HC Deb 16 May 1867 vol 187 cc623-72

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."


said, he rose to move— That a further reduction of the Duty on Fire Insurances, to which this House is already pledged, would be a better mode of disposing of a portion Of the surplus of Ways and Means for the present year than the creation of Terminable Annuities proposed by the present Bill. He proposed to devote the surplus of the present year, or a large portion of it, to the reduction of the National Debt, an expression which was hardly intelligible to those who were not able to comprehend a mass of figures. The National Debt was a monument of the mistakes and follies of our forefathers, the accumulation of years of warfare, which the right hon. Gentleman proposed to deal with by an infinitesimal contribution to the discharge of the national obligations. The right hon. Gentleman the Chancellor of the Exchequer might have felt that the policy of his predecessor was that which he should himself adopt as being the best for the public interests, but it seemed clear that he had not taken the trouble to investigate the subject, or make himself acquainted with its real merits and bearings. If the right hon. Gentleman had inquired, he might perhaps have found that neither the House nor the country was prepared to endorse the policy of the late Chancellor of the Exchequer in this particular. So far as he (Mr. H. B. Sheridan) had had an opportunity of ascertaining the views of the hon. Members, there was great probability that the measure proposed by the right hon. Gentleman during the last Session for the creation of Terminable Annuities would have been unsuccessful. He might be wrong in that view of the case, but that was certainly the conclusion he had been led to form. If the right hon. Gentleman had inquired further, he would have found that the policy of the late Chancellor of the Exchequer was a wise and beneficent one; that, during the whole time for which he was in office, he devoted himself to the reduction of the taxation of the country, to taking measures in order that the future income might correspond to the generous appeal made to the productive powers and resources of the consumers. He believed that the surplus of the present year was mainly attributable to the wise policy of the late Chancellor of the Exchequer, to the great reductions he had made in taxation, and to the wise provisions by which he had secured that the commerce of the country should be relieved from the fetters and embarrassments that depressed it. It appeared to be the ambition of the right hon. Gentleman opposite to inaugurate a policy corresponding to that of the late Chancellor of the Exchequer. He found, it was true, a surplus at his disposal which arose out of the wise measures of the late Government, but the right hon. Gentleman not only disposed of this surplus, but, alleging that in consequence of the prosperity created by his predecessors, there would be a surplus for many years to come, and a balance between the revenue and expenditure of the country, he proposed to do away with those surpluses in order to carry out the system he wished to realize. He called the attention of hon. Members opposite who were favourable to the repeal of the malt duty to the necessity of modifying the proposal of the Government, or postponing it to a future year. If it were carried into effect it would bind the House for many years to come to the appropriation of all surpluses of revenue in a particular direction. Hon. Gentlemen opposite would find that the enemy was at their gates, and that there was very little chance of obtaining any considerable reduction when the surplus of last year, or the greater portion of it, must be devoted to the reduction of the Debt. A remission of 6d. this year would interfere to a very small extent with the surplus now in the hands of Government, and the same amount might be remitted next year if the right hon. Gentleman were inclined to deal with the question in a large and liberal spirit, so that in future years he would still have at his disposal the surplus which he anticipated. Under these circumstances, he thought it would be advisable that Gentlemen who wished for the repeal of the malt duty should aid them, for in the event of the right hon. Gentleman's proposal being carried, they might almost abandon hope. He therefore strongly appealed to the right hon. Gentleman to postpone the consideration of the subject for another year. He had fully expected that the right hon. Gentleman would have done something for the fire insurers. So enlightened a statesman as the right hon. Gentleman could not be blind to the importance of the subject; and such had been the interest evinced in it by the great party with which he was connected, as well as the readiness of the right hon. Gentleman himself to meet in a popular manner the demands addressed to him, that he could hardly understand how the subject came to be overlooked. He should have expected that the right hon. Gentleman, having regard to the working of the present system in the country, and the evils which could not be denied to be inherent in it, would have addressed himself to the question with a determination to earn the popularity which would have been his meed. How was it, then, that the Chancellor of the Exchequer had failed to discover the merits and demerits of the question? Was it true that there were inner chambers in the Exchequer into whose secrets they could not penetrate, and officers who had views of their own, as to what the Budgets ought to be, who were guided by traditions handed down in the Office as to what taxes should be repealed and what retained, and who believed it their duty not to relax the grasp of office on the public purse? It was just possible that the right hon. Gentleman might not have had time to consider fully the different plans and systems proposed with a view to the removal of taxation. It was strange that the merits of this question were not known to the right hon. Gentleman. The late Chancellor of the Exchequer had done a great deal for this question. If he (Mr. H. B. Sheridan) were urging his own individual opinion against that of the Chancellor of the Exchequer and the Government which he represented, he might fairly be charged with importunity. But that was not the case. The evidence which he could cite on the question of merits against the opinion of the right hon. Gentleman was the evidence of every class in the country. There was not only the evidence of the taxpayers themselves who had petitioned the House, but also the written evidence of the great writers on political economy, the great thinkers on this question, the theorists as they might be called, with reference to Imperial taxation. There was also the evidence of the insurance offices. They had stated over and over again that they conscientiously believed that a reduction of the duty would be a benefit to the country. There was also the evidence of insurance agents scattered all through the country, who had the means of communicating directly with the owners of property, and who stated that owners of properly would not insure on account of the oppressive character of this tax. Then there was the evidence of actuaries, of men very learned in statistics. Nearly all the boroughs in the kingdom had petitioned the House in reference to this tax. 200 incorporated boroughs had done so under their seal. There was also the evidence of the Chambers of Commerce of the kingdom against the continuance of this tax. A deputation from the Associated Chambers of Commerce of the kingdom had waited upon the right hon. Gentleman to urge the propriety of a further reduction of the tax on fire insurance. He might adduce as evidence the divisions that had taken place in the House on this subject, and also the numbers of Members who had voted with him before there was a majority in favour of his proposition. All this should make out a very strong case in favour of a reduction of this duty against the opinion of the right hon. Gentleman. But he ventured to believe that the right hon. Gentleman had not given to this subject that amount of consideration which he gave to most subjects, and that the Government had not adopted on this subject any arbitrary opinion to which they were disposed to adhere. If such an overwhelming combination of evidence as he (Mr. H. B. Sheridan) had referred to were placed before any judicial court in the kingdom in order that the court might try the merits of the case, he felt that the verdict must be in favour of a reduction of the duty on fire insurance. In the whole realm of fiscal regulations there could not be found a tax so onerous as this. It had been said that this was a tax upon property, and that view had been mainly urged hitherto by the late Chancellor of the Exchequer. If it was a tax upon property, surely it was the first duty of the Government to see that all taxes on property were fairly, justly, and honestly levied — that was to say, that no unfair exemption was made in favour of individuals, whether they belonged to this or that class of the community. The other aspect of the case was that it was a tax not upon property, but upon prudence and saving. But dealing with it as if it were really a tax upon property, he would ask the permission of the House to read a Resolution which would have reference to the question of property taxes at a future stage of this Bill— That taxes levied upon property should be fairly and equally levied. That favouritism in the levying or collection of the national taxes, or in the exemption from such taxes, where persons are properly subject to them without reason for such exemption, or without pretence being offered in its justification, amounts to Governmental dishonesty. That the duty on fire insurance has been declared by the late Chancellor of the Exchequer to be a tax upon property, and has been defended by that right hon. Gentleman upon the ground that property has lately been much relieved from various burthens. That assuming the right hon. Gentleman's often repeated statements to be correct, it is an injustice amounting to dishonesty to exclude from the operation of this property tax owners of property to the value of thousands of millions, whilst the tax is levied on other owners of property who are deemed to be proper objects for this tax solely by reason of the prudent and provident manner in which they secure, or attempt to secure, that property from loss by fire. That the collector of this tax is bound to relinquish all right to levy this property tax the moment, the owner of the property relinquishes the idea of preserving it from destruction by fire. That this tax, therefore, is levied upon the idea of preservation, and not subject even to the realization of that idea. That in every other case where property subject to this property tax is owned by persons who evince a desire to preserve it from destruction, the Government exempts such persons altogether from the payment of such property tax. That the farmers of the United Kingdom, whether they evince a desire or not to preserve their property from destruction by fire, are exempt from the payment of this property tax, and that such exemption is evidence of the legislative injustice and partiality by which this tax is governed. That such a system of favouritism in taxation and the exclusion of whole classes from the operation of a particular impost, are a serious reproach to Parliament and a grave imputation upon its legislative impartiality. That this system of taxation has been declared by a high authority out of this House to be as criminal as highway robbery, and that the proposal to pay off the National Debt or to discharge the war debts and profligate expenditure of generations ago while such a system of taxation is in operation, would, if carried into effect, be an abuse of the high power confided to Parliament. That a Committee should be appointed by this honourable House to investigate and report upon the mode of assessing and collecting this property tax with a view to ascertain whether these statements of gross and unwarrantable favouritism and unjust exemptions are true or false; and also, being true, whether a more equitable mode of assessment cannot be discovered and the tax levied equally on all property; and whether the proposal to pay off the National Debt should not be postponed until our system of taxation is reformed so as to be made commonly just and fair, and until all taxes which press unequally and unfairly, or which may be found to be in conflict with common sense and good government, are expunged from the statute book. If this was a tax on property why was it not imposed on all property? Why was it imposed on one man whilst his neighbour was exempted? There might be mysteries connected with the taxation of the country with which the House was not acquainted, but if such partialities were to be exhibited towards individuals then he thought there should be an inquiry into the mode of levying the taxes. But he maintained and always had maintained that this was not a property tax. If it was a property tax it would be a shame to the House to permit such unfair exemptions as he had pointed out. It was not a property tax. It was a tax on a prudent idea from which not one sixpence might ever be realized. If his (Mr. H. B. Sheridan's) view of the case was correct, then he submitted that in reference to this tax the House stood in a very false position. If this was a tax upon prudence, upon thrift, it was still a most unequal tax, and one which demanded immediate attention with a view to a remedy. He could best illus- trate this by reading the draft of a Bill which some day or other he might have to submit to the House. Hon. Members might be inclined to smile at the wording of his Bill, but it was, notwithstanding, a true reflex of the position of this duty— A Bill to extend the tax at present levied on thrift and prudence to all similar investments of the savings of industry. Whereas great complaints have been made by divers persons throughout the kingdom, by petitions from nearly every borough, under corporate seal and otherwise, against the tax upon prudence known as the fire insurance duty. And whereas it has been alleged that the tax, which is 100 per cent upon the deposit or premium, or, in other words, upon the idea or desire to preserve from destruction the merchandize and house property of Her Majesty's subjects, even where nothing results in the shape of advantage to the depositor or insurer, and even where such prudent desires lead to the loss altogether of such savings and deposits, or premiums, as they are called, is a good and proper tax, and should be continued in order that supplies to Her Majesty may be granted out of the tax of 100 per cent upon thrift and prudence. And whereas it has been further alleged that it is expedient to raise money by any and every practicable means from the present generation, particularly where it can be done by taxing their habits of serving, in order that the Government may be enabled to pay off part of the war debts incurred in former reigns, so that succeeding generations may benefit by such payments and taxation. And whereas it has been alleged that no matter how absurd and ridiculous it may appear to some persons, or to other countries where they do not practice such a system of taxation, to tax the prudent habits of the people, yet the expenses of the Government of this country are so large, experiments in ships so expensive, and the expenditure generally of such a character, that it is expedient to raise money from any source in order to meet and defray such charges; and that, notwithstanding the mode of raising money above referred to, has been condemned by all the wise and learned men of the kingdom, and by every class of Her Majesty's subjects, and this to such an extent that many hundreds of petitions have been presented on the subject to this House; yet it is expedient, having regard to the necessities of the State, that such taxes should be persisted in. And whereas it has been alleged that to tax the prudent desires of the people to save and protect their merchandise and property from loss by fire, is a mistake on the part of the Government, for that such property is a security to the country, not only for all local taxes and to the creditors of the owners, but also for a large part of the Imperial revenue, and that the preservation of such property should be the first care of the State, inasmuch as its destruction involves such loss to local rates, to trade and commerce, and to Government; yet that the Government, not being able to see the force of such agreements, continues to act as if it were to the best interests of the country to have such property destroyed as quickly as possible, and insists upon the continuation of such taxes. Be it therefore enacted by, &c., from and after the day of, the said tax of 100 per cent upon the savings, premiums, or deposits of these persons who entertain the idea, whether realized or not, of protecting their property from fire, be extended to all similar savings, premiums, and deposits lodged with any public institution, whether insurance office, bank, savings bank, Government annuity office, or other similar institutions, provided that such savings, premiums, or deposits shall be so deposited and made, as in the case of the fire duty, with a view to the benefit of such depositor. By that Bill it was enacted that if this tax should be continued on persons seeking to protect their property from fire, it should be extended to similar savings, premiums, and deposits paid for the benefit of the depositors. Why should not the savings of such depositors be taxed as well as the savings through payments on fire insurance? Why should they stop short at the savings expended on the part of insurers who had for their object the protection of their property from fire? When persons made marriage settlements for the benefit of their wives and children, why not tax them? Why not tax the premiums on life insurances? How was it that the deposits in savings banks were not taxed as well as fire insurance? He could not see why Government should insist upon the continuance of such tax when its attention had been drawn to it in such a marked manner by all classes in the country—and when the House had at its disposal the means of remedying the evil by removing so great a stigma from the legislation of the country. He begged to read two short extracts from letters received by him since the last discussion, for the purpose of showing that property was not insured that might be insured, in consequence of the oppressive nature of the duty imposed upon fire insurance. In one case, the owner of fifty cottages said he had to pay his sister so much, and to pay expenses of repairs, and had insured some of his property but could not insure the whole in consequence of the duty. In another letter it was stated that a fire had occurred in the neighbourhood of the writer, where property had not been insured in consequence of the heavy charge on insurance, and persons had to subscribe to replace the property destroyed and prevent the sufferers from being chargeable upon the parish. That fact should have weight with so wise and generous a person as the Chancellor of the Exchequer. Mr. Petter, of the celebrated firm of printers, stated that for sixteen years he had not insured his premises because the amount of duty was so great, thus rendering insurance too costly; and it was said that it would be found on inquiry that eleven out of every twelve persons acted upon the same principle. The right hon. Gentleman proposed to pay off a part of the National Debt created by the war expenditure of their forefathers, thus taxing the present generation for the benefit of posterity. They might fairly conclude that for a generation no benefit would be received from the proposal of the right hon. Gentleman, and yet he asked them to continue a tax that struck at the root of the prosperity of the country. By the perpetual barter and transfer of goods the Government was supplied with its annual surplus, and the Government should remove all fetters that harassed or prevented the continuous interchange of goods so productive of prosperity. When the right hon. Gentleman proposed to pay off National Debt out of the present system of taxation, he was called on to prove that the present system of taxation was equal, fair, and just, and that there was nothing connected with it of which the country had to complain. The right hon. Gentleman had a surplus at his disposal, which he devoted to purposes not likely to tend to the welfare of the country, and stamped with his approval existing taxation. If it were a tax upon honesty, or, as in the present instance, on prudence, the right hon. Gentleman re-imposed and re-enacted that tax. He (Mr. H. B. Sheridan), begged to quote in support of his proposal the opinion of the hon. Member for Westminster, whose philosophical views on the subject were approved of by the whole country. The following extracts were taken from Mill's Political Economy, edition 1865, vol. ii., p. 461:— In the case of Fire Insurances, the tax was, until lately in all cases, and still is in most cases, exactly double the amount of the premium of insurance, in common risks; so that the person insuring is obliged by the Government to pay for insurance just three times the value of the risk. If this tax existed in France we should not see, as we do in some of her provinces, the plate of an insurance company on almost every cottage or hovel. On the payment of the National Debt, the hon. Member for Westminster made the following remarks, vol. ii., p. 484:— It is not desirable in all cases to maintain a surplus revenue for the extinction of debt. The advantage of paying off the National Debt of Great Britain, for instance, is, that it would enable us to get rid of the worst half of our taxa- tion. But of this worse half, some portions must be worse than others, and to get rid of those would be a greater benefit proportionally than to get rid of the rest. If renouncing a surplus revenue would enable us to dispense with a tax, we ought to consider the very worst of all our taxes as precisely the one we are keeping up, for the sake of abolishing taxes not so bad as itself. In a country advancing in wealth, whose increasing revenue gives it the power of ridding itself from time to time of the most inconvenient portions of its taxation, I conceive that the increase of revenue should rather be disposed of by taking off taxes, than by liquidating debt, so long as any very objectionable imposts remain. In the present state of England, I hold it, therefore, to be good policy in the Government, when it has a surplus of an apparently permanent character, to take off taxes, provided these are rightly selected. Some taxes were imposed for temporary purposes at periods when Governments were unable or disinclined to borrow money. One of them was the fire insurance duty. It was imposed on the special understanding that when the necessity had passed it should be repealed. The House had now an opportunity of redeeming its pledge, and he trusted that it would take care that the honour of the Government was maintained. The hon. Gentleman, in conclusion, moved his Amendment.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "a further reduction of the Duty on Fire Insurances, to which this House is already pledged, would be a better mode of disposing of a portion of the surplus of Ways and Means for the present year than the creation of Terminable Annuities proposed by the present Bill,"—(Mr. Henry B. Sheridan,) —instead thereof.


said, he thought the Motion could not be considered ill-timed on an occasion when the House was considering the best means of disposing of the surplus revenue of the year. He objected to the proposal of the Government on two grounds—first, that the scheme itself was injudicious; and secondly, that the means by which it was proposed to carry it into effect were faulty. He agreed that it was as much the duly of the State to discharge its debts as it was the duty of a private individual; but there were conditions which the nation ought to insist upon before it sanctioned such an operation on the part of its Government. It must be quite clear that the process suggested was an advantageous one, that the means proposed would not prove unjust to individuals, would not inflict injury upon any class, and would not in any way obstruct the progress and prosperity of the country, The plan of discharging debt by way of terminable annuities was an undesirable one. The right hon. Gentleman (Mr. Gladstone) bad argued that the expiration of a terminable annuity amounting to about £600,000 was a reason why the House should be prepared to repeat the operation, He (Mr. Hubbard) denied that there was anything in common between the proposal now before the House and that adopted in 1823. The operation of the income tax of 4d. in the pound had caused the Bank a loss of no less than £4,900 upon the last instalment which it received of the annuity. If the tax had unfortunately been 16d. in the pound, the loss would have amounted, on that single transaction, to nearly £20,000. Such being the case, it would be absurd to suppose that terminable annuities could advantageously be placed in the market. Alter the income tax according to the dictates of common sense and the rules of Cocker, and they might get a very different state of things. In 1860 Lord Palmerston proposed to meet a very unhappy expenditure upon fortifications. In order to mitigate the evil, he suggested that the money should be repaid within a generation. Therefore he adopted the plan of terminable annuities. He (Mr. Hubbard) took the liberty to tell the Government of that time that they would not borrow a farthing in that way in the public market, nor had they. At a subsequent period the right hon. Gentleman (Mr. Gladstone) proposed to deal in a similar manner with the savings bank funds and with a similar result. What was the present state of our terminable annuities? We had, in the first place, about £1,000,000 in life annuities. They were held by a large number of persons, to whom the loss of a portion of their capital was no object in comparison with the advantage of obtaining an assured income. There was also £786,000 made up of annuities created on account of the Red Sea telegraph, the Crimean war loan, and the fortifications loans. He wished to call the attention of the House to the cost of these annuities. In 1855 a loan of £16,000,000 was required for the Crimean war. Of that the Government borrowed a portion by means of consols and a portion by means of annuities terminable in 1885. That part of the loan which was raised in the former manner was obtained at 88, which was equivalent to 3¾ per cent. The portion borrowed in terminable annuities had cost the country no less than 5¼. This was, no doubt, a startling statement. But after having had his calculations examined by one of the first actuaries in London he had placed it in the hands of Sir George Lewis (who was at the time Chancellor of the Exchequer), and he had never said that there was the smallest error in it. What was the precise proposal before the House? It was to convert £24,000,000 of a book debt, standing to the credit of the savings banks, into terminable annuities. But how did the £24,000,000 become a book debt? The right hon. Gentleman (Mr. Gladstone), pointing out the inconvenience of having savings bank money in stocks which were continually fluctuating, had proposed to make it into a book debt, which could never change in value. There was no doubt that was a highly beneficial operation. What was now going to be done was to re-convert that £14,000,000 into the most variable and capricious security that could be conceived. If the Government had called the capitalists of London together, and offered to sell them £24,000,000 of terminable annuities at the price of the day, that would at least have been a definite arrangement. What they were really going to do was to carry out a merely apparent operation in the Public Debt Office. They were merely going to substitute for the annual interest of £720,000, being 3 per cent upon a book debt of £24,000,000, terminable annuities of £1,720,000. This would render necessary the raising of another £1,000,000 a year by taxation. The object of this operation was that the £1,000,000 might be confounded in the general charge for the public debt, and thus be regarded by the nation as a charge necessary for the maintenance of the public credit. The country would never suspect that it was taken to pay off debt instead of being, as it supposed, a charge for interest. But how would this operate on the interests of the savings banks? Year by year they would receive, not the £720,000 which they actually wanted for the purpose of paying the interest due to their depositors, but £1,720,000—that is, £1,000,000 which they did not want at all. The consequence would be that year after year for the next seventeen years they would have to go into the market in order to dispose of this surplus money. They would have to invest in consols at the market price. It might thus happen that while they were making a nominal arrangement for the redemption of consols at 88, the banks might have to buy for the purpose of re-investment at 98. The savings banks might be regarded in two lights. They might be looked on as independent bodies, whose affairs were to be administered in a manner consistent only with the interests of the bankers themselves. Or they might be regarded as mere bureaux of the Chancellor of the Exchequer. If they adopted the former view of their position nothing could be more unwise, unfortunate, or embarrassing for them, than the proposal of the Government. It might happen that there would be a drain upon the banks, as there was last year. In that case they would have nothing to convert into money but a security which, though valid, was unmarketable. On the other hand, it might happen, as he believed it would, that the increasing prosperity of the working classes would cause the deposits to exceed the withdrawals. In that case the banks, in addition to the difficulty they might have in investing the surplus, would have this extra £1,000,000 also to place out. In 1855, a sinking fund was proposed, which attracted considerable attention. But the Chancellor of the Exchequer in his Financial Statement the other day said he did not like sinking funds, and that he had always been opposed to them. There was no difference, however, between the clause of 1855, which stipulated that the House should sanction the appropriation annually of £1,000,000 to the payment of the National Debt, and the proposal placed before the House this year. The right hon. Gentleman (Mr. Gladstone), speaking of the arrangement of 1855, expressed his intention of voting against it in conformity with his strong conviction of the inexpediency of measures of that nature. The present Chancellor of the Exchequer spoke of it as neither more nor less than a recurrence to the system of artificial sinking funds, than which, to his mind, no principle could be more vicious. He (Mr. Hubbard) was not frightened at the name of a sinking fund. What was the distinction between a sinking fund and a redemption fund? A redemption fund occurred in almost every foreign loan. It might be 1 per cent on the amount of the loan, to be applied annually to the redemption of the capital. In that case it would take precisely 100 years to get rid of the debt. Or it might be 1 per cent upon the loan, but growing year by year by the interest upon the proportion of the loan discharged. In that case it would only take forty years to liquidate the debt. Therefore, the accumulating redemption fund was the more desirable arrangement. The sinking fund anathematized by both Chancellors of the Exchequer, aiming at the more rapid extinction of the debt, was a fund increasing year by year by the interest upon the portion of the debt redeemed. But the peculiarity was that it invested the money in stock but never cancelled the debt, and at any time the whole of the accumulated capital and interest was at the mercy of the exigencies of the time and the discretion of the Government. If a sinking fund were carried out honestly to the last stage it would be no more objectionable than any other mode of carrying out the redemption of a debt. It was because it was helpless before a needy Government and the necessities of the nation that it had been properly excluded from all national legislation. If the House was really in earnest in wishing to reduce the debt it might do so without any of the inconvenience he had described, by substituting an issue of Exchequer bonds for the creation of terminable annuities. An issue of Exchequer bonds to the savings banks would have precisely the same result as regarded the yearly revenue to be raised, and the application of that revenue. The difference would be that the savings hanks might avail themselves of security which would be marketable. There would be no confusion of capital and interest, and the operation could be carried out without any loss to the public and with great advantage to the savings banks. As regarded the question of the fire insurance duty, the right hon. Member (Mr. Gladstone) when he last spoke on the subject treated it as a tax upon property, and said that if it was removed care should be taken to replace it with something of the same character. He was not prepared to adopt that view. House property at present was taxed to the extent of 9d. in the pound for house duty, 4d. in the pound for income tax, and 3½d. in the pound for insurance duty. There were three taxes upon one class of property, the lowest of those taxes being nearly equal to the income tax. Was that reasonable, fair, or statesmanlike? The sooner they got rid of the fire insurance duty the better. If it could be afterwards proved that house property was lightly taxed as compared with other descriptions of property, let the question be dealt with from that view, This was not a mere question of individual grievance or of fiscal injustice, but it had a great Constitutional and social importance. There had been a lively interest excited in the House with regard to labourers' dwellings. Did the House know how much this question affected the rental of those cottages, and therefore the amount of accommodation that could be given to the labouring classes? It was something considerable, and it had a bearing upon the Reform Bill, in reference to the amount of the deductions to be made in order to get at the rateable value of property. The Committee to whom the Valuation of Property Bill had been referred would not be able to determine the deduction which should be made from the gross value, in order to arrive at the rateable value, until the retention or removal of this duty was decided on. Nothing could be worse than the financial measure now proposed, and nothing worse than the tax by which it was proposed to raise the money for the scheme. Admitting to the full extent the duty and expediency of reducing the National Debt, it would be a disgrace to the House and to the country if they were to take the first step in that direction by stereotyping in their legislation a tax so partial and so oppressive to the industrial classes as the fire insurance duty. He did not know whether the hon. Member (Mr. H. B. Sheridan) had given any definite shape to his proposal. He (Mr. Hubbard) would suggest that on and after the 30th of June next the duty should be reduced to 9d. in the pound. That would have the effect of removing £450,000 from the probable surplus, but it would still leave £600,000 or £700,000 to be applied to the redemption of the National Debt through the old customary and satisfactory mode of purchase by the National Debt Commissioners in the public market. He should propose that from the 5th of April next it should be reduced to 1d., retained as a means of recording the value of the real property brought under insurance. Short of that reduction they ought not to stop, and that was the proposal which he trusted the House would recommend by its vote.


said, they were asked either to agree to the Bill proposed by the Chancellor of the Exchequer, or to consent to the Amendment of the hon. Member (Mr. H.B. Sheridan). He had always supported the view of the hon. Member as an abstract proposition, thinking the duty excessive, and that it was most desirable that it should be diminished. But the question was, whether they were to take this opportunity of insisting upon a reduction. They had, on the other hand, to consider whether they would support a Bill intended for and certain to effect a reduction of the National Debt, and it appeared to him that they had no option as to the course which they ought to take. They found themselves in this position. By the action of the late Chancellor of the Exchequer (Mr. Gladstone), a book debt was created of £24,000,000, for which this country was responsible to the depositors in the savings banks. There was a charge created of £720,000 to pay the interest which the Commissioners for the savings banks would otherwise have received for their former investment in stock. The stock having been cancelled and the debt created, they found themselves in the position of having a perpetual charge on the Consolidated Fund of £720,000 a year. The Chancellor of the Exchequer asked, then, to get rid of that charge altogether by creating an annual charge in excess of that £720,000, which they were already pledged to provide, to the amount of £1,000,000. By making the charge £1,720,000 a year, a surplus of £ 1,000,000 would be created which would not be required under ordinary circumstances for the wants of the savings banks, but would be applied annually to the purchase of stock until, at the end of seventeen or eighteen years, a fund equal to £24,000,000 would be created which would then be in stock for the wants of the savings banks. At the end of that time the country would be entirely free of the charge of £1,720,000. He considered that a very desirable object. The hon. Member (Mr. Hubbard) might, perhaps, be able to show that it was possible to provide the money in a cheaper manner, but it was a great point to take any opportunity of surplus revenue to diminish the National Debt. They were very averse to making any charge upon posterity for this purpose, and they therefore objected to the measure of the late Chancellor of the Exchequer when he proposed, not only to create a charge for seventeen or eighteen years, but to continue that charge by the creation of annuities for some eighteen or twenty years longer. The present proposal was not, as had been alleged, a fictitious payment of the National Debt—not a transfer from one account to another—but an absolute reduction by £24,000,000, and he thought it would be very unwise of the House to throw any difficulty in its way.


said, that the present Motion raised in a broad manner two rival principles. Whether the money had better be left to fructify in the pockets of the people, or whether it would be better to raise money by taxation to pay the National Debt. He advocated the former. He had to contend against a great weight of authority. When the late and present Chancellors of the Exchequer were against him he could only hope to succeed by raising solid arguments against their proposals. He would first explain what he meant by leaving the money to fructify in the pockets of the people. On the introduction of the Budget the right hon. Gentleman (Mr. Gladstone) suggested that he (Mr. Laing) did not seem fully to apprehend the argument involved in the fructification of money in the pockets of the taxpayers. The right hon. Gentleman's argument was that the money applied to the reduction of the National Debt was not lost, but would remain in the money - market, there to fructify in commercial and monetary operations. He might retort, in turn, that the right hon. Gentleman did not seem to apprehend his argument. No doubt the money remained in the money-market to fructify according to the current rate of interest, but money judiciously applied in the remission of taxes did a great deal more good. It was not only fruitful to the extent of 4 or 5 per cent, but to ten times that amount, by the indirect benefits it conferred. To illustrate his meaning, he would take the case of the glass duty. Suppose that the sum of £10,000 had been applied in one of two ways — either by paying off that amount of the National Debt, or by remitting £10,000 of Excise duty in the case of a certain manufacturer of that article. Would not the manufacturer enlarge his works, improve his processes, find new foreign markets, and give increased employment to his artizans at improved wages? Would not those artisans consume more taxable commodities, thereby bringing money to the revenue, and buy more of the manufactures of the country, thus giving employment to the artizans engaged in other manufactures? Would not this fructification go on enlarging itself like the circle formed by a stone thrown into the water, and become much greater than the fructification of £10,000 applied to the redemption of the National Debt at 4 per cent? Take the case of the tea duty. Since 1850, when the reduction of the tea duty commenced, the consumption had increased from 50 lb. to 100 lb., or about double the consumption per head, thereby bringing money to the revenue. Could any one doubt that the money applied in reducing the tea duly had been better laid out than if it had been applied to the reduction of the National Debt? It had given employment. It had caused ships to be sent out to China. It had increased our export of manufactures to China and India. In any way in which they chose to trace it the principle of remitting taxes would be seen to be more fruitful and productive than by employing the same amount of capital in the bare redemption of the National Debt. The ordinary argument was, "What a proper thing it is to pay one's debts, and what a speculative or dishonest man he must be who counselled the House not to pay off the National Debt." But the analogy was a false one. There was no analogy between the debt of private individuals and the National Debt. What private person's debts consisted of perpetual annuities? If a man's property were insufficient to meet the principal of any debt he might owe, as well as the interest upon it, the security of the debt was clearly at an end. But the State owed no principal. The engagement was simply to pay a certain amount of perpetual annuity, and the safely of the State's creditor was just as great whether the annuity remained the same while the National income doubled, or whether the National income remaining stationary two-thirds of the debt were paid. The accounts of the country showed that since the great war the National Debt had decreased, while the means of paying it had increased three-fold. He would refer to a few figures for the purpose of illustrating the views which he entertained upon that subject. He found that in the year 1815, at the close of the great Continental war, the sum assessed to the income tax in this country was £157,000,000, while the burden of the National Debt was £32,500,000 a year. But in the year 1865 the sum on which the income tax was assessed had increased to £318,000,000, while the incidence of the National Debt had diminished to £26,000,000 a year. So that the public debt had actually diminished, while our capacity of paying it had in round numbers increased three-fold. That was the result of adopting the policy he advocated — the policy of allowing the money earned by the people to fructify in their own hands. It should be clearly understood that there is no magic in the form of terminable annuities. By whichever means it was proposed to pay off the Debt, whether by terminable annuities or by a sinking fund, the proposal simply consisted of raising money by taxation in order to invest it at 3¼ per cent in the purchase of Consols. Strong denunciations of sinking funds had fallen from the Chancellor of the Exchequer, but really little difference could be found between sinking funds and terminable annuities, except that the former had a bad name, owing to the erroneous idea that it was necessary to keep up a sinking fund in bad times, which, of course, incurred the obligation of borrowing with one hand what was paid with the other. If in the time of the Crimean war the proposed scheme had been in operation, presuming that £20,000,000 had been in course of liquidation, instead of paying 3 per cent upon it we should have had to borrow at the rate of 5 per cent to pay off, so that there would be a loss of £2 per cent, or £400,000 a year, and if a loan of £10,000,000 had been required we should have had to go into the market for a loan of £10,400,000. This clearly showed that the system of terminable annuities was worse than a sinking fund. It compelled the State to go on paying the annuities and liquidating debt in bad as well as in good times. In the case of a properly-constituted sinking fund, however, the process of liquidation could be stopped in cases of exigency. So that a scheme of terminable annuities was simply a bad form of sinking fund. Twist and turn the matter about as you please, it came to this simple question:—Is it worth while to levy money by taxation on the people in order to invest it at 3¼ per cent in the purchase of Consols to redeem the National Debt? The negative answer had great names to support it. The maxim with which he had started owed its name to one of the greatest economists, the late Lord Sydenham. It was the principle followed by Sir Robert Peel during his long career of successful legislation. The result had shown the soundness of the theories adopted by these great authorities. From 1815 to 1865 wealth had increased three-fold. Commerce, as represented by imports and exports, had increased fivefold. The burden of the Debt had diminished three-fold. An instance of the exceedingly productive nature of the application of money in the way of reductions of taxation was to be found in a study of the amounts between 1850 and 1864. During that period taxes had been reduced to the extent of £10,670,000. During the same period the revenue had increased by £13,000,000; so that there was a positive gain of £23,670,000. If through that period we had acted upon the principle of paying off the National Debt, the surplus we should have had available for that purpose would not have amounted to more than £2,000,000 or £3,000,000 a year. The sum thus paid off could not have been more than between £30,000,000 and £40,000,000. Would that be an equivalent for the French treaty, for the reduction of the duties on tea, sugar, butter, cheese, eggs, fruit, timber, hops, wine, newspapers, advertisements, and all that long catalogue of remissions of taxation which had been effected with such immense benefit to the people of this country? If such results had been attained in the past, why should they not, by the adoption of the same policy, be attained in the future? It might then be considered with reference to the fire insurance duty, which was certainly a duty on the provident. He found from the Report of the Inland Revenue Commissioners for the last year that the duty, which was formerly 3s., had been in 1864 reduced to 1s. 6d. Since that reduction the value of property insured had increased from £1,166,000,000 to £1,311,000,000, making an increase of £145,000,000. Judging from this, a uniform reduction of duty to 6d. would probably reduce the income from £942,000, the present produce of the tax, to between £400,000 and £500,000. The rate of increase in the property insured would be accelerated, so that in ten years it would exceed what it is now. Would not that be a better mode of employing the sum of £500,000, which would be the amount of the loss in the first instance, than its application to a reduction of the National Debt? If they paid off £500,000 a year, that would only give a reduction of the Debt to the extent of £5,000,000 at the end of ten years, and the interest on that sum would be £150,000 a year. That would be a bad investment compared with the diminution of a public tax to the amount of £500,000 a year. A far better investment was that which, by lightening the burdens of the people, brought back the revenue to its old position in ten years. Of other taxes which were objectionable, he might mention those on locomotion, which the right hon. Gentleman (Mr. Gladstone) had admitted were taxes on the raw material of labour. The Inland Revenue officers complained of the difficulty of collecting the tax, and pointed out that since '79 the burden had been shuffled from the shoulders of the rich to the poorer classes. If the House desired to get credit for magnanimity by paying off the National Debt, let it cast the burden on those who could bear it, as by an extra penny on the income tax. He deprecated the earning of credit for magnanimity and fine feeling at the expense of poor women and the wives and children of the labouring classes, who had to walk through the muddy way from railway stations because our system of taxation would not allow a cheap omnibus or fly to take them home. The total amount of the post-horse duty was but £158,566. To furnish a single instance of injustice. Omnibus companies paid duty at the rate of 11 per cent, while railways only paid at the rate of 2½ per cent on their net profits. Yet omnibuses were emphatically the conveyance of the middle and lower classes. The opportunity for revising all these taxes had been thrown away, because financiers had chosen to take up new-fangled notions of paying off the National Debt. Another portion of our financial system imperatively calling for revision was the taxation levied upon licences for the sale of articles of large consumption. It was desirable to simplify as much as possible the intermediate machinery between the importer and the consumer. The licence on tea in houses below £8 had been reduced to 2s. 6d. But in houses above £8 it stood at 11s. 6d. That was no inconsiderable figure, especially when the object ought to be to sweep away all such restrictions, to multiply tea-shops in every village, and so open up to poor widows and persons in that class suitable occupation. There were 170,294 persons paying tea and coffee licences. The whole amount they contributed to the State was but £66,000. Why, again, should attorneys pay licence duty, which was not paid by doctors or other professional men? Why should auctioneers, men whose business it was to sell houses and furniture, pay duty, when men might sell cotton, sugar, or shares without any similar restriction? There were other petty charges of a singularly vexatious and at the same time unprofitable character. Soap-makers paid a licence duty yearly of £1,234, vinegar-makers of £330. What was the sense or use of keeping up trivial and invidious charges like these? These and similar imposts still to be found in the statute book—small in amount, but vexatious in operation — this year's surplus presented an admirable opportunity for sweeping away. The prospects of peace seemed now more assured than ever. With peace estimates what a vast amount of good might have been accomplished! Some real impression might then have been made upon the National Debt. The great problem of substituting a beer tax for a malt tax might have been faced, or the tea and sugar duties, which still, notwithstanding all the reductions, were 40 to 50 per cent ad valorem, might have been further reduced. Taking the Estimates as they stood even, the fire insurance question and the taxes on locomotion might have been dealt with. And why had this not been done? The reason must be found in the desire to do something sensational in the way of finance. Last year an excuse was afforded by the apprehended exhaustion of coal, an apprehension that seemed to have gone off in smoke. This year the example of the United States was put forward conspicuously. He admired as much as any man the energy with which the enormous war establishment of that country had been reduced in a few months to a peace footing, and still more the spirit which made such a reduction possible. Nothing could be more honourable than the way in which American officers bad subsided into simple citizens, earning an honest livelihood by peaceful pursuits, instead of trying to keep up large armies and foment revolutions, with a view of maintaining their own influence, as was too often the case in Southern America. But, in looking at the example of America, the House must be on its guard against false comparisons. In the first place, America had adopted an inconvertible currency, which was heavily depressed, and no nation could be said to be really paying its debts as long as the currency stood at 25 or 30 per cent discount. Then, again, nobody could doubt that the Customs revenue was levied not so much with a view to the amount it yielded as for the purposes of protection. Any proposals for reduction would be opposed by the whole manufacturing interests of the North and East. In financial questions they must never jump too hastily to conclusions. The saying of the Grecian sage that nobody could be accounted happy before his death was applicable to all financial experiments, and we had not seen the last of such experiments in the United States. The last accounts showed that under this stimulus of inconvertible paper currency the cost of living had increased to such an extent that the working classes were combining to get a higher rate of wages. And what was the consequence? That important branches of industry were deserting the United States. It by no means followed that with its fertile soil, its mineral wealth, and the energetic character of its people, America was about to relapse into poverty. But vital blows had been struck at many branches of national industry. Take such a branch as shipbuilding. Before the war America was one of the foremost countries in the world in the art of shipbuilding, which was so important to her in a mercantile and in a national sense. But shipbuilding had been to a great extent driven away by those high rates. Did the extinction of a portion of their National Debt repay them for the loss of a trade forming so material an clement in their mercantile and maritime greatness? He thought not. It was by no means clear that the policy adopted by the United States of keeping up these excessive taxes since the conclusion of the war would conduce to the ultimate prosperity of the nation as much as the more sober and moderate course taken by this country at the close of the great war of 1815. We should persevere in that policy. He thanked the House for the patience with which they had listened to his remarks. Standing upon the broad lines of the Financial Constitution, he gave his hearty approval to the Amendment, looking as he did upon the proposal for the reduction of the National Debt—to borrow an expression of his right hon. Friend (Mr. Gladstone) — as "not new, but new-fangled."


In answer to my hon. Friend, who so emphatically asks us to reject this Motion, I would say it is not new-fangled but old-fangled. It is the proposal of the Chancellor of the Exchequer, and it seems rather hard that the right hon. Gentleman should be accused of doing something sensational merely be- cause I, who am not in his confidence or in any relation with him as to the preparation of this measure, have been so unfortunate as to wound my hon. Friend by a reference to the United States. I will not question how far my hon. Friend may be justified in imputing to me a desire to do something sensational as the basis of the action which I took last year as a Minister of the Crown. My hon. Friend is certainly not the most charitable or complimentary in his suppositions. I shall by-and-by inquire how far there are palpable or even probable appearances to justify these suppositions. But nothing can be more unjust than to ascribe to the Chancellor of the Exchequer a sensational desire to copy the United States merely because I said that the United States were making a great effort to pay off their National Debt. My hon. Friend understands the affairs of the United States a great deal better than the people of those States. He has therefore shown that they have gone altogether abroad in their course, and that they would have acted more wisely if they had abolished taxes and made no effort to reduce the amount of the Debt. He may be right in that opinion, but the probabilities are rather against him. There is a presumption that with regard to the management of their domestic affairs the people of the United States would be as competent judges of the policy they ought to pursue as we are. But when he says that there can be no inference justifying us in citing the example of the United States because of their depreciated currency, he must recollect that we began to pay off our National Debt with a depreciated currency, a state of things which existed long after the close of the revolutionary war. Then he speaks of their financial schemes as bound up with and reposing upon an elaborate system of protection. Does my hon. Friend mean that Customs duties are the principal source of American revenue? The principal source of American revenue is an inland revenue of an elaborate, and, in some cases, of a most vexatious character. But I did not allude to the financial affairs of that country with the object which my hon. Friend's observations might lead the House to suppose. My reference to America was to show that a great nation was making present sacrifices for a future good. But I take my hon. Friend to task as to his charge that this proposal is sensational. If I were inclined to excite people's passions I should draw a picture of a widow without boots trudging home through the mud in consequence of the taxes on locomotion, and propose a repeal of those taxes, rather than submit a proposal for the reduction of the National Debt, and a consequent limitation of the burdens of posterity sixty years hence. I confess that I think the sensational qualities—the powers of producing sensation by painting and colouring—exhibited by my hon. Friend in his speech, equal anything I ever heard in this House, and are far beyond anything I ever aimed at or could succeed in acquiring if I did aim at it. Sensation has reference to the present; the reduction of the National Debt to the future. My hon. Friend's arguments go beyond his conclusions. He tells us that we are pandering to sensation if we confer benefits on the country, the full realization of which will be felt only by those who are to live in the distant future. His arguments go against our doing anything to reduce the National Debt. Those who agree with my hon. Friend, and argue that we ought to do nothing to reduce the Debt, but that every penny of surplus ought to go towards the abolition of taxes, are much more likely to produce a sensation than those who advocate measures the full benefit of which will be felt only by our posterity. In one point I agree with my hon. Friend. I concur with him in thinking that if the House determines on upsetting the Motion of the Chancellor of the Exchequer, there are a great many questions of taxation which it will be necessary for us to consider. But supposing the House to go so far as to take out of the hands of the Chancellor of the Exchequer the regulation of the finances of the country for the present year. I must decline to be bound by the terms of a Motion on which we are not called upon to vote; but which, if we were about to vote on it, would raise the question of the fire insurance duty. The question of that duty is not before us now. The question now is that the words proposed to be left out stand part of the Motion—or, in other words, whether or not we shall have the measure of the Government. Though I do not draw a picture of a widow trudging through the mud, I have before expressed my opinion that there are other taxes, such as those on locomotion, which I should be disposed to remove rather than adopt the Motion of the hon. Member (Mr. Sheridan). But there is another tax to which I should feel it my duty to call the attention of the House if the plan of the Chancellor of the Exchequer were rejected. It is a tax not much heard of in this House. I mean the tax on corn, than which, in my opinion, there cannot be a much worse tax. I grant that it is very limited in amount; but when we say that, we say all that can be said in its favour. It is a tax which raises the price of the article at home; it is a tax on an article of the first necessity; it is a tax the effect of which is to prevent this country from becoming what it ought to become—I mean the great entrepot for the corn of all the nations of the world. There has been laid on the table of this House a Return which I hope has attracted the attention of the right hon. Gentleman the Chancellor of the Exchequer. It discloses this remarkable fact—that owing to the fine we levy on the corn which enters our ports the export com trade of this country, the entrepot, the carrying trade, remains now, after the commerce of the world has multiplied three or four times, of the same paltry dimensions as it was forty or fifty years ago, in the days of the old sliding scale. There are many other subjects which are worthy of being examined, and I certainly think our attention ought to be directed to more than one quarter of our financial policy in preference to that now presented to us. My hon. Friend (Mr. Laing) pointed out other subjects. Some of our licence duties are objectionable. I may allude especially to that in connection with the article of tea. I cannot say that the claims of the attorneys appear to me to be very strong, even in comparison with the claims of posterity, with whom I would leave it to consider them. But my hon. Friend seems to be equally in love with the attorney and with the widow who trudges in the mud. I think, however, that he is right in assailing some of those licences, because I think the principle a sound one—that when we have admitted an article, it is our direct interest to promote its cheap distribution by allowing it to be offered with perfect freedom among all classes of consumers. Therefore I think the tea licence a tax of which the removal would be highly desirable. The article of tea is one which yields you an immense revenue, which you invite to enter your ports, and when an article is one of primary necessity it is in the interest of the State to promote its general consumption, and its being offered with perfect freedom and facility by all who may choose to deal in it. My hon. Friend is a defender of the principle of fructification in connection with the public revenue. He entered into the question of the fructifying and the non-fructifying principles, and he charged me with not understanding the fructifying principle. But he has not looked back to the time when the discussion on fructifications first took place. The principle was not confined within the limits contended for by my hon. Friend. He drives or rides it so hard that he would be by no means satisfied even should he prevail on the House to reject the Bill of Her Majesty's Government. He contends that all application of surplus revenue to the reduction of the National Debt in our circumstances is bad. It is quite evident that such is the scope of his argument. He has pointed out vast operations which he thinks desirable—the commutation of the malt tax into a beer duty, the removal of the duties on tea and sugar, and he proposes to consider all this in connection with the application of money to the reduction of the National Debt. His plain principle is that it is utterly unwise to apply a single sixpence in this direction. But is that so or not? He quotes the authority of Sir Robert Peel, but with what justice? Where did he ever learn, how could be possibly extract any such principle from the statements and declarations of Sir Robert Peel? When did Sir Robert Peel lay down that it was an imprudent thing to apply any of the surplus resources of the country to the reduction of the National Debt? His great object, from the time he became Prime Minister, was to get funds for that purpose. At the close of that Administration, Mr. Goulburn, the Chancellor of the Exchequer, delivered a lucid speech in which he applied himself to showing how far he had been able to work on any portion of the National Debt. My hon. Friend has taken a course calculated to bewilder the House in quoting the opinion of Sir Robert Peel as if he had been friendly to extreme doctrines which he would now have us adopt. In endeavouring to get the House to adopt his view, that no portion of the public resources should be applied to the reduction of the National Debt, my hon. Friend says that he is walking in the old ways of the Constitution—a rather sensational expression. But he is arguing against the old principles of our finance. It has been a principle of our finance for the last 100 years to operate on the National Debt. In its beginning, the National Debt was not meant to be perpetual, but was raised only in the form of annuities. The principle of the measure before us is not a new one. It is a very modest and timid attempt to re-establish in part the fixed policy of the country, of applying year by year in a steady and permanent way some portion of the public revenue for the reduction of the Debt. What my hon. Friend calls a new-fangled proceeding is one which has been long established in this country. So far back as 1827 we paid off a considerable sum in the form of terminable annuities. By the year 1834 we had paid off to the amount of £2,000,000. From 1834 to 1858—all through the Government of Sir Robert Peel—so rapidly had the sum risen that in 1858 it was nearly £3,500,000. After 1858 the payments fell off. In the year 1860–1 they stand at £1,292,000. It is clear that the fixed policy of this country has been to apply a portion of our revenue to the reduction of the National Debt. How therefore can my hon. Friend call this proposal a new-fangled one? This policy has prevailed not only under every Government for the last 100 years, but has been approved by all political economists. It has been cordially and heartily carried into effect by all the great financiers of recent times. The Bill of the Chancellor of the Exchequer proposes to repay a portion of that amount. With respect to the general theory of fructification, all that can be said is, if money does fructify in the pockets of the people as it fructifies in the speeches of my hon. Friend, then its fecundity and the rapidity of its generation must be something marvellous. I do not comprehend how he arrives at the conclusion that the money will fructify so rapidly as he alleges will be the case in the event of the taxes of which he complains being reduced. He says that if we reduce the fire insurance to 6d. the revenue would be replaced in six, seven, or, at the outside, in ten years. I have no right to question the conscientiousness of his belief; but I am totally unable to comprehend the steps by which he arrives at his conclusion. He appears to take no note of the annual increase in the amount of property insured under the present state of things. This increase would of itself upset his theory. It having been my duty to apply myself for years to the study of these questions, I may say that I have never attempted to uphold this tax on the ground of its possessing any special merit. But there are few taxes against which the arguments that have been used against this tax may not be urged. Deal with the question of fire insurance as you will. But do not deal with it on the supposition that any sweeping reduction you may make will be replaced by an increase in the value of property insured. Such an anticipation is as visionary a one as has ever been held out by an amateur and speculative financier to a deluded, although, perhaps, delighted, audience. The hon. Gentleman sums up his arguments in this sentence:—"Inyears when you have a deficit you will have to borrow as much more than your deficit as will enable you to repay the debt." I deny that altogether as being a sound financial and economical proposition. The nominal difference between stating in an Act of Parliament that £1,000,000 shall be paid out of the Consolidated Fund every year for the reduction of the Debt, and saying, as the Chancellor of the Exchequer invites us to do, that certain terminable annuities shall be sold and £1,723,000 paid, of which £1,000,000 shall be for the re-payment of capital, is really none. The nominal difference between an Act of Parliament directing that a certain sum shall be paid annually out of the Consolidated Fund toward the reduction of the National Debt and a proposal to pay off an equivalent sum by means of selling certain terminable annuities is nothing. The practical difference between them, however, is great. Whenever Parliament enacts that a certain sum shall be re-paid annually out of the Consolidated Fund for the purpose of reducing the National Debt, when the occasion arises Parliament repeals that enactment. But when Parliament enacts that certain terminable annuities shall be sold, the sum so raised is applied to the reduction of the Debt, and to that extent the Debt is reduced. The one plan is a delusion and the other a reality. Another very important difference between the two plans is this:—When Parliament enacts, as it did in 1855, that it shall be the duty of the Chancellor of the Exchequer to come down to the House with his Budget each year and provide £1,000,000 for the purpose of reducing debt, it is found in practice that objections are raised to the allocation of the money as designed, and the £1,000,000 is struck out. In times of difficulty the House invariably rejects any proposal of the Chancellor of the Exchequer for money to be applied towards the payment of the National Debt. Consequently, the taxation of the country is not settled with a view to the provision of that sum. The level of taxation is not raised; it remains exactly where it would have been. If there happens to be a surplus the £1,000,000 will be paid. If there is not, it will not be paid. The normal level and scheme of taxation of the country is not altered one whit to meet the effect of a legislative provision of this kind. But when terminable annuities to a certain amount are issued we have a charge to provide for. It becomes a portion of the permanent charge of the country. These permanent charges, together with the charges voted in Supply, are the very facts and elements which determine the scale upon which the permanent and average revenue of the country is fixed. Consequently, if we insert in our charge for the National Debt £1,000,000, £2,000,000, or £3,000,000, although, in one point of view, it will be the same thing as providing by statute that the Chancellor of the Exchequer shall every year ask the House for the money, the difference in practice is all the difference in the world. These £3,000,000 are provided for as part of the wants of the country. It is not until these £3,000,000 have been met, just as any other public charges are met, that the region of deficit is approached. Then there is one case which must arise, which is the case of casualties. Hero I must come into conflict with the hon. Member (Mr. Hubbard). The hon. Member is the most inveterate antagonist of any scheme of this kind, and he uses it most cruelly. He began his ingenious speech by raising all manner of arguments against this proposal, on the ground of the injustice of the incidence of the income tax. But as these annuities I are not to be sold in the open market, the question of the income tax does not touch them. He then finds fault with them because they are not to be sold in the open market. But why should this be a subject for reproval? In this economical process, be it what it may, there is not the possibility of the loss of a sixpence. It is a book transaction between the Chancellor of the Exchequer on behalf of the Exchequer account of the annual expenditure and revenue of the country, and the Chancellor of the Exchequer as the great banker for the deposits of the people. And this brings me to the mode in which the plan will operate in the case of casualties. When a casual deficiency arises the Chancellor of the Exchequer meets it in one of two ways. If his balances in the bank are sufficiently large he pays it out of them, and if they are not he raises money upon Exchequer bills or bonds from the bank. He is from year to year receiving money for investment. That money he will apply to meet the deficiency of the Exchequer account by issuing Exchequer bills to the National Debt Commissioners in satisfaction of this Debt. It is not until the vey moment when the deficiency upon the annual Exchequer accounts exceeds the ordinary sum which, as a banker, he requires to invest that the slightest question of borrowing can under any circumstances arise in connection with the adoption of this plan. The question of fire insurance is so mixed up with this Bill that I shall not attempt to show what would happen with a given sum of money in each of four cases, when the banking account and Exchequer account is in surplus, when the banking account is in surplus and the Exchequer account in deficiency, when the banking account is deficient and the Exchequer account in surplus, or finally when both accounts are deficient. But I am sure I could show the House that the objection as to casualties has no application whatever to a policy of this kind. Under no circumstances could any of those practical considerations upon which turned the adverse judgment of the House against the old sinking fund apply to this scheme, which will be worked entirely between two different accounts, both of them kept and managed for the interest of the nation. I do not condemn the plan of the late Sir George Lewis. There might be an answer to the objections urged against it. It was said that while be could have raised money by Consols at 3¾, or something less per cent, he raised it upon annuities at 5¼. Supposing that were true, the State did not lose a shilling by the transaction. It had the power of fixing the price of the annuity, and it did not matter to the bank depositor what that price was. The management of it, however, is a totally different matter, because the State is the sole person who has any beneficial interest in it. If it should lose, as is very improbable, by any improvident management of the Exchequer accounts, the whole amount so lost would be made good by the profits realized on the banking account. And here I wish to correct a statement of the hon. Member (Mr. Hubbard), with respect to the account he gave of the institution of the book debt of £24,000,000. The hon. Gentleman said that it was instituted by me for the pur- pose of making the assets of the savings banks less variable, instead of allowing them to fluctuate from year to year, as they did at the time when they were invested in stocks, the price of which was constantly varying. That was not the object I had in view, and it was altogether of secondary importance. There was a heavy deficit on the assets which the State held in order to meet the claims of the savings banks. With the view of meeting that deficit, I proposed that we should convert £100 Consols into £100 cash, and that it should be met as cash. That was the main object I had in view—the filling up tin; void of real deficit. My hon. Friend says this is a bad method of proceeding as regards the interests of the savings banks. But the savings banks properly so called have no interest whatever in it. It is merely a question of regulating the banking account, and I think this is the best method which could be devised for that purpose. Without entering into any minutiae in regard to the peculiarity and technicalities of the question, I apprehend that it is a tolerably clear principle that the hanker wants to have his money returned fast upon him, or else to have securities which are easily convertible. [Mr. HUBBARD: Hear, hear!] Well, the two things are closely and immediately connected. [Mr. HUBBARD: In State securities.] Well, it can hardly be said in the present state of things that State securities are easily convertible. Fifty years ago, when the Bank rate of discount was, I believe, never below 4 or above 5 per cent, it was of course easy to have temporary securities under the name of Exchequer bills, on which a certain degree of price might be reckoned. But how, consistently with the limitations which you must impose on the financial department, are you to have these temporary securities on the part of the subject at all times immediately convertible in large quantities, when the rate of discount at the Bank of England ranges from 2 or 3 to 9 or 10 per cent, and then down again in the course of a few weeks or months? The thing is impossible. The drain on the savings banks is a normal drain. It is not an accidental drain. Unless I am very much mistaken, it has been going on for years past with little difference. The truth is that it is a note of change, and shows that the class of people who formerly used to invest in savings banks are dissatisfied at the rate of interest they obtained. That is not an unsatisfactory state of things. It arises out of the increasing intelligence of the classes in question, who are not now obliged to confine themselves—if I may use a common expression — to what is under their own noses, but are able to exercise a larger and wider judgment with respect to investments. The drain arises out of the rate of profit, which has become a normal fact in the monetary condition of this country. If this matter be examined the House will find that nothing can be more convenient, as a practical arrangement, than to have the means of the old savings banks rapidly returning in order to meet the demands of depositors. As regards the remarks made by the hon. Member (Mr. Sheridan), I may state that it is not my intention to advert to all the points touched upon by the hon. Gentleman, but I must say that he was inaccurate in his reference to the Bill of last year. He said it did not pass the second reading, whereas, the fact was, that it was read a second time on the 24th of last May.


But the Amendment was to have been taken on the next stage of the Bill.


I beg the hon. Gentleman's pardon. The Bill was read a second time after considerable discussion. The hon. Gentleman argues enthusiastically that the tax on insurance prohibits the preservation of property from destruction. I confess that appears to me to be a new view on the subject—that insuring a house prevents it from being burnt down. If that be so, insurance is not what I took it to be—namely, a very ingenious and useful scheme of reducing losses to individuals by apportioning them among the community. The hon. Gentleman, however, thinks that it is a mode of preserving property from destruction.


By replacing the property.


But it does not replace the property, it replaces the property, indeed, as far as the individual is concerned, and a very good thing too. But do not let us exaggerate the matter, and say that it prevents fires.


said, that the two propositions were substantially the same.


Well, I am unable to perceive that the two propositions are identical, but I will not continue to discuss the matter. I will only say that, in my opinion, insuring property against fire does not prevent that property from being burnt down. Then the hon. Gentleman urges that the fire insurance duty is a tax upon prudence. The very great ingenuity of the hon. Gentleman in dwelling on this point would, if extended to other imposts, be enough to make the minds and consciences of hon. Members excessively uneasy respecting the retaining half the taxes in the statute book. Indeed, there are only a very few taxes which may not be said to operate as taxes upon prudence. What, for instance, can be said of a tax which fines a man for selling his property? Is not that a tax upon prudence? It could not be said that the tax is a light one, because it is as much as 10s. on the sale of property the yearly value of which is only £3, or, in other words, one-sixth of the whole year's property. That, then, is a tax upon prudence. What is really to be desired—and I plead for it now as I did when I held an official position—is that we should not be driven into partial and peculiar views of the operation of particular taxes without recollecting—what had been most impartially referred to by my hon. Friend (Mr. Laing), but what is never mentioned by the habitual and sworn advocates of the reduction of a particular tax, who always so heighten the description of the particular case they have to submit for consideration that for the moment one feels almost ashamed to maintain the tax—that there are other taxes not immediately before us. If all the enemies of taxes had one week given them during which the House should do nothing but listen to the objections raised to particular taxes, we should be so dismayed and discomforted in mind and spirit that we should be inclined to sweep away one moiety of all the taxes. Let us, however, re-establish our equilibrium, and let us always bear in mind when we hear of a particular tax that there are other cases which would appear equally hard if they were examined and exposed with equal ability and zeal. Let us recollect this before we are driven to a conclusion. Above all, we should recollect that it is a serious matter for us to impugn, on the consideration of a question of this kind, the policy so long established in this country, and I must say so happily established, as the policy of applying moderate sums from public sources towards the reduction of the National Debt. We are told that this is working for posterity. But we are indebted to far-sighted and deeply-thinking men like the hon. Member (Mr. Stuart Mill) for reminding us of the nature of the obligation we owe to posterity. Independently, however, of these philosophic views, there is no greater fallacy than to say that the policy of paying off from time to time portions of the National Debt is limited in its advantages to posterity. Nothing does more to maintain a system of credit and to improve the value of property in the country than a policy of this description. I admit it is not to be carried beyond moderate bounds. It is at present within moderate bounds. Do not let us accede to a vote amounting practically to a condemnation of that policy—a condemnation alike injurious to posterity and to ourselves.


said, that on a former debate an hon. Member had called attention to the fact that all the advocates for the payment of the Debt were Members of large towns. Though he was not a Member for a large town he was as great a supporter of the National credit as any Member for a large town could be. There was one expression which had been used on the other side which he thought had for ever been erased out of the Parliamentary vocabulary. He meant the "fructification" of the Debt in the pockets of the people. That phrase, he believed, was first used in this house by the late Lord Sydenham, then Mr. Poulett Thomson. Though he (Mr. Scourfield) was not then a Member of the House, he remembered how Sir Robert Peel overwhelmed the phrase and its author with merciless ridicule. "Hear this," he said, "ye Chilian bondholders and other people not paid your dividends." Parodying Sir Robert Peel's language, he (Mr. Scourfield) might say, "Hear this, ye London, Chatham, and Dover bondholders, and take comfort. Though you are receiving no money yourselves yet rejoice that your money is 'fructifying' in the pockets of other people." There was a feeling in the minds of some hon. Gentlemen opposite akin to what was said when some Gentlemen met to discuss the ruin of one of their friends, and one of them said, "What can you expect from a fellow who has muddled away his property in paying his tradesmen's bills?" He took a different view of the matter. While he agreed with Mr. Burke, that though honesty was the best policy, the man who was honest only from the motive of policy was not an honest man; yet he held with the principle in that limited sense, that it would not only be right but a matter of policy that they should reduce the debt. The real want of the country at the present time was not money, but credit, which had been sorely shaken by recent events. He concurred, therefore, in the policy of applying the surplus revenue to the reduction of the National Debt. It might be said that this was infinitesimal in amount, but the aggregate was not infinitesimal. Neither was the principle. An act of self-denial might be a small matter while the habit was all-important. If that policy were to be given up there were other taxes which had superior claims to the tax on fire insurance. There was the malt tax and the tax on hackney coaches, which it was stated in the House recently, paid a tax of 1s. a day to the Imperial taxation. With regard to the fire insurance tax he thought the advocates were indiscreet in taking too high grounds for its repeal. It was said to be a tax on prudence — it might as well be said to be a tax on luxury. The hon. Member (Mr. Sheridan) had himself given them another view of the matter, when in a former debate he described fire insurance as nothing but a bet between the fire insurance office and the individual, when the office bet twenty to one that the individual's house would not take fire within the year. He was not enamoured of the duty, but many other taxes had quite as good a claim to be repealed. It had a fair claim for consideration whenever there was an available surplus to deal with it. But he protested against its being brought into competition with the reduction of the National Debt. It did not affect the credit of the country. The payment of the Debt affected their credit. If their credit were shaken by the idea that the House was not ready to do what it could in the way of payment, the fiscal consequences would be as surely disastrous as would be the consequences on the national morality.


said, he would not attempt to criticize the very able speech of the right hon. Gentleman (Mr. Gladstone); but he was bound to say, after listening to it with great attention, that he had not answered, perhaps because it was unanswerable, the very logical and able speech of the hon. Member (Mr. Laing). He criticized it with great power of sarcasm, but he did not touch its essence, which was this:—not that the National Debt should not be paid off, but that it should not be dealt with while taxes impeding the prosperity of the nation re- mained on the statute book. The right hon. Gentleman said that transactions of this sort involved no loss whatever to the public Exchequer. But the hon. Member (Mr. Hubbard) had shown conclusively that loss to the Exchequer did result. He was in favour of paying the Debt, and the object would be worth living for if it could be effected. But he disagreed with this Bill. In the first place, he objected to the time when it was brought in. When in the Slave States of America in 1859, he lived as much as he could among slaves, to ascertain their views, feelings, and wants. He was introduced to a slave of great wealth—a man who could easily have purchased his freedom. He asked him why he did not free himself from slavery, having the means and knowing the desirability of freedom; but his reply was, "You do not understand, I am an old fellow and every year I grow older I grow cheaper; let me alone, I will yet purchase my freedom." The constant meddling with the National Debt had been the great reason why it had not gone down to its minimum. Now-a-days few people would be content with 3 per cent for money, and the reason that investors were not more plentiful was not that there was no more money in the country, but because they could not trust those in whose hands it would be put. It was said that buying up the Debt of the country maintained its credit, so that in time of pressure—he supposed that meant time of war—we could raise in the market the money we required. But he had no anxiety to facilitate war. In the past it had been our curse that our credit had been so good that we could raise the money to go to war. He did not think that these investments in the Debt of the country answered their purpose, for when the country was in difficulties and large advances were required we must pay the market price for money. Supply and demand alone would govern the matter. The mode adopted of dealing with the Debt was unworthy of a great conviction and of a great nation. The comparisons which had been made between fundholders and railway-shareholders could not be sustained, for the fundholders purchased perpetual annuities, but railway investors lent their money for a short time and had a right to expect re-payment at the expiration of that period. If we entertained a conviction that the Debt ought to be dealt with, let us deal with it energetically, for it was by no means beyond the control of the purse of the nation. We could deal with it in an almost incredibly short time if we handled it with the energy we did war and other great questions. Last year the hon. Member (Mr. Stuart Mill) almost demonstrated that our power of paying off the Debt would be co-existent with our supply of coal, 83,000,000,000 tons, which at the present rate of expenditure would be exhausted within a century. It was a natural and logical suggestion to make that the payment of the Debt should be connected with the coal supply. A farthing a ton on the coals at the pit's mouth would yield £86,500,000, and 2¼d. or 2½d. a ton would yield £865,000,000 during the consumption of the coal. Such a tax would pay off the National Debt with the least possible inconvenience to the country. It was the raw material, but we must tax something. There would be extreme simplicity in the collection of this tax. The coal supply was in few hands, and the returns were easily obtainable. The coal owners would have no cause to complain, for it was acknowledged that it was the consumer and not the producer that paid the tax. Such a tax would induce economy in the use of coals. It would also annually give a surplus in the saving of interest on the Debt which could he applied in the reduction of other taxes, such as the malt tax and fire insurance duty, until we arrived at a fiscal millennium.


said, that there were two questions, whether we should pay off the National Debt at all, or whether we should do it in the particular mode proposed. He would speak of the latter. It could only be done by having surplus revenue. Terminable annuities and a sinking fund were mere measures for keeping up the surplus. The liability of the Government towards depositors in savings banks could not be altered, but we might change the mode in which we enabled the Commissioners to discharge it. At present the liability was measured by a book debt of £24,000,000. To meet it Parliament provided £720,000 annually. The Chancellor of the Exchequer proposed that they should measure the liability by terminable annuities instead of by a book debt, and that the country should pay annually £1,776,000. By this arrangement the Commissioners would have every year £1,056,000 more than enough to discharge their liability, and the proposal of the Chancellor of the Exchequer was that this sum should be applied to the extinction of the National Debt. It appeared to him that the scheme could not do much harm, unless the Commissioners were to be looked upon in the light of purchasers and not in the light of a department of the office of the Chancellor of the Exchequer. If the Commissioners were an independent contracting party, it would be a monstrous injustice to turn their book debt into terminable annuities. Harm might be done if, owing to a run on savings banks, these terminable annuities had to be sold in the open market to real purchasers, for the probability was that great loss would be incurred. Very great harm might be done if the House was, as some hon. Members seemed to think it was, pledged to the payment of this money, and to maintain this surplus until the terminable annuities ran out. Pressure might arise, war might break out, the revenue might fall short, and the charge of £1,000,000 might become a serious matter. When the right hon. Gentleman (Mr. Gladstone) tried to prove what good the scheme would do, he failed to make out his case. What difference was there between the proposed arrangement and the simpler arrangement of keeping on existing taxes and spending the surplus in the reduction of the debt. The scheme was a mere conjuring operation between the right hand and the left, between two departmental offices. The object of the manipulation was to persuade the House and the country to raise next year £1,056,000 more than was wanted for ordinary purposes. What good was gained by putting it in this particular form of terminable annuities? Suppose next year there was a deficit. It would not be so great as it seemed. It would be less by £1,056,000. But would not the House find that out? Would it be satisfied to borrow money or to impose additional taxation when it could easily avail itself of this £1,000,000? Would it not reverse the operation of this year and re-convert terminable annuities into book debt? Suppose on the other hand, there was a surplus, the apparent surplus would be less than the real and actual one by £1,056,000. Did the Chancellor of the Exchequer suppose that hon. Members who complained of particular taxes as grievances would not be perfectly alive to the existence of this surplus and to the possibility of making an assault on it? The proposal was, in effect, that a sham bargain should be made between one Government office and another for the purpose of creating a sham annuity. If there were a real contract for the sale of terminable annuities, the transaction would be bonâ fide, though objectionable. He could not say that he had any strong objections to carrying out the scheme if the Chancellor of the Exchequer was of opinion that the House would be bound morally or otherwise to provide the money. But if the Chancellor of the Exchequer was of opinion that the House was not to be taken in by the scheme, then it would be far more straightforward to pay off the Debt in the ordinary way of keeping on taxes.


said, that he agreed with the hon. Member (Mr. Gorst). He rose to ask the Chancellor of the Exchequer to give the House some explanation with respect to the probable effect of the present Bill. The hon. Member (Mr. Sheridan) had made out a good case against the tax on fire insurances, and were there no other reason for rejecting the Bill, the fact that the disposal of the existing surplus by its provisions stood in the way of repealing so obnoxious a tax as the fire insurance duty would constitute a sufficient reason. No case had been made out for adopting any exceptional measures for the reduction of the National Debt. Since the War of 1815 we had diminished the National Debt by £100,000,000, although we had been engaged in the Crimean and other wars. The Bill declared that the debt of £24,000,000 which the nation owed to the savings banks was to be cancelled. He always understood that cancelling a debt caused it to cease to exist. But in the present Bill provision was made for the payment of the debt by the creation of terminable annuities. Last year it was stated by the right hon. Gentleman (Mr. Gladstone) that by turning this debt of £24,000,000 into terminable annuities succeeding Parliaments would be bound to provide for the payment of those annuities. He should like the Chancellor of the Exchequer to state whether such would be the case under the present Bill? It appeared to him that the Bill might be repealed at any time by any future Parliament.


said, he had voted against the Motion of the hon. Member (Mr. Sheridan) before the introduction of the Budget, because he thought it wrong to fetter the choice of the Chancellor of the Exchequer. But, as the right hon. Gentleman had made the worst possible choice in disposing of the surplus, he should now support the Motion of the hon. Member. After declaring that he had too small a surplus to produce any perceptible effect upon any considerable tax, the right hon. Gentleman devoted that surplus to the reduction of the National Debt, upon which its perceptible effect would be vastly less. He thereby not only pledged the present Parliament, but sought to bind future Chancellors of the Exchequer, and to prevent relief from remission of taxation for many years to come. The right hon. Gentleman (Mr. Gladstone) had last year expressed his regret that cattle insurances were so few. The fact was that owing to the cattle plague and the imposition of the tax upon them they were almost entirely annihilated. Notwithstanding that farming stock was exempted from this duty of 3s. since 1830 the agricultural interest was saddled with similar duties amounting to about 5 per cent. Hailstorm insurances were in a better pecuniary position, but the premium upon them was very small, something like 4d. to 5d. an acre. Why was it that the Government thought fit to hamper those prudential societies? It could scarcely be worth their while to do so because of the amount raised from the tax. The whole sum derived from the duty on Hailstorm Insurances was, he believed, only £1,500. That upon cattle brought into the Exchequer not more than £1,000 per annum. There were also the taxes on Plate Glass and Accidental Death Insurances which realized about £2,500. So that the total income obtained by the Government from those four societies was only £5,000. The Chancellor of the Exchequer, therefore, had it in his power to confer upon them a great benefit at a small cost. He hoped the hon. Member (Mr. Sheridan), for whose Motion he was about to vote, would be found in the same lobby with him when questions affecting the agricultural interests were at stake.


said, he advised those hon. Gentlemen who thought that the National Debt was a good thing to get into debt themselves and see whether such a position was a good one. What was not good for individuals was not good for the nation. There were two ways of reducing the National Debt. The one was to apply the surplus of the revenue by buying up the Three per Cent Consols. The other was the system of terminable annuities. Some persons found fault with this latter mode of extinguishing a portion of the Debt because they thought it produced no good to any class and was a de- lusion. But terminable annuities enabled them to deal with a large sum like the National Debt and make some impression on it, whereas if they applied a small surplus to the paying of the Debt they would scarcely make any impression on it. The only faults of the present system were that it did not make enough terminable annuities, and also that it dealt with the surplus for many years to come. It would be far better for the Chancellor of the Exchequer for the time being to deal with his own surplus in the best possible way. If he only applied £500,000 in creating terminable annuities of 100 years date, the Chancellor of the Exchequer might go into the market and create £10,000,000 a year. So that posterity might have £10,000,000 a year going off the National Debt. Looking at the Budget as a whole, he regarded it as a good one. He was therefore unable to support the Motion of the hon. Member, which was in opposition to one of its main features, however much he might like to see the duty on fire insurance reduced when a fitting occasion arose. It had been suggested that the National Debt ought to be paid off by means of a tax on coal; but to such a tax being laid upon the raw material of an article which was as necessary to the poor man almost as food he should object, as a course unwise and impolitic.


said, he was in favour of the plan proposed by the Government. By carrying out that proposal £24,000,000 of debt would be cancelled in 1885 by a yearly payment to that date of £1,700,000. In 1885, when that amount of Debt was cancelled, they would have at their disposal the yearly sum of £1,700,000 by which it was effected. That he considered would be a desirable thing. The funds of this country had always stood high in the market, and it was very desirable that it should continue so. This country, above all others, ought to be the last to set an example, I when in so prosperous a condition, of not reducing its Debt. As the proposed plan would cancel so large a sum at so comparatively small a cost, it ought to receive the support of the House.


Sir, having attempted to bring forward, not a "sensation" Budget, but one of a very quiet character, which might not create much discussion, and not having brought it forward with any intention to imitate the policy of America, the vigour of which I admire, but the financial details of which I do not entirely comprehend, I may now state simply and shortly the reasons which influenced Her Majesty's Government in making these proposals—reasons which still influence them, and which I hope will also influence this House, and induce it to allow this Bill to be read the second time. There were many reasons which at the time when the Government had to consider the state of our finances made them feel that it was not prudent to reduce, and certainly not to put an end to, any source of our then existing revenue. Irrespectively of that, there was no tax at that moment of so crying a character of oppression as to require the attention of Parliament. There was a surplus, of no vast amount, still, in a certain sense, considerable. Feeling that it was our duty not wantonly to reduce, especially at that time, the sources of our revenue, and having a surplus, we had to consider another feature of our financial position. In the year we were commencing a large terminable annuity was about to fall in. We had therefore to consider the relative position of that kind of engagement to our financial system generally. We found that for a long period of time—certainly now for about half a century—it had been regarded as desirable by the ablest and most experienced of our financiers that a portion of our public Debt should be dealt with in such a manner as that, without violence and without exaggeration, it should assume the form, and, if possible, the continuous form of terminable annuities. We perceived also that for a considerable time events had tended to reduce these annuities. A very considerable change had therefore been taking place in the financial position of this country. We conceived that as this year a very large terminable annuity was falling in it was our duty to consider whether the course which had been pursued by our eminent predecessors for many years was a wise and rational course, or whether it was one from which we should deviate. After examining the matter, we believed that the course which had been generally adopted in the management of the finances of this country—namely, that of availing ourselves, without violence, but if possible with continuity of action, of our surplus revenue to effect a moderate conversion of our Debt into terminable annuities — was a sound practice, and one that ought not to be disregarded. We came therefore to the conclusion that not only was the policy which had been indicated by the right hon. Gentleman (Mr. Gladstone) a right policy, but that under the circumstances in which we stood, by having this annuity falling in, it was in a still greater degree imperative upon us to pursue that line. Great doubt has been expressed in the course of this discussion as to the benefits which have accrued to the country from the policy of favouring the conversion of permanent into terminable annuities in the management of our Debt. Sir, I was surprised at these remarks, coming, as they did, from the hon. Member (Mr. Laing). He dilated to-night, as he did last year, and with great truth, on the improved relative position of this country as regards its Debt, on how much the burden of the Debt is mitigated by the increase in our population and in our trade, and he also called upon us to note that the annual interest on that Debt has been diminished. At the time of the peace the yearly interest on our public Debt amounted to £32,000,000. It is now reduced to £26,000,000. That reduction of £6,000,000 has been concurrent with a great advance in the wealth and population of the country. But surely, Sir, the hon. Member has not forgotten that this system of terminable annuities has contributed greatly to this result? No doubt the reduction of the interest by operations on the Debt has had a considerable effect. But no one can deny that the system of converting permanent into terminable annuities has contributed a great deal—probably a moiety—towards the amount of that reduction. Therefore I am surprised that those who have given so much of their time and thought to this subject as the hon. Member and others have done, should have spoken with a want of regard for the great and advantageous effects produced on our financial system by the influence of terminable annuities. But the hon. Member—I mention him because he is the able representative of the opinions of many who have taken part in this debate—seems to think that in an arrangement such as is proposed in our Bill, and such as was proposed last year by the right hon. Gentleman (Mr. Gladstone), we are having an undue regard to the interests of posterity. Sir, I think a very extravagant regard for posterity in a question of morals ought to be guarded against, because we may take but perverted or contracted views of subjects which may be of great interest, but on which it is perhaps difficult to form a decidedly accurate opinion. But when we come to questions of finance I think we do owe something to the generation which follow us, as we ourselves owe much to the generation which has preceded us. In a debate of this kind, in which we are only making an arrangement the results of which will accrue in a comparatively brief space, I am surprised that hon. Gentlemen should depreciate either the importance or the duty of considering the interests of the generation which will come after us. I know of no generation which has benefited so much by the conversion of permanent into terminable annuities as that of which we are Members. The hon. Gentleman says that, instead of converting permanent into terminable annuities, and making arrangements of that description, it would be much better that you should allow the money to fructify in the pockets of the people, or use it for carrying out measures, like the French Treaty, and the other measures which have so distinguished the career of the right hon. Gentleman (Mr. Gladstone), for which he will always be remembered with gratitude by the country. I agree that the French Treaty was a measure of which any man who had the conduct of it might well be proud. Although there were disputes about its details, I believe as to the policy of that measure there was no question in this House. But the right hon. Gentleman himself, I am sure, would be the first to admit that he would not then have succeeded in carrying out that policy but for the fortunate circumstance that terminable annuities of a large character at that time fell in [Mr. GLADSTONE: Hear, hear!], and that he would have had to confine himself to more limited action but for that happy occurrence. Therefore when the hon. Member tells us that we ought to prefer operations like those connected with the French Treaty to Bills like the present, I cannot help reminding him that it was a policy of prudence like this which mainly assisted the right hon. Gentleman in the important measures then adopted. But if only six or seven years ago this happened, when, by the falling in of the long annuities, this important result was attained, ought we not to be grateful to those who preceded us when, in this very year, another great terminable annuity falls in, and we are enabled to consider our position under such advantages as we now enjoy? I think therefore these remarks as to the indifference we should feel for posterity and the little regard we should have for the interests of those who will follow us ought not be sanctioned or encouraged in this House. It is possible that by the Bill now under discussion we shall be preparing the way for great results in the lives of many now sitting here. I may not witness it. But I believe there are many Members in this House who, when the time comes, will acknowledge the prudence, the providence, and the patriotism of their predecessors in passing this Bill. Looking at this policy as regards its influence on our general finance shown in the contribution it has made towards the reduction of the interest on our Debt, or as regards the facilities it has offered in respect to some of the most important commercial legislation of our time, I think those observations of the hon. Member cannot be sustained, and were hardly compensated for by the extremely entertaining ingenuity of the rest of his speech. I turn now to the remarks of the hon. Member (Mr. Aytoun). Having a tolerable recollection of the nature of the Bill, but not having a copy of it before me at the time he was speaking, the description which he gave of it caused me to send for a copy, thinking that I might be under the influence of a dream. The hon. Member appears to have been answering a speech made by the right hon. Gentleman (Mr. Gladstone) last year, and not commenting, as he said he was doing, on the present I Bill. I understood from the hon. Gentleman that there was not the slightest provision in the present Bill for cancelling the Debt, that there was only a creation of annuities which were merely of a colourable character, and that we had no security whatever that any real business of any kind was to be done. The hon. Member (Mr. I Gorst), though he did not say anything quite so strong, stated, nevertheless, that there were really no documents in existence; that it appeared to be a case of moonshine; that it would be much better that we should at once agree to contribute £1,000,000 more a year for the reduction of the Debt; and that our proposal was, in fact, something like an unnecessary annual expenditure of about £1,000,000. I can assure the hon. Gentleman he is under a great mistake; and if he reads the Bill he will find it out. The moment the Bill passes, £24,000,000 of the Debt are cancelled as completely as if they were paid off in sovereigns, and the terminable annuity is a real annuity. We in this country find a great convenience at present in dealing with terminable annuities. If we find a public market for selling terminable annuities, we have a right to sell them in that market. Therefore, I cannot understand what the hon. Gentleman meant by saying that what we proposed was an arrangement by which a certain sum must be paid as security upon £24,000,000, a portion of the Debt which he said was not cancelled. As I have said before, the £24,000,000 are cancelled entirely as a Debt the moment this Bill is passed, and the terminable annuity which is given is the possible security the Government as a matter of convenience has to deal with if there be a demand in the market. I wish just to recall to the attention of the House, in illustration of the course we follow in pursuance of the policy which has hitherto prevailed, what has occurred in a brief but significant space of time. The right hon. Gentleman (Mr. Gladstone) drew attention to some statistics which dated from a comparatively remote period—I believe the year 1825. What I wish to do is to remind the House of the state of affairs since the Crimean War. Since that period we have reduced our Debt to very little more than the sum at which it stood before the great expenditure arising from that event occurred, when it amounted to £802,000,000. During the same period about £3,000,000 of terminable annuities have expired, and we have created only about half that amount, so that there is a diminution since the Crimean War of about £1,500,000 annually of the charge for terminable annuities. It was therefore quite clear that if we considered the policy right which had been pursued for an unbroken period of half a century, of converting a certain amount of our permanent debt into terminable debt, that we had arrived at a time when—a considerable annuity falling in and a reduction in the charge for terminable annuities to the amount of £1,500,000 having occurred within the space of ten years—we should resolve to pursue that policy. The question which the House have to decide to-night is, whether they believe that the policy hitherto pursued as to the conversion of a portion of our Debt into terminable debt is a right policy; because, no doubt, if they refuse this Bill, they give the death-stroke to this policy. We shall then have reduced the amount of our terminable annuities to a very small figure, and no Minister for the future will attempt to pursue a policy which comes down to us sanctioned by the approval of the most practical men that ever flourished in this country. With regard to the expression of Lord Sydenham, quoted by the hon. Member (Mr. Laing), I remember the night it was used, and his using it. But, far from Sir Robert Peel sanctioning the policy associated with that expression, he commented that night, if I recollect rightly, with some severity and great fulness upon it, and he at all times pursued a policy very different from that which the hon. Member attributed to him. But do not think that Mr. Poulett Thomson, afterwards Lord Sydenham, an excellent political economist and a practical man, ever disapproved the system of—not perpetually, but—occasionally and temperately converting our permanent into terminable debt. The observation which has been quoted was made, and no doubt the hon. Member put the best colour he could upon it. No one contends that the whole amount or even the greater part of a surplus is, as a general rule, to be applied to operations of this kind. One would think from the manner of the hon. Member that I had proposed to devote £10,000,000 a year to pay off the National Debt. I have no scheme of the kind. I do not approach the subject with a view to any question as to the exhaustion of our coal. My intellect is not equal to questions of that magnitude. I do not propose to pay off the National Debt. What I propose is to pursue a policy which the most eminent men connected with our finance have always approved — namely, that there should be a continuous but moderate action upon our Debt in the shape of terminable annuities. After the remarks of the right hon. Gentleman (Mr. Gladstone) I will not attempt to show the House the difference between a sinking fund—which I disapprove—and the plan of terminable annuities. I think the argument of the right hon. Gentleman completely conclusive upon that point. But I may presume to give the House a practical illustration, because there is nothing like a practical illustration, nothing which comes more home to people, and is in itself so unanswerable. The difference between a sinking fund and a terminable annuity cannot be better shown than by comparing the fate of the last sinking fund proposed by the right hon. Gentleman, which in the first year of pressure disappeared in my hands, and the fate of the terminable annuity which has fallen in this year, which has, notwithstanding all our difficulties, lasted forty years, and has at last fulfilled its destiny and benefited this generation. If you want still further instances, look to the case of the long annuities. You have had many sinking funds. At the peace of 1815 you had all sorts of schemes of the kind. Look at the plans sanctioned by Mr. Vansittart, and others. They are all forgotten; but the terminable annuities have fulfilled their destiny, and we have more than once derived benefit from them. I think, therefore, that the only way in which you can manage to regulate your Debt is by favouring as much as possible its conversion into terminable annuities. Under these circumstances, I trust the House will support the policy which Her Majesty's Government have recommended to their consideration. I have only one more remark to make before I sit down, and that shall be addressed to my hon. Friends the Members connected with counties in which barley is grown. They have been told by the hon. Member (Mr. Sheridan) that by supporting this Bill they are putting an end to a surplus which, if otherwise applied, might to a certain extent be applied to a reduction of the malt tax. The warning appeared to make some impression upon them, though, with remarkable consistency, the hon. Member accompanied his warning by an appeal that the surplus should be expended upon the remission of the fire insurance duty. If it be devoted to fire insurance it cannot be applied to the abolition or reduction of the malt duty. The fault in the statement of the hon. Member is this—he assumed that by converting the surplus of the present year into terminable annuities we were prevented from applying any future surplus to that remission of duties which is desired. There is nothing, however, in this arrangement to prevent the accruing of future surpluses, or to preclude the House from considering how those surpluses should be applied. Under these circumstances, those who are interested in the remission of the malt tax will not imagine that their object will be accelerated or expedited by removing the duty on fire insurance. Let me make a single remark upon the observations of my hon. Friend (Mr. Hubbard) on the impracticability of selling terminable annuities in the public market. It is from accidents that to a certain degree those sales are difficult and disadvantageous. But it surely is a recommenda- tion of the present proposal that it is totally independent of those accidents. Instead of being open to the objection that the machinery prescribed by the right hon. Gentleman is of a mystical character, and difficult of comprehension, it appears to me to be singularly plain and perspicuous. The House were probably not sufficiently aware before the right hon. Gentleman took up the subject, that, as the bankers of the nation, they have great advantages of which they should avail themselves. This, Sir, is the real state of the case. We have brought the proposal forward not for the reasons which have been freely attributed to us, but because when there was a very considerable amount of terminable annuities falling in it was our duty to consider the course we ought to pursue, and we determined to follow that course which the most eminent of our predecessors had for some time pursued, and which had, we believed, been most advantageous to the country.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes 162; Noes 38: Majority 124.

Main Question put, and agreed to.

Bill read a second time, and committed for Monday next.

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