§ The "other capital liabilities," though small in amount—;£45,000,000, compared with the £743,000,000—;have been increasing much more rapidly. They stand on quite a different footing. With the exception of a small outstanding sum for the Russian Dutch loan, they have all been created in the last fifteen years by Acts of Parliament for special purposes. 290 Unlike the dead-weight debt, they are, or ought to be, represented by specific and tangible assets, telegraphs, railways, cables, public buildings, and military and naval structures of various kinds and of very varying value which are scattered over the Empire from Wei-hai-wei to Salisbury Plain. Further, Sir, and this is an even more important distinction—;every one of these loans has a separate sinking fund of its own, and a charge not merely for interest but for the redemption of principal appears every year on the votes of the accounting department or, in the case of the Russian Dutch loan and the Cunard agreement, on the Consolidated Fund. In the current financial year we shall vote in the Estimates a sum of nearly £2,000,000—;£1,900,000—;towards the repayment of capital under these various loans, of which about £1,250,000 are charged to the Army and Navy Votes. These are distinctions sometimes obscured which ought in fairness to be borne in mind. There must undoubtedly arise from time to time cases of charges which properly fall under the head of capital expenditure for which temporary borrowing is legitimate; but in the main I regard this as a most unhappy chapter in the history of our national finance; and so far as the Army and Navy are concerned my intention is at the earliest possible moment to bring it to a close. The system, as it has been developed of recent years, has, in my opinion, three fundamental vices. In the first place it tends to confuse the distinction between capital and revenue charges. In the next place it inevitably encourages in the spending departments crude, precipitate, and wasteful experiments. And in the third place (and this is not the least important consideration) it draws large items of annual expenditure from any effective Parliamentary supervision. I will not trouble the Committee with, any unnecessary detail, but the present position as regards this class of debt on March 31st, 1906, was this: The amount of capital liabilities under various Acts was £51,750,000. The amount paid off from first to last was £6,027,000, and the amount of capital liability outstanding, including the Russian Dutch loan, was £45,770,000, a net increase during the year of £4,106,000. The amounts issued during the year under this head were, as I have already stated, 291 £6,148,000, which sum was made up of £5,564,000 new borrowings and £584,000 paid out of balances. On the other hand, £1,458,000 was repaid by terminable annuities provided on Votes, and in addition a sum of £226,630 provided on Army and Navy Votes for the redemption of Exchequer bonds, now in the hands of the National Debt Commissioners, will in due time be applied to that purpose.