§ SECOND READING.
§ Order for Second Reading read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."1097
§ (3.50.) SIR W. HARCOURT (Derby)
I suppose we may now proceed with the less important subject of the taxation of the people and the financial arrangements of the country. Of course, I cannot suppose that matters of this kind will command that amount of attention which is given to the more important question we have been for some time discussing; but this is a legitimate opportunity of discussing generally the financial arrangements of the year, and upon this Bill, though there is no great novelty in it, the remark arises that in a period of great prosperity and very large revenue we have a Bill for continuing the taxation of the country exactly as it was before. There is no relief to be given to the taxpayer in the course of the present year, and as to the cause of this, which is enlarged expenditure, I will say something presently. But as regards the Bill itself and our financial arrangements, there is something special attaching to the financial arrangements of the present year. Everybody knows that the Chancellor of the Exchequer is a very able financier, but he aspires also to the character of extreme originality. He has set aside all the former practices which have been thought necessary to protect the financial system of this country, and the safeguards which have been set up for many generations have disappeared, and remarkably so in the arrangements for the present year. There is an old saying, "Nemo repentè fuit turpissimus," and the Chancellor of the Exchequer has begun his practice, by degrees, in departing from the old rule that the Expenditure of the year should be covered by the Revenue of the year. On the 4th April, 1889, speaking on the first Imperial Defence Bill, the right hon. Gentleman made this declaration—I shall always adhere to the principle that the needs of the year shall be met out of the Revenue of the year.Since that pledge was given the needs of the year have never been met out of the Revenue of the year, but in each successive year a larger sum has been borrowed than in the year preceding. Last year the amount borrowed was, I think, £696,000, and, according to the Papers laid before us, the Chancellor of the Exchequer proposes this year to borrow nearly £3,000,000. The Chancellor of the Exchequer used to be a rigid finan- 1098 cier, and we remember very well the declaration which he made on this side of the House that he would not draw blank cheques in favour of Lord Salisbury. But now the whole time of the Chancellor of the Exchequer is taken up in expecting us to draw blank cheques for the Government of Lord Salisbury, and never has that been the case more remarkably than in the Budget Bill we are now asked to read a second time. He derives a good deal of his illustrations from cheques, and I was reminded the other day of a speech of the right hon. Gentleman on the subject of free education, in which he said, speaking in 1885, there are some men who have become extremely rich, and think that by their cheque books they can solve all possible difficulties. Well, the Chancellor of the Exchequer has become exceedingly rich; he has an abundant Revenue. He goes on to say, if affection is to be bought, they bring forward their cheque book; if hatred is to be bought off—cheque book; if sorrow is to be assuaged—cheque book.Now I want to know"—the right hon. Gentleman is here speaking of free education—from the Conservative Party do they think when they have got the national cheque in their hands that they can, by cheques and simply in that way, buy off hatred or secure affection?That is taken from a speech delivered to the constituency the right hon. Gentleman was then canvassing in Scotland. Now, Sir, the fundamental principle of English finance with reference to taxation and expenditure is that the House of Commons, before voting a tax, should know what is going to be done and how that tax is going to be applied. We have been told that free education is to absorb £1,000,000 or more of the taxation we are asked to vote to-night. How do we know how that money is going to be applied? I have said that the right hon. Gentleman has violated every known principle of English finance. First of all, he has struck at the principle that the Expenditure of the year should be covered by the Revenue of the year, and now he strikes at the principle that taxes are not to be voted until the Commons are informed how they are to be spent. When we are asked to vote money for the Army and 1099 Navy we are always told how many men are required, what is to be their pay, and, generally, how the money is to be expended. The same observation applies to the case of the Civil Service, and all the other Departments of the State. In each case the most accurate Estimates are laid before the House. Where are the estimates for the expenditure that will be required under this Bill? No account is given of how much it is to be, or what principle it is to go upon; and, in point of fact, the right hon. Gentleman is asking us to vote the Second Reading of this Bill without affording us any information as to how a sum amounting to £1,000,000 or more is going to be spent. That, I say, is a reversal of all the principles of English finance; and I repeat that this rigid financier has broken down every rule by which hitherto the House of Commons has controlled the Expenditure of the country. And, Sir, what is the excuse? Why, even in the case of Supplementary Estimates, particulars are given before the money is allowed to be applied. Do not let it be said that this is sprung upon the Government by surprise; they have had the opportunity of laying the matter before the country; they put this question into the Queen's Speech last November, and have had abundance of time to settle their plan and determine all its details before coming to the House of Commons. Why have they not given us these details before asking us to vote the money? The only answer they seem able to give us is that the First Lord of the Treasury happens to be ill. That is a testimonial, a compliment, to the supremacy of the First Lord of the Treasury, which is doubtless well deserved; but it is a remarkable thing that that Cabinet which put free education into the Queen's Speech in November should not be able in May to tell us what is their plan of free education. The whole current of Public Business was stopped because the colleagues of Lord Chatham could not do anything unless Lord Chatham was present. I have a great respect for the Lord Warden of the Cinque Ports, but he seems to me to occupy very much the position in the Government and in the Cabinet as Lord Chatham occupied. It certainly is an extraordinary state of things that the 1100 House should be asked to vote this money without being told anything about it. That is a position which the House of Commons never occupied before. It is a position which, so far as the House of Commons—which is supposed to administer the taxation of the people—is concerned, is humiliating and contemptible, and, in my opinion, we are bound to protest against it. We are asked to buy the Chancellor of the Exchequer's pig in a poke. The right hon. Gentleman says, "Give me the money. Open your mouth and shut your eyes and wait until the First Lord of the Treasury comes back, when I will tell you what you will get." That is the position on the Second Reading of the Customs and Inland Revenue Bill, which is supposed to settle the taxation for the year. I say such a position has never been taken up by any Government or any Finance Minister before in the House of Commons. The Government are raising £1,000,000 or more under this Bill, and they do not tell the House how it is to be spent. They do not take the House of Commons into their confidence. They do not show us the methods in which they are going to apply this money. They are preparing for themselves a situation in which, upon no known principle of financial administration, any Government has ever been placed before. The proper course for the House to take is to remonstrate against finance of that character. I do not wish, in the present state of Public Business, to refuse the Second Reading of the Bill, but I think that before the Bill leaves us the House of Commons ought to express an opinion that no such measure ought to be passed until we have a full account of the manner in which the money is to be spent. If nobody else does it on the Third Reading of the Bill, I will raise that question, so as, at all events, to give the House an opportunity of protesting in favour of the ancient principle of controlling the Expenditure of the country. So much for the manner in which the right hon. Gentleman has dealt with the question of education. There is something more I desire to say as illustrating the financial methods of the Chancellor of the Exchequer with reference to the manner in which the House is kept informed of its expendi- 1101 ture and financial proceedings. On a former occasion I raised an objection to the new-fangled system of "carrying over." I pointed out that it has all the vices of foreign finance, and I showed (although it was not necessary for me to do more than quote the Chancellor of the Exchequer himself) the mischief that necessarily arises from a system of that character. You do not know what you are going to spend. You do not know what you are going to borrow; you are absolutely in the dark as to the financial condition of the country. It is not only the public that do not know anything about the Expenditure of the country; the Government do not know. I do not suppose the Government would intentionally lay before the House incorrect information, but there is a Paper before the House which is the most discreditable financial document that was ever placed on the Table of the House of Commons by a responsible Government. That is the Paper which shows the difference between the figures in the Return moved for by my right hon. Friend the Member for Bradford (Mr. Shaw Lefevre) and the facts as they exist. The right hon. Gentleman, with less than his usual courtesy, accused me the other night of being a bad accountant; but it was not my figures that were wrong. The figures that were wrong were those of the Treasury and the Chancellor of the Exchequer. They may regard me as a simpleton for assuming that the document signed by the Secretary to the Treasury and laid on the Table of the House of Commons was reliable, representing the true state of things. I confess that my former knowledge of the Treasury induced me to take that view of the question. I accepted the figures presented in that document and I argued upon them. In the month of June last the right hon. Gentleman the Member for Bradford moved for a Return of the Estimate of the expenditure on the Army and Navy and the provision made for it, and a Return was made by the Treasury on June 4, which showed that the estimated expenditure was £38,000,000, and that £3,442,000 was to be borrowed by the Government. On that the Opposition assumed that the Government knew what they were about, and had returned to Parliament the actual state of things 1102 as they were. But, then, the Chancellor of the Exchequer turns round and says, "What idiots you were; you were utterly wrong." Why were we wrong? Because these figures placed on the Table of the House by the Government were wrong, not by thousands or hundreds of thousands, but by millions.
§ SIR W. HARCOURT
Well, we will see whether the figures of the Government were wrong or not. First of all, the Government estimated in the month of June that they would spend £5,279,000 upon shipbuilding. As a fact, they spent £3,280,000. They were wrong by £2,000,000 out of £5,000,000. Is it conceivable that a Department can be conducted in such a manner? What an extraordinary state of things! What wonderful contracts these must be! What reason have we to suppose that the Chancellor of the Exchequer will be more right this year? The Government lay a Paper on the Table which shows that these great preparations for which they took such an enormous credit for the Navy must be carried out with expedition; and then, having entered into the contracts, they fall short of their estimated expenditure by £2,000,000.
§ SIR W. HARCOURT
That may be. It will be an interesting thing to learn what can be the character of those contracts upon which barely half the money which it was estimated would be spent was actually expended. Then there is this further remarkable fact about the Return I have referred to—that there are two items estimated by the Admiralty on which nothing at all has been spent. There is Dockyard Shipbuilding, £128,728, and not one farthing spent upon it; and there is an item, Purchase of Armour Plates and Stores in Advance, £688,000, and not one farthing spent upon that. Here are these gentlemen, who take such enormous credit to themselves for hurrying on this work, telling the House of Commons in June that they are going to spend £688,000 on that item, and yet they do not spend one single farthing. That shows the difference between the 1103 estimates of the Admiralty and their performances. The consequence is that, having stated to the House of Commons in the month of June that their expenditure would be £38,000,000, their expenditure in reality was £36,572,000. What sort of information is that to give to the House of Commons? The Chancellor of the Exchequer says in an airy way, "You never can tell exactly in a matter of contract." If the difference had been a difference of £100,000, I should have said nothing; but when it comes to £2,000,000, no one can place any confidence at all in the way business is conducted. I have here dealt with the expenditure account. I now come to the receipt account, which is more extraordinary still. The estimate the Government made of the provision they would be able to make for the Army and Navy was £38,321,000. It really was £36,572,000—again a difference of nearly £2,000,000. Then they told Parliament that they were going to borrow £3,365,000; as a fact they borrowed £696,000. So when it was said, "You are borrowing £3,365,000," the Government turned round and said, "Oh, no, we are only borrowing £696,000." But how was the House of Commons to know that in the face of the Return laid upon the Table of the House in June last? How did they deal with this money? It is most remarkable. As I have said, they adopted the system of "carrying over"; and when once that system is introduced you can never know where you are, as it leads to confusion. Let us see how this Paper demonstrates that. Now mark this: The Paper which I hold in my hand was delivered in June, 1890, and the unexpended balances mentioned in it relate to the year which expired in the previous April. The Admiralty, therefore, ought to have known how much they had expended and how much was left over, for two months had elapsed since the close of the financial year when this Paper was presented. The Admiralty published this "unexpended balance for the Shipbuilding Votes for the Navy—£128,000;" but by the corrected Return it appears that the unexpended balance was really £380,000—a difference of over £200,000. So that they were wrong to the extent of about £200,000 in an account that was closed. But that is not all. The Admiralty 1104 must have known how much or how little they had paid to their contractors, yet they laid on the Table of the House a statement showing that the unexpended balance for the previous year amounted to £278,000, whereas by the corrected Return it appears that the sum was really £775,000, so that they did not know what their unexpended balances of the previous year were within half a million of money. Now, if that is not an instructive lesson as to the evil results of this system of carrying over, I do not know what can be. The fact is, that the system of finance adopted by the Government throws all their accounts into confusion. They not only mislead themselves, but they mislead the country, and then they turn on us when we comment on the condition of things, and say, "What bad accountants you are." Bad accountants? Rather what bad financiers they are to announce one year an unexpended balance of £278,000, and then to come down to the House next year and cry peccavi, and declare that the amount is £775,000. Both their estimates of expenditure and their bookkeeping in respect of unexpended balances are not worth the paper on which the figures are printed. That is what I have got to say on their system of bookkeeping under this new financial system of "carrying over." I say it is absolutely confusing, absolutely destructive of all sound finance; and if the Committee want proof of it, it is to be found in the Papers I have referred to. Now as to the subject of borrowing. The Chancellor of the Exchequer announced last year that he intended to borrow about £3,000,000 this year. How is he going to borrow the money? I confess I do not attach much importance to Treasury Returns under the existing system—not that the Treasury does not do its best, but because it cannot cope with the confusion brought about in the public accounts by the present system of finance. Whether or not the Chancellor of the Exchequer is going to borrow I know not, but I will assume he is. Is he going to borrow on Treasury bills, and to increase the Unfunded Debt? The right hon. Gentleman has been a great borrower during the past 12 months. His Consols are at 2¾ per cent., but what is the rate he has been bor- 1105 rowing at on his Treasury bills? I have the figures before me of his Treasury bills since June last. There are none of them under 3 per cent. There are some of them above 4, 4½, and there is one lot at 5. I should say the average is about 3½ per cent.
§ Sir W. HARCOURT
Well, about 3½. I venture to say that short bills of three and six months have never been under 3½ per cent. So that the right hon. Gentleman is paying on Treasury bills about 1 per cent. more than he pays on his Funded Debt. And the right hon. Gentleman hardly knows what price he is going to pay. Only a short time ago the right hon. Gentleman went into the market for £2,000,000, and cams back with only £50,000 in his pocket. What was the price offered then for his bills? It is not very creditable for a Chancellor of the Exchequer to ask for £2,000,000, and to find that the terms are such that he cannot accept them. That is a thing which happens, no doubt, to less dignified personages, to companies, and even to foreign States, that go into the market to negotiate a loan, but few of us like to see an English Chancellor of the Exchequer placed in such a position. The Chancellor of the Exchequer has, in fact, become a money jobber. He disturbs the markets; for in the critical condition in which the markets are now, it is not a matter of no importance that a man should go into the market and ask for £2,000,000. It is certain to have a very serious effect either for good or evil. The Chancellor of the Exchequer may say that he has been paying off the Funded Debt, but it is a questionable transaction to borrrow money at 3½ per cent. in order to pay off a debt at 2¾. Perhaps the Chancellor of the Exchequer will say that, as Consols are down to 95, he can go into the market and buy his own depreciated securities. There is something in that, no doubt. The right hon. Gentleman says I have been unjust to his great conversion scheme. I have no desire to treat the right hon. Gentleman's great conversion scheme unjustly, and am ready to give him every credit for it, but there are two sides to the question. The effect upon Consols has not been altogether 1106 for good, and there is no doubt that people do not take Consols as they used to take them. People dislike the very low rate of interest, and the consequence is that a large quantity of Consols have been thrown upon the market. A gentleman of large financial knowledge and experience recently told me that he believed that this throwing of Consols upon the market had stimulated the unwholesome speculation which has done so much mischief. Consols are not absorbed in the way they used to be. The Chancellor of the Exchequer spoke recently of the great diminution which he has effected in the Funded Debt. It is the depreciation of his own Consols which has enabled him to effect that diminution. When his predecessors paid off the Debt Consols stood at 102, whereas now they stand at only 95. However, I do not object to the right hon. Gentleman taking advantage of his own wrong, as it were—the depreciation of his own Consols. I mentioned the failure of the right hon. Gentleman to procure £2,000,000 on Treasury bills. I would now like to ask from what source the money ultimately came? That is a matter on which I think we ought to have some explanation. He wanted £2,000,000, or he would not have gone into the market. I suppose I shall be told that it came from the balances. Now, what are these balances? The principal part of them form what is called the old Sinking Fund, or the surplus of the previous year. Now, the surplus for the previous year ought to be appropriated to the payment of antecedent Debt. I should like to know from the Chancellor of the Exchequer whether he has to any extent, and, if so, to what extent, used the surplus of preceding years? That is a matter on which we ought to have information, because if you are trading upon your past surpluses the provision intended to be made is practically destroyed. Though it may seem to the House rather a complicated matter, it is a matter of supreme consequence in sound finance.
§ SIR W. HARCOURT
I am glad to hear the Chancellor of the Exchequer agrees with me. There is another matter to which I must refer—that of the gold coinage. The hon. Gentleman has, on the subject of the coinage, left us too long in 1107 suspense. During the short time I was at the Treasury I went carefully into the matter, and I ascertained that a sum of £700,000 or £800,000 would be required to put the coinage right. In 1889 the Chancellor of the Exchequer promised to lay his proposals before the House on the question of the coinage and the currency. What has become of his proposals? Three years have elapsed, and at this moment we know nothing at all about his views on the coinage or the currency. Is he going to deal with them together or separately? Last year he said that he had set aside £600,000 out of the profits of the Mint for the new coinage. What has become of that £600,000? Where is it? What has become of the money? I will tell you. It has been muddled away. How much has been applied to the coinage? This year, without saying what he has done with the £600,000, the Chancellor of the Exchequer tells us that he is going to spend £400,000 on the coinage. Is that in addition to the £600,000? The right hon. Gentleman said in 1889 that he mixed this question up indissolubly with the question of the currency and of the £1 note, but since that time he has also got mixed up with the question of a new gold reserve. Upon that question, which is one of profound interest and importance, I marvel that the Chancellor of the Exchequer has confined himself to postprandial orations in the provinces and at the Mansion House. He has gone there, and has sounded a note of alarm. The right hon. Gentleman has made every person believe that banking in this country is not in a sound position, that it bears an enormous weight upon an insufficient basis; but he has never brought the question before the House of Commons. An alarmist Chancellor of the Exchequer is a very formidable person; but when he cries "Wolf" and stinking fish, he is bound to come forward with some proposal to remedy the dangerous state of things, and to bring the question to the test of Debate in this House. There are in this House great financial authorities, men intimately cognisant with banking and commerce, who would gladly hear the views of the Chancellor of the Exchequer on this momentous subject. What is the condition of this matter? The Chancellor of the Exchequer says that there is no 1108 reserve. He has, to a great extent, laid the blame of that upon the private banks. What do they retort? They say, "We keep our reserves with the Bank of England, and the Bank of England, in order to pay high dividends upon Bank Stock, trade with our reserves and lend them out, and, in point of fact, it is the Bank of England that is responsible." For my own part, I am quite incapable of offering an opinion on the subject; but this I will say—if we are to have alarmist speeches made throughout the country from time to time by the Chancellor of the Exchequer upon these matters which seriously affect the public credit, the matters ought to be discussed in this House. When the Chancellor of the Exchequer flies financial kites in the shape of £1 notes, which are to be represented by a second reserve, he ought to fly them in the House of Commons, and not after dinner in the provinces and elsewhere. If I refer to these matters it is because never in my recollection has the Money Market of this country been in so anxious and feverish a condition as it is at present. It does not want excitements, or alarms, or blisters, such as the speeches to which I have referred. There are persons much better entitled to express an opinion than I am who believe that the disaster of last November has not seen its termination. There was, no doubt, a very dire necessity which led to very extraordinary and unexampled measures on the part of the Bank of England. I do not presume to judge that action, but there is one thing which the House of Commons is entitled to know in relation to the Baring guarantee, and that is, what part Her Majesty's Government were called upon to take, and what part they did take? That is a serious matter, because it is a precedent of a most dangerous sort. If you are to prop up one house in this way, why not others? Some say that the Chancellor of the Exchequer did not interfere boldly enough. The right hon. Gentleman will hear no such criticism from me. The less, in my opinion, the right hon. Gentleman interfered the wiser he was. The habit of the Government—it is a foreign habit—stepping into these private transactions is a most dangerous one. I object to the Chancellor of the Exchequer being so much in the market, but it comes of 1109 what is called the Government Banking Guarantee. I think it is a most pernicious and dangerous precedent, and I hope we shall learn from the Chancellor of the Exchequer that he has taken no such course. But now, coming back to the Bill, which leaves the Income Tax as it was before, and gives no relief to the taxpayer in a time, if not of unexampled, yet of great, prosperity, we have to ask ourselves what is the cause? It is the profuse expenditure of the Government. However much your Revenue has grown, your Expenditure has grown in still greater proportion; and in a year in which your sources of revenue have been abundant, and even superabundant, you stand in this position: you are not only unable to give any relief to the taxpayer, but are actually going to borrow £3,000,000 to pay your way. The Government endeavour to say this is the fault of their predecessors. On May 6th the First Lord of the Admiralty (Lord George Hamilton), whose absence, and the reason of it, we greatly deplore, went to the National Union Dinner and said that Mr. Gladstone, Sir W. Harcourt, and Mr. H. Fowler were influenced by the "Manchester school," and that dangers to the country were likely to ensue. He went on to say—When Lord Salisbury came into Office the dockyards were in an unsatisfactory condition, and owing to the perilous state of things Lord Salisbury attempted to embark in large plans of naval construction.I characterise that statement as absolutely unfounded, and out of the mouth of Lord George Hamilton himself I will prove it to be unfounded. It is the most unjustifiable statement I ever recollect to have been made by a responsible Minister, who ought to know, and must have known, there is not the smallest foundation for it. When the Liberal Government left Office in 1886 I, as Chancellor of the Exchequer, made provision for a larger sum for naval expenditure than had ever been made before. What did this First Lord of the Admiralty, who for electioneering purposes makes statements of this kind, say himself at the Mansion House in November of that year, when he had come into Office? Lord George Hamilton said—The number of ships in commission, armoured and unarmonred, exceed the com- 1110 bined force of the three greatest European Powers.On December 13, 1888, the noble Lord said—At no period of our naval policy during a time of peace had there been so steady and continuous an increase as in the last three years, but he did not wish to take credit for having completed this large number of ships, the main credit of which was due to Lord Northbrook.But deeds as well as words contradict the statement of the First Lord of the Admiralty at the National Union Dinner. When the present Chancellor of the Exchequer brought in his first Budget he stated that the extra charge was due to that which was commonly known as the "naval scare of 1884." He added that—In that year the House agreed to an extra expenditure of £3,100,000 on ships, and £1,600,000 on armaments. The Estimates had been increased by that which had been a temporary and, he hoped, an exceptional outlay. At the end of the financial year they would have arrived at a great diminution of the necessary charge which had been made upon the taxpayer owing to these exceptional circumstances.With such admissions as these is it tolerable that men who call themselves responsible Ministers should make such statements for electioneering purposes, knowing that those statements are absolutely untrue? It is necessary that these things should be shown up, and that men holding the position of the First Lord of the Admiralty should be shamed out of such language as this. This is what the First Lord of the Admiralty said in the House of Lords on July, 1887—I have never said that the Navy Estimates could not be reduced, and the Navy Estimates of this year show a reduction of £800,000 as compared with last year. I said in my Memorandum that I was satisfied that for years to come there could be a steady reduction of expenditure and increased efficiency.That is the statement of the man who at the National Union Dinner in 1891 said that, in consequence of the perilous condition in which we left the country, it was necessary to embark in large plans of naval construction. The statement is an audacious misrepresentation, for which the noble Lord ought to make some apology to the House. It is well-known that Lord Charles Beresford resigned office because you reduced the expenditure in the Navy. Now, it is 1111 this large expenditure which is the real secret of the Government's financial shifts and expedients. What is the course to which this expenditure has driven them? They have sot to work, first of all, to mortgage their future revenue in the Suez bonds for five years hence. They will spend the money, and go about saying they have put the country into a state of defence; but they will leave their successors to pay for it. I call this bad finance; and when I look at the excuse made for it in such speeches as that of the First Lord of the Admiralty, I am disposed to call it shabby finance, covered by still shabbier excuses. The time will come when the Government will have to give an account to the nation in this matter, and I am of opinion that when that account is made it will not, at the hands of the nation, receive an approving verdict.
§ (4.59.) THE SECRETARY TO THE ADMIRALTY (Mr. FORWOOD,) Liverpool, Ormskirk
No one can regret more than I do that the First Lord of the Admiralty is not in his place to reply to the comments of the right hon. Gentleman opposite. As I have not read the speech to which reference is made, I am not in a position to reply to the comments of the right hon. Gentleman; but I feel sure that, when the noble Lord is able to be in his place, he will amply justify every word he has uttered. One great difficulty the present Board of Admiralty had when they entered Office was the vast amount of shipbuilding which had been commenced and not completed, representing a value in ships of something like £14,000,000; and, although an addition was made to the Fleet in 1885 by the Northbrook programme, adequate provision was not made in the Estimates for that programme.
§ MR. FORWOOD
In 1886–7 the estimate for the Northbrook programme was exceeded by £544,000, and in 1887–8 by £313,000. Bat the object I have in rising is to reply to some of the comments of the right hon. Gentleman in the earlier part of his speech. The right hon. Gentleman questioned the bookkeeping and accounts of the Admiralty as rendered to the House. He said that a sum of £2,000,000 had been spent in the year 1890–1 more than was estimated as late 1112 as June, 1890; and the right hon. Gentleman based his statement on a Return, moved for by the right hon. Member for Bradford, and laid on the Table of the House in June last. The right hon. Gentleman the Member for Derby has treated that Return in a manner quite foreign to the intentions of the right hon. Gentleman who moved for it. A document was asked for, which should show the estimated Expenditure for the year 1890–1, on the Army and Navy, and the provision to be made for it under certain heads; and although that Return was dated in June, and placed on the Table in print, it undoubtedly had reference solely to the estimates which had been presented to the House in the previous February. I wish the House to bear in mind that these estimates were prepared in the months of November and December, 1889, and contained the figures, practically, for two years. An estimate had to be made of what would be the probable Expenditure of the then current financial year ending on the 31st March, 1890, and, further, an estimate 15 months in advance, of the probable Expenditure of the succeeding financial year or 31st March, 1891. There was undoubtedly an immense difficulty in preparing estimates of the earnings on contract work, because the amount of work which would be done by contractors in any year is always more or less problematical. The Return in question refers to the work on 60 or 70 contracts, and the ordinary difficulties of estimate are increased by unusual conditions. During the last two years the labour market has been very much disturbed; much of the work has been done on the Clyde, where the railway strike for some time stopped all progress, and the severe weather in the winter of the present year has also, to a great extent, hindered shipbuilding operations. The figures over which the Admiralty had direct control, namely, the work done in the Government Dockyards, the Return anticipated an expenditure on work in these dockyards during the year 1890–91 of £2,890,000, and the sum actually expended was £2,736,000. Of the difference of £153,000 no less than £140,000 was money short earned by contractors for engines, so that, as far as the estimates over which the Admiralty have 1113 direct control are concerned, there was only a difference of £13,000 or £14,000 in the total estimate of nearly £3,000,000. With regard to the contract work, the estimate prepared in December, 1889, anticipated that contractors would earn in 1890–91, on the new shipbuilding programme, £3,595,000. In point of fact, they earned only £2,600,000, owing to the circumstances which I have enumerated. The figures in the Estimates were given by the contractors and revised by experienced officers at the Admiralty. Then the right hon. Gentleman the Member for Derby has asked a question with reference to the £688,000 entered on the Return for the purchase of armour plates. This matter has already been explained by the First Lord of the Admiralty. At the time the estimate was made it was thought that the reading of the National Defence Act would allow the sum mentioned to be borrowed; but it was subsequently decided that the Act would not allow any money to be borrowed for the purpose of purchasing armour plates until £2,650,000 had been expended in the dockyards during the year. Consequently, a Supplementary Estimate was presented, and £300,000 of the money so obtained was spent on armour plates, the balance required being obtained by savings on other Votes. The right hon. Gentleman further complains that not a penny has been spent on dockyard shipbuilding of the £128,000 savings shown in the Return. This sum was made up from the savings from the previous year, and could not be drawn upon until the dockyard shipbuilding in any year amounted to £2,650,000. As to the armament of contract ships, in November, 1889, it was anticipated that guns and ammunition to the value of £866,000 would have been manufactured for the vessels under construction. Instead of that, the Admiralty was only able to obtain guns and ammunition to the value of £492,000. Then there is a difference on the credit side of the account, because the statement is an estimate dealing with two years. There is the unexpended balance for the year then current covered, and the estimate of the probable savings for the year not arrived.
§ SIR W. HARCOURT
The unexpended balance was the balance remain- 1114 ing on the 31st of March, and that could not have been altered at all. How is it that the Admiralty were ignorant in June, 1890, of how much unexpended balance there was on April 1 of the same year?
§ MR. FORWOOD
I am sorry I have not been able to make myself clear. The Admiralty, in the Return, did not attempt to tell the House the amount of the actual unexpended balance. They simply filled in a Return in the form asked for by the right hon. Gentleman the Member for Bradford. That Return is practically a replica of the Estimates for 1890–91.
§ SIR W. HARCOURT
I beg the hon. Gentleman's pardon; the Return asked for estimated expenditure, and asked also for the provision made to meet it. But the provision, as far as it was unexpended balance, was an ascertained amount on the 1st of April, and, consequently, there was nothing in the nature of an estimate about it.
§ MR. FORWOOD
The Return simply asked for the estimated expenditure of 1890–91; and if there has been any misapprehension as to the meaning of the right hon. Gentleman who moved for that Return, that will explain how the right hon. Gentleman the Member for Derby has mistaken the meaning of these figures. I wish to make it clear that these figures were not actual results, but estimates placed before Parliament, and made up three months before the actual Returns for 1889–90 could be obtained, and 15 months before the actual expenditure for 1890–91 could be ascertained. It is, therefore, quite clear that the remarks of the right hon. Gentleman have been founded on a mistake as to the figures called for by the right hon. Gentleman the Member for Bradford.
§ SIR W. HARCOURT
I really cannot accept that; a balance is not an estimate, but a fact. There is nothing about unexpended balances; the question is whether the Admiralty at the end of the financial year knew how much they had actually spent.
§ MR. FORWOOD
At the end of the financial year the Admiralty knew exactly what their actual balance was, but in the previous December they could not be aware what the balance would be on the 31st of March following. The right hon. Gentleman has missed 1115 another point. Under the Naval Defence Act we had to state what our estimated unexpended balances were, and in the Estimates for 1890–91 the right hon. Gentleman will see that the estimated unexpended balances of 1889–90 available for 1890–91 were stated. We have been dealing in this matter entirely with Estimates. The right hon. Gentleman has commented upon the system of carrying over, and desires the House to believe that it is an innovation which is unsatisfactory, and in a certain sense misleading. This question of carrying over unexpended balances is a matter of serious public concern, and I should like to be permitted to say a few words with regard to it, and to point out how these very Estimates prove the desirability of the system. If the Naval Defence Act had not provided that the balance unexpended in one year should be carried over and be available for expenditure in another year, the result would have been that, on the figures which we are now discussing, the House in 1890–91 would have raised £2,000,000 by taxation more than could have been expended, which would have gone in reduction of Debt. I think the House will admit that if it is anticipated that the contractors will require a certain sum of money, it is the bounden duty of the Government to come to the House and ask the House to provide that money. I say it is wrong finance to underestimate your probable expenditure. It is a very intricate matter, but I submit that the statement laid before the House shows that as far as expenditure under the control of the Admiralty is concerned the estimate was wonderfully accurate and close, and that the estimate relating to contract vessels was disturbed by abnormal circumstances which no one could have foreseen. Fortunately, the power of carrying over has enabled us to save the taxpayer a large sum of money.
§ (5.24.) MR. SHAW LEFEVRE (Bradford, Central)
I must take exception to the statement of the hon. Gentleman respecting the Return I moved for last year. He has endeavoured to hide the mistakes of that Return by misrepresenting its objects. He said my object in moving for the Return was to show that the estimates made by the Admiralty with respect to the Navy were incorrect.
§ MR. FORWOOD
I did not say that was your object. I did not know what your object was. I simply said we thought the Motion for the Return meant a reproduction of the Estimates in another form.
§ MR. SHAW LEFEVRE
There was nothing in the Return which in the slightest degree indicated that that was the object of it. The reason which led me to ask for that Return originated in a discussion on the Budget last year, when I said that in my opinion the Government ought to have stated what the actual expenditure of the country was, both with regard to the Army and the Navy. I ventured to form an estimate of what the real expenditure was likely to be, and challenged the heads of the two Departments to say whether I was right or not. I was followed by the First Lord of the Admiralty and the Secretary for War, who both stated that my figures were entirely wrong. Accordingly I moved a few days later for a Return for the purpose of showing what was the estimated expenditure and what was the actual provision made for it within the knowledge of the Government at the time the Return was made. The Return was the subject of a good deal of discussion between myself and the Treasury officials, and at last I obtained it. Certainly no human being, I should have thought, would have supposed I intended by the Return merely to obtain an estimate of the provision likely to be made for the expenditure in the previous November. There can be no question that the Return is entirely misleading. In June 1890, that is to say three months after the completion of the previous financial year, and at a time when the actual expenditure of the previous year must have been within the knowledge of the War Office and the Admiralty, a Return was presented which entirely misstated the expenditure of the previous year, and made an entirely false estimate of the expenditure of the coming year. It showed that the estimated expenditure of the year was £38,300,000 whereas the actual expenditure was £36,500,000. My right hon. Friend the Member for Derby (Sir W. Harcourt) has pointed out that the Return is also misleading with regard to the unexpended balances 1117 under the Ship-building Vote and the Naval Defence Act. I think the House will consider that the attempted explanation of the Secretary to the Admiralty, in reference to the statement made by the noble Lord the First Lord of the Admiralty, has been wholly unsatisfactory. The Secretary to the Admiralty hardly ventured to defend his chief in this matter. All he could say was that he hoped the noble Lord, whose absence we all regret, would be able when he returned to the House to give a full explanation. He went on to say that the late Government when it left office did not make adequate provision for the naval expenditure of the year. But he did not attempt to answer the question put by my right hon. Friend the Member for Derby as to why the present Board of Admiralty, when they came into office in 1886, reduced the Estimates for the Navy by no less a sum than £1,000,000. The First Lord of the Admiralty has made a statement in the provinces which is most audacious in its character, and for which there is no justification whatever. The noble Lord has endeavoured to throw the responsibility on his predecessors in office for the great expenditure recently adopted in the Navy, and has entirely forgotten the fact that for two years after he assumed office he was continually reducing the expenditure on the Navy, on the ground that when he came into office ample provision had been made by his predecessors. That is the charge which the Secretary to the Admiralty has totally failed to meet, and I venture to think that when the First Lord of the Admiralty returns to the House he will find it impossible to meet that charge, or to give an explanation of the character of the language he has used in the provinces. I read the noble Lord's statement with great surprise. No language ever used by the head of the Admiralty with regard to his predecessors was more completely unjustifiable, and all the facts mentioned by my right hon. Friend the Member for Derby have thoroughly exploded the statements of the noble Lord, and have shown that they are the opposite of what is true.
§ (5.35.) VISCOUNT LYMINGTON (Devon, South Molton)
To turn from Imperial questions to a matter of con- 1118 siderable importance to a large number of the poor in towns, I should like to call attention to the incidence of the Inhabited House Duty. By his Budget of last year the right hon. Gentleman the Chancellor of the Exchequer granted an exemption from that duty in the case of all houses whose gross assessment does not exceed £20. But this extraordinary anomaly or injustice has arisen, that whereas the artisan or working man who lives in a cottage outside London under £20 pays no Inhabited House Duty, the same class of tenant, or rather a poorer class, living in a town, who is obliged from the nature of his work to live in a block building, occupying a separate tenement, separately assessed for poor and other rates, has to pay the duty—or rather the Inland Revenue Office is claiming it from him. It seems to me that a mistake has arisen. I can not suppose that the Chancellor of the Exchequer, when he granted the exemption to meet the case of the poorer householders in the country, wished to impose a greater injustice on the poor in the towns. Until the present time it has been the custom of the Inland Revenue Department not to press for the Inhabited House Duty, even before the right hon. Gentleman made the remission; but the attempt is now being made by the Inland Revenue Department, in cases either of tenement lodging houses or blocks of buildings occupied by poor people in London, to lump the whole value together. Although there may be in a block of buildings 100 or 130 tenements, which are regarded as separate dwellings for other purposes, under £20 gross annual value, the fact that there happens to be one tenement above that value causes the Inland Revenue Authorities to lump the whole together, and thus the poor people are compelled to pay. The tax is thus made to fall "upon even poor working women who pay half-a-crown for a room. I am aware that the right hon. Gentleman attempted to meet the views of certain Members of this House by imposing in the Budget Bill of last year a limit of 7s. 6d. What I contend is that the working-men in towns who are obliged to inhabit tenements of less than £20 gross annual value should be placed in precisely the same position as their fellow labourers who live outside towns. 1119 The right hon. Gentleman may say that some of the building companies in London should lower their rents. It is impossible for the company with which I am connected to do so. We pay our shareholders at the price of our Stock 4¼ per cent., and the whole of the rest of the money is purposely and obviously devoted towards keeping down the rents. The cost of building in London is in all cases very expensive, and it is absolutely necessary that in some cases the rent of your tenements should be higher than others. All we press for is that the tenants of rooms, which are assessed at a sum not exceeding £20 a year, should have the same advantage as the working man in the country, and be exempt, and that all tenements whose gross value is over £20 but under £60 should pay the reduced duty of 3d. instead of 9d., as is the case in the country. It is clear to me that as the matter stands now, it is taxation either by a trick or by a blunder. I believe it to be the latter.
§ (5.42.) MR. BARTLEY (Islington, N.)
I should like to emphasise the argument of the noble Lord by quoting two instances which have come within my own knowledge. There is a block of buildings in Great Eastern Street which, under the old system, paid Inhabited House Duty of 13s. 6d. per annum. Under the new system a claim has this year been made at the rate of 9d. in the £1, making the duty claimed £10 12s. 3d. There is another block in St. John's Square which paid under the old system £4 0s. 3d. This year a claim has been made for £1 6s. 9d. at the rate of 3d. in the £1. Both blocks of buildings are within half mile of each other, and are practically of the same character and accommodation. I think the right hon. Gentleman will see that we who are interested in these dwellings of the poor have a cause of complaint, and if he can do something to put the matter on a reasonable footing we shall be extremely indebted to him.
§ (5.45.) MR. GOSCHEN
In reply to the remarks made by my two hon. Friends who have spoken last, I may say that it is the District Commissioners who administer the Act, and it was not my intention that in the case of tenements where the rental is only 7s. 6d. or under, the Inhabited House Duty 1120 should not be charged. I will see that my intention is carried out in that respect. In the case of tenants in block buildings who pay 10s. a week and over, the House Duty should be charged the same as in houses over and above £20. I think the House will feel that, when we come to a rental in a block of 10s. a week, that is a very high rent for an artisan earning weekly wages to pay, and it will be agreed that in such cases the duty should be charged. With that exception I will endeavour to meet the views of the hon. Gentlemen.
§ MR. GOSCHEN
At 7s. 6d., they will be exempted altogether from the House Duty. If my hon. Friend the Member for Islington will supply me with particulars, I will look into the question he raises.
§ VISCOUNT LYMINGTON
Seven and sixpence only represents practically about £12 a year, and our contention is that all under £20 should be exempt.
§ MR. GOSCHEN
I cannot overrule the Act passed last year with regard to the 7s. 6d. limit; but I am prepared to give a concession that seems to me to be within the spirit of the Act. I pass now to the speech of the Member for Derby (Sir W. Harcourt), and I will also say a word on the speech of the Member for Bradford (Mr. Shaw Lefevre). The latter right hon. Gentleman has, if I may say so, got his own Return on the brain. The right hon. Gentleman has been complimented by the leader of his Party as an industrious-minded man, and he deserves that compliment for the industry with which he has followed up this subject. My hon. Friend the Secretary to the Admiralty explained that the authorities at the War Office put a different construction on the wishes of the right hon. Gentleman from those which he now expresses. It is very unfortunate that a misunderstanding should have arisen, but to say that the whole Return has been muddled is a most gigantic exaggeration. The two right hon. Gentlemen have contended that the Government has made a fearful failure in administration because, whereas they were expected to expend £38,000,000, they spent only £36,500,000.
§ MR. GOSCHEN
That is how the right hon. Gentleman puts it. But, taking it at that, where is the fault? Time after time we have pointed out to the House the reason why the contractors were not up to time as regards the instalments. The right hon. Gentleman says we shall not be able to complete the work within the time anticipated. That does not at all follow, because it is highly probable that during the remaining years the contractors will fetch up their work. If they do not they will be subject to penalties. There is, therefore, only a displacement of figures or charges. The fact that this matter is brought forward only serves to show that the right hon. Gentleman is driven to poor expedients to make up a case. I think it is better to show in the Return what has not been done than that we should be in the position in which the Admiralty frequently used to be—not having accomplished the work by thousands of tons, and yet not showing that result in the Estimates for the year. I say ours is the right system. The Admiralty is now compelled to refrain from devoting any money voted for shipbuilding to repairs, and consequently this year, I will undertake to say, we have reached an accuracy in the Return of the amount of work performed in the dockyards which has never before been reached. If there is any difficulty in understanding the accounts, that is a difficulty which will be removed, I think, in the second year, and when the right hon. Gentleman the Member for Bradford is less industrious in showing us how the accounts ought to be made out. It is incredible that right hon. Gentlemen opposite should go on repeating that we are always having recourse to new devices, when we have quoted over and over again their own precedent with regard to the localisation of forces. The right hon. Gentleman the Member for Derby, complained that we are substituting new devices in the place of the old way. I think it strange that such a charge should be made by the Member for Derby, who was a Member of the Government of the right hon. Gentleman the Member for Mid Lothian, whose scheme for the localisation of the Forces 1122 has entailed on the present Government debts so incurred. We are actually paying at the present day a charge put on the taxpayers by the right hon. Gentleman and his colleagues in 1883. I do not complain of that, but I do complain that with that precedent before him the Member for Derby should complacently repeat to the House over and over again that the present Government are always having recourse to new devices. He wished to represent it was a new device to advertise Treasury bills, but during the short time the right hon. Member for Derby was Chancellor of the Exchequer he was not without experience in that direction.
§ SIR W. HARCOURT
I did not say it was a new device; I said it was extraordinary the Government could not get the money.
§ MR. GOSCHEN
I am coming to that presently. If finding money as my predecessors found it for the localisation of Forces is not a new device, what are the new devices? I will make a confession where I have introduced something new, but what I wish the House and the public not to be misled about is, that in the main there has been no change in the principles of finance which the Government has adopted. There is one thing that is new, and, whether right or wrong, I plead guilty to it, and that is pledging of the Suez Canal bonds. The other point as to which there is a novelty, no doubt, is the Naval Defence Act. Those are the two points, and the two points only, in which I admit there is something new, and these I defend on grounds which I have more than once explained and again indicated to-day. That is the whole sum of my offending in relation to the charge brought against me to-day—the charge of novelty. I must once more allude to the phrase he used, the "needs of the year." The question is whether building barracks, for instance, is a "need of the year." I hold it that the needs of the year ought to be paid for in the year, but the phrase does not mean, and has not meant, even with our most critical opponents, that where an expenditure, approaching a capital expenditure was being incurred, there should be no borrowing at all. Now, the last novelty is that the right hon. 1123 Gentleman complains that, having stated in the Budget we intended to deal with education, the Government has not yet introduced the Bill.
§ SIR W. HARCOURT
Or produced an Estimate. My point is that a public Bill which involves taxation should be based on an Estimate showing how much money is going to be spent.
§ MR. GOSCHEN
I will give the right hon. Gentleman a precedent from the time he himself was in office, and the right hon. Member for South Edinburgh was Chancellor of the Exchequer. The Member for South Edinburgh was referring in his Budget to the reduction of telegrams to the minimum charge of 6d., and, after mentioning that he had commenced a careful inquiry as to the cost of the change, he said—I cannot anticipate the result of such an inquiry, but I propose to set aside £170,000 out of my balance to enable me if possible to carry out the change in the course of the present year.I, on my part, propose out of my balance to set aside a sum of about £800,000 to enable me, if possible, to carry out the views of the Government with regard to education in the course of the present year.
§ MR. GOSCHEN
I think they can. [Sir W. HARCOURT laughed.] I do not know whether the hilarity of the right hon. Gentleman is the hilarity of conviction, or whether his heart rejoices to discover that after all the Chancellor of the Exchequer has not the originality upon which he so delights to compliment him. On the occasion which I have cited the House was not informed of the particulars of the change, and, nevertheless, the Chancellor of the Exchequer set aside a sum out of his balance. Doubtless there are many other precedents; it frequently happens that charges are imposed by Parliament upon the country, and the Budget makes provision for these before the Bills have been passed. Though the Government will do their best to inform the House at the earliest possible moment of their intentions, I maintain there is nothing unconstitutional or new in our having set aside a portion of the balance for the 1124 purpose. The right hon. Gentleman says we are not able to give any information because the First Lord of the Treasury is not here, and he is very merry, according to his wont, upon that point. It is not that the Members of the Government present are not able to give the information desired, but, as is well known, the Leader of the House is the person to determine in what order various measures shall be taken, and it is an exaggeration on the part of the right hon. Gentleman to suggest that we are in any doubt as to our plans, or that the absence of the First Lord of the Treasury is in any way delaying the progress of business in the House. The right hon. Gentleman has made a mistake, and others have made a mistake, as to the present condition of the Funded and Unfunded Debt, He read the House a disquisition upon Treasury bills in general, and ventilated his favourite theory—in which there is a great deal of force—with regard to the objections to Treasury bills, but when he came to his proofs it appeared how little the right hon. Gentleman seems to appreciate the situation. The right hon. Gentleman was not intentionally unfair, but there was great injustice indeed in the manner in which he represented the bad finance in having to pay 3½ per cent. on Treasury bills, while Consols were 2¾. The point is this: The country has saved ½ per cent. on £500,000,000, while it is paying a somewhat larger price for about £6,000,000 or £7,000,000 of Treasury bills, and that is the point on which the right hon. Gentleman is so unjust. Here is an operation which involved the conversion of from £400,000,000 to £500,000,000. A very large portion of that was converted by the holders themselves, but there remained a sum of upwards of £40,000,000, and that sum it has been my duty to face. I faced it, and we have succeeded in reducing the Treasury bills, by which a portion of the operation was carried out, really to an insignificant item compared to the enormous magnitude of the whole transaction. No doubt there are more Treasury bills out than I myself like to have out; but what is the inconvenience compared to the fact that by the conversion we have saved to the taxpayer £1,400,000 for the next 14 1125 years, and £2,800,000 afterwards? It is because the right hon. Gentleman has failed utterly to appreciate that part of the case that I have said he has not dealt with this great transaction in a manner which I think just.
§ MR. GOSCHEN
No; because Consols were not at par at that time. Here is a right hon. Gentleman, an ex-Chancellor of the Exchequer, of a few months' standing, I admit, who thinks we can put 40,000,000 of Consols on the market, when they are not at par, and get the money at par. Consols at that time were at 98, I think.
§ MR. GOSCHEN
I think it was about £24,000,000. When I heard the views of the right hon. Gentleman as to standing on the ancient and orthodox lines, I sometimes rejoice, that, after all, the right hon. Gentleman is not in a position to throw 24,000,000 of Consols on the market at a moment's notice, because the consequences that might ensue are too dreadful to contemplate. What would have ensued? I should have increased—permanently increased—the capital of the Debt; but instead of that I raised the money mainly by Treasury bills, and largely by resources in the hands of the nation, with some little inconvenience I admit, but I was able to effect the object without throwing any large amount of Consols on the market. The amount of the Treasury bills will rapidly decrease, notwithstanding the fact that we shall have to borrow £2,000,000 or £3,000,000 in this year through the operation of the National Debt Commissioners. They have money in their hands by which they can take the bills and diminish the amount, so that, after all, the inconvenience which the right hon. Gentleman fears will be of only short duration. If the right hon. Gentleman and his Friend will only give me time enough, I hope that before he again resumes office as Chancellor of the Exchequer he will find the Treasury bills reduced to a very low amount, and 1126 will not be exposed to the inconvenience he deplores. The right hon. Gentleman asked why we withdrew the £2,000,000 the other day, and said the failure to get it was a humiliation. There is no more humiliation attaching to it than to the Indian Office Council bills. I think it is perfectly right that if the Money Market is too dear, and there is no need to buy at that particular moment, then we should not accept tenders. The tenders, I believe, would have been about 4¼ per cent., and I consider—and rightly so—that if I do not accept the tenders made, and deferred, I could get the money at a cheaper rate. Surely there is nothing humiliating in that. I am, in truth, rather glad that it happened, for it shows that we are not obliged to accept whatever offers or tenders are made to us, and, therefore, such a course is not without its advantages. Then the right hon. Gentleman asks where we got the money. Well, at this time the balances in the hands of the Government were large. I purposely asked for £2,000,000 of bills, because if I had not put out tenders at that time we should have had to pay a higher rate. I accept the right hon. Gentleman's theory, and have been acting upon it by endeavouring to reduce the amount of the Treasury bills on the public, and we shall continue to do so, notwithstanding the increased amount we have to borrow. Whatever inconvenience we are exposed to is one more of sentiment than reality; but that inconvenience, whatever it may be, is of little moment when we considered it in the light of the sequel, to the great operation of which I have spoken. Those tenders are necessary, not for the purpose of the £2,000,000 or £3,000,000 that have been borrowed, but as the sequel to the redemption of the debt. The difference now between the right hon. Gentleman and myself is reduced to this—that the right hon. Gentleman would have forced sales on the market to the tune of £25,000,000, while I proposed Treasury bills over a time, and took them up without any loss whatever. As to the question of the Sinking Fund, I believe and hope that the old Sinking Fund will not be used for any deficiency of bills in the course of the year, but for the purpose of diminishing debt. The 1127 right hon. Gentleman next complains that I have not stated what has become of the £600,000 which was set aside in the Budget of last year for dealing with light gold. The fact is that the matter has slipped my memory. The sum of £400,000 is to be applied this year. As to the £600,000, as it has not been employed in expenditure, it remains in the old Sinking Fund, and has been used for the repayment of the debt. With regard to the £400,000, a sum taken from the profits on silver, I propose to apply it to the withdrawal of light coins. The sum is reduced from £600,000 to £400,000 this year, because, according to the latest researches and the opinion of some of the ablest statisticians, the estimates of the amount of gold in circulation are much too large. It has, therefore, been possible to make a reduction in the old Estimates, which ranged up to £90,000,000 or £100,000,000. That has been confirmed by the experience we have had of the pre-Victorian coin; and, therefore, we have not thought it necessary to take more than £400,000 for the withdrawal of light gold coin. The right hon. Gentleman has further complained that I have not placed before the House my views with regard to the banking system of the country and any reforms in the currency. I deeply regret that the right hon. Gentleman should have used the expression—not a very dignified one—that I have "cried stinking fish" with respect to the banking institutions of the country. It is not true, but a gross exaggeration. I have never failed in all my public utterances to pay what I believe to be a well-deserved tribute to the manner in which the banks, in most respects, have been conducted. But I have put my finger on one point which I believe to be a source of considerable weakness in the banking system, and in that I think nine out of ten men, including the right hon. Gentleman himself, will agree with me—I allude to the absence of a sufficient reserve. The right hon. Gentleman rightly thinks that the banks have not held sufficient reserve, but I am glad to say—as I have been invited to speak on the matter—that the London Joint Stock banks have consented, at my instance I may fairly say, to monthly publication of their accounts, showing the 1128 amount of money in their possession and in bank bills as distinguished from their other assets, and I believe this publication will have a considerable effect in increasing the reserves of the banks. The country banks have undertaken to publish quarterly. I therefore think I have obtained something—and without the aid of legislation, too—by what the right hon. Gentleman calls my "flying my kite." I agree with the right hon. Gentleman that the banking institutions of the country ought not to lean too much on this House or the Government, and it has been a great satisfaction to me to find that the banks are willing to adopt this step, though there was considerable doubt about it, without my having recourse to Parliament to pass an enactment enforcing a more frequent publication of accounts. Moreover, I have thoroughly threshed out the subject with the managers and directors of the great London Joint Stock banks. I have given weekly attention to this matter in conference with many who could best advise me. I am glad to be able to state that the guarantee for Barings' house was undertaken by the great banking institutions of this country without any undertaking or guarantee by the Government directly or indirectly. I do not deny that great pressure has been put upon the Chancellor of the Exchequer and upon the Government with regard to it; and there was a time, in that memorable week, when it was believed that without the assistance of the Government it would be impossible to carry through the saving of that great house and all those other houses which might be imperilled by its fall. Although, curiously enough, there had been a precedent in 1795, when a house of business was saved by the issue of Exchequer bills, yet the Government declined to enter upon such a guarantee. They held that the City of London was strong enough to carry the matter through by individual efforts, and in that way the situation has been saved. It is a great credit to the banking institutions of the country that in two or three days they took the necessary steps to save the crisis. It now only remains to me to deal with the final passages of the right hon. Gentleman's speech. Summing up his charges against the novelties of the 1129 Government, the right hon. Gentleman said they were due to the profuse expenditure of the Government. Then the right hon. Gentleman, while charging us "with profuse expenditure, informed us that he had spent more on the Army and Navy in one year than any other Government.
§ MR. GOSCHEN
At any rate, out of the Estimates there is one thing which the right hon. Gentleman did not do. The right hon. Gentleman did not pay for the ammunition for the guns which he ordered. On the contrary, the Government — and I suspect that the right hon. Gentleman had a great hand in it—struck out the ammunition, although the guns had been ordered. It was certain that the taxpayers, since I have been Chancellor of the Exchequer, have had to pay heavily for the ammunition struck out by our predecessors. I do not know how right hon. Gentlemen opposite can justify their putting themselves in such a position. At all events, the right hon. Gentleman said the present Government have been profuse in their expenditure. I do not know to what extent the right hon. Gentleman has voted against that expenditure. Hon. Members opposite at their public meetings are very fond of speaking of the confused accounts of the Government without telling their audiences that the right hon. Member for Bradford was responsible for the confusion in the accounts. However, in the speeches addressed to public meetings by the right hon. Gentleman opposite (Sir W. Harcourt), I have not observed that the right hon. Gentleman made the expenditure on the Navy one of the main grounds of his rhetoric.
§ MR. GOSCHEN
But in none of the splendid speeches addressed to the public by the right hon. Gentleman have I seen a word in which he made the expenditure of the Navy one of the main points of his attack. If I recollect rightly, the right hon. Gentleman never said naval expenditure was too large, but was rather opposed to the means by which we met it.
§ SIR W. HARCOURT
I made a strong speech on the Naval Defence Bill, which is reported in Hansard, and to which I would refer the right hon. Gentleman.
§ MR. GOSCHEN
Does the right hon. Gentleman mean to say that we have been building too many ships? This is a very interesting point. Here is a right hon. Gentleman with influence that cannot be exaggerated in the councils of his Party. Here also is a matter deeply affecting the vital interests of this country, namely, the strength of the Navy. The Government have decided on their own responsibility that the Navy ought to be of a certain strength. Now, does the right hon. Gentleman hold that we are making the Navy too strong? Does he believe that we might cut down a certain number of ships at the present time? The right hon. Gentleman, who has made some good-humoured interruptions, is silent when I ask him if he thought the Navy is too strong.
§ SIR W. HARCOURT
If the right hon. Gentleman will read the admirable speech which I made on the Naval Defence Bill he will know exactly what I mean.
§ MR. GOSCHEN
A single word from the right hon. Gentleman as to whether he thinks the Navy is too strong would be a better answer to the public than a reference to a speech of which I may have an easy command, but which the electors over whom the right hon. Gentleman exercises his influence may not be able to refer to. I hope I have now referred fully to the charges brought by the right hon. Gentleman. I can assure the right hon. Gentleman that I feel deeply conscious—as deeply conscious as any of my predecessors—of the immense responsibility of not only finding the necessary means for the defence of the country and for the expenditure, but also of the responsibility of upholding proper principles of finance. I do not feel that we have been guilty of the charges brought against us by the right hon. Gentleman. I have endeavoured to reduce them to their proper dimensions, and I leave it to the country to judge whether I have been in any way unworthy of the trust imposed upon me, not only to get in the necessary amount of taxes, but also to maintain the finances 1131 of the country unimpaired, and to keep the financial ways of the country orthodox and correct.
§ (6.40.) MR. PICTON (Leicester)
Considering that so large a part of the afternoon has been wasted on a Debate relative to a horse race, I cannot but regret we have not more time for discussing this important question. I do not believe that the oldest Member of the House can recall a more formidable attack than that which has been made on the finance of the Government by the right hon. Gentleman the Member for Derby. The reply which has been made to it is weak in the extreme. I have not risen, however, for the purpose of adding any criticisms to the Debate, for I do not feel competent to do that. But there are one or two small points to which I should like to allude. For instance, the Chancellor of the Exchequer cited precedents for voting sums of money for purposes not sufficiently defined, and he referred particularly to the Budget of the right hon. Gentleman the Member for South Edinburgh, in which £170,000 was set apart for the purpose of reducing the telegraphic charges. But surely that is not a strictly analogous case, for then only £170,000 was set aside, while here £800,000 is to be set aside, with the certainty of an annual expenditure of £2,000,000 in the future for a new system of education, without the slightest explanation being vouchsafed as to the nature of the Government proposal. It must be remembered that in the case of the Budget of the right hon. Gentleman the Member for South Edinburgh everyone knew the lines upon which the reduction of the telegraph charges would go. Under the circumstances, I hope the Debate will not be concluded this evening.
§ (6.44.) MR. MORTON (Peteboro')
I wish to move the adjournment of the Debate. It is impossible in the short time at our disposal to consider all the questions we desire to raise.
§ Motion made, and Question proposed, "That the Debate be now adjourned."—(Mr. Morton.)
§ (6.46.) MR. GOSCHEN
I hope the hon. Member will not press this Motion, seeing that on subsequent stages the questions raised can be further considered. I can assure him opportunity shall be taken on another stage to renew the most important part of this discussion. I hope, therefore, the House will allow this stage to be completed to-day.
§ (6.47.) MR. J. E. ELLIS (Nottingham, Rushcliffe)
I very much regret that the right hon. Gentleman has not at once consented to adjourn this Debate. This is an extremely important Bill. We have only had a few hours discussion on it, and I think the right hon. Gentleman will admit that points are involved to the discussion of which a whole evening might well be devoted. I trust, therefore, he will re-consider his determination.
§ (6.48.) MR. CONYBEARE (Cornwall, Camborne)
Past experience has taught me that a bird in the hand is worth two in the bush, and with all respect for the promises and pledges of the Government, I very much prefer that the important questions raised in this Bill should be discussed on this stage, and not left to future stages. The Government have chosen to waste time in a Debate as to the Derby adjournment, and they have thrown away a whole Sitting, after having first inspired paragraphs in the newspapers that it was not to be treated as a Party question. Even a Member of the Government spoke in favour of the adjournment. That being so, it is not right for the Government to seek to shorten a Debate on a Bill dealing with most important matters. Several hon. Members have shown a desire to take part in the discussion.
Mr. CHANCELLOR OF THE EXCHEQUER
rose in his place, and claimed to move, "That the Question be now put," but Mr. SPEAKER withheld his assent, and declined then to put that Question.
§ Debate resumed.
§ It being ten minutes to Seven of the clock, Further Proceeding stood adjourned till this day.