§ The House having resolved itself into a Committee of Ways and Means, Mr. FITZROY in the chair,
THE CHANCELLOR OF THE EXCHEQUER
rose and said, Mr. FITZROY, it now becomes my duty to move certain Resolutions, and to lay before the Committee such explanation as is necessary for their information in regard to them. The ordinary practice, when pacific relations subsist 1229 between the Government of Her Majesty and those of other independent States, is for the Finance Minister to submit to the House each year one financial statement comprising the revenue and expenditure of the preceding year, together with his estimate of those for the ensuing one. That practice has been found from experience to be convenient to the House, because it places before it at one view the finances of the two years under consideration. I should have been glad if it had been in my power to follow that course in the present Session; but the circumstances in which the country is now placed have left me no option. War imposes necessities upon senates no less than upon generals in the field, and renders necessary a deviation from the ordinary mode of proceeding imperative. The statement which it is my duty to submit to the Committee this evening will be confined to the finances of the present year, and will not trench upon the revenue or expenditure of that which will commence on the 1st of April next. This course, which it is necessary that I should pursue, is at the present moment not unattended with advantages. Although it might have been in some respects more satisfactory to the House that there should have been only one financial statement during the present Session, yet, considering the great efforts which the country has made during the last year, and considering the great expenditure which those efforts have occasioned, it may be satisfactory to hon. Members to learn at an early period of the Session the state of our revenue and expenditure. Uncertainty on a question of this sort must be attended with inconvenience. In friendly quarters it gives rise to apprehensions, in unfriendly ones to hopes; both of which I trust the Committee will find from my statement to be completely groundless. I will now, with the permission of the Committee, recall to its recollection the statement which I made on the 20th of April last, in submitting the budget for the year. The revenue, including new taxes, I estimated at £67,339,000; the loan was taken at £16,000,000, and there was likewise an estimate for Exchequer Supply Bills to the amount of £3,000,000, making the total estimated revenue £86,339,000. The expenditure, as I estimated it on that day, including the payment of £1,000,000 for Ways and Means bills on account of the preceding year,—that is to say, bills to cover expenditure incurred during the preceding year, and £1,000,000 for the 1230 Sardinian loan, was £81,899,000. The difference between these two sums was £4,440,000, which was the margin or surplus upon which I had calculated in that statement, so that if the expenditure and revenue had been equal to the estimate there would be on the 1st of April next, a surplus of £4,440,000. However in the supplementary statement which it became necessary for me to make on the 2nd of August last, I stated that in the former calculation I had estimated the total Ways and Means at £86,339,000; but that since that calculation was made I had abandoned an estimated amount of £200,000 from a stamp duty on bankers' cheques, thus reducing the estimated revenue to £86,139,000, and the estimated surplus to £4,240,000. The expenditure, as estimated on the 20th of April, amounted to £81,899,000, but the Committee will recollect that, towards the end of the Session, certain Supplementary Estimates for the military service were laid before the House and voted in Committee of Supply. These Supplementary Estimates amounted to £6,135,000, making a total expenditure for the year of £88,034,000. To meet this expenditure there was, as before stated, the reduced estimate of Ways and Means, amounting to £86,139,000. An additional grant of Exchequer bills and bonds was taken, in consequence of the increased expenditure, amounting to £4,000,000, making a total provision for the year of £90,139,000. The increased expenditure being £88,034,000 there remained a surplus of £2,105,000 according to the last Estimates submitted to the Committee. But this surplus was in a great measure required to restore the balances, which had been assisted at the commencement of the year by Ways and Means bills to the amount of £1,700,000, which were chargeable on the revenue of the current year. The second statement, therefore, presented nearly an equal amount of receipts and expenditure. It now remains for me to state to the Committee how far that estimate has been verified by the result. We are now not very far from the end of the fourth quarter of the year terminating on the 1st of April next, and the statement I am about to submit for the consideration of the House gives an account of the receipts and expenditure up to the latest period, together with an estimate as accurate as circumstances will permit, and derived from reliable authority, of the probable income and expenditure during the unexpired portion of the current quarter:—
|ESTIMATED REVENUE AND EXPENDITURE FOR THE FINANCIAL YEAR 1855–6.|
|Exchequer Bills and Bonds||…||6,977,000||7,000,000||—||23,000|
§ I will not trespass so far on the attention of the Committee as to enter into a minute statement of all the causes which have led to this deficiency; but a few explanatory observations may not be out of place. With regard to the Customs, the deficiency in that department of revenue is chiefly referable to the article of sugar. Sugar, tea, and coffee were the articles on which there was an increase of duties last year. With respect to the two latter, the result has corresponded as nearly as possible with the estimate; and it does not appear that the additional duty on these articles of foreign and colonial produce has materially diminished the consumption. As far as tea is concerned, the consumption has actually increased; the quantities entered for home consumption during the last three years being respectively as follows—in 1853, 58,860,000lbs.; in 1854, 61,970,000lbs.; in 1855, 63,454,000lbs. The same result is observable in the article of coffee. The great speculation in sugar 1232 arose at the latter end of October and the beginning of November, and was based on the short importations, which, up to the 30th of October, were as follows:—In 1853, 317,000 tons; in 1854, 389,000; in 1855, 281,000; and as the consumption has continued very large, the stocks on hand were reduced to nearly one-half the usual quantity. For the whole year of 1855, as compared with 1853 and 1854, the importations of sugar might be thus stated:—In 1853, 364,000 tons; in 1854, 455,600; in 1855, 367,000. The final deficiency, however, at the close of the year was not so great as it appeared at the end of October. The difference is no doubt chiefly to be attributed to the deficient supply of the article. As for the Excise, the deficiency in that branch of revenue is almost entirely owing to a cause which some Members of the House may not deplore, and which certainly cannot be regarded as a moral evil—the insufficient produce of the duty on spirits. Several 1233 circumstances have tended to bring about this result. One was the large drawback repaid on malt in consequence of a change made last year in the mode of taking the duty on spirits manufactured from malt; secondly the sacrifice of the duty upon certain articles manufactured from spirits; but the main cause was the high price of corn prevalent during the present year. The cost of provisions, cutting as it did into the wages of the working classes, furnishes a complete solution of the deficient result as far as the spirit duty is concerned. Since the 15th of September the average price of corn has not been under 75s., and for six months it was above 80s. There is another cause which may have to some extent influenced the price of spirits, and diminished the revenue derivable from that article. This cause is one which has proved beneficial to the distilling trade, and has greatly augmented the demand for barley. A great increase has taken place in the course of last year in the exportation of British spirits which has arisen in consequence of the extensive failure of the wine crops on the Continent. The diminution in the wine produce of the Continent, owing to that heavy failure, has not only diminished the quantity of wine, but also the quantity of brandy, and led to large exportations of British spirits to supply the void thus created, those spirits yielding nothing to the revenue because, being exported from bond to foreign countries, they are of course, subject to no payment of duty. Under the head of stamps there has been an increase, but coincident with that increase, there has also been a loss, as was anticipated in my Estimates of last year, amounting to £220,000, from the remission of the stamp on newspapers. That loss has to a certain extent been compensated by the post
|Account of the Payments for Military and Naval Services during the last twenty-two months and a half of the War, compared with, such Payments for a similar period during Peace.|
|Service.||1853–4||From the 1st of, April, 1853, to the 16th of Feb.,1854||Peace Expenditure in 22½Months.|
|Army, Militia, and Commissariat||…||…||…||6,415,000||5,664,999||12,079,999|
|Votes of Credit||…||…||…||—||—||—|
§ Office revenue accruing from the stamps on newspapers passing through that establishment without an impressed stamp. Nevertheless, on the whole, the receipts of the Post Office exhibit a diminution. The direct taxes, the property-tax, and the assessed taxes, have, as the Committee will perceive, yielded more than I estimated they would produce. With regard to the excess in the expenditure, the whole of that excess, within £300,000, has been owing to the Supplementary Estimates which have been either voted in the course of the present Session, or which now lie on the table of the House for future consideration. These Supplementary Estimates are as follows:—
|1st. Ordnance.—Deficiency in the, amount of the grant for 1855–6||£1,346,023||0||0|
|2nd. Navy.—Excess of expenditure beyond the grants for1854–5, on the final closing of the account for that year||204,982||1||5|
|3rd. Army Medals.—Deficiency on the grant for 1856–6||80,000||0||0|
§ The total amount of Supplementary Military Estimates either voted or to be voted in the present Session, referring to the current year, is therefore £1,631,005. Now, inasmuch as the Committee may desire to know what precise proportion of this heavy expenditure which it has been my duty to detail to them has been occasioned by the war, I shall now briefly show how much of it would have been incurred in an ordinary year of peace, and also how much is to be set down to the extraordinary cause which has been in operation. I have instituted a comparison, which I think will place clearly before the Committee the increase in our expenditure so far as it has been hitherto paid, which is attributable to the war. This comparison is furnished by the following1235
|Service.||1854–5.||From the 1st of, April, 1855, to the 16th of Feb.,1856.||War Expenditure in 22½Months.|
|Army, Militia, and Commissariat||…||…||…||8,380,882||14,825,059||23,205,941|
|Votes of Credit||…||…||…||1,800,000||3,900,000||5,700,000|
Thus it will be seen that the difference between the peace expenditure for twenty-two months and a half preceding the war, and the expenditure for the twenty-two months and a half which the war has lasted—namely, £43,564,374, is, as nearly as can be calculated, the precise sum which the contest has cost the country up to the present day. That sum includes the expenditure for the Army, the Militia, the Commissariat, the Navy, the Ordnance, and all the Votes of Credit granted for those services—in short, it comprises everything that can be reckoned as a, charge of a military character. From the observations that I have now submitted to the Committee, it will appear that we find ourselves at this moment in a financial position something like £4,000,000 sterling less favourable than the one I estimated we should occupy in the last Session of Parliament. The margin which I originally reckoned at. £4,440,000 would, as nearly as possible, be exhausted, and would leave the revenue and the expenditure at the end of the year almost equally balanced, and without any certain reserve or surplus in the Exchequer. The Resolutions winch I shall place in the hands of the Chairman are intended to enable the Government, with the consent of this House, to restore the finances of the country in the present quarter to the position in which they would have stood if the Estimates which I submitted last Session had been verified by the result. That is really all, or little more than all, that I seek to effect by the Resolutions on which the Vote of this Committee is now to be taken. The excess in the expenditure and the deficiency in the revenue leaving a sum of about £4,440,000 to be provided for, I shall lay before the Committee Resolutions for raising a sum of £5,000,000 sterling, which will be an ample supply for the service of the present quarter, and will also yield some surplus,
out of which to meet immediate demands in the ensuing financial year. Sir, the entire sum, which has been already borrowed in the present year, is made up as follows:—the loan, amounting to £16,000,000 Exchequer bills, £6,000,000 and Exchequer bonds, £1,000,000, making together £23,000,000. To that amount will be added, if the present Resolution should receive the assent of the Committee, a further sum of £5,000,000, which will make the total sum raised by loans within this year towards defraying the extraordinary expenditure, £28,000,000. I am well aware, Sir, of the great disadvantages of imposing so large a new burden on the public exchequer as the amount which I have just named, namely, £28,000,000 sterling, but in considering the magnitude of that additional burden we must not allow ourselves to be disheartened. We must not for one moment imagine that, in order to defray the expenses of this costly and gigantic war, we have yet loaded the springs of our national industry with a burden which is at all likely to crush them. We know the apprehensions which have been entertained in former times with regard to the successive additions made to the national debt. These apprehensions have been happily described by a passage in a work which, I have no doubt, most Members of this House have perused with pleasure and with instruction. I allude to Mr. Macaulay's recentlypublished volumes of his History of England, in which he illustrates the origin of our national debt. After showing the unfounded alarms which some of the greatest writers of the last century—persons profoundly versed in the most advanced doctrines of political economy current in their day—entertained on this subject, Mr. Macaulay says—
A long experience justifies us in believing that England may, in the 20th century, be better able to bear a debt of £1,600,000,000 than she is
at the present time to bear her present load. But be this as it may, those who so confidently predicted that she must sink—first, under a debt of £50,000,000, then under a debt of £80,000,000, then under a debt of £140,000,000, then under a debt of £240,000,000, and lastly, under a debt of £800,000,000, were, beyond all doubt, under a twofold mistake. They greatly overrated the pressure of the burden, they greatly underrated the strength, by which the burden was to be borne.
The circumstances of the country at present clearly show that we shall commit a great error if, in the words of Mr. Macaulay, we "underrate the strength by which this burden is to be borne." I will, with the permission of the Committee, call their attention to a few facts which indicate how little the trade and the general resources of the country have suffered, notwithstanding the great efforts which it has been necessary to make for carrying on the war. I first beg their attention to our exports, which, according to the following comparison, were as follows:—The total value of British and Irish produce was, in the year 1853, £98,933,000; in 1854, £97,184,000; and in 1855, £97,364,000. The value of the principal articles exported to Australia were, in 1854, £11,931,000; and in 1855 £6,279,000. The value of exports to the United States was, in 1854, £21,410,000; and in 1855, £17,312,000. The tonnage entered and cleared, with cargoes at ports in the United Kingdom:—entered, in 1853, 7,797,000 tons; in 1854, 7,890,000 tons; and in 1855, 7,018,000 tons; cleared, in 1853, 7,583,000 tons; in 1854, 7,870,000 tons; and in 1855, 8,348,000 tons. These figures, therefore, show a very slight diminution in the value of our exports since the year 1853, which was a year of unusual speculation both in American and Australian produce. This I decrease in our exports for 1855, as compared with those for 1853, is to be traced not to countries with which our trade would naturally have been affected by the war, but to Australia and the United States. In 1853 the value of the principal articles exported to Australia was £11,931,000; in 1855 it was £6,279,000, showing a large diminution in the Australian trade which can scarcely be attributed to the influence of the war. The value of exports to the United States was, in 1854, £21,410,000, and in 1855, £17,312,000; but this alteration in trade could not either be traceable to the effects of the war. I will now trouble the Committee with an account of the tonnage of the shipping which, during the last three years, has entered
and cleared out of British ports, for that statement will afford an important index of the prosperity of the country. The tonnage entered and cleared with cargoes at ports in the United Kingdom was—in 1853, 7,797,000 tons; in 1854, 7,899,000 tons; and in 1855, 7,018,000 tons, showing a small, but a very small, diminution. There has, however, been an increase in the number of ships cleared out. In 1853, the tonnage of ships cleared out was 7,583,000 tons; in 1854, 7,870,000 tons; and in 1855, 8,348,000 tons. I will now state the number and tonnage of vessels built during the last three years. In 1853, 798 vessels were built, of 203,171 tons; in 1854, 802, of 196,942 tons; and in 1855, 1,098, of 323,200 tons. These statistics—which I will not trouble the Committee by following out in further detail—must, I think, be regarded as proving that, in the words of Her Majesty's Speech at the beginning of the Session, "the resources of the country are unimpaired." In considering the question as to whether the expenditure for the war should be defrayed by a loan or by taxation, the Committee must bear in mind that war expenditure is of necessity, in the language of political economists, unreproductive. From the very necessity of the case such expenditure can produce no durable result, beyond those results of security abroad and general protection to the liberties of Europe, for the sake of which this war was undertaken. But that character of a war expenditure belongs equally to revenues raised by loans and by taxation. If the amount I have mentioned, of more than £43,000,000, could have been raised within a year by taxation, it would equally have been expended in an unreproductive manner, and would have bequeathed no durable benefit to posterity. There would have been the same difference between such expenditure and the expenditure for railways, docks, canals, and other objects of reproductive outlay, whether the war expenditure had been defrayed by a loan or from taxation. Sir, the Resolution, therefore, to which I am about to ask the assent of the Committee will enable the Government to raise the sum of £5,000,000 by a loan. That loan has been arranged upon terms which, I trust, will be considered—looking to the present price of stocks—as not disadvantageous to the nation. The loan has been taken at £90 in Three per Cent Consolidated Annuities, which must be considered,
on the whole, a fair price as between the nation and the subscriber. In addition to the Resolution I have mentioned, I shall also have to submit to the Committee certain Resolutions with respect to the funding of, Exchequer bills. These bills, from various, causes, have not been at a premium—indeed, they have been at a considerable discount—since last autumn. A partial increase of the amount of interest was made upon some bills of ½d., and upon others of ¼d., which produced some result for a time, but which did not permanently bring those bills to par. It therefore became necessary, for the Executive Government to resort to one of two expedients—either to fund a, certain amount of outstanding Exchequer bills, or in the beginning of next month to increase the rate of interest upon the Exchequer bills in circulation. Now, Sir, the process of funding Exchequer bills is simply the conversion of one Government security into another. It is not the creation of new debt, it is merely a commutation of that debt which consists of Exchequer bills into a debt represented by perpetual annuities. The amount of Exchequer bills which it is now proposed to fund is £3,000,000, and if the result of that operation should be to bring the rest of the Exchequer bills to par, it will be found that an advantageous arrangement has been made for the public. I may take this opportunity of stating to the Committee that the total amount of Exchequer bills now outstanding is £23,930,600, the interest being at the rate of 2½d. per diem. Of that amount £6,000,000 are not in the hands of the public, but the amount in the hands of the public may be taken at about £17,000,000, the rate of interest being 2½d. per diem, or equal to £3 16s. per annum. Assuming that the measure which I am about to submit to the Committee should succeed in raising the £23,000,000 of Exchequer bills which will remain to par, a very considerable saving to the public will be effected as compared with the alternative of raising the rate of interest in March. It might, perhaps, have been possible, by straining the powers of borrowing which are entrusted to the Executive Government, to provide a little time longer for the deficiency of £4,000,000; but the powers of borrowing which Parliament has committed to the Executive Government have been confined within narrow limits by the wise jealousy of former Parliaments. The whole power of borrowing possessed by the Government
is limited to the issue of deficiency bills for charges upon the Consolidated Fund, which must be repaid within the quarter in which they are issued; and also to the issue of what are termed Ways and Means Bills, which are applicable only to Supply services, and which must be paid off in the quarter subsequent to that in which they are issued. Beyond these two powers, which exist by Act of Parliament, the Executive Government is wholly unable to raise a single shilling by borrowing. They cannot issue a single Exchequer bill, nor can they sell a single perpetual annuity without the consent of Parliament. Therefore, however some persons, whose imagination takes fire at the sound of a loan to be raised in the market, may be disposed to blame the limited extent of the present loan, I think upon consideration they will be of opinion that the course which the Government propose to take is, on the whole, a prudent and a politic one. All that I propose to do by the present Resolutions, is to ask the Committee to place the Government in the same financial position in which it would have stood if no extraordinary expenditure had taken place in the present year, and if no extraordinary circumstances had arisen, from the high price of food, and from other contingencies upon which it was impossible to calculate, to diminish the produce of the taxation. If these Resolutions should receive the approbation of the Committee, and afterwards obtain the sanction of Parliament, they will provide ample ways and means for the present quarter, and for the commencement of the ensuing financial year. We shall then be in a position to judge how far the negotiations which are now in progress in a neighbouring country are likely to terminate in a safe and honourable peace. If, happily, they should lead to that issue. Her Majesty's Government will have it in their power deliberately to consider the state of the revenue, to reduce the Estimates submitted to the House, and to consider what expenditure will be required in the following year, and how that expenditure may best be met. If, unhappily, those negotiations should not terminate in so desirable an event as a peace which will cement, in a lasting and solid manner, the interests of Europe, it will then be the duty of the Government to appeal to this House to place them in a position in which they will be enabled to meet the large expenditure for warlike
purposes, and to continue that struggle in which we have been engaged for the last two years. Having submitted this explanation to the Committee, I will now move, Sir, the Resolution which I have placed in your hands, namely—
That towards raising the Supply granted to Her Majesty, the sum of £5,000,000 be raised by Annuities.
§ The following are the Resolutions moved by the CHANCELLOR of the EXCHEQUER in pursuance of the above statement:—
1. "That, towards raising the Supply granted to Her Majesty, the sum of five million pounds be raised by Annuities.
2. "That every contributor to the said sum of five million pounds shall, for every £100 contributed and paid, be entitled to the principal sum of £111 2s. 2d. in Annuities after the rate of £3 per centum, to commence from the 5th day of January 1856, and to be added to and made one joint stock with the existing Consolidated £3 per Centum Annuities, and to be payable and transferable at the Bank of England at the same times and in the same manner and subject to the like redemption as the said Consolidated £3 per Centum Annuities.
3. "That the said Annuities so to be payable as aforesaid shall be charged upon and paid out of the Consolidated Fund of the United Kingdom of Great Britain and Ireland.
4. "That every contributor shall, on the 26th day of February 1856, make a deposit of £10 per centum on such sum as he or she shall choose to subscribe towards raising the said sum of live million pounds, with the chief Cashier or Cashiers of the Governor and Company of the Bank of England, as a security for making the subsequent payments on or before the days or times hereinafter mentioned (that is to say):
§ Payment of
|£10 per centum on or before the 3rd March 1856.|
|£25 per centum on or before the 13th March 1856.|
|£25 per centum on or before the 29th March 1856.|
|£15 per centum on or before the 10th April 1856.|
|£15 per centum on or before the 24th April 1856.|
§ That all monies so to be received by the said Cashier or Cashiers of the said Governor and Company of the Bank of England shall be paid into the account of the Receipt of Her Majesty's Exchequer at the Bank of England, to be applied from time to time to such services for Great Britain and Ireland as have been or shall be voted by this House, or to the redemption of the principal and interest of any Exchequer Bills issued or to be issued under the authority of the Act 57 Geo. III. c. 48, or under the authority of any Act of the last or present Session of Parliament authorising the application of monies out of the Consolidated Fund for the service of the year ending on the 31st day of March 1856 and of the year ending on the 31st day of March 1857, or to such services as are now charged on the Consolidated 1242 Fund of the United Kingdom of Great Britain and Ireland, or shall be charged thereon by any Act that may be passed hereafter."
5. "That the several persons who have engaged to subscribe towards funding the sum of three millions in Exchequer Bills, dated in the months of December 1854, March, June, and August 1855, and charged on Aids or Supplies, and to make deposits of £10 per centum on the amount of their respective subscriptions on the 26th day of February 1856, shall be entitled, upon the completion of their subscriptions, for every £100 so subscribed in Exchequer Bills (or £100 5s. in money in lien thereof), to £111 2s. 2d. Capital Stock in Consolidated Annuities, bearing interest at the rate of £3 per centum per annum, the said interest to commence from the 5th day of January 1856, and to be payable by half yearly dividends on the 5th day of July and the 5th day of January in every year.
That the several subscribers shall complete their respective subscriptions at the Bank of England by instalments, in the proportions and at the times undermentioned, (that is to say):
§ Payment of
|£10 per centum on or before the 3rd March 1856.|
|£20 per centum on or before the 13th March 1856.|
|£30 per centum on or before the 29th March 1856.|
|£20 per centum on or before the 10th April 1856.|
|£10 per centum on or before the 24th April 1856.|
§ "That interest shall be allowed upon the amount of Exchequer Bills deposited with the Governor and Company of the Bank of England for the; first instalment, from the dates of the Bills, up to the 26th day of February 1856, and upon the amount of the Exchequer Bills deposited for each subsequent instalment from the dates of the Bills, up to the day when the same may be delivered to the Governor and Company of the Bank of England.
§ "That all the Exchequer Bills so to be deposited with the Governor and Company of the Bank of England, shall be delivered over to the Paymaster General to be cancelled, and that all monies so to be received shall be paid into the account of the Receipt of Her Majesty's Exchequer at the Bank of England, to be applied from time to time in the redemption of the principal of Exchequer Bills charged on the Aids or Supplies, and such Exchequer Bills so redeemed shall be delivered over to the Paymaster General to be cancelled; and further the said monies shall be applied to such services for Great Britain and Ireland as have been, or shall be voted by this House, or to the redemption of the principal and interest of any Exchequer Bills issued, or to be issued under the authority of the Act 57 Geo. III. cap. 48, or under the authority of any Act of the present or the last Session of Parliament, authorising the application of monies out of the Consolidated Fund for the service of the year ending on the 31st day of March 1856, and of the year ending the 31st day of March 1857, or to such services as are now charged on the Consolidated Fund of the United Kingdom of Great Britain and Ireland, or shall be charged thereon by any Act that may be passed hereafter."
§ SIR HENRY WILLOUGHBY
said, it was quite clear, from the statement of the right hon. Gentleman the Chancellor of the Exchequer, that there was a bill 1243 which must be paid, and he did not know that the right hon. Gentleman could have resorted to a better mode of payment than that now proposed. He understood that the intended loan related entirely to the expenditure of the financial year, which would end on the 31st of March next, and had nothing to do with the expenditure of the incoming financial year. Now, on the 6th of February, he asked whether it was the intention of the Chancellor of the Exchequer to make any financial statement before the Estimates were passed. The right hon. Gentleman was not in the House at the time, but the hon. Gentleman the Secretary to the Treasury replied that such was the state of the finances that there would be no occasion for any statement—an answer which certainly led the House to suppose that there would be no necessity for borrowing money until the usual time of submitting the Budget for the ensuing year. Now, he considered that it was rather unfortunate that such a statement was made, because it gave rise to some misapprehension in the public mind as to the; sum likely to be required for the public service, and nothing was gained by withholding the truth with regard to the amount requisite for meeting the expenditure. The Chancellor of the Exchequer had intimated that he wanted £5,000,000; in other words, he had reversed his Estimate of August last, having calculated his revenue too high and his expenditure too low. The expenditure had been in round numbers £90,250,000. The revenue had been £65,500,000, the loan 16,000,000, Exchequer bonds and bills £7,000,000 more, making a total of £88,500,000. There was consequently a deficiency of £1,500,000. Why did the Chancellor of the Exchequer call for a loan of £5,000,000 to meet a deficiency of £1,500,000? That brought him to the I question—was the right hon. Gentleman certain of the expenditure of the financial year ending the 31st of March next? Were all the bills in? It was hardly possible to know what would be the expenditure in the East, and, therefore, it was important to ascertain the data upon which the Chancellor of the Exchequer assumed that £90,250,000 would be sufficient for the expenditure of the year. The right hon. Gentleman had not clearly stated what was the amount of the unfunded debt. Under the powers of a Bill passed last Session he had issued Exchequer bills and bonds to the extent of 1244 £7,000,000. Now, he should like to know what proportion consisted of bonds? The right hon. Gentleman had been understood to say £1,000,000, but in estimating the unfunded debt bills and bonds must be taken together. The issue of Exchequer bills amounted altogether to £23,000,000; but what was the issue of Exchequer Bonds?
§ SIR HENRY WILLOUGHBY
Yes; but the right hon. Gentleman must add the amount issued at the time when the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone) was Chancellor of the Exchequer. At that period there were three classes of bonds issued payable in future years—1858, 1859, and 1860. Ho referred to these things because it was important to bear in mind what was the precise amount standing against the nation which did not assume the shape of stock, otherwise they might fall into serious error. He estimated that there must be at least £30,000,000 of unfunded debt at the present moment. The Chancellor of the Exchequer meant to fund only £3,000,000, which would still leave £20,000,000 of Exchequer bills and a large amount of Exchequer bonds unfunded. The financial question at present before the House was a very simple one. A much more important question would be raised when they came to consider the Ways and Means for next year. Meanwhile, although it was certainly a large operation to borrow £28,000,000 within one year, he thought the Chancellor of the Exchequer had adopted a wise course in not having recourse to additional taxation to meet the extraordinary wants of the year.
THE CHANCELLOR OF THE EXCHEQUER
said, he must state, in reply to the hon. Baronet, that the full amount of Exchequer bills now issued was £23,930,600, of which £6,000,000 were not in the hands of the public. The amount of bills issued since the 21st of August last was £6,000,000, and the amount of bonds issued during last year was £1,000,000. The total amount of bonds issued previously was, he thought, £6,000,000; but the question of funding did not apply to Exchequer bonds.
§ MR. W. WILLIAMS
said, he was sorry that the Chancellor of the Exchequer continued to pursue the imprudent course of 1245 raising money by adding to the Three per Cent Consols. Almost the whole of the debt was now in Three per Cents. Now, the interest of that description of stock could not be reduced without twelve months' notice, and therefore the Chancellor of the Exchequer was precluded from taking advantage of a favourable state of the money market to reduce the interest of the debt. The right hon. Gentleman the Member for the University of Oxford, when Finance Minister, made a praiseworthy attempt to effect a change, and would have succeeded had not the war unfortunately broken out before he had time to perfect his scheme. If the present Chancellor of the Exchequer, as he ought, had proposed to raise the new lean by receiving one pound sterling for every pound of the debt, he would have had an opportunity of reducing the interest of any portion of it whenever the money market was in a favourable condition. But he was now adding to the debt upon the most unwise principle that could be adopted. The right hon. Gentleman had certainly obtained very fair terms, considering the state of the market, but he greatly objected to the contracting of the debt. He thought posterity had not been honestly dealt with, for, while we were only to pay £15,500,000 towards the expenses of the war, we were about to throw a debt of £28,000,000 upon posterity. A day would come when posterity would get tired of paying that debt, and a dangerous day it would be for estates and titles, and he hoped it would not affect even the stability of the Throne. It appeared to him that the present system, if pursued, would be a ruinous one. Mr. Macaulay had been referred to by the Chancellor of the Exchequer; but he (Mr. W. Williams) had yet to learn that Mr. Macaulay was a prophet as well as an historian. The money market had been too strong for every Chancellor of the Exchequer except the right hon. Gentleman the Member for the University of Oxford, but the present Chancellor of the Exchequer might also have triumphed over that powerful interest if he had acted with the same resolution as his predecessors. He protested again most strongly against the addition now being made to the debt.
§ MR. JAMES MACGREGOR
said, he thought that the Chancellor of the Exchequer had adopted a prudent and judicious course; and, as to what the hon. Member for Lambeth had said about Mr. 1246 Macaulay turning prophet, he (Mr. Macgregor) would remind the hon. Member that he had himself indulged in prophecy as to what the effect of the present system would be in respect to posterity.
§ MR. WILKINSON
said, the right hon. Gentleman the Member for the University of Oxford had obtained money by means of Exchequer bonds at 4¼ per cent, when he might have obtained it by Consols at 3frac14;. The present high rate of interest arose from natural causes, and was, he thought, likely to continue. The discovery of gold, instead of diminishing the valuo of money, had had a contrary tendency, for it had caused large tracts of land to be brought into cultivation, and thereby increased the rate of profit. He believed that no very good opportunity was yet likely to present itself of paying off the debt upon good terms, and the price which the right hon. Gentleman had obtained for his stock proved that the apprehension expressed by his hon. Friend (Mr. W. Williams) as to the payment of the debt by posterity was not very widely spread.
Sir, I had no intention of troubling the Committee with any remarks, on the present occasion, for I confess I have' very little fault to find with the proceedings of my right hon. Friend, the Chancellor of the Exchequer. However, I wish to make a few observations on some points that have been adverted to on the subject of the Resolutions. I wish, first of all, to set right the hon. Gentleman who has just sat down, as he was much mistaken in what he stated with reference to the history of Exchequer bonds. In the first place, Exchequer bonds are not a stock at all, and, therefore, a comparison between them and any particular kind of stock is perfectly irrelevant. In the second place, the hon. Gentleman has misapprehended and misstated both the terms upon which it would have been practicable to borrow in Consols when the Exchequer bonds to which he referred were issued, and the terms upon which they were issued. He said they were issued at 4¼ per cent. [Mr. WILKINSON—Some of them were.] None of them were issued at 4¼ per cent, and the average rate at which they were issued was considerably under 4 per cent. He is also completely wrong when he says that we might have borrowed money in Consols at 3¼ per cent. The rate at which we must have borrowed in Consols in April, 1854, was much nearer 3½ than 3¼ per 1247 cent. With regard to the contracting of the loan in Consols, it is a question involving different considerations, which tell in different directions; but considering the limited amount for which my right hon. Friend was about to operate, I cannot find any fault with him for not taking this opportunity to create new stock and to borrow on a new principle. I think his natural course was to deal with that stock which commanded the hest price in the market, and I join with the hon. Gentlemen who have preceded me in congratulating him on the fair and equitable price lie has obtained. There are, however, one or two points touched on in the present discussion which I cannot pass by without notice. In doing so, I do not intend to question the correctness of my right hon. Friend's figures, but it is possible that some members of the Committee may go away with a false impression unless something be added to his statement with regard to the expenses of the war. I understood him to state that the Government had borrowed £28,000,000 during the present year; but do not let the Committee suppose that the amount we have borrowed in the present year is the total addition which has been made to the debt, taking the funded and the unfunded debt together, since the commencement of the war. The money we have borrowed is one thing, the stock we have created is another. My right hon. Friend has purchased unfunded securities to a considerable extent with money which he has obtained by the sale of funded securities, but in selling those funded securities in the open market he has created an amount of debt considerably greater than the amount of money he has obtained. It does not admit of dispute that, by the operation of to-night, we are dealing with a plan for raising £5,000,000 of money and funding £3,000,000 of Exchequer bills, but that the amount of debt to be created is nearly £9,000,000 instead of £8,000,000. I am subject here to correction by my right hon. Friend, but, as far as I can run over the figures from recollection, I should think that the present amount of the public engagements, if summed up and compared with their amount twenty-four months ago, represents, as nearly as possible, an increase of debt to the amount of £36,000,000 instead of £28,000,000. I am quite open to correction if I am wrong, but I do not think that I have overstated the case. 1248 Then, with respect to my right hon. Friend's statement as to the expense of the present war, I do not think it calculated to give an entirely just and accurate impression, because he has taken the twenty-two months and a half of war, and has compared them with twenty-two months and a half of peace, as if those months had been months of average expenditure as during peace. But it should be in the recollection of the Committee that the two years immediately preceding the outbreak of war were years in which there had been a considerable increase in I our military establishments, including not an inconsiderable expense on account of the Kafir war, which was an incident not belonging to a state of peace but to a state of war. That, however, is not the point to which I am most anxious to call the attention of the Committee. It is, I apprehend, a fallacy when we reckon the expense of the war, to reckon that which we have actually disbursed, and to: say that, because we have spent only £45,000,000, therefore, that is the cost of the operations of war up to the present time. The fair way to test the question is this:—Suppose the war to cease at the present moment, would that amount of £45,000,000 constitute the whole amount necessary to be paid on account of the war? On the contrary, however vigorous your system of administration, and however excellent your system of accounts may be, there is an immense charge actually incurred, which it is impossible to have got in, but which charge you must disburse in the future, though it belongs to the past, being already incurred. But that is not all. It is a necessary result of every war that, in proportion to the extent of the establishments you create, you should incur great prospective expense in the reduction of those establishments, in the half pay, pensions, compensation allowances, and in ten thousand different forms, connected with a great and sudden expenditure. It is not easy to make any accurate estimate of the expenditure you must make for such reasons, but I very much doubt, supposing war to cease from the present time, whether, before the account should be ultimately closed, it would not be found to be greater by the addition of 50 per cent, or one half more than the sum mentioned by my right hon. Friend. I am not stating these things as bearing on the policy of peace or war, but as bearing on 1249 a dry financial statement; and, as all these things in this country are supposed to be brought to account and presented to the House, it is the duty of Members of the House to make any contribution in their power towards a fair, accurate, and perfectly full statement of the subject. Perhaps I may be allowed to make one criticism on the speech of my right hon. Friend, and that has reference to his quotation from Mr. Macaulay. I would rather have heard Mr. Macaulay quoted in almost any other passage of his wonderful book than in that relating to the National Debt of this country. But if he were to be cited on that particular passage, I would rather have heard him cited in reference to it by any other Member than by my right hon. Friend who holds the office of Chancellor of the Exchequer. I think it is the duty of a Chancellor of the Exchequer not to anticipate in this House too great a disinclination to borrow. When my right hon. Friend comes to us to propose loans, let him rely on it, he has no need of citations from Mr. Macaulay. When he comes to impose taxes—to propose some painful and self-denying Resolution, at the hazard, to us, of encountering the displeasure of our constituents—when he should call on us to make vigorous efforts to prevent the contraction of enormous permanent obligations—then let him cite Mr. Macaulay. Let him, I adjure and I implore him, search the pages of that writer and get the most eloquent and best passage he can to wind up the House to a resolution necessary for such a course. But when the right hon. Gentleman tells us that we must borrow some more money, necessary for the discharge of certain expenses, he has no occasion whatever to consult Mr. Macaulay. My right hon. Friend adverted to another point, in respect to which, though it is not at present under consideration, I must say I cannot quite agree with him, and that was his statement that the wise jealousy of Parliament has greatly curtailed the borrowing powers in the hands of the Government. I am sorry to say, on the contrary, that it appears to me that, instead of a wise jealousy, there has been a very unwise liberality, a great carelessness and neglect on the part of Parliament in intrusting to the Executive Government powers of borrowing by indirect process, such as ought not to be given to any Executive Government whatever. Nor is this a discovery I now make 1250 for the first time, because two years ago I ventured to state this opinion when I held the office of Minister of Finance; and, before I quitted office, I presented to the House a Bill for the purpose of limiting and restraining within what I considered safe bounds these, in my opinion, very unwise powers. I will now conclude with expressing a hope that my right hon. Friend's anxiety in respect to the management of our finances during a time of war, great as it must be, will not prevent him preparing some measure with a view to the reformation of our financial system. If we are blest with an honourable termination of hostilities, I trust my right hon. Friend will apply his mind to that subject, and present some measure to establish better and more effectual safeguards on the borrowing powers of the Executive Government than can be said to exist at present.
§ MR. POLLARD-URQUHART
said, he thought that the present loan would entail a smaller charge on the country than if it had been borrowed in the manner suggested by the hon. Member for Lambeth (Mr. Wilkinson).
§ Resolutions agreed to:—to be reported on Monday next; Committee to sit again on Monday next.
§ House resumed.