HC Deb 07 March 1871 vol 204 cc1534-58
MR. CANDLISH

rose to call attention to our National Debt, and to move a Resolution— That, in the opinion of this House, it is expedient to make early provision in the Estimates for reducing the Debt not less than £10,000,000 a-year. It was, he considered, a solemn obligation of the country to get rid of the National Debt. On a former occasion the hon. Member for Knaresborough (Mr. Illingworth) said that as long as money could be borrowed by the State at 3¼ per cent, and employed at 5 per cent, it would be an improvident arrangement to pay off the National Debt. Of that statement he disputed the accuracy. Real property, of which half of the wealth of the country consisted, did not pay, on the average, more than 3 per cent; and railways, in which about £500,000,000 were invested, only yielded an average rate of interest of about 4 per cent. Taxes, again, were not ordinarily paid with money borrowed for the purpose. On all grounds, therefore, he demurred to the statement of the hon. Member for Knaresborough. Another favourite theory was that the National Debt afforded a secure investment to persons unwilling or unsuited to invest money in business avocations. Probably the whole number of our public creditors did not exceed 150,000; but, surely, it would not be said that their wishes and convenience were to be considered at the expense of the 30,000,000 forming the population of this country? It was but reasonable to deal with the National Debt in precisely the same way one would with private property—namely, discharge it from any incumbrance as soon as the means of doing so came within reach. The Chancellor of the Exchequer, in a speech delivered last year, admitted most distinctly that it was our duty to keep an eye on the National Debt and to go on reducing it. Accordingly, the right hon. Gentleman concurred in the following Resolution, which was adopted by the House on the Motion of the hon. Member for Buckinghamshire (Mr. Lambert):— That, in the opinion of this House, it is desirable substantially and gradually to reduce the National Debt. As, however, the engagement then entered into by the House and the Government was indefinite, and might result in nothing, he (Mr. Candlish) had ventured to bring the subject once more under the notice of Parliament. During the last 40 years they had literally done nothing in the way of paying off the Debt. On the accession of William IV., in 1830, it amounted to £784,000,000; on the accession of the Queen in 1837 it had increased to £787,000,000, and at the present time it stood at £801,000,000. Between 1832 and 1868 the Debt had seemingly increased by £27,000,000, though he believed there was not an actual increase, because, prior to 1855, the Government made no appraisement of the capital value of Terminable Annuities, and their value, therefore, did not enter into the account of our National Debt. If these were taken into account, he thought it would be found that the Debt had remained substantially the same. In 1855 the present head of the Government took a more rational view of the manner in which the Terminable Annuities should be dealt with, and appraised them, adding the capital value to the Funded and Unfunded Debt. That course had been pursued since, and they were now included in the present Debt of £801,000,000. It seemed a matter of great regret that a reign so illustrious for legislative and fiscal achievements should have been barren of any effort to pay off the National Debt. It was perfectly true that the Debt had had its ups and downs during that period; but it was in the last degree deplorable that such petty incidents as the expedition to Persia, China, and Abyssinia should have arrested the purpose of the nation to pay off that heavy national obligation. It might be asked—"Can the Debt be paid?" Of course, there was no obligation unless there was the power. But we had the power. We had utterly lost sight of the vastly-increased wealth of the country by means of which the Debt might be reduced. We had, indeed, displayed so much apathy on the subject, that we might seem gradually to have acquiesced in the notion that it could not be done. To pay off of the Debt had become a standing type of the impossible. But what had our fathers done? Surely, in energy, and effort, and self-denial, we were still their equals. Now, between 1815 and 1820, our fathers paid for interest £31,500,000, and as principal £5,100,000—making a total of £36,600,000 per annum. Between 1820 and 1830 the average annual payment was £29,440,000 as interest, and £4,300,000 as principal—making a sum total of £33,740,000 per annum. Yet in 1870 we only paid for interest and on account of Terminable Annuities £27,000,000, and as principal £4,000,000—or a total of £31,000,000 a-year. Now, while we had been thus diminishing our payments on account of this Debt, the population of the country had been increasing. Our population was 18,000,000 in 1811, 21,000,000 in 1821, 24,000,000 in 1831, 27,000,000 in 1841, 29,000,000 in 1861, and last year it was estimated at 30,830,000. He was aware that it might be said that increase of population did not necessarily mean increase of wealth. But during all this period the wealth of the nation had likewise gone on increasing. According to the estimates made by Professor Levi, an eminent authority well known to the House, the wealth of the country in 1811 was £2,100,000,000, or £116 per head of the population; in 1841, £4,000,000,000, or £150 per head; in 1861, £6,000,000,000, or £206 per head; and in 1870, it had advanced to £7,000,000,000, or £230 per head, and those calculations were substantially confirmed by Mr. Dudley Baxter. With that increase of capital we had become relatively to our Debt richer—it had become less relatively to our means. In 1801 the Debt was 26 per cent of our capital; in 1841 it was 19 per cent; in 1861 it was down to 13½ per cent; in 1870 it had fallen to 11 per cent. Relatively to the population our Debt in 1821 was £39 10s. per head; in 1831 it was £32 10s. per head, and last year it was only £25 10s. per head. As our property had increased so also our annual income had increased. In 1801 our annual income was estimated at £230,000,000, or £14 7s. per head; in 1841 it was £450,000,000, or £17 6s. per head; in 1861 it was £600,000,000, or £20 15s. per head; and in 1870 it was reckoned at upwards of £700,000,000, or £23 per head. Our total income for one year was now nearly equal to the whole capital of our National Debt. Our growing wealth, too, had been evidenced by our improved living. As we have got richer we have lived in a better style. In 1820 we consumed 17lbs. of sugar per head, and in 1869 it rose to 43lbs.; in 1820 we consumed 1lb 4oz. of tea per head, and in 1869 it rose to 3lb. 10oz.; in 1820 the consumption of tobacco was 12oz. per head, and in 1869 it rose to 20oz. per head; in 1820 the consumption of wine was a quarter of a gallon per head, and in 1869 it was three-fifths of a gallon. In 1821 we paid 29s. per head for interest; in 1831 23s. per head; and in 1870 we paid only 17s. 6d. per head. Whilst the interest on the Debt had been diminishing, and our means increasing, the general taxation of the country had been reduced. From 1811 to 1821 it was £3 14s. per head, and in 1870 it was £2 5s. per head; but in point of fact it was now under £2 per head. In 1801 we paid 8¾ per cent of our income for interest; in 1840 we paid 6½ per cent, and in 1870 a little over 3.8 per cent. Five per cent of our income, or 1½ per cent less than we paid for interest alone in 1841, would realize a sum of £35,000,000 a-year—a sum sufficient to pay the present, and extinguish the entire Debt in less than 40 years. Comparing ourselves with our ancestors, it was clear that our ability to pay off these burdens had greatly increased, and at the same time we had been diminishing our contributions. And let us, for a moment, compare ourselves with two other countries—the one the great Republic of the West, and the other a small kingdom in the East. The United States and Denmark furnished illustrations of what might be done in reducing National Debt. Since September, 1865, in the United States, a sum of $437,000,000 had been paid off, being at the rate of £16,000,000 sterling per annum. In the year ending the 1st of March last £23,000,000 sterling were paid off. In connection with that fact it was important to inquire what were the relative means of the two countries. From the Report of the Special Commissioners for Revenue in the United States in 1870, it appeared that the wealth of that country was estimated at £4,700,000,000, or £120 per head of the population, whilst ours was estimated at £7,000,000,000, or £230 per head; being very nearly double that of the United States. Were we less capable than the United States of sacrifice and self-denial, or were we not so high principled in reference to our obligations? If we had made the same sacrifices as the United States we should in the past 5½ years have paid off about £30,000,000 of Debt per annum, or a total of £165,000,000. Then one word respecting the little kingdom of Denmark. In 1867 the Debt of Denmark was £14,500,000, and in 1869 it was £13,200,000, having been reduced £1,300,000 within that short space of time, being at the rate of 7s. 6d. per head per annum of the population. If we had paid in the same proportion we should have paid off £11,500,000 per annum. When France entered into war with Germany, she had a Debt of £600,000,000 sterling; he presumed there was no exaggeration in assuming her Debt to be now £900,000,000 sterling, which would entail an annual payment of between £40,000,000 and £50,000,000 for interest alone. If France was capable of enduring such an amount of heavy taxation for the interest of her Debt it was not too much to expect the people of this country, who were certainly as rich as the people of France, to be able to pay £35,000,000 a-year for principal and interest. The Debt of Prussia when she began the war was £100,000,000 sterling: this had probably been increased by another £100,000,000. She would, however, receive £200,000,000 war indemnity from France during the next three years, which sum would extinguish the Debt of Prussia. Which European Power was now stimulating us to enhanced Estimates and increased armaments? It could not be France; and if there were any reason at all for our augmentations it must be appre- hension of Prussia—a country who had neither the desire nor the power to land a single soldier on our shores. But if it was otherwise, and we had to enter into a warlike conflict with Prussia, she, at the end of three years from the present time, would be free from Debt, whilst we should enter upon the strife with a Debt of £800,000,000. The question arose—How was the sum of £35,000,000 a-year to be raised? Many ingenious schemes had been suggested for paying off the National Debt. One of which was the reclamation of waste lands here and in the Colonies; another that the State should become its own banker; and another that it should withdraw all its gold circulation, and substitute for it an inconvertible paper currency: but all those schemes were as inadequate as they were ingenious. He knew of no other feasible scheme than the simple one of raising the money by the old-fashioned mode of taxation, and paying off the Debt in hard cash. But was it necessary to increase our taxation in order to do this? The right hon. Gentleman last year was able to put a very glowing Financial Statement before the country, and he at once both answered this question, and gave the key to the position which we then enjoyed in two short sentences. The right hon. Gentleman said— I need say nothing of the reductions in the estimated expenditure for the Army and Navy. They speak for themselves, and as the Committee will perceive, it is mainly to them that we owe the financial prosperity which I hope I am not too sanguine in saying now exists."—[3 Hansard, cc. 1613.] And the right hon. Gentleman added—"The secret of all this financial success is the simplest in the world—it is nothing on earth but economy." The prescription he (Mr. Candlish) would recommend was exactly the one adopted by the Government up to last year—that we should set ourselves to work rigidly to economize. But was there room for economy? A few figures would speedily show. From 1831 to 1840 the Army and Navy of this country cost, on an average, £13,400,000 a-year; from 1841 to 1850 these two services cost £15,800,000 a-year; and during the three years immediately preceding the Russian War, their cost united was only £16,000,000 a-year. But last year the Army cost £15,851,000, and the Navy £9,781,000, or together, £25,632,000; being an increase of £9,632,000 over the cost of the Army and Navy just previous to the Russian War. Within those two margins of cost in 1853 and 1871, the resting-place of efficiency combined with economy might, he believed, be found. Then, again, annuities, pensions, and compensations for the non-effective service amounted to no less than £5,300,000 a-year; and though that sum could not be reduced in hot haste by the mere exercise of the will, still there was room for a large, gradual, and early diminution in those enormous figures. A very considerable reduction might be made in these various items, in order to deal with the National Debt; but even if we had to increase our taxation to do it, that taxation, large as it was, was neither excessive nor onerous. The estimate of expenditure for the current year was £67,113,000, and that was generally accepted as the measure of the taxation imposed on the country; but the idea was very much exaggerated, for several of the items coming into this total amount did not spring from taxation. The whole of our Miscellaneous Estimates, amounting to £3,200,000, were not in the nature of taxation at all. There was, in these Miscellaneous Estimates, £1,000,000 for the sale of old stores from the naval and military Departments; £773,000 as a contribution from the revenues of India for military charges; £350,000 for extra receipts in the civil Departments; £21,000 derived from the London, Dublin, and Edinburgh Gazettes; and £594,000 from fees in public offices for specific services rendered. None of these items were derived from taxation. Then there was a sum of £4,650,000 obtained from the Post Office, and about £500,000 from the Woods and Forests, which, with other items, made a total amount of £8,675,000 to be deducted from this gross expenditure as the sum not contributed by taxation, and leaving a balance of only about £58,000,000 as the sum raised by taxation. But of that £58,000,000 at least £30,000,000 was the product of taxes on luxuries—spirits, malt, wine, and tobacco; the total receipts on these and other articles of luxury amounted to about £40,000,000, not a farthing of which could, be said, to press upon the industry of the country. We were not, therefore, so over-taxed as to be unable to deal with our formidable weight of Debt. If the Government would set itself to the work of retrenchment in the expenditure on the Army and Navy, and curtail the non-effective charges, he did not think it would be necessary to add anything whatever to the taxation of the country to reduce the National Debt. But if it was made to appear absolutely essential, he thought the country generally would acquiesce in the imposition of an extra 2d. of income tax for the purpose of achieving the great object he had in view. It would redound to the honour of the present household - suffrage Parliament if it took up and carried out the work commenced before the Reform Act, and abandoned by the middle-class Parliaments from 1833. A great advantage accruing from the payment of the National Debt would be that the vast capital its payment would set free would find employment in recruiting the industry of the country; but a yet greater good would be gained to the country by the moral strength resulting from the self-sacrifice necessary to attain so great an end. The hon. Gentleman concluded by moving the Resolution.

SIR JOHN LUBBOCK

seconded the Motion. He said, national indebtedness is one of the three great dangers which threaten Europe — namely, pauperism, war, and debt. Poor Laws, in many respects, appeal to our best sympathies against our better judgment. Military enthusiasm rouses some of our deepest passions against our calmer reason; while, as regards Debt, the love of present case stifles the voice of prudence and the sterner dictates of duty. Most European nations had immensely increased their Debts during the last 50 years. Thus, North Germany, in 1815, owed £100,000,000; in 1870, £150,000,000; France, in 1815, owed £70,000,000; in 1870, £518,000,000; Austria, in 1815, owed £99,000,000; in 1870, £300,000,000;Russia, in 1815, owed £80,000,000; in 1870, £300,000,000; Spain, in 1815, owed £100,000,000; in 1870, £225,000,000; Italy, in 1815, owed £50,000,000; in 1870, £257,000,000; and the United States, in 1815, owed £25,000,000; and in 1870, £477,000,000, making a total of £524,000,000 in 1815, and £2,227,000,000 in 1870; and if they included other countries the grand total, according to Mr. Dudley Baxter, was no less than £3,845,000,000 in 1870, against £1,530,000,000 in 1815, showing an increase of no less than £2,300,000,000, of which by far the greater part had been incurred during the last 20 years. Their own Debt, indeed, had, happily, not increased during the last half-century, but it was even now much heavier per head than that of any other country. Thus, in England the interest per head was 17s. 5d.; in the United States, 12s. 6d.; in Holland, 12s. 3d.; in Italy, 11s. 10d.; in France, 8s. 7d.; in Austria, 7s. 3d.; in Spain, 7s.; in Belgium, 6s. 10d.; in Russia, 2s. 10d.; and in North Germany, 2s. 9d. per head. Moreover, if they looked further back in England's history they found that the Debt had, on the whole, been increasing with terrible rapidity. In 1689 it was £664,000; in 1691, £3,130,000; in 1700, £9,407,000; in 1720, £54,000,000; in 1750, £77,000,000; in 1775, £127,000,000; in 1800, £471,000,000; and in 1815, £861,000,000, without including the value of the Terminable Annuities. From that date it began to decline. In 1825 it was £810,000,000; in 1830, £785,000,000; in 1840, £789,000,000; and in 1850 it was £787,000,000. In the Crimean War it rose, and in 1858 amounted to £805,000,000. The subsequent figures were not comparable with the preceding, because they contained the calculated value of the Terminable Annuities. The total Debt, then, in 1860, was £821,900,000; and in 1870, £800,700,000. Political enonomists had long urged the necessity of reducing Debt in times of peace. The practice of funding, said Adam Smith, in the Wealth of Nations, "has gradually enfeebled every State which has adopted it." David Hume, in his Essay on Public Credit, said, roundly, that if the nation does not destroy the Debt, the Debt will destroy the nation. More recent writers, as, for instance, Mr. Dudley Baxter and Mr. De Meschin, have taken the same view. Sir George Lewis expressed his conviction that— It is certainly incumbent upon Parliament to take such means as are at its disposal to prevent us from imposing a perpetual burden upon our successors. The present First Lord of the Treasury, during the Crimean War, made a noble effort to meet the expenses of the war out of the services of the year. Speaking of the National Debt, in. 1854, he said, in eloquent terms— Any man who has had to do with the administration of the finances of the country must feel how many sore evils it hag given rise to—how many grievous burdens you are compelled to keep upon the people, because of the demands of the enormous, almost overpowering, maw of our Debt; how many good works you are obliged to defer, or, if commenced, brought to a stand; how you are obliged to narrow and pare; and cut down the assistance you are desirous of offering to civilized and honest pursuits, because of the immense and crushing weight of this great, permanent, and standing Debt."—[8 Hansard, cxxx. 373.] The present Chancellor of the Exchequer had more than once spoken in similar terms; and no wonder. The average interest on the Debt since 1815 had been £30,000,000, in round numbers, making a total of £1,600,000,000 paid since that date for interest alone. In 30 years they would again have paid an amount equal to the whole Debt; and yet, as far as such payments were concerned, they would still owe as much as ever. In fact, not paying the Debt practically meant paying it over and over again. But it was said that if the money which would be required to reduce the National Debt was left to fructify in the pockets of the people, they would make a better use of it, because it would then be applied to increase the national wealth. This argument, if good for anything, is good against any reduction of Debt. But it is obvious that, as it has always been found necessary to borrow in times of war, if we do not repay in times of peace, we shall go on increasing our Debt until it crushes us, and national ruin would be only a question of time. Moreover, it must be remembered that taxes were paid out of income, and that the savings of the people were only a fraction of their income. It was estimated in 1866 that out of an income of £650,000,000 a-year the saving was only £140,000,000. But it was urged that the National Debt was mainly borrowed in Three per Cent Stock, and that individuals can get more than 3 per cent for their money. Three per Cents at 90, however, paid 3⅓, and to that must be added the expense of collecting the sum required for the dividends. The total Revenue last year was £68,850,000, and the expense of collection was £5,000,000. If, then, it cost £5,000,000 to collect £69,000,000, the expense of collecting the £27,000,000 required to pay the interest on the National Debt would be £2,000,000; and, consequently, the real annual cost of the National Debt was £29,000,000, and not £27,000,000. It was unnecessary to observe that even this did not fairly represent the cost to the taxpayer, which, even under the best system, was greater than the gross sum received by the State. Without, however, dwelling on this, it was obvious that the real cost of the National Debt was not 3 per cent, but more than 3½ per cent. Now, hon. Members knew that for the last three years the rate of discount on mercantile bills had averaged less than this; depositors in private and joint-stock banks received on an average less. The capital invested in railways, and which amounted to £233,000,000, receives, on an average, barely 3 per cent; and how about land? He should like to ask hon. Gentlemen opposite whether land, after deducting all the local charges, of which the House heard so much a few nights ago, paid a clear 3½ per cent? If this last argument, then, against the repayment of the National Debt broke down—if the arguments in favour of doing so were so strong—then came the practical question—what course ought they to pursue? He need hardly say that he was not going to advocate a sinking fund. No doubt money when allowed to accumulate at compound interest did increase with surprising rapidity. Many proposals to take advantage of this had been made from time to time; and perhaps the most extravagant ever seriously contemplated was that of a Frenchman, M. Ricard, who left 500 livres by will, 100 to accumulate for 100 years, and then to be spent on essays on the lawfulness of interest; 100 to accumulate for 200 years, to form a fund to reward virtue and literary merit; 100 for 300 years, when it could have increased to 226,000,000, to found banks and museums; 100 for 400 years, when it would have amounted to 30,000,000,000, to build 100 towns in France, each with 150,000 inhabitants; 100 for 500 years, when it would have reached four millions of millions, and was to be devoted to various miscellaneous objects—namely, to abolish fees for masses; increase revenues of clergy; maintain all French children till three years of age; found workhouses, hospitals, and asylums; and pay off the National Debts of England and France; and, lastly, the surplus was to be spent at the discretion of his executors. A sinking fund was, indeed, proposed now by no one. But neither was our present system satisfactory. We were slightly diminishing our Debt in two ways—by accidental surpluses and by Terminable Annuities. Of the first he need say nothing; but the latter—that was to say, Terminable Annuities—seemed to him to contain many of the objectionable features of a sinking fund. He objected to them on five grounds—1. They must be continued during war, even if we are borrowing at higher rates;2. They tie up the hands of Parliament;3. They are inconvenient to holders, and consequently are an expensive mode of borrowing; but this objection does not, of course, apply to those held by the Government on account of savings banks, &c.4. They assume that the people have not energy or resolution enough to look the Debt boldly in the face; 5. They diminish greatly the moral effect of a reduction of the Debt. Apart from the mode of dealing with the Debt, he maintained that we were not doing enough to reduce it. Taking the most favourable period, we had, since 1857, paid off £35,000,000, being at the rate of considerably less than £3,000,000 a-year. His hon. Friend (Mr. Candlish) had shown how much more had been done by some other countries. To the cases quoted by him he would only add that of Holland, which, from 1850 to 1868, reduced its Debt by £22,000,000, or at the rate of £1,220,000 a-year—equivalent to £10,000,000 in our case. His hon. Friend proposed that we should set aside £10,000,000 a-year to the reduction of our Debt. Now, was that an unreasonable proposition? Adam Smith, writing when the national income was £10,000,000 and our population only one-third of what it was now, proposed to raise the revenue to £15,250,000, and to devote £6,250,000, or much more than one-third of the whole amount, towards the reduction of the Debt. Sir George Lewis, in 1855, thought that £5,000,000 a-year was "little" to devote to that purpose. The right hon. Gentleman the present Chancellor of the Exchequer himself said— As far as I am concerned I should be very glad if the House would consent to put on a shilling income tax for the reduction of the Debt. A shilling income tax would produce far more than £10,000,000. That was what the right hon. Gentleman considered ought to be done. But what had been done? Last year he had a surplus of £4,337,000. Yet he only proposed to devote £337,000 to the reduction of the Debt, and of this paltry amount he postponed £147,000 to the present year. He (Sir John Lubbock) did not deny that the reduction of the sugar duties was a good thing in itself. A free breakfast table would be a great boon; but his idea of a free breakfast table was the table of a man who was not in debt. Cheap tea and cheap coffee were very desirable, but tea which was not paid for was dear at any price. Moreover, he scarcely thought that our Chancellors of the Exchequer realized the inconvenience of continual changes in rates of duty. Great changes, such as those associated with the name of the present Prime Minister, might be great blessings; but constant changes were very injurious to trade. For weeks before a Budget speech we knew in the City that business was deranged, commerce checked, and speculation encouraged. He wished that for some years our Chancellors of the Exchequer would try how little, instead of how much, they could alter. Moreover, he maintained that we had now a favourable opportunity of reducing the Debt. From 1855 to 1869 not less than £23,000,000 of annual taxes had been repealed, and yet we had a surplus amounting to more than £4,000,000, and continually increasing. Under these circumstances, he ventured to urge on the House that the liquidation of Debt was a national duty and a high moral discipline; that it would be an example to other nations, and would influence the action of individuals. If the nation was indifferent to its Debt, how could we expect that private persons would exercise an exceptional prudence? The course he recommended would also greatly strengthen the country in the eyes of foreign nations, and he did not think the sum proposed by his hon. Friend (Mr. Candlish) was excessive. If adopted, the advantage would be soon felt; in three years we should have relieved the country of a permanent burden of £1,000,000 a-year, and many of us might hope to see the Debt reduced within comparatively narrow limits. The Government had a large majority, and in his judgment deserved their support; but there was a feeling in the country that in some respects they were too humble—that they underrated the power of the country. England was conscious of strength, and, though not anxious to be feared, was determined to be respected, or, at least, to deserve respect. Now, as regarded the National Debt, he had, he thought, shown that, in the opinion of our greatest political economists—nay, in that of the Government itself—the Debt ought to be reduced, that we had the means of doing so, and that the amount proposed by his hon. Friend was not excessive. If it was to be maintained that the reduction of Debt was inexpedient, let us consider the arguments on which this opinion was based; but it was evident that, on the contrary, it was admitted by all competent authorities that the Debt ought to be reduced; then let us not trifle with this duty—let us not be satisfied with paltry amounts and accidental surpluses, but let us at once make such an effort as might be necessary to effect our object, and let us do so on a scale worthy of a great, a wealthy, and a prudent people.

Motion made, and Question proposed, That, in the opinion of this House, it is expedient to make early provision in the Estimates for reducing the debt not less than £10,000,000 a-year."—(Mr. Candlish.)

MR. J. WHITE

was quite sure that if the Chancellor of the Exchequer adopted the advice of the hon. Member for Sunderland (Mr. Candlish), or that so feelingly addressed to him by the hon. Baronet the Member for Maidstone (Sir John Lubbock), he would soon lose the majority he had at his back. He demurred entirely to the comparison which the hon. Member for Sunderland had made of the debt of the nation with the debt of a private individual. The difference between the two cases was this—a private individual was bound to pay the amount of his debt some time or other; the nation, on the contrary, only granted an annuity, it might be a perpetual annuity. If the nation, in its present condition, were to pay off the Debt that was now owing, it would be somewhat in the position of a gentleman who possessed a large landed estate that was heavily encumbered, and had a large number of children to provide for, and yet allowed those children to starve, in order that he might be able to pay off his debts. That was our position. One in 20 of our population was a pauper, and how many millions were there just on the confines of pauperism? Recollect that a vast and disproportionate amount of our Revenue was extracted from the poorer classes. The total Revenue now derived from tea, sugar, coffee, spirits, malt and tobacco was £38,300,000, or £11,500,000 more than the whole amount required to pay the interest of the National Debt. The Chancellor of the Exchequer had very wisely begun the removal of the obstructions that were in the way of trade by making an important reduction in some of the taxes on locomotion. That right hon. Gentleman knew very well that taxes on locomotion were taxes on the products of the country. When we had a very formidable competition with neighbouring States in many articles of export, it was the bounden duty of the Government to do all they possibly could to reduce the cost of living and the prime cost of production. Owing to the natural increase of our population, the normal accumulation of our wealth, and the inevitable diminution in the purchasing power or value of gold, our National Debt every succeeding year must press less and less hardly upon the people of this country. Indeed, his hon. Friend (Mr. Candlish) had made a speech which entirely confirmed that view, and the statistics he cited must thoroughly convince the House that his Motion ought not to be adopted. His hon. Friend told the House that in 1811 the amount of the National Debt was estimated at 26 per cent of the aggregate value of the property of the country, and now, in the course of a few years, it was computed to be only 11 per cent. If we did not diminish our Debt, and did not embark in any war, under the process now going on, this national burden might, he (Mr. White) thought, be reduced at the end of this century to 5 per cent of the aggregate value of the whole property of the country. His hon. Friend had spoken of sugar, tea, and coffee as luxuries, but they had become actual necessaries of life, and any Government which would abolish the duties on them would be entitled to the highest praise. He had risen to address the House merely in consequence of the transparent fallacy of the hon. Member for Sunder- land, and to point out to the Government that they would have very few supporters if they followed the advice of the hon. Gentleman. If the Chancellor of the Exchequer were to turn his acute mind to see how our fiscal system might yet be so modified as to afford greater facilities for the development of the commerce and industry of the country, he would be richly rewarded not only by the magnificent results, but by the gratitude which he would earn from the people.

MR ALDERMAN W. LAWRENCE

said, the words of the hon. Gentleman who had just spoken (Mr. J. White) seemed to imply that taxation must be removed from everything before we could apply ourselves to the payment of the National Debt. When the question was discussed last Session, the Chancellor of the Exchequer accepted the proposition that the Debt ought to be substantially reduced. The advantages that would follow from the reduction of the Debt had not been fully appreciated. When we saw what was being done across the Atlantic, how the United States were reducing their Debt at the rate of £20,000,000 per annum, the question of reducing our own Debt could not fail to repeatedly occur to our minds. In 1855 our funded Debt and Terminable Annuities amounted to £805,411,000, in 1870 they amounted to £800,681,000—so that in 15 years we had reduced these branches of the Debt by less than £4,800,000—a very poor result for a great country like this. He was not prepared to advocate an additional income tax for the purpose of paying off the Debt, nor ought any special tax or any special kind of property be selected to bear the burden—it would be most unfair to call upon any one interest only to contribute to this object; but he should be glad to see provision made in each Budget for paying off some portion of the Debt in an open, straightforward manner. What he would like to see was this—every year, when the Chancellor of the Exchequer brought forward his Budget, he would be able to mention that a certain amount had been devoted to paying off the Debt, besides what was now required by Act of Parliament. Under the Act, each quarter it was the duty of the Commissioners for the Reduction of the National Debt to add up the sums of receipt and expenditure, deduct the latter from the former, and apply one-fourth of the balance to the extinction of the Debt. But Chancellors of the Exchequers had rather evaded the Act, and the Commissioners for the Reduction of the National Debt had not always devoted one-fourth of their surplus to the prescribed purpose. No doubt the Chancellor of the Exchequer thought he might use the money in a more profitable manner, and, perhaps, the right hon. Gentleman could explain to the House how he had kept within the Act of Parliament. Not possessing the acumen of the right hon. Gentleman, he confessed he did not see how it was done. It seemed to be assumed that 3 per cent should be the minimum rate of interest in this country, and in this way the National Debt was in one sense a protection to the capital of the country—it prevented interest from being less than 3 per cent, because any man could obtain that interest for his money by placing it in the Three per Cents. But was the labour of the country protected in any shape on that account? There was no minimum price of labour. But if the Chancellor of the Exchequer were to apply £3,000,000 a-year to the reduction of the Debt; if the Government broker were 300 days in every year to purchase £10,000 worth of stock, what an effect it would have on the securities of the country. The exchangeable value of railway stock and all our various securities would rise to the great advantage of the community. But if, according to the hon. Member for Brighton (Mr. White), the National Debt was so good a thing, why not increase it? Notwithstanding its great advantages, however, according to the hon. Gentleman himself, every man in 20 was a pauper, and in this metropolis we had 150,000 or 160,000 paupers. While wealth, therefore, was increasing at one end, poverty was increasing at the other. In order to decrease that pauperism it was, he maintained, essential that some portion of the taxation of the country should be expended in reducing the Debt which would have the effect of fostering its industry. It was contended by some hon. Gentlemen that the National Debt was a benefit, because the country was bound over in a vast sum of money to keep the peace. He feared that the subject of the reduction of the Debt must come many and many a time before the House before any impression would be made upon the amount of the Debt. But he trusted the right hon. Gentleman the Chancellor of the Exchequer would begin the custom of providing in the annual Budget a sum to be applied to the reduction of the Debt; although he did not desire to see the income tax increased for that purpose.

MR. ILLINGWORTH

held that the present time was inopportune for proceeding with the reduction of the Debt, as the question of the incidence of taxation, showing on whose shoulders the burden of taxation should lie, was still unsettled. Both the Mover and Seconder of the Resolution had referred to the case of America; but it should be remembered that there was this peculiarity in the case of the United States—that its public Debt had been incurred by the existing generation for war purposes, and that it was but right they should recognize the moral obligation to pay it. Happily that obligation did not lie upon us, for it had been incurred two generations back. The hon. Member for Sunderland, in moving the Resolution, had also adverted to the fact that the wealth of this country was pro rata much larger than that of America; but he (Mr. Illingworth) wished that the hon. Gentleman had entered into the question whether the amount of poverty in England did not exceed that of the United States—whether, in fact, there was not among our population ten times the extent of pauperism; for it was clear that those who were in the position of paupers, and immediately above it, must be exonerated from bearing any charge for the purpose of liquidating the public Debt. He objected, he might add, to the analogy which had been drawn between public and private debt. In the case of the National Debt there was no obligation to pay the principal—it was a question of national expediency whether that should be done or not—while in the case of an individual it was a matter of the clearest prudence to pay the sum in which he happened to be indebted as soon as possible, for otherwise the claim for its liquidation might come upon him at a most inconvenient moment. Circumstanced as we were, it was, he maintained, incumbent upon us to remove the restrictions which pressed on the shoulders of industry, and to impose the taxation of the country more generally upon its realized property. For these reasons it would, in his opinion, be inexpedient to take at the present moment steps to discharge the National Debt in the manner proposed.

MR. LIDDELL

thought there was scarcely any feature in our national life so remarkable as the torpor which seemed to pervade the mind of the country with respect to the discharge of our national obligations. He thought it, therefore, incumbent upon Members of this House—and especially those representing large and wealthy communities—to express boldly their opinions with respect to it. He was quite aware that many of the most sagacious thinkers in this country inclined to the opinion that it was a wiser policy to relieve its industry by lightening the burden of taxation than to make sacrifices by imposing or retaining taxes for the extinction of the Debt. But he would venture to ask, with the greatest possible deference, was there no limit to this policy? This policy had been going on now ever since Sir Robert Peel so successfully carried the repeal of the corn laws. Sir Robert Peel's policy was directed to free the commerce of this country from restrictions. He succeeded; and the result had shown the sagacity and foresight of the great statesman. The right hon. Gentleman who now presided over the destinies of this country, following in his steps, and working out his great scheme, set his mind to work to relieve labour; and, though a political opponent of the right hon. Gentleman, he (Mr. Liddell) congratulated him upon the result. But we had been engaged in relieving commerce and labour from the weight of the restrictions imposed upon them by taxation for years, and he should wish to learn, from some high financial authority, whether there were any taxes which were now hampering the productive power of the country? He did not believe that there were; and he was, therefore, of opinion that the time had come when some greater effort should be made to relieve the nation from the great obligation under which she laboured. And when was that Golden Age of financial prosperity to arrive when we should be enabled to relieve—or, at any rate, to diminish — the burden of our Debt? He was afraid that, like the Golden Age of Literature, it had come and gone. Twelve months ago the Chancellor of the Exchequer held a position which he was afraid they would have to wait some time before seeing again. Then he had a magnificent surplus, and he reduced the income tax by £1,250,000, and took off half the sugar duties amounting to £2,350,000 more, and of which nobody complained, thus throwing away, in his opinion, a great opportunity; because, if he had retained these taxes, he might have made a considerable impression on the National Debt in a very few years. A good deal had been said in the course of the discussion of what had been done by America to reduce the charge which she had incurred in the late war, and he admired her efforts in that direction. But if America, with her restrictive tariff could pay £16,000,000 or £17,000,000 a-year, in how much better a position ought not we to be who were subjected to no such incubus? He did not wish that taxes should be imposed for this purpose, but only that when there was a surplus, it should not be applied to remitting taxes which did not hamper the industry of the people. They had heard much of the loss of the prestige of England—in language which he believed to be very much exaggerated; but it would be curious to trace how far the influence of England abroad was lessened by the existence of this Debt, and the absence of any commensurate effort to reduce it. Foreign statesmen might say—"England is a noble country, and we have no wish to quarrel with her; but we intend to vie with her commerce, and for that purpose a seaboard is necessary. We do not mean to be very scrupulous how we get one. We shall listen to no remonstrances from England, because she is hampered by the dead weight of £26,000,000 a-year of interest on Debt, and will not therefore go to war." It had been said that the Debt prevented us from engaging in war; and, if so, that was the best argument he had heard in its favour. The fact, however, was we had slumbered under our Debt, and had not made the patriotic efforts to reduce it which had been made by other nations. Successive surpluses, when they accrued, had been frittered away in remitting taxes which did not press upon the national industry. If hon. Gentlemen opposite, who were sometimes fond of agitation, would agitate for the payment of the Debt, he believed they would find a response from the working classes, for it interfered with their social comforts, by enhancing the cost of many articles of almost prime necessity, and thereby lessened the real value of their labour in the markets of the world.

MR. T. E. SMITH

said, he thought it would be difficult to convince the working classes that they would be benefited by paying every year, not only the interest of the Debt, but a considerable portion of the capital. He was confident that the Chancellor of the Exchequer would not propose the reduction of the Debt without fully considering the circumstance of the time when it was proposed to do so; and would consider whether we had sufficient money which we could not employ in a preferable manner, and whether our position in a future emergency would be injured by the largeness of the Debt. He denied that the Debt, large as it was, affected the credit of the country; on the contrary, we were in a much better position to bear the burden than we formerly were. Our annual income had increased so enormously that the public creditor had now three times the security that he formerly had, and if the country had to borrow any large sum he was sure that it would be obtained with greater facility than at any former time. For instance, the Chancellor of the Exchequer would have no difficulty in raising the debt to £1,000,000,000, if he could show that he had a good investment for the additional money—such as the purchase of the railways for the State.

THE CHANCELLOR OF THE EXCHEQUER

I have listened with much interest, and I hope with much instruction, to the debate; and I must say that, in a great deal that has been said, I cordially concur. If I ventured to criticize the speech of the hon. Member for Sunderland (Mr. Candlish), I should say that I feel more certain of the general conclusion at which he arrived than I do of many of the premises by which he supported it; for I do not feel the most implicit confidence in all those estimates by which he calculated to a million the income and property of the country; nor in the various divisions, subdivisions, and multiplications to which they have been subjected in his acute and ingenious brain. Nor can I follow the hon. Member in some of his statements with respect to the remissness of former Parliaments in dealing with this subject. The fact is, that within a few years past, we have had statements made of the amount of our Debt entirely erroneous and misleading, from the simple fact that while a considerable portion of the Debt has been paid off by Terminable Annuities, it used to be the practice, from some inexplicable reason, to omit that portion from the calculations of the Exchequer, and thereby to represent the Debt in former years as less than it really was. I therefore venture to point out to the hon. Member for Sunderland that at the time of the peace our Debt, instead of being £800,000,000, was nearly £900,000,000. Since that time we have added £80,000,000 to the Debt—namely, £20,000,000 for the emancipation of the slaves, £40,000,000 for the Crimean War, £10,000,000 for the Irish. Loan, and £9,000,000 for the Abyssinian War. I have provided myself with an accurate account of the state of the Debt at the present time. The funded Debt is £738,000,000, and the unfunded, I am proud to say, only £4,000,000. The Terminable Annuities, estimated at 11 years' purchase, amount to £50,000,000—making altogether about £793,000,000. It follows, therefore, that since the close of the War, and adding the £80,000,000 I have mentioned, the Debt has been reduced from £980,000,000 to £793,000,000—a reduction not very far short of £200,000,000. Consequently, it is not fair to accuse those who went before us of having done nothing for the reduction of the National Debt. Nor can I admit that we are doing nothing in that direction, for we are paying off £50,000,000, or rather more, by Terminable Annuities; and during the course of this year we have paid off £4,000,000 or £5,000,000 of Debt, not including in that the payment of the £1,000,000 which were expressly set aside for the purpose of repaying advances made by the Bank of England. Still, I agree with the general view of the hon. Member for Sunderland as to the propriety of always reducing the Debt as far as circumstances permit. The counter proposition seems scarcely arguable. Erasmus wrote an Encomium on Folly; but I can imagine no task more hopeless than delivering an encomium on debt. When the hon. Member for Sunderland says that it is the duty of the Government to place £10,000,000 a-year on the Estimates for the purpose of paying off the Debt, he stopped short of the difficult task of demonstrating how that amount was to be raised. Nor am I much moved by the example of America, quoted by the hon. Member. It certainly is not the duty of the Finance Minister of this country to indulge in criticisms on the finance, of our neighbours; but I venture to submit to those who are struck with the boldness and vigour of American finance that it may be a question whether it would not have been wiser for the Americans first to restore her currency to the metallic basis, and then endeavour to lower the interest of the Debt, rather than have asked the country to pay off the Debt rapidly. I apprehend that that that would have been the course adopted by an English Finance minister. Then the real question is not whether we ought to do what we can towards the payment of the Debt, but whether the hon. Member for Sunderland counsels the House well, when he advises us to place on the Estimates £10,000,000 every year to pay off the Debt? That proposal seems to me liable to many objections. Admitting the expediency of paying off the Debt, I am for the easiest and least offensive manner possible of doing so, and I think the mode proposed by the hon. Member the most difficult and most offensive. We have had a proof of this in the course of the present discussion, for many hon. Gentlemen have mentioned numberless taxes which they would rather have repealed. The hon. Member, therefore, whenever he made his proposition would, instead of meeting with a ready assent to pay off the Debt, find everyone who had in his mind a tax which he thought ought to be repealed, running his tax against the paying off of the Debt. Then there is another objection to any such way of paying off the Debt, and that is that taxation presses very much more heavily in one year than another; that the country is not only in a different state, but that the demands on the Revenue are greater or less in one year compared with another; but the cast-iron process of the hon. Member, for making a certain annual reduction, makes no allowance for those varying circumstances. The hon. Member for the City of London (Mr. Alderman W. Lawrence) appeared as a mediator between the two controversial parties; and while agreeing with the hon. Member for Sunderland that it is the duty of the Government to reduce the Debt, is equally of opinion that it is the duty of the Chancellor of the Exchequer to make no provision for meeting that obligation. The comparison of public and private finance made by my hon. Friend the Member for Maidstone (Sir John Lubbock), does not hold good. With regard to a nation, you might increase or diminish the revenue, but the expenditure is in some degree fixed. The case, however, is different in respect to private finance, for there the revenue is fixed and the expenditure is variable, according to circumstances. With a nation, paying off the Debt is increasing the burdens of the people, whereas an individual can discharge his debts merely by the exercise of economy and self-denial. My hon. Friend also raised another question—whether the Government does more wisely in attempting to pay off the Debt by means of Terminable Annuities, or by placing this sum upon the Estimates; and my hon. Friend threw his authority into the scale in favour of the course recommended by the hon. Member for Sunderland. I will answer my hon. Friend's arguments seriatim. In the first place, he contends that Terminable Annuities go on in time of war, so that we are at the same time paying off Debt on the one hand and borrowing money on the other. But that is by no means necessary, because such are the advantages of Terminable Annuities, as we now employ them, that it is within our power, in any time of emergency, to stop those annuities and arrest payment altogether. I also apprehend that the advantage is considerable in regard to the payment of Debt, as we can put the thing in a train that goes by itself, almost as a matter of course, and we thereby avoid quarrelling when we come to ask for the sums to be voted. Then it is said the affair is removed from Parliamentary control. In a certain sense this is not so. No doubt, Parliamentary control is not invited, because the sum to be paid off the Debt is mixed up with the interest; but if this were carried beyond a certain limit, Parliament would soon find that Government played fast and loose with it, and Parliamentary control would not fail in such a case. My hon. Friend said, also, we lost the opportunity — if I understood him, of showing that energy that would be displayed by having a Parliamentary fight over the question every Session. That, Sir, is quite true; but I am quite sure that he is too good a political economist not to know that energy is not a good thing in itself, but only good when you cannot get a good thing without it. So, my hon. Friend the Member for Sunderland also thought we might lose the moral effect of a great effort and noble spectacle in paying off all our debts. No doubt it is a very fine thing to give a great moral spectacle. When people get into distress and misery they have the opportunity of showing a great moral spectacle, and the results no doubt are great; but, for my own part, I prefer giving no such spectacle, simply because the calamities which give the opportunity of developing those high qualities do not exist. I shall continue to think we do not unwisely by paying off our Debt in a moderate way by Terminable Annuities. The truth is, that of all economical and financial authorities the worst are those who, ignoring the existence of any alternative, strive to make out a splendid case for themselves; but it appears to me that the right management of financial affairs consists not in this adoption of a certain particular theory or view, but of that sort of tolerant moderation that tries to accommodate them all, carrying none to any excess or violent extremes. I am, therefore, in moderation, for the reduction of taxes; I am, in moderation, for the reduction of Debt. The problem of the reduction of Debt is really this—how to get into the hands of the Government a large quantity of stock which they can cancel and pay off. That may be done in various ways, and if my hon. Friend the Member for Sunderland, content with the discussion he has raised to-night, will give me his confidence for about six weeks longer, I will undertake to show him, when the proper time arrives, that I have had the opportunity of making some slight impression on the Debt of the country.

MR. CANDLISH

said, he was satisfied with the discussion which had taken place, and would withdraw his Motion.

Motion, by leave, withdrawn.