§ House in Committee.
THE CHANCELLOR OF THE EXCHEQUER
Mr. Fitzroy, not with standing the advanced hour of the night, I trust the Committee will allow me to explain the Resolutions which I am about to put into your hands, seeing that to-morrow will be occupied with a debate on another subject. It would not be convenient that the Resolutions should be brought under the notice of the House on Saturday, and if they were postponed until Monday the Session would be lengthened more than we wish to see it. If the Committee will allow me to proceed, I hope to be able, in a short time, to conclude the statement that I have now to make. In the financial statement of the year made in April last I estimated the entire receipts of the revenue for the year ending April next at 86,339,000l. That amount was made up of the estimated revenue for the ensuing year, of a loan of 16,000,000l., and a Vote of 1698 3,000,000l. for the prospective issue of Exchequer bills. [Mr. DISRAELI: That does not make 86,000,000l.] The estimated revenue from taxation from the ensuing year, the loan of 16,000,000l., and the issue of 3,000,000l. Exchequer bills made together a total amount of 86,339,000l. That calculation holds good at the present time, with the exception that I estimated the amount of 200,000l. as likely to be produced from a stamp duty on bankers' checks, which I afterwards I abandoned; and, therefore, the expected receipts of the year, as set forth in the Budget of the 20th of April, may now be taken at the reduced amount of 86,139,000l. The expenditure, including the loan to Sardinia, was stated at the same time at 80,899,000l. To this sum I added 1,000,000l. for the repayment of advances made on Exchequer bills for Ways and Means of the present year: these sums, making together 81,899,000l., deducted from the present corrected estimate of the receipts (86,139,000l.), leave a margin of 4,240,000l. That is the margin of revenue over expenditure according to the estimate of receipts and expenditure as I stated it to the House in; the month of April last. At that time, as the Committee are aware, this calculation was founded upon the estimates for military purposes which had been partially voted. The Vote for the Civil Service was not then taken. The Estimates for Civil Services, which had been partially prepared, I estimated at 6,500,000l. That branch of the expenditure has now received the sanction of the House, and the total sum voted for the Civil Services is 6,506,062l., which agrees very nearly with the estimate I then made. But it has been necessary, as the Committee are aware, to submit an increased Estimate for the Military Services, in addition to those which had been agreed to by the House when I made the estimate of expenditure and revenue in April. The reasons for these increased Estimates have been explained to the House when the Votes were taken. It is an ancient observation that war does not consume according to rule and measure, and these Estimates which we proposed at the commencement of the year, after six months' experience of the war, have proved insufficient, and it has been necessary, therefore, to bring forward additional Estimates to meet the increased expenditure, as tested by the actual expenditure of the first four months 1699 of the year which have expired, and the amount of which has been ascertained. To the Estimates for military purposes originally voted, I have to add the Supplemental Estimates since agreed to, and I will now state the actual expenditure for military purposes during the four months including April, May, June, and July last. The amount of the original Estimates for the three purposes of the army, the Commissariat, and the Militia, were 16,221,197l. There has since been a Supplemental Estimate for the Commissariat, amounting to 2,568,335l. The total estimate for the Army, the Commissariat, and the Militia now stands at 18,789,532l. The actual expenditure which has taken place since the beginning of the present financial year under these three heads, in the four months to the 31st of July, 1855, was 4,850,000l. That sum has been actually disbursed, and that will give an estimated expenditure for the year of 14,550,000l. So that there is every reason to hope that the estimated sum will exceed rather than fall short of the actual expenditure of the year. The original Estimate for the Navy and the Transport and Packet Services was 16,653,042l.; the Supplemental Estimate was 2,725,971l.; making together 19,379,013l. The actual expenditure for these services since the beginning of April, has been 7,649,603l. If, as in the former case, we multiply this actual expenditure by three, we have a total of nearly 23,000,000l., which is higher than the amount that had been estimated as necessary for the naval service of the year. It is hoped, however, that the expenditure during these four months is not to be regarded as any guide to the total expenditure of the year, but that the expenditure during the next eight months may fall short of the scale of expenditure for naval purposes during the earlier months of the financial year. The original Estimate for the Ordnance was 7,803,154l., and there was a Supplemental Estimate of 841,138l., making altogether 8,644,292l. The expenditure for the Ordnance during the last four months has been 2,812,961l., and that amount, multiplied by three, gives a sum of 8,437,883l., or something below the total Estimate formed of the expenditure of this department for the year. Then, under the head of "Vote of Credit" there is an expenditure of 1,200,000l., the result being that the original Estimates for the year were 43,677,393l., and the Sup- 1700 plemental Estimates 6,135,444l., making a total of 49,812,837l. The total expenditure for military purposes during the last four months has been 16,512,564l., and if we multiply that sum by three we have an amount of 49,537,692l., which nearly agrees with the total Estimate for the year—49,812,837l. Having informed the Committee of the result of this comparison between the estimated and the actual expenditure, it now becomes my duty to propose the means of meeting that additional expenditure which has been sanctioned by the House since I made my financial statement early in the year. I then said that I should propose an additional Vote of 3,000,000l. of Exchequer Bills. I now propose to increase the amount of that Vote to 7,000,000l., taking at the same time the option, in case it should be found advisable, of raising some portion of that amount by Exchequer bonds, instead of Exchequer bills. The margin which was allowed, according to my previous Estimate, was, as I have already stated, 4,240,000l. That margin assumed that there would be a Vote of 3,000,000l. of Exchequer Bills, to which I now propose to add 4,000,000l. of Exchequer bills; so that these amounts together will provide an excess of receipts over expenditure of 8,240,000l. Deducting from that excess of revenue over expenditure the additional Estimates for military expenditure to the amount of 6,135,000l., there will remain an unappropriated margin of Ways and Means of 2,105,000l. If, therefore, the expenditure should amount to the sum already voted by the House, and if it should be necessary to resort to the entire grant of Ways and Means which I am now proposing, there will remain an unappropriated margin of rather more than 2,000,000l. sterling. It is always necessary that some margin should be left for unforeseen expenses, but in this case I think the Committee will be justified in not requiring the Government to provide any unreasonable amount of margin for such unanticipated expenses. We know the actual expenditure for the last four months—one third of the entire year, and the portion of the year, probably, which includes those warlike operations that are attended with the greatest expense. With this experience, we are able to estimate with greater correctness the probable demands of the war during the remaining eight months of the year, and there is, therefore, the less necessity for providing 1701 a large margin of unappropriated Ways and Means in order to meet unforeseen contingencies. I may also state that, though I have provided a margin of 2,000,000l. sterling, it was necessary, at the beginning of the financial year, and before the first instalments of the loan were received, to issue a sum of money in Ways and Means bills amounting to about 1,700,000l., which must be provided for out of the revenue of the year; and, therefore, although according to the calculation I have submitted to the Committee, we have an apparent margin of 2,000,000l., nearly the whole of that amount may be regarded as already practically absorbed, and the plan I propose will in fact exhibit nearly an exact balance of receipts and expenditure. I should also add, as an additional reason for not providing any considerable excess of margin, that one object of making such provision is to meet the contingency of a deficient revenue. I am, however, happy to be able to state to the Committee that the receipts of the revenue during the first four months of the year have been on the whole satisfactory, and that, so far as a judgment can be formed from the amount of taxes actually received, it may be reasonably expected that the Estimate of their produce, which I submitted to Parliament in April last, will be fully realised. I have now merely to trouble the Committee with a short statement as to the amount of Exchequer bills at present outstanding. The proposition I have to submit to the Committee is that, instead—as I originally proposed—of taking a Vote of 3,000,000l. of Exchequer bills intended to cover the Vote of Credit of 3,000,000l. to which the House agreed this morning, that Vote shall be increased to 7,000,000l., and that a power shall be given to the Executive Government of increasing to that extent the unfunded debt of the country. The amount of Exchequer bills outstanding on the 31st of July was 17,099,400l. There are also outstanding Exchequer bonds to the amount of 6,000,000l. at 3½ per cent, 2,000,000l. of which are payable in 1857, and the same amount in 1858 and 1859. Now, although that amount of unfunded debt may seem considerable, it is by no means large as compared with the amount of the unfunded debt during the late war, and even subsequently to the conclusion of the war. In 1812 the total amount of Exchequer bills in circulation was 41,000,000l.; in 1813 it was 43,000,000l.; in 1814 1702 45,000,000l.; and in 1815—the last year of the war—it had risen to 57,000,000l. Even in the year 1818 the amount of Exchequer bills in circulation was 50,000,000l.; in 1819 it was 43,000,000l.; and up to 1839 the amount outstanding was never under 24,000,000l. Therefore, if the Committee should agree to add 7,000,000l. to the present amount of Exchequer bills, and if it should be necessary for the Government, in order to meet the exigencies of the public service, to increase the issue of Exchequer bills to that extent, the amount of Exchequer bills in circulation will not equal what it was for many years subsequently to the termination of the last war. I believe means can be found of replacing Exchequer bills to a considerable amount, without affecting the general market or influencing the rate of interest. Exchequer bills are now at a considerable premium, even those the interest upon which was slightly lowered at the beginning of the quarter, the premium has risen since the time when the reduction of interest took place. Under these circumstances, seeing that scarcely any other option is left to the Government, especially at this late period of the Session, as to the mode of raising additional Ways and Means, I hope the Resolutions I have to submit to the Committee will meet with their approbation, and that they will confer upon the Executive Government the power of increasing the unfunded debt to the amount proposed in order to meet the exigencies of the public service. The right hon. Gentleman concluded by moving the following Resolutions—
- 1. "That, towards making good the Supply granted to Her Majesty, the Commissioners of Her Majesty's Treasury be authorised to raise any sum of money, not exceeding Seven Millions sterling, by the issue of Exchequer Bills."
- 2. "That in case the said Exchequer Bills be not issued for the full sum of 7,000,000l., then the Commissioners of Her Majesty's Treasury be authorised to issue Exchequer Bonds, bearing Interest at any rate not exceeding 4l. per centum per annum, to such an amount as with the total amount for which Exchequer Bills shall be issued will make up a sum not exceeding the whole sum of 7,000,000l. authorised to be raised by these Resolutions."
- 3. "That such Exchequer Bonds, if issued, shall be paid off at par at the expiration of any period not exceeding six years from the date of such Bonds."
- 4. "That the Interest of all such Exchequer Bonds shall be payable half yearly, and shall be charged upon and issued out of the Consolidated Fund of the United Kingdom, or the growing produce thereof."
- 5. "That, towards making good the Supply
1703 granted to Her Majesty, there be issued and applied, to the service of the year 1855, the sum of 5,599,112l. 6s. 8d., being the Surplus of Ways and Means granted for the Service of preceding years."
- 6. "That, towards making good the Supply granted to Her Majesty, the sum of 26,006,352l. 12s. 9d. be granted out of the Consolidated Fund of the United Kingdom of Great Britain and Ireland."
Sir, I have followed the statement of my right hon. Friend with much interest, and there is nothing in that statement to which I feel it my duty to object. Undoubtedly the variations between the Estimate and the expenditure upon the different branches of the military service are very considerable, but they are on the whole variations which we had every reason to anticipate. The result as regards the army is more satisfactory than as regards the navy and Ordnance, owing, however, to causes which are not perhaps altogether satisfactory. On the whole, I do not see that we have any right to complain of the calculations of my right hon. Friend with regard to expenditure. With regard to the mode in which he proposes to provide for that expenditure, I quite agree with him that the Committee may well feel disheartened at the great and sudden extension of the unfunded debt. Considering that debt as made up of Exchequer bills and Exchequer bonds, the change which has been effected in it has been very rapid, for only two years ago it stood at 13,000,000l., and only fifteen months ago at 16,000,000l., while after the Vote now proposed has been taken it will stand at a maximum sum of 30,000,000l. That is a very large sum, and although we may be referred to the much higher sum at which it stood in former years, we must bear in mind that the description of unfunded securities of which the debt consists is now subject to a great deal of competition in the market from circumstances which were unknown, or little known, during the last war; and, therefore, we have not the same broad field upon which to operate as those who preceded us. But I do not believe any great inconvenience will follow from carrying the unfunded debt to the amount proposed by my right hon. Friend, in case of need; and I do not see any other mode of providing for the present exigency, which, under the circumstances of the moment, it would be more desirable to adopt. There is one point to which my right hon. Friend did not advert, upon which I feel some 1704 anxiety, and although I do not intend to make any proposal with respect to it, I think it ought to be passed over in silence, My right hon. Friend proposed, almost as a matter of course, that the additional expenditure which he believes to be necessary should be provided for entirely by an addition to our debt, without raising any question as to an increase of the taxation of the country. It is necessary to bear this in mind, because the House set out at he beginning of the war with the full and firm intention of making great efforts to supply, as far as possible, the expenditure of the war by addional taxation. It would, of course, be impossible to carry this principle to extremes, but at the time my right hon. Friend brought forward his budget we had in view a certain proposition between that share of expenditure which was to be raised by loans and that share which was to be raised by taxes. My right hon. Friend then proposed that he should be enabled to impose taxes to the extent of about 5,000,000l., and that he should be invested with a borrowing power to the maximum extent of 19,000,000l. Four months have elapsed since my right hon. Friend's proposal, and the balance then established has been rather seriously disturbed. First, there are certain deductions to be made from the proportion intended to be raised by taxes. My right hon. Friend has been obliged to abandon his proposal to lay a tax on bankers' checks from which he anticipated a revenue of 200,000l. A change which had previously been under our consideration has taken place with respect to the stamp duty on newspapers, and the House has made a further, although slight alteration, in my right hon. Friend's arrangement by making it necessary for him to propose a reduction of the duty on stage carriages. So far the four months that have elapsed have tended to diminish the proportion of the extra revenue which it was intended to derive from taxes, and although my right hon. Friend has told us that the receipts from the revenue are, on the whole, satisfactory, I apprehend that the receipts he so describes are the receipts from that portion of revenue which consists of direct taxes. The yield from the income-tax especially has been progressively, from year to year, passing beyond the estimates. But, as far as regards the new indirect taxation levied on imports and on articles of consumption, I am afraid that the receipts are not altogether so satisfactory as 1705 my right hon. Friend anticipated, but, on the contrary, that you may trace in the disposition to decline manifest in these two branches of revenue the effects of some diminution in your trade and in the consumption of your people. With regard to the money derived from taxes the tendency is to diminish, while with regard to the money derived from loans the tendency is upwards, for without any addition to our taxes we are now about to add 4,000,000l. to the expenditure required for the service of the year. This illustrates the necessity of making absolute and strong efforts if we really mean to effect any practical improvement in the policy pursued during the last war. That war was commenced with a system the most improvident—that of trusting entirely to loans, and making no provision by means of taxes, except for payment of the interest of those loans; but when our predecessors became aware of the consequences of their improvidence, even under increasing pressure of the war, they increased their efforts to meet their expenditure by taxation. We began pretty well, and I hope that we do not intend altogether to forget our good intentions, but are still convinced that the expenditure of the war, as far as is reasonable, ought to be met by taxation, and that we will not, therefore, as a matter of course allow additions to be made to our borrowed money without considering what is the proportion between such borrowed money and the money raised by taxation. I hope that my right hon. Friend will bear these observations in mind, and that when he next proposes a comprehensive arrangement for the service of the year he will remind us of the great additions we have made to his power of borrowing money, and enlarge his proposals for additional taxation. There is an extremely trivial source of additional revenue to which I wish to call my right hon. Friend's attention. I think it is desirable that he should lose as little time as possible in giving effect to the extension of the succession duty to corporations. In 1853 this subject was postponed on account of the pressure of business; in 1854 it was again postponed, because the working of the law had not sufficiently advanced to enable us to judge whether this Amendment would be required; but I had hoped it would have been in the power of the Government to bring the measure into operation during the present Session, and I trust my right hon. Friend will give us 1706 reason to expect that it will be carried into effect at the opening of next Session.
THE CHANCELLOR OF THE EXCHEQUER
Sir, I did not undertake, upon the occasion of a Motion of my hon. Friend the Member for Lambeth (Mr. Williams), to look into the question to which my right hon. Friend has just adverted. I can assure him that I have not lost sight of the subject, but I am afraid, although it may be desirable on grounds of equity and justice to extend the same rule to corporations as to the owners of other property, that I cannot reasonably expect any large amount of revenue from this source. With reference to the subject of taxation, I can only say that the balance between taxation and loans had not, of course, escaped my attention when I submitted these Resolutions to the Committee, but the reason which principally guided me in making these propositions, and in not imposing any additional taxation, was the difficulty I should have had in realizing such new taxation within a limited period. Certain taxes are meant to be collected at the time when the Resolution respecting them is passed, but the period of collection of many others is postponed for six months, and it was important in making the propositions which I have laid before the Committee with respect to the remaining eight months of the year to provide Ways and Means which could be realised without delay. With reference to my hon. Friend's statements as to the unproductiveness of our indirect taxation, I must say that his apprehension appears from the figures which have been supplied to me not to be altogether well founded. The produce of the Customs during the last four months has been 7,599,000l.; the estimate of that produce which I submitted to the House last April for the current year was 22,400,000l.; and if the produce of the last four months be multiplied by three it gives 22,797,000l., or about 300,000l., more than my estimate.
My observations applied quite as much to the Excise duties as to the Customs. I am afraid, however, that my right hon. Friend forgets that during the last fortnight—even since these Supplementary Estimates were laid on the table—people have had before them the prospect of the imposition of new import duties, and that, consequently, with a view of anticipating these as far as possible, a large amount of import duties has been 1707 entered which does not properly belong to the last four months.
§ MR. DISRAELI
It is not my intention, Sir, on the present occasion, to make any remarks on the discrepancy between the right hon. Gentleman (the Chancellor of the Exchequer's) Estimates and the actual expenditure, nor do I think it convenient now to enter into any discussion as to the principles on which his financial system should be based. We have seen enough already to show us that the idea of being able to meet the expenses of the year, in a time of war, out of the revenue of the year, without borrowing, is rather a delusion. Besides a loan of 16,000,000l. we have already, in this brief space, increased our unfounded debt to the amount of 30,000,000l., and in the face of these results, although I should be glad to hear from the right hon. Gentleman that he felt sure of being able to meet the expenses of the year with the resources at his command, still what has occurred does not impress me favourably in that respect. I do not clearly understand how far the right hon. Gentleman's present position is compatible and consistent with the engagement which I believe he entered into when the loan of 16,000,000l., was negotiated, not to borrow any more money in the course of the present year. When the right hon. Gentleman asked for that Vote of Credit of 3,000,000l., which is now to be followed by an additional Vote of 4,000,000l., he told us that he did not expect to have to avail himself of that resource until the end of the month of December, and I am sure it would be satisfactory to the Committee to hear from him an assurance, now that he sees his way clearly, with the resources at his command, to the end of this year, so as to be able to fulfil the engagement into which he entered with the contractors, without, at the same time, trenching upon the resources afforded to him by this Vote of Credit.
THE CHANCELLOR OF THE EXCHEQUER
The precise promise made to the contractors was, that no additional loan of the same nature as the loan then made—by an addition to the funded debt—should be contracted until the end of the present year. An express reservation was made with regard to any foreign loans which might be brought into the market. It was also stated that Exchequer Bills would be issued, and I believe the precise amount 1708 was mentioned, but at the same time, an intimation was held out that it would not be necessary to bring any large amount of Exchequer Bills into the market before the end of the present year. That hope I still entertain. I do not anticipate that there will be any necessity, either with respect to the 3,000,000l., before voted, or the 4,000,000l., additional which we now ask for, to bring any great number of Exchequer Bills into the open market until the month of December. I must not, however, be understood as distinctly engaging myself that, in case of necessity, the Government will not resort to that method of raising money. I only express my opinion that it probably will not be necessary.
§ MR. DISRAELI
If the Government are satisfied that they have kept their engagements with the contractors I shall be the last person in this House to raise any objection. I must say, however, that nothing can be more impolitic than that the organ of the Government should hold out these loose anticipations, and should enter into engagements which he cannot be sure of strictly fulfilling. It would in my opinion have been much better that he should have negotiated the loan without any conditions of this sort—without attempting to make a better bargain by holding out vague promises which are liable to misinterpretation. Though I am perfectly willing to believe that the right hon. Gentleman has fulfilled his engagement, still he must admit that there has been an idea entertained, and with considerable foundation too, that he had entered into a contract such as I have stated.
THE CHANCELLOR OF THE EXCHEQUER
I wish, Sir, to guard myself against the supposition that I entered into any loose or vague engagement. The answer I gave was carefully considered beforehand, after as precise a calculation of the wants of the Government and the means of borrowing money as the nature of the war would permit. It has always been the custom for those who engage to furnish a loan to ask the Government what are their intentions with respect to contracting any future loans, while the instalments of the loan then under discussion remain unpaid; and there has generally been an understanding of some sort entered into on the subject. I gave the most distinct answer I could consistently with the circumstances 1709 in which the Government was placed. I believe I have adhered most strictly to the understanding, and that I shall be able to observe it to the end of the year. It was distinctly intimated, however, that a case of necessity might arise which would make it impossible for the Government to abstain from this mode of raising money, but that that case of necessity would not be allowed to affect the funded debt.
§ MR. GLYN
said, he was glad to hear that the right hon. Gentleman the Chancellor of the Exchequer proposed to take power to issue Exchequer bonds, which were become a more favourite species of security than the Exchequer bills, especially since the latter had lost the great advantage of being receivable in payment of Government duties. He regretted that the right hon. Gentleman, when he raised his loan of 16,000,000l., had not boldly asked for 20,000,000l. That sum would not have been too large, and it would have been a much better mode of raising the money than by issuing Exchequer bills. No one could blame the right hon. Gentleman for not attempting to impose new taxes, for the disturbance of commercial relations and the interference with the general operations of the country which such a proposition must have caused would have more than counterbalanced any advantages offered by that mode of raising money.
said, he felt bound to give in his adherence to what had fallen from the Chancellor of the Exchequer with regard to his engagement with the contractors for the loan. No doubt it would be very desirable, if possible, to avoid giving any sort of pledge tending to tie the hands of the Government; but if such a refusal involved the necessity of giving a higher price for the loan, then the doctrine of convenience must prevail, and that course adopted which was plainly most advantageous to the public.
§ Resolutions agreed to; House resumed.