§ The report of this bill was brought up. On the question, that the Amendments be read a second time,
§ Mr. Tierney
rose, not to oppose the motion, but in consequence of his wish distinctly to understand what it was that the House were now called upon to pass. He wished to know what was the exact bearing of the present bill. It professed to be framed on the resolution of the House, of the 8th June, 1819, that for the better maintenance of the public credit, by the progressive reduction of the national debt, it was necessary that there should be a clear surplus of the income of the country, beyond the expenditure of 5,000,000l. But, let the House consider what might be the result of the course now adopted. By that course, in the event of any accidental failure in the revenue, the only resource would be, to impose new taxes to make good the deficiency. No resort could be had to borrowing. There could be no creation of any unfunded debt for the purpose; 544 because the proposition which the resolution contained was, that the income must exceed the expenditure to the amount of 5 millions. There could not be the slightest doubt, that such was the unequivocal meaning of the proposition; for, when the resolution was agreed to in 1819, there being then only a surplus of income over revenue of two millions, taxes to the amount of three millions were immediately imposed for the purpose of carrying the resolution into effect. He could not see the possibility of getting rid of the fact, that the resolution of 1819 distinctly declared, that the sinking fund must arise from the surplus of the revenue, after defraying the whole of the national expenditure, and not from borrowing or from any other source. He was sure that many gentlemen were not aware of the length to which they were going. The bill under consideration did not merely provide, if the surplus should extend to five millions, that it should in that case be applied to the reduction of the national debt; but it created a permanent annual charge to the amount, of five millions on the consolidated fund. There were two questions on which it was desirable to obtain explicit information. The first was, whether the present surplus of income beyond the expenditure was five millions, or only three? The second was, if the present surplus was actually five millions, how any deficiency that might arise from an accidental diminution of the revenue should be made good? With regard to the first question, he really was at a loss precisely to comprehend whether the surplus applicable to the sinking fund was five millions, or only three. With his present impressions, anxious as he was to maintain the sinking fund, and also, if possible, to take off further taxes from the people, when the bill was passed, he should consider his hands tied up with respect to the latter object. He was very sorry that his noble friend who had given notice of a motion for the repeal of the leather tax, was not in his place. It was evident, that neither that nor any other remission of taxation could take place after the passing of this bill, without exposing the country to a relapse into all the evils attendant on a nominal sinking fund. The way in which he understood the chancellor of the exchequer's plan was, that the sum saved by the extension of what was called the dead weight, over a long course of years, namely, two mil- 545 lions, was to be added to three millions surplus of revenue beyond expenditure. Now, how those two millions could be called income, he was at a loss to conceive. It was a sum borrowed every year. For what was the difference in principle between borrowing money on the grant of a permanent annuity, and borrowing money on the grant of an annuity for 45 years? Those two millions could in no way be said to assume the shape of income. It was extremely important that this matter should be thoroughly understood; because, if he was right in his position, the moment the present bill was passed, the Assessed Taxes Repeal bill ought to be stopped, in order that the surplus income should be made up to the five millions, which the resolution of the House had declared to be absolutely necessary. The main question was, whether, supposing there was at present a real surplus of five millions, and supposing that any deficiency of the revenue should diminish it, parliament was or was not bound to extend the revenue by fresh taxes, in pursuance of the resolution of June, 1819.
The Chancellor of the Exchequer
said, he would state, as distinctly as he could, how it was that he considered himself entitled to assume, that there was an actual surplus of five millions, applicable to the reduction of the debt. He took it, that after the repeal of the 2,200,000l. of taxes, the income derived from the taxes might be estimated at 50,000,000l. exclusive of the sum derived from the arrangement respecting the half pay, &c. The annual expenditure (still supposing no reference to the arrangement of last year respecting the half pay), including the charges arising from the funded debt, the civil list, the army, and navy, &c. was 47,000,000l. In that view of the subject, there was only a surplus of 3,000,000l. But he thought he was entitled to assume that, supposing the plan respecting the half pay and pensions should succeed; supposing the annuities should all be sold (which was a likely supposition), that surplus would be increased to 5,000,000l. He apprehended nobody would deny, that if it were practicable to enter into an agreement with the actual individuals holding the half pay and pensions, that instead of their present annuities for an indefinite period, they should receive 2,800,000l. for 45 years, the case would stand thus:—In the 47,000,000l. of expenditure was com- 546 prehended 4,800,000l. being the amount of the half pay and pensions. If, then, the parties holding that half pay and those pensions were disposed to give them up, on the conditions which he had mentioned, it was clear that 4,800,000l. must be deducted from the 47,000,000l., and that 2,800,000l. must be added to it; thus diminishing the expenditure to 45,000,000l. Now, if that sum of 45,000,000l. of expenditure were deducted from the 50,000,000l. which would be the income of the country, after the proposed repeal of taxes for the present year, it was manifest that there would be a surplus of 5,000,000l. What was the substantial difference between such an arrangement as he had described, and the arrangement by which other parties agreed to pay the 4,800,000l. on condition of receiving for 45 years an annual sum of 2,800,000l.? Now, if that sum of 2,800,000l. were added to the expenditure of 47,000,000l., it increased it to 49,800,000l. But then he was entitled to add the 4,800,000l. received from the contracting parties to the income of 50,000,000l., which increased it to 54,800,000l. Let 49,800,000l. be deducted from 54,800,000l., and there would remain a surplus of 5,000,000l. That appeared to him a real bonâ fide surplus, applicable to the reduction of the debt. It was that surplus which, by the bill, it was proposed so to apply. In so doing there was no increase whatever made of the unfunded debt. Nor was there any mystery—any of what was familiarly called hocus pocus. The right hon. gentleman next wished to know how he (the chancellor of the exchequer) proposed to act, through all the vicissitudes which the income of the country might in future years experience, and seemed to think that government could not proceed upon the principle of having a sum of 5,000,000l. for their surplus, unless they were prepared to state, that in every year, when some fluctuations of the revenue might have the effect of bringing the actual income somewhat below such an amount as would yield a surplus of 5,000,000l., they would put on fresh taxes, to raise that surplus up to 5,000,000l. Now, in the first place, he did not think this was a very probable anticipation; and in the next, he did not imagine that it would be possible even to regulate the amount of that fund upon such minute principles, as to be prepared for every possible contingency. He did 547 not see why, if the revenue should fall so short, they should not make the surplus up by means of exchequer bills, or some other temporary expedient. He could not conceive why they should not be permitted to appropriate a portion of the revenue to the reduction of their debt, merely because it might happen, in some future year, that they might not have revenue sufficient to reserve the precise amount of such a portion. On mere financial grounds he would rather have a larger surplus fund, than what he considered necessary to apply to the reduction of the national debt. A larger surplus he might have had; but 2,000,000l. and upwards he had proposed to remit in taxes. He was not at all unwilling to state, that the principle upon which he recommended that remission was this—that he thought it better to give the country the benefit of such a reduction of taxes, than to retain, upon mere financial grounds, a surplus beyond the 5,000,000l. in question. In fact, he believed that the consequence of that remission would by no means be so injurious to the revenue as might be supposed; but, on the contrary, that the very reduction itself would benefit the revenue. In that event, without any pressure on the people, there would be a surplus beyond that appropriated by the present bill to the sinking fund, with which parliament would have to deal at its own discretion, either by a further remission of taxation, or by a further liquidation of the debt.
§ Mr. Hume
said, that the resolution of June, 1819, which declared, "that it was absolutely necessary there should be a clear surplus of the income of the country beyond the expenditure of not less than 5,000,000l.," was immediately followed by another resolution, "that with a view to the attainment of that most important object, it was expedient to increase the income of the country by the imposition of taxes, to the amount of 3,000,000l. per annum. It was not proposed to make up the 5,000,000l. by incurring debt, which was the proposition of the right hon. gentleman; for what other character could be given to the plan of selling annuities for 45 years? The provisions of the bill were evidently in direct contradiction to the principle of the preamble. Instead of a clear surplus of income derived from taxation, which was the intention of the resolution of 1819, the right hon. gentle- 548 man made up his surplus, partly from taxation, and partly by incurring debt; which, according to the resolution of 1819, he was not at liberty to do. If the principle were admitted, of saving 2,000,000l. at present by spreading a debt over 45 years, why not extend it to 80 years? In that case, the right hon. gentleman, instead of remitting 2,000,000l. of taxes, might remit the whole 5,000,000l. If the surplus of income were to fall short by 500,000l., the right hon. gentleman must increase the unfunded debt. And yet the right hon. gentleman allowed, that any sinking fund, but one resulting from a clear surplus of income beyond expenditure, was a mockery and delusion. He would move by way of amendment, before the words "five millions," to insert the words "real surplus of revenue not exceeding," and after the words "five millions," to add, "such real surplus to be estimated by the Lords of the Treasury, and to be increased or diminished as the real surplus shall increase or diminish in each year."
thought that the plan was peculiarly ill-advised at the present moment, when the continent was about to be convulsed by a war, in which, he believed, we could not avoid taking a part. He suggested, that a considerable reduction of the amount of debt might be effected, by converting the 3, the 3½, and the 4 per cent stocks into a 5 per cent stock, not redeemable for a certain number of years.
§ Sir H. Parnell
wished to have a clause inserted in the bill, to enable the commissioners of the sinking fund to grant annuities for years, to such persons as might propose to transfer into a stock of this description, 3 per cent or other stocks now vested in annuities for ever. He recommended this mode of applying a sinking fund as preferable to the plan provided by the bill; because it would place it out of the reach of the government, and thus secure its being applied to the intended purpose of redeeming the national debt; for if the sinking fund were thus arranged, it would be absorbed in the annuity, and would not be available for any other object. The following was the way in which it would operate in redeeming debt. Supposing 3 per cent stock to be at 75l. per annum on 100l. on this stock (or on 75l. in money), given to the holder of 100l. of this stock in addition to the regular interest of 3 per cent for 35½ years, making together an 549 annuity of 4l. per annum, for this period, would be precisely that terminable annuity, which would be equivalent to 100l. 3 per cent stock of perpetual annuity. If in place of 1l. per annum, one million per annum was applied on 100 millions of stock for 35½ years, it would extinguish these 100 millions; and if in place of a term of 35½ years a greater number of years were given, the quantity of debt redeemed would be in that proportion greater. The principle of accumulation with which a sinking fund applied in long annuities would operate, was exactly the same as that which was the basis of Mr. Pitt's sinking fund; and the only difference between his plan and the plan now recommended was, that the fund applicable to redeem debt by his plan was collected together in each year, and applied in purchases of stock by the commissioners; whereas, by this plan, it would be vested at once, and be payable to the public creditor, just as the dividends were now paid. The whole object of Mr. Pitt's plan had been frustrated, by converting the sinking fund to the current expenses of the year. By the plan of long annuities, as now recommended, no distinct fund would exist that ministers could make use of. These two plans were the only ones by which the benefit of accumulation by compound interest could be made available in extinguishing the national debt; and as we now had a complete proof of the total unfitness of one of them, it was a proper time to make a trial of the other. But, in thus stating what would be the result of applying a sinking fund in annuities for years, it was not meant to be asserted, that that result which would be the result from a strict calculation of figures, would be the practical result of this plan. This would be influenced by the demand in the market for annuities for years; unless the transfer was made compulsory, in order to secure a certain extinction of the whole debt. By the proposed plan of proceeding, this further advantage would be secured, that a sinking fund of smaller annual amount than that now provided, would be sufficient to redeem the debt. For, if 2,300,000l. were applied in long annuities for 41 years; 1,300,000l. for the succeeding 15 years, and 300,000l. for the following 39 years; 100 millions of debt would be redeemed in 41 years; 200 millions more in 56 years, and 300 millions more in 95 years, making toge- 550 ther 600 millions of the principal of the debt. This calculation was founded on the following data, 1st, that 1 million per annum, would increase at compound interest to 100 millions in 41 years; 2nd, that 1 million per annum would increase to 200 millions in 56 years; 3rd, that 300,000l. per annum, would increase to 300 millions in 95 years, supposing the interest of money to be 4 per cent when the annuities were created.
could not see how the right hon. gentleman could object to the amendment; for it was clear, that if they supported a sinking fund greater than the actual surplus of revenue, it could only be done by increasing the unfunded debt.
§ Sir F. Blake
considered the sinking fund, as far as regarded the extinction of the national debt, a mere fallacy. Its operation might be compared to the taking of a bucket of water from a great reservoir which was abundantly supplied from the fountain-head. The country had gone on paying off, as it was called, the national debt for a number of years, and what had been the result? The debt had been augmented to four times its original amount. The new chancellor of the exchequer had come down to the House to make them a present of a new sinking fund; but the new sinking fund was grafted on the parent stock, and possessed all the faults of its original. The new chancellor of the exchequer had boasted of the benefits that would result from his scheme; but, "timeo Danaos, et dona ferentes." The right hon. gentleman said, that he had a sinking; fund of 5,000,000l.; but the fact was, that he had only 3,000,000l. certain; the remaining 2,000,000l. depended upon contingencies. What would be thought of a married man who, because he had got three children, said he would have two more at all events? Would it not be said that he was reckoning his chickens before they were hatched? So it was with the chancellor of the exchequer; he was reckoning upon his money before he had got it.
§ On the question, "That the said words be inserted," the House divided: Ayes, 38; Noes, 82.
|List of the Minority.|
|Abercromby, hon. J.||Blake, sir F.|
|Althorp, visc.||Boughey, sir J.|
|Barratt, S. M.||Browne, Dom.|
|Bernal, R.||Burdett, sir F.|
|Cradock, S.||Newport, sir J.|
|Curwen, J. C.||Normanby, visc.|
|Davies, T.||Pelham, J. C.|
|Foley, J. H. H.||Price, R.|
|Griffith, J. W.||Poyntz, W. S.|
|Haldimand, W.||Ricardo, D.|
|Heathcote, J. G.||Robinson, sir G.|
|Hughes, W. L.||Rumbold, sir E.|
|James, W.||Shelley, sir J.|
|Jervoise, G. P.||Tierney, right hon. G.|
|Lethbridge, sir T.||Wharton, J.|
|Leycester, R.||Wood, alderman|
|Lushington, S.||Wyvill, M.|
|Maberly, W. L.||TELLERS.|
|Monck, J. B.||Hume, J.|
|Moore, P.||Ellice, E.|