§ But, of course, you cannot deal with the terminable annuities without raising another question, and that question is this—What rules should guide us in fixing the amount to be devoted annually to the redemption of the debt? Now that is a question which cannot be decided according to the financial conditions of any one single year. It is not a, question of the temporary suspension of the Sinking Fund. It is a question of the permanent amount of the fixed debt charge; and it is a question the consideration of which, if we were to do nothing with the terminable annuities now, could not by any possibility be postponed beyond February 1902, when the great Savings Bank annuity falls in. Now I would venture to suggest to the Committee some principles which I think ought to guide us in this important and difficult matter. In the first place, I think that the amount of the fixed debt charge ought to bear some relation to the amount of our outstanding debt. Let me take an extreme case. Suppose that Parliament had continued the original amount of the fixed debt charge, £28,000,000 a, year, quite irrespective of the amount which had annually to be devoted to the interest and management of the debt, until the whole of the debt was extinguished. Why, does not everyone feel that that would have been an utterly unreasonable tax on the present for the benefit of the future? It would be an attempt to overdo the Sinking Fund which would certainly end in undoing it. To my mind, Sir, this is clear, that the taxpayers of the time who provide millions annually for the interest of this old debt which they have not themselves incurred, and also for its reduction, are entitled without question to benefit by such reduction in the interest of the debt as may from time to time occur. No one, I think, will question this—that where the reduction in the interest of the debt is due to the reduction of the rate of interest on the debt the tax- 1012 payers of the day have a claim to that benefit; such, for instance, as accrued to them from the reduction of the rate of interest on the debt made by my right honourable Friend the First Lord of the Admiralty a few years ago, and which will again take place in 1903. But I go further. The reduction in the interest of the debt may be due not merely to a reduction in the rate of interest on the debt, but also to a reduction in the amount of the debt bearing interest. That is clear. I think on that ground also' the taxpayers have, from time to time, a clear claim to some benefit. Now, 12 years have passed since the taxpayers got any benefit from the redemption of capital, although within that time the charge for interest on the debt has, by reason of the redemption of capital, been reduced by no less than £2,100,000 a year. When Sir Stafford Northcote established the fixed debt charge in 1874, the amount of our debt was £768,946,000; yet he never provided more than £5,000,000 a year for its redemption. The amount of our debt since that time has been diminshed by £141,000,000, and it is now over £627,000,000. And yet we are providing this year seven and three-quarter millions for its reduction. But, Sir, I will go further. I contend that the amount of the fixed debt charge ought to bear some relation, not only to the outstanding amount of our debt, but also to the amount of that debt which is purchase-able in the market, because it is only on that amount that our Sinking Fund can operate at all. I am referring in this matter, of course, to Consols, which is practically the only debt which we can now redeem. There has been a remarkable change in this matter in the last 15 years. In the year 1884–85 there were in the hands of the public, and, therefore, presumably, likely to go on the market—although I shall qualify that presently by what I have to add—£529,986,000 of Consols. There were in the hands of the Government Departments, and, therefore, practically out of the market altogether, for the Government is a buyer and not a seller of Consols, £82,775,000. In that year a sum of £6,852,000 was devoted to the redemption of the debt, and the average rate at which Consols were purchased for that purpose was 100J. This year I 1013 find that there are no more than £358,000,000 of Consols in the hands of the public, and, therefore, likely to come on the market; whereas the amount of Consols held by the Government Departments has nearly doubled, and amounts to £162,000,000, and we have £7,736,000 to devote to the purchase of Consols, probably at the rate of something like 11 per cent. premium. Now, Sir, we will take the proportions. The sum devoted to the reduction of the debt through the fixed debt charge in 1884–85 bore the proportion of 1.29 per cent. to the amount of Consols in the hands of the public. This year it will bear a proportion of 2.15 per cent. But still there is something more to be said. Out of that £358,000,000 of Consols in the hands of the public, by no means the whole is likely to come on the market. A very large proportion of it is held by banks, financial institutions, insurance companies, trustees, and foreigners, in older that they may have a nest-egg easily realisable at a time of crisis, and with very little regard either to the price that may be obtainable for Consols or the rate of interest they may produce.