§ WAYS and MEANS considered in Committee.
§ (In the Committee.)
§ THE CHANCELLOR OF THE EXCHEQUER
Sir, when my right hon. Predecessor last year made his Financial Statement, and offered to the House his Estimate of the amount of our income and expenditure, although the air was then apparently serene, we were on the verge of perhaps the most severe monetary disturbance and crisis that this country has ever experienced. It must therefore be a source of satisfaction to the right hon. Gentleman 1111 that his Estimates, tested by a trial of so; extreme a character, should yet have; proved the sagacity of his calculations; and it will not only be satisfactory to him, but I am sure to the whole House, when I tell them that notwithstanding the scenes of apparently extreme peril this country, as regards its financial condition, went through after that statement was made—notwithstanding the disasters experienced by the financial circles of this country—the consuming power of the country never for a moment flagged, and the results are of a nature which, whatever may be the anticipations of the House, will, I am sure, be a source of as much satisfaction as surprise.
Sir, the right hon. Gentleman estimated his income last year, for the year 1866–7 at £67,013,000, and the actual income amounted to £69,434,000, showing a surplus of £2,421,568, and this after a period of trial which, so far certainly as the monetary interests of this country are concerned, has seldom been equalled. But what is most gratifying is that this surplus has been acquired mainly and almost entirely under the heads of Customs and Excise—by the consumption of sugar, of tobacco, of malt, and of spirits. The right hon. Gentleman estimated his Customs last year at £20,923,000; they have realized £22,303,000, showing an increase of £1,380,000. He estimated his Excise at £19,665,000; it has realized £20,670,000, showing an increase of £1,005,000. The other items in his Estimate have been realized, but they call for no particular remark. As the Committee will see from the items I have given them, the surplus is almost accounted for by the increase in the Revenue of the year under the two heads of Customs and Excise. The estimated expenditure for the year 1866–7 was £67,031,000—including the sum of £369,000, Supplementary Estimates voted in the Session of 1867. The actual issues from the Exchequer during the year were £66,780,396. There has therefore been a saving effected of £251,000, so that the balance surplus of the year 1866–7 will amount to £2,654,172. This, of course, has exercised a very salutary influence on the balances of the Exchequer, which stand thus—on March 31, 1866, the balances in the Exchequer amounted to £5,851,314; and on March 31, 1867, to £7,294,151.
Sir, it will now be my duty to call the attention of the Committee to the expendi- 1112 ture for the present year 1867–8. I may mention, in the first place, that the Naval and Military Annuity granted to the Bank in 1823, which was designated at the time by Mr. Cobbett "the Dead Weight Annuity," and which has ever since borne that name, ceases, I believe, to-morrow. Though we shall have to provide a portion of that annual charge during the present year, that provision will be limited only to the last moiety, which is something under £300,000. The exact sum is £284,000. The estimated expenditure of the present year will stand in this wise—the interest on the Debt actually payable in the year, and providing for the completion of the measure of the right hon. Gentleman the Member for South Lancashire for the conversion of the £5,000,000 of Debt, which, from circumstances to which I shall afterwards have to refer, is not yet completed—the total interest on the Debt actually payable, providing for that conversion, will be £26,000,000. The other charges on the Consolidated Fund will amount to £1,900,000. There is an increase—though a slight one—which arises from a change in the mode of meeting certain charges. Thus the salaries of the Masters of the Law Courts, which were formerly paid by fees, have been transferred to the Consolidated Fund, as the fees have been converted into stamps—the increased charges on the Consolidated Fund caused by this transfer will be balanced by the increased receipts under the head of Stamps. The Army Services, including the Supplementary Vote for £500,000, will amount to £15,253,000, the Navy Services will reach £10,926,000; the Civil Service, £8,203,000; the Revenue Departments, £5,045,000; the Packet Service, £807,000; making a total estimated expenditure for the year of £68,134,000.
I now proceed to state in what manner the income to meet these estimated charges is to be obtained. We estimate the Customs income for the year at £22,000,000. That is a diminution certainly upon what was received during the year just terminated; but there are special reasons, and which are to us apparently valid, for that estimate; there were exceptional circumstances concerning the consumption of sugar and rum last year, in consequence of the scarcity of barley, which very much affected the Revenue; and it would not be prudent to estimate the Customs at a 1113 higher figure than £22,000,000. The Excise we estimate at £20,700,000; Stamps (including £100,000 for Common Law Stamps), at £9,550,000; Taxes at £3,500,000; the Property and Income Tax, £6,000,000; Post Office, £4,650,000; Crown Lands, £340,000; and the Miscellaneous we put at £2,600,000. Under this last head there is an increase upon the previous year, which I think was £2,350,000; but there are items of a special character to the amount of £255,000 which will accrue this year. These are:—estimated balance of Common Law Fee Fund, released under the recent Act, after paying salaries, &c., £80,000; the Japanese idemnity, estimated share of Great Britain, after paying the other Powers, £68,000; constabulary fines and penalties from Ireland, the salaries being provided for the future in the Estimates, £70,000; and re-payments by the Post Office and Mint, and other charges connected with the Post Office Annuities, and Mint, re-payable to the Exchequer, £37,000. These justify us in placing the Estimate under the head "Miscellaneous" at £2,600,000. The total estimated income for the year will therefore be £69,340,000, as against an estimated expenditure of £68,134,000; and this will leave an estimated suplus of £1,206,000 for the ensuing year.
Now, Sir, it is extremely easy, in making the Financial Statement, to proceed to this point; but, having shown that we possess a surplus, our difficulties commence when we begin to consider how that surplus is to be dealt with. There can be no doubt that, leaving a moderate but sufficient balance, there is a sum, and not an inconsiderable sum, which may be applied to the general relief of the community. The question then arises in what manner this sum can be best applied in giving that relief. Of course, the first impulse of every mind under the circumstances would be to consider what taxes might be most advantageously remitted. I would, however, remind the House that the remission of taxation during the last ten years—I take that period because it dates from the termination of the Russian War—has been very considerable. Irrespective of the reduction in the Income Tax, which never stood at so low an amount as it does at the present moment—namely, 4d. in the pound—irrespective, I say, of the reduction in the Income Tax, the remission of taxation during the last ten years, 1114 over and above the amount of taxes that have been imposed during that period, has not been less than £11,000,000 per annum. When, therefore, we consider the great reduction of the Income Tax, and the other great remissions of taxation, it is not very surprising that it is difficult to fix on any particular tax of that extreme severity and apparent injustice that all minds will agree at once that the resources of the country should be directed to alleviate or remove it. There is, indeed, no tax at the present moment that injuriously affects the industry of any class of the community, except that affecting the industry of the producers of barley. I cannot avoid seeing that the incidence of the malt tax injuriously interferes with the industry of a considerable portion of the community. But to deal with that tax would involve a very large question. I have, indeed, in my generation, carefully considered this question, and I have shown no desire to evade the difficulties attending the re-adjustment of a system which, as it at present exists, injuriously and inequitably affects the industry of a considerable portion of Her Majesty's subjects. I have, however, come to the conclusion that it is impossible to deal with the malt tax, unless you do it in a very comprehensive and effectual manner. It is quite impossible, with the resources at my disposal, that I can deal with this tax in this manner. Putting aside the malt tax, there is no particular tax that can be particularly alleged to be one that unduly interferes with the industry of any portion of the community, or which from its severe and unequal pressure demands our immediate attention. There is no tax, of course, of which the removal or the reduction may not be vindicated and upheld by the most plausible reasons; but I maintain that, generally speaking, there is no particular tax—with the exception which I have acknowledged, and with which I confess my inability to deal—there is no tax which demands, before any other, special consideration or immediate attention.
Then, Sir, what is the next mode by which relief can be given to the general interests of the country? The next mode, of course, is the reduction of Debt. The attention of the Committee will be obviously directed to the consideration of that question. Now, it is impossible to deal effectively with the reduction of the National Debt, unless you do it by means of some specific sum which 1115 is charged upon the Consolidated Fund, and which is annually applied to that object. Of course, in considering the question of the reduction of the Debt, I do not want for a moment to advert to the existing law, by which occasional surpluses, when our account every quarter is periodically settled, are appropriated to the reduction of the National Debt. I take it for granted that no Gentleman on either side of the House wishes to interfere with the action of that law. It is founded on scientific principles, it is, as far as it goes, extremely useful and beneficial, and the effects of which have to a certain extent been satisfactory. But that is not a course of legislation by which we can deal on any large scale with such a question as the Public Debt. Now, if we admit that the only way of dealing effectively with the Public Debt is to deal with it by some specific amount which shall be charged upon the Consolidated Fund, there are only two modes by which we can operate. The first is by a charge of that character, voted annually, when the Financial Statement is made, the amount of which shall be employed in the purchase and cancelling of stock and other public securities—in short, what is called a Sinking Fund. Now, I have myself always looked with great disfavour upon that mode of operating on the Debt. I have always felt that, however sound might be the situation at the time when such a fund is established, whenever a strain should come upon our resources, such a fund would infallibly cease to operate. The last attempt made to establish a Sinking Fund upon this principle was made during the Russian war by the excellent Sir George Lewis; and I felt it my duty then to oppose the proposition. I was supported in that opposition by the right hon. Gentleman my predecessor—a rare and gratifying incident; but notwithstanding our united efforts, I am sorry to say we were completely defeated. But, Sir, Ministers—even those who are so popular as Lord Palmerston—are totally uninfluential in the long run against the inexorable logic of facts; and in a very short time there was no surplus to feed the Sinking Fund, and the only way in which the Sinking Fund could have been supplied would have been by the imposition of new taxes upon the community. That strain upon our resources which adversity brings, and which the right hon. Gentleman and my- 1116 self had contemplated, did occur. I happened to be in that year, 1858, Chancellor of the Exchequer, and I had the melancholy satisfaction of proposing to the House that the Sinking Fund should be terminated; and I think there never was a proposition which was agreed to with greater unanimity; because the House thought that to inflict upon the country new taxes at a moment when, like the present, there was considerable monetary disturbance and pressure—and that to the amount of £1,500,000—for the purpose of paying off debt, would be to involve ourselves in a ruinous and really silly proceeding; and I think that was the last effort which will ever be made to establish a Sinking Fund upon the old principle. However, there is another method by which the reduction of the Debt can be effected. The Committee are of course aware of it. You may grant Terminable Annuities, or you may even do better—you may convert Stock into Terminable Annuities; and that is a proceeding for which there are great facilities in this country, because the Government themselves are very great holders of Stock; they hold Stock to the amount of many millions on account of the savings banks and other interests. Last year the right hon. Gentleman (Mr. Gladstone) called our attention to this subject. He was impressed with the policy of dealing with the amount of our National Debt. He thought there having been a great remission of taxation for many years, that the time had arrived when we ought to consider whether our surplus revenue should not be employed to that object. Now, Sir, although the right hon. Gentleman, when he opened his scheme, commenced with a sneer at myself, in consequence of an expression which I had once used in regard to the Public Debt—but which I had never used in this House, and which therefore it was unnecessary for him to have taken notice of—
§ THE CHANCELLOR OF THE EXCHEQUER
Well, I suppose my natural egotism induced me to appropriate the right hon. Gentleman's remark to myself. At any rate, I am responsible for using a very familiar expression regarding the Public Debt, though my respect for the House will not allow me to repeat it. I did answer a great booby on the hustings of 1117 my county, who quoted the great amount of our National Debt as a reason why we could not vindicate the honour of the country, or even defend its independence, that, compared with such considerations the Public Debt would be—I will not use the familiar expression—but that it might be compared to the incision of the most troublesome though not really the most unpopular of insects. Now, although the right hon. Gentleman commenced his speech with that quotation, which, with the egotism that influences all men, I really thought was intended for myself, because I was guilty of the phrase, I entirely approved of the policy which it enunciated. I thought it a wise policy and a sound policy. The measures which the right hon. Gentleman brought forward to effect that policy were numerous. In some instances I thought them unnecessarily complicated, and, further, that they attempted to deal with too great a space of time, and penetrated farther than it is necessary for Parliament to follow the scheme of a Minister. But these were small objections compared with the character of the policy itself, and I, and those with whom I act, entirely approved of that policy, and supported the right hon. Gentleman throughout.
I must now very succinctly call the attention of the Committee to the general character of those plans of the right hon. Gentleman; because one of them indeed very much affects—whatever may be the decision as to the proposals that I am going to make at the present moment—the state of our finances. The right hon. Gentleman proposed first to cancel Debt to the amount of £5,000,000 which we owe to some of the savings banks, by its conversion into an annuity, which was to terminate in the year 1885—eighteen years' time. One moiety of that £5,000,000 belonged to the Post-Office savings banks, and the other moiety to the old savings banks. The measure was agreed to; but before it could be carried into operation very great changes had taken place in the monied world, to which I have already referred, and it became impossible at that time to carry out the original intention. But fortunately there was what was called a suspending power in that Act—the Chancellor of the Exchequer had discretion to suspend its operation, if necessary, and generally to act as circumstances would allow him for the completion of the scheme. Now the £2,500,000 that was applicable 1118 to the Debt owing to the Post Office savings banks was operated upon immediately; but there happened to be a considerable panic in the country, which caused a run upon the old savings banks, and the trustees of those savings banks did not feel justified in consenting to the conversion that was intended. They felt that, if the distrust continued to prevail, they might be called upon to realize other securities at greater loss and inconvenience than would result from realizing the stock which was to be converted—and at one time it even seemed probable that they would have had to fall back on the great debt that we owe to the savings banks, and which the right hon. Gentleman formerly explained to the House. But I am glad to say that we now live in different times—those circumstances have disappeared, or are fast disappearing; and I hope, and, in fact, feel confident, that we shall very soon be able to complete the first part of the right hon. Gentleman's plan—that which was agreed to—and I have accordingly made provision for it in the charges for the present year. It was necessary to advert to this in order to explain the amount of the interest of the Debt; but I think that the Committee may fairly assume—certainly for this evening in deciding upon our general policy—that the operation of the right hon. Gentleman will be completed.
The next operation proposed by the right hon. Gentleman was of a much more considerable character. He proposed to deal with no less than £24,000,000 of the Debt. It was an operation which would at once cancel that amount of debt by its conversion into annuities to terminate in 1885. That operation he termed "operation A;" and then by a second operation, which was described as "operation B," we were to deal with such amount of the Terminable Annuities as represented the capital advanced; and fresh conversions were fixed upon this part of the arrangement—the operations extending to a very long period—I think its final solution was not to occur until the year 1905. At that time I expressed my opinion that that part of the scheme appeared to me of too complicated a character for us to adopt, and one which would unnecessarily extend the sphere of legitimate financial operations. But those were criticisms which, after all, do not affect the principle of the measure. Although, however, neither of those measures of the right hon. Gentleman has really 1119 ever come into operation, it would be a great mistake to suppose that that fact was occasioned by any change in the Government. Her Majesty's Government entirely approved the general policy of the right hon. Gentleman on the subject; and, if circumstances had permitted it, although they might have slightly modified some of the secondary arrangements, they would have loyally attempted to carry it into effect. But very considerable changes occurred in our financial position; and when we acceded to office we found that the surplus upon which the right hon. Gentleman counted as the basis of his operations had been already considerably diminished; and circumstances were hourly occurring which created a further diminution or an almost entire absorption of it. There were the circumstances of the cattle plague, the distress of Irish railways, the battle of Sadowa, which brought about a complete revolution in our small arms, and other circumstances no doubt familiar to the Committee, which materially affected the surplus upon which the right hon. Gentleman had counted. The consequence was that it was quite impossible to proceed with that operation; and the House will perhaps recollect that on coming into office I made a statement on the subject, the fairness of which was not contested, and the policy of which was assented to by the right hon. Gentleman.
Now, Sir, I wish the Committee to consider to-night a proposition—the effect of a proposition—which I am going to make in reference to this large sum of £24,000,000, which is of a simpler description than that recommended to our notice last year by the right hon. Gentleman; but to the merits of which, if the proposition have any merits, the right hon. Gentleman is solely entitled. What I wish the Committee to consider is the effect of cancelling this debt of £24,000,000 by granting Terminable Annuities which shall cease in 1885; and which shall not be accompanied by any of those more complicated arrangements which would have extended it to the year 1905. Before, however, the Committee decide on the proposition which we recommend, perhaps they will allow me to give some figures which will be explanatory of the result, and without which they can scarcely come to a decision on the subject. It is necessary that the Committee should bear in mind that this sum of £24,000,000 1120 consists of two amounts. One is a sum of £18,000,000, and the other of £6,000,000. The interest upon these two amounts is payable at different times in the year, summer and winter—on one in July and January, and on the other in October and April. The plan we wish the Committee to consider is this: we propose to convert the £18,000,000, now yielding an interest of £540,000 a year, into an annuity of about £1,332,000 per annum, terminating on the 5th of July, 1885, and payable half-yearly, the first quarter to be payable on the 5th of July, 1867. We propose to convert the £6,000,000, now yielding an interest of £180,000 a year, into an annuity, terminable on the 5th of April, 1885, of about £440,000, payable half-yearly—namely, on the 5th April and the 10th October, the first quarter to be payable in October, 1867. The total of both annuities will be £1,776,000. We have got an annuity, then, of about £1,776,000 by which to cancel this debt of £24,000,000. I wish to show to the Committee the amount of the annuity which will be payable in the present financial year. There wall be one quarter payable on the 5th of July, 1867, on the annuity of £18,000,000, which will be £333,000, and a half-year on the 5th of January, 1868, on the same annuity, which will be £666,000. There will be, on the annuity for £6,000,000, a quarter payable on the 10th of October, 1867, amounting to £111,000. But we must add to our liabilities the interest of those two capital sums until the dates of conversion—making, firstly, for the one half-year on the £18,000,000 due the 5th of April, 1867, £270,000, and secondly, for the one half-year on the £6,000,000, due the 5th July, 1867, £90,000, being a total of £1,470,000. But then of course we must deduct from that sum the interest we are now paying during the year for the £24,000,000 stock debt, which amounts to £720,000—so that the total additional charge for 1867–8 will be £750,000.
It will be necessary, in the next place, that I should put before the Committee what will be the effect of this operation in its entirety, and therefore I must take the next year, and see what will be the complete charge on the Consolidated Fund when the whole shall be in operation for the entire year. The future annual charge will be £1,776,000, less of course by the amount of the annual interest we are now paying on the capital sums to be converted, 1121 which is £720,000. Therefore the increase of annual charge from 1868–9 up to 1885, when the annuity will cease, will be £1,056,000 per annum. But I must remind the Committee that the "Dead Weight Annuity" which amounts to £585,740, from which the country will now be totally freed, has to be deducted; and therefore, practically, the increase of annual charge by which we shall cancel this £24,000,000 of debt, will be a sum less than £500,000 a year. That is the proposition which we recommend to the Committee to adopt. It is a sensible and very considerable reduction of our Public Debt; amounting, coupled with the original measure which the right hon. Gentle man carried last year, and which I hope to bring to completion, to £29,000,000; and, practically, it will be effected, as far as £24,000,000 is concerned, by a charge less than £500,000 a year.
Now, Sir, if the Committee will, after consideration, adopt the measure we recommend, the surplus of the year will be reduced by the sum of £750,000, and there will still remain a surplus of £456,000. Now, under ordinary circumstances, if the balances in the Exchequer were in the same condition as they were in this time last year, I should not hesitate to recommend the Committee not to deal with that surplus. If our balances were £1,000,000 or £2,000,000 less, I do not think it would be wise to reduce a surplus of £456,000. But in the present state of our balances I think that we are justified in dealing with this portion of it. That portion cannot be very considerable; but the great point is to employ our resources in the manner which will be most effective, and which will give the most sensible relief to the community. Although the amount is not large, there are several modes by which it may be beneficially appropriated. After much consideration of the subject it appeared to Her Majesty's Government that the manner by which the most extensive relief could be given would be by dealing with the question of Marine Insurances. That is a portion of our fiscal system which has long been open to various objections, and to which all persons who are interested in the transactions of trade have frequently called the attention of the Government. The Committee are probably aware of the extremely complicated character of the law as at present existing in reference to the tax upon Marine Insurances. These duties 1122 are based upon the principle of a graduated scale, and in that scale there are a great many degrees. They commence by 3d. per cent, and they go as high as 4s. per cent. They are so framed that precisely as the premium is higher—that is to say as the danger is greater—the duty increases. Therefore you are really taxing risks and inflicting a penalty on the incurring of danger. Now, that is a principle which I cannot think the Committee will for a moment approve of. Moreover, the tax in its present form has led to great evasions; it is a great restriction upon commercial intercourse; and in an infinite variety of ways this complicated arrangement of the duties of Marine Insurances exercises a very baneful influence upon our general commercial intercourse. What we propose to do is—with one slight exception, which is rather of a technical than of a fiscal character—at least it is rather a technical than a fiscal reason which influences us—is to establish one uniform rate of Marine Insurance, and to fix it at the lowest amount which now prevails. Therefore you will have for all policies, whether they be time policies or voyage policies, a uniform rate of 3d. per cent, except in the case of time policies exceeding six months, the duty on which will be 6d. per cent. And the reason is that if that arrangement is not made no policies will be negotiated except time policies of the length of twelve months. Now the fact is that time policies for twelve months are not in accordance with the spirit of the age, nor the circumstances under which we live; and there is no reason why time policies, with the rapid communication at present at our command, should be for a longer period than six months. But, certainly, unless that increase is made with regard to time policies after six months, it will have an injurious effect upon all voyage policies; and therefore we recommend that, in establishing what we wish to make a uniform rate, that exception should be sanctioned, with the conviction that after a short time the fashion of time policies for twelve months will become a thing of the past.
Now, Sir, I have informed the Committee of the state of our finances and our surplus, and the mode in which we recommend the Committee to deal with that surplus. [An hon. MEMBER: What is the amount of the reduction of the Marine Insurance?] It will cost about £210,000; 1123 and will leave a surplus of £246,000, not an excessive, but, I believe, an adequate surplus, considering the state of the finances and the general condition of the country.
I have placed before the Committee the present general state of our affairs, and the mode in which we recommend them to deal with this surplus. But there are one or two other points which I ought to mention to the Committee or rather remind them of. They are aware, of course, that the tea duties annually expire in August, and that the Income Tax expires within twenty-four hours. It will therefore be necessary for me to take these Votes this evening, and the Committee, I apprehend, will make no difficulty in their renewal. In November of this year, and in March of next year, Exchequer Bonds to the amount of £1,700,000 will become due, but we recommend them to be renewed. The floating debt of the country is very small, and it is really for the public convenience that they should be so renewed, and it is not with reference to any financial operation that I recommend it to-night, but because I think that, under any circumstances, it would be politic to renew them.
Sir, I believe I have now informed the Committee of everything, and I hope they will approve of the propositions we have made for the reduction of the Debt. I am not myself an alarmist in public affairs. I do not awake in the morning believing that the country is going to be involved in a great European War. I have great confidence in the sagacity with which our affairs are managed by my noble Friend (Lord Stanley), and I hope that any expectations that are afloat in the air may not be fulfilled; but it is impossible to shut our eyes to what is passing around us—to the state of Europe. The state of Europe is remarkable—it is at present an armed camp; and although I trust and feel confident that, so long as my noble Friend retains the management of our Foreign Affairs, we certainly shall not be involved in any unnecessary war, still at this time, when we are speculating on the fortunes and destinies of the nation, it is impossible to shut our eyes entirely to contingencies which, however improbable, may occur; and certainly I think that, if a Chancellor of the Exchequer is called upon to go into the market to raise money, he will walk with a prouder mien, and experience greater facilities in raising 1124 money, if it can be shown that in the day of our prosperity we have made an honourable and an honest attempt to reduce the amount of our National Debt. [Cheers.] I hope I may construe that expression of feeling on the part of the Committee as sanctioning the measures which the Government have recommended to them, and with that observation, I will take the liberty of placing in your hands, Sir, this formal Resolution.
Motion made, and Question proposed,
That, towards raising the Supply granted to Her Majesty, the Duty of Customs now charged on Tea shall continue to be levied and charged on and after the 1st day of August 1867 until the 1st day of August 1868 on the importation thereof into Great Britain and Ireland, viz.
§ MR. CANDLISH
said, he would take the earliest opportunity of thanking the right hon. Gentleman the Chancellor of the Exchequer for his proposed reduction of the duty on marine policies. Considering its amount there was no tax that acted so prejudicially to the trade of the country, and was so anomalous in its character, as the marine insurance duty. The right hon. Gentleman by this change was rendering great service to the commercial marine of the country. He would also congratulate the right hon. Gentleman on the simplicity, and quiet, unassuming character of his Budget, and the extreme good sense in which it had been conceived. He ventured to say that it would commend itself to the general acceptance of the House.
§ MR. LAING
said, that was not the time to enter into any detailed discussion of the measures which had just been submitted to the Committee; but as the principle of the reduction of the National Debt had been discussed at such great length last year, he thought it advisable to offer a few words of warning on the subject. He would not then offer a decided opinion upon the proposition which had just been made to the Committee in reference to the Debt, because it was one that required very great consideration before the House committed itself to its adoption. A nation, like a landed proprietor when he found himself embarrassed with a heavy debt, might adopt either of two principles in dealing with its liabilities. It might proceed to get rid of the debt, either by paying off part, while the value of the estate remained the same, or he might 1125 continue to pay the interest keeping the amount of the debt the same while he employed the surplus revenue in improving the value of the estate. In this country we had proceeded for a long series of years on the latter principle; and that principle was summed up in a few words by the late Lord Sydenham, when he said that "the money of the country should be left to fructify in the pockets of the people." The practical result of that system might be seen by contrasting our present state with that of 1815, at the termination of the great war; the income of the country had increased three or fourfold, while the charge for the National Debt had slightly diminished. He wished to point out that the proposed system of temporary annuities to a certain extent involved the principle of a sinking fund. What was a temporary annuity after all but a compulsory sinking fund? It differed from an ordinary sinking fund in this—that being unable to trust their own virtue they pledged themselves to their creditors. Several inconveniences were inseparable from such a mode of proceeding. First, it was a more expensive way of paying them off than the simple straightforward process of going into the market and buying up whatever the amount of surplus revenue permitted. In the next place, as being a compulsory sinking fund it was open to the objection that it created engagements that must be met, although circumstances might have completely changed in the meantime. In the instances referred to by the right hon. Gentleman of money being borrowed for the Crimean war, if instead of applying the sinking fund, they had applied terminable annuities, they had applied terminable annuities, they would have found themselves in exactly the same position—in the first year in which there was not a surplus they would have been obliged to put on increased taxes or borrow money. He merely pointed it out because the objection was certain to be raised when they came to consider the principle of the measure. With reference to the alleviation of the burdens of the people, he did not think they had yet arrived at that millennium in which there were no bad taxes to reduce. On the contrary, the discussions which had taken place respecting fire insurance made it obvious they clearly were not in that position; and the discussions of last year on the post-horse duty, and other taxes of that description, showed there were still taxes which pressed heavily on the humble classes of the com- 1126 munity, and which ought to be taken into consideration, when there was a surplus to dispose of. He reserved his opinion whether the whole or a portion of the present surplus, instead of being applied to the reduction of our National Debt by the establishment of temporary annuities, should not go to a further reduction of our present taxation.
§ MR. MARSH
congratulated the Committee on the very flourishing state of the revenue, notwithstanding the panic and the deficient harvest, from which the nation had suffered severely. He also congratulated the Chancellor of the Exchequer on the improved method of keeping accounts, under which fees which used to be paid to officers of Chancery and others were now to be paid to the Exchequer, and the salaries paid out of the Consolidated Fund. This was a step in the right direction, and there were other parts of our financial system in which similar changes might be made with advantage. He quite agreed with the hon. Gentleman the Member for Wick (Mr. Laing) that there were many taxes still in existence which were very disagreeable and ought to be removed at the first opportunity. Some he thought actually did more harm than was compensated for by the revenue which they produced. In this class the licenses might be included. They were most objectionable. The tea licence caused that article to be sold dearer, whilst the Exchequer got very little by it, and the purchaser of a glass of sherry wine at a confectioner's, paid 700 per cent more for it than he ought in consequence of the licence.
§ MR. DENMAN
said, he rose merely to state the course he intended to pursue with reference to the Bill now pending (the Attorney's, &c., Certificate Duties Bill) the second reading of which was adjourned a few nights ago. He did not wish to interfere with the chorus of approbation with which the Budget just disclosed had been greeted, beyond saying that he looked upon it as a grand testimonial to the success of the financial measures proposed during late years by the late Chancellor of the Exchequer; but he never could consent to consider a Budget as entirely satisfactory which made a portion of its surplus depend upon the continuance of an unjust and oppressive tax. He would have preferred leaving the surplus at £156,000 rather than £246,000, for it was perfectly certain that in the course 1127 of the year there would, owing to the elasticity of our commerce, again be an ample surplus in hand, and an unjust and oppressive tax of £90,000 a year might have been given up at once. He should consult those of the profession most interested in the Bill with regard to the course proper to be pursued in relation to it; and if they were so enamoured of the Budget as to think that it ought not to be interfered with, even to the extent required to do them justice, he should not press the Bill forward in the present Session, otherwise he should name a convenient day for proceeding with the discussion on the second reading of the Bill in question.
said, he regretted he was unable to express his concurrence in the approbation which the Budget of the right hon. Gentleman had already elicited from the House. Its great blot was that it began by asking from the people £2,000,000 more than was disbursed last year. He had on several previous occasions protested against the magnitude of the expenditure proposed by the late Chancellor of the Exchequer, and had often urged on him the necessity of practising the economy he habitually inculcated. He must say that the present Government beginning by inaugurating so large an increase in the national expenditure led naturally to the inference that they were not merely indifferent, but absolutely adverse to public economy. In following the financial policy of the late Chancellor of the Exchequer, the right hon. Gentleman had also imitated his eminent predecessor in his estimate of the incoming revenue of the current year. The right hon. Member for South Lancashire (Mr. Gladstone) used systematically to under-estimate the amount of the revenue, his desire being to apply as large a surplus as he could to the reduction of the National Debt. This was no doubt a very laudable ambition; but he (Mr. White) would rather the funds appropriated to such an object should be derived from a diminished expenditure than from an increased draft on the industry and earnings of the people. With regard to the proposed reduction of the Marine Insurance Duty, he thought it would be better to abolish it altogether. By the Finance accounts for the year ending the 31st March last he found the net produce of the Marine Insurance Duty was £472,561 8s. 6d., and seeing what a large amount of Marine Insurances were effected abroad, he was convinced that the 1128 total abolition of the duty would lead to a vast augmentation of the underwriting business of this country. Again, our tariff was still disfigured by several duties which ought to be abolished. According to a recent Return he found, for instance, that the gross revenue derived from a duty of 1d. per pound on almond paste was £1. From the same rate of duty on dried cherries £7, and comfits £9, the duty on the latter must, however, be retained, on account of the present scale of sugar duties. He (Mr. White) did not hesitate to express his conviction that it would have been much more conducive to the prosperity of the country had the Chancellor of the Exchequer proposed the immediate abolition of all duties on coffee, cocoa, chocolate, currants, raisins, and other dried fruits, instead of the Budget which was now so favourably received by both sides of the House.
§ SIR GEORGE BOWYER
said, he considered that the proposals of the Chancellor of the Exchequer for the reduction of the National Debt left the House in the same difficulty as they were placed in by the Budget of the right hon. Gentleman the Member for South Lancashire last year. He agreed in what had been said by the hon. Member for Wick (Mr. Laing) that these complicated plans of terminable annuities and so forth resolved themselves into nothing more nor less than a sinking fund, which he (Sir George Bowyer) regarded as an awkward and inconvenient way of paying debts. They could not get 1s. more out than they put in. What, he asked, would be the result of the extinction of the £24,000,000 in eighteen years? Why, simply that there would be a surplus of something more than £1,500,000. But they had very nearly got this now; so that it was in reality as broad as it was long. It seemed to him that the more advantageous plan would be to pay the money over manfully at once, and thereby extinguish so much debt. He thought there were many taxes which might be reduced without detriment to the revenue; and one of these was the duty on fire insurances. The right hon. Gentleman the Chancellor of the Exchequer had said that in the event of a war the then Chancellor of the Exchequer would be able to go into the money-market with greater advantage on account of this arrangement for the prospective extinction of the Debt than he could otherwise do. He (Sir George Bowyer) could not see 1129 this; as it appeared to him that the Chancellor of the Exchequer would have a better chance of borrowing money if he could say, "We have £1,000,000 surplus available now," than if he said, "Eighteen years hence £24,000,000 of debt will be extinguished." What were £24,000,000 in comparison to the whole amount of the Debt? They were really not a bit more than the bite of that insect which had been referred to on a former occasion by the Chancellor of the Exchequer. The scheme of the right hon. Gentleman dealt with a very serious matter in a very trifling way. It reminded him, in fact, of the proposal of the schoolboy who, hearing people say what a dreadful thing the National Debt was, said he would gladly give half his pocket money towards paying it off. He was unable to see any merit in the proposed arrangement. In the event of a war breaking out, the Chancellor of the Exchequer would not be able to borrow money more advantageously than if these prospective reductions of the National Debt had not been determined on; but, on the contrary, he would then have reason to regret that he had pledged himself to this increased annuity. Indeed, the scheme was worse than the old Sinking Fund, which might be given up at any time when necessary, and the surplus revenue taken. In the present instance, however, a pledge was made to give up the surplus revenue for eighteen years; and even if a war broke out, the arrangement could not be changed.
§ MR. HUBBARD
said, the latter part of the right hon. Gentleman's statement had given him unmixed satisfaction. Last year it was his duty to call the attention of the House to the exceeding demerit of the tax upon marine insurances; and he hailed with great satisfaction the announcement that the tax was to be equalized and reduced to a minimum. Here, however, his satisfaction stopped. He regretted to find that the Chancellor of the Exchequer had re-produced a portion of his predecessor's last year's financial proposals, touching the terminable annuities. He (Mr. Hubbard) could not but express his deliberate disapproval of any sort of plan for reducing the National Debt while we had taxes pressing upon the industry and the prudence of the country, such as the duty upon fire insurances. When the hon. Member for Stafford (Mr. H. B. Sheridan) proposed that the House should repeat for almost the tenth time its condemnation of that obnoxious 1130 tax, he (Mr. Hubbard) had taken the liberty of interposing, and begging the hon. Gentleman, out of courtesy to the new holder of the financial seals, not to press his Motion. He did so because he could not think it possible that the Chancellor of the Exchequer, having in mind the numerous times the House had pronounced its views, could delay obedience to them, if any opportunity were offered of dealing with the impost. An opportunity had now arrived. We had a surplus of more than £1,000,000; and that surplus would more than exterminate the tax. Its original amount was £1,600,000; but half had been abolished. There had, no doubt, since been an increase; but he believed that the present produce of the duty would not exceed £900,000. There was not a man in that House—there was not an economist in the country—who had not pronounced this tax, both in practice and in principle, to be one of the most mischievous that was ever devised. Although it was true that in time of war or pressure the House might be obliged to maintain, or even to impose, taxes which were injurious, it was "a new and horrible thing" to pretend to reduce the National Debt by such means. The fire insurance duty was a tax, not upon the rich, but upon the middle and poorer classes, who could not afford to run the risk of fire; and it ought not to be continued for any such purpose as paying off £1,000,000 out of a debt of £800,000,000. He should therefore at a fitting opportunity feel it his duty to move a Resolution to the effect that, until the fire insurance duty is abolished, or considerably reduced, this House is not prepared to enter upon the consideration of any mode of reducing the National Debt.
Mr. Speaker—Although, Sir, it is the general rule of the House that those Members who have the advantage of hearing the propositions of the Chancellor of the Exchequer should postpone the declaration of any final judgment upon them, yet there are two reasons which make me desirous to address you on the present occasion. One is, that I think the simple character of the statement which has been so clearly submitted to us by the right hon. Gentleman makes it easier than under other circumstances it might have been to appreciate the nature of his proposals; and secondly, he has referred so pointedly to a portion of the scheme which it was my duty to submit to the House last year, that I think, not feeling myself incompetent to do so, it is only 1131 fair that I should give him at once the opinion which I form on the proposals he now makes. With respect to the retrospective part of that proposal I shall be very brief; but I will venture to refer to one or two points on which it is possible that the right hon. Gentleman is in a position to give us further information. He did not enter upon any details with respect to the sources from which the great increase in the revenue from the Customs and Excise during the year 1866–7 has proceeded; and I confess that I should be very glad if the right hon. Gentleman had given us the particulars, which I feel could not fail to be full of interest. The case of the Excise is, indeed, a very remarkable one, and well deserves the special attention of the House. I think the right hon. Gentleman stated at£900,000 the amount of augmentation which has taken place in the revenue of the Excise over and above the Estimate submitted last year. Now, Sir, I think these figures are among the most extraordinary that have ever been submitted to the House of Commons—and particularly on account of the singularly unfavourable character which the season of last year assumed, at the most critical moment, with regard to the yield and especially with regard to the quality of the barley harvest, upon which commonly it may be reckoned—at least, it has in former times been reckoned—the malt tax will depend to the extent of £500,000 or £1,000,000. To judge from the gross figures before us, and from such fragmentary information as has reached me, I am under the impression that, notwithstanding the exceedingly unfavourable character of the weather of last August and September, which seemed in a great degree, in many parts of the country, not so much to damage as almost to destroy the barley crop for malting purposes, yet I apprehend we must be in the condition of having received from the article of malt a revenue as large as, or probably even larger than, we ever have received in any former year. If so, this is a circumstance of very great interest and importance, for it seems to show that the consuming power of the community, even in regard to this, which the right hon. Gentleman seems to consider rather persecuted article, has reached such a point that beer must be brewed whether there is a fine barley harvest or not, and that the brewers, partly availing themselves of the resources opened to them 1132 by foreign barley, of which a considerable portion is of high quality—and partly falling back on sugar and other materials, produce, even in a year of a very bad barley harvest, an amount of malt duty not less than that obtained in former years, even with the advantage of a very good barley harvest. It would be extremely interesting to be assured of this satisfactory circumstance, because it implies the removal of an element of very great and perplexing uncertainty which has always had to be encountered in calculating the revenue of the country. I presume, also, there must have been a considerable increase in the revenue from spirits, and consequently that the present working of the very high duties imposed for fiscal purposes may be judged, as far as present experience goes, to be satisfactory. With respect to Stamps, I observe that the actual revenue appears to have fallen slightly short of the Estimate submitted by me about twelve months ago. I shall be glad to know, if the right hon. Gentleman happens to have the information at hand, what are the items to which the shortcoming is to be attributed. [The CHANCELLOR of the EXCHEQUER: The total is only £20,000 short.] The total deficiency is only £20,000; but although not in the same degree as the revenue from Customs and Excise, yet of late years the revenue from Stamps has exhibited a remarkable elasticity; and this year, as I am reminded, there ought to be some receipts from the Courts of Justice Stamps above those included in my Estimate. I shall be glad to know what has been the actual result of our financial operations with regard to the Fire Insurance Duty. My hon. Friend who has just sat down (Mr. Hubbard) still apparently clings to that phantom expectation for which he has always had a great attachment, and for which some hon. Members have had a greater and warmer attachment. I mean, that a great reduction of the Fire Insurance Duty could in a great degree be compensated for by an augmentation in the number of insurances. [Mr. HUBBARD: I never said such a thing in my life.] My hon. Friend said just now that he anticipated that the revenue had been increased some £100,000 in consequence of the diminution of the duty; and therefore my hon. Friend has, not only in his life, but within a very recent portion of his life, said something which I, perhaps, put rather strongly—possibly more strongly than the form of expression 1133 justified—but something which indicated an expectation that a very considerable increase of revenue had followed the reduction of the duty. It would be important and interesting that even now or on a future occasion we should be favoured with the exact figures of the right hon. Gentleman, because it is now two or three years since the first reduction of the Fire Insurance Duty was made, and the case can now be put completely before us. As far as my knowledge goes, there was no reason to suppose that the revenue from Fire Insurance Duty would be in so great or considerable degree replaced by the effect of a reduction, when you distinguish between the increase due to that reduction and the regular annual progressive increase which the wealth of the country necessarily produces. The right hon. Gentleman has been able to present to the Committee a most favourable statement of the condition of the country with respect to its financial resources. I consider that one of the most remarkable results of the great change we have passed through with respect to our commercial legislation and the liberty which has been given to the operations of trade has been, that along with a vast increase in the scale of those operations there has been an almost equal increase in their steadiness. It is not that the spirit of speculation is less active than in former times; but if there be a peculiarity of the present time, it seems to be this—that whereas in former times, when what is called a panic occurred, and commercial men experienced a period of pressure, the effect of that pressure was felt in the diminution of the consuming power of the country, and, consequently, in the diminution of the revenue, in a manner which we have now the greatest difficulty to realize. We now seem to pass through years of great and serious difficulty—years like the two last—without their appearing to leave the smallest trace upon the consuming power of the country or upon the revenue which is its produce. That is a circumstance of the greatest possible consolation, and it should encourage us to go forward in the path which we have for so many years been pursuing. I will not dwell at any length upon the subject to which the hon. Member for Brighton (Mr. White) referred. I do not contemplate with satisfaction the augmentation of the Estimates for the present year. The Supplies which were voted last year, the demands for which were laid on the table twelve months 1134 ago, amounted to £38,205,000, including the Army, Navy, Civil, Miscellaneous, Packet, and Revenue Estimates. If I have put the figures together accurately, the present Estimates for the same classes amount to £40,234,000, which represents an increase of £2,029,000. It is not upon an occasion like this that this augmentation can be duly analysed, or that the grounds of the claims for such increased expenditure can be discussed. Far less would it be upon an occasion like this, so far as I am concerned, that any endeavour should be made to impart a political aspect to such a discussion. But, speaking generally, I own I do not think the circumstances of the country such as to warrant this very serious additional outlay. I know that on many points it is impossible to question those charges without joining issue in the most serious manner with Her Majesty's Government, and there are particular reasons at the present moment in the gravity of the political issues that are pending why every man must desire not to multiply, but rather to reduce and diminish, those points on which the House, or any portion of it, may be in conflict with the Advisers of the Crown. Certainly, in view of these circumstances, I, for one, should be and am disposed to examine more slightly those particulars than I should be disposed to do in the circumstances of an ordinary year. Some of these augmented charges have reference to purposes of great importance, and I would even venture to hope there are among them items in respect to which discussion in this House may lead to a diminished demand. For the present, however, it is not my intention to go beyond those general observations. I will therefore pass on to consider the mode in which the right hon. Gentleman proposes to deal with the surplus at his command. That surplus, I calculate, is £1,206,000. I may be permitted to observe—not in the way of criticism of what has fallen from him—that nearly the whole of that surplus would actually have been applied during the year 1867–8 to the liquidation of the Debt had the plans of last year taken effect. An Act which was passed early in the year, if carried out to its full extent during 1867–8, would have applied about £150,000 to the liquidation of the Debt in the form of terminable annuities. A greater measure which was pending at the time we quitted office, and which the right hon. Gentleman found himself, owing to augmented charges, obliged to drop, would 1135 have entailed, if I remember rightly, for the year 1867–8, a charge of about £1,000,000. Consequently, the whole of the money with which we have to deal is money which, if these plans had been carried forward to their consummation from the time they were introduced, would actually have been disposed of for the purpose indicated. I would depart from the order pursued by the right hon. Gentleman, and deal first with that portion of the surplus which he proposes to apply to the reduction of the Marine Insurance Duty. Undoubtedly, there are a large number of imposts, a list of which it is impossible to survey without feeling a strong desire that it may be in our power, from time to time, to apply to them the beneficial effects of growth in the revenue, and so gradually mitigate the burdens or remove them altogether. I, for one, cannot except to what is said by those who point out that licence duties are among those which it would be most desirable to reduce, and in some cases remove, and altogether and among these especially the duties upon locomotion. In point of fact, they tax, at its very root, the whole raw material of labour, because the movement of the industrial portion of our population from place to place is an essential portion of the cost of production; and these taxes are, therefore, more analogous to the taxes upon the raw material of industry than I think all or any of the other taxes to which allusion has been made. I can assure my hon. Friend (Mr. Hubbard) that I am no admirer of the Duty upon Fire Insurance. All I plead for is that when we deal with that duty—not the part of it which relates to stock-in-trade, but that which relates to buildings—we should remember how closely that duty is associated with property, and should consider this element of the question along with others—the possibility, if we part with it, of obtaining a fair substitute from property in some less objectionable form. I cannot help thinking that if there be a widely spread and earnest desire in the House to make with respect to the Fire Insurance Duty—not that sort of reduction which we sometimes make in order to obtain an augmentation of revenue—but a root-and-branch reduction, so that the act of insurance should no longer be felt to be a sensible burden—if the House were disposed to take that view of the matter, and at the same time were indisposed to grant to property remissions that might be fairly claimed by trade and labour, it would not 1136 be difficult to devise some arrangement which would enable them to attain that end. The cases adduced by the hon. Member for Brighton (Mr. White) do not awaken in my mind so much emotion as they have stirred up in his. Nothing, I admit, can be more ridiculous than to read a list of trifling and trumpery articles, happily now very short, on which the duty is still continued, and, at first sight, nothing can be more absurd than to levy £9 a year upon comfits. But then these duties are not to be considered alone; they must be looked on as outworks and defences of great branches of the Customs revenue. What would be the effect of abolishing the duty on comfits? There would be a most enormous increase in the importation of comfits? You would be able to put them into your tea and coffee, and use them there with just as much satisfaction as we now use the article called sugar. Sugar would, in fact, come to us under the name of comfits. Whether, in proposing to reduce the duty on Marine Insurances, the right hon. Gentleman has made the very best choice among the many claims which present themselves, I cannot undertake to determine. But I think these two points may be safely assumed. In the first place, a great deal is due to the initiative of the Government, and to the superior means which the Government must possess for making a selection among many competing claims in the application of a surplus revenue. In the second place, unquestionably, the duty with which the right hon. Gentleman proposes to deal, whether it be or be not the most exceptional upon the list, is a duty which urgently calls for revision. So far as I am concerned, I have not the smallest intention of entering into any controversy upon that point, but shall thankfully accept the very simple, and at the same time the very effective proposal of the right hon. Gentleman respecting this duty, which is totally indefensible in its present form. Then the right hon. Gentleman proposes to leave himself a surplus of £246,000, and I earnestly hope that the House will not countenance any invasion of that moderate sum. My hon. Friend (Mr. White) says I have a habit of systematically underestimating the revenue of the country. Now, if my hon. Friend will only travel back to a period when there was, unfortunately, a greater pressure upon our resources than there now is, and when in certain instances the actual revenue fell 1137 short of my Estimates, he will find that at that period I was more than once accused of systematically over-estimating the produce of various branches of the revenue. The truth is that a very salutary practice prevails in estimating revenue—I mean, that of paying very great respect to the opinions and judgment of the able and experienced gentlemen who are at the head of the revenue departments. I say of myself, and I should say of any Chancellor of the Exchequer, it is not wise that the Chancellor of the Exchequer, either of this day or of any day, should take too much into his own hands the business of estimating revenue. You must proceed upon fixed rules, and these cannot be well propounded or applied without a great and determining regard to the judgment of those who are at the head of your Revenue departments. I believe that the right hon. Gentleman has been guided in the Estimates he has submitted to us to-night by just and sound principles; and I am quite sure it would not be wise in us to undertake upon our own responsibility and imperfect information to question these Estimates for the purpose of throwing the right hon. Gentleman into a deficit by our eagerness to deal with some of the taxes which still press upon us. Regarding the £210,000, then, which is to be applied in the reduction of the duty on Marine Insurances and the £246,000 of surplus as fixed points, I come to the measure by which the right hon. Gentleman will dispose of the principal part of his surplus—a fresh investment in those terminable annuities originally created by Sir George Lewis, which will come to an end in 1885. Here I must say—and I say it in no spirit of complaint—I think that in all probability the right hon. Gentleman has exercised a sound discretion in liberating himself from that portion of the measure of last year—which may be called the secondary portion—which dealt with the fruits of the reduction to be effected by the primary portion, and which ranged over a longer period. If I had been able to deal with the measure of last year, I think it is very probable that the same result would have happened. Parliament is justified in saying with regard to such a measure, "Do not take the question too much or too long out of our view. Come back to us when you are prepared to recommend a further adjustment of national income to national debt; but do not ask us for too much at a time." I have no complaint to 1138 make of the right hon. Gentleman on that score, and think that, upon the whole, he he has taken the wise course. But now comes the question—Is the basis of his measure just and sound? Here I must say that I have undergone no change in the opinions I held last year, and, moreover, I must express the conviction that of the objections which were stated by several hon. Members last year, and which have been re-stated to-night, a large portion arise from want of minute and accurate acquaintance with the subject, which is of a complicated character, and upon the complications of which the merits of the case really depend. My hon. Friend the Member for Wick (Mr. Laing) is a Gentleman to whose speeches, in regard to financial questions especially, we always listen with the greatest advantage. But I differ from him in what he has said to-night. He tells us there are two systems which he places in contrast one with another, and with regard to which he leaves his own preference not a subject of much doubt. One of these systems is, diminishing your debt; the other is, leaving the money with which you would otherwise diminish debt to fructify for the benefit of the nation through the reduction of taxation. Now it appears to me that that is not a just or a true statement of the case, and that when you talk of the "fructification" of money—I accept the term, which is originally due to very high authority—for the public advantage, there is none much more direct and more complete than that which the public derives from money applied to the reduction of debt. For what becomes of that money? It is not sent to the moon—it is not exported from the country. It finds its way into the money-market of London, and that is the point whence loanable capital finds its way to the most direct and profitable employment in cheapening production and stimulating industry. In my opinion, therefore, it is an entire fallacy to suppose that the question lies between the diminution of debt and allowing your capital to fructify. I contend, on the contrary, that there is no surer method of promoting an immediate and profitable application of capital than by reducing debt. Of course, that proposition would require to be modified under given circumstances. Suppose, for instance, this was a country with a National Debt held mainly by foreign creditors. The question then would assume a different aspect. But in our own case, our National 1139 Debt being held in overwhelming proportion by Englishmen, the money applied in reducing that debt will take its first start in London, where it is paid; [Sir GEORGE BOWYER: Then why reduce the debt at all?] and I think the proposition may be broadly laid down that such an application of money is immediately profitable, not merely with regard to the commercial and political stability which you acquire by pursuing such a course in finance, but with reference strictly to the industrial pursuits of the country. Then, my hon. Friend (Mr. Laing) says this measure involves the principle of a sinking fund, and my hon. Friend (Sir George Bowyer) dwells much more strongly and with less limitation upon that point, no doubt because he has not studied the subject of a sinking fund so carefully as my hon. Friend behind me (Mr. Laing). Now, I deny that in its ordinary and usual application this measure involves the principle of a sinking fund at all. I cannot justify this denial now, because to do so would require a very long and minute statement. But the essential point in our condition, which relieves a measure of this kind at the present day from the objections applicable to the sinking funds of former times, is that we not only have an Exchequer account, but a great banking account to manage. That banking account is commonly in a surplus, even when the Exchequer is in a deficit. Under no circumstance is it likely, except in the exigencies of war—a general war—that both those accounts should be in a deficit together; and I will undertake to prove that setting aside the contingency of a deficit so arising, there cannot be the loss of one single farthing from the operation of the measure proposed by the right hon. Gentleman. It is much too complicated to go through the several cases. The essential point to be kept in view is that your banking account is one upon which you have a steady and a uniform surplus, upon the continuance of which you may pretty confidently reckon; that you are always looking for investments of that surplus from year to year; that those annuities afford the means of making such investments; and that the profit of your banking account is, in point of fact, your own profit, because it is as much a business carried on for the benefit of the State as any branch of the national revenue. I do not pretend to have proved this proposition. I am only stating the effect which a close investigation of the case will, I believe, produce upon the 1140 minds of hon. Members. My hon. Friend the Member for Dundalk (Sir George Bowyer) challenges the whole policy of reduction. He says, "Why reduce the debt at all?" Well, that likewise opens a very wide question; but I hope that, without pretending to aim at as wide a discussion of that question as it deserves, I may call the attention of the House to a half-sheet Return, No. 69 of the present Session, which contains matter of considerable importance in relation to this point. It may, however, be enough for the present purpose to stand upon this basis—that the reduction of the Debt has been recognised in this country as a principle of public policy ever since our Debt began to be created—with the exception, of course, of those unfortunate periods when we were obliged to go on adding to it; and that reduction was sought to be effected in two modes—first, by the application of surplus revenue, and secondly, by means of terminable annuities. A principle of policy so established and recognised has something to say for itself even independently of the abstract argument. I may assume that the House of Commons does not intend to reverse that policy. I may, at any rate, throw on my hon. Friend the burden of proof, and say, "Why not reduce your debt?" The Legislatures and Administrations of this country have established this policy as right; and let us now see how it has been acted on. From 1834 onwards a regularly increasing sum has been applied to the reduction of the Debt by the fixed operation of law through the medium of terminable annuities. In 1834 a sum of £2,076,000 was so applied. The amount increased progressively; in 1855–6 it passed £3,000,000, and in 1858–9 it was nearly £3,500,000. Then fell in the terminable annuities. In the year 1860–1 we paid only £1,292,000; but the payment of 1865–6 was raised to £1,673,000. And now in this year with which the right hon. Gentleman has to deal falls in the "dead weight"—a sum in round numbers of £600,000; and if no endeavour is made to replace it, it amounts to very nearly an abandonment of our policy, and is as much as saying that we will adopt no means for a reduction of our Debt, except the application of the casual surplus of revenue. The occasion does not admit of lengthened argument; but I will quote an example which I think the House will do well to bear in mind; and I say, let us not be ashamed to follow a good example, 1141 find it where we may;—let us not be ashamed to cross the Atlantic and to render a just tribute of admiration to the courage and forethought with which the American people are at this moment bearing a burden of taxation which, both in amount and in kind, makes their conduct a marvel, because they think that the true secret of their future power lies in the steady and rapid reduction of their Debt. Sir, I think that the authority of the British Legislature so adopted—repeated and echoed from the other side of the Atlantic—has a weight which it is very difficult to resist. At any rate, it is worth while to consider what the Americans have really done, The American debt reached its highest point on the 31st of August, 1865, when the total amounted to 2,757,000,000 dollars. Immediately after it reached that point the process of reduction was commenced; and on the 30th of June, 1866, it had been reduced to 2,650,000,000 dollars. By the 31st of October, 1866, it was reduced to 2,551,000,000 dollars; and by the 1st of January, 1867, to 2,543,000,000 dollars. Thus the total decrease of the debt between the 31st of August, 1865, and the 1st of January, 1867, was 214,500,000 dollars, or very nearly £43,000,000, all taken out of the taxation of the country in a period of sixteen months. And, Sir, I must say, passing by the argument of my hon. Friend, when I see such facts I am infinitely more impressed with the greatness of that people, and with the formidable character of the conflict which we or any other country would have to sustain upon entering into conflict with them, than if, instead of thus applying their resources, they had idly and vainly imagined that the secret of their security lay in endeavouring to maintain huge armaments in time of peace. I believe they judge rightly in the calculation they have made—and made deliberately—with regard to the true basis of national power, that their means ought to be husbanded and saved in ordinary times, but should be developed freely and without stint in periods of emergency. Therefore, so far from acceding to the doctrine of my hon. Friend that we should not reduce our Debt, I cherish the hope that this magnificent example set by the American people will have an effect not only in England but in Europe, and will shame the nations of the Continent into an abandonment of that suicidal policy by which they are wasting the resources created by the thrift and in- 1142 dustry of the people in what is either an idle parade or, worse, a source of positive danger; because to be ready with the means of conflict is, perhaps, the very course which may tend to render conflict itself possible. These are the feelings with which I cannot help contemplating the policy of America with regard to the reduction of the National Debt; and I am sure that the sentiment of this House would be to convey, if we could, to the American people and their able Minister of Finance, Mr. M'Culloch, our hearty congratulations on what he has achieved, and our best wishes that he may long continue with the same vigour and prudence thus wisely to apply the resources of his country. Not that we can expect a continuance of the same extraordinary and unheard-of measures by which so much has been already done, for human nature can hardly stand such a strain; but I trust that the American people may persevere in the vigorous prosecution of the decision at which they have arrived as to the true policy they have to pursue; and I believe that the same policy which is good there is good here and good elsewhere. Really, what the right hon. Gentleman now proposes, and what I proposed last year, shrinks into insignificance in comparison with what the Americans have done; and the hon. Gentleman the Member for Dundalk takes advantage of that, and says, "What is £24,000,000 out of £800,000,000?" But I say it is something. Do not despise small things. If we have the self-denial and courage to do this now, the year after we may have self-denial and courage enough to do something more. The language of the hon. Baronet seems to me like that of the young spendthrift, who, when he has reduced himself to the last fragment of his property, finds it so little that it is not worth keeping. But my hon. Friend, instead of tempting us as he does—instead of approaching us on the frail side of human nature, and endeavouring to take advantage of our weakness, ought, on the contrary, to have appeared here as a prophet of truth, and endeavoured to brace us up to the manly discharge of our duty. I would request my hon. Friend to reflect upon these matters of grave importance; and when he next addresses the House I hope it will be in a manner more worthy of his position, and of that recondite, well-stored, and long-tried wisdom which he possesses. In conclusion, I beg to say that I cordially concur in the proposition 1143 of the right hon. Gentleman; and I must add that if in this year, when we are about to cease to pay £600,000 of the "dead weight," some proposition of this kind had not been made, it would have amounted to a dereliction of duty. I think the right hon. Gentleman deserves credit for having resisted the temptations to which he must have been subjected; and I believe the course he has taken a wise one, and one well adapted to the promotion of the national wealth.
§ MR. READ
said, that judging from the applause which had greeted the Chancellor of the Exchequer's statement from the other side, and from the silence with which it had been received on that side, the Government had consulted the wishes of the party opposite rather than those of his own party. He knew it was a Divine principle to love our enemies; but it did not follow that they were to shirk their friends, or to ignore what was due to them. It might be a true saying that the acknowledgment of our faults was half their remedy; but in this case they had the acknowledgment of a grievance, and a substantial grievance, not only without any attempt at a remedy, but with the adoption of measures that would prevent the chance of a remedy for many years to come. If the right hon. Gentleman had reduced the malt tax even by one-fifth—if he had reduced the duty of 2s. 7½d. a bushel to 2s.—this would have brought the revenue derived from malt to £4,000,000, and the right hon. Gentleman might then have instructed the Committee which was about to sit to consider whether the duty thus charged on malt might not be transferred to beer. In that case the right hon. Gentleman would have earned the confidence of the agricultural class, and he would have conferred a special benefit on the country. The right hon. Gentleman the Member for South Lancashire seemed surprised that the duty on malt should have yielded such a large return during the present year; but the result was explained by the comparatively fine crop of 1865, and the bad yield and harvest of the following year, which rendered good barley in demand, and which brought even the dark-coloured barley into request. The supply was rapidly exhausted, and the duty would fall off. With regard to the other propositions of the right hon. Gentleman, and especially with regard to his proposition respecting marine insurances, he must say that if he would dabble 1144 in insurances, whether by land or water, he thought the right hon. Gentleman might have relieved the agricultural interest from the beggarly insurances they were now obliged to pay on their cattle and hail politics. They produced a very trifling revenue, but were a source of great annoyance to those who had to pay them. The right hon. Member for South Lancashire said we ought to borrow an example from America, and strive to reduce our National Debt. He (Mr. Read) wished they could; but however desirable it might be to pay off our Debt, he did not think the means used by the Americans—a high tariff and a depreciated currency—would find favour in England.
§ MR. POLLARD-URQUHART
said, there were two things which disappointed him in the Budget. He remembered the noble Lord the Foreign Secretary had once stated that the taxes ought to be reduced to £60,000,000; but now, he was sorry to say, not only was there no attempt to bring the reduction to £60,000,000, but he thought they were getting farther from it than ever. His next point of disappointment arose from the conduct of the right hon. Gentleman the Chancellor of the Exchequer. That right hon. Gentleman was the author of the novel of Sybil, and in that novel he complained that taxes were laid on the comforts of the people for the benefit of the Whig oligarchy. But now that the right hon. Gentleman was himself in office, there was no attempt to reduce the taxes on the comforts of the people. The right hon. Gentleman had a splendid opportunity before him. If he had raised the income tax to 7d., which was its normal amount, and that to which all were accustomed, he might have made large reductions on those taxes which pressed on the comforts of the people. For example, with the surplus which would then have been at his disposal, he might have repealed the malt tax. If he had added only another 1d. or 1½d. it might have enabled him to repeal half the malt tax. With regard to the reduction of the National Debt, it was not so clear a matter as the right hon. Gentleman appeared to think. It was worth consideration whether they had yet arrived at such a financial millennium that they would reduce no further the burdens on the people, but were free to give their whole attention to the reduction of the Debt. What was the object of paying off the National Debt? It was not like the debt of a private individual; it only repre- 1145 sented a certain annuity. He was glad, however, that the right hon. Gentleman had given notice of a Motion which would raise the whole question at some future time. Even with regard to the taxes which were to be reduced, he doubted whether the right hon. Gentleman had chosen his tax in the wisest manner. He was glad, however, to find that the right hon. Gentleman did not propose to reduce the balances in the Exchequer, for he thought that a time of adversity might yet come; and as to what had been said about bad harvests, it should be remembered that bad harvests usually affected the revenue of the second year after their occurrence.
§ COLONEL BARTTELOT
said, his hon. Friend who had just sat down proposed to get rid of the malt tax by placing an extra l½d. on the income tax. Now, he was one of those who considered that the malt tax was a great grievance, and he had worked hard, and he believed conscientiously, for its repeal. But he wished to remind those who had worked with him that this end could be secured only by consulting the House of Commons, and offering to the House some proposal which would commend itself to the common sense of hon. Members. In this view of the case the Chancellor of the Exchequer had acted wisely; if the right hon. Gentleman had proposed the repeal of the malt tax, although the proposal would have met with warm approbation by those who had agitated for the repeal, he firmly believed the Committee would have rejected it, and then in what position would the malt tax question have been? Three or four years ago there was a large surplus, and that was the time when the malt tax ought to have been dealt with; but the right hon. Gentleman opposite, who was then Chancellor of the Exchequer (Mr. Gladstone), in his wisdom did not think so. He had no doubt his right hon. Friend the present Chancellor of the Exchequer was sincere when he said that he would like to deal with the malt tax; but he was satisfied that the mere remission of £1,200,000 would have been of little benefit to the barley growers, and would only have shelved the question for a time. The tax was a large one, and it could not be dealt with in a small way. But he did not see why the tax should not be removed from malt to beer. The right hon. Member for South Lancashire said that the repeal of the malt tax would be the deathblow of indirect taxation, because spirits 1146 were included in the same category with beer. But they were not parallel cases. They would be so if, as in the case of spirits, the tax was removed from the raw to the manufactured article—from malt to beer. He proposed to move on a future day for a Committee to inquire into that question of the malt tax; and he hoped that their labours would expose the great injustice of that impost, and would show that that injustice could be removed in some unobjectionable mariner.
§ MR. MORE
observed, that when a deputation of farmers asked the advice of Mr. Cobden, with respect to the subject of the malt tax, he told them that they could not possibly expect any reduction in it until there was a reduction of public expenditure; and he regretted to hear that, so far from any such reduction taking place, the Chancellor of the Exchequer rather anticipated that there would be an increase. In past years the leading newspapers of the country had expressed their surprise at hon. Members urging the malt tax as a great grievance, and recently they had expressed just as much surprise at the comparative silence of county Members on the subject since the present Government had been in office. He was afraid that if they wished to estimate the liberality of the Chancellor of the Exchequer towards the farmers, they must take some other test than that of the malt tax. The right hon. Gentleman informed a deputation of farmers in 1852 that he was prepared to deal partially with this tax; but that he did not receive sufficient support from the country party. He did not speak in hostility to the right hon. Gentleman; because from the great influence he possessed, and the interest he manifested in everything connected with counties, he possessed the sympathy more or less of every county Member, though they did not appear to support him. He (Mr. More) believed that the Chancellor of the Exchequer would gladly deal with this tax if other Members of the Government would permit him to do so and his party would support him; and he was convinced that if he brought in a measure for the reduction of the malt tax a large number of Liberal Members would support him even against their own party. The hon. Member for West Sussex had prepared the House for the course which the Chancellor of the Exchequer had taken, and there was now the objection which formerly existed to his moving for a Committee on the tax; because the hon. and 1147 gallant Member could not have moved for it before the Budget without some misapprehension arising that the Committee was to be proposed for the purpose of preventing the Chancellor of the Exchequer from dealing with the tax.
§ SIR FRANCIS CROSSLEY
admitted that in selecting the duty on marine insurance for a remission of taxation, the Chancellor of the Exchequer had taken a very proper course, for that and the charge on fire insurance were, perhaps, two of the most objectionable imposts which now existed. With respect to the mode of reducing £24,000,000 of the National Debt by the means of terminable annuities, he thought that there was considerable force in what had been stated by the hon. Member for Wick (Mr. Laing), that the scheme was adopted because the Chancellor of the Exchequer wished to pay a larger sum than he had money to pay it with. The great blot in the scheme was that by this proposal the Chancellor of the Exchequer was not only dealing with the Budget of 1857, but with those of eighteen succeeding years, and the plan was defective on that ground, although he agreed that the very best way of preparing the country to bear a war expenditure was to reduce the National Debt in time of peace. It might be that before eighteen years elapsed, and at the very time they were raising taxes to pay the annuities, they would be going into the market to borrow money. If the Chancellor of the Exchequer had dealt simply with the surplus, the case would be wholly different. As he had stated on a former occasion, if the Chancellor of the Exchequer set aside £500,000, and created terminable annuities, payable over 100 years, he might pay off £10,000,000 of the debt, and that course would be one free from the objections which had been raised to the proposed plan by many hon. Members. At the same time, he (Sir Francis Crossley) was so convinced of the necessity of reducing the Debt that he would accept the proposition of the Chancellor of the Exchequer in lieu of what he considered would have been a better one. He regretted very much to see an increase of expenditure to the amount of £2,000,000 in time of peace, and could not divine any reason for it. So far from it being necessary to have a large expenditure in time of peace, that we might be prepared for war, he believed that we should be far better prepared for war if we considerably reduced the enormous expenditure we went 1148 to in time of peace. The people of the United States were able to pay off a considerable portion of their debt, not by keeping up a high rate of expenditure, but by reducing their expenditure in time of peace. We, in England, however seemed to have adopted the plan of increasing our expenditure when we were involved in war, and maintaining it at something near the same level when peace was restored.
§ MR. FAWCETT
said, he had listened to the statement of the Chancellor of the Exchequer with mixed feelings. He was gratified at the clearness of his statement; but, on the other hand, he strongly objected to some of the propositions the right hon. Gentleman had made. For instance, he did not think the right hon. Gentleman was correct in saying that scarcely one tax was now levied in this country which could be regarded as operating at all oppressively. He (Mr. Fawcett) would not refer to the malt tax, but he thought the taxes on locomotion, hackney carriages, and tea were objectionable; besides which there were a number of small Customs duties which yielded no great revenue, but which encumbered and embarrassed the trade of the country. That, however, which impressed him with the greatest degree of anxiety, was the fact that in a time of peace our expenditure had increased £2,000,000—and he could not discover the slightest reason or justification for that increase. It seemed a very incongruous thing to him that at the very time they were inaugurating a scheme for the reduction of the National Debt, we should be incurring an increased expenditure. Without wearying the House with giving reasons for it, he would say that he was in favour of reducing our National Debt in time of peace, agreeing with his Friend the hon. Member for Westminster (Mr. Stuart Mill) that it was an act of prudence which they owed to posterity. The right hon. Member for South Lancashire alluded in glowing terms to the magnificent efforts now being made in this direction by the people of the United States. But how have they reduced their debt? They did not rely upon elaborate schemes of financiering, but they had made up their minds to reduce expenditure, to keep up taxation, and resolutely to apply the great surplus of each year, not in any fantastic schemes, but in the plain, simple process of cancelling so much debt; and that was the only honest, satisfactory, and straightforward way of reducing debt. He looked with 1149 most startled alarm upon the state of the Continent of Europe at the present time. Every country seemed to be rushing upon a mad career which must land them in ruin; and without exaggeration, he believed that, with one or two exceptions, there was not a Continental State which was not each year spending more money than it raised by revenue. If that policy was continued it must lead to disastrous conclusions. Europe, as the right hon. Member for South Lancashire had said, was never so full of armed men as at the present time. Do not let us follow in the same mad career. He was afraid there was a wish in some quarters to do so, and that partly explained the additional expenditure this year of £2,000,000. He thought the scheme of the Chancellor of the Exchequer for reducing the National Debt had many of the defects of the old Sinking Fund. By this arrangement, as by a Sinking Fund, the country arranged to pay off debt by agreeing to increase its annual burdens. But if next year, from bad harvest, the breaking out of war, or some other unfortunate cause, our expenditure should exceed our revenue, the scheme of the Chancellor of the Exchequer could not be carried out. If it were carried out it could only be in the same way as Mr. Pitt's Sinking Fund was carried out, either by borrowing money to pay the annual charge, or—a more objectionable course—by imposing some additional taxation, which must to a certain degree embarrass the trade of the country. Therefore, any scheme of reducing debt by terminable annuities involved more or less the defects and mischiefs of the old Sinking Fund. They ought to adopt one of two plans for reducing the National Debt. If there was a surplus they might do as the Americans had done, and apply the surplus at once to cancel so much debt. In that way they would reduce the annual burden, and get all the advantage of the principle of compound interest; because if they cancelled £1,000,000 of stock this year the annual burdens next year would be less by £30,000; and therefore, if they had the same expenditure and the same taxation, instead of a surplus of £1,000,000 there would be a surplus of £1,030,000 applicable to the reduction of the Debt. The other way of reducing the Debt, if they were enamoured of terminable annuities, was this. The difference between a permanent annuity of £3 a year and a temporary annuity of the same amount, ex- 1150 tending over fifty, sixty, seventy, or eighty years, was of very trifling amount; and therefore if they had £1,000,000 at their disposal they might apply it by transferring permanent stock into long annuities, by which they would create terminable annuities, without any increase of the national burdens, and without taxing posterity.
§ MR. M'KENNA
I cannot permit the unmixed eulogium of the right hon. Gentleman the Member for South Lancashire and that of the hon. Gentleman who has just sat down (Mr. Fawcett) upon the American financial system, to pass without some protest on my part. If the American system is to recommend itself to this House and to the world it will be in my opinion the triumph of the principles of protection. The Americans, to this day, maintain a system of protection of the most enormous and extravagant proportions, as well as a system of irredeemable paper money. Before they return to the system of payment in coin they commence the reduction of their debt, and no doubt they deserve credit for the efforts they have made, which have accomplished the reduction of £30,000,000 or £40,000,000 by paying back the holders of bonds with greenbacks which they had issued at pleasure. The first duty of a man anxious to pay his debts is to discharge his promissory notes in coin, or, what is equivalent, in exchange for coin, and the same principle applies to a State, with whom the first duty should be to apply its surplus means to restore the integrity of its currency. With respect to the strictures on the mode of reducing the debt proposed by the Chancellor of the Exchequer—namely, by creating terminable annuities, there is some force in them; but it appears to me that the system adopted by the Chancellor of the Exchequer is a judicious compromise between what is most desirable and what is most practicable. A State is about as wise and provident as the average of the units of which it is composed and no more. In our private affairs, we are in the habit of placing ourselves under stoppage for a short period to accomplish some future advantage; and although perhaps that system is not as efficacious or as sound as the reduction of all unnecessary outlay, and the immediate application of surplus to the payment of debts, it is found to be more consonant with our natures, and is unquestionably more successful in practice. In this light I view the annuity scheme of the Chancellor of the Exchequer—it is a compromise 1151 between two principles of economy, and such as a private individual would be the most likely to adopt successfully in his own affairs.
§ MR. H. B. SHERIDAN
said, he had been led to suppose that the right hon. Gentleman would have felt it his duty to do something more with respect to the fire insurance duty. It was not his intention to discuss the policy of reducing the Debt, which was the policy laid down last year by the right hon. Gentleman the Member for Lancashire; but he rose for the purpose of giving notice that on an early day he should raise the question in a definite manner, whether the Resolutions of the House upon the subject of the fire insurance duty should be altogether passed over, or whether they should proceed to discuss the problem for the extinction of the National Debt. There had been no petitions presented for paying off the National Debt; but petitions in vast numbers had been presented, and Resolutions had been passed, in favour of a reduction of the duty on fire insurance. He could hardly understand how the right hon. Member for South Lancashire insisted upon treating that duty as a charge upon property—the way to test that would be to propose a duty upon property of all kinds, and the abolition of the duty on fire insurance. He did not think it right or statesmanlike to approach the reduction of the National Debt until all taxes were remitted which pressed upon prudence and forethought.
§ MR. GREENE
said, he differed from the Chancellor of the Exchequer in his proposal to reduce the National Debt by terminable annuities. It was a mere deception. A much more simple plan would be to reduce it year by year by the application of his available surplus. By that means they would avoid the risk of having to tax the country to pay off debt when, perhaps, they might be borrowing money to pay for a war. He thought a revision of the licence system was very much required. It was most unjust as a principle to tax men for their trade; but before he would consent to remit the tax on attorneys' certificates, he must ask the House to consider how the entire hop duty had been placed on brewers when it was taken off the hop-growers. It was just to remit the tax on hops; but when it was charged directly on brewers, and became an augmentation of the malt tax, it became most unjust. He should take an early opportunity of calling attention to the whole 1152 subject of licences. It had been suggested that a substitute for the malt duty might be found in a tax on beer; but if it were to be repealed, it ought to be repealed entirely, and not added to the price of the poor man's beer. If the farmers desired it he should rejoice at the repeal of the tax; but he thought that before proceeding to pay off the National Debt, they should reduce the burdens on the country. That would enable them to pay off the Debt in a more consistent manner. England was becoming richer every year, and he believed that, with proper management, the present Government, whom he believed to be thoroughly practical business men, would be enabled to propose such a reduction of taxation as would pave the way to the reduction of the Debt in a more consistent manner.
said, he must express his hearty approval of the determination of the Chancellor of the Exchequer to operate on the National Debt, though probably he might not entirely concur in his modus operandi. He would prefer the simple operation of applying the annual surplus to the reduction of the National Debt. But what was proposed was a step in the right direction: it was a diminution of the charge on the country, and therefore it had his approval. It had been said by the last speaker that they should diminish taxation before attempting to operate on the National Debt. But it should be remembered that the present amount of taxation was the consequence of the National Debt. The interest of that Debt, including management, terminable annuities, and interest of Exchequer bonds and bills, was £26,233,287 a year, which must be raised by taxation. The labouring classes had a greater interest in the reduction of the National Debt than any other portion of the community, for taxation on articles of consumption was necessary to pay the interest. In the year ending the 31st March, 1866, £21,276,000 was derived from Customs duties, and £19,788,000 from Excise duties, making a total of £41,064,000. Now, the Customs duties were derived chiefly from articles consumed by the labouring classes—tea, sugar, coffee, &c. The importer was compelled to add the duties to the sale prices; and the retailer did the same, and the consumer therefore had to pay 20 to 30 per cent more for articles of necessary consumption than he would have had to pay, if it had not been necessary to raise so large an 1153 amount of Customs duties for the payment of the interest of the National Debt. The same argument applies to the Excise duties—spirits, wine, beer, &c. The working man, therefore, has a deep interest in the reduction of the National Debt. The Americans were doing precisely what we would not do. During the war they had an immense expenditure, but they had a system of taxation commensurate with it. Since the termination of the war they had diminished their expenditure; but the people submitted to be taxed as if the war still continued. There was therefore a large surplus of revenue which they applied to the reduction of their debt; and within little more than one year they had reduced it to the extent of £40,000,000. One word as to the obligations we had incurred. Take, for instance, the question of fortifications. The country had engaged to lay out on fortifications £6,995,000; of which £3,491,000 had been already advanced. There remained £3,500,000 to be provided for. But this was not alluded to in the Budget. Then, again, the armament of the defences when completed would require 1,104 rifled guns, and cost £1,882,000. We were also pledged to the extent of millions for dockyard extensions, barracks, public works, &c. The Chancellor of the Exchequer had not said one word about these prospective claims on the finance of the country. So long as the National Debt existed with annual charge for interest to the amount of £26,000,000, taxation must be kept up for the payment of interest.
§ MR. AYRTON
said, he entirely concurred in the general feeling of satisfaction with which the House had heard the Financial Statement of the Chancellor of the Exchequer. It was marked by severe simplicity and prudence. That simplicity, he hoped, would be accepted by the House as an evidence of the real intention of the Government to enable them to deal during the present Session with the great subject of Parliamentary Reform. He could not conceive anything more unfavourable to the complete discussion and solution of that question than being embarrassed during the Session by any complicated matters of finance. He also thought the speech of the right hon. Gentleman deserved to be admired for its prudence. He had not in the present posture of affairs attempted to do battle with any great remission of taxation. He had done well and wisely in pursuing the course marked 1154 out by the speech of his predecessor last year in attempting to effect a reduction of the National Debt. He thought the House might safely adopt the method of dealing with the National Debt indicated in the speech of the Chancellor of the Exchequer that night. He did not think that the propositions deserved the criticisms which had been passed upon it, and which seemed to him to be of rather a pedantic character. There was a general disposition to cry out againt the principle of sinking funds; but it must not be forgotten that we should never have got rid of so large a portion of the Debt had not £3,000,000 per annum of it been contracted in the form of terminable annuities, and he must ask what was the use of indulging in abstract speculations when they had such a cogent argument before them? The question of extinguishing the National Debt was not simply an arithmetical question—it was a moral question, and he ventured to express his earnest thanks to those Chancellors who had declined to yield to the pressure of particular class interests, which were seeking to get rid of the taxes that pressed most peculiarly upon them. It was in consequence of the resistance of Chancellors of the Exchequer to such pressure that the right hon. Gentleman was enabled that night to remit a tax which he regarded as being the most unjust. He wished, however, to call the attention of the right hon. Gentleman to one other tax which might be considered without materially trenching on the Budget. He had for some years brought under consideration the unjust character of some of the charges upon locomotion, and he succeeded at last in obtaining from the late Chancellor of the Exchequer some remission; but there still remained the vexatious tax levied upon hackney carriages in the metropolis. This was a tax levied originally for the purpose of improving the communication between the City of London and the Houses of Parliament and the Courts at Westminster. At that time the road lay through a miserable lane, which was almost impassable, and the consequence was that most persons chose to make the passage by water. No sooner was the tax levied than by a dexterous movement the Chancellor of the Exchequer of that day converted the tax into a source of Imperial revenue. At that time hackney carriages, or, as they were now more generally called, cabs, were almost ex- 1155 clusively used by the wealthier classes, but now they had become conveniences for a very large portion of the inhabitants of the metropolis. The charge upon these vehicles was perfectly amazing, it being no less than 1s. a day on each. If the proceeds of the tax were applied to local improvements something might be said in its favour; but there was no pretence for its being made a source of Imperial revenue. This tax was not levied on conveyances anywhere else. In all other parts of the kingdom the only duty paid by these vehicles was the ordinary tax upon horses and carriages. The result of this tax was that the public had to put up with bad cabs. There was no objection to the impost being levied in the metropolis as it was in Manchester, Birmingham, Liverpool, and other large towns; but in its present form the burden was most objectionable, and if it were removed one good result would be that a better class of vehicles would be provided. Although the total sum raised by its means was but small, the pressure upon the proprietors of the street cabs was enormous. He did not intend to press his views on this subject upon the Chancellor of the Exchequer in the form of a Motion; but he hoped that that right hon. Gentleman would take the matter into consideration, and would allow the Secretary of the Treasury to bring in a Bill to amend the laws relating to this duty, so as to subject the metropolitan cabs to the ordinary horse and carriage duty only. He regretted that the hon. Member for Dudley (Mr. H. B. Sheridan) should have given notice of his intention to raise the issue of the reduction of the Fire Insurance Duty against the scheme of the Chancellor of the Exchequer. No doubt the question would be brought under the notice of the House with all the vast machinery of agitation which insurance companies could bring to bear upon the minds of Members of that House, and might therefore find more support than it deserved. The hon. Gentleman had denied that the Fire Insurance Duty was in any way a tax upon property; but he, on the contrary, believed that that duty was only a bad method of collecting what was really intended to be a tax upon personal property. Although bad in the mode in which it was collected it represented one of the most ancient forms of taxation with which the country was acquainted—namely, a tax upon personal property possessed by individuals. The 1156 fire insurance duty was only a means of ascertaining the quantity of personal property of which the individual was possessed; but it was open to the great objection that it only included those who consented to assess themselves by taking out a policy of insurance. If the owners of property insisted on being relieved of that tax, the question would arise, how they were to levy a substitute for it on the visible personal property of the country. If the House should like to add to the income tax 2d. in the pound, and take off that and some other duties, it would, he believed, be a very wise proceeding; but it was not just to the mass of the people that there should be an agitation on the part of the owners of property to relieve themselves of that tax unless they would frankly tell the Chancellor of the Exchequer that they were ready to submit to another impost which would yield an equal amount to the revenue. He must also express his deep regret that, instead of having a diminution of the national expenditure, they should be compelled to bear so large an increase as £2,000,000 to that increase in the present year. He hoped that that increase might be regarded as temporary, and that the Government would apply themselves earnestly to the question of reducing the public expenditure, so that if they remained in office till that time next year they should not have to ask the House to raise Ways and Means to the enormous amount that was asked that night; because if in the exceptional state of Europe the country should assent to that scale of expenditure this year, it certainly would not assent to its continuance. Though the present Government came after Lord Palmerston, who inflicted the greatest injury on the public interests by encouraging every kind of expenditure and extravagance, still it was to be hoped that as that Minister's career was forgotten so his extravagance would not be imitated in these days. The Minister who had not left associated with his name any great act for the benefit of the people, but who had only increased their burdens, would, he repeated, be forgotten unless he was remembered to his disadvantage. But the time had come for applying themselves seriously to that subject, in order that a better account might be presented by the Government next year.
§ MR. M'LAREN
said, that last year he expressed his approval of the plan for re- 1157 ducing the National Debt by means of terminable annuities, and he was delighted to hear that the present Chancellor of the Exchequer had taken up that plan. It was much to the right hon. Gentleman's credit that, foregoing the advantage of the popularity which he might have obtained by trying to do something new, he had candidly adopted the proposal of his predecessor, thinking it the best for the country under the circumstances. That we, the richest people in the world, should make no effort to pay off the National Debt was quite discreditable to us. He could not admit that the paying off of £24,000,000 of that Debt was so infinitesimal a matter as not to be worth considering. £24,000,000 was 1–33rd of the whole Debt, and by ten such operations as that proposed one-third of the Debt would be extinguished. Some hon. Gentlemen had approved the Budget with certain qualifications, but for his part he made no qualifications; he approved it pure and simple. He thought, however, that the right hon. Gentleman ought to offer a little reciprocity, and not be so much afraid, as some of his friends seemed to be, of intrusting the people with political power. It was a curious fact that every hon. Member who supported the proposal to pay off a portion of the National Debt represented a large popular constituency.
Motion agreed to.
1. Resolved, That, towards raising the Supply granted to Her Majesty, the Duty of Customs now charged on Tea shall continue to be levied and charged on and after the 1st day of August 1867 until the 1st day of August 1868 on the importation thereof into Great Britain and Ireland, viz.
2. Resolved, That, towards raising the Supply granted to Her Majesty, there shall be charged, collected, and paid for one year, commencing on the 6th day of April 1867, for and in respect of all Property, Profits, and Gains, mentioned or described as chargeable in the Act passed in the 16th and 17th years of Her Majesty's reign, chapter 34, for granting to Her Majesty Duties on Profits arising from Property, Professions, Trades, and Offices, the following Rates and Duties (that is to say):
For every twenty shillings of the annual value or amount of all such Property, Profits, and Gains (except those chargeable under Schedule (B) of the said Act), the Rate or Duty of Four pence.
And for and in respect of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act, for every Twenty shillings of the annual value thereof,
In England, the Rate or Duty of Two pence, and1158
In Scotland and Ireland respectively, the
Rate or Duty of One penny halfpenny. Subject to the provisions contained in Section 3 of the Act 26th Victoria, chapter 22, for the exemption of persons whose Incomes from every source is under One Hundred pounds a-year, and relief to those whose Income is under Two Hundred pounds a-year.
3. Resolved, That, the Stamp Duties now payable in the United Kingdom under the Act 7 Vic. c. 21, and the Act 28 and 29 Vict. c. 96, for Policies of Sea Insurance shall cease and determine; and that, in lieu thereof, there shall be charged, collected, and paid for such Policies the Stamp Duties following (that is to say):
|For every Policy or other Instrument whereby any Insurance shall be made upon any Ship or Vessel, or upon any Goods, Merchandize, or other Property on board of any Ship or Vessel or upon the freight of any Ship or Vessel, or upon any interest whatever in or relating to any Ship or Vessel which may lawfully be insured, for or upon any voyage, in respect of every full sum of One Hundred Pounds, and in respect of any fractional part of One Hundred pounds thereby insured||0||3|
And for every Policy or other instrument whereby any such Insurance as aforesaid shall be made for any time, in respect of every full sum of One Hundred pounds, and in respect of any fractional part of One Hundred pounds thereby insured—
|Where the Insurance shall be made for any time not exceeding Six Months||0||3|
|Where the Insurance shall be made for any time exceeding Six Months and not exceeding twelve Months||0||6|
But if the separate interests of two or more distinct persons shall be insured by one Policy or Instrument for a Voyage or for Time, then the Duty of 3d., or the Duty of 3d. or 6d., as the case may require, shall be charged thereon in respect of every lull sum of One Hundred pounds, and every fractional part of One Hundred pounds thereby insured upon any separate and distinct interest.
4. Resolved, That no allowance shall be made for the Stamp Duty on any Policy or other Instrument whereby any Sea Insurance shall be made, except in the first case specified in the first section of the Act 54 Geo. 3, c. 133.
§ On question, "That the Chairman do now leave the Chair,"
§ MR. OSBORNE
said, that before the Chairman vacated the Chair he wished to make an appeal to the Chancellor of the Exchequer. He did so without having been in any communication with the Irish Members whom the next Order on the paper (the Tenants Improvements (Ireland) Bill) more immediately concerned. But the right hon. Gentleman, who understood the matter as well, if not better, than any Member of that House, would hardly 1159 gainsay that the Bill to which he referred was probably one of the most important measures that could be brought before them, ["Order!"] He thought he was taking the simplest course by raising that question then.
said, the Question before the House was that he should now leave the Chair. The hon. Gentleman having put the Question, declared, in the usual form, that "the Ayes have it."
§ MR. OSBORNE
believed that he could speak on that Question, and he challenged the Chairman's ruling by saying that he thought the "Noes" had it. The hon. Member was proceeding to offer some observations to the House; but being called to order said he would not put the Committee to the trouble of dividing.
§ Motion, "That the Chairman do now leave the Chair," agreed to.
§ House resumed.
§ Resolutions to be reported To-morrow; Committee to sit again To-morrow.