§ When I appeared at this Table a year ago with a heavy realised deficit, and another deficit in prospect, the position of Chancellor of the Exchequer appeared to me to be hardly enviable. Now that I appear twelve months later with a modest surplus already realised, and a further surplus possible, fresh fears beset my mind. I am not certain that a Chancellor of the Exchequer with emptypockets is not a safer and more light-hearted man than one with a small surplus at his command. There are so many candidates for relief, and the fragments at my disposal will not suffice to feed the multitude! But I have no doubt 1061 whatever what is the first claim upon us under present circumstances, and I hope this Committee, without distinction of Party, will support the Government in the course they have decided to recommend. I spoke just now of the amount of our National Debt. It stood on March 31st last at £796,736,000. or taking the dead-weight debt alone, at £755,072,000. It was largely increased during the late war, when not only was the major portion of the Sinking Fund suspended for three years, but heavy new loans were incurred. That was not only a justifiable but a necessary course; but if it is right and just to borrow largely in the emergency of a great war, when the honour and even the existence of the Empire are at stake, it is upon the condition that when, peace is re-established we take the first opportunity in our power to restore our national credit and to lighten the burden of debt which we hand on to our successors. And if that statement be true of all times and all circumstances, there are special reasons for taking such a course to-day. It is not only that the total of our debt is large, but the unfunded debt stands at the exceptionally high figure of £77,633,000. I use the term unfunded debt to describe all debt the discharge of which on a fixed date was part of the bargain with the lender, and for the redemption of which within its currency no specific provision has been made by Parliament. It includes Treasury bills, amounting in round figures to £21,000,000, War Stock amounting to £30,000,000, and Exchequer Bonds amounting to £26,500,000. Of this amount the whole of War Stock and £12,500,000 of the Exchequer Bonds do not fall due until 1907–8 or later years, but £14,000,000 of the Exchequer Bonds expire in December of this year. In view of that contingency, I think it is necessary that we should not be content with the simple renewal of these Bonds, for which we already have Parliamentary authority, but that we should take such steps as will secure their redemption by a regular process and within a reasonable time.
§ The proposal which I am about to submit to the Committee has these objects in view. By the Sinking Fund already at our disposal, and by means of the repay- 1062 ments lately received from the Transvaa on account of works executed upon their railways and stores handed over to them at the close of the war, I hope to be able to extinguish four out of these fourteen millions. There will then remain ten millions of Bonds to be dealt with in December next; and in order to enable me to pay them off, I propose that new Bonds of an equivalent amount should be issued with a currency of ten years, but—and this is the important consideration to which I desire to direct the special attention of the Committee—that one-tenth of the total issue should be drawn and repaid each year. And in order that the Sinking Fund which I attach to these new bonds shall not trench upon the Sinking Fund we have at present available for the redemption of the debt, I propose that the Fixed Debt Charge shall be increased by £1,000,000 a year, so that it shall stand at £28,000,000 instead of £27,000,000. By this means we shall have redeemed this portion of the debt within a comparatively few years, and without any of the disturbance which accompanies a sudden operation upon a large scale, whilst, by attaching to the new Bonds a Sinking Fund of the amount and character I have described, we shall render them more attractive to investors, and be able to issue them upon better terms than would otherwise be obtainable.