SECOND READING.

HC Deb 07 August 1883 vol 282 cc1859-942

Order for Second Reading read.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

I rise, Sir, to move that the National Debt Bill be now read a second time; and, considering how many weeks have passed since I made a Statement with reference to the Debt, and also considering the great interest that is taken in this subject, perhaps it will be convenient to the House that I should now say a few words by way of explanation and information on the subject of the Bill. There are, I observe, several Amendments to the second reading proposed in different quarters of the House. One hon. Member thinks the measure premature; another thinks we ought to have less taxation on articles of consumption; another that there ought to be less taxation on land and property and it is also suggested that, instead of reducing expenditure, it would be expedient to increase it, in order to give aid to local authorities. All these Amendments are aimed at the reduction of the National Debt; and the effect of these divergent and inconsistent lines of objection will be that when you, Sir, at the proper time put the Question that the words, "That the Bi11 be now read a second time," stand part of the Question, all who are in any way opposed to the Bill will vote "No" to that Motion. Therefore, it is necessary that I should, in the first instance, explain, with the view of meeting such a variety of opposition, what the Bill really proposes. And I will, first of all, state what the Bill does not do. Practically, the Bill does not propose to alter the charge for the Debt now established by a per- manent law. I must qualify that, however, by saying that it does propose to reduce the charge by £60,000 a-year; but that is a very small and almost accidental matter. The Bill, then, does not propose to alter the aggregate charge for the Debt. What the Bill does, in general terms, may be stated to be this—that in view of the Terminable Annuities which have been created at various times, all running out in 1885, it proposes to substitute for them other Terminable Annuities, with, as I hope to show, a somewhat improved action. But, except in that respect, the Bill, so far as the charge for the Debt goes, makes no change whatever. Let me state what is the present state of the law governing the annual charge for the Debt. Under an Act which was passed on the proposal of the right hon. Gentleman opposite the Member for North Devon (Sir Stafford Northcote) in 1875, £28,000,000 is permanently appropriated as the annual charge for the Debt, that £28,000,000 containing not only the interest on the Debt, but also the amount which Parliament decided as proper to be appropriated for paying off or reducing the Debt. In addition to the permanent charge of £28,000,000, there is a temporary charge of £800,000 a-year, ending in 1885, to meet part of the cost of the preparations at the time of the Russo-Turkish War, and the cost of the Cape War. There are also a few small charges, which I need not enumerate now, amounting to £203,000 a-year, raising the whole charge for the Debt to £29,003,000. This is, however, irrespective of the charge for the Debt raised either for the purchase of the Suez Canal Shares or for Local Loans, as to which the receipts more than meet the charge. We need not mix up these with the charge of £29,003,000. That charge may be conveniently divided into four heads. In the first instance, there is the charge for the interest and management of the Funded and the Unfunded Debt, amounting to £21,464,000 a-year. Then come the certain Terminable Annuities, ending in 1885, which, including the £800,000 a-year I have just mentioned, amount to £6,061,000. In the third place, come the Life and other Annuities, which extend beyond 1885, amounting to £1,242,000; and the balance of the £29,003,000 con- stitutes what is known as the New Sinking Fund set up by the right hon. Gentleman in the year 1875, and its amount for the present year is £237,000. I will ask the House to follow me while I describe shortly what will happen in 1885–6. First, the £800,000 a-year charge, set up in connection with the Russo-Turkish War, and the War in South Africa, will come to an end, and to that extent the taxpayer will get relief. In the second place, the other Terminable Annuities I have described will fall in; and, unless Parliament should otherwise provide, the New Sinking Fund, by the operation of the law which makes the charge of £28,000,000 permanent, will, instead of being £237,000 a-year, rise to £5,498,000. Now, in our opinion, the time has come when we should anticipate that serious increase of the New Sinking Fund, and that we should re-construct a sufficient amount of Terminable Annuities, leaving the New Sinking Fund at about the amount originally intended. In our opinion, also, it would be unwise to leave this operation to the last moment. My right hon. Friend (Mr. Gladstone) proposed, two years ago, to carry out a plan anticipating, in the same way, the change which must take place in 1885. Unfortunately, the pressure of other Business left no time in 1881 for the discussion of this plan; but we ought not to lose the present opportunity. If it is necessary to give one among many reasons for immediate action, it is that the accumulation of Stock in the hands of the National Debt Commissioners is now larger than it was in 1881, so that a wider measure may be adopted, and one of a more permanent kind. The present Bill, then, in the first place, as I said before, makes no alteration in the charge on the taxpayer, except so far as it authorizes us to pay off, out of the balances, £1,000,000 of the 12,000,000 which was borrowed in connection with the annual grant of £500,000 a-year to India on account of the Afghan War, and so reduces the permanent charge by £60,000 a-year. That being the only effect of the Bill on the taxpayer, its main operation is to create fresh Annuities in the place of those that will fall in next year but one. We shall cancel, in the first instance, about £70,000,000 of Stocks held by the Court of Chancery and by the National Debt Commissioners—namely, of the former £40,000,000, and of the latter a little over £30,000,000; and, besides the Annuities representing these £70,000,000, we shall constitute a small Annuity equivalent to the two last years' payment of the present £5,135,000 Annuities expiring in 1885. We do not intend to leave the Sinking Fund at the small amount at which it is this year; but, as contemplated by the right hon. Gentleman, who was its author, at something more than £800,000 a-year. I will now give the House the exact result of these operations in figures—that is to say, the items making up the whole charge for the National Debt in the year after the new state of things will have come fully in force. In 1886–7, the interest of the Funded and Unfunded Debt, and the charges connected with it, will amount to £19,185,000, as compared with £21,446,000 now; the New Terminable Annuities will amount to £6,957,000; the Life and other Annuities of the same character are estimated at £1,167,000; and the balance going to the New Sinking Fund will be £835,000, the total being £28,144,000, as compared with £29,003,000, the total permanent charge at the present time. The New Terminable Annuities, amounting in all to £6,957,000, will be as follows: — The £40,000,000 of Stock standing to the credit of the Chancery suitors will he converted into a 20 years' Annuity of £2,674,000; somewhat over £30,000,000 of Stock standing to the credit of the Savings Banks with the National Debt Commissioners will be converted into three Annuities of £1,200,000 each, for 5, 10, and 15 years, the total being £3,600,000 a-year; and the two remaining years of £5,135,000 Annuity will be converted into a 20 years' Annuity of £683,000. I pass over small details as to the latter conversion, for, as the House knows, the series of Annuities, making in all £5,135,000 a-year, does not all fall due at the same time of the year; but a single Annuity of £683,000 a-year will be their equivalent. I ought, however, to explain the peculiar and novel method we propose to adopt in dealing with the Savings Bank Stocks. I said that we proposed to divide the Annuity, the result of the cancellation of something over £30,000,000 of Savings Bank Stock, into three separate Annui- ties of £1,200,000 each for 5, 10, and 15 years respectively. What we propose is, that as each Annuity runs out there shall be substituted for it a fresh Annuity, which, including the interest on the Stock cancelled, should produce the same charge upon the £28,000,000 a-year. Accordingly, after five years, when the first £1,200,000 Annuity fell in, £22,500,000 more Stock standing to the credit of the National Debt Commissioners in connection with the Savings Banks would be cancelled; after 10 years, another £22,500,000; and after 15 years, another £22,500,000; but after 20 years the amount requiring to be cancelled would be increased to £35,200,000; so that the operation in the first 20 years would result in the cancellation of £133,000,000 of Stock, besides the £40,000,000 of Stock standing to the credit of the Court of Chancery. These figures verify the general Statement I made in moving the Budget—that there would be a cancellation of £173,000,000 of Stock through two operations on the Stock standing to the credit either of the National Debt Commissioners, or of the Court of Chancery. Upon this point, however, it has been asked, why pledge Parliament for 20 years? My answer is, that the Charge of £28,000,000 a-year for the service of the Debt is a permanent charge; and t is, in my opinion, far better, under those circumstances, to make arrangements within that charge for a moderate fixed period, than to be continually coming to Parliament for fresh powers on the subject. In this connection, let me remind the House that the taxpayer is on the eve of receiving no small relief in addition to the £60,000 a-year provided by the Bill. As I said, in the year 1885, the War Annuity of £800,000 falls in; and in 1887, what I may call the last Annuity payment to India of £500,000 for the Afghan War falls in, making a total of £1,300,000. On the other hand, there will be a slight increase in the charge for Local Loan Sinking Funds of £200,000, and this, perhaps, should be set off against the relief of £1,300,000 a-year; but the taxpayer will be relieved to the extent of something like £1,100,000 a-year in connection with Annuity payments between 1885 to 1887. Should that not be sufficient; should a great war derange our finances, it will be in the power of Parliament to revise the charge of £28,000,000 a-year; and, in that extreme event, the amount of Stock to be cancelled after each five years would be diminished. But if those things do not happen, if Parliament retains, as I trust it will long retain, this charge of £28,000,000 a-year, we had better provide permanently for the method in which it will be applied. This leads naturally to the question, how much Debt will be actually paid off by the method which we propose in 20 years? I have already explained to the House that the cancellation of the Chancery Stock and of the Savings Bank Stock will extend to £173,000,000. It is necessary, however, to bear in mind the difference between cancellation and redemption, because redemption is the measure of reduction. The £40,000,000 of Chancery Stock will be entirely redeemed in 20 years. Of the £133,000,000 of Savings Bank Stock cancelled, £73,000,000 will be redeemed. There is on the Table a Paper which shows the exact amount which the new 20 years' Annuity, in substitution of the two years' instalments, will pay off; in round numbers it is £10,000,000. Then there are the two other operations, of which we must not lose sight. I have reminded the House of two items in the total of £28,000,000, each of which has the effect of making a considerable impression on the National Debt. The first is the amount of Life and other Annuities, the second is the New Sinking Fund. The operation of the Life and other Annuities will be to pay off about £23,500,000 of Debt. The New Sinking Fund, in the same way, will pay off £26,800,000 of Debt. Thus, altogether, the amount of Debt paid off by means of the five operations—the cancellation of the Chancery Stock, the successive cancellations of Savings Bank Stock, the substitution of a 20 years' Annuity for those which expire in 1885, the operation of the Life and other small Annuities, and the New Sinking Fund, will be £173,300,000 within 20 years; and in this calculation I have not included the operation of the Old Sinking Fund, because no one can make a reasonable estimate as to how far the Old Sinking Fund—that is to say, the annual surplus of Revenue over Expenditure—will operate. In all these calculations, I have taken Consols at par. If the Funds rise again above par, of course there will be some small diminution of the £173,300,000; but, if the Funds fall, that sum will be increased. It is safe, I think, on the whole, to base our calculations upon Consols at par; and the House will see that on that assumption we shall be able in 20 years to pay off Debt to the extent of £173,300,000. It has been suggested that, in estimating that the National Debt Commissioners will have at their disposal in five, 10, 15, and 20 years, a sufficiency of Stock for these successive conversions into Annuities, we may have made an extravagant estimate. As a matter of fact, we have made a very careful estimate, and one very much within the mark. The suggestion has come from a financial journal of great authority, and therefore I think I ought to answer it. I will state to the House a few figures to show how careful we have been in making this estimate. During the last 10 years the payments made by the Savings Banks to the National Debt Commissioners have amounted roughly to £22,600,000; the payments made by the Commissioners to the Savings Banks have amounted to £18,600,000. The improvement from year to year in the Savings Banks deposits has thus enabled them to pay the proper interest to their depositors, and also to remit to the Commissioners for investment no less than £4,000,000. I may say that in this respect the progress in the latter half of the 10 years has been greater than in the earlier half. In making a calculation of what will be the probable assets of the National Debt Commissioners on Savings Banks accounts during the next 20 years, we have here assumed that the £400,000 a-year will be increased to £550,000—that is to say, that on the average £550,000 a-year will be the difference between the payments from the Savings Banks to the Commissioners and from the Commissioners to the Savings Banks; and on that basis the excess of Stock in the hands of the Commissioners beyond what they will have to find for the proposed cancellation of Stock to form the new Annuities will, at the end of the 20 years, be no less than £72,000,000. Even if we had assumed that the National Debt Commissioners, instead of receiving from the Savings Banks £400,000 a-year, had received nothing, there still would be an enormous margin at the end of 20 years, so I think that the estimate may be taken as perfectly safe. Now, Sir, having thus described what the Bill proposes to do, let me say a word or two about the Amendments which have been placed on the Paper.

MR. W. H. SMITH

Will the right hon. Gentleman state what the amount of the Chancery Funds now in hand is?

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

It is stated in the Treasury Minute at something over £60,000,000 a few months ago; but I have not got the exact figures for to-day. Now, with respect to the Amendments, the noble Lord the Member for Middlesex (Lord George Hamilton) proposes a Resolution, the effect of which will be not to hold out any prospect of relief to the taxpayer, but to prepare us for additional expenditure, in the shape of grants in aid of local institutions. The only criticism I would now pass upon the Resolution of the noble Lord is, that he speaks of the decrease of the Revenue from Excise. But the Revenue from Excise for the last two years has not been decreasing; at the worst, it is merely stationary. My hon. Friend the Member for Glasgow (Mr. Anderson) takes a very different view to that of the noble Lord. He also proposes an Amendment to the second reading of the Bill; but his Amendment is based upon the proposition that we ought, at the present time, to do something in the way of relieving the consumer from taxation on certain articles of consumption. He does not propose to leave things as they are, and spend more money; but he proposes to reduce the receipt side of the account by taking away a certain amount now received in taxation. There was, until lately, another Amendment on the Paper to the same effect, standing in the name of my hon. Friend the Member for Burnley (Mr. Rylands), and I remember the murmurs which arose from the other side when Notice was given of it. "Reduce the taxes on the consumer? You should reduce the taxes on property." My hon. Friend the Member for Galway (Mr. Mitchell Henry) takes an entirely different line of argument. He says the present generation has paid enough, and he, on this account, would reduce the amount of taxation. I have never been able to understand precisely what, in arguments of this kind, is meant by the "present generation," because the generation in which we live consists of persons of all ages. It is impossible to say that all the persons now living are of any one generation, or that taxes now paid fall alike on the old and the young, in this sense. All these Amendments, however, combine in proposing that the present reduction of Debt shall not continue. I trust, however, that it will not be so; for it would be, in my opinion, an unwise thing if we were to break down the system of providing for a substantial diminution of the Debt. Let me ask the House to compare the present charge for the National Debt with the charge of not many years ago. I will take the three years 1857–8, 1858–9, and 1859–60. If hon. Gentlemen will turn to the statistics of those years, they will find, first of all, that the wealth and the trade of the country since that time has, if not doubled, at least increased by something like two-thirds; they will find the population of the country has increased by one-third; they will find that the wages enjoyed by the working classes, whether agricultural or manufacturing, were far less than now—probably not two-thirds of the present purchasing power.

MR. MITCHELL HENRY

To what country does the right hon. Gentleman refer?

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

I am speaking of the whole of the United Kingdom; and I have taken the averages for the whole Kingdom. What was the amount which we were setting aside at that time in connection with the Debt, and what is the amount which we propose to set aside in connection with the Debt this year? The permanent charge this year for the Debt, with the amount representing temporary additions, and the interest on money raised for Local Loans, is £29,700,000. The receipts from investments are £1,200,000, so that the net charge for the Debt this year is £28,500,000. In 1886–7 the permanent charge for the Debt will be, under this Bill, £28,000,000, the charge in respect of temporary additions will be £100,000, and the interest on the amount raised for Local Loans £900,000, giving a total of £29,000,000. The receipts from investments will amount to about £1,000,000, so that the not charge will be, at the outside, £28,000,000. But, in 1857–8, the net charge was £28,500,000; in the following year, 1858–9, it was £28,300,000; and in 1859–60, it was £28,500,000. Now, I appeal to the House, with these facts before it, whether we should be justified in setting aside less for the payment of the Debt than we did in the period from 1857 to 1860? There is one great example in this respect, which this country and this House should bear in mind—I mean the example of the United States. Does the House know how much of their Debt was paid off by the United States last year? The amount was £25,000,000 sterling. And during the last 17 years, from June, 1866, to June, 1883, we have these remarkable results—In June, 1866, the Debt of the United States was £537,000,000; in June, 1883, it is £310,000,000. In June, 1866, the interest on the Debt was £29,200,000 a-year; in June, 1883, it is £10,100,000 a-year. So that the Debt in that time has been reduced by 42 per cent, and the interest by 65 per cent. I would call special attention to this reduction of interest. In 1866, the rate of interest was, on the average, 5½ per cent; the interest paid to-day is 3½ per cent—a reduction of 2 per cent. And I will undertake to say, without fear of contradiction, that that reduction of interest from 5½ to 3½ per cent is mainly the result of the unremitting efforts which the Government of the United States have made to reduce their Debt. And if that reduction in the rate of interest from 5½ to 3½ per cent paid by the Government of the United States on their Debt has been the consequence of paying off Debt, may we not look forward to a similar result in this country? Lot me remind the House that per cent upon a Debt of £700,000,000 means a charge of £1,750,000 a-year; and a diminution of charge in this manner is not like a casual surplus of income over expenditure, but is the permanent effect of a deliberate policy. I contend that if this Bill should by some misfortune be rejected, it would be evidence to the country and to the financial world that we are indifferent to paying off the Debt; and, on the other hand, I say that, if this Bill is carried, we shall be within a measurable distance of dealing with the rate of interest on our Debt; and that is the point of view from which I ask the House to look upon my proposal. The rejection of the Bill, if it is followed by an inroad upon the £28,000,000 a-year set aside by my right hon. Friend opposite for the payment of Debt, may possibly produce some temporary relief from taxation. But the adoption of the Bill will, to my mind, be the first step towards the permanent relief of the taxpayers from a portion of the charge for former wars. The taxpayer should, undoubtedly, have the benefit of any reduction in the rate of interest; and on his behalf, therefore, I ask the House to pass the second reading of the Bill.

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

Sir STAFFORD NORTHCOTE and Mr. MITCHELL HENRY rising together, Mr. SPEAKER called upon the former.

MR. MITCHELL HENRY

, before resuming his seat, said, that he had an Amendment standing first on the Paper, which he had kept alive for the last four months; and he would now, as a point of Order, ask for the ruling of the Chair on the point whether, as that was the case, he was not entitled to the possession of the House; and whether, if he gave precedence to the right hon. Baronet opposite the Leader of the Opposition, his doing so should not be regarded as a matter of courtesy, and not as a matter of right?

MR. SPEAKER

said, the hon. Member (Mr. Mitchell Henry) had no positive right to precedence in consequence of his Notice of Amendment being first on the Paper. The right hon. Gentleman (Sir Stafford Northcote) rose; and he felt it his duty to call upon him. In doing so he did not deprive the hon. Member of any right whatever. It rested entirely with the Chair to call upon the Member who should first address the House.

SIR STAFFORD NORTHCOTE

I apprehend, from my experience of debates, that the ruling, Sir, which you have now given is the same as has been given on several occasions. But I can assure the hon. Member opposite (Mr. Mitchell Henry) that, as a matter of courtesy, I should be very unwilling to interfere, if I thought I was interfering, with his freedom in bringing forward the Amendment. I will, however, stand but a very short time between the hon. Member and the House; but the few observations which I intend to make are of a very general character, and would be very inappropriate to the particular question which the hon. Gentleman wishes to raise. Therefore, I think it would be a very inconvenient course to pursue to introduce them on the Amendment. My reason for rising thus early in the debate is because it seems to me that there has been a great deal of misunderstanding among the public, and even, to some extent, among hon. Members of this House, with regard to the nature of this Bill and the exact effect of the proposal and the course which some hon. Gentlemen may wish to take with regard to it. The observations of the right hon. Gentleman opposite the Chancellor of the Exchequer have, however, I am bound to say, very greatly cleared away the doubts and misunderstandings to which I have referred. The right hon. Gentleman has given a most able and clear account of the position in which our National Debt arrangements stand; and he has shown very clearly what the effect of this Bill will be, if it is adopted, and what it will not do. I only wish, as far as that part of his speech goes, to confirm the view he has laid before the House. The Bill does not propose to carry the charge which we now bear for the payment of interest and redemption of the Debt beyond the amount at which it now stands, and has stood for some time. I, of course, put aside the £800,000, which stands upon a different footing. But ever since 1877, I think, we have voted at the rate of £28,000,000 a-year for the purpose of paying the interest of the Debt, and devoting the balance to its redemption by a New Sinking Fund. It is not intended to add to that £28,000,000, or to extend the limit of time, because, as the Chancellor of the Exchequer truly said, the money is made payable by an Act of Parliament which is of a permanent character, and remains in force until Parliament may decide otherwise. That being so, what we have to deal with now is, not whether we ought, or ought not, to make any greater exertions towards the payment of the Debt, as some people suppose, or reduce the exertions we are actually making. The question is, whether we shall adopt a certain change in the machinery under which we act. I do not know that it goes so far as a change in the machinery; because, to a certain extent, we employ a system of Terminable Annuities now, and it is proposed we shall carry on Terminable Annuities hereafter. There is, however, a certain proposal made which, I think, is of a novel character, and which deserves consideration; but it is one which does not affect the general system on which we proceed, or the amount we have to pay. That being so, this remark, at all events, is obvious—that this is not a case in which we are specially bound to proceed at the present moment with any alteration in the system now in force. Whether we pass this Bill, or do not pass it; whether we adopt this machinery, or do not adopt it, the matter remains safeguarded by the former Act of Parliament, which has been enforced and put into use, and it cannot be changed until the existing Act of Parliament is repealed or altered. It may be a question whether it is, or is not, convenient to bring forward this proposed change at the present time; but the matter is certainly not of that absolutely urgent character that we are bound to deal with it at once; and if the House should be of opinion that we require more time for the consideration of the principles and right details of this scheme than can conveniently be given to it at this period of the Session, having regard to the great pressure of Business, and to the fact that the House is already melting away, before it has got through one-third of the programme of the Session, I can see no inconvenience that can result from the postponement of this measure. At all events, in dealing with a subject of this kind, it is always better to wait rather than hastily to plunge into an unsatisfactory arrangement which cannot hold water in the long run. I say this, notwithstanding the fact that the right hon. Gentleman has held out the most gloomy anticipations to the House in the event of our rejecting this Bill upon the present occasion. The right hon. Gentleman says that, if this Bill were lost, we should be aiming a heavy blow at the principle of paying off the National Debt, and that the consequences would be most disastrous. But, in my opinion, it would be equally disastrous if, without due consideration, we were to adopt a system of an artificial and of a complicated character, in order to find that, after all, that system was one that would not work. With regard to the principle of paying off the National Debt, I must venture to point out that, although I entirely agree with the principles which have been laid down by the Chancellor of the Exchequer, and which are, for the time, in favour with the Government, those principles are not to be taken so absolutely and certainly for granted, as being applicable in all circumstances, as the right hon. Gentleman seems to think that they should be, because there have been, in former times, many very high financial authorities—including the Prime Minister himself, as to whom I would refer to his Budget of 1853—holding very various theories with regard to the systematic exertions requisite to be made for the purpose of paying off the Debt. I must remind the right hon. Gentleman that the principles upon which, in former times, our Predecessors—and, indeed, upon which some of those who are still with us—proceeded with regard to the payment of the National Debt were expressed in the phrase that, I think, was used by the late Mr. Joseph Hume, that there were many ways of employing our money that would be more profitable than buying Consols at 90 or 94. By that phrase Mr. Hume meant that our system of taxation was still of such a character that it would be of greater advantage to the country at large that changes should be effected in that system, in order to give relief to our industries, than that so much of the National Debt should be paid off by special exertions. Our Predecessors, acting upon that view, proceeded to reduce taxes in such a way as to render it impossible to pay off the Debt. And, indeed, the Prime Minister himself, when his ideas had arrived at maturity, and when he was in the zenith of his fame as a financier, had declined to avail himself of the opportunity that was afforded him of taking effective steps towards paying off the National Debt. In bringing in his first great Budget of 1853, there was a great question raised with regard to the abolition of the Income Tax; and the right hon. Gentleman himself made a proposal which pointed to this—that it should be in the power of Parliament, seven years from that time, to take advantage of the falling in of the £5,000,000 of Long Annuities in order to get rid of the Income Tax. In 1860, when these Annuities did fall in, the right hon. Gentleman had an opportunity not to take off the Income Tax, which had then gone too far to be abolished, but to do that which is now proposed to be done—namely, keeping the charge on the Debt at the figure at which it stood, and applying it further in consequence of the falling in of the Long Annuities. The right hon. Gentleman, however, made no proposal of that kind. He said they ought to take advantage of that great opportunity, in order to give some general relief to the industries of the country in the way of the remission of taxation. I do not question that, in taking that course, the right hon. Gentleman was acting wisely; but I desire to point out that in adopting that course, the right hon. Gentleman was actuated by a desire to do what was best generally for the country in the circumstances, rather than by that of paying off the National Debt. I merely refer to this fact for the purpose of showing that the principle of paying off the National Debt is not applicable to every state of circumstances. Let us consider for a moment what are the circumstances of the present time. The Chancellor of the Exchequer referred just now to what was being done in the United States in the way of paying off the National Debt; but, as was well pointed out, on a former occasion, by the hon. Member for Preston (Mr. Ecroyd), who takes a very great interest in financial matters, the United States are paying off their National Debt by means of protective duties. The right hon. Gentleman in 1860 adopted exactly the opposite course, because, instead of keeping on protective duties for the sake of getting a large Revenue and paying off the National Debt, he disregarded the Debt, but took off the duties. I have referred to these matters, because when we have doctrines like those to which I have referred laid down to us ex cathedrâ, we should exercise our own judgment with regard to them. Even with regard to the present proposal, the right hon. Gentleman the Chancellor of the Exchequer himself affords a striking instance of a great change of opinion in a short time. I remember that, when I made a proposal by which a certain portion of the Debt should be extinguished in 1904, the right hon. Gentleman said that we had no right to bind our successors. The right hon. Gentleman added that I was endeavouring to get credit for a proposal that involved no present sacrifice or cost to the Government or the country at the time. That assertion is true of the present proposal, but it was not true of the proposal I then made; because I called upon Parliament to make an immediate sacrifice by raising the charge from £27,200,000 to £28,000,000, whereas we are now asked to make no sacrifice whatever. We are simply asked to adopt a certain piece of machinery in order to effect a desired object, and which may be a very good piece of machinery for the purpose; but when we are desirous of testing its principle, we ought to be allowed to do so, and it should not be charged against us that we are endeavouring to throw cold water upon the principle of paying off the Debt. I admitted, at the time I made that proposal, that Parliament would have the power at any time of revising the scheme—as, indeed, the right hon. Gentleman now admits that Parliament would have the power of revising the present proposal. But it did appear to me that the year 1885 would be a moment at which it would be natural to take the whole state of our financial arrangements into consideration, and to consider with ourselves what was the proper view to take of our National Debt arrangements. It would, however, I venture to say, be perfectly legitimate before 1885 to take into consideration the whole question, and in connection with it the whole circumstances of our financial position, and no more important subject could be laid before Parliament. Sir, I do not myself adopt the Amendments, or, indeed, approve of some of them, which I see placed upon the Paper. I am very reluctant, indeed, to give countenance to any inroad upon the scheme and arrangements which we have made, and which are already in existence, for the purpose of paying off the National Debt. But I say that this particular arrangement which you are going to make may possibly not strengthen, but weaken, the arrangement which we have at present in force. There is one object, at all events, in which I must be interested—the maintenance of my own child, the New Sinking Fund. The right hon. Gentleman and others say that this measure is in the nature of a guard to the New Sinking Fund. The right hon. Gentleman, who was not at all favourable to it, now seems to take quite a parental interest in it, or, at all events, the interest of a step-mother. It is by no means certain that the New Sinking Fund is quite as safe as the right hon. Gentleman seems to have been led to think. It is obvious that it is a Fund which will increase and will challenge attention, and it is one upon which the efforts of those who wish to reduce taxation and the expense of our National Debt arrangements are likely to fasten; and therefore it is that I am very jealous indeed of this arrangement, because I cannot help thinking that the fund which hears that name is not likely to be altogether so safe as it might be. As far as I understand—I do not know whether I am right—the present scheme goes beyond the scheme of 1881, introduced by the right hon. Gentleman the Prime Minister. The proposal of the right hon. Gentleman was one which was limited to the creation of Annuities which would suffice to redeem a fixed amount of the Chancery Funds. The amount fixed was £30,000,000, which was to be taken from the funds of the National Debt Commissioners. But this proposal goes beyond that, because it introduces a sort of rolling Annuity, which is to go on increasing every period of five years. It will go on increasing. It is not simply that when a certain sum has been redeemed by the effect of an Annuity lasting for 15 years, a now Annuity of the same amount is to be set on foot to redeem a like amount; but the new Annuity is to be larger than the old Annuity by the amount of the interest on Stock cancelled. Therefore, each Annuity will be larger than its predecessor. It is also obvious that this scheme will make a very serious demand upon the National Debt Commissioners. The right hon. Gentleman says that, at the present time, there is a great amount of Stock in their hands; and not only so, but that, from calculations made, there are likely to be more and more deposits in the hands of the Trustees of Savings Banks, and that there is no fear that we shall not always have a sufficient amount of funds there to be able to carry on this operation. That may be so; but it is a delicate work, when you have to calculate upon the large amounts which are coming in from the depositors in the Savings Banks for 20, or 30, or even a larger number of years. I think we ought carefully to examine how far that statement will hold water; but it is not a matter which we can discuss upon the second reading of this Bill, though it may be at a subsequent stage. Then, the use proposed to be made of the National Debt Commissioners seems to me to require great care. The first idea of a Terminable Annuity is a very simple one; it is to convert a Perpetual Annuity into a Terminable Annuity for a larger amount to last a shorter time, in such a way that, at the end of the period, exactly the amount which has been taken out has been replaced—neither more nor less. That is rather difficult to calculate, and is subject to disturbance of a character which might lead to inconvenient results. I know there is a clause in the Bill dealing with that point. But the whole proceeding is of an artificial character. At first sight, nothing could appear easier than to go into the market and say—"I offer you this Annuity to last for so many years. How much Stock will you give me for it?" Or—"I wish to cancel so much Stock; how much by way of Annuity can you give me for it?" But the fact is, you cannot get these Terminable Annuities taken; therefore, you have to go a roundabout way, and have recourse to the National Debt Commissioners, over whom the Chancellor of the Exchequer exercises almost unbounded power, and tell them they must take your Terminable Annuity in exchange for the Perpetual Annuity, and then you have to make a calculation as to the price at which that transaction can be effected without either cheating the depositor in the Savings Bank or the public. That is a delicate matter, which has rendered necessary the introduction of a clause which arranges the amount of the Annuity from time to time. Then the National Debt Commissioners and the Trustees of Savings Banks have to separate from each other that which is repayment of principle from that which is interest, and then reinvest the principle. But how can they do that, except by buying Stock in the market? At present, all your purchases of Stock are made through the National Debt Commissioners. Why cannot you go yourselves and do it, without the intervention of those Commissioners? Would it not be simpler and better to do so? But that is what the New Sinking Fund did, as it was applied in the direct purchase of any kind of Debt which it might be desirable to buy up—it might be Exchequer Bills, or any other kind of Debt; it was equally for the relief of the public. Then, again, as to this operation of the National Debt Commissioners proceeds, in process of time and in a short time, the price of Consols rises so as to make the investment less profitable. But the National Debt Commissioners, as guardians of the Savings Banks, will be anxious to make the best interest, and will not be very pleased to take Consols at a high price, when they have other means of applying their funds. They may lend to public Bodies, and can make a better interest than Consols give; but that will interfere with your operations, because they turn upon the investment and re-investment of funds by the Commissioners. I have noticed these things not as wishing to express, or expressing, any conclusive opinion against the scheme which we have before us. To a very great extent I agree that the substitution of Terminable Annuities must form a part of any scheme for the redemption of the National Debt; but I doubt very much whether the present scheme is the best, or whether it is not open to the objection of being "too clever by half." It is looking too far ahead to establish this system—though I am not obstinately opposed to it—and the point which weighs with my mind is that I think there is a disposition to press this matter forward at a time when it will not be as fully and carefully considered as it ought to be. I regret that it should be pressed forward in that way, and I think it would be better if the scheme were allowed to stand over for further consideration. It has developed already in the hands of the present Government during the past two years—being considerably in advance of the scheme of 1881, and, perhaps, by 1885, we might find something better still. I think, therefore, it would be a very desirable thing that we should have more time to consider it. I do not deny that there is always an opportunity for Parliament to alter a scheme which it may have hastily adopted, and which does not work well; but any alteration of that kind would, in my opinion, do more harm than to postpone consideration of the question till another Session. Undoubtedly, the scheme is one of the highest importance, and I hope will receive the very full consideration of the House.

MR. GLADSTONE

Sir, my right hon. Friend opposite (Sir Stafford Northcote) has done me the honour of making me the hero of a large part of his argument, by making references for a purpose which I do not think was politic, and in a manner which I conceive to be wholly inaccurate. My right hon. Friend, however, has not told us what vote he intends to give on the present occasion. Now, interesting as any argument may be which the right hon. Gentleman offers us on a financial question, such as the one under notice, a statement as to the vote he intends to give would have been to me, at least, of still greater interest, and it would have been so on this account—that on a former and a recent day I said, in respect to this Bill, that our belief was that it had the assent of a very large majority of the House in principle. It was on that account that we were going to take the judgment of the House upon it; but I then signified that it was a measure in respect to which it was impossible for us, unless we were substantially correct in the opinion we had formed, to think of forcing it on the acceptance of the House. As many other votes will go with the vote of the right hon. Gentleman, it is to me a matter of great regret, and no small amount of marvelling, that he should have made a lengthened series of remarks on this Bill without conveying that intimation. To those remarks I listened with great anxiety, in order to find out in what way he was going to vote; but the right hon. Gentleman went first one way and then the other, and, between this way and that way, I was never able to arrive at the point either of an affirmative, or of a negative vote. That, to me, is a great defect in a financial speech, for it was desirable that, in matters of this kind and gravity, we should know our own minds. The judgment of the House this evening, however, will, I hope, enable us to form an adequate conclusion as to whether we were correct or not in believing that this Bill expresses the very general sentiment of the House. We must still look to obtaining light upon that conclusion, though the light does not come from the quarter which I hoped would have supplied it to me and to us in considerable abundance. The right hon. Gentleman thinks fit to say that my doctrines and practices with respect to the reduction of the National Debt have been very different at different times; and he quoted my laxness in former days against my strictness at the present day, seeking to use my authority against myself in support of more lax doctrines. If the right hon. Gentleman were correct in his facts, I should still lament that practice. It appears to me that financial purism and financial rigour are not things so common that they can afford to be despised, but that they ought to be held in respect; and I think that those who are most of all bound to hold them in respect are persons who have been responsible for managing the finances of the Kingdom. While independent Members commit a very minor offence even in holding less strict and less prudent opinions on this subject, it is much to be lamented when a Gentleman of great authority and knowledge seeks to lower what I may call the tone of opinion in respect of the cardinal and fundamental principle of good finance—namely, a steady effort for the repayment of Debt. Therefore, even if it were true that I had given countenance on a former or remote occasion to lax views of the obligations of Parliament, it would have been bad policy on the part of the right hon. Gentleman to quote them against me now. He ought rather to have been anxious to draw a veil over such errors and infirmities, or, if he had referred to them at all, he should have welcomed me as a returning prodigal, and said that he was glad to find, at length, that I had arrived at a doctrine of such strictness as was likely to meet the wants of the country. Besides offending against the not unreasonable principles I have laid down, the right hon. Gentleman has entirely misunderstood me. He says that in 1853 I held out to Parliament that they would have an opportunity, in 1860, of repealing the Income Tax by means of the falling in of the Long Annuities. What is the fact?—that, in 1853, the whole question was whether there should be any Income Tax at all. The right hon. Gentleman was not in Parliament at the time, and, therefore, knows nothing, except historically, of the circumstances in which we stood. He has forgotten that, at that time, Mr. Disraeli, the Leader of his Party, proposed a plan for dealing with the Income Tax, which, in the opinion of Mr. Pitt and Sir Robert Peel, and in the opinion of myself, not worthy to be named by the side of either of them, was considered utterly ruinous, and destructive of the Income Tax—namely, the establishment of different rates of duty for the different Schedules. Mr. Disraeli, who was then Chancellor of the Exchequer, had engaged himself to a payment of 7d. on Schedule A, and 3d. on Schedule D. At the time Mr. Disraeli did that, he commanded, to my great surprise, the acquiescence of the Party called the Conservative Party, and he had, as he very well knew, the assent and approval as well of a very large proportion of the Liberal Party. What I did upon that occasion was to make a desperate effort to save the Income Tax. A proposal of that kind was, in my opinion, ruinous to the Income Tax; and, therefore, in order to save £6,000,000 to the Exchequer, even if I had been actually sacrificing £2,000,000 falling in by Annuities, it would have been worth while sacrificing those £2,000,000. How can the right hon. Gentleman quote me, when I was making this desperate effort in the face of opposition, as having given, in these circumstances, a deliberate opinion that the Annuities might justifiably be sacrificed for the purpose of giving ordinary relief from taxation? I was obliged to do everything in my power, to seek resources in every quarter, for the purpose of inducing Parliament not to sanction the change, but to pass the old Income Tax on its old basis; and, in spite of the leaning of many Liberal Members to what we thought a destructive plan, we did succeed in saving the Income Tax. Yet now the right hon. Gentleman comes forward with his petty criticisms—["Oh, oh!"]—on the methods we adopted. It is petty criticism to say I pointed out, in circumstances like those, the fact that £2,000,000 of Annuities would fall in seven years after, and that Parliament would then have the option, if it thought fit, to fill up part of the deficiency. I never committed myself as to what the right judgment of Parliament would be. Again, the right hon. Gentleman says that, in 1860, I availed myself of the falling in of £2,000,000 of Annuities for the purpose of giving protective duties. I deny that. This is not the first time that question has been debated. The right hon. Gentleman, in one of his Budgets, made that statement before. I confess I thought the right hon. Gentleman would have been satisfied with a former explanation upon it. He made that statement in one of his Budget speeches. I rose, and stated that the statement was totally incorrect; but it was impossible at the moment to go back and show that it was so. On a subsequent occasion, however, I did show that it was incorrect, and the right hon. Gentleman got up, and candidly confessed that he was wrong; and I am a little surprised now at the revival of a statement which he himself abandoned. I showed that, in the mind of a very large portion, what Parliament did, in 1860, was undoubtedly to remit a certain tax; and, after putting on one side the remission of that tax, he imposed a very much larger amount of taxes. That confession was made by the right hon. Gentleman, though he had for the moment been led into making such a statement. I shall now dismiss all those uninteresting references to myself, and come to what is to be said on the question before the House. If I understood aright, the main argument of the right hon. Gentleman adverse to the Bill of my right hon. Friend the Chancellor of the Exchequer was this—that not 1883, but 1885, would be the proper year for considering this matter—that that was the time to consider whether or not Parliament ought to continue to appropriate a large sum for the purpose of the annual payment of the Debt. No doubt, it is a very important question, whether Parliament should regulate these operations for the payment of the Debt from year to year, or whether, by a decision taken one year, it ought to bind future years—perhaps for a long period of time. The right hon. Gentleman now seems to lean to the doctrine that he will not allow us to deal in 1883 with financial matters, which, he says, can stand over to 1885. I am going to quote the right hon. Gentleman against himself, but in a totally different manner from that in which he quoted me. He quoted my supposed present laxity with my former strictness; and I am going to quote his present strictness against his former laxity. If 1883 is an unfit year to dispose of legislation of 1885, with respect to finance, certainly 1875 was a much more unfit year; and yet the right hon. Gentleman, in 1875, bound the Parliament up to 1885 to apply £28,000,000 to the payment and reduction of the National Debt. What does the right hon. Gentleman mean by the argument that we should postpone till 1885 dealing with this matter? What does he mean by saying that, in 1883, we ought not to bind Parliament for two years? He has completely changed his opinion since he proposed his own Sinking Fund. He has tied the hands of Parliament for 10 years, and now he says—"I will not allow you to tie the hands of Parliament for two." [Mr. R N. FOWLER dissented.] The hon. Member for the City of London comes to the rescue, and shakes his head. But the fact remains. In 1875 the right hon. Gentleman spoke of a great windfall in 1885. He said they would have a great temptation in that year, and the wise thing in 1875 was to provide against that temptation. Now, that is all that my right hon. Friend does. He strengthens the safeguards taken in 1875 against the temptation of 1885, and he does that in 1883. At that time I was one who objected to the course taken by the right hon. Gentleman, on the ground that we had three times over attempted to set up a Sinking Fund by positive legislative provisions, and on each of these occasions the provision had failed. I expected that hon. Gentlemen would come forward with plausible arguments to sap and undermine this provision. I own that I did not anticipate that amongst those who seemed inclined to undermine the provision would be the author of the provision himself. We have now said we believe his plan to be ineffectual; but we are here to maintain and fortify his plan. The right hon. Gentleman says his plan—his Sinking Fund—is in danger. We agree in that opinion; and, because it is in danger, we want to introduce into the law additional provisions, which will tend to fortify it. It is rather singular, under these circumstances, to find the right hon. Gentleman denouncing and criticizing our proposal, and apparently disinclined to give his support to those who are carrying out his proposal. There is no doubt the Bill of my right hon. Friend is one not of very proud pretensions. It does not make large appropriations of public money de novo, or any appropriation at all for the purpose of effecting a reduction of the National Debt. We are content to appear on this occasion as auxiliaries of the Sinking Fund of the right hon. Gentleman—we are endeavouring to strengthen the defences of that Sinking Fund. As that Sinking Fund stands now, the mere alteration of one word in an Act of Parliament may cut it down to zero. My right hon. Friend proposes to build up and fence round the system of Terminable Annuities, so that it cannot be affected by the alteration of one word in an Act of Parliament. The question is, whether or not the right hon. Gentleman will join in preventing us from endeavouring to supply, perhaps, a sufficient defence for that which is recommended as an excellent provision for securing the reduction of the National Debt. Some time or other, we shall know whether the right hon. Gentleman intends to vote for or against this Bill. I hope, in his reference to mothers and stepmothers, he will recollect that there have been occasions, although they have been rare, in which the mother and the step-mother have changed places. We have heard of mothers feeding on their own children. That was, I believe, in the siege of Jerusalem at the time of Titus. I hope the right hon. Gentleman will not perform a similar operation on the present occasion; when he has no such pressure or palliation to offer in excuse. Whether we are to be regarded as mothers or step-mothers, we are endeavouring, as well as we can, to supply the part of mothers; and, in our endeavours, we think we are entitled to call upon every Member of this House to support us in our poor and feeble efforts. But there is one person in particular whom we are entitled to call upon for support, and that is the right hon. Gentleman opposite. I ask the right hon. Gentleman this—I will not say that the rejection or loss of the Bill means that Parliament does not intend to prosecute, with firm purpose, the reduction of the National Debt. That would be an overstatement to put it so high; but I will say this—and the right hon. Gentleman knows that it is true—that the rejection of this Bill is a step in that direction. I ask him what he thinks will be the effect, suppose this Bill were rejected by a majority of this House? Suppose there was a minority such as to show us that, considering the character and the time of the year, we could not go forward with it, does he believe that those interests in this country which are conversant with transactions in money, and which are set upon the passing of this Bill, not from any Party motive, but because they consider the financial interests of the country bound up with steady efforts to pay the National Debt—does not the right hon. Gentleman know, as well as I know, that they would regard the rejection of this Bill, and the failure of this Bill, as a blow, perhaps not a fatal one, but as a real blow aimed at that system? It is known that what we are asking is to keep in certain operation that machinery by which, heretofore, and by which alone, the reduction of the Debt has been effected; and £140,000,000 or £150,000,000 has been paid off since the Debt reached its maximum about the year 1815. Since the war, during the past 60 or 70 years, £150,000,000 have been swept away, and that was done through the Terminable Annuities. Take away the Terminable Annuities from the history of the last 60 or 70 years, and you will have had no reduction of the National Debt. During that time, it must be borne in mind that £150,000,000 represents the net result, because we have largely added to the Debt, partly through loans for the Crimean and other Wars, which have amounted to about £100,000,000, and our proposal is that, acting upon the lines and opinion of the right hon. Gentleman in 1875, it is better not to wait for the moment of the windfall, but allocate the money beforehand. Our proposal is, that we should keep alive, by reviving the mechanism and organization, that system of Terminable Annuities under which, practically, alone any impression can be made upon the National Debt. We are walking in the train of the right hon. Gentleman. We are not asking for new measures to be taken. We are founding ourselves upon the Act of 1875. The right hon. Gentleman seems to waver in his allegiance to it. I hope we shall succeed in relieving his fainting spirit, and bring him up to the firm determination to uphold this Act. I am reminded that £160,000,000 is the amount paid off by Terminable Annuities. That that system should be trifled with by persons of great authority is perilous to the highest interests of the country. The system embodied in the Bill is amply commended to us by experience, and, speaking generally, it enjoys the confidence of the public. Gentlemen here and there may be disposed to impair and destroy it; but any tampering with the allegiance of Parliament will be sure to produce injurious results. It is a good principle in politics to resist the beginning of evil, and if the principle be good in matters of general politics it is of essential value in finance. It is through financial difficulty and discredit first in small measure and amount, that nations have been led down the path of ruin. They have tampered with the difficulty because it was small, saying—"It will not be understood as a repudiation of the sound principle of the payment of Debt." Let there be no misgiving or belief that we are moving in that direction. Do not let us wait until public evils have grown into vast dimensions. Let us plant our foot, and resist the beginning and approach of anything that would tend to lower the high standard of public credit in England. By maintaining that system we shall follow in the steps of all great and sound financial authorities in the country, especially Sir Robert Peel. There was nothing more than this, except, perhaps, the frankness of his adhesion to Free Trade when he perceived its soundness, that lay so near the root of Sir Robert Peel's high reputation; and I trust that the House will not be induced by any criticisms, however plausible, on details to allow themselves to be drawn off from this great cardinal principle of the Bill, and of public policy. The right hon. Gentleman the Leader of the Opposition said that my right hon. Friend the Chancellor of the Exchequer has gone beyond former proposals, which, in dealing with Terminable Annuities, have, as far as I know, undoubtedly contemplated a certain limit. The Chancellor of the Exchequer has been bolder in this one point—that he has provided for a self-working system to continue in operation until Parliament shall interfere; but he has distinctly conformed to the Act of 1875, which has no limit to its operation; and if objection were taken on this ground only, it ought, probably, to carry along with it the limitation of the Act of 1875. I do not say we shall find it necessary to make that point an article of life or death to this Bill; let that be understood in any further discussion. At this period of the Session, it is material to the comfort of the House collectively, and the welfare of its Members individually, that a great deal of time should not be spent in unnecessary discussion on the measure. The Government wish the Bill to be discussed; but they wish it to be understood, at the same time, that they will not push their views to an extremity if, by abating them somewhat, they can facilitate the passing of a useful measure, and one, at the same time, conformable to their opinions. The Government have promised not to introduce or push legislation which threatens to extend enormously the length of the Session; and I hope it will be thought that, in speaking as I have done, I am acting in a fair and equitable spirit. I trust that the House will show a disposition to meet the Government in the same spirit, by not declining to examine the question before us; but I am satisfied that the more they do so, the more they will find that they will be committing a serious error, and taking the first step in a wrong direction, were they to intercept the effort made by my right hon. Friend to procure the passing of this Bill.

MR. MITCHELL HENRY

, in rising to move the following Amendment:— That the National Debt having been reduced during the last three years by £20,500,000, the present generation of British taxpayers, who have contributed to that result, are entitled to some relief from their burdens; considering also the backward state of Ireland, and the miserable condition of a large part of its population, it would be in the highest degree impolitic and unjust to re-create, partly at their cost, terminable annuities calculated only to relieve posterity of taxation in the year 1905, said, he had to complain that, although it was exactly four months since the right hon. Gentleman the Chancellor of the Exchequer (Mr. Childers) had introduced his Budget, yet it was not until now, on the 7th of August, when many hon. Members had left town, that the House was called upon to discuss this important question, and to consider the Bill founded upon the recommendations of the Budget. So far, the discussion had merely resolved into a contest between the two Front Benches as to which of them had done most for the taxpayers, or had deviated most from their professions; but, in his opinion, all such discussions were as nothing, and did not affect the interests of the taxpayers in the Bill. His Amendment was framed solely with regard to their interests, for he did not believe, although the Prime Minister had said that they were in favour of it, that they understood the Bill; and he felt convinced that it had been adroitly postponed till the last days of the Session in order to avoid the possibility of a debate or of any real discussion taking place. Personally, he favoured, as much as anyone, the reduction of the Debt which had been put upon us by the folly or the patriotism of our ancestors, as people chose to consider it, provided the country was in a position to bear the extra cost of the reduction; but as the question touched those who had to pay, it was entirely a question of how much and by what means. There was only one mode of paying off debt, and that was by putting our hands in our pockets and producing the cash. To get rid of £3 of annual claim for interest, the taxpayer must put his hand into his pocket and take out £100 and pay it away. What taxpayer, except a rich man, would care to perform such an operation? He denied that the Debt was a mortgage, based, as it was sometimes said, upon the realized property and upon the industrial income of the country; because the man who held Stock could only demand interest; and he protested against the idea that those who opposed rapid and enormous reduction of the Debt were in favour of repudiation, or were unwilling to fulfil their obligations. There was no obligation to redeem the debt, except according to convenience and in consonance with the moral sense of the community; and it was the State itself, and not the creditor, who had anything whatever to say to the question. The peculiar terms in which the fundholder spoke of his investment gave rise to much misapprehension. A Frenchman would logically say that he held £30 a year of Renate; but an Englishman says he holds £1,000 in the Funds, whereas he only holds a perpetual annuity of £30, and cannot claim to be paid the principal at any time. What they had to ask, therefore, was this—What, at this moment, was the real pressure of the Debt on the nation, and what efforts had they made to reduce the corpus of the Debt? Now, the exact amount of Unproductive Debt on the 31st March last was £723,768,087 4s. 6d. (Parliamentary Return, 291 — 1883.) The Productive Debt — such as Local Loans, Suez Canal, and Telegraph Shares, &c.—are not Debt proper, but are, in fact, national investments, and produce profits, not loss, to the nation, and they need not row be considered.

Adopting, therefore, the figures he had quoted as the true amount of Debt, he denied that, as some great financiers said, the people of this country had made no considerable effort to reduce the National Debt, for in the last 20 years they had paid off no less a sum than £100,000,000 of Debt; and the Chancellor of the Exchequer, in his Budget Speech, which was the most controversial he ever heard, contrasting Conservative finance of six years with three years of Liberal finance, showed that the Liberals had paid off nearly double what the Conservatives had paid. During those nine years £39,000,000 was paid off the Debt. Independently of that, the country had been engaged in many wars, such as the Afghan War, the Zulu War, and the Egyptian War; but instead of throwing this burden on posterity as was formerly the case, either in whole or in part, they had called on the taxpayers to pay at once. The taxpayer had thus had to pay £23,000,000 for war in addition to the £39,000,000, making in all £62,000,000 extra taxation in nine years. It was not, however, so much on behalf of English and Scotch taxpayers that he appealed, but rather for the Irish. Out of the £62,000,000 paid off in the last nine years, a ninth part had fallen upon Ireland, so that, during that period, the Government had abstracted from that unfortunate country, which had known nothing but suffering, misery, and famine nearly all that time, about £7,000,000 extra and gratuitous taxation to pay off a Debt borrowed at 3 per cent. The money would have been worth to the Irish people 5, 10, or perhaps 15 per cent, if only devoted, as they would wish it to be devoted, to the development of the internal resources of the country. It would, in fact, have been worth to them as high a percentage as even the Suez Canal Shares were expected to bring in. Again, in estimating the real pressure of the burden of the Debt on the resources of the nation, it should be remembered that we borrowed at 3 per cent, whereas the National Debts of other nations stood at a larger interest. To make a fair comparison we must calculate our Debt on a 5 per cent basis, when it would be found to be a burden of only £425,000,000, or little more than one-third of the annual income of the country. The Bill before the House was really in favour of, and desired by, the great capitalists and bankers, and of all those who desired that the Funds should attain an abnormal value; but it was asked for by no other classes of society. It was in no way in favour of the small investor.

As to the £6,000,000 of Terminable Annuities, about which so much had been said, and which were to fall in in 1885, where did that money come from? It had emanated from the extra taxation of the people, and from nowhere else; while our expenditure on wars, during the past few years, had all been met from the same source. He would further ask—what had the people been promised at the time the present Government came into power? They were promised at the General Election what he now asked for them—a free breakfast table. Where were the professions in favour of the poor and temperate man, and of those who had few luxuries? Where were their hopes of the abolition of the Tea and Coffee Duties? They were all gone—swept away by this scheme for the glory of high finance, and for the increased value of the Funds in favour of the rich investor. Again, he defied anybody who was not an expert to understand all the distinctions between Long Annuities and Short Annuities and Terminable Annuities. The Chancellor of the Exchequer had played with these expressions in a manner which reminded him (Mr. Mitchell Henry) of a juggler in the street who skilfully threw golden balls in the air. The spectator stood gaping at the skill with which the conjuror threw first one and then several more, keeping them all in the air in constant succession, without allowing one to touch the other; but when the spectator got home he found that somebody in the crowd had taken the opportunity to pick his pocket. That was precisely what the Chancellor of the Exchequer was doing. While amusing the country with his financial manipulations, he had so juggled with these Sinking Funds that the people altogether forgot that, at the same time, he was picking their pockets of £6,000,000 a-year. It was not, as many supposed, a sum of £6,000,000 of a windfall which was to be skilfully invested when it fell in in the year 1885; but the taxpayer was to go on producing another £6,000,000 every successive year for 20 years to come, and all that time he was not even to be allowed the benefit of the interest of the cancelled Stocks. Now, what was the real object sought to be attained? Nothing more nor less than to hood-wink the people into providing money for purposes unintelligible to them. If the £28,000,000 for interest and redemption secured by the Act of 1875 was allowed to go on it would eventually produce exactly the same effects as the Chancellor of the Exchequer proposed to produce by his very remarkable financing; but that scheme had the disadvantage of being plain and intelligible to the people, who were reminded every year of the extra taxation they were paying for the purpose of reducing Debt. The less hocus-pocus there was in matters of finance the better it would be. In his opinion it was a grossly immoral practice for the Government to wrap up their financial proposals and formulate them in an Act of Parliament in such a way that they could not be understood by the people. In his view that was the surest way to breed financial deceit in other matters, and a sure way besides to make the poor man, when he found how he was done, to rise up against the rich man. The people were entitled to know what taxation they were submitting to, and they had a right to know what was done with the taxation; and, moreover, to demand that any surplus should be applied in the most judicious and paying way.

The Chancellor of the Exchequer, however, in Office and out of Office were two different persons, as plainly appeared from his speech in opposition to the Budget of 1875, of which he would venture to quote two extracts. In criticizing the proposals of the right hon. Baronet the Member for North Devon, in 1875, the present Chancellor of the Exchequer said this— The plan required that in 1885 and 1886, when the Terminable Annuities fell in, the Chancellor of the Exchequer should not apply any part of it to the relief of taxation under this permanent Act. He must apply the whole to the reduction of Debt, and would be debarred from doing what Mr. Gladstone did in 1860, use the £2,000,000 of Terminable Annuities to effect great financial reforms. Surely it was better to deal with their surplus from year to year as it arose, and to leave the year 1885 to be dealt with as 1860 and 1861 had been dealt with by the right hon. Member for Greenwich."—(3 Hansard, [224] 1538.) Again— An argument which had great weight with Members of the House was that the proposed Terminable Annuities would, by a sort of hocus-pocus, delude the public, and that the best way would be to apply any money which might come in directly to the reduction of the Debt by the purchase of Stock. So much for consistent finance; and now about the relief of taxation. Tea, almost the one luxury which modern civilization had brought to the doors of the poor, was raised in value to nearly double, or at least to 75 per cent over its proper price, in consequence of the duty it had to pay. Did they suppose that the poor, who bought their tea in pennyworths and two pennyworths, would not feel aggrieved when they came to understand that the price was so increased, and that they were to continue to bear this heavy weight, in spite of all the professions of a free breakfast table, simply in order that the price of Consols might be raised, and great financiers have desirable investments for their funds? Instead of devoting this £6,000,000 to paying off some of the National Debt, he would advise the Government to devote it to the purpose of sweeping away a class of duties, which were nothing more or less than a disgrace to the country, and necessitated the keeping up of an army of Custom House officers. We collected something less than £4,000 a-year upon plums, and £4,700 a-year upon prunes. Figs were taxed to the amount of £34,000; and the other day the Custom House officials confiscated some small boxes of bon-bons containing chocolate, which some lady friends of his were bringing over with them from Paris. He would suggest the sweeping away of the duty on tea, which amounted to nearly £4,000,000 a-year; and, in doing so, would pause to ask where was the honesty of preaching the doctrine of temperance, and, at the same time, retaining a high duty upon the only temperance beverage which the majority of the people drank, and which, in the greater part of Ireland, was the one luxury the poor had learned to use of late years? He would advise, also, the repeal of the duty upon coffee, cocoa, currants, raisins, and upon carriages, which would be as great a boon to persons of small income in this country as it was in Ireland. If these duties were remitted, the Chancellor of the Exchequer would have disposed of £5,299,000 of his surplus, and would still have £700,000 which he might convert into Annuities for 20 years. If, however, the right hon. Gentleman should happen to think that that was not a sufficient sum for conversion into Annuities, he had only to alter his Spirit Duty and tax alcohol at the rate of ½d. per alcoholic degree, and he would find he would get all the revenue he wanted, without imposing an unequal burden on the beverages of the poor.

He would now turn to the latter part of his Amendment, and lay before the House the case of Ireland, with which it dealt. The National Debt, then, had been reduced, during the past 20 years, by a sum of £100,000,000. Now, it was a vital question to ask, where did the money come from which enabled successive Chancellors of the Exchequer so largely to reduce the National Debt? His answer would, probably, startle the House. It came out of the extra taxation placed upon the Irish people of late years, and from no other source. That was a bold and broad assertion; but he would proceed to prove it, and would entreat the House to listen to the story. In 1847 they had the Irish Famine, which swept away 1,500,000 of the Irish people. That Famine was partially relieved by contributions from all the civilized countries of the world, and England, in its private and individual capacity, contributed very largely to the relief. The Government of England, moreover, lent the Irish people, for the purpose of dealing with the prevailing distress and keeping the population alive, £4,500,000 sterling; that £4,500,000 sterling being secured upon local Irish taxes. In the year 1851, Ireland was still, of course, in a critical condition, and a Committee of the House of Lords, after inquiring into the state of the country, recommended that the Debt of £4,500,000, which had been commuted for an Annuity of £260,000, should be remitted, on the ground that the calamity of the Famine was national in its character. In 1853 the present Prime Minister (Mr. Gladstone) was Chancellor of the Exchequer, and, having a surplus, he proposed to take off a number of taxes from the English people, and to effect some of those financial reforms which had done so much good to this country. With regard to Ireland, the right hon. Gentleman said that he had considered the Report of the Lords' Committee, and he agreed with the recommendation that they should make a clean sweep of the Debt incurred for the Famine, which, at that date, had been reduced to about £4,000,000, involving an annual payment by Ireland of £245,000 a-year; but he added that he thought the time had come when the Income Tax should be imposed on Ireland. Sir Robert Peel had always refused to do this, because, he said, money was drained rapidly enough from Ireland as it was, and there was left only a small amount of property among the people. But the right hon. Gentleman (Mr. Gladstone) thought differently. He said that he would not only impose the Income Tax on the Irish people, but he would increase the Spirit Duties by 8d. a-gallon, calculating that the Income Tax would produce £460,000 a-year, and the increase of the Spirit Duties £198,000, making a total of £658,000 a-year of new Irish taxation. He said he would set against that the £250,000 a-year which the Irish people had to pay for the Famine Debt, and in that way he would gain a sum of £413,000 a-year. The Irish Members, of course, objected, and then the right hon. Gentleman said— I admit the taxation that we propose will be higher; but let hon. Gentlemen bear in mind that the Income Tax is only temporary; and, if we look at the time the tax will extend, Ireland will receive in the long run a larger remission than if the Annuity were continued. The Irish Members protested against that argument, and were joined by one English Member, a great financial authority, and himself previously in Office as Chancellor of the Exchequer. Sir Francis Baring, father of the present Lord Northbrook, had honesty and independence enough to stand up and earnestly protest against the relief from taxation which England was about to receive at the expense of the poverty-stricken people of Ireland. Sir Francis Baring's words ought to be quoted and remembered. He said— The relief given to Great Britain by the immediate operation of the Budget of that year would be £1,443,000, and the taxes imposed new and peculiar to Great Britain £403,000, making the amount less to be paid by England £1,040,000. He submitted, for the fair consideration of his fellow-countrymen, whether it was quite fair, when they would be immediately receiving a relief of £1,040,000, to place a new Income Tax on Ireland and a whole amount of additional taxation of £413,000?"—(3 Hansard, [126] 732.) Well, that was not the only way that England found herself able, at the expense of Ireland, to reduce her National Debt. When the Chancellor of the Exchequer discovered that he got money by this process, he was not slow to do it again, and in the very next year (1854) the Spirit Duty on Irish whisky was again raised by the right hon. Gentleman by 8d., making the duty 4s. a-gallon; in 1855 it was raised by 2s. 2d. a-gallon, making it 6s. 2d. per gallon; in 1858 it was raised to 8s., this time by Mr. Disraeli, for where money was to be squeezed out of the Irish orange Whig and Tory were convertible terms; and the very next year the Spirit Duties of England, Ireland, and Scotland were equalized by Mr. Gladstone, who was again in Office, and made 10s. per gallon. He believed that so rapid an advance of taxation was unparalleled. Hon. Members might say that additional duty was put on Irish spirits in order to discourage intemperance in Ireland; but that was all stuff and rubbish. Additional duty was put on whisky because the Government wanted to get more money out of it. The general result of the operations that were carried on with regard to Irish financial matters was that, while in 1851 Ireland paid only £4,000,000 in taxes, it now had to bear a taxation of between £7,000,000 and £8,000,000 sterling annually. He (Mr. Mitchell Henry) had written several letters on this subject, and his statement regarding the £8,000,000 was questioned by his hon. Friend the late Member for Edinburgh (Mr. M'Laren), who pointed out that he (Mr. Mitchell Henry) was in error in stating that sum, inasmuch as £1,000,000 of it was borne by Scotch distillers. Up to that time, he (Mr. Mitchell Henry) was too innocent of the ways of Scotch distillers to be aware of the fact; but he believed their practice was to buy Irish whisky, place it in bend in Dublin for a time, and then take it over to Scotland, smoke it, and sell it as Scotch whisky; and in that way they bore a part of the taxation of Ireland. Taking it, then, at £7,000,000 only, they would find that if they multiplied the £3,000,000 a-year—extra taxation—which they had placed on Ireland since 1853, by the 30 years which had since elapsed, it would come to £90,000,000, or within £10,000,000 of the £100,000,000, by which the National Debt had been reduced. Let it be borne in mind also that the extra taxation was levied on a smaller number of people now than ever inhabited Ireland during the whole of the present century. The English Government had actually raised the taxation of the Irish people from 9s. 6d. per head in 1853 to £1 6s. 2d. per head at the present moment. The taxation of the English people had been reduced, and that of the Irish people increased, and what did the Chancellor of the Exchequer now propose? He proposed to continue that abominable injustice, of which no explanation had ever been given. Were the Irish people better able to pay £7,000,000 a-year in imperial taxes now than they were to pay £4,000,000 in 1851? Well, if it was proposed that the Irish people should continue to pay these taxes, the least they might have was a voice in the disposition of the money. If they were to continue to pay their share of the £6,000,000 a-year of extra taxation, which they would have to do under this system of Terminable Annuities, and as they would have to under the Act of 1875, surely they ought to have a right to say what they thought should be done with their share of the surplus of £6,000,000 that would accrue in 1885, and which was, according to the proportion of their taxation, £750,000 a-year. They had. petitioned the House, and they claimed that the money should be capitalized, and be devoted to the development of the resources of the country—to drainage, to making railways and harbours, and to the reclamation of land, which would enable them to cherish some hope of alleviating the great strain of unjust and excessive taxation which was now imposed upon them. In India railways were being made to avert famine, and increase prosperity. Why could not the same be done for Ireland? A. more just claim than he had just put forward had never been presented to the House of Commons; and, in so presenting it, he would ask such hon. Members as were present to consider why it was that the policy of successive Governments in Ireland had failed, why it was that, at the present moment, there was in the breasts of the Irish people deeper feelings of hatred against the English than ever existed since the days of Cromwell. Could they wonder that there should be such hatred of England, when there was so much cause for it? They persisted in linking the fortunes of the Irish people financially with their own, caring nothing for their poverty. They took the results of the hard work of the Irish people to pay off immense sums of National Debt, and persistently and obstinately refused to develop the resources of the country, so that they could the more easily bear their burdens. The whole financial arrangements of this country as regarded Ireland was wrong, iniquitous, and unsuccessful. He believed that the poverty of the Irish people was principally due to the burdens laid upon them by an excessive financial drain, and this was the principal source of the hatred and disaffection that prevailed. What Chancellor of the Exchequer, no matter to what Party he might belong, when he made out his annual Budget, ever condescended to cast his eye across the Channel and consider the effect it would have in Ireland? None; he only thought of what English financiers desired, and of the views of great capitalists. Never a thought was cast on the miseries that so-called brilliant proposals would inflict upon Ireland; but he (Mr. Mitchell Henry) would warn them that, until they endeavoured to separate the financial interests of Ireland from the financial interests of England, they would never have a tranquil Ireland, and never a United Kingdom. The hon. Gentleman concluded by moving the Amendment of which he had given Notice.

MR. MARUM

seconded the Amendment.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "the National Debt having been reduced during the last three years by £20,500,000, the present generation of British taxpayers, who have contributed to that result, are entitled to some relief from their burdens; considering also the backward state of Ireland, and the miserable condition of a large part of its population, it would be in the highest degree impolitic and unjust to re-create, partly at their cost, terminable annuities calculated only to relieve posterity of taxation in the year 1905,"—(Mr. Mitchell Henry,) —instead thereof.

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

MR. ANDERSON

, who had the following Amendment on the Paper:— That, in the opinion of this House, as the present taxpayers have been so patiently bearing an excessive burden of taxation, looking forward to relief through the expiry of the terminable annuities in 1885, it is inexpedient 'to deprive them of that well-earned relief by continuing the taxation beyond the term of its natural cessation, instead of using it for reducing the Duties on tea, coffee, and fruit, or in some other way for the immediate benefit of the taxpayer, said, that, after the extremely able speech to which they had listened from the hon. Member for Galway (Mr. Mitchell Henry), there was not a great deal for him to say. The hon. Member had taken part of his (Mr. Anderson's) Amendment as well as his own; and he had defended that part of it with very great ability, as well as the portion relating to Ireland. The right hon. Gentleman the Chancellor of the Exchequer had made two statements in the course of his speech that he would take exception to. The right hon. Gentleman said that, if the House refused to sanction the Bill, it would be a proof that England, or the Parliament of England, was indifferent to the principle of paying off our Debt. Well, he (Mr. Anderson) denied that entirely. It would prove nothing of the kind.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

I did not say it would be a proof. I said it would be said so.

MR. ANDERSON

said, that, if it were so said, it would be said most untruly, and there could be no ground for such an assertion. It would not mean that Parliament would be indifferent now to pay off the Debt, any more than it had been during the last 30 or 40 years; but that they considered that they could turn their money to better account in some other way. That was the policy they had been pursuing for many years past. They had been paying their Debt very fairly; but they had not been paying it when they had an opportunity of putting the money to better account by relieving the taxation. The other statement to which he took exception was the right hon. Gentleman the Chancellor of the Exchequer's reference to America, as if the action of that country in this respect was something which they ought to copy. A great deal of nonsense had been talked about America on this point. The Americans paid their Debt simply because they were driven to it, because of the exertions of the Protectionist Party there, and because of the existence of hostile tariffs from which they derived large sums of money. They taxed all imports to such an extent that they did not know what to do with the money that they got, and so they paid their Debt with it; and, at the present time, there was much dread among the Protectionists as to what was to follow when the Debt was paid. The Protectionist Party would have no excuse to raise a Protective Tariff any longer, and they would have to go in for Free Trade, of which they had a very great dread. Then the United States had no great Army or Navy to spend large sums upon, and that also made a great difference. In this country, on the other hand, we had a large Army and Navy; and if we spent our money upon them, we could not so easily spend it in reducing the Debt. The Americans, in fact, were doing no more than we were doing. Parliament now was only acting on the same lines and the same policy as they had acted on for many years past, and that was that they paid their Debt as they went along. They were not adding to their Debt. Moreover, in 20 years they had reduced it by £100,000,000, which was a very fair amount of reduction. If their forefathers had acted on the same principle, they would not have had that enormous Debt to pay; but they went in for a high foreign policy, which cost a great deal of money, and they left us to pay the bill. The policy now was, however, that the generation that spent the money ought to make a point of paying it. The right hon. Gentleman said he did not know what a generation was. A generation was generally held to be 30 years, and the Americans expected to be able to pay all their Debt off in 30 years. Our forefathers did not do that; but left a Debt which we had been paying off at a rate greater than he saw any particular occasion for. We had been paying £3,000,000 a-year since 1873 more than we had been paying previously. Why did we do that? In view of the relief that was to come to us in 1885. But of that relief the Chancellor of the Exchequer now proposed to rob us. Why, he asked, should the people, who had been paying extra taxation so long, in order to get relief in 1885, forego it entirely for the benefit of a further away generation? Why should we go on paying £6,000,000 a-year after 1885, which we did not need to pay at all? The hon. Member for Galway had pointed out the exact duties of which he (Mr. Anderson) would like to be relieved. He saw no good reason for the proposal of the Government, if they could turn their money to better account, as he submitted they could, in another way, by relieving the people of £4,000,000 a-year duty on tea, £700,000 on dried fruit, and £250,000 on coffee. A large amount of relief could be secured on these three items; while there were smaller matters, such as the duty on silver plate, the duty on marine insurances, and a great many other things, which were improperly levied and ought to be swept away or reduced, and which the opportunity of 1885 ought to be taken to reduce. The Chancellor of the Exchequer told them that the Excise Duties were rising again. In his Budget Speech, he told them that the increased sobriety of the people was having a very sensible effect upon the Excise Duties; and if the sobriety increased, no doubt the effect would be still greater in future years. In that respect, the country was in a sort of transition state. They had also been, and were spending a great deal of money on education. That was gradually making the people more sober; and it was having an immediate effect upon the Revenue. It told upon the Revenue adversely first; but, in future years, it would tell in another way—upon the pauperism and crime of the country—and future generations would get back in reduced cost of these what the present generation had spent upon education. But, meantime, when 1885 came, the Chancellor of the Exchequer might find his Excise Duties not yield so much as he expected; and then he would, no doubt, be glad to have had some of these dropped Terminable Annuities to help him with his Budget. This country had been paying its Debt fast enough of late years, and he did not wish to give up paying it off to a reasonable extent. But, when they derived these great sums from the necessities of the people, there ought to be some modification of taxation, if not abolition of the taxation, before they began to be so very anxious about paying the Debt. The fact was that they were enriching the rich and doing nothing for the poor. The main object of this scheme was to tie up the industry of this country more completely to the payment of the National Debt; whereas, in his opinion, the Debt should be paid by the property of the country. The Debt finance ought to be something entirely apart from the general finance; and there ought, he contended, to be special property taxes alone devoted to the payment of the interest and the reduction of the National Debt. He objected to the scheme as one which nobody who did not go into it closely could understand. The industrial population could not possibly understand it in the least; and they would feel, when they found out that these £6,000,000 a-year of Terminable Annuities were to be thrown upon their shoulders again for an indefinite period, without any hope of any relief—they would feel that they had been deceived in the matter by a policy of finance which they did not, and could not, possibly understand. He should heartily support his hon. Friend's Amendment, which almost made his own unnecessary.

MR. J. G. HUBBARD

said, he hoped it would not be thought that in placing on the Paper the Notice of Motion which stood in his name, and in asking the House to express its opinion upon it, he had been prompted by any feeling of hostility to Her Majesty's Government, or to the Finance Minister; but, after careful consideration, he had come to the conclusion that, considering the magnitude and perplexity of this subject, it would be impossible adequately to discuss it at present, and that, therefore, the Government would do well to postpone the consideration of the Bill until next Session. He maintained that there was not a single point that could be obtained by passing the Bill now that would not be equally attained by passing the measure at the beginning of next Session. In regard to the main proposition, no one could be more thoroughly convinced than he was, that it was the duty of the country to make a determined effort to reduce its Debt; but, before we determined to fix and perpetuate a particular scheme for accomplishing that purpose, we ought to be sure that that scheme would be the best and the most practicable which could be devised. In these respects, he ventured to impugn the scheme now presented to the House. To his mind, it was by no means the best that could be devised; and he held, besides, that it was impracticable. The question was, what was the sum which this country ought to devote annually to the reduction of the Debt? Having determined that, we ought next to settle whether it should be an increasing, a permanent, or a decreasing sum. Then we ought to consider how perpetuity could be given to the scheme. On a retrospect of the last seven years he found that the average net reduction of the Debt was £4,700,000, and that the highest amount of reduction in any one year was £6,900,000. The conclusion he had arrived at, from calculations he had made upon the subject, was that £7,000,000, being 1 per cent on the present entire amount of the National Debt, was an adequate and a sufficient amount to appropriate annually fur the reduction of the Debt. That amount ought, in his judgment, to be permanent—that was to say, a system should be devised which would make the application of £7,000,000 yearly a certainty in our financial arrangements, and neither to be diminished nor increased. This was, in a few words, the view he took of the duty of this country with regard to the National Debt. The Chancellor of the Exchequer started from the same platform as he did, inasmuch as the right hon. Gentleman proposed to appropriate about £7,000,000 by investing in the form of Permanent Annuities such an amount of Stock for the first year or two as would eventuate in the production of that sum annually to be applied to the reduction of Debt. But, not satisfied with doing that, the right hon. Gentleman wanted to supplement the amount by further reductions of Stock into Terminable Annuities. Thus the sum would be brought up in 20 years to £14,000,000, and in 30 years to £17,000,000, and so on, to be taken from the taxpayers of this country. This process would go on at an accelerated pace until the patience of the taxpayers was exhausted and the scheme came to a violent collapse. He held that that scheme was impracticable, unworkable, and essentially wrong in principle, and that it would bear most harshly and unjustly on the taxpayer. Let it be remembered that the Debt could only be reduced by taxation. £7,000,000 sterling per annum meant an Income Tax of 3½d., and if the Chancellor of the Exchequer's scheme of expansion were carried out, in 30 years they would be making a reduction equivalent to more than the whole of the present Income Tax. No system could ever work safely and successfully which was not homogeneous. Now, the scheme of the Chancellor of the Exchequer was complex. It was made up of two principles absolutely distinct and diverse—the system of Terminable Annuities on the one side, and of fixed Debt on the other. One or other of these systems was superfluous. In. his (Mr. Hubbard's) opinion, Terminable Annuities were the preferable course, as being by far the most clear and effective scheme. He sincerely protested against the modern system of unhealthy sensational schemes of finance, which had been introduced, no doubt, by the eloquence of the Prime Minister; and every Financial Minister who followed him seemed to think it was necessary to have a picturesque and sensational Budget. But Downing Street was not Drury Lane. Downing Street had nothing to do with eloquence and picturesqueness, and what they wanted in finance was quietness and caution. It was all nonsense to talk of redeeming the Debt by a Sinking Fund. Nothing would redeem the Debt but taxation. The Chancellor of the Exchequer said he did not want this generation to pay more than the last. The figures were correct; but what did they mean? The right hon. Gentleman asked them to pay the same amount, although in the interval £100,000,000 of Stock had been cancelled. Was no allowance to be made for this? The right hon. Gentleman was like the Russian General who continued to draw rations for the dead men. He brought up phantoms of creditors, and made the country believe that it was as deeply indebted as it was 20 years ago. That was really tasking their credulity too much. It was, in fact, an attempt to deceive the nation. It was a mistake to connect the redemption of Debt with the reduction of the charge for it. If they forced up the price of the Funds they would make re-purchases less desirable. No good could result from raising the price unless a fresh loan were in view. If we were not going to borrow, then it was evident that the high price of the Funds while the reduction of the National Debt was in progress, so far from being an advantage to the country or the Exchequer, would be exactly the reverse. There was, moreover, no advantage in resorting unnecessarily to the Chancery Funds. They would be necessary to the scheme for the reduction of Debt; and the conversion of Perpetual into Terminable Annuities would complicate and confuse the Chancery Accounts. The Resolution of which the hon. Member for Burnley (Mr. Rylands) had given Notice was so much to his mind that he had determined to support it; but, as the hon. Member had retired from the front of the battle, he (Mr. Hubbard) had put on the Paper an Amendment to the effect that the Bill was not entitled to the acceptance of the House, and that at this time of the Session it could not be adequately discussed. Postponement was the more desirable, seeing that the withdrawal of the Bill for one year could not in any way embarrass the Government or disturb the finances of the country. He ventured to ask the House to give a distinct declaration in favour of one or other of the two schemes—whether they would pay off £7,000,000 a-year, or adopt a scheme by which they would increase that sum up to £17,000,000 within 30 years. The latter was really the proposition of the Chancellor of the Exchequer; and he ventured to think such an important question ought not to be hastily affirmed on the 7th of August, when there were many previous occasions on which the subject could have been discussed had the Government been inclined.

MR. ILLINGWORTH

said, the question was one of great importance, and the right hon. Gentleman the Chancellor of the Exchequer must feel that the manner in which the present Bill was brought forward was attended with some inconvenience, and that some consideration was required for such a proposal as the present, especially when the real question at issue was, whether they should keep up taxation at £6,000,000 a-year beyond the requirements of the country. The discussion, so far, only showed that there was no infallibility or constancy on either Front Bench. He, however, did not complain of right hon. Gentlemen changing their minds; but he thought it afforded some justification to independent Members like himself exercising their own judgment on such a scheme as the one now proposed. He thought they ought to hold before the people this fact—that, in reality, it was an extraction from the pockets of the taxpayers in exact proportion to the amount that it was proposed to reduce the National Debt. He did not look upon it as a matter of high moral consideration; we discharged every moral duty if we provided the necessary 3 per cent for the payment of the interest upon it, and its reduction was a question of prudence and expediency, and governed by the question how far the taxpayer was able to bear the additional taxation. Although the scheme might be very ingenious and possibly the best, the proposed reduction meant the extraction of a sum from the pockets of the people in exact proportion to the amount of reduction. The case of America had been made much of; and, though the Chancellor of the Exchequer did not know what a generation was, it was the present generation of Americans who were responsible for the great war, and they had rightly taken upon themselves the obligation of paying their Debt. But we were not responsible for the creation of our own Debt, for it was incurred more than 70 years ago; and he did not reproach any Government for not reducing it more quickly, while he affirmed that the Prime Minister had made good use of his great opportunities. If it could be proved to the great majority of the taxpayers that it was better worth their while to pay 3 per cent on the amount of the Debt, and make from 5 to 7½ per cent with the money in their business, than it was to pay off the capital of the Debt, it was desirable that they should be allowed to do so. Although he did not agree that Ireland was unequally taxed, he could not help feeling that there was much force in the observations of the hon. Member for Galway (Mr. Mitchell Henry); and he thought the present impoverished condition of the people of that country furnished a strong argument in favour of relieving them from unnecessary taxation. The people of this country had some faith in the free breakfast table; but he observed, with regret, that the hon. Member for Burnley (Mr. Rylands) had not only removed his Notice on that subject from the Paper, but had removed himself from the House. Had he not taken that course, he (Mr. Illingworth) would have supported him. The present Prime Minister had made his great reputation by relieving industry and commerce from the burdensome taxation which hampered them; and he believed that the right hon. Gentleman the Chancellor of the Exchequer also would create for himself a lasting renown if he would devote himself to assailing our system of Customs and Excise instead of spending his energies in endeavouring to reduce hastily the National Debt. What he (Mr. Illingworth) desired to see was this country made the free port of the world; but when that happened, if it ever did, the Chancellor of the Exchequer would have to fall back on a more scientific method of taxation than that which now prevailed. he was an advocate of direct taxation, and his right hon. Friend the Chancellor of the Exchequer would, no doubt, say that if they accepted the Amendment, they would confine indirect taxes to alcoholic drinks and tobacco, and the total abstainers would escape; but, so far from regarding that as an objection, he would go further, and save the cost of collecting the Customs and Excise, which was about £3,000,000 a-year. That was a most extravagant cost, compared with the cost of collecting the same amount of local rates and direct taxes. It was sometimes urged that the taxation of spirits and tobacco was exacted on moral grounds. He doubted that statement; but, if it were so, it must be highly impolitic to tax ordinary tea 75 per cent on its value, when it was well known that it was one of the most successful competitors of alcoholic drinks. Such a tax was manifestly indefensible. For his part, he would have been glad if the opposition to the Bill could have been manifested sooner, so that the right hon. Gentleman could have deferred the consideration of the Bill for another year, so as to give the Chancellor of the Exchequer an opportunity of devising some more scientific plan; and his only fear was that, by pressing this matter forward instead of promoting the reduction of burdensome taxation, he was tying his hands behind his back, and postponing the abolition of Customs and Excise to a very remote period indeed.

MR. ECROYD

said, he supposed they were all agreed that it was a national duty, in times of peace and prosperity, to reduce the Debt; but the question before the House seemed to him to be not so much the reduction of the National Debt, as the rapidity of the process, the particular sacrifices to be made, and the manner in which the reduction was to be effected. Those, however, were grave questions; and to his mind the House of Commons, on the 7th of August, was not in a position to undertake the solution of them. If his right hon. Friend the Member for the City (Mr. Hubbard) had had an opportunity of submitting his Amendment to the House, he (Mr. Ecroyd) should certainly have felt it his duty to support him; but as his right hon. Friend could not now move it he should support the Amendment of the hon. Member opposite (Mr. Mitchell Henry). At the same time, he yielded to no man in his desire to see a steady, determined effort made to reduce the National Debt. Any special step, however, might be extremely wise at one moment, and extremely unwise at another. When the country formed the definite resolve to burden itself with the system of Terminable Annuities, our industries were expanding, and showing an amount of vitality and energy which had never been surpassed; but, at the present moment, all our great industries, whether agriculture or manufactures, were in an extremely despondent and stagnant condition; and the people were not in a position to bear any avoidable strain and burden. As matters stood, it was perfectly possible that, if this subject could be fully debated, it might appear unwarrantable, at the present moment, to impose a heavier burden than necessary upon the industries of the country; but, on the contrary, it might be better to relieve those industries than to make an investment which would return interest only at the rate of 3 per cent. Those industries were the great sources of the national wealth, and they ought to be fostered as much as possible. No benefit derived from the reduction of the Debt could be comparable to that which would be derived from the restoration of industrial prosperity. The right hon. Gentleman the Chancellor of the Exchequer had put before them the example of the United States with regard to the reduction of Debt; but the right hon. Gentleman entirely forgot to tell them that the United States accomplished that by placing enormous protective duties on imports, whilst this country had adopted a very different policy. He (Mr. Ecroyd) would like to know whether the right hon. Gentleman intended to imply that the United States had taken the wiser course? He thought, on the contrary, that we had, upon the whole, taken the wiser step, though he had no doubt this country would benefit very greatly by imposing a moderate amount of taxation upon certain imported luxuries and manufactures, and upon some other articles. He did not, however, advise a senseless system of enormous protective duties upon almost all commodities, such as the United States practised. In conclusion, he desired to guard himself from giving the least support to any Amendment which should have for its purpose the denial of the pressing duty of reducing the National Debt in prosperous times. He was one who would support to the utmost what he believed to be a safe and fair course to endeavour to reduce the National Debt; but he thought that the question as to whether it ought to be done by the precise methods, and to the full extent proposed in the Bill, was a very important one, and demanded such a complete, deliberate, and full discussion as could not be entered upon at that late period of the Session.

MR. W. FOWLER

said, he most cordially supported the proposals of the right hon. Gentleman the Chancellor of the Exchequer as embodied in the Bill. The enormous increase in the wealth of this country during the last 20 and 30 years made it incumbent upon us to diminish the amount of our National Debt. It was sometimes said that the taxation of the country was still so very heavy upon the labouring classes that we could not afford to pay off Debt as we had been doing. If the matter were carefully examined, however, it would be found that the proportion of taxation was nothing like so great on us as it was on our forefathers. The taxation of the necessaries of life was made another ground of opposition to the Bill. With regard to tea and coffee, he would admit that they were necessaries, and he should like to see the duties on them lowered as soon as his right hon. Friend the Chancellor of the Exchequer found himself in a position to lower them. But the case was different with regard to beer, spirits, and tobacco, which he must decline to consider as necessaries of life, though by the consumption of the latter article by some hon. Members he was half inclined to think he was mistaken. It might also be necessary to those who had but few of the luxuries of life, and for that reason he would vote for the reduction of the duty in times of prosperity; while, with regard to tea and coffee, he thought the duty should be reduced whenever it was possible. He would not deny tobacco to persons of any class of the community; but beer and spirits he regarded as superfluities, which he did not regret to see taxed, and as being, in fact, the greatest curse of the country. It was said that we had nothing to do with the exertions made by our forefathers in bearing taxation; but, at all events, we had to meet the interest on our Debt, and the simple question was, whether we ought not to take every opportunity of reducing the capital on which we paid interest? He looked forward to the time when our Debt would only bear 2½ per cent interest; indeed, he believed we were within a measurable distance of borrowing at 2½ per cent, if a great scheme such as this were carried out; but he thought it would be better to confine it to a 20 years' operation, instead of letting these Annuities go on for ever, or until stopped by Parliament, and he would commend that idea to the consideration of the right hon. Gentleman. He would admit that great difficulty surrounded Terminable Annuities; indeed, he regarded the whole system as a kind of Parliamentary hocus pocus. Here was a certain sum of money which they had to pay, and they were afraid to trust themselves. The right hon. Gentleman said—"If we get this Bill passed, you cannot alter it; whereas, if we leave the matter to the chance vote of the House of Commons, we cannot trust the House. We shall have the hon. Member for Galway and other hon. Members trying to get taxation taken off." It seemed to him rather strange that Parliament was so much afraid of itself that it could not trust itself to do this thing. If the Chancellor of the Exchequer said he had no confidence in Members of the House, he was ready to take the right hon. Gentleman at his word and vote for the Bill. But he thought that if the Chancellor of the Exchequer bought the Stock every year instead of getting the National Debt Commissioners to buy it, the result would be exactly the same. Whoever bought the Stock it mattered not. If they bought Stock they reduced the Debt. If they did not buy Stock they did not reduce the Debt. But as this was a question of machinery and detail, he would vote for the Bill. While he regretted the continuance of some of the taxes, he thought, on the whole, it was highly expedient, for the credit of the nation, that we should go on paying off the Debt; and, although there were a number of taxes which required reforming, yet it would be a very retrograde step to relax our efforts, and pay off less of the National Debt than we had been in the habit of doing.

SIR JOSEPH M'KENNA

said, the right hon. Gentleman the Chancellor of the Exchequer issued, on the 21st of last month, a Memorandum or Minute, which he intended as an argument in favour of passing this Bill. He (Sir Joseph M'Kenna) had carefully examined the document, and could not accept its conclusion—that they ought to pass the Bill. He took no exception to the mere statements in the Memorandum; but, if he accepted every one of them without reserve, it did not follow that the Bill was a good Bill; or, even if it were a good Bill, that that was the proper time, on the 7th of August, 1883, to ask Parliament to adopt it. The Bill intended to deal with a fund which would commence to accrue two years hence, of the capital value of £150,000,000 or £160,000,000 sterling—accruing thenceforth at the rate of upwards of £5,000,000 sterling a-year; and he should say, if there were no other objection in his power to urge, save the lateness of the period of the Session they had arrived at, before any discussion of the subject in either House of Parliament, it appeared to him (Sir Joseph M'Kenna) to be an objection strong enough in its nature to induce the Government to withdraw the Bill. The right hon. Gentleman the Prime Minister had stated, a few nights since, that, if he had found there were many objections in various quarters of the House, he would withdraw the Bill; but he now made light of the objections, or the number of the objections then on the Paper, and pressed on the Bill. There was no possible urgency in the matter. The right hon. Gentleman the Chancellor of the Exchequer prepared his recommendatory Memorandum at his leasure, and deliberately—it, therefore, required deliberate reply. The object of the document—indeed, its only object—was to make out a case to show that, whoever else was free to oppose the Bill, the right hon. Baronet who led the Opposition (Sir Stafford Northcote) was not, but was irretrievably committed by his Act of 1875 to this Bill, which the Memorandum contended was an inevitable sequel to that Act. He (Sir Joseph M'Kenna) did not take that view of the case so far as the right hon. Baronet was concerned; but, if it were even so, and that he was committed to the principle of the Bill, that was no argument in its favour from the Treasury Bench. When the Bill of 1875 was passed, nothing was clearer than that the House did not accept it as the basis of perpetual legislation. It would be very instructive for the Members of Her Majesty's Government to read the debate of 1875—the moral of it was, to his (Sir Joseph. M'Kenna's) mind, that, when out of Office, they did not scruple to assail the policy of which now they were anxious to avail themselves. The Preamble of the present Bill treated the word "permanent" as if it were of the same import in the Act of 1875 as the word "perpetual." No such force was ascribed to the word by the right hon. Baronet when he introduced his Bill in 1875. What did the word permanent mean? It signified a quality of endurance, through some course of events, or over some space of time, sufficient to negative the idea that the arrangement so qualified was merely pro hâc vice, or temporary. In that sense the arrangement under the Act of 1875 had been permanent, and was permanent then; but that fact afforded no earthly reason why the Government which happened to be in Office two years before the further permanence could be reasonably questioned should desire to convert the permanence into a perpetuity disavowed by the framers of the Act of 1875, and bitterly opposed by the present Prime Minister and Chancellor of the Exchequer at that time. The attempt to deal, then, with this question in the sense of the Bill of 1883, with an income Tax saddled on the people of the United Kingdom—for he (Sir Joseph M'Kenna) was not speaking for Ireland alone—was, in his view of the case, a positive breach of faith. It was, of course, a greater breach of faith with Ireland than with Great Britain, for reasons he would adduce; but still he put the case as one of breach of faith with the whole people of the United Kingdom. These were the right hon. Gentleman's words on the 18th April, 1853— We wish, in the first place, to put an end to the uncertainty respecting the Income Tax. We think it unfortunate that political circumstances have for the last two or three years led to a state of doubt in regard to the continuance of the tax, and have even begotten by degrees a feeling on the part of the public that the country is about to be entrapped unawares into its perpetuation. …. There is a certain class of transactions with regard to which the uncertainty about the Income Tax operates most unfavourably, such as the Terminable Annuities for example. It is very desirable that certainty should be restored on account of these transactions, and also on grounds more enlarged and general. I think it also most desirable that effectual measures should be taken to mark this tax as a temporary tax. By this I do not mean merely or chiefly that I would commit the Government to an abstract opinion to be acted on in future years. My own opinion is decidedly against the perpetuity of the tax as a permanent ordinary portion of our finances."—(3 Hansard, [125] 1384–5.) There could be nothing clearer from this than that the right hon. Gentleman was pledged to the abolition, unless circumstances rendered it impossible to get rid of the Income Tax. But these were very faint indications indeed in comparison to what was to be found further on in the report of the same speech. The right hon. Gentleman asked the question— How are we to attain a rational prospect of being able to part with the Income Tax in 1860? And then the right hon. Gentleman went on to say— The country, after so many announcements that have been made to it from time to time that the Income Tax was to be parted with, has become, doubtless, incredulous on the subject, and may, perhaps, conceive that we are aiming at a fictitious and undeserved popularity when we seek to show that, together with our remissions of indirect taxation, we can enable the House to surrender the Income Tax; but the statements shall be put plainly before the Committee—the Committee and the country can form their own judgment on them. The right hon. Gentleman then proceeded to show how he would be able to redeem his engagement to get rid of the Income Tax in 1860; he recapitulated the sources from which he calculated an increased Revenue—namely, legacy duty, spirits, and licences, making a total of £2,549,000. Attention should be paid to the right hon. Gentleman's words— Making a total of £2,549,000 towards the fund which we must provide in order to put Parliament in a position, if it should so think fit, to part with the Income Tax."—(Ibid., 1419–20.) But all that money would not go half way to get rid of the Income Tax, which was set down in the right hon. Gentleman's speech as about £6,000,000. Therefore, the question that bore on the discussion of the Bill now before the House was—what was the other great source from which he was to make up £6,000,000? [The hon. Member then proceeded to read copious extracts from the same speech, showing that it was to come chiefly out of the resources which he expected in 1860 from the expiration of Terminable Annuities in that year.] Resuming, he said he had not made these citations from the speech of the right hon. Gentleman in 1853 to upbraid him with his failure to carry his promises into effect in 1860. He made the best explanation he could in 1860 as to how he failed to realize the hopes held out in 1853. This answer and excuse might be summed up in the phrase force majeure; but having such an excuse in 1860 did not hold good in 1883, and would not hold good in 1885. His obligations to carry out his avowed policy in respect to the Income Tax were not discharged by his inability to realize them in 1860. They were simply postponed till circumstances would enable the policy to be fulfilled, and there was every prospect that in 1885 Parliament would be free to abolish the Income Tax, and yet to continue to apply towards the reduction of the National Debt from £2,000,000 to £3,000,000 a-year. It was the most astounding of all assumptions that the right hon. Gentleman could get rid of his engagements of 1853, because the right hon. Baronet (Sir Stafford Northcote), happening to be Chancellor of the Exchequer in 1875, brought in and carried a Bill bitterly opposed by the present Prime Minister and Chancellor of the Exchequer, which took no account one way or other of the present Prime Minister's engagements to the country; and yet not a vestige of other reason or suggestion was there for the introduction of the Bill, which ignored in toto the object to which 30 years ago, when the country was considerably heavier in Debt, he had consecrated the Annuities which were to expire in 1860. Why should not the right hon. Gentleman the present Prime Minister, even after such a lapse of time, when he would have the power to do so, fulfil in 1885, if he would be then in power, his engagements of 1853? Had Ireland no claim for remission of taxation? He (Sir Joseph M'Kenna) could scarcely summon patience sufficiently to go into her cruel case. So far as Ireland was concerned, the financial policy of the Government for the last 30 years had been one long series of injustice and exactions, occasionally assuaged by doles from the Funds of the Disestablished Church or the reduction of rents, many of which, it was confidently maintained, could and would have been cheerfully paid by solvent tenants, if the legislation of 1853 had not exhausted the community of its means, and forced some of the most active and intelligent of the tenant class to exhaust the fertility of the soil—as they had heard the other day had happened in Egypt—or to descend to the rank of labourers, or to emigrate. There had never been a proposal made to Parliament more in oblivion of engagements than in the case of introducing this Bill. No matter what doubt there might be as to the date at which the Prime Minister would be bound to effect the abolition, there could be no doubt as to what was the occasion whenever it arose, in 1860 or later, on the occurrence of which he would be bound to submit the abolition of the Income Tax to the consideration of Parliament. The occasion did not, in fact, arise in 1860, nor had circumstances concurred from that year to the present in such force as they did then in prospect of 1885. But, at the end of the Session of 1883, they forced on a Bill to deprive themselves in advance of the power to keep faith with the country, and sought to render perpetual a measure passed in 1875, on which they poured out the vials of their wrath when it was before Parliament. He put it to both right hon. Gentlemen, who opposed this legislation in 1875, to withdraw the present Bill until they had time to reconcile the House and the country to that remarkable change of front of which they had made no sign until a fortnight ago, when the right hon. Gentleman the Chancellor of the Exchequer issued his famous Minute. On the grounds he had stated, and on the special ground that the Bill before the House was one which would, if it became law, throw difficulties in the way of obtaining redress for the injustice inflicted on Ireland by the legislation of 1853, he would give the Bill his most uncompromising opposition.

SIR JOHN LUBBOCK

said, he supported the Bill. There were only two ways of getting rid of the National Debt. One was by repudiating it, which the honesty of hon. Members would not allow them to adopt; and the other was by paying it off. With respect to the statement of the hon. Gentleman who had spoken last (Sir Joseph M'Kenna), as to the alleged hardship of calling upon Ireland to contribute to the Income Tax, he had only to observe that she had not been called upon to do so until England and Scotland had for many years been subjected to it; besides which, Ireland was still exempt from several imposts which the other portions of the United Kingdom had to pay. No doubt, there were parts of Ireland which were in a state of great misery; but, taking the country as a whole, there had been a great improvement in its material prosperity, as shown by the Income Tax Returns. In proof of that assertion, he would advert to the circumstance that the assessment to the Income Tax in Ireland, which was only £26,000,000 in 1870, had now increased to no less a sum than £36,000,000.

SIR JOSEPH M'KENNA

pointed out that there was a technical error in the system of the Returns.

SIR JOHN LUBBOCK

said, it had been argued that this was a Bill in the interest of bankers. In fact, however, it was contrary to the interest of bankers, as one effect of it must be that the rate of interest on the National Debt would be diminished. It was their interest that the price of Consols should be as low as possible; and the probable effect of this Bill would be to increase the price of Consols. He was glad that, even at that late period of the Session, Her Majesty's Government had determined to persevere with the Bill; and he must say that he was surprised at the opposition it had met with. The hon. Member for Galway (Mr. Mitchell Henry) asked the House to declare that the "present generation of British taxpayers are entitled to some relief from their burdens;" but they were the Representatives of the taxpayers, and, of course, could do what seemed to them wisest. His belief was that they, the taxpayers, would most effectively relieve themselves of their burdens by paying them off. The hon. Member for Glasgow (Mr. Anderson) talked of the excessive burden of taxation; but that, again, if it were true, would be a strong reason against additional expenditure, but not, surely, against the repayment of Debt. He (Sir John Lubbock) should have expected that this Bill would have received the hearty support of the Front Opposition Bench, and that they would have felt it desirable to settle in advance what should be our policy with reference to the Annuities expiring in 1885. To leave the question open would surely be very undesirable. The policy of this Bill was the same in substance as that of the Act passed by the right hon. Baronet the Member for North Devon (Sir Stafford Northcote) in 1875; and he (Sir John Lubbock) was therefore surprised to find the right hon. Gentleman was not able to support it. The Act of the right hon. Gentleman provided that— For the payment of the annual charge on account of the National Debt, there shall be issued for every subsequent year—that was, subsequent to 1877—the sum of £28,000,000; and it went on to provide that such portion of this annual charge as was not required for interest should be devoted to the redemption of principal. That Act was passed by the Government of which the noble Lord the Member for Middlesex (Lord George Hamilton) was a Member; and he (Sir John Lubbock) had, therefore, read the noble Lord's Amendment to the present Bill with surprise, for it was, in reality, a Resolution in favour of the repeal of the Act of 1875. This Bill, indeed, dealt specially with Terminable Annuities; but on that subject the right hon. Baronet opposite (Sir Stafford Northcote) expressly said— The difficulty in regard to Terminable Annuities arose when the Annuities ceased. A large sum was then thrown on our hands, and there was a natural temptation to apply it to some other purpose than the extinction of the Debt. He trusted Parliament would maintain the payment of the really moderate amount of £28,000,000 a-year for the discharge of Debt."—(3 Hansard, [224] 1532.) The right hon. Baronet continued— In the present year we were reducing the Debt by some £3,700,000. Why? Not in order that the Chancellor of the Exchequer in 1885 might have a good surplus, but for the national benefit, because we thought it a good thing for the country that at a time of peace and prosperity it should make a steady effort to reduce Debt."—(Ibid., 1534.) Perhaps it would be said that the circumstances were now different; but the right hon. Gentleman very properly and prudently explained in the same speech under what conditions he thought his proposals would require reconsideration. "There were," he said, "undoubtedly two limitations to the Government proposal. One was, if a time should arrive when it would be impossible, with advantage, to get Stock; the other was, if a time came when our circumstances were greatly altered, and we were called on to make far greater exertions than at present." Neither of these two events, however, had happened, and the right hon. Gentleman was bound, in all consistency, to support the present proposals; and if they went to a Division, he (Sir John Lubbock) should expect to find the right hon. Gentleman in the same Lobby with the Government. Those who were unfavourable to the reduction of Debt often asked, why should we pay off Debt which costs us so little in interest? But though the nominal rate was only 3 per cent, if we calculated the whole expense to the State, the cost of raising the funds, and other incidental consequences, the real rate could not be put at less than 3½ per cent. Now, that was scarcely more than the usual rate of interest on mercantile bills; it was not much loss than the rate at which the large railways and municipalities could borrow; it was more than the average rate paid to depositors in banks; and it was much above the rate paid by land. He would not occupy the time of the House by enlarging on the very strong argument derived from the consumption of coal, which had been urged with so much force by Mill, Jevons, the Prime Minister himself, and other great economical authorities. No doubt, our coal would last a long time, though the difficulty of winning it would gradually increase; but that did not affect the fact that we were annually consuming a large amount of national capital, and that, as Professor Tyndall put it, "the very life-blood of the country was flowing away." We treated all this as income; we should call any landowner improvident who cut down his timber and spent the proceeds annually. Yet that was just what we were doing, for what were our coal supplies but ancient forests preserved for our use by the munificence of Nature? As a nation we owed much of our prosperity to our commerce, and our relations with other countries were very extended. That fact made our position one of great delicacy. It increased the chance of war and the danger of war, and in any great struggle we should suffer from indirect results, which would probably be far more weakening than the actual expenditure or loss of life. Commercial competition, too, was very severe, and a slight turn of the scales might divert a very large proportion of our trade. History, in fact, taught us lessons we should be foolish to neglect. While the country had increased immensely in wealth and population, the amount devoted to the service of the Debt in 1860 was £28,600,000, and the present amount was £28,300,000. In the meantime our wealth had made great strides. If we compare 1870 with last year, our shipping had increased from 5,700,000 tons to 7,000,000 tons; our exports and imports had risen from £547,000,000 to £720,000,000; the annual value of gross estimated rental assessed to the poor rate from £126,000,000 to £165,000,000, and our assessment to the Income Tax had risen from £445,000,000 to £585,000,000, showing the enormous increase of £140,000,000. Although the amount devoted to the service of the Debt was very much the same as it was, the pressure on our people was much less. The agricultural interest was suffering. But that was an additional reason for this Bill. If, notwithstanding eight unpropitious seasons, we had on the whole made considerable accumulations, we might reasonably hope to do still better hereafter. Paying off Debt would enable us to reduce the interest on the remainder, and thus effect a still further saving. If this Bill were allowed to operate we might in a few years reduce the interest on the Debt by something very near ½ per cent. No doubt, the greater amount of the taxes was raised from income; but the death duties—the legacy and succession duties—amounting to over £7,000,000, might be said to be deductions from capital, and ought surely not to be used as income. When local authorities borrowed we insisted on the Debt being repaid within 50 years, and what was good for them must be wise for the country also. For his own part, he should have been glad if larger sums had been applied to the reduction of Debt, for while he agreed with those who said there was no moral duty upon them to do so, yet that course was one which gave the country great moral strength, and added weight to its voice in the Councils of Europe and the world at large. But the Bill simply proposed to maintain the limit of £28,000,000, which was surely a very moderate provision for a purpose which, he believed, had the general assent of the country. His complaint of the Bill was that it did not go far enough. He should like to see £10,000,000 devoted to the reduction of Debt. Adam Smith, when our National Income was only £10,000,000, proposed to raise it to £15,000,000, and devote £6,000,000 yearly in reduction of Debt. Sir George Cornewall Lewis was of opinion, many years ago, that £5,000,000 was little to allot to the repayment of Debt, and Viscount Sherbrooke thought we should impose a 1s. Income Tax, and devote the proceeds to the reduction of Debt. He trusted, therefore, the Bill would have the support of the House, and that the result of the Division might be to encourage the Government to persevere with it, so that they might feel that if they had not got all they could have wished, they would at least be making a substantial provision for the reduction of Debt, and we should transmit to our children a burden less heavy than that which we had ourselves inherited.

MR. W. H. SMITH

said, he desired as much as the hon. Barenet opposite (Sir John Lubbock) to see the Debt reduced; but he desired to see it reduced in a manner which, while it was consistent with the credit, should be conducive to the prosperity of the country. He must confess he could see no reason for the introduction of the measure; because provision was made by a law, which was in force until it was repealed, and which was as effectual as any provision of the Bill, for the continued and persistent reduction of the Debt, by the allocation of a sum of money which was not altered or increased. By the measure before the House, they were asked to enter into the consideration of a mere arrangement of figures. Consols and Three per Cents were saleable in the market; they were convertible securities known and recognized; but Terminable Annuities were absolutely unsaleable in the market. What did the Chancellor of the Exchequer seek to arrive at? He sought, by converting the one into the other, to produce an account which seemed to imply an annual charge, behind which he expected the taxpayer would not go, so that he was not to find out that he was paying from £7,000,000 up to £17,000,000 a-year in reduction of Debt. But public discussion would surely expose any "hocus pocus" of that kind. He (Mr. W. H. Smith) understood one method only of paying off Debt, and that was of applying to that purpose the surplus over the annual expenditure. He preferred to do that in a straightforward and simple manner, and by the method which the hon. Baronet opposite would pursue in relation to his own private affairs. The same rules should be applied to public as to private business, and no man would encumber himself with securities that were inconvertible, or seek to deceive himself or his family as to his annual expenditure, including a considerable sum for the reduction of debt. He held that he was amply justified in asking the House to postpone the consideration of this measure until that period when it could be more tho- roughly discussed. In the Bill now before the House there was one expression on which he laid some stress, and that was that the right hon. Gentleman the Chancellor of the Exchequer had to produce in the Terminable Annuity the equivalent value of the Perpetual Annuity from which he converted it. But what was the equivalent value? The value of a thing was what it would fetch. But he was convinced that the value of a Terminable Annuity of this character, paying the same rate of interest as the Perpetual Annuity, would be considerably less than that of the Perpetual Annuity which was converted. In other words, if the Chancellor of the Exchequer went into the market, and asked bankers to take Terminable Annuities, they would require a higher rate of interest on the money invested than they would ask for on Perpetual Annuities. Therefore, if the Court of Chancery were to require an equivalent value, the Chancellor of the Exchequer must pay a higher price than he had to do now. The right hon. Gentleman, it must also be borne in mind, was a trustee; he was bound to care for the interest of his clients, and he was not justified in running any risks. It was not at all sufficient to say that there had been no risk. In the conditions of our trade, he was bound to take precautions against future contingencies, by adhering to rules, which would exclude the possibility of doubt in the mind of any man. Neither was it sufficient to say that the Chancellor of the Exchequer pledged himself to himself; that the Terminable Annuities wore to be held by the National Debt Commissioners, or by the Court of Chancery, by direction of the Chancellor of the Exchequer, and would be dealt with as Parliament decided. He saw no additional security in that scheme; and while he agreed with the hon. Baronet opposite that it was the duty of the Government, when the circumstances of the country admitted of it, to pay off the Debt, he saw no advantage in the provisions the House was now asked to sanction. The Chancellor of the Ex. chequer was a banker, and had to answer on demand for £85,000,000 of money deposited in the Savings Banks; but he differed from other bankers, inasmuch as he was a banker without any specie reserve of any kind whatever. His reserve consisted entirely of Consols and these Terminable Annuities. The right hon. Gentleman the Chancellor of the Exchequer said there had been an average annual increase in the deposits in the hands of the National Debt Commissioners from the Savings Banks, for the last 10 years, of 1;100,000. Well, looking at the prosperity of the country during the last 10 years, he should say that he thought that increase ought to be very suggestive to the right hon. Gentleman, and point out to him that there was not that vast elasticity in the Savings Banks business. The prosperity which the country had enjoyed for so many years could not be expected to continue for ever. It was not impossible that there might be a demand in excess of what was paid in; and he must confess he had always felt a certain degree of uneasiness that the Chancellor of the Exchequer was liable to be called on at any moment, and without notice, for £85,000,000. Our financial system was a marvellous one. It was an excessively economical one; but it must not be assumed that the prosperity of the country would continue without a check. No doubt, there had been a large expansion of trade during the last few years; but now, wherever he went, he heard the same story—that the business transacted was large, and that the amounts passing from hand to hand were considerable, but the profits were small, and he was told they were decreasing. In the City he heard of stagnation, resulting front the fact that the profits during the last few years were inconsiderable. There was another consideration which entered into all these financial operations. At present there was a large property wholly unsaleable; a large quantity of land was unsaleable in Ireland and also in England. It might be that the depression was only temporary; 'but the immediate effect was greatly to reduce the means of a very large number of persons, and to diminish their powers of giving employment, and so to interfere with trade. Going further, he heard that the shipbuilding trade was threatened with stagnation, that shipbuilding had been overdone, that the tonnage was in excess of the requirements of the country. He was told, moreover, that house property, in common with other things, was depreciating in value, and that the only compensating circumstance in connection with these unpleasant indications was that at present there was good employment for the working classes. But it should he remembered that employment depended largely on the profits of trade, and when those profits fell below a certain point the employment would cease. Then the men who were the least satisfactory workers would be discharged, and in course of time the pressure would come upon the country which was expressed in the Budget by a decrease in the Excise and the Income Tax returns, and a reduction of the deposits in the Savings Banks. Therefore, he thought it would be a matter of very grave risk indeed to part with securities which were easily convertible, and to change them for something which would remain locked up in the box of the Chancellor of the Exchequer, simply for the sake of the "hocus-pocus" spoken of by the hon. Member for Cambridge (Mr. W. Fowler), and which merely amounted to a system of changing certain figures in account, without making a single additional charge upon the income and resources of the year in order to reduce Debt. It would give rise to a certain amount of doubt and uncertainty as to whether the resources would be forthcoming when the demand was made upon them. The circulation was placed upon a gold standard, and it was capable of depreciation from a fall in the value of property. The circumstances and conditions of the circulation, therefore, rendered it of the highest importance that the confidence which existed at present in the financial system should be maintained. He believed that the change from a convertible into an inconvertible security was one that was full of danger and destructive of confidence, and that it would prove injurious to commerce. He did not in the slightest degree think the evil had yet come upon us; but prudence, judgment, and caution would suggest the necessity of taking steps which would avert the possibility of doubt and danger. As he had already said, the Chancellor of the Exchequer was carrying on a vast trade without a reserve of any kind, and the least the right hon. Gentleman could do was to maintain the securities he held in the most readily convertible form, and in one which would command the confidence of the people. He agreed that we ought to do everything we could in times of prosperity to pay off the Debt and discharge the obligations of the country; but he could not believe it was necessary to pass a measure which added nothing whatever to the security for the payment of Debt, but which merely supplied a series of financial puzzles and arrangements known thoroughly and intimately to the Chancellor of the Exchequer, but which were intended to cover a system which ought to be perfectly open and plain.

MR. R. BIDDULPH MARTIN

said, he was unable to accept the doctrine which had just been enunciated by the right hon. Gentleman opposite (Mr. W. H. Smith). The right hon. Gentleman began by saying it was a very common doctrine that Public Business ought to be conducted exactly upon the same footing as private business, and then he reproved the Chancellor of the Exchequer for doing what any commercial man would do. Debt ought to be paid off, as was proposed, upon a fixed plan, and he (Mr. R. B. Martin) ventured to think that the fixed method proposed by the Chancellor of the Exchequer was the proper way in which we should pay off our National Debt. No Government was, in his opinion, justified in establishing Perpetual Annuities, and burdening the country for an everlasting term of years. We ought, at least, to discharge our liabilities at the same rate of interest as that on which we borrowed money. The right hon. Gentleman the Chancellor of the Exchequer had stated that if the House passed the Bill, we should come within a measureable distance of the reduction of the interest upon the National Debt. The absorption of so much Stock to replace what belonged to the suitors in Chancery must, in a very short time, send up the price of Consols to such a figure as would enable the right hon. Gentleman to reduce the interest. He would like to know the amount which the right hon. Gentleman thought he could purchase, without absorbing all the floating Stock in the market, so as to begin the operation of reducing the interest? If he could absorb some £30,000,000, he might begin. If the Chancellor of the Exchequer were to institute a 3 per cent Stock, iredeemable for 30 years, and then, ipso facto, to become a 2½ per cent Stock, he would have no difficulty in placing it in the market. The right hon. Gentleman had pointed out that a ¼ per cent on the Debt would amount to £1,750,000. Therefore, ½ per cent would amount to £3,500,000, a sum which would have a very important effect upon the Budget. With reference to the remarks of the hon. Member for Youghal (Sir Joseph M'Kenna), he hoped this scheme for the reduction of the National Debt, which, in his opinion, commended itself to the goodwill of the country in general, would not be mixed up with any sentimental consideration for any particular portion of the United Kingdom, however badly it might be thought that taxation pressed there.

SIR GABRIEL GOLDNEY

said, he did not regard the question as a Party one, because both sides of the House were agreed, up to a certain point, that the reduction of the National Debt was, in one form or other, a desirable object which they all ought to endeavour to obtain; and they were further agreed—for an Act of Parliament had been passed to the effect—that £28,000,000 a-year should be set apart for the purpose. The question was, what was the best application of the £5,000,000 or £6,000,000 which would fall in in 1885? He must say, boldly and fairly, that the proposition of the right hon. Gentleman the Chancellor of the Exchequer, as far as he was able to judge, was the right one. In the first place, he proposed to cancel a portion of two sums, neither of which was likely to be called upon, and to carry still further a process which had been adopted for a great many years by both Governments—namely, the system of Terminable Annuities. When the right hon. Gentleman the Member for Westminster (Mr. W. H. Smith) said that the Chancellor of the Exchequer was a banker who might be called upon at any time, at two or three days' notice, for the whole of these millions in the Chancery Fund, he must remind the right hon. Gentleman that the State was answerable for that money, and that the Court of Chancery ought to be very well content to have this security. [Mr. W. H. SMITH said, that there were also the Savings Banks Funds.] He would deal with the Chancery Funds first. He believed those Funds amounted to something like £61,000,000, of which the Chancellor of the Exchequer proposeed to take £40,000,000 and to cancel the sum in 20 years. But, as he had said, the State was answerable for the money, and the Court of Chancery ought to be quite content with the security; and it seemed to him to be a very simple process for cancelling the Debt. With regard to the Savings Banks Annuities, some hon. Members were opposed to Terminable Annuities in any shape. But hardly a fortnight ago, when they were engaged in considering the Agricultural Holdings (England) Bill, it was suggested that they should create Terminable Annuities, and he believed it was proposed to bring up a clause to give the House the advantage of considering that question. The Chancellor of the Exchequer had shown that the amount of the Savings Banks Funds had been increasing from time to time, until it amounted to £4,000,000, and by a process of Terminable Annuities since 1874, when the National Debt amounted to £776,000,000, it had been reduced to £712,000,000. With that example before them, he thought they would agree that it was a wise policy to endeavour to further apply the same system of cancelling the Debt. The Prime Minister had said that if the House objected to the new process of Annuities for 5, 10, and 15 years, he did not wish to make it a vital point of the Bill, but that it was a matter for Committee. What, therefore, the House had to determine now was, whether the principle was a right one, and that they should take the same process for reducing the National Debt? No person had the temerity to propose that the Bill of 1875 should be repealed. They were to deal with the £28,000,000 as fixed by Statute for the interest upon the Debt and for its reduction. Looking at the general accord with which the proposal had been received, and the fact that, as a nation, they ought, like other countries, to do everything they could to reduce their Debt on behalf of the public, then they ought to agree to the second reading of the Bill. If there was any fear of the country getting into a worse state of commercial prosperity, what could give greater stability than showing that the Debt had been reduced when they were in a better position? If commerce was not going on well; if the shipbuilding trade was going down, and other trades were not prospering, at all events they could show that they had wisely agreed to adopt the same policy which they had adopted during the last nine years under the Administration of his right hon. Friend below him (Sir Stafford North-cote), with a view still further to reduce the Debt.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

Sir, I think the House will expect me to say a few words, after the very interesting debate we have had on this subject. And, first of all, with reference to what has fallen from the hon. Baronet opposite (Sir Gabriel Goldney), I may at once say, in answer to his appeal, and also to the appeal made, as I understand, by the right hon. Gentleman the Member for North Devon (Sir Stafford Northcote) and other hon. Members who sit on that side of the House, to whom my right hon. Friend the Prime Minister has given a short reply, that I do not consider as at all being of the essence of our plan the perpetual rolling-up of the Annuities after each term of five years, and I shall be quite prepared, between the present time and the Bill going into Committee, to consider after how many years that rolling-up might cease. I should be sorry, at this moment, to say at what date that arrangement ought to terminate; but I think it is reasonable that that part of the Bill should not be perpetual, and therefore I will propose an Amendment in the clause, which will provide that that system, of what is called "rolling up" the Annuities, shall only last for a certain number of years, so that Parliament shall be in a position to deal, after a certain time, not only with the £40,000,000 Chancery Funds—the conversion of which into Annuities is not perpetual and need have no rolling operation, but would come to an end in 20 years—but also with the cancellation of the Savings Banks Stocks. I hope the House will now see that the main objection that has been taken, as far as I understand it, to our proposal by the right hon. Gentleman the Member for North Devon (Sir Stafford Northcote) has now been fairly met. I also thank my hon. and learned Friend behind me (Mr. Biddulph Martin) for the suggestion he has made; but I cannot say—indeed, it would be very rash to say—how many millions of Stock we think we can take off the market in a limited time, or to what extent we ought to make use of that provision of the law under which, if notice be given to only a proportion of Stockholders, they must submit either to a lower interest or receive the capital value of their Stock. I think the House will be satisfied when I say that that point has been for a long time in the mind, not only of myself, but of others who are concerned. And now I come to the Amendment moved by my hon. Friend the Member for Galway (Mr. Mitchell Henry). My hon. Friend boldly demands that, instead of the proposal we have made to the House, we should determine, to use his own words, at once to wipe away the whole £4,000,000 of duty on tea, besides those on cocoa, currants, dried fruits, and other articles, amounting altogether to £5,300,000. Of course, I cannot accept that Amendment, and I hope that the body of the House will not accept it; because it means neither more nor less than the stoppage of paying off Debt. My hon. Friend has gone into a long discussion as to the relative taxation of Ireland and Great Britain, and he has introduced, I am bound to say, one or two new facts into that very old controversy. That controversy was gone into some years ago before a Committee which was moved for by the late General Dunne, and on which sat the right hon. Gentleman the Member for North Devon (Sir Stafford Northcote), Viscount Sherbrooke, and many other financial authorities; and, certainly, the results arrived at by that Committee were not at all such as to justify the extreme view taken by my hon. Friend. My hon. Friend went very minutely into the relative taxation of Ireland compared with that of other parts of the Empire; but he quite left out of view the relative expenditure of one kind and another in Ireland. My hon. Friend said one thing to which I am bound to take exception. He used these words—"That no Chancellor of the Exchequer ever looks across the Channel." Now, I have only had the opportunity of making one Financial Statement to the House, and my proposal was one of an extremely simple character, confined almost entirely to a remission of a temporary increase of Income Tax and one or two small changes already entertained by Parliament. Nothing could have been less ambitious than that Budget; but I repudiate altogether the idea that a Chancellor of the Exchequer is not bound, when it is in his power to make considerable changes, to consider the taxation of Ireland. quite as much as the relative taxation of Great Britian. Certainly, I shall not be governed by the very narrow views attributed to my Office. My hon. Friend was supported by the hon. Member for Glasgow (Mr. Anderson), who took practically the same view—namely, that we should remove what are known as the "Breakfast Table Duties," and who also laid down the doctrine that the money applied to the payment of principal and interest of Debt should be money raised in a special way from acquired property, to be set aside for that purpose. I do not think that that would be a safe principle of finance, and I trust that the House will not be prepared to accept it. Next, my right hon. Friend the Member for the City of London (Mr. Hubbard) made it one of the charges against the present policy that I had used different language in 1875, and implied that I had said something then which compelled me, in common consistency, to repeal the Act of 1875. But on other occasions we are also being told that Governments should not use their majorities to upset the acts of their Predecessors, and that a certain continuity in policy as between successive Governments is a characteristic of English practice. But I am bound to say that while I did not approve, in all its detail, of the Sinking Fund plan of 1875, I did not object in principle to the proposal of the late Government. My objection was to the preference of a Sinking Fund, which might become inconveniently large, over an extension of Terminable Annuities. But to-night my right hon. Friend's main grievance is that it will be hard on some classes of the people to reduce the interest on the National Debt; and with this doctrine I can have no sympathy. He was followed by the hon. Member for Bradford (Mr. Illingworth), who went even farther than the hen. Member for Galway, because he proposed to take off all duties on articles of consumption, and to substitute increased duties on property in order to make good the amount. Now, the proposal of the present Bill does not touch taxation at all, it only deals with funds actually in existence; and a proposal to abolish all taxation on articles of consumption and substitute increased duties on property seems so very wide of the question, that I hope my hon. Friend will excuse me from discussing it. As to the remark of the hon. Member for Youghal (Sir Joseph M'Kenna), that if the Income Tax were removed from Ireland it might he removed from England and Scotland, "and so much the better," I may reply that if you are to have no Income Tax there will be £10,000,000 to make up; and this, also, it is a little foreign to discuss now. The right hon. Gentleman the Member for Westminster (Mr. W. H. Smith) has made a speech which, for courage, I think never was surpassed. He sits next to the right hon. Baronet the Member for North Devon, and the only method he proposes for paying off the Debt is to apply to it the surplus of Income over Expenditure—in other words, to fall back on the old Sinking Fund and the policy of 1829. Nothing, in his opinion, is worse or more dangerous than the plan of Terminable Annuities, which he called on us to abandon; but he made an attack upon the Terminable Annuities, and called upon the Government to give up the dangerous system of Terminable Annuities.

MR. W. H. SMITH

What I said was that the measure of my right hon. Friend the Member for North Devon (Sir Stafford Northcote) would render this Bill absolutely unnecessary.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

But the maintenance of Terminable Annuities was part of the policy of his right hon. Friend (Sir Stafford Northcote); and his speech was an appeal to us to give up what he called the dangerous method of Terminable Annuities, which, he said, only complicated the Public Accounts. I would appeal, however, from the right hon. Gentleman to the experience of all those, except himself, who have been concerned in the management of the financial affairs of this country for the last 20 years, whether it is possible to secure the application of a considerable Sinking Fund for the payment of Debt to a large extent, except through the operation of Terminable Annuities? I will not enter upon the question which the right hon. Gentleman discussed at great length, whether bankers hold sufficient reserves, because I do not see what it has to do with the present Bill. We do not deal with anything in the hands of bankers, but with funds in the hands of Public Departments; and whether these are Perpetual or Terminable Annuities cannot affect bankers. I hope the House, having the matter fully before it, will now, after the declaration I have made, as to the changes in one clause, agree to read the Bill a second time.

LORD GEORGE HAMILTON

, who rose amid cries of "Divide!" said, he was sorry to obtrude himself upon the attention of the House, and to postpone the Division which many hon. Members seemed anxious to have; but he had an Amendment which had been for some time on the Paper which raised questions of the utmost importance, and which, he thought, ought to be kept in the view of the House, before they arrived at any decision on the second reading of the Bill. The Amendment related to the subject of local taxation, and his own excuse for raising the question was that his hon. Friend the Member for South Devon (Sir Massey Lopes), who had made the subject his special study, had had a Notice on the Paper for some time, as an Amendment to the Motion of the hon. Member for Burnley (Mr. Rylands), on the same question. But, for reasons best known to the hon. Member for Burnley himself, the hon. Member's Motion was withdrawn at the last moment; therefore, the Amendment of his hon. Friend the Member for South Devon had also fallen to the ground, which he regretted, because he thought he should have been better able to speak upon that Amendment than he would upon the Resolution now before the House. The Amendment which he (Lord George Hamilton) had himself placed upon the Paper was as follows:— That, considering the Government are pledged to give relief in some shape or other to local burdens, and that the Revenue derived from Excise is annually decreasing, it is impolitic for this House to hastily pledge itself to proposals which may hereafter necessitate either an increase of taxation or a postponement of the promised relief to the ratepayers. He thought that nobody would deny that it was more than probable that within the next20 or 30 years, if this Bill became law, and if it was in no way repealed, it might be necessary to impose additional taxation, or indefinitely to postpone the promised relief which the Government had undertaken to give to the ratepayers. Perhaps the House would allow him to lay before them, very shortly, the figures on which he based his statement. The Chancellor of the Exchequer very cautiously alluded to one of the statements contained in this Amendment "that the Revenue derived from Excise was annually decreasing." That statement was perfectly correct. Although the Excise had not decreased during the past year or two, nevertheless, the Revenue derived from alcoholic liquors was annually decreasing. Hon. Members had had placed in their hands, during the last few days, a statistical abstract for the last 15 years, and he had taken out some figures from that abstract which were quite unimpeachable. He would take two periods of three years. First, the three years ending 1880, which formed a period of great depression, when the consumption was unusually low, and he would compare the average consumption during these three years with the corresponding period of three years ending 1883, which was a period of comparative prosperity. The Customs Returns, under the head of Spirits, for the first three years, showed an average of £5,180,000, as against an average of £4,340,000 in the three years ending 1883. That was a decrease of £840,000. Under the head of Wine, for the first three years the amount was £1,470,000; but it was only £1,340,000 on the last period of three years, showing a diminution of £130,000. The figures showed another remarkable fact — namely, that the amount paid for licences was almost identical during the two periods; but instead of there having been an increased consumption, owing to the increased population and increased prosperity, the amount consumed had been actually less than in any year during the last 10 years. He thought that nobody who looked at the great strides which were being made by the Temperance Movement now going on would deny that, in subsequent years, the Revenue derived from alcholic liquors would rather tend to diminish than to increase. The Excise and Custom Duties, under the head of Alcoholic Liquors, formed two - thirds of the total Revenue coming from that source; and yet, during the past three years, they had fallen off by more than £1,000,000 as compared with the previous three years; and that fact formed strong presumptive evidence that the diminution would probably continue. He had no wish to weary the House with figures; but there was a certain aspect of the question which had not yet been presented, and, no doubt, he was placed at a disadvantage in attempting to bring on such a question at that period of the Session. It was not his fault, however, that he was compelled to lay before the House now certain facts, and a certain view of the question, which would undoubtedly have been listened to with much greater interest early in the year. Taking the Expenditure of the year 1873 for the Army, Navy, and Civil Services, other than that for the collection of Revenue, he found that it amounted to £35,800,000; whereas, in 1883, it amounted to £45,300,000. Therefore, these two facts were clear, that the cost of the Army, Navy, and Civil Services, not connected with the collection of Revenue, was increasing and must increase. As the price of labour increased, so must the cost of the Navy and Army; and side by side, therefore, with a falling Revenue, especially as far as the main staple and support of the Revenue was concerned, they had an increasing Expenditure. Arid what was the state of local taxation? A number of deputations had waited at various times upon the Prime Minister; and invariably the answer to such deputations, on the part of whatever Government was in Office, had been that Her Majesty's Ministers were anxious to give some relief, if possible, but that the Ways and Means were wanting. On the last occasion of a deputation waiting upon the Prime Minister, the right hon. Gentleman said he could not give a remission without imposing new taxes. The Prime Minister had more than once stated that the rates really fell upon labour; and when last year his hon. Friend the Member for South Leicestershire (Mr. Pell) brought forward a Motion in respect to local taxation, an Amendment was moved to that Motion by the hon. Member for South Northumberland (Mr. Albert Grey), which Amendment was accepted by the Government as the principle upon which they proposed hereafter to deal with local taxation. The Amendment amounted to a declaration that the relief should be by the transfer to the local authorities of a certain amount of control over particular taxes. Of course, if they transferred a certain portion of taxes now paid to the Imperial Exchequer by the local authorities, they must necessarily diminish the Imperial Income; and it was self-evident that if they absorbed for an indefinite period so large a sum as £28,000,000, and, at the same time, had the prospect of a falling Revenue and an increasing Expenditure, no remission of taxation to the ratepayers was likely to take place for some years to come. The House had had figures placed before them which, no doubt, were rather startling in their magnitude. The Chancellor of the Exchequer informed them that if the Bill passed into law, under its operation a reduction of Debt would take place amounting to something like £120,000,000 in the next 20 years. The sum to be reduced by this operation would be £173,000,000; but, of that sum, £53,000,000 would not be entirely wiped off until some years subsequently. Now, the fact was—and whether this Bill passed or not it was perfectly immaterial—that £120,000,000 or more would be wiped off during the next 20 years; and it would be entirely duo to the Bill which was introduced and passed into law by his right hon. Friend the Member for North Devon (Sir Stafford Northcote). Under that Bill £28,000,000 would not only be applied to the reduction, or rather to the service, of the Debt, which now stood at £700,000,000, but, applying that sum of £28,000,000 to the service of the Debt, the Debt itself would cease to exist in 47 years. It was, therefore, just as true for him to assert that if the Bill of his right hon. Friend had not been interfered with, in 50 years there would be no permanent Debt at all, as it would be to assert that under the operation of this Bill £120,000,000 would be paid off during the next 20 years. Hon. Gentlemen were evidently voting upon this Bill in ignorance of the real facts. If, in three years, the National Debt were less than £700,000,000, they would have applicable to the services of that Debt £28,000,000 a-year, which was 4 per cent interest; but, as they were paying only 3 per cent interest, they would have a Sinking Fund of I per cent. But the question would naturally arise, whether anybody would suppose that this country would consent to vote a sum of £28,000,000 annually to the service of the Debt, when it knew that in 50 years the Debt would be paid off? In point of fact, nobody was paying off their Debt so fast as this country, except the United States. There was no analogy, however, between this country and the United States, because it was well known that one of the main objects of a certain Party in the United States in making so large an annual reduction of Debt was to keep up the Protective Duties at present imposed, for, if there was no Debt which could be taken off, those duties would have to be reduced. At the present moment we were reducing our Debt at at enormous rate; and, whether this Bill passed into law or not, it would make no difference in the reduction of the Debt. In point of fact, the passing of the Bill would, in his opinion, rather retard the reduction of the Debt than otherwise. There were two sentences, one of which fell from the Chancellor of the Exchequer, and the other from the Prime Minister, with which he thought everyone would agree. The Chancellor of the Exchequer pointed out that it was unwise to postpone the operation until the last moment, and he used that as an argument for introducing the Bill now; but that was exactly the reason why they were opposing the Bill that night. The Bill had been postponed until they had reached the fag-end of the Session, when it could not be adequately considered. The Prime Minister capped that excellent sentiment by another—that it was their duty to resist the beginning of evil. With that we agree, and we contend that having given the whole time of the House to the Government, to enable them to accelerate the transmission of Public Business, we ought not now to have hustled down our throats a Bill of the utmost importance which had been lying for so many months upon the Notice Paper. The Prime Minister said the vast financial interests of the country were at stake, and that they would receive a great shock if this Bill were postponed until next Session. He did not believe one word of it. He did not believe if the Bill were postponed until next Session that Consuls would fluctuate one farthing. But if it were the case, then what a reflection it was upon the Government so far as their conduct of Public Business was concerned. Was it not their duty, if that enormous finan- cial evil was at stake, to have brought forward the Bill at a time when it could be properly discussed? So far from these financial evils being at stake, it was only a fortnight ago that the Prime Minister, when asked what it was proposed to do in regard to the Bill, said that it was proposed to put it down to-night for discussion, in order to ascertain what the views of the House were in regard to it. But now it appeared to be of such paramount importance that they must pass it, or some great financial interests were to receive a severe shock. The principle the Bill proposed to assert was the application of Terminable Annuities for the reduction of the Debt. He would make a statement which he challenged anybody on the Treasury Bench to deny—namely, that if they postponed the Bill until next year, and brought in exactly the same scheme as they did now, in 20 years they would bring £5,000,000 more to the reduction of Debt than they could do this year. The reason for that was obvious. The proposal of the Chancellor of the Exchequer was to substitute for Annuities terminable in 1885, other Terminable Annuities for a longer period. The value of the Terminable Annuities which ceased in 1885 would be £5,000,000 less next year; and, therefore, the Government would have Annuities to the extent of £340,000 available to add to the new Terminable Annuities. That was a mathematical certainty there could be no dispute about.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

said, the noble Lord did not appear to observe that this was as broad as it was long, for the Annuities would run a year later, unless they were made for 19 instead of 20 years.

LORD GEORGE HAMILTON

begged the right hon. Gentleman's pardon; that had nothing to do with it, and he adhered to the statement he had made. The amount, instead of being £10,000,000 next year, would be £5,000,000; and if they were to set up 20 years' Annuities next year they would be able to redeem £5,000,000 for half the sum they could now redeem £10,000,000, and if they did not interfere with the Terminable Annuities now existing, the Chancellor of the Exchequer next year would have £5,000,000 less Debt to reduce. Therefore, it seemed to him (Lord George Hamilton) that every argument pointed against the hasty adoption of the Bill. The Chancellor of the Exchequer said there would be a remission of taxation in the years 1886 and 1887 of something like £1,300,000; but the remission to the taxpayers would consist of a return to them of a sum raised for a certain purpose and for a specific object, and when the time for realizing that temporary purpose and specific object had terminated, as a matter of course the taxation would be removed. It was a cardinal maxim of finance that wherever exceptional efforts were made to reduce Debt, the taxation imposed to meet these exceptional efforts should not continue; but, where it was only raised for a temporary purpose, then that it should cease when the purpose was accomplished. There seemed to him to be another serious objection to the attempt to force this Bill through the House that night. It had hitherto been the practice, no matter what might be the personal views of Members of the House, always to respect any statement arrived at after full discussion, which was supported by the majority of the House. Now, would anybody pretend that if the Government forced this measure through Parliament during the present Session, any such respect could be paid to this Bill? For his own part, and he was expressing the opinion of others with whom he had conversed, he thought the House would be justified hereafter in endeavouring to oppose the arrangement which, without adequate discussion, they had been forced to adopt at the fag-end of the Session. There was another and, to his mind, a still stronger objection. He thought that nobody could deny that, in the course of a very few years, a great re-adjustment of taxation, or an entire re-modelling of our financial system, must become necessary. If the consumption of alcoholic liquors went on decreasing to the extent it had decreased of late years, they might anticipate the greatest difficulty in making both ends meet. Great financial reforms had been carried on by Mr. Pitt, Sir Robert Peel, and the present Prime Minister; and, in carrying them out, great difficulty had always been found at the beginning of a financial reform in retaining an equilibrium between Income and Expenditure. The difficulty was to balance the Expendi- ture and the Revenue for the first two or three years of the so-called great reforms; because, in the first years, the taxes were less productive, and the taxes which might be imposed instead did not make up the deficiency. So nicely adjusted at the present moment were our Taxation and our Revenue, that when the Prime Minister made the gift of £5,000,000 to India, and distributed it over six years, the small annual payment of £500,000 had almost in every subsequent year necessitated additional taxation. Consequently, he considered it more than probable that if we chose to tie our hands, as it was proposed to-night, by assenting to a Bill the operation of which was almost indefinite, we might prevent some great financial scheme or other in the course of a few years from taking effect. His hon. Friend the Member for Chippenham (Sir Gabriel Goldney) expressed what he (Lord George Hamilton) thought was the general feeling of the House, when he said that if this principle of reducing Debt by Terminable Annuities was unpalatable to the House, then the Government ought to be prepared to introduce some other system in lieu of this Bill. The right hon. Gentleman the Chancellor of the Exchequer had himself admitted so much. [Mr. MUNDELLA: NO.] The right hon. Gentleman the Vice President of the Council said "No;" but the right hon. Gentleman was not present, and he (Lord George Hamilton) bad heard the statement made. The House had been assured that the Government were quite ready to consider the objections which had been raised to these Annuities. Then, if they were quite ready to make alterations, and if these Annuities were not to roll up, then it seemed to him that they were laying down an unfortunate principle, when they declared that £28,000,000 should be placed at the service of the State for the reduction of Debt.

THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)

said, that what he had stated was, that he was willing to limit to a certain number of years the "rolling up" arrangement which, under the Bill, would be perpetual.

LORD GEORGE HAMILTON

said, he was obliged for the explanation, and he was bound to say that he had somewhat misunderstood the original remark of the right hon. Gentleman. He would not detain the House with further remarks. The Prime Minister had held out a great inducement to them to vote for the Bill, that it would place a solid obstacle against the repeal of the Bill of his right hon. Friend the Member for North Devon; but it must be borne in mind that up to the present moment not a word had been said about repudiating that Bill. He sincerely hoped the considerations he had mentioned would have some weight with the House in arriving at a decision upon the present measure.

MR. R. N. FOWLER

said, he wished to say a few words in support of the Amendment of his right hon. Friend and Colleague (Mr. Hubbard). The Prime Minister had, in a very eloquent speech, argued that those who opposed the Bill were, in effect, opposing the scheme for the reduction of the National Debt introduced by the right hon. Baronet the Member for North Devon (Sir Stafford Northcote) some years ago. That seemed to him (Mr. R. N. Fowler) an entire misconception. They were not opposed to the policy inaugurated by the right hon. Baronet eight years ago; they were all agreed as to the desirability of reducing the Debt, although, undoubtedly, there was a difference of opinion as to the way in which that reduction ought to be effected. It was true that the right hon. Baronet introduced the policy, the effect of which must be the reduction of the National Debt, and which had been referred to by previous speakers as being now the law of the land; but the Bill, although in one sense it embodied that policy, tied the hands of future Chancellors of the Exchequer as to the way in which it was to be carried out. The question was, whether the Chancellor of the Exchequer in 1893 should apply the funds in his hands to the reduction of Debt by means of Terminable Annuities, or whether it might not be more advantageous to buy Consols? His right hon. Friend the Member for North Devon had pointed out that before then we might be involved in a great war. Everyone knew that that meant a great fall in the Funds. Suppose then Consols went down to 90 or 85, would it not be desirable that the Chancellor of the Exchequer of the day should be able to purchase Consols in the market at that price, rather than that the scheme of Terminable Annuities should be carried out as proposed by the Bill? It was because he did not wish to bind the future Chancellor of the Exchequer; because he wished that 10 years hence he should be able to act in whatever way he thought best for the interest of the country, that he should vote for the Amendment of his right hon. Colleague.

SIR STAFFORD NORTHCOTE

Sir, I will not detain the House for more than a few moments in explaining the vote I am about to give. My feeling is that the discussion we have had to-night has been a useful one, inasmuch as it has cleared our minds on several points, and has, among other things, produced on the mind of the Government an impression that it is necessary to qualify the proposals made. The suggestion which came from the Prime Minister, and which was supported by the right hon. Gentleman the Chancellor of the Exchequer, is, undoubtedly, an improvement upon the original plan of Her Majesty's Government; but, Sir, it does seem to me that, at this time of the Session, it is impossible to give this question full and fair consideration. I see no necessity at all, even from the point of view of the Chancellor of the Exchequer, for passing the Bill in the present year. I think, if we do enter upon the Committee stage, we shall have a good deal of discussion, and that it will take us some time to settle the details of the measure. For these reasons, I think it necessary to vote against the second reading; but, in so doing, I wish to say that, although the Division will be taken upon the Amendment of the hon. Member for Galway, I cannot undertake to say that I support that Amendment. I shall take the course of giving a negative vote upon the Question, "That the words proposed to be left out stand part of the Question;" but not with the slightest hesitation as to the propriety of continuing our efforts for the reduction of the National Debt, or with any idea of going back one inch from the position I have taken up in previous years. I regard this as a necessary measure, but one which, in its present form, is open to objection; and it is because I do not think we can, at this period of the Session, fairly and properly discuss all the questions arising from it, that I shall give my vote against the second reading of the Bill.

Question put.

The House divided:—Ayes 149; Noes 95: Majority 54.

AYES.
Acland, Sir T. D.	Fitzwilliam, hon. C W. W.
Acland, C. T. D.
Agnew, W.	Flower, C.
Ainsworth, D.	Foljambe, C. G. S.
Allen, H. G.	Forster, rt. hon. W. E.
Armitage, B.	Gabbett, D. F.
Armitstead, G.	Gladstone, rt. hn. W. E.
Arnold, A.	Gladstone, H. J.
Asher, A.	Gladstone, W. H.
Ashley, hon. E. M.	Goldney, Sir G.
Balfour, Sir G.	Gordon, Sir A.
Balfour, rt. hon. J. B.	Gourley, E. T.
Barclay, J. W.	Grant, A.
Bass, H.	Grant, D.
Brand, H. R.	Gordon, R. T.
Brassey, Sir T.	Hardcastle, J. A.
Brett, R. B.	Hartington, Marq. of
Briggs, W. E.	Hastings, G. W.
Bright, rt. hon. J.	Hayter, Sir A. D.
Bright, J. (Manchester)	Henderson, F.
Broadhurst, H.	Heneage, E.
Brogden, A.	Hibbert, J. T.
Bruce, rt. hon. Lord C.	Hollond, J. R.
Bruce, hon. R. P.	Holms, J.
Bryce, J.	Hopwood, C. H.
Buchanan, T. R.	Ince, H. B.
Buszard, M. C.	Inderwick, F. A.
Buxton, F. W.	James, Sir H.
Buxton, S. C.	James, C.
Caine, W. S.	James, W. H.
Cameron, C.	Jardine, R.
Campbell, Sir G.	Jenkins, D. J.
Campbell-Bannerman, H.	Jones-Parry, L.
	Lawson, Sir W.
Carington, hon. R.	Leake, R.
Causton, R. K.	Leatham, E. A.
Chamberlain, rt. hn. J.	Leatham, W. H.
Cheetham, J. F.	Lee, H.
Childers, rt. hn. H.C.E.	Lefevre, right hon. G. J. S.
Clarke, J. C.
Cohen, A.	Lloyd, M.
Collings, J.	Lubbock, Sir J.
Cotes, C. C.	Lyons, R. D.
Courtauld, G.	M'Coan, J. C.
Courtney, L. H.	Mackie, R. B.
Cowper, hon. H. F.	Macliver, P. S.
Cropper, J.	M'Minnies, J. G.
Cross, J. K.	Mappin, F. T.
Davey, H.	Martin, R. B.
Dilke, rt. hn. Sir C. W.	Maskelyne, M. N. H Story.
Dodds, J.
Dodson, rt. hon. J. G.	Milbank, Sir F. A.
Duff, R. W.	Monk, C. J.
Earp, T.	Morgan, rt. hon. G. O.
Edwards, P.	Morley, A.
Errington, G.	Morley, J.
Farquharson, Dr. R.	Morley, S.
Fawcett, rt. hon. H.	Mundella, rt. hon. A. J.
Ffolkes, Sir W. H. B.	Noel, E.
Findlater, W.	O'Shaughnessy, R.
Firth, J. F. B.	Otway, Sir A. J.
Fitzmaurice, Lord E. G. P.	Paget, T. T.
	Palmer, J. H.

Parker, C. S.	Thomasson, J. P.
Pease, A.	Tracy, hon. F. S. A. Hanbury-
Peddie, J. D.
Playfair, rt. hn. Sir L.	Trevelyan, rt. hn. G. O.
Porter, rt. hon. A. M.	Vivian, A. P.
Powell, W. R. H.	Waugh, E.
Ramsay, J.	Whitbread, S.
Rathbone, W.	Williams, S. C. E.
Roberts, J.	Williamson, S.
Roe, T.	Wilson, C. H.
Russell, G. W. E.	Wodehouse, E. R.
Shaw, T.
Shield, H.	TELLERS.
Smith, Lt.-Col. G.	Grosvenor, right hon.
Stanley, hon. E. L.	Lord R.
Stanton, W. J.	Kensington, right hon.
Summers, W.	Lord
Tavistock, Marquess of

Main Question put, and agreed to.