BOUNTIES AND DRAWBACKS ON SUGAR.

HC Deb 20 April 1855 vol 137 cc1580-611

Resolved— 19. "That, in lieu of the Bounties and Drawbacks now payable on the exportation of Refined Sugar, the following Drawbacks shall be allowed, on and after the 19th day of May 1855, on the exportation or on the removal to the Isle of Man for consumption there, of the several descriptions of Refined Sugar hereinafter mentioned (that is to say): "[Then follows the Schedule.]

The Resolutions relating to the Loan having been read by the Chairman,

MR. MARTIN SMITH

wished to learn from the right hon. Gentleman whether or not he had given notice to the parties with whom he contracted the loan this morning, partly in terminable annuities, of his intention to levy an additional tax upon terminable annuities. He could hardly believe that the Chancellor of the Exchequer would contract a loan in terminable annuities in the morning, and put a tax on them in the evening, without notice.

THE CHANCELLOR OF THE EXCHEQUER

said, it was impossible for the Government to make any statement when about to contract for a loan concerning additional taxes not then proposed to Parliament. Of course, those gentlemen who made offers for the loan did so with the knowledge that any additional taxation might possibly affect terminable annuities.

MR. LAING

said, that though the present was not the proper time to go into the details of the Budget, still the question raised by the present Resolutions involved principles of such great and vital importance that he thought it would be wrong for hon. Members to commit themselves to what might be deemed the sanction of those principles without any discussion whatever. He believed the Committee would disappoint the expectations of the public out of doors if they allowed these Resolutions to pass sub silentio, especially as he was aware that the principles which were involved in them had been the subject of great discussion in the city, and that strong opinions were entertained in the moneyed circles there, those opinions being not very favourable to them. It was evident we were now at the commencement of what, he feared, if this war continued, must be a series of loans of very great magnitude. It was surely, therefore, incumbent upon the Members of that House, as the guardians of the public purse, to see that they did not in the first instance, without due deliberation, lay down principles upon which a second national debt, equal, perhaps, in amount to that which at present existed, would be created, and to see that they did not rashly commit themselves to principles which might prove to be as mistaken as those upon which Mr. Pitt acted during the great French war. One obvious objection which presented itself to the mind of every one familiar with these subjects as to the mode by which the Chancellor of the Exchequer proposed to deal with this loan was, that it was neither one thing nor another. He could understand the right hon. Gentleman coming forward and stating that 3 per cent. perpetual annuities being the most marketable security, he was anxious to avail himself of that which gave the greatest facilities for raising large sums of money. If the Chancellor of the Exchequer found himself placed in difficult circumstances, and driven into a corner to obtain money, he could understand the right hon. Gentleman saying, "I must resort to 3 per cent. Consols, because that is the only mode in which I can get the money necessary for my purpose." But the object of the right hon. Gentleman seemed to be to get a sum of money in the mode which would involve the smallest possible burden upon the present generation—not looking to posterity at all, but having an eye solely to the interest of the present generation, and, therefore, resorting to the most marketable security. Now, this was completely contrary to the doctrine they had been accustomed to bear in that House from the right hon. Gentleman behind him (Mr. Gladstone), and he confessed he, for one, could not so easily accede to it. Twelve months had not yet elapsed since hon. Members listened to appeals made to them in that House, to show themselves worthy of their ancestors, not to shrink from sacrifices which those ancestors had made, and not to throw the whole burden of this war upon posterity, but to bear a fair proportion of it themselves. He thought, perhaps, that doctrine was pushed a little too far under the circumstances. He did not believe that, under the circumstances which now existed, they could hope to raise the whole amount of expenditure by taxation within the year, and was of opinion that they must resort to some description of loan; but he was not prepared—and he believed the country was not prepared—for such a total abandonment of the principles then laid down, as to say that they should now throw all consideration for posterity to the wind at the very commencement of the war, and that, in an easy state of the money market, and before they had exceeded the limits of our taxation, they should resort to an old-fashioned loan in 3 per cent. consols. The Chancellor of the Exchequer appeared to think that any other mode of raising money—such as by a resort to terminable annuities—was wholly impossible. He should like to know what the right hon. Gentleman said to the very large amount of capital which had been raised upon the French and other foreign railways. How was it, he would ask, that upon those railways a sum of something like 100,000,000l. had been raised upon securities which were all terminable within periods of sixty to ninety years at the furthest? If this were possible to the Government of France, why should it be impossible for the Government of England, with the vast means of credit possessed by them, to raise a sum of 16,000,000l. of money in some similar way at a time when money was extraordinarily abundant? He did say, then, that a great principle was at stake here. All the experience afforded by history must satisfy the Committee that sinking funds were absolutely illusory. Must not every hon. Member be convinced in his own mind that a sinking fund of 1,000,000l. a year at the termination of the war was perfectly illusory? When peace came there would be a pressure upon the Government to take off some unpopular tax; and if they could escape from the liability of this annual payment without a positive act of bankruptcy, would not this sinking fund share the fate of other sinking funds? They ought to look the whole question boldly in the face, and be prepared either to create a perpetual national debt and borrow upon 3 per cent. Consols—the cheapest form in which they could obtain money—or else they should consider whether there was not some form of loan in which whatever addition was made to the national debt should be of a terminable character, so that in a given period of years it might be extinguished. He looked upon all this as a mere question of price in the market. If the Government of England went into the market and said, "Here is an annuity of 4l. or 5l. a year, terminable within a period of sixty or 100 years," this would have a clear, intelligible market value, and, like everything else, might be made negotiable. It would not bring for the moment quite so much proportionably as a perpetual annuity of 3 per cent, because the 3 per cent Consols formed the bulk of our stock, and commanded a better price on that account. But that was entirely a question as to the amount of stock you created. If the Government created so small an amount of stock as now proposed, that stock would be unavailable except to a very limited extent; but if they began by borrowing in the form of terminable annuities for a period of 100 or sixty years, and created similar stock whenever they were obliged to incur new debts, so as to throw into the market a large amount of stock expiring at the same period, and being, therefore, a uniform stock in the market, such a stock would be easily negotiable, and there would be no difficulty as to the rate at which that kind of security would go off. In creating it in Consols there was one important consideration; it would not be all gain which the Government made by effecting their loan in 3 per cent Consols. The circumstance which kept that stock at such an extraordinarily high price was, that it formed at present the only mode of investment for the greater number of trust funds. There was always, therefore, owing to this, a large demand, with a limited supply; and this stock was thus kept artificially high. If they compared the prices of the funds in England and France, the difference of price in the public securities was by no means justified by the intrinsic credit of the two countries, but it was due to the great wealth of England, seeking for investment in the one large and uniform description of stock open to it, which stock was therefore kept at an artificially high price. In consequence of that, 3 per cent consols bore a higher value than other securities, and consols were the barometer which regulated the value of the great mass of other property. If, therefore, by creating a large additional amount of that stock the Government increased the floating supply in the market, they would inevitably bring down the price of 3 per cent Consols, and in doing so would also bring down the prices of securities of every denomination, which fluctuated more or less with the price of Consols. Let the Committee consider for a moment whether the Chancellor of the Exchequer had obtained a loan on terms which gave an equivalent for having created perpetual instead of terminable annuities. A short time since consols remained steadily at from 92 to 93; money was comparatively scarce; the rate of interest at the Bank was 5 per cent; money suddenly became abundant and the market changed, from a condition of tightness to one of easiness; foreign exchanges were in our favour; bullion accumulated rapidly in the Bank; the Bank reduced the rate of interest to 4½ per cent, with the prospect of still further reduction; the circumstances were all in favour of retaining the price of Consols. But Consols were considerably depressed by a series of operations on the part of the Government, which, in his opinion, were short-sighted. The amount of sales by the Government broker on account of savings banks was so great that Consols, instead of rising from 92 or 93 to 94 or 95, had been depressed to 90 or 91. It was very bad policy, when a loan was contemplated, to depress the market by sales by the Government broker. The natural effect of a loan was to produce a heavy fall even with an abundance of money, and when every circumstance was otherwise favourable for great operations; and as soon as it was known a great portion of the loan would be created in 3 per cent Consols, as a natural consequence there was a heavy fall in the market. And thus, with favourable circumstances and abundance of money, instead of Consols rising, which he contended they would have done if there had been no sales by the Government broker, they had fallen, and instead of the loan being calculated on the basis of Consols at 94 or 95, or certainly, at the lowest calculation, at 92 or 93, Consols had been forced down to 90, and when the value of the annuity given with the 3 per cent Consols was estimated, he believed it would be found that the 16,000,000l. of national debt was created at a figure equivalent to little more than consols at 85 or 87. There was another point connected with the loan in which he thought the Government was at fault. In borrowing money they had to choose between a system of open loan, in which the Government applied at once to the public, and a system of close loan, in which the Government applied to middlemen. He by no means participated in the prejudices against middlemen. He believed that in money, and in corn, and other trades, middlemen were useful, and that they might do better through a middleman than by direct communication with the customer; but in making use of middlemen or agents, they ought to bring the element of competition into action, and pit the middlemen against each other. If the Government resorted to agents for a loan they ought to take care there should be sufficient competition. They might either do that or abandon the use of agents, and resort to an open loan. Upon the information derived from private negotiation, they might fix the terms, and leave everybody who pleased to subscribe his 100l. That system was adopted by the French Government, on a recent occasion, with great success; and he thought under that system the results obtained would have been more satisfactory than under the system which had in this instance been adopted by the right hon. Gentleman. If the Government had avoided the sale of savings-banks money, which depressed the market; if they had determined not to create more 3 per cent Consols, but to create a new 3½ per cent stock, or some description of terminable annuities; and if they had made up their minds to a clear and intelligible plan, by which the whole public would have been invited to subscribe, his belief was that they would have obtained the money on much more favourable terms than had been obtained on this occasion. The first hearing of a Budget was not an occasion upon which to enter into details, but he trusted the House would take the opportunity of considering the principle on which this loan bad been created, and, after mature deliberation, decide the principle on which future loans should be created. He would merely make one remark on the increase of taxes. There was a sum of 5,000,000l. to make up; and he had heard with great regret that several additional taxes were to be proposed. He could not understand why the income tax was not raised higher, when during the last war it stood at 10 per cent. The present generation were as patriotic as the last, and as ready to pay with their eyes open the taxes which were necessary, end not 10 but 9 per cent would produce the whole money which was required. He could net understand why they were to retrace their steps—why they were to affect such important interests as the interests of our West India colonies by an alteration of the sugar duties—why they were to meddle with a tax of so much importance as the duty on coffee, for the sake of a miserable sum of 150,000l.—or, why they were to incur all the evils of unsettling the system of taxation adopted in recent legislation for these comparatively small amounts, while the income tax remained to them. He trusted the Committee would bear in mind that the money derived by the Exchequer by no means represented the evils caused by these small additions to taxation. If by an alteration of the sugar duties the Government raised a million of money, that million of money would not adequately represent the mischief to the colonial interests by unsettling the sugar duties. During a great many years past the sugar duties had been in a state of perpetual alteration. No man interested in the West India colonies had known from month to month, scarcely from day to day, what those duties were. At last, when, having struggled through great difficulties, those colonies were beginning to raise their heads and improve their condition, the sugar duties were again to be unsettled. He hoped the House would say, "We have gone to war with our eyes open, and we will bear the burden with our eyes open; we will not fritter away the sources of our trade; we will not affect the condition of the working classes; we will not undo what we have done; and we will not consent to all these petty and peddling alterations in the financial policy established by Sir Robert Peel."

SIR HENRY WILLOUGHBY

said, he should not enter into the question raised by the speech of the Chancellor of the Exchequer, but rather seek to obtain information for future discussions. Upon the Resolutions read by the Chairman he did not feel himself in a position to give an opinion; but, in reply to the hon. Gentleman who had just spoken, he would say that he did not believe the Chancellor of the Exchequer existed, ever did exist, or ever would exist, who was able to extract from the pockets of the people in one year 86,000,000l. He said it was impossible either by direct or indirect taxation to raise that sum. If he were allowed to make a remark upon that large amount, it would be to point out the enormous danger of entering on an aggressive war upon the Russian Empire. They might have easily protected their allies the Turks from aggression, but when they entered on an aggressive war the immediate consequence was the raising of taxation to 86,250,0001. He understood the Chancellor of the Exchequer to say that the expenditure of the year 1854–55, ending the 31st of March, amounted to 65,692,9621. He wished to learn whether there were any outstanding expenses; because, unless they could get at that, they would know nothing, and might fall into a prodigious error in supposing those figures represented the whole expense of the war up to the end of March last. He wished to learn from the right hon. Gentleman to what extent this country had run in debt during the past year? Fresh taxes to the amount of upwards of 10,000,0001. were voted last year, a large portion of which—he believed nearly onehalf—was still unpaid, though upwards of 7,000,0001. of money raised by Exchequer bonds and Exchequer bills had been actually spent. He wished to know, therefore, where the right hon. Gentleman took credit for the 5,000,0001. of taxes still due on the year 1854–55—because there are both the debt and the taxes to be accounted for. So far from the expenses of the war having been paid out of the taxes, he believed the Government had spent all the taxes that could be obtained, and 7,300,0001. of borrowed money in Exchequer bills and Exchequer bonds. The right hon. Gentleman had stated very clearly what was a terminable annuity; but in the course which the right hon. Gentleman proposed to take of applying the income tax to these annuities there was the danger of taxing, the principal and not the interest, and to tax the principal would be to enter upon a career at variance with all principle whatever. Was it not the fact that at this moment an enormous tax was levied upon Long Annuities, and could it be imagined that taxes could be continued to be raised by a species of taxation which was nothing more than robbery and plunder of the grossest description? He agreed with the hon. Member for Wycombe (Mr. Martin Smith), that the right hon. Gentleman ought to give some clear intimation of the intention of the Government with regard to subjecting the new terminable annuities to the income tax.

THE CHANCELLOR OF THE EXCHEQUER

In answer to the first question of the hon. Baronet with respect to the expenses of the war, I may inform him that the chief part of the expenses of the army, navy, and ordnance department, is met by payments in ready money; and that with regard to the charges for transports, and for various contracts for food and clothing, the payments were made every quarter, and have been made within the last few days—at all events very recently. No doubt some of these payments may be in arrear, but I do not apprehend that the amount is very large. With respect to the Exchequer bills and bonds referred to, no portion of them is payable next year, and therefore no provision for them is necessary at present. With regard to the terminable annuities referred to by the hon. Baronet, I am perfectly aware that they are subject to the income tax. In my opinion, it is right in principle that an annuity terminable in a certain length of time should be considered as income, and be subject to the income tax. Those who take terminable annuities reckon upon the income tax as one of the elements of their calculation when they offer a certain price. So long as the income tax exists their calculation holds good, and if the income tax should be diminished or repealed they receive a benefit upon their speculation. The Committee will be aware that terminable annuities to a considerable extent were created in the late war at the time when the income tax was in operation, and no doubt the loans then entered into were entered into upon the calculation of the income tax. With regard to what the hon. Member for the Wick boroughs said in reference to terminable annuities, I apprehend that these annuities are terminable stock in the same sense as railway debentures in this country are terminable stocks. They are loans granted for a short term of years, which, when the term expires, are renewed by reborrowing; and I apprehend that that is the principle adopted by the foreign railway companies referred to by the hon. Member for Wick (Mr. Laing). The hon. Gentleman talked of effecting a loan in terminable annuities by appealing to the public at large. If such an appeal had been made, it would have been made in vain. The only customers for terminable annuities are such bodies as the Bank of England, insurance and other companies, who are in the habit of dealing in money, and who hope in a speculation of this nature to gain some advantage.

MR. LAING

observed, that the foreign railways he had referred to had obtained money upon securities strictly terminable. A person bought what he supposed to be an annuity of 10 per cent, and it positively terminated in it certain number of years.

MR. FREWEN

thought some portion of the propositions of the right hon. Baronet would meet with considerable opposition. He wished to call the attention of the right hon. Gentleman to the desirability of giving every possible facility to a person charged with the income tax without being liable to it, or who had been overcharged, to appeal against the tax. He could assure the right hon. Gentleman that many persons whose incomes were considerably under 1001. a-year, and who therefore ought not to be called on to pay the income tax, had had it deducted when they received their dividends, and they very seldom succeeded in recovering the amount, or, when they did so, it was with great difficulty. The difficulties of appealing against the tax were very great, and ought to be rendered much lighter.

MR. GLADSTONE

Sir, I am induced to rise at this period of the discussion, because I do not feel entirely certain that the Committe are aware of the precise nature and bearings of the Resolution which has already been read from the chair. In the excellent speech of my right hon. Friend the Chancellor of the Exchequer—a speech distinguished as well by the utmost candour and fairness as by its great clearness —in that excellent speech I only regretted a single omission—namely, that my right hon. Friend did not state to us precisely both the order of the Votes he intended to ask for to-night, and likewise the exact effect and character of those Votes. If, therefore, I now presume to state what is the nature and character of those Votes, I do so only with a view of offering my humble assistance to the Committee, and I shall do so subject to correction from my right hon. Friend if what I state is inaccurate. I apprehend my right hon. Friend will ask us to-night in the first place for a Vote which will empower him on the subject of the loan for which he has made a provisional contract; and I presume that, after having done so, he will go on to ask for a series of further Votes, which will enable him to levy the new taxes he has proposed in so far as they belong to the class and character of indirect taxation. If I am right, the Votes for which my right hon. Friend will thus ask us are entirely distinct in their substantial character. If he asks us for a Vote to levy an increased duty on tea, sugar, coffee, or spirit, to-morrow morning, I apprehend he is in a condition to say that, as far as the Vote of to-night is concerned, it does not in any way commit the final judgment of hon. Members, but that every Gentleman who concurs in the Vote to-night, if he thinks proper, in the very next stage of proceedings will be as free to take a different course, and to reverse the measure proposed by the Chancellor of the Exchequer, as if he had never concurred in the preliminary step. I am afraid that the Committee may think it an analogous proceeding with respect to the Vote on the loan; but, on the contrary—not from any fault of my right hon. Friend, for he has acted in strict conformity to practice and according to the dictates of prudence —I apprehend he is asking for a Vote on the subject of the loan which will be binding and conclusive between us and the contractors, and, though with reference to the taxes proposed you are only called upon to give an indirect and technical Vote, yet you are going to commit yourselves as to the loan of 16,000,000l. I apprehend I am right in this statement. [The CHANCELLOR of the EXCHEQUER signified his assent.] I understand then that the Vote we are called upon to give will be a distinct "ay" or "no" as to the arrangements my right hon. Friend proposes to make between the State and certain contractors who are about to lend us 16,000,0001.; and that, after having given this vote, though we may criticise the arrangement, yet it will not be competent to us to dispute or interfere with the conditions of this contract. If this is the state of the case, the Committee is aware of the issue before it, and must consider the Resolution which we have now heard for the first time; and in consenting to which the Committee will sanction the provisional contract which has been made. Up to this moment we possess entire liberty, which, by consenting to the Resolution, we are about to part with. I am not prepared to withhold my affirmative vote from the proposal of my right hon. Friend, if the House should confirm the contract which he has provisionally entered into; but, before I say anything on the merits of the contract, I wish to express my desire, for fear of any misunderstanding, that we should exclude from the Resolution that portion of it which relates to the peculiar arrangement proposed by my right hon. Friend for the repayment of the loan. My right hon. Friend has proposed an arrangement, with respect to which I give him credit, not only for the best, but for the highest intentions; for he has tried on his part to vindicate the principle that we should transmit as little as possible of the burden of this war to those who are to follow us, and that we should make provision as far as we can to discharge its expenses ourselves. At the same time, without giving any conclusive judgment, I feel great doubt and difficulty with regard to the peculiar provisions proposed for the repayment of the loan, and should wish to have time to consider these provisions; but I am afraid that it is just possible we may be told, if we agree to-night to the Resolution now before the Committee, which Resolution is understood to be binding and conclusive as to the substance of the arrangement, the Committee may find that it has parted with its liberty with regard to the peculiar arrangements made for the repayment of the loan, and that it will be held that the Resolution of this House sanctions the substantial contract between the State and the lenders of the money, and that they will have a right to bind and hold us to the peculiar provisions which my right hon. Friend proposes. What I would suggest to my right hon. Friend is, that the provisions with respect to the repayment of the loan should be separated from the rest of the Resolution, and I am not aware of any strong reason, if it is so separated and put into a distinct Resolution, why a Resolution should be taken on it to-night. I hope my right hon. Friend will consent to separate this Resolution, so that we may be left free not only to canvass his proposals as to the repayment of the loan, but even to modify his Resolution in that respect. I listened to the speech of the hon. Member for Wick (Mr. Laing) with great interest, and sympathised in the high English spirit which it appeared to evince; but I am not prepared to say with him that it was the duty of my right hon. Friend to propose to us on the present occasion to raise the income tax to 10 per cent. My opinion is that, if all persons who are payers of the income tax possessed the same incomes and were in the same circumstances as those who listened to the hon. Member's speech, then it would have been right and obligatory on my right hon. Friend to propose to raise the income tax to 10 per cent; it would have been the simplest, the most powerful, the safest, and fairest measure he could have taken. But it is only those who are actually conversant with financial affairs who are aware of how severe becomes the pressure of the income tax when you approach the classes that are touched by it when you come to its lowest limits. I am bound to say that it is a serious and doubtful question whether you can carry the augmentation of the income tax to the war limit of 10 per cent without undertaking the difficult political problem of a further extension of the income tax downwards beyond any limit that has yet been attempted. Let us consider the present position of the income tax. You levy it on persons possessing an income of 100l. a year, and, in so doing, I may say that you take it from the whole of the educated part of the community; those of the educated class who receive less than 100l. are so few that they may for the present be put out of the question, while, on the other hand, those labourers and mechanics who receive 100l. are limited in number. Therefore, in the main, the dividing line of 100l. is the line between the educated and the labouring part of the community. I hope the sense in which I use these terms is understood. What I feel strongly, and what I think the Committee must feel is that, measuring wealth and poverty not by figures merely, but by their relations—station, position, and social wants—the educated part of the community, with 100l. a year, is clearly poorer than the less educated part of the community, who may have 60l., 70l., or 80l. per annum. I say, therefore, that it is not a mere fiscal question to be settled at a stroke—that there are more than mere fiscal questions involved in the question, whether we should raise the income tax to 10 per cent or not. I look at the augment- ation of the income tax as a necessary incident of the war, and have not a doubt that if the war is materially protracted you must raise it to 10 per cent; but, if you do so, you must consider in connection with it the relation of the classes to which I have briefly adverted—that great political problem—and, also, the extensive machinery that will be required, and the difficulties of its administration. I think my right hon. Friend, not finding it absolutely necessary to undertake these gigantic difficulties, was justified in resorting to other means, and I am not prepared to join in a censure for his not having proposed to raise the income tax to 10 per cent. I am bound to say that, though not prepared to withhold my vote from the proposal of the Chancellor of the Exchequer to borrow a large sum of money, my impressions on the subject of public loans are not different from those which I entertained when I had the honour to propose a War Budget to this House. If there is one sentence in the speech of my right hon. Friend from which I emphatically differ—and that difference is a verbal, though a marked one—it is contained in the sentence in which he referred to the able and ingenious pamphlet, well worthy of the attention of every Member of this House and of the public generally, recently published by Mr. Newmarch, who has examined in detail the financial policy of Mr. Pitt during the revolutionary war. The words of my right hon. Friend were, I think, that Mr. Newmarch had shown that the loans of Mr. Pitt were contracted on far more advantageous terms for the public than was of late years commonly supposed to be the case. I frankly own that, in my opinion, that is not what Mr. Newmarch has proved. What he has shown is this—that infinitely greater difficulties than are commonly supposed would have beset the path of Mr. Pitt if he had attempted to proceed in another manner. No doubt Mr. Newmarch shows that you could not have realised the whole of those advantages which many persons supposed that you might have gained from a different method of proceeding. It has been a common idea that if you had borrowed at 5 per cent in place of at 3 per cent, instead of getting 100l. at the latter rate you could easily have got 166l. at the former. In my opinion Mr. Newmarch shows that there is no mode of borrowing which is advantageous to the public, but that all modes alike are attended with difficulty and disadvantage. I own that he strengthens my opinion of the damage and detriment which accrue to the public from becoming borrowers upon a large scale under pressing necessities; for he shows, not that Mr. Pitt's loans were less disadvantageous to the country, but that any loans whatever, contracted how you will, must be attended with immense economical disadvantages and with heavy pecuniary burdens. But with these impressions upon my mind, and being by no means disposed to extenuate my share in the proposals of last year—on the contrary, being well content to have been the instrument of any Government in inducing the House of Commons to make what I think was a manly, resolute, honourable, and successful effort—without in the slightest degree receding under that storm of invective which every man must expect who does not endeavour to square and suit himself to everybody's convenience, but remembers that there is such thing as the public interest, which, after all, is somewhat different from the convenience of classes—being prepared to stand up and contend for the principle which I then avowed; yet I apprehend that there is a limit to its application, and that we cannot possibly expect a free country—that we cannot possibly expect even this great and enlightened assembly, representing a free country—to push the very soundest economical doctrines, under all circumstances, to their extremes. You must remember that you have to deal with flesh and blood, and that you cannot ask from flesh and blood more than they can reasonably bear. I go a step further, and I admit that there is a point at which the sudden accumulation of taxation becomes so great an evil, and so great a cause of disturbance to all personal and social relations, that it is better to provide yourself with money up to a certain limit at a pecuniary disadvantage than to carry that disturbance through all ranks of the country. Therefore, for some considerable time past—ever since the growth of the expenditure for the war became so uncontrollable—I have fully admitted that it was necessary for the Government to make provision for a considerable portion of the expenses of the year by borrowing money, and I was prepared to say that the Chancellor of the Exchequer could not be blamed for resorting to a loan. I do not speak merely of raising money in anticipation of taxes—I myself last year made provision for a considerable portion of the expenses by borrowed money —but it was merely borrowed money in anticipation of taxes, which has been covered, within a million, by the taxes raised last year —but it was clear to me that some more extended measure must be resorted to if we were to make provision for another year of war expenditure. Holding that opinion, I am not disposed to enter upon any minute criticism as to the precise proportion of money to be borrowed in comparison with that to be raised by taxes, or even as to the question whether my right hon. Friend has selected the stock in which to borrow with a sound estimate of the public interests, or whether he might have carried to a greater extent the principle of borrowing by terminable annuities. I entirely agree with him that it would not have been practicable, except upon the most extravagant terms, to complete the whole, or anything like the whole, of his operation in that form. These are questions which, upon the fitting occasion, it may be proper to discuss, but it does not become me to discuss them now. The question for me is, whether I think, upon the whole, that the principle and outline of my right hon. Friend's plan, considered simply as a means of providing for the financial necessities of the country, are such that I should give to them my support, and I am quite prepared to say that none of those preferences which we may have for one mode of proceeding over another should induce us—as they do not refer to matters of primary importance—to withhold our vote from the plan of my right hon. Friend, the general principle of which we approve. I certainly should wish to have the power of considering more maturely the special provisions which he proposes to make for the repayment of the loan; but, as respects the form of the loan, I shall not even question the abstract merits of the proposition, because I am of opinion that it is of capital importance that the House should maintain the strength and credit of its financial organ in the face of the country; and even if it were in my power to show—which I do not assume— that in one point or another my right hon. Friend might have made this proposal in a manner more precisely coinciding with the public interest, yet I should have to balance the advantage so obtained against the great and heavy disadvantage—which I have good reason to know to be a great and heavy disadvantage—which a Chancellor of the Exchequer, who is the guardian of the public interests, is exposed to by criticisms which, though unavailing indeed, are ac- tively, zealously, and constantly indulged in upon the plan which he proposes. I, therefore, am very much disposed to withhold those criticisms upon the present occasion. But there is another question upon which I think it necessary to reserve my judgment. My right hon. Friend opened his speech by referring to the time at which he made his financial statement, and he appeared to think that he owed us some apology for not having come before us at an earlier period with this exposition of his views. There was one reason, undoubtedly, why it was desirable, if it could have been done, that the finances of the country should have been brought before the House of Commons at a very early period of the Session, and that was, that the extremely rapid growth of expenditure during the last quarter has outstripped all bounds and all possibility of calculation. That rapid growth of expenditure pressed so severely upon the immediate resources of the Exchequer that it was necessary, if the Minister did not ask for additional supplies, that he should use his own discretionary power, and, availing himself to a certain extent of the favourable state of the public funds, should raise money by the sale of stock belonging to the National Debt Commissioners. My hon. Friend below me (Mr. Laing) has censured that step. I am responsible, however, for a large part of that proceeding, and my right hon. Friend is responsible for having continued in the same track. I do not believe that it would have been satisfactory to the House that, before the conclusion of the financial year, it should be called upon to make another financial arrangement. The real truth of the case is, that in time of peace it is an easy thing to propose to the House of Commons a financial arrangement which shall last over twelve months; but in time of war it is extremely difficult to do so. On the other hand, it is most annoying and worrying to the House of Commons to be continually pressed with one application after another for an increase of taxation; and it is most desirable to adhere, if possible, to the principle of an annual statement in preference to a multiplication of your financial plans. It may be open to question whether last year, in our desire to act in a constitutional manner, and to place ourselves at the command of Parliament, it was for the public convenience that the House of Commons should have been twice called upon to alter its arrangements, and to make ad- ditional pecuniary provisions for the expenditure; at any rate, I think that my right hon. Friend did quite right to reserve his statement to the usual time, and that he did right to use his discretionary powers for obtaining money upon terms which I do not think at all disadvantageous, but rather the reverse, instead of coming down prematurely to Parliament with a budget which he would have to alter again before the end of the Session. I am about to express regret in quite a different direction. I am decidedly disposed to regret that my right hon. Friend, having postponed his financial statement till the 20th of April, did not postpone it and the loan consequent upon it for a week or a fortnight longer; and I am so upon account of a question of the greatest importance. You have at this moment negotiations going forward at Vienna. Upon the issue of those negotiations it must depend whether your expenditure will be, as my right hon. Friend says, 86,000,000l., or under 70,000,000l. If you were to conclude peace to-morrow your expenditure for next year would probably be greater than for the year which has just closed, yet it would not be near the mark which my right hon. Friend has estimated. Take, for example, the item of 4,000,000l. for embodying the militia. Of that sum 3,000,000l. at least, and perhaps more, would be saved in case of peace. Then, again, for the transport service there is a sum of from 5,000,000l. to 6,000,000l. which has been voted, more than one-half of which would in all probability be saved if the negotiations which are now going on should lead to an immediate peace. We have also the large estimate of 8,000,000l. for the Ordnance Department, a large portion of which is voted as a provision to meet the weekly, daily— nay hourly consumption arising from the exigencies of the war, and the necessity for those supplies and the arrangements connected with them would terminate with the war itself. It appears, then, that a large portion of the money which has been voted is connected with the immediate expenditure for the war, and I should have been glad if we had not been called upon to take a step of so great importance as the one which has this evening been proposed, at a time when we may expect from day to day to learn the issue of the conferences now being held at Vienna. I do not mean to say—for I am aware of the argument that might be urged if I did, that a war may leave off at any time—that by the present proposal you are pledging yourself to carry on the war; but our present position, as it appears to me, is somewhat peculiar. We have negotiations on foot in which a certain progress has been made. We have arrived at the third out of four conditions, and we have something like a moral certainty that if the negotiations on that third condition should fail in being brought to a satisfactory termination —and if they do unhappily fail we shall know it in a few days—the war will continue. Under these circumstances, I should have thought that, financially speaking, the budget, having been delayed to the 20th April, might have been advantageously postponed to a somewhat later period. [Mr. WILSON intimated dissent.] I see that my hon. Friend the Secretary of the Treasury shakes his head, but I think I am sufficiently familiar with the ordinary practice of my hon. Friend to understand the meaning of that shake of the head. I think he meant to express his conviction that if the budget had been postponed things could not have gone on; and I can quite believe that my right hon. Friend the Chancellor of the Exchequer might have found it necessary to ask for some temporary means of obtaining money on certain conditions, but on conditions not involving an important financial arrangement like that now proposed. I must add one sentence to what I have already said, because I am anxious that my vote tonight should not be made to bear an aspect which in reality it does not bear. It is to my mind impossible to overstate the magnitude of the issues involved in the negotiations now going on at Vienna. I confess it pains me deeply to see signs of levity, come they whence they may—and I do not allude to what has taken place in this House, for here I am glad to say I have seen no such tone exhibited—with reference to matters of such tremendous interest. I apprehend that when these negotiations are concluded, whatever may be the result, whether they lead to peace —which God grant—or whether they terminate in a manner which will render necessary a prolongation of the war, the House of Commons and the country, in one form or other, will have to pass their judgment upon them. It will then be for this House to determine whether in its judgment the Government has conceded too much or too little—whether it has well discharged its duty and its awful responsibility either of acceptance or rejection of terms of peace; and it is hardly possible to find language strong enough to characterise the grave nature of the responsibility which now devolves upon them. One thing is clear, and that is, that you cannot come out of the conferences now going on at Vienna as you entered into them. It would indeed be a sufficiently important matter for reflection if the only question involved in the conferences was the continuance of the war, after the conclusion of the conferences, upon the same footing as that upon which we stood before their commencement and holding the same relations towards the other Powers of Europe which we then held; but there is a high probability—if not a certainty—that if these conferences terminate without any result, your relations with the other Powers of Europe will be essentially changed. Compared with the present position of this country, the fundamentally new conditions under which it may be called upon to pursue the war form a question of gigantic importance. I wish that there should be no misunderstanding as regards the vote which I shall this night give—I do not wish it to be regarded as my judgment upon that awful question. Do not let it be said, that by consenting to make pecuniary provision for the year I have committed myself to the issue of the Vienna Conferences. As to the mere financial advantage of taking a loan at the present moment, I am perfectly willing to pass by that question rather than to attempt to interfere with the Government or with my right hon. Friend, but I reserve to myself the most perfect and absolute freedom to pass my judgment with respect to the issue of the conferences at Vienna. I will no longer trespass on the time of the Committee, but I will only say that my object has been to endeavour to place in a clear point of view the vote we are now called upon to give, and I, for my own part, retaining all my objection to loans, and all the desire I have always expressed that the expenses of the war should be defrayed, as far as they reasonably can be, from the taxation of the year, and reserving to myself the perfect freedom to which I have alluded, shall say "aye" to the proposal of my right hon. Friend.

SIR FITZROY KELLY

said, he felt that he could not consistently with his duty give a silent vote upon the Resolutions before the Committee; but he felt called upon to call attention to one or two considerations regarding the loan which had that night been announced by the right hon. Gentleman the Chancellor of the Exchequer. It was not his intention to trouble the Committee with any observations on the proposed increase of direct or indirect taxation, but, as regarded the loan, it might prove, as had been suggested, by the hon. Member for Wick (Mr. Laing) the first of a series of loans to which the House would be called upon to assent, and it certainly was the duty of the Committee to withhold its approbation from any loan which might be proposed if they were satisfied that the plan proposed was vicious in principle and detrimental to the public interest. He felt called upon to say that the scheme of the loan now proposed by the right hon. Gentleman was marked with every defect which could belong to a loan, while it possessed no single advantage which the present state of the public revenue enabled a Minister to command. The scheme embraced two conflicting and objectionable principles, inasmuch as an amount of stock equal to the capital borrowed was created, and at the same time the repayment of a portion of the loan was to be made upon terminable annuities. It appeared to him that, looking at the present rate of interest and the price of the funds, to borrow 16,000,000l. by the creation of an equal amount of stock was to proceed upon a false principle, and one which involved a large sacrifice of the public money. From the beginning of the year to the present day it appeared to him impossible that a worse time could have been selected or a more unfortunate moment for proposing a loan. The present state of the negotiations at Vienna, and the condition of the war in the Crimea, acting upon the money-market, rendered it more disadvantageous to contract a loan at the present day than at any former period of the year, and more especially as the public were led to believe that a very few days would bring the negotiations to a point which would give the public information to enable them to consider the terms upon which the loan was to be adopted. The first observation he should make was, that by creating this loan of 16,000,000l. when the funds were about 10 per cent. below par, they made it impossible at any future time, however favourable the circumstances might be, fur the country to get out of it with a loss of less than 1,600,000l. The difference between the present period and the time of Mr. Pitt, to which the right hon. Gentleman referred for precedents, was this—that in Mr. Pitt's time not only was a long war anticipated, which depressed the money-market to an almost unexampled degree, but public credit was at that time at its lowest ebb, and the mercantile community was in a condition of deep and wide-spread distress. Could, then, the terms at which a loan was obtained under such circumstances justify the bargain made by the Government now, when public credit was high and money abundant, and when, if some different principle had been acted upon, much more advantageous terms might doubtless have been procured for the public, and a saving of some 40,000l. or 50,000l. a year in interest at least effected. He conceived there were still greater objections to the other part of the right hon. Gentleman's proposition—namely, that which involved the payment of an interest of 14s. 6d. by means of a terminable annuity expiring at the end of 30 years. This he thought was paying an unnecessary and extravagant percentage. He was of opinion that nothing but a case of extreme national necessity could justify any addition to the national debt, and therefore he did not hesitate to say that he was favourable, as a matter of general principle, to the raising of money by terminable annuities. But he must qualify that observation by adding that for Government to raise money on terminable annuities, when the rate of interest was high, and the price of the public funds far below what it would be in a time of prosperity, was making a bargain obviously most disadvantageous to the country, and guaranteeing for the long period of thirty years a rate of interest which they all hoped might not continue for more than three or four years longer. If the present war were to terminate in three, four, or five years, there could be no doubt that the rate of interest would fall, and there would be the means of obtaining a loan to any amount either by the creation of stock or terminable annuities on much more favourable terms than at present:—yet in consequence of the bargain now being made the country would have guaranteed a rate of interest for thirty years founded on the state of the money-market at the present moment under all the effects of an existing war. This naturally accounted for the hard terms forced on the right hon. Gentleman; for in accepting this loan the Government had sacrificed about a million sterling in capital, and in interest some 40,000l. or 50,000l. a year. The present price of the funds being about 90, money was worth about 3l. 6s. 8d. per cent. and no doubt with the credit of the Government it would have been perfectly easy for the right hon. Gentleman to raise 16,000,000l. at the current interest of the day, for as long or as short a time as the Government might think it necessary to retain the money, and thus he would have been enabled, when the rate of interest fell, to pay off the loan by a fresh loan at a reduced interest. But instead of that, the right hon. Gentleman proposed the double plan now before the Committee. He had required an advance of what might be called a sum of 1,600,000l. upon a terminable annuity of thirty years, not at 3l. 6s. 8d., the present value of money, but at 3l. 14s. 6d. which was paying 8s. per cent., or 62,000l. a-year, for the difference between a perpetual annuity and an annuity for thirty years on the sum of 1,600,000l. It had been stated that Pitt made his loans during the war upon the principle of the right hon. Gentleman; but it should be borne in mind that that statesman never borrowed upon the creation of stock until he had exhausted all the resources of his genius, until all his efforts had failed to procure money on other terms. He should abstain from dividing the Committee on the question, following the example of the right hon. Member for the University of Oxford; because he felt that it was the duty of every Member of the House, engaged as they were in a war requiring all the efforts and resources at their command, not to thwart her Majesty's Government in any measures they might bring forward for the carrying on of that war, unless they should feel that, besides being vicious in principle and detrimental to the public interest, it would actually be a breach of faith in the House to sanction them. The loan, although both vicious and detrimental, was yet necessary for the purposes of the war. He should not, therefore, oppose the passing of the Resolution, but he entered his protest against the principles on which the loan was to be raised. Should they feel themselves again under the necessity of once more resorting to the money market, he hoped it would be upon other and more advantageous terms.

MR. W. WILLIAMS

said, that, so far as concerned the direct taxation the right hon. Gentleman proposed, he saw nothing particularly objectionable, but he decidedly objected to the way in which it was proposed to add to the national debt, the amount of which was already so enormous. The right hon. Gentleman had followed in the track of all former Chancellors of the Exchequer, who, whenever they were under any financial pressure, resorted to an addition to the national debt. In this manner we had added no less than 44,000,000l. to it during the last twenty years; and, although it might be alleged that we had made some reductions, they did not compensate for the augmentations of the debt. When 8,000,000l. had to be raised to relieve the distress in Ireland a few years ago, the then Chancellor of the Exchequer, making the best bargain he could in Consols, added to the debt more by 938,000l. than he received in money. He therefore remarked with pleasure that now, for the first time, the Chancellor of the Exchequer proposed to get his pound sterling for his pound of Consols. If Mr. Pitt had adopted that principle, our national debt would now be 175,000,000l. less than it was. We had in 1798 a Finance Minister who made a loan of 34,000,000l. in Consols; and how much did he get for that? Just half the amount—only 17,000,000l. The 3 per cent Consols now amounted to more than 500,000,000l. sterling, and their interest could not be reduced without a twelve month's notice; and no Chancellor of the Exchequer would be bold enough to attempt it with such an amount; yet it was now proposed to add to that amount. Our national debt in 1818 amounted to 776,000,000l., and in 1852 it was 765,000,000l., so that 11,500,000l. was the whole amount of the reduction we had effected in the last forty years; but if he included the Exchequer bonds and Exchequer bills, our whole debt was but little less than 800,000,000l., and would some day swamp the country. The proposition to lay aside 1,000,000l. yearly for sixteen years to pay off these 16,000,000l. was quite fallacious. It was not likely the House of Commons would be disposed to carry it out; and if they did, what an enormous loss the public would sustain when each million of these Consols, which were issued now at 86½, were to be bought back again, perhaps, at the price of 101 or 102, at a future day! The right hon. Gentleman had omitted, in his (Mr. Williams's) opinion, a very important item of taxation. He alluded to the omission of imposing the probate and legacy duty, and all property belonging to corpora- tions, colleges, Universities, and properties of that kind which now escape, but which would not have escaped under the Chancellorship of the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone). He (Mr. Williams) brought the question before the House some little time ago, and the Chancellor of the Exchequer promised to consider it—indeed, he stated that the late Chancellor of the Exchequer had left him the outline of a Bill which would be satisfactory with regard to that important measure. Although successive Governments had not been very successful in regard to the reduction of the national debt, he held that they were not justified in making additions to the debt irrespective of its present enormous amount, for he believed that the time would come when, as had been described by Hume, (the historian), the debt would put down the country, or the country would put down the debt. To that end it was as certain to come as day followed night, unless the Government put a speedy stop to the system of increasing our national debt. He desired to object in the strongest terms possible to any increase of the 3 per cent Consols, and he was surprised that any Chancellor of the Exchequer should recommend such a course, why not create new stock reserving the right to pay it off at par after twenty years.

THE CHANCELLOR OF THE EXCHEQUER

wished to say a few words in reply to the observations of the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone). In negotiating the loan now under the consideration of the House the Government had strictly followed the precedents set by former Governments; and, though they were conscious that the course necessarily limited to a certain extent the discretion of the House, and would gladly have adopted some other means of providing for existing exigencies, they had found it impossible to resort to any other course. It was not their wish to do so if they could have adopted any other course previously to obtaining the consent of the House; but it must be obvious to any hon. Member, on reflection, that it would be utterly impossible for any Government to come down to the House and discuss the manner in which a loan should be effected, to arrange the minimum terms, and settle the details of negotiations which, in order to be successful, must necessarily be settled in private. So far from obtaining more satisfactory terms by the adoption of such a course, he believed that a contrary result would have been shown, They therefore decided to adhere to the precedents of former Governments, and had in no respect departed from them. It necessarily followed that, a provisional contract having been made with reference to the loan, they must now ask the House to abide by the terms contained in that contract, for it was impossible for the Government to consent to any alteration. With regard to the proposition to which his right hon. Friend had referred for the repayment of 1,000,000l. a year at the termination of the war, that was not one of the essential conditions of the contract, and was a matter entirely open for the consideration of the House. If the House should not approve that provision it would be quite competent to them to modify or reject it. He hoped, however, that the Resolution relating to that subject would be permitted to pass with the other Resolutions to-night, as its omission might occasion some inconvenience, and he would undertake to say that that provision should not be viewed by the Government on the same footing as those parts of the Resolutions which were matters of contract with the lenders. With regard to the question of terminable annuities, the hon. and learned Gentleman (Sir F. Kelly) seemed to be under the impression that the Government had resorted to some novel and unprecedented course; but so far was that from being the case that the whole of the existing terminable annuities, which now amounted to above 1,000,000l. a year, had been created in the same manner, namely, as attendant annuities upon loans. From 1793 to 1816 there had been thirty-one loans contracted, ten of which were aided by long annuities; and the slave compensation loan, contracted more recently, had been aided in the same manner. In adopting this mode of borrowing money the Government had, therefore, followed a long series of precedents. The hon. and learned Gentleman complained that the Government obtained 100l. in money for every 100l. of stock they created; but he (the Chancellor of the Exchequer) was at a loss to understand how that could be said to be a losing bargain on their part. when the Government, in borrowing money, gave 100l. of stock for some 70l. or 80l. or 90l. in money, the bargain was perhaps a disadvantageous one for them, but he could not see on what ground a complaint could be made against the Government, that they received 100l. in money for each 100l. of stock.

MR. HEYWORTH

said, he had a most serious objection to all indirect taxation, because it tended to raise the price of all articles of general consumption. If prices were raised, consumption diminished, and a diminished consumption materially affected the industry of the country, destroying the very sources from which the country derived all the wealth which paid all the taxes. That was the ground on which politically he objected to indirect taxation. Members of that House did not like to increase their income tax, or to impose any additional tax upon those who were rich; but they had no hesitation in putting it upon the poor in the shape of a tax upon articles which they consumed, and which they paid for out of their incomes. It would have been far more politic and just to raise the additional taxation by an increased income tax, even if it amounted to 20 per cent—that would have shown some hardihood and nobleness in their warlike profession—but he should oppose any measure which recognised the objectionable system of indirect taxation.

MR. H. BAILLlE

said, the Chancellor of the Exchequer appeared to have misunderstood the observations of his hon. and learned Friend the Member for East Suffolk (Sir F. Kelly), in whose views he entirely concurred. He (Mr. Baillie) believed that if the Chancellor of the Exchequer had gone into the market, and had borrowed money at the present rate of interest, which was about 3½ per cent, instead of bargaining to pay what was equivalent to 3¾ per cent, the Three-and-a-half per Cents thus created might, on the conclusion of peace, have been reduced without difficulty to Three per cents, and the country would have been relieved from a burden of ¾ per cent upon the debt, which under the present plan they would be compelled to pay for thirty years.

MR. WILKINSON

said, he thought that the plan of the Chancellor of the Exchequer for raising the loan had been contrived so as to meet objections from both sides; because it would not defray the increased expenditure entirely from the revenue of the year, neither would it do so wholly by loan; while on the other hand, the amount to be borrowed would not be raised exclusively by perpetual annuities nor by terminable annuities. The scheme was therefore based upon a combination of the different principles advocated in oppo- site quarters. As to raising money upon Consols, it too was clearly the duty of the Chancellor of the Exchequer to borrow as cheaply as he could; and if the entire sum wanted were to be raised in the shape of Three per Cent consolidated and perpetual stock, it was not improbable that that would be a more advantageous arrangement for the public. It was notorious that the Three per Cent Consols were more in demand and fetched a higher price than other stocks, in consequence of what had been termed their "delightful simplicity." As to the plan of the right hon. Gentleman (Mr. Gladstone) for creating a two-and-half per cent stock, it was no doubt a great and a remarkably good plan, only it had been tried and found to fail, and therefore was not at all feasible. He scarcely thought, too, that the country would prove to be so virtuous as to lay by 1,000,000l. a year for the purpose of redeeming the stock now proposed to be borrowed.

MR. JOHN MACGREGOR

said, he would give the Chancellor of the Exchequer credit for sincerity in the conviction that his measures were of the best possible character; but he was compelled to differ from him. He did not think that the present state of affairs justified a loan in the manner now proposed; he objected not only to the form of it, but he thought the right hon. Gentleman had committed a grave error in not having thrown it open to public competition. If that course had been pursued, and the necessary amount had been borrowed in the form of terminable annuities, no doubt sufficient money could have been obtained at an average rate of 31 per cent, with this advantage, that the debt would have vanished for ever at a given period. When the late French loan was announced and thrown open to public competition, more than double the sum demanded was rapidly subscribed; and a similar result would, in all probability, attend the adoption of that principle in this country. The country had long pronounced its verdict against any addition being made to its permanent debt, and the House should therefore pause before it suffered itself to be hastily drawn into sanctioning a fallacious and dangerous principle. The Government had not treated the country with confidence in this matter. There was now less prospect of peace than there was six months ago—the war was now only at its commencement, and it was obvious that if there was a deficit of 23,000,000l. at this early stage of the struggle, the present budget, should the House unwisely commit itself to its principle, would be only the first of a series of similar additions to our already enormous and overwhelming public debt. He therefore trusted the House would pause before they sanctioned the present proposal of the Chancellor of the Exchequer. Montesquieu had observed that the English constitution would fail when the House of Commons became more corrupt than the Government—in other words, when they fell into apathy—and he much regretted to see so small an attendance when measures were being discussed which would injure the real interests of the country. Posterity was not being treated fairly, and it would say that it was not responsible, for it was not represented, and that the tax was saddled upon it without its consent by those who engaged in measures to which it was not a party. If ever there were measures which exhibited little practical wisdom with respect to future events they were those of the Chancellor of the Exchequer. If the House agreed to them, the country would not, and he would do all he could to make the country take up his opinions. He believed that Government belonged to the fatal number whom the gods had in their anger determined to destroy, but whom in their mercy they had first deprived of their senses to prevent them feeling their sufferings. He protested against the Resolution, which he was afraid would be only the commencement of a series of loans; and he must also dissent from the other parts of the budget. He had consented to arrest the decline in the tea duties in the present state of affairs, but he was opposed to any increase in them. Our merchants had framed their calculations upon the hypothesis that the existing legislation with regard to import duties on articles of consumption would be maintained, little dreaming after all that had passed in Parliament of late years on this long-controverted subject, that the Legislature would bo asked to retrace its steps and increase those duties. Although he thought their minimum scale of sugar duties had been fixed too low, the attempt to increase those and the tea duties would bring down upon the Government the curses of every woman in the country. This was one of the worst budgets that had ever been proposed, and it would make the Government more unpopular than any other measure they could have introduced.

MR. MUNTZ

said, the hon. Gentleman who had just sat down had observed that posterity would have a right to complain of being taxed in the manner proposed. Posterity might complain of them as they complained of their ancestors; but what would posterity say if in avoiding to tax them, they were to allow the Russians to carry the war into Europe generally, and to take possession of different countries till they arrived at our own coast, and destroyed all our trade and prosperity? No man could have a greater objection to loans under ordinary circumstances than he had, believing as he did that when money was obtained easily, either in public or in private life, it was generally spent wastefully. But this was an exceptional case, for there never before was a war which belonged so completely to posterity as the present one. It was of no interest to the nation at large, as it existed, whether the war were carried on or not; and if the war were for posterity, surely posterity ought to pay something toward the expense. He did not object to a loan, but he objected to the principle which had been adopted. He was quite at a loss to understand why the Government had not adopted the principle of terminable annuities, and on that point he agreed with the hon. Member for the Wick Burghs (Mr. Laing), that the only question was what the country should pay. With terminable annuities only, the transaction would ultimately have closed itself, and the loan have come to an end. He thought the House of Commons was used in a rather extraordinary manner, inasmuch as the Government did not come there in the first instance to ask what the loan should be, whether as regarded the amount or the terms, but agreed with a great capitalist for a loan at a certain rate, and then came to them for sanction. That was making a laughing-stock of the House. How could the House check the Government when the whole affair had been settled before it was brought under their notice? With regard to the rest of the budget, he thought it would cause much unnecessary suffering to merchants by making alterations which they had no reason to anticipate. As regarded the income tax, he objected as strongly as any one to the manner in which that impost was now levied, but he would rather see it extended so as to meet the requirements of the country, than see any increase of the taxes on the necessaries of life.

MR. HILDYARD

wished to know whether the Chancellor of the Exchequer pro- posed that the increase of twopence in the pound should apply to incomes under 150l. a year?

THE CHANCELLOR OF THE EXCHEQUER

said, his proposition was that the increase should apply to incomes generally.

MR. MASTERMAN

said, he thought the House ought to come to an early decision with regard to the loan. He did not think the Government had made an unfavourable bargain for the country. In his opinion the House should be satisfied with the bargain, and not hesitate to sanction it.

MR. THORNELY

was gratified to learn from the Chancellor of the Exchequer that they would not bind themselves by assenting to the Resolution in the chairman's hands, to appropriate a million a year after a treaty of peace had been signed, to the extinction of the three per cent consols. He totally objected to the making of such an engagement beforehand, and was satisfied with the present arrangement with regard to the sinking fund.

MR. MALINS

said, having last year deprecated any attempt to raise the amount required annually during the war from taxes levied within the year, he felt extremely gratified that the present Chancellor of the Exchequer was not about to engage in such a task. On general principles he approved of the plan adopted by the Chancellor of the Exchequer for the purpose of meeting the deficiency; and he thought the Government had made a fair compromise between direct and indirect taxation, when they proposed to raise 3,300,000l. by indirect, and 2,000,000l. by direct taxation. The Government had, in his opinion exercised a wise discretion in coming forward so early for a loan, and in giving up all attempts to raise 86,000l. within the present year; and if it should be necessary to carry on the war for a long period, he hoped the Government would endeavour to meet it by a mixture of direct and indirect taxation, combined with moderate loans on the best terms that could be obtained. He rose chiefly for the purpose of expressing his approval of the budget submitted to the House.

Resolution agreed to.

Resolution having reference to the spirit and malt duties having been read,

THE CHANCELLOR OF THE EXCHEQUER

stated, in reply to a question from Mr. CRAUFURD, that the Government had no intention to make any alteration with regard to the drawback on malt

Resolution agreed to.

Other Resolutions agreed to.

MR. JOHN MACGREGOR

rose to warn the House against reporting the Resolutions in a hasty and ill-considered manner. The effect of reporting these Resolutions would be to enable the Government to levy from to-morrow all the new taxes indicated by them, without having to wait for the authorisation of distinct Acts of Parliament. He was quite aware that to oppose this new scheme of taxation would be quite in vain, unsupported as the attempt must be by any organised party opposition. Still he could not allow the moment to pass without entering his protest against the rash interference with the progress of industry and commerce contemplated by the proposal announced that evening.

Resolutions to be reported on Monday next.

The House resumed.