HC Deb 24 May 1866 vol 183 cc1220-78

Order for Second Reading read.


Sir, I rise now to submit to the House a statement with respect to this Bill, and I must begin with a confession on my own part, and at the same time with a plea in mitigation of any blame that may be due to me. I must confess that I ought, according to general rules, to have given in the Financial Statement of the year a fuller explanation of this measure, and especially a more complete statement of the grounds for adopting, it, in order to convey a perfectly clear idea of it to the House. But, at the same time, the House will understand that the Financial Statement annually made involves such a mass of varied matter that the Minister who delivers it may well be unwilling to add an hour to a speech which must of necessity be a long one, for the purpose of entering into all the details which I fully admit to be requisite in order to enable the House to understand the nature of the proposals which I now recommend to its notice.

I will advert, in the first instance, very shortly to a particular point, my object being merely to obviate a misapprehension which has arisen out of certain words of mine incautiously used. It is quite true that in the Financial Statement I dwelt, particularly in connection with this subject, upon certain opinions which I think, although of necessity they are indeterminate in their form, yet are more and more coming into vogue with respect to our supply of coal. Now my intention was not to make those opinions the basis, properly so called, of a proposition which, as I will presently proceed to show, did not in the least degree stand in need of them—that is to say, which I think quite capable of being supported without the least reference to those opinions. On the contrary, the proposals which I have to make depend upon those ordinary considerations which I may safely take for granted as belonging to the fixed policy of the country—considerations which, in my opinion, are amply sufficient to justify the proposition which is now made to the House. On the evening when the Financial Statement was made the right hon. Gentleman the Member for Oxfordshire, with his usual acute discernment, observed that the proposal was a somewhat small one when it was measured by a reference to the prefatory reasons by which it had been introduced, Undoubtedly, I think that observation is a just one, for those prefatory reasons, which might well have been dispensed with if the proposals now before the House were to be put each of them on its own merits as an isolated proposal, were, in truth, intended by me to bring to the mind of the House considerations somewhat wider than those which are involved in the measure now before us—considerations connected with the policy of adopting a more decisive course, not only for the present but for future years, in regard to our action upon the public debt. I can assure the House—I need hardly assure those who heard me—that I did not mean to convey that the greatness of England was exclusively dependent upon coal, and that we were to look upon the exhaustion of coal as fatal to her greatness. I treated coal as a special, peculiar element in connection with the greatness of England, as an element which largely contributed not only to that greatness in general, but in particular to the commercial precedence of England over other countries; and that is the point which it is essential to keep in view. That Eng-land without her coal would keep an equal place in the race of nations I am little disposed to doubt. But it is her precedence in the race, it is the start she has already obtained, it is the constant gaining ground, if I may so speak, upon herself, and exhibiting increased accelerations of development as she appears to exhibit them, if not from year to year, yet from one term of year to another—it is these things which, as I think, constitute that specialty in our position which results not only from the possession of coal generally, but from the almost exclusive possession for the purpose of bringing to market of unlimited quantities of the cheapest coal.

These, then, were the considerations which I presented to the House, not by any means in the form of strictly determinate and rigid propositions, but as considerations of great weight, and so far determinate that they ought to influence our policy, while, at the same time, they ought to be presented only in a general form; because if presented specifically they would be likely to lose a great part of their title to practical attention. The state of our knowledge is such as to call for attention, I but not yet such as to warrant very precise conclusions. I adhere, then, to the general scope of those observations, but with the qualification that they are, as I have stated, necessarily indeterminate.

But returning to the principal points involved in the present Bill, I have two propositions, in the first place, to state to the House. First of all a portion of the argument which I have heard to night from my hon. Friend the Member for Salisbury (Mr. Marsh), and portions of arguments which I have heard in various forms on the subject of this Bill, are, I think, to be met by this observation— that the policy of paying off our debt in fixed sums from year to year in the shape of Terminable Annuities has never been fully argued by me because I have assumed it as a datum. I have assumed it as an elementary proposition fixed and embodied for a long time past in our financial policy. If any one should say that the whole scheme of financial policy ought to be recast and re-considered from its first principles, they are entitled to do so; and if they think that this is a fit occasion for considering the matter somewhat at large, well and good. But I excuse myself for not entering into that subject on the occasion of the Financial Statement because I always thought that that which had been embodied from time to time in so many Acts of Parliament, including, indeed, one of the present year, and which had taken as the basis of such great transactions as is the system of Terminable Annuities, might be held to he a matter upon which, until it was questioned, argument would not be necessary.

Now that being so, and the policy of our Terminable Annuities in their social forms being a fixed portion of our financial system, the simplest and most natural justification of the proposition I will make is undoubtedly to be found in this—that it is not, as my hon. and learned Friend the Member for Suffolk seems to suppose, a great extension of that which we have uniformly done; it does not at all amount to a marked step in advance, as compared with our traditional and ordinary scale of proceedings; it amounts to only this—an attempt to recur to something like the scale of operations for the reduction of our debt by means of Terminable Annuities, which scale had been uniformly maintained for a considerable period until about five years ago.

At the close of the Great War, putting together the life annuities and annuities for terms of years, we were paying away in this form an annual sum of £1,900,000. It was evident, however, the fixed policy of Parliament to work that amount upwards and to secure the payment of a larger and larger portion of money from year to year with regularity in the shape of Terminable Annuities, including, of course, a proportionate liquidation of the capital of the Public Debt. Consequently, when we reached the year 1840, that annual amount, which had been only £1,900,000 in 1815, had been brought up to about £4,300,000 in round numbers. From the year 1835 to 1859, a period of a quarter of a century, our annual charge in respect of Terminable Annuities, a large portion of which represented the interest of the debt, but a large portion of which, likewise, represented the re-payment of the capital of the debt, was on the average about £4,000,000. In 1860 by the lapse of the long annuities that charge fell to £2,094,000, so that there was at that moment—in consequence of the lapse of the long annuities and of our inability at the, time to adopt any extensive measure for the purpose of re-filling the gap—a considerable retrogression in our operations so far as regards the liquidation of the Debt.

It maybe said—and I am probably open to the comment and to the criticism—that I was myself the person who proposed to Parliament a different disposal of our funds at that day; and if that were now a matter to be discussed, I am prepared to defend the course I then took, in common with my colleagues, on account of the exceedingly important and beneficial nature of the objects which were contemplated by the financial measures of that year. But that justification applies only to the particular juncture; but we neither expressed nor favoured an opinion that this kind of operation should be permanently reduced; on the contrary, we have made various efforts since for a partial extension of it, and we now propose a larger one.

I think with my hon. Friend the Member for Salisbury and my hon. Friend the Member for Westminster, that there were certain operations aiming at the removal of the most objectionable taxes which it was of the first importance to effect, and that it was a wiser course to reduce those taxes than to pay off the debt. But, when you have advanced a certain point in the reformation of your fiscal system, the balance of consideration begins to change, and a greater urgency begins to come into view for the re-payment of debt, with a diminished urgency for the remission of taxes or for maintaining an equal dispatch in that remission. Since that time we have not been entirely neglectful of the question, because we have done something, although not much. We have since 1860 or 1861 increased by the sum of £300,000 or £400,000, the annual charge for Terminable Annuities, which stood in 1865 at about £2,400,000, and an Act passed during the present year will make a further not inconsiderable addition. But still, if I take the payment as it stood in 1865, the House will see that the character of the measure now proposed is simply one to make a further contribution from annual revenue towards the liquidation of the public debt in a recognized and established form; and that it is not, properly considered, an extension of our system, such as it prevailed up to 1860, but a partial attempt to approximate to the scale on which we had then begun and for a rather long time continued to act. We are at present about £1,600,000 annually within what we paid on the average for the quarter of a century before 1860, and the law passed during the present year would bring that £1,600,000 down to between £1,200,000 and £1,300,000. But the Bill I am asking the House to pass would scarcely do more than replace us in the position in which we stood, I may almost say, as a matter of course before 1860, when we were all accustomed to look on this payment of large sums in the shape of Terminable Annuities as being a fixed and beneficial part of our financial policy.

Now, Sir, let me offer a few words on the interesting question, whether we ought to contemplate in prudence and in wisdom a system of increased effort for the reduction of the Public Debt. Is it wise for a nation burdened with debt to make it an object of policy to reduce the debt? There are certain cases in which I, for one, should admit that this can hardly be considered an object of policy. The argument, indeed, commonly used against the reduction of Public Debt—and it is a very fallacious argument in the only case in which we are practically concerned—is this, that the debt is held by the public at an interest which may be represented at 3 or 3½ per cent; so that if we pay off the debt the saving for every £100 paid off cannot be taken for a larger sum than £3 or £3 10s., but that the money thus obtained and used in repayment is taken from the mass of an industrious community, who are so employing it in commerce and in enterprize that they are making 5, 6, 8, 10, or even it may be 20 per cent, at any rate a much higher rate of profit, out of it. In my opinion that argument is entirely fallacious, because it seems to assume that the operation of paying off a debt which only costs £3 10s. is a final operation, and that when the money has been paid back to the public creditor it ceases to exist for any practical purpose. But that is utterly and totally untrue. The money employed in paying off debt goes straight into the money-market of London, and becomes at once available in the most direct and effective manner for cheapening capital, and thereby stimulating production. And, as far as I know, the only qualification which ought to be attached to that is noticed by Mr. Mill in his Political Economy, where he discusses the subject of the liquidation of National Debts, as in the case of a country whose industry is active and whose public burdens are serious, but where the debt chances to be held not by natives but chiefly in foreign countries. I grant that in such a case a very important element is introduced into the discussion, the exact value of which it is not material now to attempt to fix. That is not our case, for our debt is held in an enormous proportion at home, and when £100 is raised by taxes to liquidate the debt it is just as available for the purpose of stimulating enterprize and industry, and producing 5, 10, or 20 per cent of profit, as it would have been if the debt had not been paid off. I might, perhaps, strengthen this statement by observing what I think Mr. M'Culloch and other economists have remarked, that although taxes are grievous evils, yet they are not unmixed evils, inasmuch as they have a great tendency to check waste and produce economy. It would be possible on this ground to argue plausibly, and something more than plausibly, that money raised by taxes to pay off debt would become more largely available for the purposes of production than if the debt were not paid off.

It is again stated, and with perfect truth, by those who are adverse to efforts for the diminution of the debt, that we cannot estimate the reduction of our debt down to this time simply by the dry and bare figures as they stand before us. We must not consider, they say, merely the naked proposition that we have brought our debt in half a century from £900,000,000 to £800,000,000, but we must also consider the relative power and wealth of the country. And it is a very fair and plausible doctrine to hold that owing £800,000,000 of debt, we are at this moment fitter, so far as wealth is concerned, to enter upon a great, sanguinary, and protracted struggle —though may God forbid it should be necessary— than were our forefathers at the time of Mr. Pitt to enter into a revolutionary war, and when our debt, perhaps, did not much exceed £50,000,000. But that, however true, is not a sufficient and satisfactory answer. I should be very sorry, indeed, apart from the horrors and mischief of war itself, to see the mere financial process of the revolutionary war repeated. I doubt very much whether we have sufficiently realized the enormous political mischiefs that were attendant upon the revolutionary war—the change of tone which was produced in the spirit of our domestic Government; the unhappy alteration which it brought about in the relations of classes; the tendency to stringent and I will say arbitrary legislation; the re-creation or extension which we owed to the Revolutionary war, of that huge system of protection, which Mr. Pitt, if he had been blessed with fair opportunity by the continuance of peace, would, it is almost permitted us to hope, have utterly destroyed. In point of fact, it would not be too much to say that, as regards those indirect consequences, we are only now beginning to extricate ourselves from the results of the Revolutionary war. But there is another most important consideration to be borne in mind as against those who tell us that the nation which went into war in 1793, and which increased the debt from £250,000,000, or little more, to £800,000,000, can much better go into war in—what shall I say?—not 1866, as we trust, but any given future year—that such a nation can much more safely carry its debt of £800,000,000 into war hereafter, and come out of it with greatly in-' creased obligations than the same nation when it had a much smaller debt could afford to wage the war with France and add, as it did add, £600,000,000 sterling to its debt. This, at any rate, should be recollected. There was in the ease of the Revolutionary war one most remarkable and peculiar compensation which this country derived from its mastery of the seas. That mastery of the seas became a monopoly of the seas, slightly qualified by American competition, and rigidly defended by a code all our own. But the American marine and the vast power of the American nation were then only beginning to exist. In the main, what between the infancy of America and the command of the seas that we enjoyed, as compared with other European Powers, we became, it may almost be said, the only masters and almost exclusive possessors of the maritime trade of the world. And the stringent code of maritime law, or what we contended was maritime law, made that possession an effective reality. We cannot expect again to see—it would be impossible for us again to see—our trade during a war of an analogous character placed in an analogous position. Those days have absolutely gone by. In the case, then, of the Revolutionary war it must be observed that, while the war brought with it immense burdens, it opened up new sources of wealth for us through the exclusive possession of the ocean trade. Those new sources of wealth cannot be opened up again; and consequently the argument founded upon the supposed parallel between the cases is to that extent, and it is to a considerable extent, fallacious. Do not, therefore, let us hastily conclude, from a retrospect of the Revolutionary war, that we can with safety apply the parallel derived from that period to a policy which, again involving us in a war with £800.000,000 of debt on our shoulders, should be destined to end in adding some three, four, or five, or six hundred millions more to that debt.

Having stated these general considerations, I would now remind the House of the exact character of the proposition before it. The proposition is twofold. First of all, by that which, for the sake of convenience, I Call operation A. we propose to convert a book-debt of £24,000,000 into an annuity of £1,725,000 for eighteen-and-a-half years, ending in 1885. That statement, so far, is complete when I add to it the remark that of this £1,725,000, £720.000 represents the present annual charge. But when the dividends for this annuity of £1.725,000 are paid from time to time from the Exchequer, what, under the actual provisions of the law, will become of them? They pass into the hands of the Commissioners for the Reduction of the National Debt, and the Commissioners for the Reduction of the National Debt hold those dividends, as they hold all their other assets, liable to the claims of the trustees of savings banks; I mean now of those useful institutions what we call the old savings banks. The claims of those trustees might absorb the whole of this annuity, or they might absorb any given portion of it. No man can tell how much of it they will draw, because that depends upon causes which it is absolutely impossible to forecast with any precision, inasmuch as the withdrawal of the deposits of the old savings banks is a matter very considerably connected with the general state of the money-market; and the general state of the money-market in the coming year is a subject as to which opinions may vary, and of which there is no certain and fixed criterion. In general, however, we may anticipate that the rise now established in the general value of money, and likely to last for some time, will be found to offer such inducements to the depositors in these banks as to give rise to very considerable withdrawals. In the regular course of things, supposing we terminated with operation A, what would happen would be nearly as follows. The duty of the Commissioners for the Reduction of the National Debt would be to see what is the state of their balances from time to time, and to invest either in public securities properly so called, or in securities guaranteed by Parliament, which are virtually, though not nominally, public securities, as much as could be spared from those balances—that is, as much as could not be deemed requisite for meeting the probably incoming demands of the trustees of the savings banks. Observe, that these powers already exist by law, and do not depend upon the Bill before the House. Therefore, what would happen would be, as I have said, that out of this £1,725,000 the available and spare balance would be invested from lime to time as might be most expedient according to the circumstances of the period. That might be invested in Exchequer bills, in Exchequer bonds, or in any of the stocks of the country; or, again, it might be invested in those guaranteed securities according as circumstances might appear to render it prudent. So far there is no proposal to make any change— there is no proposal that the investments under this Bill shall be absolutely limited to public securities or to the funds. It will continue to be the duty of the Commissioners to make their investments within the limits allowed by law, on the princple on which as bankers they ought to make them. But, still, assuming that a proportion—and, probably, in the ordinary course of things, a considerable proportion—of them would go into the funds, then whatever stocks were in that way acquired would become subject to operation B. And here, and to this extent, comes in the influence and effect of the present Bill. The spare balances, as I have said, would be invested in securities. A portion, at any rate, of those securities would be in the various Three per Cent Stocks; powers are taken by the Bill to convert such stock as might thus have been acquired from year to year into another set of annuities, commencing from the date of the conversion, and ending in the year 1905. That is the character so far of operation B. Now let us look at the result in point of figures. What the immediate result would be for the year I have already pointed out in the Financial Statement. During the present financial year only half of the additional burden of a million becomes payable, because the conversion will only take place in time for two of the quarterly dividends of the annuities to be paid within the financial year. In the next year it is true that the whole of the million would come to charge; but then the remaining moiety of it would be more than met by what is called the Bank annuity or dead-weight of £585,000, which falls in in 1866–7, or, to speak with great precision, partly in the financial year 1866–7, and partly in the following financial year. It is not necessary, however, now to look at the precise relation between the financial effects of this measure and the figures of this, or of the next, or the following financial year. The provision made for these years appears to leave little ground for dispute. It is better, as this is a measure which will operate for a series of years, that we should look at its general effect, and especially that we should look at the maximum effect which it might or would have. Now, I am going to represent the maximum effect of the two operations; and first of operation A, which is comparatively a very simple matter. The annuity to be created is £1,725,000 a year; £720,000 of that is the present charge as interest at 3 per cent on the £24,000,000 of book debt which is to be cancelled; £585,000 more is also present charge, or the sum now payable on account of the dead-weight to which I have just referred. These two sums together make £1,305,000; and deducting that £1,305,000 from the £1,725,000, which will become payable annually, we have an increase of charge—a certain, positive, invariable increase— of £420,000 upon operation A, as compared with what we now pay, and after allowing for the fact that by the operation of law the dead-weight annuity will expire, £420,000, therefore, is all the charge that will come upon the public from the combined influence of these causes.

But, then, I come to operation B; and now I am about to represent to the House a case which, as respects the burden to be entailed, is, I must say, almost imaginary. That is to say, the case as I shall first put it is founded on the supposition that the whole of this annuity of £1,725,000 per annum would from year to year be free for re-investment, and would always be reinvested in stocks. Now, that is a hypothesis so improbable that I merely state it for the sake of information; because, in the first place, it is almost morally certain that the whole of it could not be invested, on account of the demands of the trustees of the savings banks. It is again open to the observation of my hon. Friend the Member for Salisbury that it is almost morally certain some of these years will be years either of loans, or, at any rate, of deficiency, which means years when money must be borrowed in some form or other to meet public charges, and when I may add if borrowed at all from the Commissioners it would almost certainly be taken in the form of some instrument not convertible into the proposed annuities. But still on this assumption, which is hardly a practical assumption, I believe the case may be said to stand thus. In 1885, which would be the last year before the Government again came to Parliament on the subject, there would be, as I have shown, a public charge from operation A of £420,000. Now, from operation B, if the whole of the annuity down to that time had been regularly invested in Three per Cent Stock, the amount of the annuity created by 1885 to be terminable in 1905 would be £3,170,000. But then the stock that had been cancelled would have borne an interest amounting to £1,875,000; so that the additional charge would have leached a maximum, on account of operation B, of £1,295,000, which, added to the charge of £420,000 from operation A, would make a total of £1,715,000. That, therefore, estimated upon suppositions entirely extravagant, would be the maximum amount of the Increased charge. That is, I say, the maximum abstractedly, but not practically possible. Then in 1885 the annuity of £1,725,000 would lapse, and there would then also lapse £680,000 a year of annuities belonging to the class of those originally created by Sir George Lewis. Therefore, in 1885 there would be a relief of £1,725,000, plus that £680,000, making together £2,405,000 to be set against the increase of charge which I have stated at £1,715,000; or rather, I ought to say, the relief which would accrue in 1886. supposing the maximum charge in 1885 to be £1,715,000, would be £2,405,000, showing a decrease of charge, as compared with the starting point on the year 1866, of £690.000. [Sir STAFFORD NORTHCOTE was understood to ask whether the Fortification Annuities were included in these calculations?] The case stands thus:—The Fortification Annuities already raised are included. As respects those not yet created, I cannot name the precise figures, but the amount of money which remains to be raised in order to fill up the plan as adopted by the House in 1860 is email. I apprehend that much the larger portion of that money has been raised already, and the case would not be materially disturbed by taking these annuities into view. I am also taking into account the annuities which will very shortly be created by the Act passed this year in relation to the old savings banks. But that which I want now to point out is the precise effect of our present proposal, everything else either being in the power of the House as being prospective, or else being dependent on the operation of proposals which the House has already adopted, and to which it has given the force of law. Hon. Members will now have seen, therefore, that, so far as regards the mere financial extent of this plan, it does not involve any figures which are of an alarming character for those who may be disposed to look upon it with alarm, or which would entitle it to be regarded as a gigantic measure by those who may be inclined to look upon it with favour. [An hon. MEMBER: What will be the amount of Consols cancelled?] The amount of Consols to be cancelled is, I think, shown in the printed paper which has been laid on the table, and will reach by the single operation in 1885, £62,500,000; but then a considerable portion of the price of this cancelling of stock would, of course, then still remain to be paid in the dividends on the annuities that would have to be formed from 1885 on to 1905. I may, however, add that the amount of this operation, so far as the charge on the public is concerned, is confined within moderate bounds.

There are other questions I, at the same time, admit, which may very fairly be deemed worthy of special consideration. From observations which have been made in this House, and which have reached me in various forms, it appears to be thought that a portion, at any rate, of this plan involves the revival of the principle of a sinking fund. My hon. Friend the Member for Salisbury gave expression to this view, and read extracts, copious—but not too copious—from the admirable pamphlet of Lord Grenville. The pamphlet of Lord Granville, although I have not referred to it recently, I might almost say I fully adopt; it may almost be termed the classical publication on this subject; but I would further observe that no portion of the principle of the sinking fund of Mr. Pitt is involved in the proposal which we now make. This is a statement the truth of which, at any rate its truth in every case except an extreme and very improbable case, I will now proceed to demonstrate. I have been on all occasions opposed to the creation of a sinking fund. I joined many Gentlemen in all quarters of this House, and among others the right hon. Gentleman the Member for Bucks, in objecting to the sinking fund which was created by Sir George Lewis in 1856; and although we did not then succeed in preventing the creation of that sinking fund on paper, yet in the very first year, I think, in which it became practically operative, it was, with my most perfect goodwill, destroyed. I may also take credit with my hon. Friend the Member for Salisbury for this, of which he is not, perhaps, aware, that I have during the present Session obtained power from the House for the abolition of two sinking funds, purely and properly involving every element of such a fund, which have existed without criticism, comment, or I might almost say even the knowledge of any portion of this House, up to 1866; in connection, the one with what are termed donations and bequests, the other with the audit rolls. If, therefore, the proposal before the House be one for the re-institution of a sinking fund, it can scarcely be thought that it assumes that character through any wilful action on my part. But, to proceed with the explanations which I have to make on the main proposal involved in this discussion, let us consider for a moment what are the real objections to a sinking fund. I take them to be as follows:—In the first place, it is said, and said truly, that in having recourse to it you do not pay off, but only pretend to pay off, a debt. That proposition appears to me to be elementary, and Mr. Pitt knew as well as we do how the matter stands in this respect. I do not believe he would have been influenced for a moment by those fanciful calculations about the wonderful effects to be produced by pennies put out at compound interest. He was a practical man, and his main object was, in my opinion, to produce a practical result, and that was to make persons more willing to lend him their money for the purposes of the war. Viewing it as a purely subjective operation, I am by no means sure that he did not produce that effect by his sinking fund; but we do not wish to produce that effect. We have no occasion at present to borrow, we have had none for a good while, and it may, I hope, be long before we find ourselves in that position. The first objection to a sinking fund, then, is that it is a fiction when it is not really intended to make it the means of paying off debt. The next objection is that the sum you pay under its operation is sure to be less than the sum you borrow in order to pay with, just as if you undertake to pour water over a porous bed from one part of the surface of the earth to another, you must not forget that there will be considerable loss occasioned by evaporation and absorption on the way. So with regard to the sinking fund—-you borrow, in order to pay off a given amount, a sum greater than that amount. When you go into the market to ask for a loan the contractor must have his profit on that loan; and, again, when you go to redeem the stock the jobber must have his profit also; while all the charges for establishment and for brokerage are regularly going on. Considered on the score of economy, therefore, such a scheme is one which cannot he said to be capable of enduring criticizm for one moment. Such are the financial objections to a sinking fund, and I apprehend they must be looked upon as conclusive. I will, at all events, assume them to be so without any qualification, and I will ask how far are those objections applicable to Terminable Annuities; because upon the answer to that question would depend, primé facie at least, the merits of the proposal which we now make so far as operation A is concerned, that operation terminating with the creation of Terminable Annuities.

Terminable Annuities have, I think, evidently great political advantages. They place the payment of the public debt to a certain amount beyond the competition with the repeal of this or that particular tax, beyond the caprice and vicissitudes of the finance of a particular year. Some persons may say that this is right, while others may be disposed to look upon it as wrong. It is sometimes said that if is disparaging to the dignity of Parliament and the nation thus to tie up their own bands by entering into a contract which extends over a considerable time. I must, however, confess, for my own part, that I am disposed to side with that long succession of authorities who have established our system of Terminable Annuities, those who have founded the system of life annuities, and those who have made it their object on all occasions to induce Parliament to consent to the payment of debt in this particular form; because I think that by means of it we are enabled to raise and enlarge somewhat the scale of our liquidation of debt, besides causing it to he more certain. We are enabled to extend the scale, not to any extravagant or perhaps even adequate amount; but, still a little further than we could carry it if we were to depend exclusively on the application to the purpose of what is known as surplus revenue. There is then this undoubted advantage in Terminable Annuities; but how far, let me ask, are they open, on the other hand, to the charge that they entail the disadvantages of a sinking fund? There is in a year of surplus no objection to Terminable Annuities, because then you not only have a surplus available for the payment of debt, but if your Terminable Annuities did not exist, and if at the same time all other things were the same, so much of your surplus would be laid by, and you would simply have a payment made under one form which would otherwise be made under another. There is, therefore, no objection to Terminable Annuities in a year of surplus. But how do they operate in a year in which a deficit occurs? In a year of deficit, we will say that £1,000,000 represents that portion of capital which might by law be appointed to be liquidated through the medium of Terminable Annuities. In such a year, no doubt, at first sight we must allow that nothing is gained. You are not, indeed, under the disadvantages you Would have been under, according to Mr. Pitt's plan, of going into the market to purchase and redeem stock; but still this is the fact, that while you are borrowing in the market you are likewise paying off debt. That, primâ facie, is a disadvantage; but I will presently show that that disadvantage—for I admit it to be really such—has no application whatever to the scheme now before the House. This is a matter in dealing with which it must be the object of all of us to arrive at a perfectly clear and dispassionate view of the whole case. I shall, therefore, put it that we have a certain system of Terminable Annuities, under which £1,000,000 goes in liquidation of capital, besides what is due in the shape of interest. Suppose, in a given year, we are borrowing £5,000,000 in the market, it is clear that if we were not paying debt in the shape of Terminable Annuities we need only borrow £4,000,000 instead of £5,000,000. It may be said, in passing, in mitigation of any prejudices against Terminable Annuities, that years of deficit are likely to be, as we hope they may be, exceptional years, while it must also be admitted that the annuities give a scale of operation in liquidating debt? which it is unlikely we could otherwise command. There is another objection, however, to Terminable Annuities, which it is only fair to take into account, and that is, that they are only saleable on the bidder's terms in the open market. They do not suit the views and objects of the bulk of those men who have money to employ. They are likewise open to an unfavourable influence, as has been often observed by the hon. Member for Buckingham (Mr. Hubbard), in consequence of the fluctuating and at the same time burdensome operation of the income tax upon them; and for both these reasons they form, especially at present, a costly mode of borrowing in the open market. I am by no means prepared to admit that it might not be good policy to make use of Terminable Annuities, even if you made use of them in the open market, as was done by Sir George Lewis, that is to say by way of supplement to a Three per Cent loan. I think that in the year 1855, he invited biddings for Three per Cent perpetual annuities, and the question put to the lenders was this, for how much terminable annuity, ending in 1885, added to their pounds of perpetual annuity, will you give the sum of an hundred pounds? There is also an objection to deal with Terminable Annuities on the ground that they cannot be disposed of on terms so favourable to the public as to the borrowers, but one minute will suffice to show that that objection is inapplicable to the present Bill, for under this Bill not one of the annuities will be saleable in the open market.

I have stated thus far, Sir, and as fairly as I could, the case with respect to Terminable Annuities, not as considered in relation to this plan, but on general grounds. Now, let us take the principles which I have endeavoured to establish and apply them to the plan before the House. And here I must request that a consideration may be taken into view, which, though vital and fundamental, is a matter less familiar to the great bulk of the Members of this House than to myself and others engaged in the actual administration of the finances of the country. That fundamental consideration is this, that we, the public, are not only to be regarded as borrowers, but as bankers; and further, that whereas we are only occasionally borrowers, we are always bankers. As borrowers we conduct losing operations, but as bankers we are supposed to conduct, and if not improvident, we do conduct, though on a very humble scale as regards the margin of profit, profitable operations. Let the House bear in mind that quite independently of our Exchequer account—that is to say, our account of revenue and expenditure—we have a banking account which runs continually on, and which depends upon deposits received from various sources. I put the funds of the Post Office savings banks out of view for the present purpose; but still, though I put them out of view in the general argument, they have a most important bearing on this question, because it is mainly due to them that, even under circumstances of the greatest pressure, and even in years when the Exchequer account shows deficiency so that we must borrow, we are still likely to have a surplus on our banking account. The answer to any objection to the present Bill turns very much on that most important consideration. We shall in all probability have a surplus on our banking account, even in years when we have a deficiency on our Exchequer account. The surplus of the Post Office savings' banks account shows a balance of some £7,000,000, received since their establishment, over our payments out. As bankers, we have need rather than otherwise of the means of investment, and the tendency is not absolutely, but on the whole, to accumulation. On the account of the old savings banks the tendency is at present very decidedly to depletion, but the operation of the Post Office savings banks does more than counterbalance the tendency to reduction on the part of the old savings banks. Therefore, for the present I will assume this surplus to be certain. We have recently had to create Terminable Annuities—the fortification annuities, for instance, but we sell them only to our own banking establishment. We do not admit any other customer, and under the operation of the present Bill we shall do exactly the same. We admit one only customer; and one conversion into Terminable Annuity is at a price regulated by the price of stock; but, in point of fact, whether the price at which the conversion takes place is advantageous or not is of no importance, for if the price is very advantageous to the purchaser of the annuity, the meaning of that is simply this: we merely do so much to enrich and fatten our own banking account, the profit of which goes in the last resort to the public.

Now, Sir, there has been a great deficiency on the savings banks account, which I propose to take the present opportunity of supplying. The effect of this Bill will be to bring up the assets of the Commissioners in respect of savings banks to something like the amount of the claims upon them.

In considering the effect of the first operation, A, I will take certain descriptions of years, dividing them, as I believe will be most convenient, in a threefold manner, I will take years of surplus, years of casual and unanticipated deficiency, and years of regular and foreseen deficiency, that is to say, years of war, when we know beforehand that we must resort to extraordinary resources. With regard to years of surplus, I need not take up the time of the House in making any observations, because in respect to Terminable Annuities like these they would give rise to no possible objection. For in three years that repayment of capital, which takes place in the form of Terminable Annuity, would, if the Terminable Annuity did not exist, be effected in the shape of surplus revenue. But suppose a time when there is a casual deficiency in the Exchequer account, amounting, I will suppose, to £1.000,000. What happens? The Chancellor of the Exchequer, as Finance Minister, goes with his deficiency of £1,000,000 to the Chan- cellor of the Exchequer in his capacity of National Debt Commissioner, whose receipts have been such as to enable him to spare £1,000,000 from his balance. This it is his business as a banker to invest. Accordingly he makes over to the Chancellor of the Exchequer, as Minister of Finance, this sum of £1,000,000, and probably receives for it Exchequer bills or bonds. It will be seen, therefore, that there is no waste whatever in the transaction, and no economical objection attaches to the proceeding. Then in a year of a loan, no operation could be simpler. With a surplus upon our banking account of £1,000,000, we, the National Debt Commissioners, shall simply lend the sum on the same terms as any other person would give his money in the open market. That is a perfectly simple operation, and, as far as I can perceive, there is no economical objection to it, The only other contingency which requires to be taken into view is the case of a deficit at once in our Exchequer and in our banking account—that, is to say, the case wherein a year of deficient revenue, it might also happen the dividends received on the stock and other securities held by the National Debt Commissioners, together with the deposits, should be less than the claims made on them, and where, consequently, the banking account, instead of being able to help the Exchequer account, is itself in need. Now I might, perhaps, contend that the operation of this measure will be beneficial in some respects even in that case. If we had a surplus on the Exchequer account it would he enormously beneficial. The very worst case would be where there was a deficit on the Exchequer account along with a deficit on the banking account. What would happen then? Certainly you would be obliged to borrow money in some shape or other in the open market; but what would you do? Say you borrowed £1,000,000 in that way, and that £1,000,000 went to feed your banking account, what would be the effect of the operation then? It would simply prevent your selling so much stock. Would it be desirable for you to sell so much stock? Most certainly not. Because nothing has so injurious an effect as that at periods which, by the very terms of the supposition, are periods of general pressure, the public should appear as sellers of stock in the general market. It is always very much better that any given sum, say £1,000,000, wanted should be raised by some special arrangement, on Exchequer bills or bonds, than that the National Debt Commissioners should go into the market as sellers of stock in times of falling markets. Suppose the State wanted £15,000,000, of which £1,000,000 was due, under this Act, to the National Debt Office, and suppose the State Banking Account was at the same time short by £1,000,000, then undoubtedly £1,000,000 more would be borrowed by the State, but the necessity for realizing £1,000,000 of Stock in the open market would be obviated. I grant this is not a case in which I could pretend that any great benefit would attend the operation, because it is by the supposition a year of the most unfavourable position in which we could possibly find ourselves. It would be an extraordinary year, but even in that extraordinary year I do not think any real mischief would accrue; and in every other description of year I do not hesitate to say the operation would be one of the greatest convenience as regards the class of circumstances it is most difficult and dangerous to deal with, I mean in years of casual deficit; because it is in such years, when Parliament has not been able to make due provision for the wants of the State, and consequently when the Chancellor of the Exchequer would be in difficulties, from being dependent on the favour of the bank or the money-market in some shape or other, that the operation of the measure would prove eminently convenient.

Well, I have discussed the case thus far only with regard to operation A: but with regard to operation B, the case is precisely the same; because the House will remember that the money we are going to pay—namely, £1,725,000, is trust money, and, being trust money, we must deal with it according to the conditions of the trust. It is not to be dealt with simply for the purposes of the Exchequer, it is held liable to the claims of the savings bank trustees. It is perfectly true that we should be able, under the Bill, to invest the surplus of that money in the public stocks, out so we do under the present law. Under the present law whatever surplus money is received is invested in stocks or in securities guaranteed by authority of Parliament. I do not propose to alter the present conditions as to investment. It would be the duty of the Commissioners to make those investments which, within the limits of their legal powers, might appear most convenient and expedient; but investments must be had, for these monies are trust monies. These investments, however, if made in stocks, might, if this Bill should pass, be reconverted into Terminable Annuities, and the proceeds of these annuities would be subject exactly to the same set of considerations which I have mentioned as applicable to operation A, and which, therefore, it is not necessary to recapitulate as applicable to operation B. The sum and substance of the measure, therefore, will be as I shall now state it. But first I will venture to put out of view, on account of its improbability, the only ease in which it could happen that we should be, both for the Exchequer and for the National Debt Office, borrowers and payers of debt in the same year; because, on all these questions, you must look not at what may happen exceptionally, but at what will happen ordinarily. I grant there would be no great substantive advantage attending this operation, considered on its own merits, in a year when an Exchequer deficit happened to be combined with a deficit on the banking account; but, even in that event, I do not admit that a balance of inconvenience would be produced by this measure; because the evil that would be avoided by saving the Commissioners from appearing as sellers of stock in the public market is, I think, a greater evil than that which would be incurred by the necessity of the Chancellor of the Exchequer going into the City for the purpose of raising money. It might be better for him to borrow than for the National Debt Office to realize; and that seems to be, In the very worst case, nearly the whole question. In a case of casual deficit, the Minister of Finance might indeed be able to make the necessary provision by drawing on the public balances; but even if it be thought that for the case of a double deficit my proposition does not hold good, still, and in any case it is a safe proposition to maintain that in all ordinary years—if we take into view the immensely important consideration connected with the system of banking account—no inconvenience whatever can arise out of the operation of a measure like this.

All, however depends, I must admit, on a thorough and clear comprehension by the House of our position as bankers. The dealings of the State under this measure would not be with the public at all, but only with its own banking accounts—with accounts the losses of which it must bear under all circumstances, and the profits of which it would, under all circumstances, receive. Through the Commissioners for the reduction of the National Debt it receives the monies of the savings bank trustees. It is accountable to them for the principal, together with the interest at a certain rate. The principal and the interest, appointed at a certain legal rate, constitute the liabilities of the State considered as bankers. The State invests the monies which it receives from the trustees of the savings banks and from friendly societies, and from the Post Office savings banks. The securities which it holds, and the dividends which it receives on the securities it holds, together with its cash balances, form the assets of the State considered as a banker. I wish, Sir, to point out that this measure has no bearing whatever in any conceivable form on the liabilities of the State, but only on its assets—on that fund which as a banker it holds, and on the relations to the Exchequer which, under the system here proposed, will be relations of extreme convenience. To a certain extent, therefore, we should contemplate, and we hope the House may be disposed to adopt the view, in part now, and in part, perhaps, on future occasions. If the opinion of future Governments and of this or other Parliaments be conformable to the views which I now venture to recommend—we wish to adhere to the policy of paying off debt through Terminable Annuities; but there were certain inconveniences attending that policy, partly, and indeed mainly, dependent on the fact that the State has heretofore repeatedly been compelled to carry them into the open market. What we now propose is to adhere to that system of paying off public debt through the medium of Terminable Annuities, with the intention, perhaps, of developing and extending it from time to time, as the resources of the State and the balance of considerations of public convenience may seem to recommend; but we propose to adhere to that system, freeing it from its serious inconveniences and possible losses, which undoubtedly rendered it liable to part of the objections that are applicable to the sinking fund properly so called; and we free it from that inconvenience and loss by combining the operation of it with the banking functions of the State—by limiting the conversion simply to stocks which form part of the assets held by the State itself as a banker, by paying the dividends to the banking account, and by adjusting through that banking account the wants of the State in years of surplus or years of deficit. With this method of procedure, I think, I have shown that through the operation of such a measure as this, so long as we act simply on deposits in the hands of the public, we completely avoid the objection, even in the most unfavourable circumstances, which must be admitted to apply generally to our becoming borrowers and payers of debt in the same year.

I admit, Sir, that there is a limit to the operations of this kind which can be submitted to Parliament. It is so favourite an idea with many persons that debt should be paid off wholesale by Terminable Annuities, that those who are connected with the management of the finances of the country are continually receiving plans of that nature from volunteers; plans for carrying them into the market for the purpose of liquidating great masses of the National Debt. I am not prepared, directly or indirectly, as at present advised, and with the exception of cases such as 1855, when peculiar circumstances came into view, to recommend to the House the adoption of measures which would have for their result our going into the market to sell Terminable Annuities. I look to our extensive system of public deposits as probably supplying the natural and legitimate limit for the operations we have in view. By this measure we propose to carry the system as far as it can be carried with reference to the present state and amount of the deposits; but it is perfectly possible that the deposits in the hands of the State may in future years be greatly enlarged. It is probable we shall, though, perhaps, not at a very early date, see a lower range of prices for money in this country. I have no doubt that such a contingency, if it arises, will of itself greatly enlarge the deposits in the hands of the State. There is even now in one important branch a progressive enlargement going on. I will not undertake to predict the exact number of years that may pass with but a cheapening of money; but I may say this, that if the deposits in the Post Office savings banks continue to increase till the close of this century at the same rate as they have done thus far, we should between this time and that receive a sum approaching £50,000,000, the whole of which, if Parliament thought fit, would be capable of being dealt with in the manner that is proposed by the present Bill. Then there are other modes in which it is quite possible the public deposits might be enlarged. I confess my own belief is that there are various funds in this country, the custody, the natural custody, of which ought to be with the State, upon the simple ground that if a defalcation were to occur this House would be looked to in order to make good the loss; and whenever that is the case it appears to me to be a necessary corollary that this House ought to have the custody, though I do not say the control or management, of those funds, of course through the medium of the executive Government. These, however, are matters upon which I do not now express anything beyond a general opinion, or do more than point out that, while this measure would carry us to the limit of our present means as far as regards the use of public deposits for the purpose of creating Terminable Annuities, and while we are not, as at present advised, prepared to go beyond those deposits as the basis of such an operation, it is quite possible that the body of assets of which we propose to make use may be considerably enlarged from time to time, either by the action of causes already in operation, or through the adoption of measures by this House which would have a tendency to draw into the hands of the State monies which are at present otherwise held.

Sir, I have now, I think, gone over the whole of this subject, dealing very shortly with that portion of it which embraces the actual figures, because bearing in mind that Gentlemen have in their hands a statement, moved for by my hon. Friend near me, the Secretary for the Treasury, which will show with precision what upon any given supposition would he the exact financial effect of the plan proposed by the Government. Any further explanation it will be very satisfactory to me to afford, and shall listen with great interest to the sentiments that may be expressed by any Members of the House, making the free admission—indeed, setting out with it as a first principle—that we do not desire to be parties to the re-establishment of a sinking fund, in the earlier and exceptionable sense of the phrase, but that, taking advantage of the large sums which the State receives in its capacity as banker, we now at length possess a means by which we can avail ourselves of the undoubted benefits of a system of liquidating portions of the Public Debt through Terminable Annuities, while at the same time avoiding the great inconveniences which in former times were incident to that process.

Most anxious, however, am I not to seek to claim for that proposal the credit of attempting or effecting a great operation. The scale of the measure, though not inconsiderable, is moderate. It is perfectly possible that any action that takes place under operation B may be rather insignificant. Indeed, it would not at all surprise me to find the demands made on the savings bank debt so large that the funds available on this account would be very small indeed. I am bound to point out that contingency, but the House must remember that the Post Office savings banks supply a growing fund under which we have already obtained powers to mate conversions of this kind of permanent stocks into Terminable Annuities, and, of course, as long as we believe it to be consonant with the views of Parliament expressed in our actual legislation or otherwise, it would be our duty to continue this operation.

I have only one observation to add to what, I fear, the House must have regarded as a very protracted explanation. I have not argued in detail the policy of making this application of the money, rather than of applying it to the remission of any particular tax, and I think I should only be abusing the patience of the House if I were to enter at this time upon a comparison of the merits of this plan with the merits of the plan of the hon. Member for Dudley, who proposes to divert the fund dealt with by the Bill, or of any other plan of disposing of this portion of the surplus of the year. My wish has been that, on the occasion of the second reading of the Bill, the financial character of the operation proposed should be thoroughly understood by the House, so that it may be able to form a mature and deliberate judgment upon the very important question whether, while we are endeavouring to pursue a public object of the utmost importance, we are or are not liable—I myself think we are not liable—to the imputation of reintroducing principles which, however plausible they may have seemed on their first promulgation, have been proved by experience to be unsatisfactory, and principles which, after such experience, and after such condemnation as they have received both in writing and in practice, it would undoubtedly, I think, be a great mistake on the part of any Govern- ment to endeavour again to place in a practical form upon the statute book of the country. I now beg, Sir, to move the second reading of the Bill.

Motion made, and Question proposed, "That the Bill be now rend a second time."—(Mr. Chancellor of the Exchequer.)


said, he did not intend to raise an argument upon the policy of applying the surplus of revenue in the way proposed, but he wished to remark upon some points which the right hon. gentleman had not, he thought, made perfectly clear. The first remark he had to make was, that this Bill proposed what was equivalent to an addition to the existing taxation. He submitted that when the country was in a state to pay off debt they were in a position to exonerate the country from so much taxation. This was the first point which should be distinctly understood. The Chancellor of the Exchequer had treated the cessation of the dead weight of £585,000, expiring in 1867, as an additional source of revenue; but the fact was, that whatever payment was made in liquidation of that loan was really raised by taxation. It must not be said that because we ceased to pay £600,000 to the Bank therefore that we had got the £600,000. This was the first fallacy which he detected. Again, in the Return placed on the table, a case was assumed in which the whole of the savings banks deposits would be released from other claims to be applied to the creation of Terminable Annuities, while the argument of the Chancellor supposed as possible the opposite extreme, that the entire annuity should be absorbed in payment of re-called de posits; but this was surely a monstrous supposition, for the Post Office savings banks, instead of showing a decline in the deposits, presented every year a steady increase. This was a matter of great satisfaction, and he felt no apprehension of the increase not continuing. Nor could he see any reason for the distinction which the Chancellor of the Exchequer appeared to draw between the operations of the old savings banks and those of the Post Office savings banks. A million and a half were last year withdrawn from the former, but that amount had not gone back into the pockets of the depositors, but had been transferred to the Post Office banks, and this process was likely to continue. [The CHANCELLOR of the EXCHEQUER: Oh, no.] The right hon. Gentleman had himself quoted the figures. He (Mr. Hubbard) admitted that Terminable Annuities were, under certain circumstances, a means of paying off the National Debt. When Sir George Cornewall Lewis' annuities were proposed, he (Mr. Hubbard) protested against them on the ground that they would never be a marketable commodity; and though this opinion was strongly combated, the result had proved its correctness, for not a single pound's worth had ever reached the public market, or ever would do so while the income tax continued in its present shape. If Terminable Annuities were placed with the public, he admitted that this would be paying off the National Debt; but the mere creation of the Terminable Annuities now proposed would not pay off a farthing of the debt, although it would be an immediate means of taxing the people. The process was this: by calling Terminable Annuities a charge upon the Consolidated Fund, they were making a pretext for raising a million more money aunually by taxation. Only three years ago the Chancellor of the Exchequer propounded a scheme for annihilating twenty-four millions of stock, which he said it was inconvenient to keep as an investment for the deposits of savings banks, and substituting a book debt of an equal amount, which would be invariable in value, and would not fluctuate with the funds. The House admitted that that was a wise arrangement; but the right hon. Gentleman was now going to reverse that policy, and cancel the book debt. £725,000 a year was to be devoted to the payment of the interest due to depositors, and a million was to be invested in Consols and other funds. Now, this would place the savings banks exactly in the same position that they were in three years ago, and what constituted the reduction of the debt was not the payment of this £1,725,000 per annum, but the operation of buying these Consols in the market and cancelling them. The Chancellor of the Exchequer might go through the same operation without creating the Terminable Annuities whenever there was a surplus of a million on the Budget; and the fact was, that these annuities were not a necessary means of paying off the National Debt, but were a pretence for making the people pay a million more taxes a year in order to redeem the debt. Whether this measure were to be accepted or rejected by the House, it was surely much better to call things by their right names. It would be in the power of the Chancellor of the Exchequer in the year 1888, of his own arbitrary volition, to add the sum of £2,000,000 per annum to the taxation of the country, because he would have the power to convert the £17,000,000 he had then accumulated into annuities terminable not in thirty but in six years. [The CHANCELLOR of the EXCHEQUER dissented.] The right hon. Gentleman would find on looking at the Bill that by Clause 2 the Commissioners for the Reduction of the National Debt for Savings Banks might apply from time to time any part of the Terminable Annuities created under the authority of this Act which should not be required to pay the demands of the trustees of savings banks in the purchase of capital stocks of perpetual annuities, and might hold them, it did not state for what purpose. By Clause 3 the capital stocks of perpetual annuities held by the Commissioners under the authority of this Act might from time to time be cancelled by warrants of the Commissioners of Her Majesty's Treasury, and such warrants should create equivalent Terminable Annuities in lieu thereof, not extending in any case beyond the 5th of April, 1905. It would be seen that the clause only limited the length, but not the shortness, of the duration of the annuities. This was the only clause bearing upon the question, and there was nothing in it to prevent the Chancellor of the Exchequer from operating with regard to these annuities in such a manner as would throw an additional burden of £2,000,000 per annum upon the country. He thought that the matters he had referred to should be made clear before the Bill went into Committee.


said, that from the course proceedings had taken, the House was discussing the important principle involved in this Bill under great disadvantages. In the first place, the discussion had been cut in two by the Amendment of the hon. Member for Buckingham, and, owing to the Bill being taken at an hour in the evening when it was scarcely possible to keep a House together even where the subject was far more attractive than that before them, hon. Gentlemen found some difficulty in arguing the question. A second and still more serious disadvantage, however, arose from the totally different ground upon which the Bill was now laid before the House from that taken by the Chancellor of the Exchequer in his Budget speech, when it was alluded to as a measure involving principles of the greatest importance. [The CHANCELLOR of the EXCHEQUER dissented.] Early in the Session they had had a most remarkable speech from the hon. Member for Westminster, in which they were informed that a new light had dawned upon him, which had revealed to him the fact that they were behaving unjustly to their posterity in not making adequate provision for the payment of the National Debt, and he added force to that proposition by the argument he drew from the prospective exhaustion of the coal-fields. The proposition so advanced by the hon. Member he certainly understood the Chancellor of the Exchequer to adopt to a great extent. The right hon. Gentleman had given them a full and elaborate view of the position of the country with regard to the National Debt since the conclusion of the Great War, and compared the debt of this country with those of other nations. In telling them that the National Debt had been reduced during the current year by about £5,000,000, and by an average of £3,600,000 during the last ten years, the right hon. Gentleman stated emphatically that this was not a satisfactory rate of reduction. He repeated the argument of the hon. Member for Westminster, derived from the alleged exhaustion of the coalfields, re-inforcing it by reference to other authorities, and the result was to leave upon the minds of many persons the impression that the introduction of the Bill before them was to be the inauguration of a new era with regard to the financial position of this country, and an admission of the necessity for making greater efforts in future than had been made in the past for the reduction of the National Debt. Another disadvantage under which they laboured in discussing this Bill was that the broad general principles put forward in the speech of the Chancellor of the Exchequer in introducing the Budget were lost in the extreme complexity of the details of this measure. It was always an ungrateful task to have to answer speeches made on a former occasion; still he felt that, where certain principles were advocated with eloquence and authority, those who differed from those principles should have an opportunity of placing before the public their answer to the argument put forward in their support. In the first instance, he would refer to the broad distinction drawn by the Chancellor of the Exchequer between the principle of dealing with the National Debt by means of Terminable Annuities and that of dealing with it by means of a sinking fund. He did not agree with the right hon. Gentleman that any such distinction existed between those principles. If the facts and the arguments of the hon Member for Westminster were correct, he believed the legitimate conclusion would be that they should make a great effort, by means of extra taxation, to establish a bonâ fide sinking fund, and thus to make a considerable impression on the National Debt. Now what was the principle of a sinking fund? The Chancellor of the Exchequer seemed to assume that its very essence was borrowing with one hand in order to pay with the other. That, however, could not be the case where the sinking fund was established out of surplus funds raised by taxation. The weak point of Mr. Pitt's sinking fund was that he forgot that while they accumulated at compound interest the money they were paying off, the money they were borrowing was accumulating at the same time at a greater compound interest, but that did not apply to a sinking fund where there was a bonâ fide surplus The real difference between a sinking fund and Terminable Annuities was, that by a sinking fund they avoided the difficulty of buying in a limited market, and therefore at a disadvantage. A sinking fund in years in which there was no surplus was merely an expensive delusion. It appeared to him that the real difference between extinguishing the debt by means of a sinking fund and paying it off by means of Terminable Annuities was this, that in the first case the surplus of prosperous years only could be devoted to that purpose, whereas in the latter case they would bind themselves to the creditor to pay him whatever the disasters of the year might be. By the measure before them they were to bind themselves to pay a certain sum for so many years, but supposing in the course of those years there should be a deficiency, or that they were at war and were compelled to borrow in order to pay the sum due upon the annuities, would not they have to pay a far higher rate of interest for the money they were borrowing in order to meet the demand than they would have had to pay in case the Bill had not been passed? The whole advantage to be found in the adoption of the principle of Terminable Annuities consisted merely in the fact that it provided securities against ourselves, and enabled us to dispense with the necessity of trusting to our own virtue. If the House of Commons could but trust its own resolution to keep up an adequate surplus in times of peace, the best way to pay off the National Debt would be to purchase it in the open market, or by keeping up a sinking fund, and so accumulating the surpluses. These plans were undoubtedly easier and cheaper than that of Terminable Annuities; but by accepting the latter the virtue of Parliament would certainly be less exposed to temptation. It might possibly be advantageous to adopt some such principle with the large dead weight which would fall in in the ensuing year; but, even in that ease, next year, and not the present, would be the proper time to make a proposal upon the subject. The objection which he had to the measure referred mainly to its prospective character. He objected to the hands of Parliament being tied in its dealings with reference to the revenue and expenditure of future years, and on that principle such a proposal as that now made should be made next year instead of this, when it was proposed to deal with money which as yet was not in our possession. But had a new era arrived,; as the principles now advocated would seem to imply? Had a new light really dawned upon us? Had we been neglecting our duty to posterity, and was it incumbent upon us to do something very different from what we had been doing in the past? The past financial history of this country had tended to establish two principles more clearly than any others, and they were the condemnation of the principle of Mr. Pitt's sinking fund and the condemnation of any prospective financial legislation. It was a sound principle that the Budget should deal as far as possible with the affairs of the year, and take as little prospective action! as possible. Parliament ought to be able to deal with the financial situation as it arose, and to exercise its own judgment upon it. He did not presume to maintain that those principles were sound simply because he held them. They had been accepted and announced by several of the most distinguished statesmen of this country. In a debate in 1858 Sir George Lewis, certainly one of the wisest statesmen of modern times, had stated his opinion in the House, that Parliament ought not to enter into prospective engage- ments with respect to the taxation of future years. The arguments employed by the hon. Member for Westminster tended to preclude the discussion of the question on the ground of expediency, and to substitute instead its discussion on the moral ground of duty. He could not, however, avoid thinking that the analogy drawn by the hon. Member from the case of a private debtor was a mistaken one. The debt incurred by a private person was almost always an engagement by which the debtor bound himself to pay it off at some not very remote period. If he, therefore, neglected to make provision for its payment the chances were that at the expiration of the prescribed term he would not be able to meet the demands of his creditors. But in the case of the country the contract was an entirely different one. It was quite a mistake to talk of £800,000,000 of National Debt. Our obligation was in reality the annual payment of £26,000,000, mainly perpetual, but partly, also, terminable. As long as we continued to maintain the ratio between the resources of the country and the amount of the annuity as high as formerly we satisfied our obligations to our creditors; if we either increased our resources or diminished the annuity we did more than we were bound to do; but we were meeting them as effectually by the former as by the latter process. In point of fact, there had been a great deal of misapprehension which might have been corrected by a reference to the facts. Let the House consider how this country stood at the conclusion of the Great War. At the end of the year 1815 the National Debt amounted to an annual payment of £32,000,000. During the fifty years, therefore, that had elapsed since that period we had reduced the debt by £6,000,000 a year of annuity, or, in other words, had reduced the amount of our National Debt by one-fifth, or 20 per cent. In the same period the commerce of the country had increased more than five-fold. That had been the result of working on the principle he had named; and it was simply a question whether in the words of Mr. Poulett Thomson, afterwards Lord Sydenham, they should permit the money to fructify in the pockets of the people, or whether they should have a sinking fund, which he might describe as real, in contradistinction to an illusory sinking fund, which amounted to no more than a proposal to borrow money with one hand in order to pay it away with the other. Now, when it was remembered that this country had in the course of the past fifty years increased its power of paying its creditors certainly three or four-fold, while it had reduced its National Debt 20 per cent, we could not be fairly accused of having failed in our duty. Those instances of the debts of foreign countries alluded to by the Chancellor of the Exchequer strengthened this argument, because they showed that during the last ten or fifteen years England alone had considerably reduced her debt, while she had enormously increased her power of fulfilling her obligations. Then the question of coal had been imported into the discussion, though he really did not think it had much practical bearing upon it. The remoteness of the contingencies anticipated robbed them of all practical weight. Possibly, the investigations of a Royal Commission might give something like definiteness to the theories advanced; but at present, without pretending to say how many millions of tons of coal may remain workable at a given date, he thought the matter was well put by the hon. Member for Salisbury when he said it was a sort of mathematical puzzle, to which the key might be found in the shape of an elaborate calculation by geometrical progression. The whole argument was based upon the assumption that the consumption of coal would increase according to geometrical progression. It was perfectly certain, however, that nothing of the sort would happen. When coal became scarce certain branches of industry in which coal was very largely consumed would have to be given up to a great extent, and other branches of industry in which coal was less extensively used would be carried on instead. England would, doubtless, fail to preserve her ascendancy over other nations in the production of pig iron if coal were dearer to her; but it was equally without doubt that she would increase her manufacture of articles in which the cost of coal was of small moment and preserve their superior quality at the same time. For instance, the cost of spinning coarse cottons was much greater on account of the coal used than in spinning the finer numbers. The whole tendency of modern manufactures was to bring about not only a subdivision of labour, but what might be called an international subdivision of labour; and thus certain countries, owing to their climate or geographical situation, would excel in particular classes of workmanship which they would naturally cultivate. Then, why should not England, if coal became scarce, be able by virtue of its valuable geographical position and its facilities for communication, to supersede other countries in the spinning of fine yarns, as other countries might, in consequence of the same anticipated event. excel England in the spinning of coarse yarns; and why should not England excel in the manufacture of iron wares as other countries would, in the case supposed, excel in the production of pig iron? The whole thing was entirely speculative, and it was impossible to say what would happen in so remote a period. But, pursuing his argument, he would admit even the most extreme case, the entire exhaustion of our coal supply. Instead of using that as an argument to pay off the debt, he would rather picture to himself this island as having then an enormous accumulation of capital—of becoming, like Holland, the bondholder and fund holder of Europe. He could imagine that the old country would still possess attractions enough to draw thither men who had made their fortunes in the colonies; and altogether he saw no reason why they should not he able to pay their £26,000,000 for the interest of the debt then as easily as they did now. Indeed, if it were assumed that the coal supply would he exhausted within 100 years, was it not quite an open question whether it would not be better to meet the position by accumulating wealth while the coal lasted rather than to impede the springs of industry by retaining taxes to pay off the National Debt? If the rule of geometrical progression were to be applied to the coal supply, it should also be applied to the growth of the national wealth. Applying the rule, then, what would be the result? If a penny income tax produced £1,400,000 now, and if the incomes of the people were in the future to double them selves every twenty years, as they had done in the past, the result would he that an income tax of ⅜d. in the pound would produce £26,000,000, or the whole amount of the interest paid on the National Debt He did not, of course, propose that as a serious prophecy, but he did offer it as an argument that, for all practical purposes, the coal question might be left out of account; because he maintained that precisely the same reasoning as that adopted with respect to the coal question would lead to the other conclusion, that if incomes continue to increase in the future as they had in the past, the result would be that an income tax of between a farthing and a half-penny in the pound would produce sufficient to pay the whole of the interest of the National Debt. Returning from the region of speculation to sober detail, he expressed the opinion that the question was simply one of practical expediency. It was for Parliament to consider what was the fair balance of the argument between the claims of reduction of taxation or increase of expenditure, and the reduction of the National Debt. Putting the matter upon simple and rational grounds, he was very far from saying that in times of peace England should not do something towards the diminution of the National Debt: and he said that not because of those remote contingencies which had been suggested, hut because experience led them to believe that the advent of bad years was not improbable as a result of foreign entanglements, famine, and other causes; and these would tend to increase our National Debt. One bad year was sufficient to swallow up the savings of five and-twenty good ones, and therefore it was advisable to do as England had done in the past— namely, not to look forward to spending to the last farthing the whole of her estimated revenue, but to leave a moderate surplus. The question was what amount of surplus ought to be retained for this purpose? He did not object to the way in which the Chancellor of the Exchequer proposed to deal with the surplus of the present year as regarded taxation. He did not think the surplus should be reduced further than was proposed, when he looked at the year in the light of European politics and the menace of a general war. Looking also at the state of the money-market, he felt that there was considerable risk that the next year would not be so prosperous as the past. His objection, therefore, was not to the surplus that had been left over for the present year, but to the proposal to go beyond it, and to say that we ought to pledge ourselves for the next eighteen or nineteen years to come to raise an extra £1,000,000 of the taxation of the country for the reduction of the National Debt, and that the option should not be open to future Parliament which was open to us—-to weigh and balance of the various considerations for reducing taxation or the debt. The only argument offered in support of the proposals made was that we had now got rid of all had taxes, and that in the future a sort of financial millen- nium was about to commence in which no taxes save good ones would remain. To a great extent he coincided with the principle contained in that argument. He had had occasion to uphold it against his hon. Friend the Member for Brighton, at the commencement of the Session, and he was glad that he had such a powerful auxiliary in the hon. Member for Westminster to support him by his assertion that they had now few bad taxes left. He could not, however, go quite so far as the hon. Member for Westminster; for to specify what taxes were good and what were bad required a somewhat comprehensive view of our financial position. By dividing the national revenue, however, into two or three classes the matter would be simplified. With regard to spirits and other stimulants, which produced about £26,500,000, in round numbers, those were articles which ought to be taxed, and rather than reduce the duty upon them in the event of a surplus he would retain it to pay off the National Debt. On the class of what might be called harmless stimulants such as tea, coffee, sugar, dried fruit, and various miscellaneous articles which contributed to the revenue, in round numbers, about £10,000,000, taxation had of late been considerably reduced, and could no longer be called oppressive. As long as it was necessary to raise revenue, those were proper articles for taxation, although he contended that, if the nation could afford it, the duty upon them should still further be diminished. The rate of taxation on the chief of them varied according to the quality from 35 to 55 or 60 percent, giving an average of 40 or 45 per cent. This was not excessive when the taxation imposed in former years was considered; but, nevertheless, it was pretty high. If it were possible to reduce the duty on sugar and other articles to an average of 20 or 25 per cent, such a reduction would, no doubt, be attended with beneficial results. The consumption of those articles, he believed, would be augmented, and in that way a great part of the deficiency of the revenue would be made good, while the labouring classes would be materially benefited, and the commerce of the country enlarged. He could not, however, say that the duties he was referring to should be classed among the bad taxes, although a further reduction of them was desirable. Here he might advert to the duty on malt, to which the attention of the House had been specially directed by the hon. and learned Mem- ber opposite. He thought that as long as it was necessary to derive a large portion of the revenue from alcohol in the shape of spirits malt or beer should not be exempted. At the same time, it appeared to him that the discussion on the malt duty brought the House to this point—namely, that the imposition of the tax on the article at the last stage, beer, instead of on the article at its earlier stage, was simply one of practical difficulty, which he had no doubt would some day be overcome. There need not be any change in the amount of the tax, but still it might require a considerable surplus in the first instance to carry that change into effect; and he would ask the hon. and learned Member, and those who supported his views, whether they would like to see the House pledged to a course of procedure with respect to the reduction of the National Debt, which would preclude them from dealing with any such important proposition as that relating to the malt duty that might hereafter be submitted to its consideration. He next came to assessed taxes, stamps, licences, and similar imposts, which altogether produced about £22,000,000. He included in this calculation the insurance duties, about which the House had heard so much that evening, and which everybody must feel were a simple question of finance. No one could doubt that it was desirable to get rid of a part if not of the whole of the present insurance duties if we could afford it. But even a stronger case had been made out for the remission of the duties on locomotion. Indeed, no one could have listened to the discussion on the question of taxing locomotion when the Chancellor of the Exchequer introduced the Budget without being convinced that an exceedingly strong case was presented for a much larger remission than that the right hon. Gentleman proposed. The hon. Member for the Tower Hamlets had in that discussion mentioned some of the glaring absurdities of the present law. The tax also caused large numbers of poor women, the wives and daughters of the working classes, of whose welfare the House was so tender, to walk home through the dirt and rain to the great detriment of their clothes and temper because cheap omnibuses did not run from the railway station. These were subjects demanding the fair consideration of the House in future years, whenever there should be a surplus of revenue. He did not urge that such taxes as those on insurance and locomotion should be remitted this year, because, as he had stated, moderation and prudence were desirable in dealing with financial matters. Considerable reductions had already been made, and he could not see very clearly what would be the surplus next year; he would reserve the question of further diminishing the duties he had enumerated, or reducing the National Debt, for the decision of future Sessions of Parliament. He would add also, that the reduction of the National Debt, important as the question might be, was not the only subject fairly claiming the attention of the House of Commons in the event of there being a surplus revenue in future years. The House had beard much of the claims of posterity, and he did not wish to deny them; but he contended that there was a generation that had far greater claims—and that was the present. He believed, with regard to much of the taxation which had been remitted, that it was better to get rid of it than to devote the money so raised to the execution of other reforms bearing upon the physical and intellectual condition of the working classes. We had now, however, arrived at a point when the taxes which oppressed the commerce of the country had been largely removed, and when Parliament might be very properly called upon to devote some portion of the surplus of future years to effect various internal improvements. The House ought to do something more than it was doing for the elevation and improvement of the present generation as the best means of improving the condition of the future. There was the important question of education. Would it be wise to tie the hands of future Parliaments, and thus prevent, should a national plan of education requiring the expenditure of a million a year be agreed upon, any portion of that money being applied to increasing the means of educating the people? Would the House be acting in a judicious manner by binding itself to apply the whole of the million of money to the reduction of the National Debt for the benefit of posterity, allowing nothing to be devoted to increasing the number of schools throughout the country? Apart from that consideration, there were many things to which a great and wealthy nation ought to attend besides the reduction of its debt. There were the interests of art and science, and he would ask the House, whether the National Gallery was worthy of a great nation such as ours? The treasures of art and of science were being stowed away out of sight because there was no national building in which they could be properly exhibited as at the British Museum, where the choicest works of antiquity were stored away in cellars, while out of mere economy Government now made the proposition which this House had declined to sanction, of separating the collections. If the national prosperity should continue and we should annually find ourselves in possession of a surplus, it would be a fair question for Parliament to consider whether some pro-vision should not be made for objects in which the present generation had so deep an interest, and tending so directly to elevate the character of the people. To maintain a high moral and intellectual standard in the present day, and to act up to it, was, he believed, of more importance to the future of the country than the question whether the National Debt, as it descended to posterity, should be £750,000,000, instead of £800,000,000. But if the country were really in earnest —if we believed it to be a real duty to make an impression upon the National Debt, the right way to proceed would be to bring before Parliament, as a distinct proposal, this question—Is it worth while, for the purpose of reducing the National Debt, to levy an extra 1d. or 2d. of income tax? The income tax already stood at a lower rate than most persons had expected to see; and if on the occasion of the last reduction, it had been proposed to keep it up a 1d. higher for the purpose of helping to pay off the National Debt, and the country had shown itself ready to adopt that proposal, it would have been a clear proof that men of practical common sense recognized the obligation now put before the House. But the matter ought to be put forward clearly, and as a duty. In case of war the House never hesitated to impose income tax to the extent even of 1s. in the pound; and in like manner, if it were once convinced of the importance of reducing the National Debt, it would not hesitate to maintain the income tax at 5d., 6d., or any other other sum that might be necessary. The House, therefore, should not be asked to commit itself indirectly to this course, or to sanction—he would not call them juggles, but the puzzles by which it was sought to bind the House to enter on this system of Terminable Annuities. The Government, if such was their conviction, ought to come down and say, "We think that more ought to be done in the way of paying off the National Debt, and we propose, in addition to the ordinary surplus that may be expected to accrue from the Estimates, after providing for the ordinary expenditure, to establish a distinct fund of £1.000,000 or £2,000,000 a year, by means of an additional 1d. or 2d. of income tax." And that surplus the Government ought to apply, not prospectively, but by going into the market, making their purchases, and cancelling so much of the National Debt. That would be a clear and straightforward proposition. And when such a proposition was made, he should be happy to give it the most attentive consideration. He offered no pledge now as to the vote which he might give on such a proposition but it certainly was one which he should greatly prefer to the scheme by which the House was asked at present indirectly, and somewhat invidiously, to pledge itself to the extent of a million a year for the next twenty years to come.


entirely agreed with the Chancellor of the Exchequer that it was not desirable to enter into a discussion that night as to the expendiency of applying the £500,000, or something more, left at the right hon. Gentleman's disposal, to the further remission of the duty on fire insurance. He rather regretted that the question of the duty on fire insurance had been brought forward at all, until it was raised by the Motion of the hon. Member for Dudley. After the able and luminous speech of the hon. Member for Wick (Mr. Laing), it was not his intention to go into the general principles of the Bill now under discussion. He agreed with that hon. Gentleman that if there were no other objection to the Bill an insuperable one was to be found in the fact that for forty years to come it would tie up the hands of every Financial Minister of this country in respect of any further remission of taxation no matter how heavy the pressure of taxation, or how strong the claim to mitigation. On the other hand, this measure would compel the Minister to ask of Parliament a power to tax the country to a considerable amount in order to enable him to pay off certain portions of the National Debt. Anticipating those consequences to follow the enactment of this measure he should certainly require to hear much stronger arguments uttered in its favour than those relied on by the Chancellor of the Exchequer, before he would assent to its passing into a law. It appeared to him that so long as any duties remained on such articles as tea, sugar, and coffee, or malt, it was dangerous in the extreme to tie up the hands of the Finance Minister in the manner that this Bill would do, in order to pay money for forty years to come in reduction of the National Debt. For example there was the malt duty, two or perhaps three-fifths of which was paid by the working classes. It was generally admitted to he in accordance with the true principles of taxation to tax the manufactured article rather than the raw material. But if once this measure were passed into a law, the Chancellor of the Exchequer would be precluded from dealing with this tax upon malt by either altering its amount or substituting for it a tax upon beer, however strong were the claims for its remission. At an early period of the evening he had asked the Chancellor of the Exchequer whether to obtain so large an amount as £2,000,000 a year he proposed to increase the taxation of the country, or did he trust to the continuance of a surplus in all future years. The right hon. Gentleman by his reply seemed to think that he (Sir FitzRoy Kelly) had misunderstood the contents of the paper just circulated by the Government. He, however, contended that the effects of the scheme might be considered in two ways. In the first place, what would be the effect of it, supposing the amount in the hands of the Government, as deposited by the ordinary savings banks and the savings banks in connection with the Post Office, should be increased, as was likely to be the case, or should even remain as they were? Secondly, what would be the effect of it if, contrary to general expectation, those deposits should be considerably diminished? He believed there was now about £40,000,000 in the hands of the Government as the debt due to the ordinary savings banks. Upon that sum an interest at the rate of 3¼ per cent was at present paid. Then there was a further debt of about £7,000.000 with respect to Post Office savings banks, upon which the Government paid an interest at the rate of 2½ per cent. Now, suppose that the deposits in saving banks of all descriptions should rather increase than diminish in future years, what would be the effect of this scheme? A certain sum of money must be levied by taxing the people to pay these annuities every half year. By this measure a contract was entered into by Parliament and the country to pay until 1905—that was nearly forty years to come—a certain annual sum in the shape of annuities without reference to any changes that might from time to time take place in the value of money or the financial state of the country. What, then, would be the specific sum to be provided by the Finance Minister in the year 1884–5, in order to be applied to the extinction of a certain portion of the National Debt? It would amount in that year to £4,731,030. The taxation of the people under this scheme would at that period, after all deductions, reach the sum of £4,000,000 a year. The right hon. Gentleman the Chancellor of the Exchequer had questioned the accuracy of that Statement, and he would therefore mention the sums which must be raised from year to year and applied in the manner required by the Bill, always supposing that the amount due from Government to the trustees of savings banks and Post Office savings banks would continue the same. On the 10th of October, 1866, this measure would so far come into operation that the first payment must be made, amounting to £863,554. That would be applied to the extinction of £980,186 of Three per Cent Stock. He would now state in simple figures what amount would be payable supposing this scheme were never adopted. The whole sum would be £1,745,054. But, besides that, there was the difference between what would have to be provided and the amount saved by the extinction of the first portion of the National Debt, so that the balance would be £1,010,651. The sum of £1,010,651, then, would be the actual amount levied in the shape of taxes on the people of this country over and above what would be levied supposing this scheme were never adopted; and this sum would go on largely increasing until the year 1884–5, at which time it would reach an enormous amount. In that year the sum to be applied under the scheme to the extinction of a portion of the National Debt would be £4,731,035. From that, however, deductions must be made, first, of the £720,000 which he had already mentioned, and which would be payable, supposing this Act never passed; and secondly, of about £500,000, which would be saved in the year 1884–5 inconsequence of the previous extinction of the debt. Therefore, after making those deductions, upward of £2,000,000 must in the year 1884–5 alone be applied to the extinction of the National Debt. In the year 1884–5 the sum to be provided would be upwards of £2,000,000, and the result of the whole operation, up to and including the last year, would be that a total of £55,013,160 would have been applied to the extinction of the National Debt. From that had to be deducted the aggregate of £720.000 a year, which reduced the £55,013,160 to £49,693,160, From that again must be deducted the aggregate savings of the half yearly dividends of stock, and they amounted, for the whole period, to £5.248.836, which, deducted from the £49,693,160, left £44,444,524, and he would be glad if the right hon. Gentleman would show them that his scheme would take a single pound less from the taxes. True, at the expiration of the term stated, a large sum would have been redeemed; it was set down at £62,542,849; but assuming his figures to be correct, it was clear that considerably above £40,000,000 must be raised in taxes, beginning with £1,500,000 in the first year, and increasing every successive half year. What would be the effect of such a series of operations as these upon the financial condition of the country. He invited the Chancellor of the Exchequer to state whether he anticipated that the large sums required would be provided out of an annual surplus, and whether he depended upon a sufficient surplus for nearly twenty years to come, beginning with one above £1,000,000 and ending with one over £2,000,000. But if it were so, was the Chancellor of the Exchequer prepared to tell the House and the country that, however much any particular tax might press upon property and prudence, however burdensome and vexatious it might be, it was to remain unremitted and undiminished in order to provide a surplus for this scheme? Not with standing the success of the financial policy of the Chancellor of the Exchequer, there had been years in which he had had a deficiency; and suppose he should again find himself without a surplus, would he resort to the Commissioners of the National Debt, or would he accept a loan? If there were no surplus, the money for these large annual payments must he provided by taxation; and therefore he hoped that the next Member of the Government who addressed the House would state distinctly whether in the event of there being no surplus the people were to be taxed to the extent of the deficiency. If it were found inconvenient to provide the money or expedient to apply it to better use, the scheme would be puerile. He would not enter into the question whether such vacillating weakness characterized the House of Commons that it could not be trusted to do justice to the people, and must be pledged to support a Minister in what might be impossible, and that therefore this Act of Parliament was necessary; but it was enough for him that this Bill, if passed, would effectually disable the Finance Minister of the day from remitting objectionable taxation, and bound him to provide an immense sum of money annually by taxation, in addition to what we might be otherwise subjected to. To call upon the people to continue to pay, in addition to the £425,000 a year, the £580,000 that would otherwise cease to be payable on the expiration of the annuities was simply taxing them to that amount. In introducing the subject, why did not the Chancellor of the Exchequer plainly and simply state, "We propose to tax the people £1,500,000 the first year, a larger sum the second year, and an increased sum every succeeding year up to the year 1885, when we propose to tax them to the amount of £2,000,000?"That simply was the scheme; it had no more to do with savings banks than with any other institution; and all the money levied under the Bill would be applied to the extinction of the National Debt. Whether this Bill passed or not, whatever the sum the Government in 1885 might hold in its hands, the relation of the Government to the savings banks, the amount of money in deposit, the investment of that money, the amount of issues payable, the sums due, the increase made—the whole of the transactions from this moment not merely to 1885, but to 1905, whether the people were taxed to the amount of £4,000,000 or £2,000,000 a year, would be precisely the same; and he ventured to say, looking to its effect upon the people, the result with regard to the savings banks would be exactly the same. In fact, he really did not see why the savings banks had been introduced into the question, except for the purpose of complicating it, and rendering it more difficult to be understood. Supposing, contrary to the expectations of the Chancellor of the Exchequer, some change were to take place in the state of the country, and the amount of savings banks deposits in the hands of the Government were diminished by half a million, what would be the result in any given year— 1879, for instance, when £3,000,000 would be invested in the purchase of Three per Cent Stock? That would reduce the sum to be invested in the extinction of stock to £2,500,000. How would that affect the taxpaying people? The Government would have £2,500,000 instead of £3,000.000 for the public creditor; but then £500,000 more would be required for the trustees of the savings banks. He ventured, therefore, to submit that this was a scheme for levying in the shape of taxation—whatever our financial position might be, whether there should be a large surplus or a small surplus, or no surplus, but a diminishing revenue—a sum of £3,000,000 and upwards down to 1885, and a much larger sum afterwards, to be applied to the extinction of the National Debt. We must pay the interest on the £47,000,000 of savings banks deposits whatever should become of this Bill, whatever the amount levied from year to year, and in whatever way the money was invested, saving only that in any year when there was only £2,000,000 to be disposed of, £1,000.000 would be applied to the purchase of Three per Cent Stock, and the other million would go to the savings banks trustees. In this way a million of the funded debt would be paid off, and a million of the unfunded debt, and the account between the Government and the savings banks would be the same. With regard to the latter portion of the scheme, we should arrive at nearly the same conclusion. From 1885 to 1905 the account between the Government and the savings banks would be the same as if the scheme had never been introduced. But then this was to be observed, that we were binding ourselves by this Act of Parliament whether there should be a surplus or not whatever might be the condition of the country, its trade or finances, for a period of nearly forty years to an annual payment of a very considerable amount. What he would venture to say was this—that it was unwise, impolitic, and dangerous in the extreme to tie up the hands of a Minister against any remission of taxation whatever for a period of nearly forty years. In conclusion, he would only observe that if they did not receive some more satisfactory explanation from the Chancellor of the Exchequer or from some hon. Gentleman on the Treasury Bench as to how those large sums, very considerably exceeding £3,000,000, were to be provided —sums which the people would not have to pay but for this scheme—it would require some stronger reasons than had been urged by the Government to induce a Committee of that House to accept the proposal.


said, he had always been such a sincere admirer of the financial policy of the Chancellor of the Exchequer, that it was with extreme regret that he felt himself bound to express some doubt as to the wisdom of the present plan for reducing the National Debt. In the first place he considered that the scheme was a bad scheme, and that it was uncertain in its operation; and in the next place, if one-half the importance ought to be attributed to the reduction of the National Debt, which was attributed to it by the Chancellor of the Exchequer in his Budget speech, he (Mr. Fawcett) maintained that the House ought not to be content with the insignificant scheme now before them. First, as to the scheme itself. Having listened attentively to the speech of the Chancellor of the Exchequer that evening, he arrived at the conclusion that, although everything was certain connected with operation A, yet everything was uncertain connected with operation B, and it was impossible for the Chancellor of the Exchequer, or any other person, to tell what would be the amount which would annually have to be paid in consequence of the fiscal operations classed under category B. He considered that this was a very serious defect. But there were other kinds of objections connected with all plans for paying off debt by means of Terminable Annuities. He would not enter into the vexed question whether the present plan involved the vices of the old sinking fund or not; but, without deciding that point, he would say that he thought it was an unfortunate financial policy to provide for a future reduction of debt by promising to increase the annual charge, and by throwing upon their posterity a greater annual charge than they themselves were prepared to bear at the present time. The scheme would of course become nugatory if it should be found necessary to borrow. But to that it might be replied that they should not have to borrow, as non-intervention, it might be said, had be- come the watchword of their foreign policy, and that although the Continent might be convulsed, yet they should remain placid and peaceable. But if that argument be advanced from the Treasury Bench, he should then be entitled to ask why had they their present gigantic armaments. But there was another objection. Suppose that next year they had a bad harvest— and the present uncongenial weather rendered such a contingency not altogether improbable—suppose they had financial difficulties—suppose in consequence of the dearness of money great public works had to be stopped, and thousands of men were thrown out of employment—suppose any of those contingencies were to occur, the Chancellor of the Exchequer when he introduced his Budget next year might have to tell a different tale. During the last few years everything had gone in their favour, and each year they had had a larger revenue than the estimate; but next year the revenue might be less than the estimate. If that occurred they would have to impose fresh taxation; and, although he did not say that they would have to borrow, yet, in consequence of their having promised to pay so much in Terminable Annuities, they must impose so much more additional taxation If they increased the income tax they pressed heavily upon industry, and if the cost of commodities was increased the poor man had to incur greater expenses in living. And if they increased the cost of living, they ought to remember that they were giving effect to the most dangerous tendency which at the present time threatened their commercial greatness—they stimulated the poor man to leave these shores and settle in countries where taxes were less heavy; and by doing this they struck a most mischievous blow at the future of the country. But it might be asked, wa3 he not anxious to see the National Debt reduced? He thought the House ought to come to a definite decision on this point. If they did consider that the National Debt ought to be reduced let them face the question in a manly, earnest, and honest way. There was only one real practical way to reduce the National Debt. It could not be by elaborate financiering. They could not make money go further than it would. The only practical way to reduce it was each year to get a good surplus—and how was that surplus to be maintained? Why, the only way in which it could be maintained would be for a mutual confidence to be created between the House of Commons and the Government, after the House had been convinced of the paramount importance of reducing the debt. Let the Government, on the one hand, say, "We have a great and serious question to face, and it is of absolute importance that the National Debt should be reduced." The House of Commons would then exert its influence to maintain the revenue, and the Government might exert its power to reduce the expenditure. In this way, year by year they might have a good surplus, and having got that surplus, there was no difficulty or uncertainty about reducing the debt, because each year they would apply this surplus to the reduction in the old-fashioned, straightforward, and, he believed, best way, by cancelling so much stock. But if the House were so enamoured of the principle of Terminable Annuities, and they had a surplus, there was one way of creating them which had none of the objections connected with the present scheme of the Government. Suppose the Chancellor of the Exchequer had this year a surplus of £1,000,000, the difference in the present value of a permanent annuity of £3 at 3½ per cent and an annuity of the same amount to be continued for forty years, was about £20; therefore, they could spend that £1,000,000 in paying premiums to induce people to take annuities for forty years instead of the permanent annuities which they now held. He had been told by high commercial authorities that if such premiums were offered, annuities of that character would be accepted; and instead of permanent annuities they would have temporary ones, without increasing the annual charge to the extent of one single farthing. Much had been said with regard to the general question. He had very carefully read Mr. Jevons' book, and it seemed to him that the conclusions of that gentleman had really given rise to this scheme. But those views were very one-sided. Most of Mr. Jevons' calculations were based on the principle of a geometrical progression. The Chancellor of the Exchequer, in his speech on the Budget, said, supposing the rate of the consumption of coal continues to increase as at present, the result would be that in 1970 they would consume about 50 per cent more coal than was supposed to exist within 4,000 feet of the surface. It was very easy to make these calculations, and a person might come to the conclusion that if the population of the metropolis con- tinued to increase at the present ratio, in thirty years there would not be standing room for them, and they would have to live on each other's backs. Therefore a calculation of that kind proved nothing. In his belief there was no immediate danger of England's industrial supremacy being affected. He placed confidence in the discoveries of science, and the moment the price of coal advanced various means would be discovered for greatly economizing the use of fuel, and the time of our falling short of coal would be very indefinite. If it was thought desirable to provide for the financial future by paying off the National Debt, there was one thing which had struck his mind. In the Budget speech of the right hon. Gentleman there was one remark which, to his mind, was far more ominous, and caused in him far more alarm than the possible and problematical exhaustion of coal. The Chancellor of the Exchequer said, in a congratulatory and triumphant tone, that the commerce of this country was greater than the commerce of France and the United States put together. That was a singular and gratifying fact no doubt, but when it was brought forward there was a melancholy aspect connected with it. Great and marvellous as was the commerce of this country, he believed that the people who produced this great wealth, those who laboured, were infinitely worse off than those were who lived in the United States. This seemed to him to be the great danger, which England had to guard against. No doubt England's great wealth had been produced by cheap labour, and the labourers were beginning to find this out, and other countries were also discovering it, and it was no exaggeration to say that at the present time nearly the whole civilized world was competing with English labour. It was therefore of the highest importance that they should make the future lot of the labourer of this country more endurable and happy, and thus prevent him from emigrating to other lands; for if labour left this shore in too great amount, whatever might be our supply of coal, it was impossible for our wealth to be produced at the same rate. Just at a time when it was of peculiar importance to diminish the cost of the labourer's living here, the Chancellor of the Exchequer brought forward a scheme to increase the burden of taxation which was thrown upon the people of this country. It was of particular importance that those burdens should be reduced, and he therefore entreated the Government not to favour a scheme which would tend to augment taxation. If they would only meet the wishes of a large section of this House, and reduce the expenditure, he, for one, representing a very large borough, would do what little lay in his power to devote the fruits of the profuse expenditure to the reduction of the National Debt.


said, he bad listened with great attention to the hon. and learned Gentleman opposite (Sir FitzRoy Kelly), who had begun by saying that the proposal of the Government would create a charge for a certain number of years of £4,000,000 annually, in addition to existing charges, and that it would tie up the hands of the Government for some forty years. It was true that before he concluded the hon. and learned Gentleman discovered that according to his own figures the £4,000,000 was reduced to £2,000,000, and that the charge to be imposed for the latter half of the forty years would only be £1,(100,000; the fact, however, being that at the outside it would amount to only £500,000 a year. It was desirable to state to the House in a few words what the exact financial effect of the scheme would be, because the hon. and learned Gentleman had evidently rather confused himself by figures, and some other hon. Members also appeared to have somewhat misapprehended the matter. The hon. and learned Gentleman bad stated that because £580,000 of Terminable Annuities would fall in next year, it would be the absolute duty of Parliament then to take off an equivalent amount of taxation. Now, he should say that the duty of Parliament, if there was any duty in the matter, lay rather in the very opposite direction, and that Parliament should apply the £580,000 falling in next year and the sums falling in in future years to a diminution of the permanent burdens of the country, instead of to a reduction to existing taxation. Coming then to the figures, the proposal before the House substituted an annuity of £1,725,000 for eighteen-and-a-half years for a permanent annuity of £720,000. During those years, therefore, the interest of the National Debt would be increased by £1,005,000. But this operation was to be effected at a time when advantage could be taken of the lapsing of £580,000 existing annuities, and thus by an increased charge of only £480,000, we should succeed in extinguishing £24,000,000 of the permanent debt in a aeries of eighteen-and-a-half years. That was the first operation. With regard to the second operation, it was true that at the outside the Terminable Annuity which might be created under operation B would be an annuity of £3,170,000 a year; but it was also true that against that annuity they would have to set off the interest on Consols extinguished, or £1,875,000; so that there could, under no possible circumstances, be an increase of charge to a greater extent than £15,29,000. But in 1885 the second saving on the present charge, that is, the £720,000 annuity, will have been made, and moreover the war and fortification annuities amounting to £680.000 a year will fall in; so that in 1866 the actual charge for the interest of the National Debt would be some £500,000 or £600,000 less per annum than it was at the present moment, and no less ! than £86,000.000 of debt will have been cancelled. The hon. Member for Wick (Mr. Laing) spoke of the operation as one that would tie the hands of the Govern- merit for a long succession of years; but, considering the moderate amount by which it would increase the charge for the debt during eighteen-and-a-half years, and the great extent to which the debt would be ! diminished at the end of that period, the proposal was not fairly open to that objection. He had listened with much attention to that hon. Gentleman's speech, because from his financial reputation he had felt sure that be would suggest some distinct and determinate plan of dealing with the present surplus, and point out what should be done with such moderate sums as they might expect to have at their disposal in the next few years. That hon. Gentleman said they ought greatly to increase the Education Vote, to build a larger National Gallery, and also get rid of the disgrace attaching to the present condition of the British Museum. That was to say, be deliberately proposed to the House, as a proper financial operation for the future, not to economize their expenditure, but to increase it, and he thought that to spend more money than was asked for by the Government for education, the National Gallery, the British Museum, and objects of art would be a better prospective arrangement than the reduction of the permanent Public Debt by what might possibly amount to £86,000,000, as now recommended.


explained that he had said the reduction of taxation or the reduction of the debt was one of the questions which should be left open to a future Parliament.


said, that no doubt his hon. Friend had said so; but, at the same time, he had distinctly intimated that an increase of expenditure such as he had just described would be better than that prospective scheme of finance. Now, all he could state was that the Government were malting provision for each of the objects mentioned by the hon. Gentleman. They were proposing a scheme for the National Gallery, which he hoped was not extravagant, and also a liberal and complete scheme for the British Museum; and as to the Votes for Education, looking to the increase which had taken place in them of late years, he did not think the House had shown any inclination to be niggardly in respect to that branch of expenditure. On that ground the speculation of his hon. Friend was, he thought, hardly one which ought to be substituted for the plan of the Government. His hon. Friend, however, used very hard words in reference to that plan. He called it a juggle and a puzzle, and spoke of it as being an insidious proposal. He, however, could scarcely conceive any scheme which was less open to be so designated, inasmuch as the House had had placed before it exact information as to the greatest possible charge for each year, and the utmost extent to which the National Debt could be reduced by its operation. The hon. Gentleman who had just sat down spoke of the plan as uncertain and insignificant, but a proposal the ultimate effect of which might be to bring about a reduction of £86,000,000, while in no year could it actually fail to secure its object to some extent, was he thought hardly liable to those changes. It was also said that by the operation of the plan we should be throwing more on posterity than on ourselves, but an arrangement which was to continue for eighteen-and-a-half years and which would then put the Chancellor of the Exchequer in a better position to the extent of half a million a year could not very well be regarded as one throwing a charge on posterity. It was in bad years that the great merit of the scheme would be most conclusively established. When the hon. Gentleman the Member for Brighton had warned the House that the present was not a time for reducing the National Debt, but rather for the reduction of taxation, because the working man whom he was so anxious to keep in this country would be induced to stay more by the latter than by the former mode of proceeding, he must remind him that in America, the country to which those very working men were going, the Government instead of following his plan, proceeded on the principle of levying taxes to reduce or extinguish its debt as speedily as possible.


, in explanation, said, that in stating the amount of the charges referred to by the hon. Gentleman at £4,000,000, he meant to add that it was after the deduction of the sum of £720,000 a year, and that it was left subject to the aggregate of the dividends saved. The amount of that aggregate he had not ascertained when he spoke.


said, the last thing he expected to hear was the assertion by the hon. Gentleman (Mr. Childers) that this was a simple measure. Very simple, indeed, considering the various opinions expressed on it, and the figures quoted, as to which no two Members seemed to entertain the same opinion. When the measure was first introduced he ventured to say that it was a very little one, when the threatening speech in which it was ushered in, having reference to the destruction of our supply of coal, was taken into account. He could not help thinking the conclusion a very impotent one based upon such premises. That evening, also, he felt bound to confess that he remained totally unconvinced by the speech of the Chancellor of the Exchequer, for the plan, disguise it as he would, amounted to neither more nor less than a sinking fund. He, at all events, was unable to see it in any other light, for all the clothing thrown round it by means of the savings banks operated only to make it more of a mystery. The savings assets, so far as the £24,000,000 were concerned, were gone. The Chancellor of the Exchequer had given hon. Members, with great clearness, an explanation of which, considering the times in which we lived, they scarcely stood in need. He said that banks had very often no assets, but then he added that they had plenty of liabilities. He went on to observe, "Sometimes the banking till of the Government may be empty and the Exchequer may be full, and vice versâ, and it might be that they both happened to be empty together." But be that as it might, there was always, according to the right hon. Gentleman's statement, abundance of liability, and the nation was no doubt liable to the unfortunate depositors in the sayings banks for the assets that ought to be there, because the Three per Cents having been cancelled and a book debt created, that book debt constituted a liability which was going to be dealt with again by another sort of shifting of the pea. It was about to be converted from a book debt into a Terminable Annuity. Now, let him suppose that there was a war, and that we were driven to borrow every year, how would matters stand? The scheme would be embodied in an Act of Parliament: but the Chancellor of the Exchequer of the day would come down to the House and say that it was a foolish arrangement; that the best course to adopt would be to place the book debt back again where it was before, and to do away with the Terminable Annuities, for that there could be no use in taxing people to pay £1,000.000 a year. The Chancellor of the Exchequer, among other curious things, had stated, that when the Bank was empty and the Exchequer was empty, it would be a terrible calamity to be obliged to sell Exchequer bills or bonds, which must be sold or represented by something else in place of money. Times had been, however, when nobody would have that sort of thing, and if such were to be again the case he did not know where the assets were to come from. Twist the proposal anyhow, if it was anything, it was a sinking fund in disguise. Indeed, the way in which the right hon. Gentleman mingled one, thing up with another put him in mind of the throwing a piece of mud into a pool to muddle the water, in order the better to tickle the trout. If the country was prosperous, it would be as well to pay the money as not; but if it were not prosperous, and we became involved in war, it would not be paid. He was old enough to recollect the sinking fund having been done away with. It went on very smoothly while the payments were made with borrowed money, but the moment taxes were raised for the purpose it went to smash, and so it would be with the present scheme under similar circumstances. Every Government ought to have the moral courage to provide a proper surplus, for the real way to reduce the debt was by the application of that surplus according to law. He was satisfied that this would necessarily be the result if the present were set on foot. People would be apt to say, "Oh, you have established a sinking fund, and it is not necessary to do anything more." The Chancellor of the Exchequer, a great financier, had thought it necessary to alarm all the old women in the country by representing that coal was coming to an end, and that they would have to burn wood; and he has gone against this terrible evil, and set up this vast financial scheme, to remove all imputation of laches from this generation. He (Mr. Henley) did not think that the scheme would have any prejudicial effect beyond this, that whenever there should happen to be a pressure upon the country the scheme would be done away with as easily as it had been created. But he thought it unfortunate that the Chancellor of the Exchequer had mixed it up with the savings banks; for, though everybody who had knowledge of the matter knew that the whole country was pledged for the amount of the savings bank money deposited, yet in uneasy times this might not be generally understood, and they might, by shuffling backwards and forwards these funds, and by having no assets but only liabilities, easily create an alarm which, when it once set in, might be an unfortunate item for any Chancellor of the Exchequer to meet. For these reasons, he believed that they would all of them require that they should not consider themselves pledged to this measure that night —and, indeed, the measure did not at present seem to have many friends in the House—but that they should be at liberty on any future occasion to take such steps as they might think desirable.


hoped the House would have some more definite explanation than they had had from the Government on the question of the coal supply of the country as bearing on the measure before the House. For his own part, he did not agree in the doleful anticipations which had been held forth—and he would briefly tell them why. This question was first raised some three or four years ago at the Newcastle meeting of the British Association, by that eminent man—Sir William Armstrong—who said that in some 300 years the coal supply of England would be so much diminished as to seriously impede the manufacturing industry of the country, This led to an investigation, which was made by Mr. Hull of the Geological Survey, a most valuable public servant, who published a book on the subject, in which he stated that there was a probability of 80,000,000,000 tons of coal being obtained from the coal-fields of England. In a return made by Mr. Hunt, keeper of mining records, it was stated that the annual consumption of coal was 80,000,000 tons. Hence it followed that if no great increase in the consumption of coal were to occur the coal-fields would yield a supply sufficient for 1,000 years. In Mr. Jevons' work on the coal question the result of the geometrical ratio of the increase in consumption was shown to be that, if the consumption continued in the same ratio, the coal-fields would be exhausted in 100 years. The hon. Member for Westminster was understood in some quarters to have said that the coal-fields would be so exhausted, but he (Mr. Samuelson) did not believe the hon. Gentleman said anything of the kind. The Chancellor of the Exchequer, in his Budget speech, stated that, although he was no believer in an approximate exhaustion of the coal-fields, yet he believed the increase in the price of coal would be so great as to endanger the manufacturing enterprizes of the country. This evening the right hon. Gentleman had somewhat modified that statement. He said the country might take an equal course with other nations, although she might lose the precedence she had possessed. Under all the circumstances, the House must believe that the right hon. Gentleman felt what he said on this question was a strong and important argument in favour of the reduction of the National Debt. He (Mr. Samuelson) thought, however, that it was incumbent on the Government to show the House that the increase in the price of coal was BO imminent as to be likely to endanger the supremacy of the country. For his own part, he did not believe it was anything of the kind, and he would tell the House why he thought not so. In comparing the resources of this country with those of other nations, he would leave out all European countries, because it was admitted that the coal-fields of England were more extensive and less liable to exhaustion than those of any other European nation. The only comparison which could be made was with the United States of America, and it would be found by statistical returns that the area of the coal-fields in the United States was thirty-seven times as great as that of the coal-fields of Great Britain. That was true, but it was equally true that those coal-fields could not be worked to advantage until there was a proportionate population to work them. Now, the waste lands in the United States were thirty-two times larger than those in the United Kingdom. This was not only true in theory but in practice. At present the coal trade and the trade in iron smelted by coal, in the United States, was very fluctuating; and the United States could not at present compete with England in the production of these articles. While other trades in the United States had steadily increased from 1860 to 1864, the, coal trade was stationary, and since 1864 had decreased. The production of iron by anthracite and bituminous coal had fallen off, while there had been an increase in the quantity of iron made with charcoal. And yet the iron trade absorbed one-third of the entire coal produce of England. What' would be the consequence of coal becoming very much dearer in England and somewhat cheaper in the United States? Simply that the export of iron from this country to many places would cease, and the United States would beat England in neutral markets. The effect of that would be that the price of coal would somewhat fall and the consumption be very much diminished. What would be the effect on trade? The entire value of exports of pig iron, bars, and sheets, in 1865, was under £9.000,000, and yet the exports of haberdashery, millinery, and wearing apparel amounted to upwards of £8,000,000. The consumption of coals in all the textile manufactures of this kingdom was only 3,000,000 tons a year, which was little more than one-tenth part of the consumption of it in the iron trade, or than one-half of the domestic consumption of London. It might be said that the price of coal might rise so that we should be unable to ballast our ships; but as the Chancellor of the Exchequer truly said, one of the great sources of the wealth of this country consisted in the proximity of our coal to our seaports, and therefore we might be able to compete in coal with America in the markets of the world in spite of a considerable rise in price. He considered that the question of our coal supplies having been raised by such high authorities ought now to be fully investigated.


hoped the House would not allow itself to be diverted from the consideration of the very important proposition of the Chancellor of the Exchequer by the introduction into the debate of the question of the coal supply. The two subjects were totally and entirely distinct. The Chancellor of the Exchequer was partly responsible for the discussion as to the coal supply, as he had added his testimony in support of the views which had been expressed on it by the hon. Member for Westminster and others. The proposition of the right hon. Gentleman had not, he thought, received that attention from the House which it deserved. He quite admitted that the scheme was a fair weather scheme; but if they were not in the time of prosperity to grapple with the great question of the National Debt, the period would never arise when they could do so. He believed he spoke the feeling of the great commercial I community when he said it was the duty of the country to assist a Minister who was determined to grapple with the great difficulties of this question. Whether the details of the scheme were precisely those which would meet the different views in that House, he was not prepared to say; but fair weather scheme as it was, they ought, while in the enjoyment of fair weather, to carry it out. In times of difficulty, if a commercial crisis should occur, and a run was made on the savings hanks deposits, the scheme would probably be entirely in abeyance. That was the great objection to the plan, and it was precisely at such a time that the pressure upon the National Debt Commissioners would be the greatest, inasmuch as they would have to realize when stocks were low, and a considerable loss to the Exchequer would ensue. With respect to the question of the coal supply which had been introduced incidentally into this debate, and in which his own constituents naturally felt the deepest interest, he thought the Chancellor of the Exchequer having added very materially to the apprehension which existed, it was the duty of the Government to grant such an inquiry as would either remove the grounds of apprehension, or show that it was well founded, and that it had become absolutely necessary that some steps should be taken to economize the use of coal. He must remind the House that gigantic interests were involved in the question, and he therefore hoped the Government were not unprepared to grant a Commission or institute a general inquiry into the whole subject. Apart from any personal considerations, the most important national interests were at stake, and he hoped the matter would receive fair and full consideration when the Motion of which notice had been given was brought forward by the hon. Member opposite.


said, that as he intended to submit a Motion on Tuesday, the 12th of June, on the question of the supply of coal, he hoped the House would not on this occasion discuss that question. He thought there was no immediate danger of our coal failing. With respect to the measure before the House, he cordially supported it, and he hailed with the greatest pleasure any attempt which was made to reduce our gigantic National Debt. He approved of the language used by the Chancellor of the Exchequer in proposing the measure more than he did, perhaps, of the scheme itself. He regretted the scheme was not a larger one, though it was very possible that a larger scheme could not now be introduced. Without re-introducing the old sinking fund, there might be a fund created out of the surplus revenue to which an addition would only be made when the country had a real surplus. The surplus had been hitherto wisely expended in the reduction of taxation, and the time had arrived when a portion of the surplus might be applied towards the reduction of the debt. According to a calculation that had been made, £1,000,000 a year in 90 years, at 4 per cent, would form a fund that would extinguish the National Debt. £1,000,000 a year at 3 per cent, would produce the same result in 109 years. £2,000,000 per annum at 4 per cent, would, in 72 years, create a fund that would wipe off the whole of the debt. The surplus revenue of the country for the last few years would be sufficient for the creation of a fund to wipe off the debt of the country in a comparatively short period. Owing to the elasticity of their revenue a sum might be applied to the reduction of debt, leaving a sum still available to the reduction of taxes.

Motion agreed to.

Bill read a second time, and committed for Thursday 7th June.