HL Deb 02 May 1854 vol 132 cc1175-82

Order of the day for the Third Reading read.

EARL GRANVILLE moved, That the Bill be now read 3a.

THE MARQUESS OF CLANRICARDE

said, that he was not about to enter at that stage of the Bill into a consideration of the whole of the points involved in the measure; but there were one or two matters connected with it, in regard to which he had heard no satisfactory statement in the course of the debate last night, and upon which he thought their Lordships were entitled to have some further information—he meant particularly the effect upon the financial policy and the government of the country which the financial arrangements of the Ministry and the present Bill were calculated to produce. Her Majesty's Government appeared to make up their minds upon their financial policy, not from year to year, nor even from month to month, but almost from week to week; and he thought their Lordships ought to have some notification as to what would be the last of their financial proposals for the present Session. Last year it became necessary to consider the system on which the permanent taxation of the country should be conducted; and the whole question of direct and indirect taxation was revived and discussed at great length. The evils and inequalities of the income tax were then reiterated, and were admitted by the Chancellor of the Exchequer himself in the very able speech in which he demonstrated the difficulty of changing the incidence of that tax without creating greater anomalies and inequalities than those they wished to correct. After deliberate consideration, Parliament was induced to continue the system of direct taxation, and to repeal a large amount of indirect taxation, on the understanding that the scheme of the Government would lead to the gradual diminution and ultimate extinction within a certain fixed period of the income tax. If, however, on the commencement of a war, we were to be called upon at once to double the income tax, and to renew the doubled tax from half-year to half-year, according to the necessities of the country, what would be the result? He was quite free to admit that the Bill now before their Lordships would not affect the general question; because when the half-year was over, we should fall back again, in the natural course of things, upon the income tax of last year. But, if upon the first note of war, before any formal declaration of war was made, Parliament was at once called upon to double this income tax, then he should say we were apparently relying for the main strength of our financial resources upon direct taxation, and the whole scheme for the gradual reduction and proximate repeal of the income tax must fall to the ground. At the very same time at which the present Bill was brought forward, a strong opinion was expressed by the Chancellor of the Exchequer against the system of loans to meet the expenditure of the war; yet, while the measure was in the course of its progress through Parliament, a loan was proposed by the right hon. Gentleman, and tenders were being sent in for it to the Bank at this moment. This loan was to be repaid in three instalments, falling due in 1858, 1859, and 1860, respectively. Now, see how this arrangement must affect the scheme for gradually reducing the income tax, the tax would reach its minimum in the year 1857. Therefore, whilst it appeared that the Government was unable to foresee, for more than from week to week, the exigencies it had to meet, it was imposing on the country prospectively in the years 1858, 1859, and 1860, additional burdens for the repayment of this loan; having previously provided that their revenue from the income tax should fall to its lowest point just when the instalments of the loan would become due. Without some explanation, this seemed to him to be hardly keeping good faith with the public creditor, because either the income tax was to be at once permanently doubled, and the whole scheme for its cessation to fall to the ground, or else the Government were pressing upon the years he had mentioned in a manner quite unprecedented—selecting the very years in which they had determined to have a minimum of direct taxation to meet these increased burdens, and diminished resources with which to keep faith with the public creditor. He thought, under these circumstances, that their Lordships ought to receive some explanation from Her Majesty's Government as to whether they intended to have recourse again to loans, or whether the direct taxation of the country was to be relied upon for defraying the war expenditure; or whether the scheme of last year was no longer to be adhered to, and the whole question of direct and indirect taxation was to be left entirely open as before. If they were to have another addition to the income tax this Session, and their sittings were to close at any early day, Parliament ought to be apprised of the proposal without delay. Undoubtedly, when the present Bill was introduced, it was intimated that a further addition to the tax might be necessary; because the Chancellor of the Exchequer said, when the Government should want more money, they would come to Parliament, and ask for it; indeed, to suppose that they were to go to war with an empire like Russia, with no other provision for the contest but an extra half-year's income tax, was perfectly ridiculous and puerile. But it was held out by the Government that though further supplies might be necessary, certainly recourse should not be had to a loan. This was stated on the 15th of March, and was re-stated on the 11th of April; but on the 21st of last month tenders for raising a loan were advertised for by the Chancellor of the Exchequer. He, therefore, thought the Government ought distinctly to declare their intentions; and if they meant to proceed upon something like a system in paying the expenses of the war, their Lordships were entitled to be informed of it. In the last European war the income tax was continued until the restoration of peace; and if that course was again to be pursued, let it be distinctly stated, so that the country might not be deluded with false hopes of the termination of this tax at the date fixed by the Budget of last year. His opinion was, that the outbreak of the present war might have been foreseen, if not as certain to occur, at least as most probable, long before the Government decided upon their financial propositions; but he was convinced that the Chancellor of the Exchequer was then determined, and he thought that the First Lord of the Treasury was also determined, that there should be no war with Russia. At the same time, he thought it injurious to the public credit of the country that an attempt should have been made by the Government, even when such an event as war was possible, to perform so difficult, delicate, and dangerous an operation, as to undertake to pay off a large portion of the public debt in order to reduce the rate of interest. Every circumstance which had since occurred had been foretold in Parliament, and the scheme of conversion had proved abortive. He would not trespass further on the attention of their Lordships, but he believed he had said enough to show that an explanation of their policy was demanded from the Government in the present aspect of affairs.

EARL GRANVILLE

said, with regard to what had fallen from the noble Marquess, he had stated last night his opinion that the finances of the country, as well as every other subject of public interest, should be fully debated in that House, and that he thought the noble Lords who took part in the discussion rendered the public a service in going into the matter. There was a portion of the observations which fell from noble Lords on the previous evening as to which he had observed then, and repeated now, that he could not be forced into premature discussion, namely, with regard to the future financial measures of the Government, in reference to the conduct of the war. It was clear that neither he nor any other member of the Government in that House could consistently enter at present into that subject, when it had been announced that the Chancellor of the Exchequer would, in the other House, at the beginning of next week, make a financial statement, in which full explanations of the Government's intentions would be given to the public, and after that had been done it would be the proper time for their Lordships' House to discuss any parts of the Government's proposals which they might think open to criticism. As to the alleged prospect of going to war at the time when the Chancellor of the Exchequer introduced his first Budget, he (Earl Granville) thought Her Majesty's Government were not to be blamed because the Emperor of Russia departed from the promises he had made in the secret correspondence. It was impossible for the Government to have foreseen the position in which the Emperor had since placed himself, and looking at the position he occupied eighteen months ago, it was not unreasonable to have supposed that he would have consulted his own interests, and made the just concessions that were demanded of him. For these reasons he (Earl Granville) thought the Government were justified at the time in hoping that peace would have been maintained, although those hopes had unfortunately been disappointed; and he said that to assert that a Chancellor of the Exchequer was to refrain from effecting any change in the finances of the country, under favourable circumstances for such an operation, was to lay down a very unsound and also very dangerous doctrine. And he repeated that one great justification for the scheme of conversion of stock was, that the whole force of the objections which were stated to it when it was proposed, went to show not that the offers of the Chancellor of the Exchequer were likely to be rejected, but that he was holding out extravagantly favourable terms to the public creditor.

THE EARL OF MALMESBURY

said, that in reference to the speech of the noble Earl, and his allusion to the extraordinary confidence that had been entertained by Her Majesty's Government in the maintenance of peace with Russia, he must again remind the House of the dates to which he alluded yesterday. The Budget was presented to the House of Commons on the 18th of April. On the 15th of that month Colonel Rose, our Chargé d' Affaires at Constantinople, informed the Secretary for Foreign Affairs that all the information he could collect indicated that the Emperor of Russia was intent upon hostile acts. He (the Earl of Malmesbury) had been told by the noble Duke (the Duke of Argyll) that on the same day that this despatch was received, by a strange coincidence Baron Brunnow had called at the Foreign Office, and made the most solemn declaration that all the reports which Lord Clarendon had heard were false. That such was the case did not appear from the blue book; but at all events this was no excuse at all for Her Majesty's Government. They ought not to have placed confidence in the Russian Minister rather than in our own diplomatic agent in Constantinople. Colonel Rose told Lord Clarendon distinctly that Prince Menchikoff had been guilty of a gross act of treachery, and had proposed a secret treaty to the Porte so detrimental to this country that he threatened that if it was disclosed to this country he would leave Constantinople; and yet, in the face of this alarming information, Her Majesty's Government preferred believing the Russian Minister, in direct contradiction to the statements and warning of their own diplomatic agent, Colonel Rose, sent subsequently to the warnings of Sir Hamilton Seymour. If our own diplomatic agents were not to be believed, there was little use of maintaining them abroad. Their particular duty was to discover what foreign agents were about, and whether foreign courts were deceiving this country or not; and if it was not upon them, he (the Earl of Malmesbury) did not know upon whom it was that the Minister of England must rely for his information upon foreign politics. Any justification of the Chancellor of the Exchequer, therefore, that might be attempted, on the ground that the Government placed confidence in the statements of the Russian Minister, in preference to those of our own diplomatic agents, was futile.

THE DUKE OF ARGYLL

said, he must remind their Lordships that this discussion was entirely irrelevant to the question at issue. The noble Earl must be aware that the Budget of April, 1853, was drawn up under circumstances that could not have any reference to the complications in the East. The noble Earl must be aware that the whole structure of a Budget must depend upon the financial position of the country at the time, and the Chancellor of the Exchequer had to meet the difficulties in which he was placed by what he considered, and what he (the Duke of Argyll) considered, the most dangerous proposal of the late Government, to reconstruct the income tax. The whole key of the Budget was with reference to that proposal. The conversion of stock was proposed long before war could have been anticipated, and the Chancellor of the Exchequer had admitted that it failed, from circumstances which he could not foresee. That scheme was introduced on the 8th of April, and the Budget was brought forward on the 18th of April. Such a scheme could not have been decided upon in a moment, but its details, which were necessarily of a complicated nature, had to be matured before being submitted to the House of Commons. The Budget was eminently successful; it left the country with a surplus of 3,500,000l., and he did not know how any Budget could be more satisfactory with regard to the means for carrying on the war. The conversion of stock was an entirely different question. If war had been foreseen, no doubt it would not have been proposed. It was avowedly an experiment, and even without the war it might possibly have failed. He was not at all sure, however, that even if the war could have been foreseen, it would have altered the Budget. He utterly repudiated the insinuation of the noble Marquess (the Marquess of Clanricarde), on the part both of his right hon. Friend (the Chancellor of the Exchequer) or any other Member of Her Majesty's Government. It was perfectly true that the Government were determined that, as far as they were concerned, there should be no war if, consistently with the honour and the interests of England, it could have been prevented. But it was not true that any one Member of Her Majesty's Government wished war to be avoided by any measure that would sacrifice that honour or those interests.

THE MARQUESS OF SALISBURY

said, that with the knowledge he must have had of what was contained in the blue books, the Chancellor of the Exchequer must, unless he were the blindest man in England, have been aware at the time he introduced his Budget that war was impending. Though it was the duty of the Government to avoid war as long as possible, yet it was also the duty of the Chancellor of the Exchequer not to hazard financial operations without regard to its imminency.

THE DUKE OF ARGYLL

said, that so far from the Secret Correspondence leading the Government to expect war, if the Emperor of Russia had adhered to the principles of that correspondence there would never have been a war. The particular dispute concerning which that correspondence took place was actually settled by negotiations.

LORD BROUGHAM

hoped that the observations he was about to make would not be objected to by any noble Lord, as irrelevant to the matter. My revered friend the late Mr. Wilberforce, when he supported me in the House of Commons, when we successfully objected to the continuance of the income tax after the peace, said, and justly and wisely said, that it was well to keep that tax wedded to war. The principal objection he (Lord Brougham) had taken to the renewal of the tax ten years ago, and again four years ago, was that it was not required by necessities entailed upon us by war. But now, unhappily, that "pernicious spouse," to use the words of the Greek poet, of that pernicious tax, had been inflicted upon us. Let us hope and trust, not that the union between them would last long enough to give us time to alter our system of finance—if that should require much time—but that pains should be taken so to amend it, that this tax should not survive the war.

On Question, Resolved in the Affirmative.

Bill read 3a accordingly; and passed.