit they exist. The accounts upon the table show the series of losses suffered by the funds of these societies through the speculations of the Chancellor of the Exchequer. This is a great blow to the confidence of the classes who furnish the depositors. The whole system of dealing with these banks appears to me little better than a stock-jobbing process, and one which requires serious explanations from the right hon. Gentleman. I cannot say the catalogue of errors is finished, because I think at the end of the fatal year of 1853, or rather in the month of August, when the right hon. Gentleman found that all his schemes had failed, and that his Exchequer must be empty unless he had recourse to means for replenishing it, the funds being then at 97 and a fraction—when he could have raised money on very easy terms—the right hon. Gentleman, of course, being in possession of grave State secrets, which must have assured him that even if peace could be preserved, it could be so only by a combination of the happiest circumstances with the greatest skill—the right hon. Gentleman contemptuously let the opportunity pass by, and the year 1853 terminated on the part of the right hon. Gentleman with the failure of all his financial projects, with the almost certainty of a war, and with an empty Exchequer. Now that is the state in which the right hon. Gentleman commenced the campaign of 1854; and I want to see what are the measures which he has adopted, first of all, to compensate for the mistakes of the preceding year; and secondly, to do that which the right hon. Gentleman had also to do, not merely to compensate for the mistakes of the last year, but to encounter the difficulties of the present one. The right hon. Gentleman, in breathless haste, one month before the financial statement was due, came down to Parliament, and announced his determination to make his financial exposition to the country. On the 6th of March the right hon. Gentleman came down to the House—an army of 25,000 men having quitted our shores and a large

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fleet being in the Black Sea—I say a month before it was necessary, the right hon. Gentleman, with a frankness which gave confidence to the country, in order to put us in complete possession of our financial situation, so that we might thoroughly understand the responsibilities that we might incur, and provide for the difficulties in which the preceding year had left us, made his financial statement. Well, the right hon. Gentleman told us on that occasion that he had a considerable surplus—fortunately for us, to the amount of 3,000,000 l.—and the increased estimates he had to propose would come to somewhere about the same sum, or something exceeding 2,850,000 l. The right hon. Gentleman entered into many particulars as to the moving and bringing back the large force which had quitted these shores. The right hon. Gentleman offered us estimates to something like 1,250,000 l., which was a large sum; but he said it was right that the country should know what was necessary for moving and bringing back—
THE CHANCELLOR OF THE EXCHEQUER: I was not speaking of bringing the troops back, but of the probable cost of their removal at that time.
MR. DISRAELI: Well, let the right hon. Gentleman explain his statement on that occasion in any way he can, and reconcile it with a fair narrative of facts as he best may. I say the right hon. Gentleman gave us this estimate of 1,250,000 l., which was a large sum, he said, but it was right that the country should know what was necessary for removing and bringing back this force to our shores. How he could reconcile that with the much larger sum which was afterwards asked for the transport of troops I never could comprehend. But the whole statement of the 6th of March was a statement either inadequate or deceptive, and of course I cannot believe anything deceptive on the part of the right hon. Gentleman. And how was it inadequate? The right hon. Gentleman intimated to the Committee and the country that he thought it would be necessary during the year, or perhaps early in July, to apply for further supplies. This, of course, every Minister might feel it his stern duty to do. On the 6th of March, however, the Committee was put in possession, generally speaking, of their financial responsibilities and requirements. If that were not his intention, what was the meaning of that precise and almost pe-
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dantic vote for Exchequer bills to the amount of 1,750,000 l. to be paid off out of the produce of the taxes in November? The scheme of the right hon. Gentleman, such as we understood it on the 6th of March, and as was certainly expressed by him in a statement made on that occasion, was, that his estimates, on the whole, gave a fair idea of the requirements of the country, and of the responsibilities of Her Majesty's subjects in consequence. What did we then do? We had some slight controversy on the management of the finance, and the right hon. Gentleman was advised by some to raise the requisite sums to put his balances in a fair condition. The House then adjourned for the holidays; they then saw that the right hon. Gentleman and the First Lord of the Treasury were raising money, and the mode in which they proposed to do so was strange and quaint. The House met and expected to have some discussion on this attempt to raise money by the Government, which had, we supposed, not been successful; but the whole was forgotten in the circumstance that, though the Chancellor of the Exchequer had before the Easter holidays given estimates of the expenditure—as to how much would be necessary to take out and bring back the troops—although the sum of 1,750,000 l. had been provided for by taxes payable in November; yet, notwithstanding this, what was our surprise when we were summoned to learn that the table groaned under increased Estimates, and that nearly 6,000,000 l. more were required? Nobody objected to Her Majesty's Ministers asking for 6,000,000 l. or 12,000,000 l., if they thought that the interest and honour of the country required them; but that of which we complained was that the Minister of Finance, who had been called upon to investigate great questions that affected the country—who must have necessarily and naturally have placed himself in connection with his Colleagues at the head of the various departments—had made estimates on the 5th of March, which, during the interval of the holidays, were found to be erroneous to the amount of 6,000,000 l. sterling.
We now, Sir, have the consequences these continuous and systematic errors in the administration of our finances—namely, an attempt by the Government to raise a loan—for such I must still style it until better informed of the object and proceedings of Her Majesty's Treasury. I

747
need hardly, Sir, recall to the Committee the circumstances which attended that proposal; even the right hon. Gentleman himself cannot pretend that this was a successful endeavour on his part. He has not yet come forward to confess that it was an abortion; but he has also not yet advanced to tell us that the attempt to raise 6,000,000 l. by three series of Exchequer bonds was a successful operation. This attempt was accompanied by some of the most remarkable circumstances that have accompanied financial transactions of this kind made by an English Minister. At a time of unrivalled prosperity, at a time of unexampled wealth—the country engaged in war, with all their feelings enlisted on behalf of their Sovereign and those who wielded authority under Her—the Chancellor of the Exchequer suddenly appears in the market to borrow 6,000,000 l. at 4 per cent, and is absolutely unable to raise the funds which he requires! What the Emperor of Russia must have thought of the business it is impossible to ascertain, but I think he would put it down as a countervailing incident to the bombardment of Odessa at the least. It is a mystery to men of business how the right hon. Gentleman could have managed to have brought his enterprise to such a ruinous conclusion. In that wild desert the City of London, inhabited by—I will not say savage beasts, though there are some "bulls" among them, and the rest are "bears"—in the City the Chancellor of the Exchequer is supposed to have some knowledge of these animals; but the right hon. Gentleman would not content himself with "bulls" and "bears," but aimed at higher prey, and nothing would satisfy him but to bring down the antlered monarchs of the forest, and all the "stags" of London, to contribute to maintain the credit of the Chancellor of the Exchequer. The right hon. Gentleman was actually tinder the necessity of striking out 200,000 or 300,000 of the subscriptions to his bonds, on which no instalments were paid. This mismanagement of the finances, though slight, was the occasion of a great deal of public scandal, and does no good to the public credit. I speak not front hearsay, for, through unknown contributors, I have here some documents in my possession—letters from three persons, most obscure, penniless varlets, all subscribing for 5,000 l. of Exchequer bonds. It is a striking fact that these fellows, without
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a roof, not only subscribed for 15,000 l. of the Exchequer, for 5,000 l. of each of the series, but they received an offical answer. What was that reply? That the Government would grant their request? Much more than that. The reply was not only granting the request, but begging, as a particular favour to the Government, that they would take the whole of the subscription fur the series A bonds, and that by doing so, they should enjoy all the advantages and privileges which they might obtain from series B and C. The Chancellor of the Exchequer, with that array of phrases which he has at command, may pretend that this scheme equals the Loyalty Loan of Mr. Pitt, whom he so much admires, but I think that all acquainted with the subject must have felt annoyed that the Treasury of England should be placed in so ridiculous a position; for not only could the right hon. Gentleman not raise 6,000,000 l. at 4 per cent, but he absolutely gave occasion to circumstances which make the public functionaries contemptible in the eyes of the country. Who would have supposed, when we listened to the right hon. Gentleman as he touched upon these matters in an indignant spirit of self-defence, that he had been in correspondence with all the "stags" of London? The right hon. Gentleman came forward as though he were to be the victim of the Government he has served; he asserted that he would not allow his Colleagues to share the faults he had committed, which are to his mind so patriotic; and he took refuge in a quotation more classical than novel. From so accomplished a scholar as the right hon. Gentleman we might have expected a more felicitous line. The Committee will recollect the circumstances which attended the events that called for that exclamation, and I think the right hon. Gentleman must, in making it. have ventured on the forgetfulness of others. The Committee will remember when the young gentleman alluded to was, with his companion, like the Chancellor of the Exchequer with the First Lord of the Treasury, detected in having plundered the Rutulian public, he exclaimed—
"Me, me, adsum qui feel, in me convertite ferrum!"
I am surprised that the right hon. Gentleman could resist, with his knowledge of the original, the infinite humour of the

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succeeding line, and not have quoted it—
"O Rutuli, mea fraus omnis."
That I think would be a good motto for his new Exchequer bonds. Let us now consider whether we ought to agree to the proposition which the right hon. Gentleman has placed before us. I have traced a series of financial errors, which have brought the right hon. Gentleman to his present condition; and finding it impossible to escape from the pains and penalties of an empty Treasury and an exhausted Exchequer, he has at last been obliged to propose this loan in masquerade. It is impossible to add to the force of the objections which my hon. Friend the Member for Huntingdon (Mr. Baring) has urged against the inconvenience and impolicy of raising money in this manner; it is usual to raise it in a cheaper and infinitely more convenient way than can be done by this fantastical expedient. I will not dwell upon the inconvenience, and even danger, of the course now recommended, because higher authority has touched on this subject in an admirable way; but I will put it in a manner which must flash conviction on the House, not by reason, not by argument, not by detail, but by a pregnant instance—by example and experience—as to what may be the injurious consequences of the system of finance now recommended by the Chancellor of the Exchequer for raising money. I will take the last case, in which a loan was raised in 1847, for a great national purpose by one of the right hon. Gentleman's predecessors; it was raised in the old-fashioned style, with the official routine which people understand, and by a mode which generally succeeds—namely, by getting for 100 l. Consols as much as you can; by this means 8,000,000 l. were raised by the right hon. Member for Halifax (Sir C. Wood) in 1847. It was a gloomy period, and the right hon. Gentleman went into the market with disadvantages which the present Chancellor of the Exchequer has never experienced, and yet the right hon. Member raised 8,000,000 l. under the old system, and did not affect the price of Consols one-half per cent. But suppose that the right hon. Gentleman had raised these 8,000,000 l., not by the salutary system on which he proceeded, but by the fantastical projects of the right hon. Gentleman the Chancellor of the Exchequer—suppose that, in 1847, he had agreed to pay back Exchequer bonds in 1854, 1855,
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and 1856, to that amount, I should like to know what would have been the condition of the country at present?
The Committee should not allow any feeling but the public interest to influence them in this vote. It is idle to talk of this question being a question of confidence—it is mockery to contend that the vote we have to give is one of confidence to the Minister. A question of confidence to the Minister, indeed, who has asked us for 10,000,000 l. of taxes, and has virtually received them, and we are not to set our mark against that system of administration of finance, which we think not only inconvenient, but which may prove, as I have shown, most injurious and intolerable to the country! I am sure that the Committee will on this question vote according to that which they believe is for the advantage of the country. Sir, my opinion is, that the advantage of the country will be best consulted by following, as much as we possibly can at this moment, the precedents we possess for raising the ways and means of the country. Now, I say that there is no precedent for the policy of the right hon. Gentleman, which has this most anomalous feature—it is paying off the amount of old debts while, at the same time, it is increasing taxation to carry on new wars. The right hon. Gentleman is defraying the legacy of burden which old wars have left to this country, and at the same time he is raising taxes within the year entirely to carry on new wars. The right hon. Gentleman laid down, the other night, a variety of principles on which he thinks the finances of the country ought to be managed in a time of war; and the Secretary to the Treasury has to-night re-echoed the same opinions, and quoted the authority for them, which the right hon. Gentleman did not—for all the opinions which he favoured the Committe with as to the expediency of raising the supplies for carrying on the war within the year, and not having recourse to loans, are a reproduction from the "Financial Reform" of Sir Henry Parnell, in language as well as sentiment. The name of Sir Henry Parnell will always be mentioned in this House with the respect which it deserves. He was a sound financier and a skilful economist, but he was not a great statesman, and he was not a man who, if he had had to decide on the means of carrying on a war, would have had recourse to any other maxim than the rule of three,

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or supposed that it could be conducted on any other plan than the severest principles of political economy. But there are other principles to be looked at, with such an end in view, than the favourite doctrines of Sir Henry Parnell; you must look a little to the temper of a people—to the character, the passions, the weakness, the genius of a people—and you must conduct your war, no doubt with some regard to scientific finance, but also with some regard to the spirit of the age and the country. There is this difference between the work quoted by the right hon. Gentleman, of which he appears a disciple and an ardent votary—there is this difference between a man who acts upon such views and Mr. Pitt, that it is possible he may carry small matters to a successful conclusion, but I should not like to see him intrusted with the management of great enterprises. The right hon. Gentleman told us that Mr. Pitt was not a good war Minister, and he indulged very free and flippant criticisms of the career of Mr. Pitt. It is well to be accurate in trifles, and I do not believe that the phrase "heaven-born Minister," which came in for a passing censure, originated with the Stock Exchange. I believe the fact to be that it had a more patrician origin, and that it was the Duke of Chandos who, in the House of Lords, called Mr. Pitt a heaven-born Minister; and, therefore, the sneer of the right hon. Gentleman on this head was hardly correct. But if the right hon. Gentleman will allow me, I trust without offending either himself or his friends, I would presume to give him a piece of advice; I would give over these unworthy sneers, levelled at the reputation of a great Minister. I would, if I were the right hon. Gentleman, confine myself in future to self-glorification, an art of which, I admit, that the right hon. Gentleman is a master. Let him dilate upon the astuteness with which he effects the conversion of South Sea Annuities; let him dwell upon the intrepid courage with which, to show his spite against the party he has quitted, he can double the malt tax; but let him cease from these reflections upon the memory of a statesman who, I can assure him, is still dear to the people of England. Let him remember that Mr.
Pitt, whatever may have been failings in the opinion of the right hon. Gentleman, held with a steady hand the helm, when every country but Great Britain was submerged in the storm; and when he taunts
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Mr. Pitt with courting bankers and money-lenders, he might also remember that that Minister owed to a grateful country an eleemosynary tomb.
THE CHANCELLOR OF THE EXCHEQUER: Sir, both the lateness of the hour and the recollection of much former indulgence, I may add too, the debate, or at least my view of the debate, which the Committee have heard to-night, combine to impress upon me the necessity, while gratefully acknowledging that former indulgence, of not again taxing the favour of the House by detailed statements and elaborate calculations. The speech we have just heard front the right hon. Gentleman (Mr. Disraeli), and the speech with which the hon. Member for Huntingdon (Mr. Thomas Baring) prefaced his Motion, consisted in great part of references to what they have termed my financial errors. Now, with respect to those financial errors, if such they be, all that I have to say may be summed up in three or four sentences; because I think, after having listened to the discussion, that we have at length pretty nearly exhausted all that can be said upon these questions—a matter, I venture to think, of no small consolation to the Committee. The case stands very simply thus. The right hon. Gentleman says that the first financial error was the error of reducing the rate of interest upon Exchequer bills. On that head I fairly tell him, and I fairly tell the hon. Member for Huntingdon, that I have nothing to retract and nothing to repent; for, in my opinion, the reduction of the interest to the public was both a great and a most legitimate advantage. And the reduction of the amount of the unfunded debt in June last was another great advantage (though one of which subsequent circumstances have robbed us), that being also the first time since the peace when a large reduction of the unfunded debt has been effected without any loss whatever to the public. So far, then, as that subject is concerned, I hope the right hon. Gentleman, if he is disposed to do so, will not scruple to bring it before the House; because this House is the ultimate judge upon what principles every department of our finances should be managed. I have announced plainly and without disguise the principles upon which I have proceeded. In the first place, I have urged that the public is entitled to borrow upon the best terms on which holders of money are willing to lend; and, in the second place, I

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have contended that the sound policy is to reduce your unfunded debt in easy times, in order that you may be able to make an effective use of that great instrument in times of difficulty. These are the principles on which I stand, so far as that question is concerned. The right hon. Gentleman says truly that I do not recede from those principles; it is for him then to consider whether he chooses to submit the issue between him and myself to the judgment of the House of Commons. With respect to the second subject, that of the conversion of the minor stocks, I really have nothing to do but to repeat—and it is needless for me to do that—what I have stated on former occasions. The right hon. Gentleman accuses me of self-glorification; he says that I have not spoken upon that subject with sufficient humility; I have only described it as an "abortion," and that he thinks is a phrase savouring much of conceit on my part, and very far from expressing what is due to the character of the measure. Well, Sir, I can only say that if the right hon. Gentleman will himself form a frame of words which he thinks ought to be put in my mouth in the shape of a confession, I will see whether or not I can accept it; but if he undertakes that task, I very much doubt whether he will be able to invent a stronger form of description than the word I spontaneously used at the commencement of the Session. The right hon. Gentleman, as he lengthened his elaborate catalogue of the delinquencies of the Chancellor of the Exchequer, appeared to me to have stolen a march upon us when he made one error do duty twice—for the error as to the unfunded debt passed muster as the first, and subsequently as the fourth on his list. I take the liberty of retrenching that excrescence, and having retrenched it, I have done with the subject of the unfunded debt.
Speaking first to those points upon which the right hon. Gentleman laid the smallest stress, I come to another charge—the charge that I had tampered with the funds of the savings banks, and that there had been, as appeared from the papers laid on the table, in consequence of that tampering, a loss to those persons who had invested their money in savings banks. Now, I must again say that I rebut and repudiate the charge of having tampered with the funds of the savings banks. I have done with them precisely that which it is the duty of every Finance
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Minister to do; when the money which is deposited in the savings banks comes into his hands, he is bound to invest it according to what he believes to be best for the interest of the country. I must confess that it is my own strong opinion, and, speaking generally, I suppose it will be the opinion of the House, that the Chancellor of the Exchequer ought not to apply savings banks money to meet a deficiency in the revenue of the year. I, Sir, have done, as the right hon. Gentleman knows, no such thing. What, then, have I done? I might have invested the money received from savings banks in reducing the funded debt; I invested it in reducing the unfunded debt. Further, to a limited extent I purchased Exchequer bills with the proceeds of stock sold for the purpose. The creation of stock which took place was a creation of stock against reduction of the unfunded debt. In that way it took place, and, I say, that if you will examine the reduction which was effected in consequence of the purchases made with the moneys of the savings banks, you will find that it was a more economical reduction—a more economical funding of Exchequer bills, for that is what it amounts to—than had ever been made upon any former occasion since the peace. I, therefore, entirely rebut the charge of tampering with the money deposited in the savings banks. I am prepared to show in the minutest detail that the operation was both legitimate and beneficial; and I invite the right hon. Gentleman to enter into that subject on some occasion when it may be fairly discussed. But I cannot express the astonishment with which I heard the right hon. Gentleman say that the consequence of my tampering with those funds had been a loss to those who had invested their money in the savings banks. Why, I spoke the other night of mythical histories; but I really begin to doubt now whether it is not a mythical history that the right hon. Gentleman was once Chancellor of the Exchequer himself, and that, being so, he was himself the trustee and manager of these monies, amounting to some 32,000,000 l. sterling, which have been received from savings banks. Why, when the right hon. Gentleman brings this charge, he either has never known, or has entirely forgotten, the terms upon which these monies are held; and his statement that there has been a loss to the investors is so mischievously absurd, that I am

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bound publicly to state to the House what I really should have hoped it would not have been necessary for me to state, at any rate to the right hon. Gentleman—namely, that the use made by the Chancellor of the Exchequer of the savings banks moneys has no bearing whatever upon, and no conceivable connection with, the security of the parties for the amount invested by them. These investments are investments made by the State, for account of the State, and at the risk of the State. The covenant of the State with the depositors in savings banks is a covenant totally irrespective of that investment—the money, when once received, becomes the money of the State, and all these facts, I am almost ashamed to state, are elementary facts in the business of a Chancellor of the Exchequer.
But, Sir, the right hon. Gentleman stated, and I think truly, that this was not the gravest error which I have committed. He said that the great error of the last year, among the series of five errors which he enumerated, was the error of the peace Budget. Now, Sir, I wish to know whether the hon. Member for Huntingdon and the right hon. Gentleman are or are not prepared to challenge a verdict either from this House or from the country upon the financial measures proposed in the Budget of 1853. One would suppose, from the language of the right hon. Gentleman, that that was the case—for the measures, measures of the Government, and not of the Chancellor of the Exchequer only, measures of the Legislature and not of the Government only, are denounced in their principle and root. We have had the doctrine laid down to-night, that no taxes whatever ought to be repealed when there is a chance of this country being engaged in a war. Now, Sir, I wish to inquire, first of all, what are the merits of that doctrine; and secondly, what would have been our position if we had ventured to act upon it last year? Should we have succeeded? Should we at any rate have had the aid of the right hon. Gentleman in our attempt? Why, Sir, we had the greatest difficulty in defending the taxes of the country from the rapacious fingers of the right hon. Gentleman. Not following the course which had been usual with an ex-Minister of Finance, the right hon. Gentleman thought he best discharged his parliamentary duties by joining with every vote, and catching at
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every vote, for the repeal of this tax or of that. One week it was the hop duties—another week it was the advertisement duty, which he, as a Minister, had declined to repeal—another week it was the Consolidated Annuities, which he, as a Minister, had declined to remit. One week it was one tax, another week it was another tax; but I am in the recollection of the Committee when I state that twice a week usually, during the Session of 1853, until the time of the Budget, it was my duty—namely, on Tuesdays and Thursdays, to appear in my place for the purpose of defending—and not always successfully—the finances of the country against attacks either joined in or led on, or even brought about by the right hon. Gentleman. I should like to know what would have been my chance if at that time I had ventured to lay down the doctrine that as long as there was a chance of war, no tax should be repealed.
But now, Sir, let us advance a little further, and consider for a moment; is that doctrine a sound doctrine, or is it not—is it one that is in accordance with the dictates of prudence and common sense? What is the situation of this country at all times with respect to the chances of war? Why, with the empire you possess, with your extended relations, with the arms of Britain's power and influence encompassing the globe, there is always a chance of war for this country. There has been no period almost, and certainly there has been no period for many years past, at which there have not been grave questions in agitation, sometimes in relation to one Power and sometimes to another, sometimes in relation to one continent and sometimes to another, any one of which might have issued into war, many of which have seemed each in their time to bear but too much the fearful likelihood upon them. If we are to be bound by this doctrine, you will find that if you are to wait for a period of absolute and entire tranquillity throughout the world, you will never repeal, never lighten, never improve, your taxes. And now, Sir, I am obliged to say—and that without rendering myself liable to the charge of self-glorification—because the Budget of 1853 is the Budget of the House, which adopted it, and of the nation, which approved it—I am bound to say that, at this moment, I do not regret the repeal of taxation which took

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place last year. I do not regret those diminutions of taxes; they gave an immense stimulus to the trade and commerce of the country, and the happy result of the legislation of last year, and of other similar legislation was this, that after a great remission of taxes, after perhaps the worst harvest for near forty years, and with war first imminent and then flagrant in Europe, at the close of the year we saw a surplus revenue of nearly 3,500,000 l. Again, I say, this question goes very deep; it opens up the history of past years—it opens up the policy with which the right hon. Gentleman and his adherents were so long identified—namely, that policy, which declined to reform the finances of this country with a view to the expansion of its industry and trade—that policy, most fortunately the very opposite of the policy which has governed the proceedings of Parliament now for a period of ten or eleven years, and the happy and blessed fruits of which the people of England are reaping at the moment when I address you.
Sir, the right hon. Gentleman adverted to the charge which I made against him with respect to the income tax. I think he was perfectly justified in referring to that imputation; but I wish him to understand that he has entirely misconceived the nature of the charge which I made against him. He says my charge was, that in December, 1852, he did not lay upon the table of the House the schedules of the income tax. I made no such charge against him. What I said was, on the contrary, that he did lay them on the table. He did lay upon the table the schedules of the income tax, and he accompanied them with a declaration that Schedule A was to be taxed at 7d. in the pound, that Schedule C was also to be taxed at 7d. in the pound, and that Schedules D and E were to be taxed at 5¼d. in the pound; and my charge against him was this, that when he propounded that plan with the authority of the Government to which he belonged—a plan that would completely alter and transform, I might say subvert, the income tax, which is the keystone of our financial system—he had not prepared any plan for carrying his proposition into effect, and was, therefore, himself in total ignorance whether it was feasible or not. That was the nature of my charge, and I founded it, not upon a mere rumour or upon any indirect information, but upon the declaration
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of the right hon. Gentleman himself, because, when charged by my right hon. Friend near me (Sir J. Graham) and by others with the absurdities which would result from the operation of the schedules as he had produced them—when it was shown that at every step there would be flagrant violations of the very principle he had laid down, there was no attempt made by him to vindicate these strange anomalies; the answer of the right hon. Gentleman was that he had not had time to look into the schedules. It was plain, therefore, that that was the only adequate answer which the right hon. Gentleman could make to the suggestions thrown out by myself and by my right hon. Friend.
I hope, therefore, it will be understood by the right hon. Gentleman that my charge is this, that in a matter of the greatest public moment, with immense dangers dependent on his failure, he made a promise to the House which he had never taken the pains to inquire whether he could or could not redeem. I go on, however, to the next error as regards the peace Budget, and this is a question worthy of grave consideration. The right hon. Gentleman and others mix up, in a manner not altogether convenient for the discussions in this House, the responsibilities which attach to the department of finance, and the want of foresight and forethought which they impute to the Government with reference to the war in which we are engaged. I have stated on a former occasion, and it is unnecessary to restate now, what was our position on that head. If the Government were wrong in their anticipations of continued peace, and if they fell into error upon that point, that of itself is a subject for discussion and consideration, for attack and censure, in this House. We do not shrink from the issue. We do not think the Budget was, a bad Budget, even for a time which might be thought to threaten war. We did, however, found that Budget upon principles applicable to peace, and we proceeded, under the belief that, instead of sacrificing the revenue of the country, we were thereby greatly strengthening its resources, and preparing it for every contingency. Nay, Sir, we did more. I should like to know whether the right hon. Gentleman has ever considered the moral grandeur of the spectacle which the people of England present at this moment in the willingness they display before the

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world to make great and generous efforts for a just and necessary war? It is, indeed, a noble attitude in which the people of England stand. There is exhibited a willingness to undergo additional taxation, such in its degree as, I think, has rarely been seen in former times. And why is this—why do the people show that willingness? Because, Sir, they have confidence in the House of Commons—because they see that it has been the study of Parliament to remit taxes, and to relieve them from burdens, whenever such remissions could be made. And in my opinion, the financial measures of last year, which remitted such a large amount of taxation, together with the series of similar measures which preceded them, form no small part of the cause why the people have evinced so marked a disposition to back the wishes of this House, and to make a gallant effort to provide by immediate sacrifices for the great expenditure which it is necessary to meet.
Sir, to sum up this part of the case, the substance of what I have to say in regard to my own past conduct is this—that it seems to me that these are questions which, to use an ancient phrase, have now been fairly "bolted to the bran." I think we now know pretty well all that can be said, for or against, in respect to them, and it is time for the House, or for any Members of the House, if they wish to do more, to proceed to consider their definite shape. In the meantime, it is needless for me to detain the Committee any longer upon the matter of the unfunded debt, the conversion of the minor stocks, or the alleged tampering with the money of the savings banks.
Sir, the hon. Member for Huntingdon (Mr. T. Baring) made a speech to which I listened with a sense that, while it was the speech of a Gentleman opposed to the Government as a member of a party, and belonging to a most powerful and highly respected class, with which, and with whose apparent interest, quite contrary to my desire, circumstances may seem to have placed me for a moment in conflict, yet, at the same time, it was the speech of a Gentleman who stated nothing that he did not sincerely and conscientiously believe, and the speech of one, moreover, who well knew how to place his opinions and sentiments before the House with every advantage that they could derive from perspicuity and force. I might even go a little further, and say, that if there
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was one sentence in his speech which appeared to me entirely out of place, it was that in which he alluded to his own want of aptitude and of custom in addressing the House, and apologised for having ventured to speak upon a question of so much importance. I must say, on the contrary, that the hon. Member, if he had not proved it before, has certainly proved himself, by his speech to-night, to be a first-rate parliamentary artist. I never knew a man to make either a more elaborate or a more effective use of his materials. It appeared to me that he ascended to the very height and summit of Parliamentary oratory, for I never saw a Gentleman display so much dexterity in fixing the attention of the House upon matters of secondary importance, on which we did not and he does not ask you to vote, and in shading over and putting and keeping out of sight the Resolutions upon the table—which form the actual Motion before the House—and his own Amendment upon them. Now, my purpose is, Sir, to draw the attention of the House to those Resolutions and to the Amendment which has been submitted by the right hon. Gentleman.
Sir, the Motion on the table has been described by the right hon. Gentleman opposite as involving "a loan in masquerade." I have already on a former occasion stated to the Committee why I think that description is fundamentally untrue. Criticisms may doubtless be made upon that project. One has already been made by the hon. Member for Wick (Mr. Laing), who says that it would be wiser to issue the Exchequer bills at a higher rate of interest. I am disposed to coincide with the justice of that criticism. The rate of 3½ per cent was fixed at a time when, according to the best advice I could receive, there was reason to suppose that money might have been raised at that rate; but circumstances have changed since then, and perhaps, with the permission of the House, I may advantageously amend the Resolution by saying, "at any rate not exceeding 4 per cent." I wish, Sir, to describe to the House what is the meaning and intention of this proposal. When, in March last, we proposed that we should be authorised to levy a double income tax for the first half of the financial year, taking into view the interval which would necessarily elapse before we could receive the proceeds of

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that tax, we asked for power to raise 1,750,000 l. by Exchequer bills. When we came, at a later date, to make a further statement to the House, and to propose to raise nearly 7,000,000 l. of new taxes, we had to consider that not only the same, but a more considerable interval must elapse before the proceeds of these new taxes would reach the Exchequer. The second half of the income tax will yield us about 3,250,000 l., but no appreciable proportion of that sum will be realised within the financial year at all. It will only begin to be realised, with certain small exceptions, after the month of April, 1855. Nearly the same is the case with regard to the other duties. With respect to the malt duty, the proceeds of which formed the principal item in the catalogue, after the income tax, it will not begin to be realised in any considerable amount until the winter has approached; and therefore it followed, as a matter of course, that when the right hon. Gentlemen near me had framed in their several departments their estimates of what the war expenditure would be—a work of no small difficulty—it was our duty, after determining to call upon Parliament to make an effort to meet that expenditure by new taxes, likewise to make a proposal with regard to a temporary supply of money to meet the exigencies of the public service before these taxes could be received. Now, Sir, the lowness of the public balances may no doubt be referred to in this matter; and it is true that to some extent—perhaps to about the extent of 1,000,000 l.—it might have been necessary, or, if not necessary, yet desirable, to raise money even irrespective of the war. But, Sir, that was a small matter. It is but a partial and minute cause, if a cause at all, of the proposal of the Government, and has reference to a very small fraction of its amount. The ground and object of the proposition that we are making to the House are twofold. In the first place it is necessary to anticipate the taxes which the House has been pleased to vote so as to supply ourselves with funds to carry us over the interval before the taxes can be realised. In the second, it is impossible at the opening of a war to form a reliable calculation of what our expenditure will be for twelve months. In 1793, Mr. Pitt thought he made an adequate provision for the expenses of the war by creating
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6,000,000 l. of funded debt, which realised 4,000,000 l. in money; but so far did the expenditure exceed his estimate, that he was obliged to create some millions of unauthorised debt in the course of the year. I pretend not to foresee what will be our expenditure under circumstances like these, but in order to endeavour to provide for the future as far as possible, we ask you to give us this considerable margin—this, I admit, extensive power of raising money, with a view to the services which may be sanctioned by Parliament, or which it may even under possible circumstances, such are the imperious exigencies of war, be necessary to undertake without the sanction of Parliament; in order to meet this extraordinary state of things—a state of things unknown to our experience, known to us only from history, and which is brought about by a general European war. These are the grounds upon which the proposal of the Government rests. Is this, then, really to be called a loan or not? What says the hon. Member for Huntingdon? He undertakes to define a loan, and he defines it in such a manner that his definition absolutely excludes everything known by the name of a loan in this country. He says it is something which, in some form or other, you are engaged to repay. Well, that is precisely what a loan in this country is not. For if you were to give a rigid definition of a loan in this country, it means a sum of money taken on condition of paying for it a perpetual annuity, but upon the condition that the lender has no right to reclaim the capital.
MR. BARINGremarked that what he said was that a loan was a sum of money for which the lender got some return in some shape or other. He got a return in the form of interest.
THE CHANCELLOR OF THE EXCHEQUER: Then the word "return" as it was used by the hon. Member, if at least I heard him rightly, is a very ambiguous word. It is quite obvious that it was the natural interpretation of the word, when so used, to suppose that it means a return of the capital borrowed. However that is really a mere question of words, and nothing turns upon it. You will not dispute that Exchequer bills are not a loan. If you describe them as a loan you are playing with words and no one would understand you; but they are as clearly something "for which the lender gets a return" in interest, and in capital too.

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They are a temporary borrowing of money. Well, I do not wish to quarrel about a question of terms. If you choose to say that Exchequer bills are a loan, then I must call on you to be tried by that principle; and in that case what in the world is meant by those who charge me from the other side with having promised on the 6th March that no loan should be raised at the very time when I had proposed on that very 6th of March to raise 1,750,000 l. by Exchequer bills? I pass away now from the word loan to consider the thing. These Exchequer bonds you may call a loan or not; but they are not the creation of a new stock; they are not, of necessity, they are not by their own nature, the contracting of a debt, permanent in its form and character. They are temporary engagements, as the need which they are to meet is temporary. That with which you should compare them, if you wish to understand their nature, is the unfunded debt of the country. They belong to the unfunded debt of the country, only they are in a form more durable than that of Exchequer bills. Such, Sir, is the nature of the plan we propose, with a view to provide for the interval before the taxes can be realised, and with a view to give us that large command of money which in such an exigency as the present the Government may require, without resorting to the other and much severer alternation of asking you to place in our hands the power to raise by taxes a sum much larger than we have demanded.
But I am desirous, Sir, that the Committee should understand that the sum which we propose to take power to raise is not one that is immediately wanted. It is not the sum which is required for the services that have been laid before the House in the form of Estimates. It is a sum intended both to anticipate taxes by meeting services already known to be in prospect and to give an ample margin to Parliament and to the Government for whatever services, as yet unknown, the course of the financial year may bring into view. Well, that is the view of the Motion that is before the Committee. And now I ask, what are the objections to it? They are difficult to grasp; is it stated that these Exchequer bonds are an undesirable form of security? For now, having described the Motion before the Committee, I must come to the consideration of what is the nature of the Amend-
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ment. In doing so, I am bound to say, this is the part of my case which I enter upon under a sense of the greatest difficulty. It was with the utmost curiosity I listened to the hon. Gentleman when he came to this part of his speech—a part which, I must say, stood in strange contrast with the rest. Nothing could be more effective than that part of the hon. Gentleman's speech in which he criticised my financial operations—nothing more limping (if I may use the term) than the argument of the hon. Gentleman when he described and defined his own Amendment. Does he, or does he not, mean to tell us that Exchequer bonds —that is to say, documents on the whole of the nature of Exchequer bills, but current for a longer period—does he mean, I say, to tell us that the opinion of the City of London is adverse to the creation of such a security? The hon. Gentleman has carefully avoided making any such assertion. It is very well for the right hon. Gentleman opposite (Mr. Disraeli) to refer to the various classes of wild animals known within the precinct of the city, with whom, according to his own account, he has been in correspondence. The right hon. Gentleman having imparted to the Committee the valuable information which has been privately imparted to him as a matter of favour, I possibly may likewise not go far wrong if I acquaint the Committee with certain information that has also been imparted to me as a matter of favour. It is to this effect:—That some of those letters which are sent out from the Bank to all proposed subscribers—I apprehend as a matter of form, on all such occasions, and before the payment of the deposit, which is the decisive time for determining whether the transaction shall go on—that certain of these letters were purchased at a low rate by gentlemen, who did it with a view to amuse themselves by sending them to the right hon. Gentleman, as they were pretty certain that he would turn them to some kind or other of account in the House of Commons. That is the counter-information which has reached me through some of the private channels of information to which the right hon. Gentleman has referred. But does he, any more than the hon. Member for Huntingdon, venture to state that the Exchequer bonds are a kind of security which has been condemned by public opinion in the City of London? Again, I say, neither he nor the hon. Member for Hun-

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tingdon has thought fit, though the nature of their motion to-night really required it of them, to make any such bold assertion. Now, Sir, I claim no credit for the invention of these securities. Their creation was recommended to me by persons of great weight, and with whom the hon. Member for Huntingdon himself is, I dare say, in frequent communication. My belief is, that they form a very rational and convenient kind of security; and although of course there are difficulties in the establishment of any novel kind of security in the London money market, which make the course of such a transaction less smooth than if we were dealing with matters entirely known and usual, yet I do not hesitate to express my belief that public opinion is in favour of the creation of such securities. What, then, does the hon. Member for Huntingdon mean by his Motion? He does not mean boldly to condemn Exchequer bonds. Does he mean a vote of want of confidence in the Government? He did not say that he meant a vote of want of confidence; and I will not discuss the motion on that ground, because the right hon. Gentleman opposite said it was idle to treat it as a question of confidence or no confidence; for he said the Committee had a perfect right to pass a judgment—and so I agree with him, it has—upon the means proposed by the Government—for what?—not the means proposed by Government to meet the exigencies of the case, for that has been done by the taxes which have received the sanction of the House—but the means to make a temporary provision in anticipation of the proceeds of those taxes. I do not treat the Amendment, therefore, as one of want of confidence:—but if it does not mean that, if it does not mean anything at all that we can discover except mere objection and impediment, what does the Motion mean? The hon. Member for Huntingdon does not say that we are making an unreasonable demand—that we are asking too much; nor does he deny that the taxes which have been newly voted will have to be anticipated by some provision in the way of ready money. Reference has been made to Sir Henry Parnell; now Sir Henry Parnell states, in his able and very useful work on finance, that one great reason for reducing a large unfunded debt was, that at the commencement of a war it deprived Government of that command over Exchequer bills which might be so beneficially
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employed until the war taxes should become productive. That is precisely the case and the contingency, with reference to which this proposal is brought forward. We wish at this most appropriate season to make this most appropriate use of an unfunded debt. The hon. Gentleman, then, does not refuse the motion because the sum asked for is too large—he does not venture to condemn Exchequer bonds, as an inconvenient form of security, or as unacceptable to the capitalists of London. He has not stated that I am wrong in asking for Exchequer bonds instead of Exchequer bills. I heard the hon. Member, indeed, say at one part of his speech that the money might have been raised by Exchequer bills if I had not destroyed the market by my injurious measures; still, according to him, it is destroyed, therefore I am right in not trusting to it. And yet he does not define what his Amendment means. Since, then, we cannot get a definition in plain terms from the hon. Member, I must endeavour, by the process of exhaustion, to extract an affirmative proposition by showing what it does not mean. It does not mean that we should have raised the money by Exchequer bills, because he said that we might have done it if we had not spoiled the market; and of course, as I have said, if the market was spoiled, it is clear that we could not take this course. We are agreed that the money is wanted, that we do not ask too large a sum, that it cannot be raised by Exchequer bills; but Exchequer bonds are refused by the Motion at the same time that they are not condemned. The hon. Member himself, we have seen, does not think fit to say that they are a form of security of which he disapproves, or that they are a form of security disapproved of in the City of London. Well, then, I ask the Committee what is the meaning of this Amendment? I must say that I am only aware of one meaning that it can have. It appears to me, after watching the debate carefully, that the meaning of the Amendment is, that there should be a loan in the ordinary sense of that word—that there should be a creation of stock. I do not see that the hon. Gentleman is disposed to deny it. I certainly think that is the inference to be drawn from the speech of the hon. Gentleman; indeed, I think it was declared by him with tolerable plainness and ingenuousness. It appeared even still more clearly in the course of the debate;

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for the hon. and learned Gentleman the Member for Belfast (Mr. Cairns) stated that he thought there should be an equitable adjustment of burdens between ourselves and posterity. Well, Sir, I was very much struck by that phrase, "equitable adjustment." It seems I was wrong in the conjecture I repeated from others with respect to the birth of the phrase "heaven-born." Let us see if I shall be more happy in tracing this other phrase to its origin. I think it was a phrase invented by Mr. Cobbett, and intended to describe the terms on which what is familiarly called "the sponge" should be applied to the national debt—it meant with him the composition which the nation should make with its creditors; and now the hon. and learned Member for Belfast proposes an "equitable adjustment" of burdens between the present generation and posterity, and I think his plan did pretty well correspond, as to its inequality, with the idea of Mr. Cobbett; for his plan of equitable adjustment was simply to borrow in the money market whatever you may require for the expenses of the war. Well, that is the plan of the hon. and learned Gentleman the Member for Belfast. The right hon. Gentleman opposite held, as I thought, very much the same language. I think what he said amounted pretty much to this—that it was better, if we wanted to raise money, to raise it in what he calls the usual manner; and that he thought we should follow as much as possible what he modestly and cautiously termed the precedents in our possession. I could not help being struck on an early night of the Session—I think the first evening on which we had any financial discussion—by a sentence which fell from him. He said, "You had better go and borrow seven or eight millions now; for if you do not do it now you will have to do it hereafter, and you will then have to borrow it on worse terms, and at a higher rate of interest." That recommendation showed me that the right hon. Gentleman greatly cherished and was deeply enamoured of the idea of a loan. Well, the right hon. Gentleman has thought fit to taunt me to-night with having proposed to increase the malt tax out of spleen towards the party which he states I have quitted. I cannot, Sir, enter on any such discussion with the right hon. Gentleman. If there be those in this House who think that either I myself could be actuated by
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such motives, or that, if I were, my Colleagues would give me countenance in such baseness, Gentlemen of this disposition must undoubtedly be quite beyond the reach of such feeble argument or expostulation as I could offer to them. I, therefore, wish the right hon. Gentleman to understand that if he should think fit to repeat charges of that nature in this House, they will receive from me, at least, no other answer than silence may be understood to supply. But I go back to his love of loans. I cannot help reminding the right hon. Gentleman, who is sometimes fond of reference to history, that his doctrine of loans is not the doctrine that in ancient times was in favour with that party—if it be still a party—of which, as he informed us the other night in explicit terms, he is "the humble leader." Yes; the right hon. Gentleman has reproached me—no doubt very justly—with want of humility, and I choose to show the terms in which he has advertised his own position. Well, now, Sir, to proceed with my reference to history. What are we doing—we who are said to be adverse to the landed interest? We are resisting, as far as we can—not on abstract principles—not with a vow registered in perpetuity, but under present circumstances—a proposition sometimes insidiously suggested, sometimes timidly and faintly half-uttered, sometimes more broadly proclaimed, under the title of an "equitable adjustment"—to shirk and evade the weight of the burden of the war, and to recommence the career which Mr. Pitt was unfortunately induced to commence in 1793. But the right hon. Gentleman, the "humble leader" of what he calls "the interest connected with the land," is pressing for loans. Let him, however, go back to the origin of the funded system—to the times when Dean Swift wrote upon the bearings of that system. He denounced the early and unnecessary recourse to such a system as impolitic, as injurious to the nation at large, but as most of all injurious to land. And, so far from admitting the charge that the Government is actuated by spleen against the party opposite—so far from believing them guilty of a baseness that would deserve impeachment if there were one solitary grain of truth in the accusation—I say that we are defending all interests, but most of all the interests of the most permanent and substantial description of property in

769
this country, when we ask the House of Commons to meet as far as they can the expenses of the war from the taxes of the year, instead of by mortgages on posterity. The labourers of the country may emigrate to distant shores; the moveable capital of the country may emigrate, nay, even while the owner remains at home, by being lent upon foreign investment; but the land! that cannot emigrate—that must remain, subject to the mortgage of the national debt. It is that mortgage which we are endeavouring to keep comparatively light; it is that mortgage to which the right hon. Gentleman reproaches us for not making an addition.
Now, Sir, I have stated this part of the case at some length, because I was not willing to make a light assumption on a matter which I must confess appears to me of deep importance. I hope the attention of the Committee will have fixed itself on the matter really at issue. I have shown you that the terms of the Motion, as they are set down, are utterly unworthy of the occasion. I believe it is a dwindled and emasculated form of some broader proposition which was previously entertained—that some weeks ago there was courage enough to frame a design of endeavouring to tempt the House of Commons out of the path of self-denial and self-command into that easy and downward course which is opened to you by the immediate creation of permanent debt; but when it was seen in what manner the House of Commons answered the invitation of the Government to grant new taxes, it was then thought, perhaps, that a Motion in favour of a loan outright would be a little too much for the House of Commons generally to admit or endure—that it was better to disguise and soften it; perhaps to present it—(I am greatly obliged to the right hon. Member for Huntingdon for the phrase he has supplied to-night)—not with its face and features fully displayed to the gaze and admiration of the world—but that it was better to frame an Amendment which would only commit the House to "a loan in masquerade." A loan in masquerade is what we are here to discuss. It is not because Exchequer bonds are preferred to Exchequer bills, for we have used the alternative that the Government may employ either of the two, as may, when the time comes, appear to be recommended by convenience; it is not because the amount of demand is unreasonable—it is not because we can safely dispense with the
770
money, or the power to raise the money;—it is because we do not raise a loan, and it is because upon a loan the "humble leader" of the landed interest is set.
Sir, I am unwilling, even in closing the remarks I have made to the Committee, to enter at large—and it is quite unnecessary for me to enter at large—on the discussion of the policy of the creation of stock at this particular period. I venture to think that the manifestation of the feeling of the House on former evenings has been quite sufficient to show that it will not accede either to an open or to a covert proposal for such a purpose.
But, Sir, I have been told by the right hon. Gentleman that I have indulged in unworthy sneers at Mr. Pitt; and the right hon. Gentleman says that Mr. Pitt is revered by his countrymen—and that he received from them an eleemosynary tomb. Sir, I have claimed, with respect to Mr. Pitt, as I have claimed with respect to Mr. Fox, or any other historical personage, that freedom of criticism which belongs to our place in this House—which it is the duty of the representatives of the people to exercise, when they are endeavouring to draw wisdom from the experience of former times with reference to their own obligations under actual emergencies. Sir, it was in that spirit that I referred to the errors of Mr. Pitt, and if I used one word which seemed like a sneer at that great man, it was, indeed, unwittingly and unintentionally that I did so. It was the keenness, I freely own the fault, with which I was set upon showing what appeared to me the immense importance of the proposition for which I sought to obtain the assent of the House, and the enormous dangers into which Mr. Pitt, not simply nor mainly as an individual, but, as I said then, and as I say now, as the representative of a misjudging public, unfortunately led the country by the financial policy of a particular epoch. I stated at that period, I now state again most explicitly, I will not enter into the question whether the creation of loans is to be treated as in any degree the individual error of Mr. Pitt. I treat it as mainly the error of public sentiment. But I will freely grant to you that has nothing to do with the argument. It was not Mr. Pitt depraving and perverting the public sentiment, but Mr. Pitt, as I believe, giving way to public sentiment—that, attaching too forcible an interpretation to the emergencies of the time, he entered on that policy for the

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creation of stock, the ruinous and disastrous consequences of which we are still feeling, and our children after us must feel. The proof of what I say may be stated in one sentence. Let us only recollect that if Mr. Pitt had made in 1793 the efforts which he made in 1798, and in subsequent years, the effect would have been this: That this country would have paid heavy war taxes six or seven years sooner, and therefore six or seven years longer; but the debt at present would have been less by a sum of 400,000,000 l., possibly 500,000,000 l., of money. And was I not justified, then, in making reference to facts such as these? It was not for the purpose of dwelling on errors that I referred to them, but for the purpose of drawing a broad contrast between the mistakes of the first years of the war and the noble and gallant efforts made afterwards to redeem them. it was for the purpose of fixing, as far as I could presume to fix, the attention of the Committee on the change of policy of which Mr. Pitt early perceived the necessity, and which he devoted the last years of his devoted life and the last remains of his strength to bring into activity and operation. That was the motive with which I referred to Mr. Pitt, and with which I presumed to touch upon his errors. I referred to the errors for the purpose of drawing the attention of the House to the mode in which these errors were, as far as circumstances would permit, at a subsequent period retrieved. But the right hon. Gentleman worships Mr. Pitt; he lauds Mr. Pitt; he exalts him to the skies; but for what purpose? that we may imitate his virtues and his wisdom? that we may come down to Parliament as he did, and endeavour to inspire the British Parliament, as it is our duty to do, so far as our power extends, with sound views of the exigencies of our time? No; but in order to induce us to select for imitation the errors of Mr. Pitt, and to repeat those errors in the light of experience, and without the excuses which may most justly be pleaded on the part of those who originally fell into them. If the opinion of the right hon. Gentleman is that which I have shown it to be—if the meaning of the Member for Huntingdon is that which I have a right to suppose—and I think I am right in saying the meaning of this Motion is that there ought to be an immediate creation of stock—if that is his recommendation, and he wishes to support it by reference to the memory of Mr. Pitt, it
772
reminds me of a remarkable scene which once was witnessed in this House, when the memory and authority of Mr. Pitt were quoted, on a particular occasion, against the principle of commercial freedom. There was under discussion, if I recollect the argument rightly, about thirty years ago, a particular instance in which Mr. Pitt, acting under the pressure of circumstances, did adopt a measure hostile to that principle; and his authority was quoted in the House of Commons. Mr. Canning, his Friend and follower, Mr. Canning, who said of him that his political allegiance lay buried in his grave, resented that reference as an insult to Mr. Pitt. Nay, more; he was not satisfied with compliments paid to the great Minister, when used as an inducement and seduction to commit that Minister's error: Mr. Canning retorted by declaring, "that those who alluded to the memory of Mr. Pitt, while they wished to draw Parliament into an imitation of his error, reminded him of the barbarous nations who profess to worship the sun in the heavens, who chose him for their god, but who, indifferent to the blaze of his meridian splendour, when he falls into eclipse come forth with their cymbals and their dances to adore him." That was the view which Mr. Canning took of men that could pronounce their eulogies on Mr. Pitt—men, perhaps, who could have said that Mr. Pitt was a great man, and had an eleemosynary tomb, in order to keep from view that which was the steady unwavering policy of Mr. Pitt in his closing years, and to induce the repetition of the errors of the earlier portion of the war—errors which he saw, errors of which he repented, errors which he used, and induced others to use, the most determined efforts to redeem. What did Mr. Pitt do when he found the country in the state into which it had fallen—sinking deeper and deeper into the mire, coming nearer to insolvency—by the lavish use of that national credit to which the hon. Gentleman refers us? He did as we do. He came down to the House of Commons. The hon. Member for Huntingdon says he has a great respect for the House of Commons, but at least there were some things which the House of Commons could not do, and I think he said the House of Commons could not induce a man to buy an article which he did not want or which he did not like. I fully grant that the House of Commons is not in possession of the boot and the thumb-screw, as in former times, for the purpose, according to the

773
language of religious persecution, not of punishing men for being unwilling to believe, but of making them willing to believe. The House has no command of such instruments as those; but I am silly enough to believe, in spite of the Member for Huntingdon's high authority, the votes of this House have a considerable effect in inducing men to buy to-morrow what they will not buy to-day—to give a price tomorrow which they would not have given yesterday. And I rather think experience is on my side; because whereas fourteen or fifteen days ago people would give no more than 87 l. for an annuity of 100 l., bearing interest at 3 per cent in Consols, within the past three or four days they have been willing to give 89 l., and something more, for that very self-same annuity; and I am really apt to believe that certain votes of this House have had a great deal to do in bringing about that change. But if you are satisfied with these experimental effects of the votes of the House of Commons, I am still further weak enough to believe that, if it be the determination of the House of Commons that the financial measures of the Government for raising new taxes shall be passed into law, they will be passed into law, and that when they have been passed into law, no inconsiderable effect will be produced by that decision of Parliament on the views of many gentlemen who deal in the particular commodity of money in the City of London, gentlemen with respect to whom, permit me to say, if I have said, either on this or on a former occasion, one word which seemed to savour of disrespect, I deeply regret it, first, because I hold it is not for any one in this House to find fault with any class of his fellow-countrymen, and least of all is it consistent with duty or propriety in a Minister of the Crown; secondly, because, in my opinion, those Gentlemen have acted, in the exercise of a discretion to which they were perfectly entitled, just as this House will, I hope, use its own discretion, to which, on its side, it has a perfect title. As, then, Sir, Mr. Pitt made his appeal to the House of Commons, so we appeal to the House of Commons; as Mr. Pitt placed before the House of Commons his plan for its support in the system which he proposed for raising the necessary means from the country, and thereby obviating, as far as possible, the necessity for resorting to the creation of stock, so we, at the first moment of the war, make our proposals to the House of Commons, entreating them
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to assist and support us in such an effort as may be reasonably expected from the wealth and power of the country to raise, from the year itself, the means towards meeting the expenses of the year.
Sir, before I sit down, I have still to notice, that the right hon. Gentleman has referred to what was done in the year 1847; and I shall make a remark upon that subject. He says that in the year 1847 a loan was raised by Consols, and he asks what would be your condition now if in 1847 you had raised that loan by Exchequer bonds. It is quite unnecessary that I should enter into a comparison of the circumstances that dictated one course to my right hon. Friend (Sir Charles Wood) in the year 1847, and that dictates another course at the present moment. The exigencies of the two periods are entirely different; especially, I may observe, that that was an isolated operation; this is a period at which unfortunately we have before us the prospect of a continuing and extraordinary demand upon the public purse. I do not hesitate to say, however, that it appears to me the country would not now have been in, a bad predicament if the money raised in 1847 had been raised by means of Exchequer bonds instead of by Consols. Yet one other word, Sir, with the permission of the House. The hon. Member for Huntingdon contends, according to the terms of his Motion, that it is most improper that we should bind ourselves to pay off the Exchequer bonds in a particular year; and I ask, is that doctrine sustainable by a reference to practice or experience? It is the very thing we do in the case of Exchequer bills; but, with this difference, that we do it annually, and do it for five times the amount. Within a few days it may be necessary to call in 9,000,000 l. of Exchequer bills, and re-issue Exchequer bills for the same amount if the holders are willing to take them. But the hon. Gentleman, having felt that he had got into a considerable difficulty, drew a distinction between promising to pay off, and promising positively to pay off. I am unable to appreciate the value of the distinction certainly; and I do not believe that the hon. Gentleman, in the exercise of any other function which he may be called upon elsewhere to perform, will attach more value to a note which says, "I promise to pay," than to a note which says, "I promise positively to pay." And again, although he says that in the Exchequer bonds we say we promise positively to pay, and that in the

775
Exchequer bills we only say we promise to pay; yet that is not the fact; we make a promise to pay in the case of Exchequer bonds precisely as we do in the case of Exchequer bills; the whole question, in each case alike, is the renewal on a given day, whether it shall be thought fit to renew on a given day, or to liquidate them, and the rate of interest to be paid in case we shall think fit to renew. The hon. Member for the Wick Burghs (Mr. Laing) has stated to-night that the railway companies throughout this country are renewing their debentures every year to the extent of 40,000,000 l., and I want to know after that, whether any hon. Member will attempt to justify a vote in favour of the Amendment on the ground that we cannot renew, if need be, 2,000,000 l. of Exchequer bonds by the use of the public credit? No, Sir; the plea is an idle one. As for us, we make our appeal again to-night to the House of Commons on the ground on which we stood. As for the matters in the first financial proposals of the year of retrospect, to which the hon. Gentleman refers, if he wishes for the opinion of the House of Commons these matters, let him by all means raise the issue in plain and intelligible terms. But what we have now before us is, the question of whether the Queen's Government shall be permitted to raise money for the expenditure of the war in anticipation of the taxes, and until the proceeds of those taxes are received. We ask for that power. We make our appeal to the House of Commons, with the full confidence that the House of Commons will answer it. I join cordially in the sentiment expressed by the hon. Member for Huntingdon; I—and I am certain I may say the same on the part of my Colleagues—have no other desire but one, it is that the Committee shall vote on this Motion as they think shall be most for the advantage of the country.
MR. T. BARINGin reply, said, that the right hon. Gentleman had put several questions to him which it was impossible to avoid answering. The first was—"Do you object to the amount of the grant?" And in answer, he must be allowed to say that the amount was not required. The whole deficiency was only 3,500,000 l., and when, by the first Resolution, 2,000,000 l. had been already obtained, and 4,000,000 l. of taxes would come in in the course of six months afterwards, he did not think it was requisite to issue additional Exchequer bonds to the extent of 4,000,000 l. The
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right hon. Gentleman also made this remark, "You say the amount cannot be obtained by Exchequer bills." Damaged as the market had been by the conduct of the right hon. Gentleman, we had seen, in the granting of 1,750,000 l. Exchequer bills, that the Exchequer-bill market could still bear that amount. But when it was proposed to borrow at 4 per cent, payable in four years, when the rate of Exchequer bills, high as the rate in the market was, was only 3 per cent, he must confess he held the opinion that Government were borrowing in a very improvident manner for the country. And he held also that there was this advantage in Exchequer bills—in borrowing from year to year, when the war was short the rate of the bills could be reduced, while in pledging to pay for four years, if the war terminated to-morrow, the country would be bound to pay the 4 per cent. The right hon. Gentleman said he had suspicions that he (Mr. Baring) intended a fortnight ago to make a Motion in favour of a loan, but he must tell the right hon. Gentlmen that whatever he intended to have done he would have done openly. He had never had any other project or any other intention than to move the Resolution which he had already moved, and that Resolution was to this effect, that whereas he thought it unwise to fix any definite period for the payment of positive obligations, he thought it was much less dangerous to fix them after six years than it was according to the plan of the right hon. Gentleman to fix them now for four or five years. The right hon. Gentleman asked if he (Mr. Baring) said Exchequer bonds would be unacceptable in the City? Let the right hon. Gentleman look to his own lists, and he would see the opinion entertained of them; let him look first to the amount of subscriptions, and then let him say if there had been any general wish to have these bonds. He thought he had now answered all the questions of the right hon. Gentleman. He had moved the Amendment with no covert object and as no vote of want of confidence, but he thought it was unwise for the country to adopt the course the right hon. Gentleman was pursuing. The right hon. Gentleman said, "Bring the points you complain of to an issue in this House." He (Mr. Baring) would have said, let bygones be bygones, and he would not have alluded to the right hon. Gentleman if the right hon. Gentleman had not only challenged criticism,

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but accused the House of gross ignorance. It was impossible to hear the speech of the right hon. Gentleman without some answer, and when the right hon. Gentleman said, "Bring the question to an issue in this House," he would leave the financial measures of the right hon. Gentleman to the judgment of the world, merely referring him, if any criticism were wanted, to the Member for the Wick Burghs (Mr. Laing), who had not treated the right hon. Gentleman's financial measures with extreme tenderness that night.
Question put, "That the words 'the Commissioners of Her Majesty's Treasury be authorised to issue Exchequer Bonds' stand part of the proposed Resolution."
The Committee divided:—Ayes 290; Noes 186: Majority 104.

List of the AYES.

Acland, Sir T. D.

Coffin, W.

A'Court, C. H. W.

Cogan, W. H. F.

Adair, H. E.

Collier, R. P.

Adderley, C. B.

Colvile, C. R.

Alcock, T.

Coote, Sir C. H.

Anderson, Sir J.

Cowan, C.

Atherton, W.

Cowper, hon. W. F.

Bagshaw, J.

Craufurd, E. H. J.

Baines, rt. hon. M. T.

Crossley, F.

Ball, J.

Currie, R.

Baring, H. B.

Dalkeith, Earl of

Barnes, T.

Dalrymple, Visct.

Bass, M. T.

Dashwood, Sir G. H.

Beamish, F. B.

Davie, Sir H. R. F.

Beckett, W.

Denison, J. E.

Bell, J.

Dent, J. D.

Berkeley, Adm.

Divett, E.

Berkeley, C. L. G.

Duff, G. S.

Bethell, Sir R.

Duff, J.

Biddulph, R. M.

Duke, Sir J.

Biggs, W.

Duncan, G.

Blackett, J. F. B.

Dundas, G.

Bland, L. H.

Dunlop, A. M.

Bonham-Carter, J.

Elcho, Lord

Bowyer, G.

Ellice, rt. hon. E.

Boyle, hon. Col.

Ellice, E.

Brand, hon. H.

Elliot, hon. J. E.

Brocklehurst, J.

Emlyn, Visct.

Brockman, E. D.

Ewart, W.

Brotherton, J.

Fagan, W.

Brown, H.

Feilden, M. J.

Bruce, Lord E.

Fergus, J.

Bruce, H. A.

Ferguson, Sir R.

Buckley, Gen.

Ferguson, J.

Byng, hon. G. H. C.

Fitzgerald, J. D.

Cardwell, rt. hon. E.

Fitzgerald, W. R. S.

Cavendish, hon. C. C.

Fitzroy, hon. H.

Cavendish, hon. G.

Fitzwilliam, hon. G. W.

Challis, Mr. Ald.

Foley, J. H. H.

Chambers, M.

Forster, C.

Chambers, T.

Forster, J.

Cheetham, J.

Fortescue, C. S.

Clay, Sir W.

Fox, R. M.

Clifford, H. M.

Fox, W. J.

Clinton, Lord R.

Freestun, Col.

Cobden, R.

Gardner, R.

Cockburn, Sir A. J. E.

Geach, C.

778

Gladstone, rt. hon. W.

Mackinnon, W. A.

Gladstone, Capt.

M'Cann, J.

Glyn, G. C.

MacGregor, John

Goderich, Visct.

M'Taggart, Sir J.

Goodman, Sir G.

Mangles, R. D.

Goold, W.

Marjoribanks, D. C.

Goulburn, rt. hon. H.

Marshall, W.

Gower, hon. F. L.

Martin, J.

Grace, O. D. J.

Massey, W. N.

Graham, rt. hon. Sir J.

Matheson, A.

Greenall, G.

Matheson, Sir J.

Greene, J.

Miall, E.

Greene, T.

Milligan, R.

Gregson, S.

Mills, T.

Grenfell, C. W.

Milner, W. M. E.

Grey, rt. hon. Sir G.

Milnes, R. M.

Grey, R. W.

Milton, Visct.

Grosvenor, Lord R.

Mitchell, T. A.

Hadfield, G.

Moffatt, G.

Hall, Sir B.

Molesworth, rt. hn. Sir W.

Hankey, T.

Monck, Visct.

Hanmer, Sir J.

Moncreiff, J.

Harcourt, G. G.

Monsell, W.

Hardinge, hon. C. S.

Morris, D.

Hastie, Alex.

Mostyn, hon. T, E. M. L.

Hastie, Arch.

Mure, Col.

Headlam, T. E.

Murrough, J. P.

Heard, J. I.

Norreys, Lord

Heathcote, Sir G. J.

North, F.

Heathcote, G. H.

O'Brien, Sir T.

Heathcote, Sir W.

O'Connell, D.

Heneage, G. H. W.

O'Connell, J.

Herbert, H. A.

O'Flaherty, A.

Herbert, rt. hon. S.

Oliveira, B.

Hervey, Lord A.

Osborne, R.

Heywood, J.

Otway, A. J.

Heyworth, L.

Owen, Sir J.

Hindley, C.

Paget, Lord A.

Hogg, Sir J. W.

Paget, Lord G.

Horsman, E.

Palmer, R.

Howard, hon. C. W. G.

Palmerston, Visct.

Howard, Lord E.

Patten, J. W.

Hughes, W. B.

Pechell, Sir G. B.

Hutchins, E. J.

Peel, Sir R.

Hutt, W.

Peel, F.

Ingham, R.

Pellatt, A.

Jackson, W.

Perry, Sir T. E.

Jermyn, Earl

Peto, S. M.

Johnstone, Sir J.

Philipps, J. H.

Keating, R.

Phillimore, J. G.

Keating, H. S.

Phillimore, R. J.

Kershaw, J.

Phinn, T.

King, hon. P. J. L.

Pigott, F.

Kinnaird, hon. A. F.

Pilkington, J.

Kirk, W.

Pollard-Urquhart, W.

Labouchere, rt. hon. H.

Ponsonby, hon. A. G. J.

Laing, S.

Price, Sir R.

Langston, J. H.

Price, W. P.

Langton, H. G.

Pritchard, J.

Laslett, W.

Ramsden, Sir J. W.

Lawley, hon. F. C.

Ricardo, O.

Layard, A. H.

Rich, H.

Lee, W.

Richardson, J. J.

Legh, G. C.

Robartes, T. J. A.

Lemon, Sir C.

Roebuck, J. A.

Lewis, rt. hon. Sir T. F.

Russell, Lord J.

Lindsay, hon. Col.

Russell, F. C. H.

Lindsay, W. S.

Russell, F. W.

Locke, J.

Sadleir, Jas.

Lockhart, A. E.

Sadleir, John

Lowe, R.

Sawle, C. B. G.

Luce, T.

Scholefield, W.

Mackie, J.

Scobell, Capt.

779

Scully, F.

Traill, G.

Scully, V.

Vernon, G. E. H.

Seymour, Lord

Vernon, L. V.

Seymour, H. D.

Vivian, H. H.

Seymour, W. D.

Walmsley, Sir J.

Shafto, R. D.

Walter, J.

Shelburne, Earl of

Waterpark, Lord

Shelley, Sir J. V.

Watkins, Col. L.

Sheridan, R. B.

Wells, W.

Smith, J. A.

Whatman, J.

Smith, M. T.

Whitbread, S.

Smith, rt. hon. R. V.

Wickham, H. W.

Smollett, A.

Wilkinson, W. A.

Stafford, Marq. of

Willcox, B. M.

Stanley, hon. W. O.

Williams, W.

Starkie, Le G. N.

Wilson, J.

Stephenson, R.

Winnington, Sir T. E.

Stirling, W.

Wise, A.

Strutt, rt. hon. E.

Wood, rt. hon. Sir C.

Stuart, Lord D.

Wortley, rt. hon. J. S.

Sutton, J. H. M.

Wyndham, W.

Talbot, C. R. M.

Wyvill, M.

Thicknesse, R. A.

Young, rt. hon. Sir J.

Thompson, G.

Thornely, T.

TELLERS.

Thornhill, W. P.

Hayter, rt. hon. W. G.

Townshend, Capt.

Mulgrave, Earl of

List of the NOES.

Alexander, J.

Coles, H. B.

Arbuthnott, hon. Gen.

Compton, H. C.

Archdall, Capt. M.

Conolly, T.

Arkwright, G.

Corry, rt. hon. H. L.

Bagge, W.

Cotton, hon. W. H. S.

Bailey, Sir J.

Davies, D. A. S.

Bailey, C.

Dering, Sir E.

Baldock, E. H.

Disraeli, rt. hon. B.

Bankes, rt. hon. G.

Duckworth, Sir J. T. B.

Baring, T.

Duncombe, hon. W. E.

Barrow, W. H.

Dunne, Col.

Bateson, T.

Du Pre, C. G.

Beach, Sir M. H. H.

Egerton, E. C.

Bective, Earl of

Elmley, Visct.

Bennet, P.

Evelyn, W. J.

Bentinck, Lord H.

Farnham, E. B.

Bentinck, G. W. P.

Farrer, J.

Beresford, rt. hon. W.

Fellowes, E.

Bernard, Visct.

Forster, Sir G.

Blair, Col.

Franklyn, G. W.

Blake, M. J.

Frewen, C. H.

Boldero, Col.

Galway, Visct.

Booker, T. W.

Gaskell J. M.

Booth, Sir R. G.

George, J.

Brooke, Sir A. B.

Goddard, A. L.

Bruce, C. L. C.

Gore, W. O.

Buck, L. W.

Graham, Lord M. W.

Buller, Sir J. Y.

Granby, Marq. of

Bunbury, W. B. M.

Greaves, E.

Burke, Sir T. J.

Grogan, E.

Burrell, Sir C. M.

Gwyn, H.

Butt, G. M.

Hale, R. B.

Butt, I.

Halford, Sir H.

Cabbell, B. B.

Hall, Col.

Cairns, H. M.

Hamilton, G. A.

Campbell, Sir A. L.

Hamilton, J. H.

Cecil, Lord R.

Hanbury, hon. C. S. B.

Chelsea, Visct.

Harcourt, Col.

Child, S.

Hayes, Sir E.

Christopher, rt.hn.R.A.

Henley, rt. hon. J. W.

Christy, S.

Herbert, Sir T.

Clinton, Lord C. P.

Horsfall, T. B.

Clive, R.

Hudson, G.

Cocks, T. S.

Hume, W. F.

780

Irton, S.

Repton, G. W. J.

Jones, Capt.

Ricardo, J. L.

Kelly, Sir F.

Robertson, P. F.

King, J. K.

Rolt, P.

Knatchbull, W. F.

Sandars, G.

Knightley, R.

Scott, hon. F.

Knox, hon. W. S.

Seymer, H. K.

Langton, W. G.

Shirley, E. P.

Lascelles, hon. E.

Sibthorp, Col.

Lennox, Lord A. F.

Smijth, Sir W.

Lennox, Lord H. G.

Smith, W. M.

Leslie, C. P.

Somerset, Capt.

Liddell, H. G.

Spooner, R.

Lisburne, Earl of

Stafford, A.

Lockhart, W.

Stanhope, J. B.

Long, W.

Stanley, Lord

Lowther, hon. Col.

Stuart, H.

Lowther, Capt.

Sturt, H. G.

Lytton, Sir G. E. L. B.

Sullivan, M.

Macartney, G.

Taylor, Col.

Maguire, J. F.

Thesiger, Sir F.

Mandeville, Visct.

Tollemache, J.

Manners, Lord G.

Tomline, G.

March, Earl of

Trollope, rt. hon. Sir J.

Masterman, J.

Tyler, Sir G.

Meux, Sir H.

Tyrell, Sir J. T.

Miles, W.

Vance, J.

Michell, W.

Vane, Lord A.

Montgomery, H. L.

Vansittart, G. H.

Montgomery, Sir G.

Villiers, hon. F.

Morgan, O.

Vivian, J. E.

Mowbray, J. R.

Vyse, Col.

Mullings, J. R.

Waddington, H. S.

Mundy, W.

Walcott, Adm.

Naas, Lord

Walpole, rt, hon. S. H.

Napier, rt. hon. J.

Walsh, Sir J. B.

Neeld, J.

West, F. R.

Newdegate, C. N.

Whiteside, J.

Newport, Visct.

Whitmore, H.

Noel, hon. G. J.

Willoughby, Sir H.

North, Col.

Woodd, B. T.

Oakes, J. H. P.

Wyndham, Gen.

Ossulston, Lord

Wyndham, H.

Paeke, C. W.

Wynn, Major H. W. W.

Pakington, rt. hn. Sir J.

Wynn, Sir W. W.

Palk, L.

Wynne, W. W. E.

Palmer, R.

Yorke, hon. E. T.

Parker, R. T.

Percy, hon. J. W.

TELLERS.

Portal, M.

Jolliffe, Sir W. G. H.

Powlett, Lord W.

Malins, R.

Proposed Resolution amended by leaving out the word "the" in line 2, and inserting the word "any" instead thereof, and by leaving out the words "of 3l. 10 s." and inserting the words "not exceeding 4l.," instead thereof.
Original Question, as amended, "That the Commissioners of Her Majesty's Treasury he authorised to issue Exchequer Bonds bearing interest at any rate not exceeding 4l. per centum per annum, for any sums not exceeding in the whole 4,000,000 l., at any prices and on any terms determined upon by the said Commissioners, such Bonds to be paid off at par at the expiration of any period or periods not exceeding six years from the date of such Bonds," put, and agreed to.
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 in case the said Exchequer Bonds be not issued for the full sum of 4,000,000 l., as hereinbefore mentioned, then the Commissioners of Her Majesty's Treasury be authorised to issue Exchequer Bills to such amount as, with the total amount for which such Bonds shall be issued, will make up the whole sum of 4,000,000 l., authorised to be raised by these Resolutions."
The House resumed; Resolutions to be reported To-morrow.
The House adjourned at a quarter after Two o'clock.