HL Deb 25 June 1822 vol 7 cc1319-24
The Earl of Liverpool,

in moving the second reading of this bill, said, it would be, in their lordships' recollection that in the various discussions respecting the peace establishment, it had generally been represented as too expensive. It had been contended on the other hand, that its magnitude arose from its including charges which did not fairly come under the natural character of a peace establishment, such as the half-pay for the army and navy, which alone exceeded the whole amount of the peace establishment at the close of the American war. Under these circumstances it had occurred to minsters whether it would not be advisable to transfer that charge from the peace establishment to the national debt, as had beet done by the French government, and as it was in fact a matter of bonâ fide debt. The magnitude of the sum which had thus grown out of a war of twenty-one years' duration, made it a natural consideration whether any relief could be given to the country by an arrangement with the parties themselves, either by purchasing their half-pay for smaller annuities of a marketable nature, or by the payment of a fixed sum at once. There would have been nothing unfair in such a proceeding; for had the parties consisted of a few individuals, they might have been assembled in a room, and the offer submitted for their option. This had been the first idea; but when ministers had looked to its execution they had found it impracticable from the number of individuals concerned, and the circumstances in which they wee placed. For it was not to be forgotten that those individuals might be recalled into service, and that those who should refuse to serve would lose their half-pay altogether. The plan, though founded on a sound principle, was therefore abandoned. The next idea was, how far it was possible to farm the amount of the half-pay, and whether it could be done on terms advantageous to the country. But here another objection arose to the half-pay being paid through any other hands than those of the government. It had been therefore thought advisable to take, on a given number of lives, a given sum to be paid each year, either by a public body becoming contractors or by the scheme now proposed. Such had been the origin of the present measure; and the measure for their lordships to consider was, whether the bargain was advantageous to the public. He contended that it was: the five millions of half-pay were as much part of the national debt as the 800 millions of which it was admitted to be composed. The proposed plan would, at the end of the 45 years, leave the country exactly where it was: the liquidation of the national debt would not be postponed for a single day on its account, whilst the five millions would decline in a manner to make relief progressively greater than it would be at present. It had therefore been determined to take an average sum of 2,800,000l. for 45 years, which would go on decreasing till the end of that period. For the first 16 years, the advantage would be on the side of the public, after that in favour of the contractors. He considered this arrangement to be just and equitable, not only to the present generation, but to posterity. It was, besides, the only mode of coming at once to the diminution of the taxes. Had the five millions of half-pay been kept on the present footing, the sum falling in every year would have been so small, that it would have been difficult to apply it to the relief of taxation. No greater burthen would be thrown on posterity than that assumed by ourselves; but even if that were the case, the country would have been placed in a better state to bear it than it now was, by the operation of the sinking fund and its accumulation by compound interest, which in ten years would raise that fund from 5 millions to 7½ millions. He did not believe that any reduction of taxation which could be proposed would have a considerable effect in relieving agriculture. The people reasoned as though the taking off of a tax from the payers would yield unmixed benefit. But that was not the case: loss might be incurred in another quarter, and no general relief be produced. The noble earl illustrated this doctrine by the example of the reduction of the 5 per cents. It had enabled government to repeal 1,400,000l. of the Malt-tax, and had been productive of advantage to the consumers of beer; but it had also taken from about 150,000 individuals one-fifth of their income, and had decreased their means of consumption to that amount. It was certainly desirable that the peace establishment should be fixed as low as possible, but in doing so many individuals must be turned out of employment, and a valuable branch of consumption must be destroyed. So far from the reduction of taxes being calculated to relieve agricultural distress, he conceived that the only measure, and he confessed it would be in the end a fatal one, which could have a direct effect on agriculture, would be a great increase of the public expenditure. If that expenditure were augmented by ten millions tomorrow, the benefit to agriculture would be immediate, though purchased with an ultimate loss to the country. He believed that the present measure would prove useful, not so much in the way of relief, as in contributing to remove the artificial state in which the war had placed us. As it was unavoidable in time of war to contract a debt, so it ought to be the object of go- vernment in time of peace, to reduce that debt; and this would be the effect of the present bill.

The Marquis of Lansdown

said, that having been one of those who had strongly recommended the reduction of taxes, he could not withhold his consent from a bill which would have that effect, at the same time the observations made by the noble earl rendered it necessary for hint to qualify his consent. There had hither to been two modes of proceeding with respect to public burthens: either to increase that which we bore ourselves in order to relieve, posterity, or to remove the weight, from t our own shoulders and place, it on those of posterity. It had been reserved for the noble earl to act on both systems at once, by creating a sinking fund of five millions, to extinguish so much of the national debt, and, in the course of the same session, adding 2,800,000 l. to that debt. This bill created a set of commissioners to sell annuities in the market, whilst there was another set employed in buying them up. The fund market was affected by the same circumstances as markets for other commodities. What would the most common farmer think if, on going to the corn-market, he should find an agent purchasing corn for a gentleman because he had not enough of it, and on moving a little farther, he should find another agent selling corn for there same gentleman because he had too much of it? And yet, only change the names of agent and steward for those of trustees and commissioners, and it would be found that his majesty's government were exactly in the situation of that gentleman. As something was to be gained in the execution of the bargain, he wished to know why the public should not deal for itself, and obtain whatever advantage might be thus produced? In another place, a proposal had been made, which had not been well received, to enable the commissioners for the sinking fund to take the bargain in behalf of the public. Notwithstanding the disapprobation then expressed, a clause had been introduced into the present bill, giving them that power; and he hoped that they would avail themselves of it. Considering the object of the bill to be both legitimate and useful, he should give it his support. He should not follow the noble earl in his remark concerning taxation, farther than to say, that if his principle were carried to its fullest extent, it would not signify, if the whole property of the public were absorbed by taxes, as it would revert to them in some other shape.

The Earl of Lauderdale

agreed with the sentiments expressed by the noble earl opposite, that the sudden check given by peace to the increased demand occasioned by war, had been the chief cause of the agricultural distress. He then took a view of the proposed measure. It would put annually 2,800,000l. into the hands of commissioners, who would pay 4,800,000l. into the Treasury, whence the money would go into the hands of individuals, who must expend it in procuring the necessaries of life. Upwards of two millions would thus be taken from the rich, and given to those who would go to market, and create a demand with it. The effect would, therefore, be most salutary. But it would be entirely counteracted by keeping up a sinking fund of five millions, which acted on quite a different principle; for the money paid to the commissioners for that fund, instead of going to hands that would spend it in the market, would be locked up in the purchase of stock. The funds might be raised in that manner; but would the noble earl raise the funds, by taking from the people five millions, which it would otherwise have spent in the purchase of commodities, at the same time that he acknowledged that the great want of the country was a demand? Why should he refuse to give up the sinking fund, and thus increase public industry and consumption? In the time of sir Robert Walpole, the city of London dreaded nothing more than the establishment of a sinking fund. Dr. Price had drawn up three plans of a sinking fund for Mr. Pitt, and had always said that Mr. Pitt had taken the worst. By suspending the action of the sinking fund for a time, the noble earl would increase the expenditure and consumption of the people to the amount of five millions. He would also augment the revenue, and thus afford fresh facilities for reducing the taxes.

Lord King

said, he had heard a great deal about a sinking fund, but wished to know whether there was one or not; for until the nine or ten millions due to the Bank were paid off, the money raised under that denomination must go to the discharge of that debt. His noble friend had exposed the absurdities of this bill, the principle which it contained, that of reducing taxation, covered a multitude of absurdities, and he should not oppose it.

The bill was read a second time.