THE UNFUNDED DEBT.

HC Deb 19 March 1855 vol 137 cc814-39

On the Motion for going into Committee of Supply,

SIR HENRY WILLOUGHBY

said, he rose to call the attention of the House to the state of the Unfunded Debt for 1855–56. He was anxious to obtain from Her Majesty's Government some explanations in reference to this subject, because a strong impression rested on his mind that this branch of the public debt stood at a much higher figure than Parliament had a right to expect, or even, he suspected, were aware of. Indeed, he should have directed attention to the matter during the passing of the Exchequer Bills Act; but it did so happen that at that time there was no responsible Finance Minister in the House, besides which the Bill was only a sessional one. The only occasion on which he had had an opportunity of stating his opinion on the subject was upon the occasion of the passing of the Bill—which was late upon a Wednesday—when he took what he might venture to term a flying shot at it, and expressed a hope that these Exchequer bills would not change their nature and he turned into funded debt securities. However, the hon. Secretary to the Treasury (Mr. Wilson) seemed on that occasion to consider any such contingency quite impossible. It was, however, an indisputable fact that Exchequer bills were converted into funded debt in the months of June and October of the year 1853; and it was against that process that he wished strongly to protest. The unfunded debt of 1853 amounted to 17,742,000l. By the 17 Vict. c. 25, it would be seen that the unfunded debt stood at 16,000,000l. But what was the amount of the unfunded debt for 1855 as it now stood under the Bill which had gone through that House? The actual sum appeared to be 17,183,000l.; but a certain amount of bills had been exchanged for bonds to the amount of 591,000l.; so that, practically, the unfunded debt for 1855 stood at the same amount as in 1853. He humbly submitted, therefore, that some explanation ought to be given as to why it was that the House had not been duly informed of the increase which had been made in the amount of the unfunded debt. Last year, on the occasion of his bringing forward his first Budget, the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone) stated that some Ways and Means would be required while his increased income tax was being realised; and, accordingly, he obtained a vote for the issue of 1,750,000l. in Exchequer bills. Now, it was these very Exchequer bills which he wished the House would trace, and in regard of which he was desirous it would determine whether it had been duly advertised of their issue. For he held it to be the imperative duty of Parliament closely to criticise every variation in the public debt—whether funded or unfunded—a doctrine nowhere more fully recognised than in the speech of the right hon. Gentleman the late Chancellor of the Exchequer. Well, on the occasion to which he had just alluded, the right hon. Gentleman stated that the vote of 1,750,000l. was in the nature of Supply Exchequer bills, while he carefully drew a distinction between the permanent and unfunded debt and the class of bills we were then advocating. He added that they were to be withdrawn as soon as the new income tax was realised, and that they were not to be confounded with the permanent Exchequer bills debt, but were to be taken per se, and were to be paid off out of the growing products of the revenue. Well, on the 21st of February the right hon. Gentleman ceased to be Chancellor of the Exchequer; and then, in the absence of all explanation—there being no one in office capable of rendering the necessary official statement—Her Majesty's Government did not hesitate to bring forward a measure actually rendering nugatory all their former professions, and incorporating this issue of 1,750,000l. Exchequer bills of last year with the unfunded debt of the country. He certainly thought the House of Commons had a right to expect some explanation would be given relative to this occurrence, and he trusted that the course recently pursued would not be drawn into a precedent.

MR. J. L. RICARDO

said, he had also given notice of a question to the same effect as the Motion of the hon. Baronet (Sir H. Willoughby)—the terms of his question being, whether the Secretary of the Treasury could give any explanation of a renewal of 1,750,000l. Exchequer bills, which was stated to have been made contrary to a pledge given to the House of Commons by the Chancellor of the Exchequer in the last Session? There was a general impression abroad that there was an irregularity in the statement of the accounts, and some discrepancy between the theory and the practice of the finance of the right hon. Gentleman the late Chancellor of the Exchequer. The amount of Exchequer bills which it was generally expected would have to be renewed this year was 15,433,000l., whereas the actual amount was 17,183,000l., which included the item of 1,750,000l. referred to by the hon. Baronet. Now, the right hon. Gentleman (Mr. Gladstone) in his budget speech of 1854, stated that these were special bills raised for the purpose of meeting expenses which had been incurred before, that they would be paid off from the produce of the accruing taxation, and would not appear in the amount of Exchequer bills to be renewed this year. On the 6th of March, 1854, in bringing forward his budget, the late Chancellor of the Exchequer said, he proposed to double the first half-yearly payment of the income tax, and to make provision, in the interval, before the tax could be actually levied by the issue of Exchequer bills within the amount of 1,750,000l., which would be paid out of the growing produce of the revenue. In alluding to these bills, the right hon. Gentleman (Mr. Gladstone) said, they were, in reality, what other Exchequer bills falsely purported to be supply Exchequer bills, and that when the supplies came in the bills would be paid off from such supplies, and nothing more would be heard of them. He had read that day the correspondence to which the hon. Baronet had alluded; and in it the right hon. Gentleman seemed to make two pleas, which appeared to be totally inconsistent with each other. The first was, that although the right hon. Gentleman might have stated what he had quoted, he, on a subsequent occasion, declared that they were not to be paid off at all, but were to be renewed as ordinary Exchequer bills. The other plea was, that this sum of 1,750,000l. was not renewed without notice, because he (Mr. Gladstone) did actually make a statement on the subject in reply to the hon. Baronet opposite. Now, the question of the hon. Baronet did not refer to this particular matter at all, although the right hon. Gentleman went out of his way to say that the bills to be renewed this year were ordinary Exchequer bills, to be renewed in the ordinary manner. This was on the 8th of May. He certainly could not find any modification in this of the previous statement; but even if there were, the right hon. Gentleman, on the 23rd of May, returned to his original statement, and declared that there was no change whatever in the intentions or the announcement of the Government, from the beginning, and that the bills were to be paid off from the accruing taxation. Now, no one could have expected to see such a sum of money mixed up—unintentionally, no doubt—with the whole amount of Exchequer bills. And were it not for the zeal and activity of the hon. Baronet opposite in these matters, who referred back to the returns of 1854, no one would have been likely to trace what were the real circumstances of the case. It was not his intention to assert that the right hon. Gentleman was not perfectly within the law in what he had done. But what he (Mr. Ricardo) maintained was this, that if the right hon. Gentleman intended these returns for the information of the House they were most clumsy and unbusiness-like. But if—what he could not believe—they were intended as a mystification, they could not be more efficient and successful. Who could suppose that the right hon. Gentleman intended to add to the debt in this manner? The right hon. Gentleman had denounced the raising of money by loan as a deliberate system of deception upon the public. [Mr. GLADSTONE: Where, or when?] He could not tell the exact line in which the expression occurred, but that the remark was made he would undertake to say. He had written it down from the speech as he had read it in Hansard. The right hon. Gentleman repudiated any idea of making a loan, and was indignant with the hon. Member for Huntingdon (Mr. T. Baring) for supposing that the 6,000,000l. of Exchequer bonds might, by unfinancial minds, be interpreted into a loan. He (Mr. Ricardo) confessed that, for his part, he had very much the same idea as the hon. Member for Huntingdon. He thought, notwithstanding the presence of those unfortunate Long Annuities, which had been the prey marked out for destruction by successive Chancellors of the Exchequer, and which were to fall out as the Exchequer bills fell in, that if, at least, there were not 6,000,000l. added to the permanent debt of the country, they would be prevented from taking off a very large number of millions from the permanent debt of the country at the expiration of the Long Annuities. The right hon. Gentleman appeared not to be pleased at hearing these things mentioned; but he (Mr. Ricardo) felt bound to say that, if ever there was an amount of money added to the debt of the country without the country exactly understanding the process, it was the 1,750,000l. of Exchequer bills which the right hon. Gentleman the then Chancellor of the Exchequer created last year. He did not think the present was the moment to discuss the abstract question of whether it was advisable to carry on war by means of taxation, or by means of loan. He was certainly very far from being one of those who objected to taxation, because it would render the war unpopular: he should be very glad to see war unpopular; but at the same time he believed that the attempt which was made last year—a very praiseworthy attempt, as he believed it to be—to raise the supplies, and to carry on the war by the taxation of the country, was an utter, unmixed, and irretrievable failure. That was plain from the result of the operations of last year. That being the case, would it not be better that the failure should be honestly, straightforwardly avowed? Why not let it be confessed that it was a failure? Of what use could it be to conceal that 1,750,000l. had been added to the permanent debt of the country? The right hon. Gentleman could easily explain how the failure had taken place without having recourse to any subterfuge. He recollected the open and manly way in which the right hon. Gentleman avowed the abortion—as he was pleased to call it—of the conversion of the South Sea notes. He thought the hon. Baronet (Sir H. Willoughby) was entitled to the thanks of the House for calling attention to the subject under consideration. It was a subject of great importance, and he trusted that the statements which had been made that night would have the effect of making the House more vigilant in such matters in future.

MR. WILSON

said, that the hon. Gentleman who had last spoken rose to put a question to him, and he would endeavour very briefly to give him a satisfactory answer. In the first place, however, he heartily concurred with the closing observation of the hon. Gentleman, that the House was indebted to the hon. Baronet the Member for Evesham (Sir H. Willoughby) for even at the eleventh hour calling the attention of the House to a circumstance so interesting and so important, and he sympathised very much with him when he regretted that these discussions were to be carried on in another place, where there was an absence of persons intimately acquainted with the details. He wished the hon. Baronet would exercise his vigilance still more, so that no misrepresentations might hereafter take place in reference to such transactions. The hon. Gentleman (Mr. Ricardo) said that if there were one question more certain than another, it was that the 1,175,000l. of Exchequer bills, which were now the subject of discussion, were as completely and as irretrievably added to the permanent debt of the country as any loan that was ever made. Now, on that point, he totally joined issue with the hon. Gentleman. He proposed not only to show that it formed no part of the permanent debt of the country, but still more to show that out of the taxation of the past year—out of the produce of the year—the whole expenditure had been paid, and that the country had not been debited with one single shilling on account of the expenses of the past year. It had been assumed that there was no question but that the Government had added to the national debt for the purpose of contributing to the necessary expenses of the war during the past year. Those assumptions were entirely unfounded, and he hoped he should succeed in convincing the House that upon the principles which were announced last year the Government had entirely fulfilled the promises which had been made. Perhaps the House would permit him to recur in the first place to the amount of Exchequer bills provided for the present year. The hon. Baronet (Sir H. Willoughby) was quite right in saying that the Exchequer bills ought to have been reduced by 591,000l., and both the hon. Baronet and the hon. Gentleman the Member for Stoke were right in supposing that the 1,750,000l. made part of the 17,183,000l., the amount of the unfunded debt. When he introduced the Exchequer Bills Bill, and laid his statement on the table of the House, the hon. Baronet asked him whether that amount of 1,750,000l. would be reduced by the amount of Exchequer bills that had been funded in the preceding year. His reply was that the amount of Exchequer bills had been reduced, so there was no discussion on the subject, and the matter passed off without much observation. Having made these observations, perhaps the House would permit him to refer to the state of the unfunded debt as it now stood in relation to the previous year. In the previous year it amounted to 17,742,000l.; in the present year it was 17,183,000l., showing a reduction of 559,000l. Perhaps he might be told by the hon. Baronet that in the meantime the Government had to a considerable amount converted Exchequer bills not only into stock but into Exchequer bonds. Well, if that were so, the House would of course find the amount figuring proportionally in the funded debt of the country; but, if they turned to the account of the funded debt, they would find that it amounted on the 5th of January, 1853, to 761,622,000l., and to not more than 751,839,000l. at present; so that, in that period, the floating debt had been reduced by 559,000l., and the funded debt, instead of being increased by the suggested conversion of Exchequer bills, likewise had decreased to the extent of 9,783,000l. The amount of Exchequer bonds forming a new species of debt on the 5th of January last was 1,043,000l. If that sum were deducted from 9,783,000l. being the amount of the funded debt, there would be still left a clear reduction of 8,740,000l. as funded debt, and 559,000l. as unfunded debt. Therefore, so far as the debt at the present period was concerned, it stood at least 9,200,000l. less than at the commencement of the year 1853. He must ask hon. Gentlemen to go back to the Budget of the 6th of March, 1854. On that day his right hon. Friend (Mr. Gladstone), then Chancellor of the Exchequer, introduced that Budget with this explanation: He said, "The country was not then at war, but it was very likely to be at war, for which very large preparations had been made. He, therefore," he said, "proposed to lay before the House a statement of finances independent of that consideration, reserving to himself the right of coming down for further expenses, which would be rendered necessary by the war, if it should unhappily take place." Now, on the 6th of March there was a deficiency upon the Estimates of 4,307,000l., supposing no war took place. Now, how did the right hon. Gentleman propose to provide for that deficiency? He said that, in the first place, he should ask the House to double the income tax, and that the whole amount of the increase should be received by him in the first half year. The half year's income tax was estimated at 3,370,000l. The right hon. Gentleman said that it was quite true that he lost an additional amount of taxation equal to the income tax of the half year, but inasmuch as the dividends would not come in until July, he must make immediate arrangements to meet demands, and he asked the House to give him 1,750,000l. of Exchequer Bills Supply Bills, distinctly stating that they were different in their nature, though not in name, to the ordinary Exchequer bills of the year. The right hon. Gentleman intended paying those Exchequer bills from the growing produce of the taxes which he then proposed. He took the precaution also of saying that he could not foresee what would happen. If war took place he should be obliged to make a further provision, and he distinctly, time after time, referred to the impossibility of guaranteeing the House that he should not make further claims during the year. Suppose no declaration of war had taken place, let them see how the principle would have operated. His 3,000,000l. of new taxes would have come into collection in October, and in April the whole of that amount would have been in the Exchequer, and his expenditure would have been paid as the year went on, and he would have been clearly in a position to have redeemed now every shilling of that 1,7,50,000l. But he did not intend limiting the matter in that way. He would show to the House that under those unfavourable circumstances the right hon. Gentleman was perfectly justified, and that facts had since that time more than borne out his declaration. The right hon. Gentleman, after the war had been declared, came down with his second Budget on the 8th of May. The new deficiency he showed was 6,850,000l., and he proposed to provide for it thus:—he proposed that the income tax for the second half year should be doubled, that 450,000l. should be raised from spirit duties, 700,000l. from sugar duties, and 2,450,000l. from malt duties. Only a small portion of that amount could come in until this year; and how did the right hon. Gentleman propose to remedy that inconvenience? He proposed that there should be issued Exchequer bonds to the extent of 6,000,000l. in anticipation of those taxes. He ought at the same time to say that 625,000l. of that amount was exchanged for Exchequer bills, and therefore the bonds were reduced to 5,375,000l. Now, the House would have arrived at this fact, that the Government had 1,750,000l. Exchequer bills and 5,375,000l. Exchequer bonds in aid of the expenditure of the year, independent of the income from the ordinary revenue. To show that his right hon. Friend took a correct view of the character of these Exchequer bills and Exchequer bonds, he, in the end of May, in showing what were his Ways and Means, included the Exchequer bonds and bills in his calculation; and in the course of the debate which ensued he combated the opinion that the issuing of these Exchequer bonds and Exchequer bills was the creation of debt. It was quite clear that, whatever category the bonds were placed in, the bills were placed in the same. Could hon. Gentlemen believe that bills that bad three, four, or six years to run were to be paid off in the year on which they were issued; or that, when the House sanctioned Exchequer bonds that had three, four, or six years to run, the right hon. Gentleman did not contemplate that those bonds were to be paid off at a future time by means of the increased taxation which he then imposed? Let the House stop for a moment to inquire how the country was affected by these operations, and how this 1,750,000l. bills and the Exchequer bonds stood against the public at the present moment. On the 8th of May, 1854, my right hon. Friend (Mr. Gladstone) estimated the deficiency of the year at 11,157,000l. That deficiency, on the 17th of the present month, instead of being 11,157,000l., stood at 14,198,000l.; that was, the expenditure of the year had exceeded the expectations of the Government by 3,041,000l. The House had passed Bills sanctioning taxation to the extent of 3,000,000l. on that amount. In addition to that, he ought to inform the House that the whole of that amount had been spent in ready money. All these additional supplies since the House met in the present year had been spent in ready money, thus contradistinguishing the present war from any of the wars which had preceded it. Not one single payment had been deferred more than it would have been in time of peace. When, therefore, he quoted these figures, he wished it to be understood that they represented the real state of the expenditure in a time of peace. There was nothing behindhand which could ever come against the country as a future charge, and that, he took it, was a great distinction from all former wars. He would say, also, that not a single demand had ever been made by a single department which had been refused during the whole year. It was the duty of the Treasury to exercise a vigilant supervision in ordinary times; but the Government had felt that during the war the responsibility of expenditure rested on departments, and, except where there had been an extraordinary expenditure, it was their duty to see that it was not laid on as a basis of permanent expenditure. If he had taken credit for the present state of the finances, it was not that the Government had been niggardly in the expenditure of money, for without reserve they had sanctioned every expenditure every department had proposed. They had, up to the 17th of the present month, expended in Supply services alone, for the quarter, 9,579,000l.; before the close of the quarter it would reach 11,000,000l., whereas the ordinary amount was between 4,000,000l. and 5,000,000l. There was an important element which had been kept out of sight by the hon. Gentleman, who had taken exception to the financial operations of the Government. His right hon. Friend (Mr. Gladstone) told the House last year that he should not receive his taxes within the year. The Government would have, on the 5th of April, due in uncollected taxes, not for ordinary revenue but for the war, no less than 5,120,000l., being for income tax 3,320,000l., and for malt duty 1,800,000l. Well, then, if they were to balance accounts at the end of the year, when they put their whole expenditure which had been paid in ready money, they must give credit for that which was due, and which, if peace should come, would go to the payment of ordinary revenue. Again, he would state that every shilling incurred by the war had been paid out of the income of the year. The case was strong enough as it stood; but he would ask the House to recollect what was the state of matters on the 5th of April, 1854? Why, on the 5th of April last year, after his right hon. Friend had paid off nearly 10,000,000l. of national debt, there were deficiency bills to the amount of 6,642,000l. Upon the 5th of January of the present year that sum had been reduced to 1,598,000l., so that there had been paid off in nine months upwards of 5,000,000l. of deficiency bills, and that out of the growing produce of the year. Now, he was compelled to say that he did not think we should stand so well on the 5th of April next, because the expenses of the present quarter had been very large. He should be very glad to leave the matter as it stood, because he believed that all the gratuitous assumptions that had been indulged in would be dispelled when it was ascertained that the Government had fulfilled all their obligations, and had placed the finances in a better state than they were in at the commencement of the war. But then he would be asked what became of the 1,750,000l. of Exchequer bills. They had been renewed, but they were not a permanent debt. They were a mere floating debt, and there was a great difference between the two things. He had told the House that the Government had some 5,000,000l. of taxes due, and that they had paid the expenditure of the war. Hon. Gentlemen must not expect that because in a time of war the Government raised money for the present half-year, they were going to allow the next half-year to starve. These anticipations of the revenue must be made from half-year to half-year as long as the necessity existed. A noble lord had told them in another place that the conduct of the Government in this matter was like that of a young spendthrift who borrowed money for four months and thought himself a paragon of prudence because he repaid the amount by fresh bills at the expiration of that time. Perhaps he (Mr. Wilson) might venture upon a more correct illustration. Suppose that any hon. gentleman possessed an estate of 5000l. a year and contemplated making large improvements which would absorb his whole income. He began in April, and his dividends would not come in until six months afterwards. Did he take credit for what he would have to pay the contractor, or did he take the more prudent course of obtaining advances from his banker for the half-year? He would, in all probability, adopt the latter course; and he (Mr. Wilson), as well as his right hon. Friend (Mr. Gladstone), thought that was a very sensible operation. Government anticipated to the extent of 7,125,000l. the revenue of last year. There was 5,000,000l. of it uncollected on the 5th of April; and they might go on anticipating it, and these securities might be kept afloat so long as the existing expenditure went on, because they would still have the remaining six months taxes in arrear, which would be collected during the six months to follow; and then, with that amount of income in excess of expenditure, they might either liquidate these securities, or else by the operation of the sinking fund, pay off other securities, which would come to the same thing. That sum would be available at the conclusion of the period for paying off the debt which was created in anticipation of it. The hon. Baronet (Sir H. Willonghby) in a tone of complaint a few weeks ago, asked if it was the intention of the Government to convert Exchequer bills into funded debt? and he complained of savings-bank money being applied to that object. [Sir H. WILLOUGHBY: Without the consent of Parliament.] The consent of Parliament had been given, but the hon. Gentleman appeared to him to speak of savings-bank money, as if he had not a very accurate notion of the nature of the investments in which that money was laid out. The real fact of the case was, that Government took upon itself the enormous responsibility, and also the cost of holding that money; and, therefore, unless the Chancellor of the Exchequer had intrusted to him the power of using the widest discretion as to the mode of conducting those funds, the sooner the management of them was given up the better. But with all the discretion that could be employed, the loss to the country was greater than was generally supposed. During ten years the loss upon the difference of interest paid to that which was received amounted to 434,000l., and, taking into account friendly societies, to 660,000l. These funds ought to be regarded as bankers' deposits; and what would any banker pay to a customer who should, after having deposited his money in the bank, attempt to control or find fault with the securities in which the banker chose to invest it? It was quite enough that the banker undertook the responsibility of holding that money and of paying the interest. It should be remembered, also, that it was during times of great prosperity that the largest amount was deposited in savings-banks, and in times of adversity that money was withdrawn; and as the Government were obliged, in the latter case, to convert stock into money to meet that demand, the result was that, taking an average of ten years, the price at which they bought in the funds with the savings-bank money was 97½, while the average price at which they had been compelled to sell out was 87⅞ showing what a serious loss was imposed upon the Government by making it responsible for that money, which the Government ought, on the other hand, to be allowed to make use of. In conclusion, he must appeal to the House to place some confidence in the discretion of the Finance Minister.

MR. GLADSTONE

Sir, as I was a party to those transactions to which the hon. Baronet (Sir H. Willoughby) has called the attention of the House in a very brief statement, made in a spirit of great fairness and in a temper most unexceptionable, it may be that the House will expect me to say a few words on this very small question, which has, I think, most unduly been magnified into a great one. I stated, when I asked for the issue of these bills, that they might be redeemed by the first moiety of the income tax, and at that time I explained to the House, and I thought I was successful in explaining to the hon. Baronet, that I did not want both an issue of bills to the amount of 1,750,000l. and also the first moiety of the income tax; but that what I asked for was, an issue of those bills in anticipation of the first moiety of the income tax. I did not at that time make a proposition for the finances of the year, and I will not now discuss the question as to whether it was prudent for the Government to come to this House and ask for the means of transporting a military expedition which it was intended to send out, but I will only say that the proposition then made was not made for means to carry on the war, it was only made for the purpose of sending out a military expedition, and, if no active operations should take place, of defraying the expense of its return. I made another statement on the 8th of May, in which I said the exact contrary to that which I had stated on the former occasion to which I have referred. On the 8th of May I said, that I should want both the doubled income tax and the issue of 1,750,000l. Exchequer bills. I am unwilling to trouble the House by reading extracts from the report of that speech, but I may state that, after having brought forward what is commonly called a Budget, in my anxiety to make the subject under the complicated circumstances of the time clearly understood by the House, I took a course which I believe had never before been adopted by any Chancellor of the Exchequer, and drew out what may be called a cash balance for the convenience of the House. I told the House on that occasion that the total expenditure which I anticipated I should have to meet was 63,339,000l., and I then proceeded to show how the money was to be forthcoming. The ordinary revenue of the year I estimated at 53,349,000l., the proceeds of the first half-year's doubled income tax—3,307,000l.—raised the revenue to 56,656,000l.; and I took into my calculation also the vote of 1,750,000l. Exchequer bills, which raised the whole revenue to 58,406,000l. I stated as distinctly as possible that I should not only require the double income tax, but the 1,750,000l. of Exchequer bills also which had been voted in March, and I think, therefore, the hon. Baronet must allow that the charge of having kept something back from the House entirely falls to the ground. But I have heard it said to-night that I ought to have told the House on the 8th of May that it was my intention to renew these Exchequer bills. Sir, I should have been guilty of the grossest folly if I had told the House any such thing, for at that time I was of necessity perfectly unable to form any judgment on the subject. The hon. Member for Stoke-on-Trent (Mr. Ricardo) went into the very much larger and more important question—of how the expenditure of the war is to be raised. He says, the attempt to raise the supplies for the year by the taxation of the year has turned out to be an utter, irretrievable, and unmixed failure. The hon. Gentleman did not condescend to support this statement by reasoning or facts—he delivered it oracularly, and I must say that his statement is, to me, an utter, irretrievable, and unmixed puzzle. I cannot understand what the hon. Gentleman means, and I very much doubt whether he knows himself. The question, however, which the hon. Member has opened is one of the utmost importance. It deserves the most careful and deliberate consideration from this House, and I certainly am the last man to deprecate its discussion. For myself, I maintain that all attempts to forestall the expenditure of the year in a time of war are futile. I never attempted to submit to this House any war estimate which was, or ever could be, reliable in the same sense as a peace estimate is. All I could do was to urge upon my colleagues, in whose hands was the administration of the great military and naval departments, to present outside estimates; and then, in addition to providing for these estimates, it was my duty to ask for a considerable vote of credit and the command of a large additional amount of cash. The Estimates have certainly been exceeded; but still, in the first year of the war, and with all the additional expense of a winter campaign, the forethought of this House has been very nearly equal to the entire expenditure. With respect to the question of the public debt, I find that it was somewhere about 2,000,000l. less when I quitted office in January, 1855, than when I accepted office in January, 1853. The process by which I arrive at this result is this: I take the funded debt as it stood in January, 1853, I add to it the unfunded debt, and I deduct from it the balance in the Exchequer. I do the same with regard to January, 1855, and I find, as I said, that during the two years I held office the debt has been reduced by about 2,000,000l. But, in the course of the year 1854 there had been an excess of 9,000,000l. of expenditure connected with the immediate purposes of the war, a very small, in fact, I may say, an insignificant portion of which had been defrayed out of the proceeds of the taxes that year imposed by Parliament. Now, in answer to the question whether the effort made by the House last year, to provide for the expenditure of the war out of the taxes of the year was, or was not, an utter failure, I will offer a brief statement. It was not the effort of an individual, or of the Government, it was the solemn and formal decision of the House of Commons. The deliberate view they adopted was, not that they should register a vow against any resort to loans, nor that they should entangle themselves with any abstract resolution or distinct pledge, but that it was their duty to commence the war with a manful and resolute effort, after a liberal estimate of the expenses of that war, to provide for the liquidation of those expenses out of the taxes of the country. Now, how does the matter stand? The amount of provision which was made in May, 1854, from permanent sources, was, in round numbers, 12,000,000l., and of that about 10,000,000l. was taxes newly imposed, and 2,000,000l. was handed over to us upon the estimate of the revenue, with the taxes as they stood in the previous year. The excess of expenditure was then estimated at something under 11,000,000l., and out of the 12,000,000l. permanent provision it was expected that within the year we should realise about 8,000,000l. If we actually had got 8,000,000l. in hand during the year, it follows that we should have had to draw upon the funds granted to us in expectation to the extent of about 4,000,000l. We should have had so far to pledge the credit of the country—in fact, to create debt to that amount; but, as has been stated, against that 4,000,000l., we were fully justified in setting that portion of the receipts of the extra taxation of the year which would have been received on the 5th of April, amounting to somewhere about 5,000,000l.; and, therefore, if the expenditure of the war had been confined within the estimated limits, we should have an actual surplus of 1,000,000l. from the revenue belonging to the year over and above the actual expenditure of the war. But the expenditure has gone beyond these hounds. I apprehend that if, instead of providing for the expenses of the year by means of taxes, we had taken a loan to the same amount, we should have been equally open to the risk of the expenditure going beyond the limits that were placed. The two subjects were entirely distinct. Some people seemed to think that money raised by taxes was not so good, and would not go so far, as money raised by loans. My impression is, and I shall be ready at the proper time to support it, that money raised by taxes will go quite as far, and even a little further; because the House would be disposed to keep a sharper watch upon expenditure raised by taxes, than it would do if that money were raised by loans. But the expenditure was gone beyond the estimate to the extent will now state. The excess for the year was estimated, in May, at a little under 11,000,000l.; the actual excess, as we have now ascertained by experience, up to the present time, has passed 14,000,000l. Therefore, there was a surplus of 3,000,000l. of expenditure over and above the 11,000,000l. which we estimated. But even there the House, in its forethought, did not leave us without resource, because, on the 8th of May, when we presented estimates showing that the expenditure of the year, including the vote of credit, might run up to 63,000,000l., the House was pleased to sanction the provision of cash to an amount exceeding 66,000,000l., or 3,000,000l. beyond the estimates. The consequence of that 3,000,000l. excess of expenditure has been that, instead of drawing to the extent of 4,000,000l. upon the aids in anticipation of taxes, we have drawn 7,000,000l. Against that sum of 7,000,000l., you must place 5,000,000l. for taxes that have not yet come in; so that the result is that, with all the gigantic operations which you have been carrying on, the whole excess of expenditure over the sum to be raised by taxes is 2,000,000l. Such an excess in time of peace would indicate gross want of care on the part of the Chancellor of the Exchequer and his colleagues, or on that of the revenue departments; but surely, in time of war, an excess of 2,000,000l. is not a discreditable account to present. What was the state of things at the commencement of the revolutionary war? There was then, at the end of the first year of the struggle, when the efforts made had been but trifling, an excess of expenditure more than doubling the provision made by Parliament. Parliament provided 4,000,000l., and, in addition to spending that sum, the Government of the day contracted a debt of 5,000,000l. It is inherent in the nature of the demands made by war that you cannot set limits to them; and I am sure that the House of Commons is prepared to make the most liberal allowance, not for the Government's neglect or failure of duty, but for those circumstances with which it is possible for human forethought and care to cope. I do not wish to push the matter too far—I will not pursue it further into detail. I do not seek to entrap the House into assenting to an abstract principle, nor to induce it to tie itself down to any foregone conclusion; but I say, as a matter of retrospect, and reverting to the extensive operations in which you have been engaged, that you have not cause to regret a failure or an abortion—for this House has made provision in a remarkable degree for the expenditure which has been incurred, and it has great reason to look back with satisfaction on the course which it thought fit—wisely, as I believe—to adopt.

MR. DISRAELI

Sir, nothing can be more important than that at this period of the year we should be favoured with the financial statement of the Chancellor of the Exchequer, and under the present circumstances in which the country is placed recognise additional reasons for our being furnished with such an exposition. I lament the causes which have deprived the House of that great advantage. The right hon. Gentleman the Chancellor of the Exchequer, placed as he has suddenly been in a position of great difficulty and responsibility, had a perfect right to throw himself on the indulgence of the House while he refrains for a time from making that explanation; but, although it is our duty, no doubt, to show him that forbearance which he justly demands, still nothing can be more inconvenient than that, while the official statement of the condition of our finances from the responsible Minister of the Crown is withheld, these desultory debates should arise, circulating assertions, as they do, which I, for one, am not prepared to admit to be authentic, and which are certainly not made under circumstances that would justify their receiving that criticism which they might otherwise require. I do not mean for a moment to say that my hon. Friend the Member for Evesham (Sir H. Willoughby) was not fully authorised in making the remarks which he did. They related to a very pertinent point, but one that is limited in its character. Yet the hon. Gentleman the Secretary for the Treasury takes advantage of the inquiry which my hon. Friend made with regard to it, and in putting which he was followed by the hon. Member for Stoke (Mr. Ricardo), to enter into a detailed exposition of the financial state of the country. With the exception of the future supplies which we may be called upon to grant, the hon. Gentleman (Mr. Wilson) really concealed nothing from our knowledge. He has, indeed, communicated to us an amount of information which rather astonished me. "I wanted," he says, "so many millions and I obtained them, and having obtained them in such and such a way, I have spent so many millions"—"Ego et Rex meus." Whether "Rex meus" will be prepared to submit to the despotism of the Secretary of the Treasury is a point which, with our limited experience of the Chancellor of the Exchequer, I am unable to determine; but I hardly believe that the late occupant of his important office would have been so willing, as the right hon. Gentleman appears to be, to yield to so severe a surveillance. All that the hon. Gentleman opposite (Mr. Gladstone) said may be perfectly true; but I prefer having from the lips of the proper Minister and at the proper time the authentic account of the liabilities and resources of the country, and I decline to enter at the present moment into any discussion on the subject. The question which has been brought before our consideration is one of a much more circumscribed scope. It has been legitimately introduced, and, so far as I caught the purport of the hon. Member for Stoke (Mr. Ricardo), with temper, and also, as I believe, with accuracy. Let us endeavour to recall the single point which is now before us, putting out of view the comparative merits of sustaining the expenditure of the country by sheer taxation—or by the aid of the national credit. Let us forget the admirable management of the Secretary to the Treasury, and pass by for a moment his panegyric upon himself. What is the real question that has been brought before us by my hon. Friend the Member for Evesham and enforced by the hon. Member for Stoke? There is no doubt, notwithstanding the honied phrases and mellifluous sentences of the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone), that in March last the House of Commons was under the clear impression that there was a vote of 1,750,000l. Exchequer bills of a temporary character, and which was to be defrayed from the accruing revenue of the year. This vote was past with the full understanding on the part of the House that it was a vote of Exchequer bills to be kept perfectly distinct from the usual vote of that character; and that, to use the language of the right hon. Gentleman, these bills were to be strictly and literally bills of Supply—(which is a term still preserved, though not observed)—and not to be mixed up with the ordinary votes for the year—that in fact they were to be a provision of a temporary nature. I believe that hon. Gentlemen on both sides of the House will agree with me that there is no mistake on that point. But it is said that in May there was a great change, and a fresh statement was made. Now, I always thought that it was a very great error, considering the position in which the country stood—and I mentioned this opinion at the time—that we should have had a precipitate Budget in March, which was quite unnecessary. Under the difficulties of the period the right hon. Gentleman might have postponed his financial exposition, and need not have created that confusion which has since occurred, by reason of his rival statements of March and May. In May, however, you had a second statement from the right hon. Gentleman; and he tells us now that then virtually, although not in that distinct and formal manner which might have been wished, he intended to alter the plan which he had submitted to the House, and that that which was a temporary vote of Supply two months before for nearly 2,000,000l. of Exchequer bills was, in fact, then changed in its character, although this House, and other persons beside this House, do not even now seem to be aware of it. The right hon. Gentleman has read passages—of course from authority—from his own speech, and, following those passages, as I heard them quoted, I am bound to say that I could not deduce from them that clear inference which he thinks they will bear. I have not now had an opportunity of referring to authority, but certainly my recollection of the right hon. Gentleman's speech was to this effect:—"The Government proposes to do nothing more now (in May that was) than it proposed to do in March—we propose to increase the permanent revenue of the country, and likewise to establish some temporary supply which shall be defrayed out of the accruing revenue of the year." Well, what happens? The right hon. Gentleman himself admits, whatever were his own intentions, the House and the country did not share them. We did believe that the temporary loan of the month of March was really a temporary loan, and was actually to be discharged out of the accruing revenue of the year. Now, in this year the usual Exchequer Bills Bill is brought in, and we find an increase of 1,750,000l. added to the ordinary amount of Exchequer bills. The hon. Gentleman the Secretary of the Treasury says, that this is not an increase of the permanent debt; technically it certainly is not so, but it is an increase of the permanent debt as compared with the temporary assistance that the right hon. Member for the University of Oxford at first projected. We are in this position—in March, 1854, a Vote for nearly 2,000,000l. of Exchequer bills was taken, on the distinct understanding with this House, that the Vote was for the temporary aid of the public service, and that it was to be defrayed out of the accruing revenue of the year; but, early in the spring, the house of Commons finds that this sum is made a portion of what may he called the permanent debt of the country, and is any one to be surprised that an hon. Gentleman should come forward and call the attention of the House to what he considers a violation of faith on the part of the Ministry, or that he should come forward and ask for explanations with respect to this considerable sum, and should draw what appears to me to be the natural inference, that the principle on which the financial system of the Government was established—namely, that the expenditure should be defrayed from the annual revenue—had been departed from, and had, in fact, broken down? I do not object to a Minister, placed in the difficult position in which the right hon. Member for the University of Oxford was, borrowing 1,750,000l. Exchequer bills; and I am sure if he had come forward and thrown himself on the country, and asked for 17,500,000l. he would have been supported. It is not with regard to the amount that I object, nor will I say anything now as to extravagant expenditure, for until we have the formal statement from the Chancellor of the Exchequer I decline to enter into that question. But I say that it is most unfortunate that the right hon. Gentleman should have proposed a Vote of 1,750,000l. of Exchequer bills as a temporary loan, to be defrayed out of the accruing revenue, and that this was to be a test and proof of the new financial principle on which the whole war expenditure was to be conducted, and that when a few months have elapsed we should find that this sum takes the shape not of a temporary loan, but really becomes a portion of the permanent debt. The right hon. Member for the University of Oxford says, that there have been great misrepresentations, and rather complained of the perverted view which has been taken of the course of his conduct on this subject; but let me remind him that he distinctly impressed upon the House that these 1,750,000l. of Exchequer bills were distinct from the other 16,000,000l. Exchequer bills that were to be issued in the course of the year, and were entitled only to the name of Supply Bills in the strict sense of the term. I do think that after this statement had been made, if circumstances had altered in the interval—and I do not deny that such circumstances might not have occurred in conducting a war of such magnitude as that for which the right hon. Gentleman was responsible—but if circumstances had occurred so as to change the course originally determined on, was it not incumbent on him to have come forward and distinctly to have said so, and to have fairly announced it to the House? Although the right hon. Gentleman had quitted office, the Secretary of the Treasury, remembering the declaration that was made with respect to this particular Vote, that it was the keynote, the corner-stone of the financial system on which the war should be conducted—ought to have come forward and have said that, in consequence of the change of affairs and the difficulties that had arisen, the Government felt that it was no longer expedient to maintain this principle, and that they should recommend that this 1,750,000l. of Exchequer bills should be placed with the rest of the Exchequer bills; but, as far as I can recollect, no statement of any kind was made. Under these circumstances, I do not think that there is anything that justifies what has been said by the hon. Secretary of the Treasury and the right hon. Gentleman the Member for the University of Oxford on this subject, or that they were justified in objecting to the course taken by the hon. Member for Evesham, to whose objections no satisfactory answer has yet been given.

SIR FRANCIS BARING

Sir, I must make a few observations—but, following the example of the right hon. Gentleman who has just resumed his seat—not upon the present question, because I think, with him, it will be better to wait until we have the financial statement of the year before us previous to entering into that question. I will only say, that when that statement is made, I hope the Chancellor of the Exchequer will be able to present the same flattering picture which has been drawn by the Secretary of the Treasury. But there is a point to which a noble Friend of mine (Lord Monteagle) was the first to draw attention, and in which he is said by the right hon. Gentleman (Mr. Gladstone) to have misrepresented his conduct, upon which I must say a few words in vindication of my noble Friend. It is the vigilance of my noble Friend that has shamed the House of Commons, and they were indebted to his attention that the circumstances with respect to these Exchequer bills, which had escaped the House of Commons, had been brought before them. The observations made by my noble Friend had no reference to the late Chancellor of the Exchequer individually, but to a sum of money voted for Exchequer bills under particular circumstances and under particular pledges. The point was—that a certain amount of Exchequer bills was voted by the right hon. Gentleman upon the distinct pledge that it was to be a temporary loan, and that afterwards this was departed from without any notice to the House, and the bills, which were to be temporary, were made part of the permanent debt of the country. The answer to the charge is, that an announcement was made to the House that the intentions of the Government were altered. Now, I will show to the House that the statement, as made by my noble Friend, was quite correct, and justified by the only information to which he could resort. I need not recur to what took place in March last year, and the distinct and repeated explanations made by the right hon. Gentleman that the Exchequer bills in question were to be paid off out of the ordinary revenue of the year. The words were clear and distinct"—These bills will be paid off out of the current revenue of the year, and you will never hear anything more of them." This was a pledge most distinctly given, and it required an equally distinct and unequivocal withdrawal before these bills could properly be made part of the permanent debt. Let the House observe that the right hon. Gentleman himself drew a distinction between the mass of Exchequer bills which formed a part of the permanent debt and the Exchequer bills in question. But what took place on the 8th of May? The right hon. Gentleman stated that he then gave an explanation, announcing that he had altered his intention. What were his words?— You then voted 1,750,000l. Exchequer bills (of which 1,250,000l. have been since issued), which makes a total amount of 58,406,000l."[3 Hansard, cxxxii. 1465.] It is true that in that calculation he included these Exchequer bills, but he at the same time told the House that there were 3,500,000l. applicable to any purpose Parliament might think proper. I must say I read over the speech of the right hon. Gentleman, with the view of finding out any announcement of an alteration of intention; but I could not find it out. Nay, more; I have read it over again, after the right hon. Gentleman referred to the passage in question as containing his explanation on the occasion, and I cannot see it even now. And I must say I think he would have acted better if he had distinctly stated his change of intention as to these bills.

MR. GLADSTONE

It was impossible.

SIR FRANCIS BARING

The right hon. Gentleman says it was impossible.

MR. GLADSTONE

Quite. Quite impossible.

SIR FRANCIS BARING

The right hon. Gentleman now tells us that he had counted the bills in question as permanent debt, and told the House he had done so; and now he says it was impossible for him to have told them so. Now I desire to know whether the right hon. Gentleman says he did tell the House so, or that he did not? If he did, then he was certainly unfortunate in his manner of doing so, for no one understood him to have done so. If he did not, then how can his defence be that he did so? At one moment his defence is that he did tell the House so, and the next it is that it was "quite impossible" to do so. Nay, after the speech in question, in which he says he did do so, there was a debate on the subject, in which he was charged with having made a loan in an improper manner; and it was said, "You have charged 6,000,000l. of Exchequer bills." But if the House had understood the statement which the right hon. Gentleman now says he had made, that this amount of 1,750,000l. was to be added, hon. Members on that occasion would have charged him not with 6,000,000l., but 7,750,000l. Yet no one in that discussion had the least notion that this sum of 1,750,000l. was to be deemed added to the permanent debt. The right hon. Gentleman does not seem to have made his case intelligible even to his late colleagues; for the defence they now make for him is not the defence he makes for himself. The right hon. Gentleman cannot have explained his defence to them, or they could not have understood him. And further, in the Queen's speech, at the close of the last Session, there was this passage— I fully recognise your Wisdom in sacrificing Considerations of present Convenience, and in providing for the immediate exigencies of the War without an Addition being made to the permanent Debt of the Country. Now what is the permanent debt? The right hon. Gentleman, in his own speeches on the subject, drew the distinction between the Exchequer bills temporarily issued and these bills in question; and he said of the other bills (of which these now form a part), "they constitute a debt, permanent in itself, but renewable from year to year." In fact, then, the right hon. Gentleman converted 1,750,000l. of bills voted as a temporary aid into permanent debt. [Mr. GLADSTONE: Oh, oh!] Why, these are the right hon. Gentleman's own words, "A debt permanent in itself." Sir, under these circumstances no complaint can be more just than that the pledge which was given was not adhered to; and I confess I retain that impression myself. No doubt the right hon. Gentleman intended to convey the explanation which he says he did convey, but he is so quick himself, that he attributes to us more acuteness than we unfortunately possess in understanding his meaning. It is a misfortune that a measure of this kind should have been adopted without being sufficiently announced. I hope that in future it may not, be so, and that we shall not have explanations which we cannot understand.

MR. GLADSTONE

I am sorry, Sir, that what has fallen from the right hon. Baronet renders it necessary for use to explain what I said in May. The right hon. Gentleman says that on the 6th of March, I expressed an expectation that these Exchequer bills would not be renewed, and that I did not explain in May that they would. My answer is, that it would have been impossible and absurd for me to do so, because I could not then have known of the intention to renew them. I said, in March, that, according to the plan then proposed, they would not be renewed; and I said, in May, that after making full provision for the estimated service of the country, it was necessary for me to have a further command of cash to the amount of about 3,500,000l.; and in that 3,500,000l. I expressly included the 1,750,000l. of Exchequer bills, and yet the right hon. Gentleman, I am sorry to say, states that he did not understand me.

MR. LAING

said, he wished to make an observation upon a matter with respect to which much interest was felt in the City of London—namely, the money that had beets deposited in savings banks. The Secretary of the Treasury had laid down the doctrine that, inasmuch as the Government received as bankers the money deposited in those banks, they ought to have the same privileges as were possessed by ordinary bankers. But private bankers were at liberty to go into the market and sell or buy according to such information as they possessed relative to public matters. Would any one suggest that the Government ought to do that, and that the Chancellor of the Exchequer was to make use of the information he possessed as a member of the Government in order to buy or sell to advantage? If he did he was sure that the greatest possible dissatisfaction would be caused, and if he did not he must be prepared at times to incur a certain loss in savings-backs operations. The Govern- ment could not conduct these transactions to any advantage, and he had no doubt that if all the operations relative to the savings-bank money were investigated, they would be found to entail a considerable loss. It was much more important for the Government to keep a high character in the City, and to put up with a small loss, than to seek to effect a profit upon such transactions. The best thing would be for the Government to deal with the subject by such an Act of Parliament as would remove the temptation to deal with this money.

Question again put.