The Sun.
London, England, 1855-04-21 00:00:00

tion embodying the terms of the loan, and carrying them
out. The right hon. gentleman concluded by placing in
the hands of the chairman a resolution setting forth and
adopting the terms of the loan as they have already ap-
peared in print.
Mr. M. T. SMITH asked whether the Government had
given notice to the parties wi.h whom they had that
morning contracted a loan, partly in terminable annui',lel,
that it was their intention to levy a tax on those
annuities ?

The CHANCELLOR of the EXCHEQUER said VI a
it was impossible Government should make a statement
to the contractors for a loan as to the additional terse
about to be proposed to Parliament. Of course those who
contracted for a loan must be aware of the possibility of an
increase of taxation taking place.
Mr. LAING thought that the house should not by a
silent vote commit itself to an approval of the important
principleadnvolved in the resolution just proposed by the
right. Lin.. gentleman—principles with respect to which
a strong and by no means favourable opinion was enter-
tained in circles conversant with monetary matters. We
appeared now at the commencement of the war to be enter-
ing win a succession of loans of large magnitude ; :and it
duo
deliberation was therefore incumbent on the house to exercise
deliberation as to the terms en which they were contracted,
or we might act on. principles as erroneous as those on
eeceat the debt incurred during the late
which Mr. Pitt contrae-
war. , An obvious We. objection or of method of raiting the
tehantiellor of the Exchequer gas that
:I?9n;Pta-P);ersee."4 eitthe g nor another. He could understand
"' wan g not incumbent upon us td impose
_ ite being-PA. the presentgeneration for the sake of pos.
any
_burden- uP°
and, that 't Was therefore desirable to raise the loan
tileirtlrairphsers-Gent. cowls, lqecau,se. they being the most
marketable security were, the one in which 'a large sum of
money---„ciould be most readily raised on an emergency. That
I,;eeeine was.indee4 very different from the one. they had
d from the lateChaueellor of the Exchequer, Who only
two.montha ago appealed to. them not to throw the whole
-tharden;ou their posterity, but to malreea gallant effort to
beazPart,ofitthemeelves. That doctrine might, however,
be pushenUtcrofar, for there could be ncidoubt that in great
emergencies we could, toternaitie the whole revenue by taxa-.
tion, but must rasort to a latiti. Bet then came the question
as.to theaform in which they should contract the loan. The
Chancellor of the Exchequer said that it was impossible
toutract it in tenantable annuities. • Bat if from
• OaO4OAlOl- to 100,000,00D1.. embarked in French and other
foteiglvrailwav disci actually been- raised on terminable
sacutitieei. how could it bediripossible for the Government
of Engliad, with the vast :credit it possessed, to raise
16,000,0004 at a time when money market was re-
markably esny ? It was- said-indeed that there was to be
. weiakitg fluid, hut with therlight of experience th •• guide
.ne,.oolllii any one doubt that on .the return of pe&ceethat
ftbna.w°l2l4l be oPeedily sacrificed in order' to enable the
-Government to meet the pressure for the . repeal 'of some
ohnottious tax. -There was really no hope of paying, off
any considerable portion of debt unless it was expressly
contracted in a terminable, form. The raising of money
by terminable annuities was, in fact, simply a question' of
_ price in the market.. An annuity of 60 or 100 years had a
clear and intelligible market value._ It would not indeed
fetch quite so much in proportion as the Three per Cent.
Consols, 'because the latter being a larger stock, there was
More deraing in them ; they ware, therefore; a more readily
available security in the market, and consequently com-
manded a higher price- But if now, at the commencement.
nithe war, they began to create,terminable annuities, and
continued doing so year by year, so as to make them all
4i:epics together and thus form one stock, they would be
as readily available, -and would therefore comb-sad as
high a proportionate price, as Consols. (Hear, hear.)
.Let.the house consider the. effect of contracting a new'
loan in Consols. That stock was,at present kept :hp at
an artificially high price, because it was the only a Jail-
able :security for thoinveitrneeit of trust funds. But if,
by an • increased issue, they increased the qiiality in
-the hands of jobbers and large capitalists, the value of
Console, which • was the barometer of the money market;
and regulated the price of all other securities, would fall,
and the amount of money obtainable by Government for a
certain' amount of stock must necessarily be diminished.
Why, what occurred lately ? Some few weeks since Con-
sols were at. 92 to 93, with a tlght,money market, anti the
Bank rate of discount 5 per cent. The money market
had since become easier, the rate of discount had fallen to
4:4 per cent., with a probability of further reduction ; but
Consols, instead of going up, had fallen to 90 to 91. No
doubt this was partly due to the rumours of the impend-
ing loan, and partly to the suicidal policy of the Govern-
ment in selling savings bank steels at the very time they
knew they were about to contract a loan. Had a more
judicious policy been pursued, he believed that tlee loan
might have been negotiated at 92 to 93, perhaps eveu 91
or 95 ; whereas, if they calculated the terms of the ',resent
loan, they would find them only equivalent to 85 or 66.
Then with regard to the method of negotiating the loan.
The Government might appeal to the public either directly,
as had been done in France and Austria, or through the
medium of the agents or middlemen. Now he did not,
for his own part, participate in the prejudice entertained
by some persons-against middlemen. But, then, if their
agency was to be employed, the element of competition
amongst them ought to be brought into play, which had
not been done in the present instance. If they adopted
the other method, they must fix a price which private ne-
gotiations would easily enable them to do ; throw open the
• lean at that price to the nation, and let any one who liked
subscribe 1001., or any other sum. That course had been
adopted' by the French Government on a recent occasion
with far better success than had attended the Chan-
cellor of the Exchequer's operation ; and he must say
that he believed that the money might have been ob-
tained by this plan ore terminable annuities on much more
• favourable terms than had actually been done. (Hear.)
He must say he had bean]; with great regret, the enurne-
rietilettilef the, additioaal taxes by which the Chancellor cf
theelterchetater proposed to raise the amount reilaire,l for
thetieeVice of the-year.' 'The 'income tax stood during the
"late war atad.per cent, and he could not think tket tbe
preisent generation era-relies wilting than any fbrrner one
to- bear by direct taxation the burdens of a war into which
they bad entered- with their eyes open. Now, the whole
additional revenue' it was proposed to raise might he oh:
Wiled by a 9 per cent. income tax. Why, then, should
they prefer to retrace the steps of their recent legislation,
unsettle the system of taxation which had been established
of late years, and for such small sums as it was proposed
to raise by the additional duty an coffee and sugar disturb
interests soimportant as those which were concerned in
the-production or import of those great articles of con-
exemption ? He did trust that the house would declare its
readiness to vote a 10 per cent. income tax, if it was ne-
cessary, to support the expenses of the war, but that they
would nob fritter away the recourses of our trade, burden
the working classes, and unsettle commerce by peddling
and petty alterations in the system of taxation established
by Sir R. Peel.
Sir H. WiLLOITGEEDY observed that it was utterly im-
possible toextract eighty-six millions and a quairter in one
.year fronaltha pockets, of the people, either by direct or in-
edirect[taxation, and that the necessity for a loantwas there-'
fore, beyond dispute. Howished, however, for information
twoon, of three pointe4einbraced in the statement of the
hareceller of the Exchequer, He understood the right hen..
gentleman te sayahat the expenditure for the year ending
March 31, 1x854-5 was 65,646,592 i. Did not that represent
the accounts that . had come toehand rather than the total
expenditure of the year ; And, if so, could the right hen..
gentleman say what the total expenses up to that period
were likely to be ? Heatlee wished to know to ghat extent
thecountry had run in debt during the last year ? the
additional ten millions revenue voted kilt year, he under-
. stood five millions hod not been paid. On the other hand,
7,300,0001 additional debt, _consisting of Exchequer bills
and bonds, to be repaid it was true in future yeariehad been
contracted and the -money had actually been event. He
wished to know when the Chancellor of the Exchequer had
takencredit for the five millions of unpaid taxes for the
past year? He wished also to ask whether, in impoiiug the
income tax on terminable annuities, they were not taxing
principal, and if so whether it was not evident that they
were entering upon &career opposed to any sound principle
whatever ?
The CHANCELLOR-of the EXCHEQUER said that,
the chiefportion of the payments on account of the expenses
of the army, navy, and ordnance were either madein ready
money, or at all events fell due lathe course of the quarter.
And therefore, although there might be some arrears, he
did not think they would be very large. He was quite
aware that annuities were subject to the income tax. Ile
was; however, of opinion that an annuity, whether termi-
nable or perpetual, should be considered as 'income and
treated accordingly. Undoubtedly the fact of their being
thus-liable to taxation was one of the reasons which deterred
the public from taking them to any extent. But those who
purchase 1 them reckoned on theincome tax—its increase or
decrease—as one of the contingencies to which they were
exposed and for which they made allowance. With regard
to what had been said about foreign railway securities, he
apprehended they were not terminable in any other sense
than railway debentures, which were loaps taken f; r a
short time, and to be renewed by reborrowing.
Mr. FREWEN said it was evident, from the speeches
which had been already made, that the plans proposed by
the Chancellor of the Exchequer would meet with a good
deal of opposition. There was one point to which he
wished to call the attention of the right hon. gentleman.
It was this, that the Government should give every possible
facility to those persons who were charged with taxes
which they ought not to pay to- appeal against the injustice.
Mr. GLADSTONE—I am in laced to rise at this pesiod
of the discussion, because I do not feel entirely certain
whether the committee are aware of the precise nature and
bearings of the resolutions which have been read from the.
chair. In the excellent speech of my right hon. friend the
Chancellor of the Exchequer, a speech distinguished as ;ell
by the utmost candour and fairness as by its great clearness
—(hear)—in that excellent speech I only
.regretted a single
`Oteissio,n, namely, he did not state to us precisely either the
ciAler of the votes he intended to ask for to-night or tee
Irsti.4gent and character of those votes. If, therefqre, I
-Zatt"4o. * to state what I believe to be the character
tletertba; those votes, it is only by way of offering my
:1111,1stiiice to the committee, and my observations
the aretieat to the correction of my right hon. friend if
us to-ra4r-e, At The Chancellor of the Exchequer asks
whole subject 416 nrst ple, for a vote which embraces Lae
eoQt.lee loan ac
for which he has made a Pr(wi-
go on to ask for I.l4l,ll.preettuie that, having done so. , he
Lira to tircy th::weitaiezes
votes
Tither votes, which will enel I
Nrw, 4'yr:is/they beiouwgutolatile has proposed this oven-
friend will tloisiglt' tam foe class of indirect texes.
their substantial are entirely ifist7''i'th my right bun.
enable him to levy It asks us
different in
coffee, and spirits, stress If
ea for a vote to
arprehe ee,„th' upon sugar, tea,
he would be in a condition Do'
night does not in any manner-etell tilarw mots
but that every gentleman who-:oarl'it "r fulatvrtaievilaogrteinilelti.to,e
as free at the next stage of the-cPirs in
different eourse, and reverse the mearsecee(Olg to
of the Exchequer, as if he had never eseurn°,-e-rethe, Chancellor
lineinary step. The case is different, however
sp:.lA,to the loan. Not from any fault out
ctohnef-,4l;rarlioth tors ;
Chancellor of the Exchequer, but in
wirli
previous practice and the dictates of prudence,il'mavy
right
hon. friend is asking us to give a vote upon the subject.
the hem which will be virtually binding and conclusive ofa,-;
between us and the contractors. We are called upon to.
bight to give a vote which is to be a distinct " aye" or
-.,,n0" upon the arrangement proposed by the Chancellor of
the between the State and certain contractors,
:who are about to lend him 16,000,00 W., and after having
. ' that vote it not be competent to us to inter
,will
tore with or impair the conditions of that contract.
eau no
toiprteirearcehad to withhold my affirmative from the pro-
posalenittee sbould eoneellor of
chequer, that the corn-
visionally the Ex
merits of that
enterelwra the-contract into which. he has pie,-
contritio'bilit before I say anything upon the
should wish to express my desire

that, to prevent a possible misunderstanding, we should
contrive to exclude from the resolution that portion 0' :'
which relates to the peculiar arrangement proposed by oy
right ho4onrable friend in regard to the repayment 01
the loan. (Hear, hear.) With respect to that arranee
meat, I give him credit for the best and highest
intentions. It is obviously an effort on his part to vi‘ dicate,
as far as he could, the principle that wo should transmit as
little as we can of the burdens of the war to those who are
to follow us, but to make provision for discharging them
ourselves. At the same time I confess that, without ex-
pressing a final judgment, I feel great doebt and difficulty
upon the subject of that peculiar arrangement. I think
the Chancellor of the Exchequer should give es time to
consider it deliberately. What I am afraid of is, that if
we agree to-night to the resolution now before the commit-
tee, which resolution is understood to be binding and de-
cisive as to the substance of the arrangement, we may find
that we have parted from our liberty to discuss the peculiar
provision for the repayment of the loan. I would there-
fore suggest to the Chancellor of the Exchequer that that
provision should be separated from the rest of the resolu-
tion ; and I am not aware of any strong reason why, if the
provision should be so separated and put into the form of a
eistinct resolution by itself, a vote should be taken upon it
to-night. I hope mytight honourable friend will act upon
my sugge3tion, so that there may be a distinct understand-
ing that his proposal as to the repayment of the loan is one
of public policy exclusively, having nothing to do with the
bargain between the State and the contractors, and that we
may modify or-even reject it. I listened to the speech of the
hon.mcnber for Wick with great interest, with great sym-
pathy, and with great admiration for its high English spirit.
Atthe same time lam not prepared to concur with him in
saying that it was the duty of the Chancellor of the Exche-
quer to propose at the present time to raise the income tax
to 10 per cent. (Hear.) If all the payers of income tax
were-irk the same circumstances as those who listened to

the speech of the hon. member for Wick, then it would
have been obligatory upon the Chancellor of the Exche-
quer: to raise the ineome tax to 10 per cent. That would
have been the-simplest, the most powerful, and upon the
Whole the safest and fairest measure he could take ; but it
ie only those who have been conversant with the actual
management of financial affairs who know how severe be-
comes the pressure of the income tax when you approach
the blassea that are touched by its lowest limits. (Hear.)
The qeestten ie a serious one; whether ' you can raise the
iIIOOI3IO tax tin the war limit of 10 per cent. without under-
taking to solve a difficult problem—namely, the practica-
bility of a further extension of the tax downwards beyond
anything' you have yet attempted. ' Consider the present
position of- the' tax. You levy it upon persons who have
1001. a yeal'. In the main,' though not of course altogether,
the dividing lisle of 1001. per annum is the dividing line
between the edueited and uneducated parts of the commu-
nity. Now I donitt whether, all things considered, the
educated part of the community having 1001. a year are
-really a great deal better off than the less educated part of
ethe community having Wt., 701., or 901. a year. (Hear.) I
fear, therefore, that there are more than fiscal considera-
tions involved in the question whether we should raise the
incomertax to 10 per cent. I look to that augmentation as
a necessary incident to the present war, if protracted ; but
when you raise the income tax to 10 per cent., you
must consider that question with respect to the relations of
the classes to which I have adverted, and in doing so you
still have a great political problem to solve, and immense
difficulties of machinery and administration to encounter.
I think the Chancellor of the Exchequer was quite right,
not finding it absolutely necessary, under present circum-
stances, to encounter these gigantic difficulties, to resort to
other measures ; and I am not prepared to join in any
censure upon him for not having proposed to raise the in-
come tax 'to 10 per cent. (Hear.) lam bound to say that
although I am not prepared.to withhold my assent from
the proposal of the Chancellor of the Exchequer to borrow
a large sum of money, yet I cannot profess to have a
weaker oefninter impression of the disadvantages of public
loans than l had formerly, when in an official capacity it
was my duty to make provision for the present war. If
there was one sentence in the speech of my right hon.
friend from which I emphatically differed, it was that iu
which he referred to a most able and vigorous pamphlet,
well worthy the attention of members of this house and of
the public generally, recently published by Mr. New-
march. That gentleman has explained in great detail the
financial proceedings of Mr. Pitt during the revolutionary
war, and I think the words of the Chancellor of the Ex-
chequer were that Mr. Newmarch had shown that the
loans of Mr. Pitt were contracted- upon terms much more
advantageous to the public than was commonly supposed.
The CHANCELLOR of the EXCHEQUER—Of late
years.
Mr. GLADSTONE -In my opinion, that is not what
Mr. Newmarch has proved. What he has shown is this-
that greater difficulties than is commonly supposed would
have beset the path of Mr. Pitt if he had attempted to
proceed in another manner. I have no doubt Mr. New-
march means that Mr. Pitt could not have realised so
many public advantages as he did from a different manner
of pi ocueding. He strengthens my impression of the da
mage and detriment that occur to the public from be-
coming a borrower on a large scale under a pressing neces-
sity ; and he shows, not that Mr. Pitt's loans were less dis-
advantageous to the country, but that all loans whatever,
no matter how contracted, muatbe attended with immense
economical disadvantages, and heavy pecuniary burden.
(Hear.) But, with that impression on my mind, lam by
no means disposed to extenuate my share in the proposals
of last year; on the contrary, I am content to have been
the instrument of the late Government in attempting to
induce the House of Commons to make a wise, a resolute,
an honourable, and a successful effort. (Hear, hear.)
Without in the slightest degree receding under that storm
of criticism and invective which every one must expect
who does not endeavour to square himself to everybody's
wishes, but remembers there is such a thing as a public
interest, which after all is something different from the
convenience of classes, I am yet disposed to admit that
there ie a limit to the application of the 'doctrine-which
I advocated last year. You cannot possibly expect
a free,eountry, or the representetives of a free country,
to 'pleb- a very' ' sound economical doctrine, under
‘ all circumstances,,_ to ` these' extremes. Yon must re-
niember •tha.t you'haveto deal with flesh and blood, and
Yoi &wk. not expect-$.9811 and blood to bear more than is
reasonable. But Igo further, and admit that when a sud-
den accumulation of taxation becomes so great an evil,
so great a cause of disturbance to all personal and social re-
lations, it is far better to provide yourselves with money
at a pecuniary disadvantage than it is to carry that disturb-
ance to a dangerous height. Therefore, for a considerable
time past, ever since the expenditure of the war became so
uncontrollable that it was clear it would be necessary for
the Governmeet to provide for a considerable portion of the
expenses of the year by borrowed money, I was prepared to
say that the Chancellor of the Exchequer could not be
blamed for resorting to a loan. Last year I made provision
myself ,for a considerable portion of the expenses by bor-
rowed money; but that was simply money borrowed in an-
ticipation of the tares, and I may state that the taxes im-
posed lest year will cover, within one million, the whole of
that borrowed money. - I am indisposed to enter into any
minute criticism as to the precise proportion of money to
be borrowed in comparison with that to be raised by taxa-
tion, or even as to the question whether the Chancellor of
the Exchequer has selected the stock in which to borrow
with a sound estimate of the public interests, or whether
he should have carried to a somewhat greater extent the
principle of borrowing upon terminable annuities. I
entirely agree with my right hon. friend that it would
not have been practicable, except upon extravagant
-terms, to have effected the whole operation upon
,that principle. But these are questions which may be
discussed upon some future occasion. Ido net think it
would become me to enter upon them now. The question
for me is whether the principle and outline of the Chan-
cellor of the Exchequer's plan, considered simply as a
means of providing for the financial necessities of the
country, is one to which the committee ought to give its
approval or not. None of those preferences which we may
have for one mode of proceeding rather than another, are,
under !present circumstances, sufficient to induce us to
withhold our votes from the proposal of my right hon.
friend. I certainly should wish to have the power of con-
sidering more maturely the special provisions he proposes
to make for the repayment of the loan. On the other
hand, it is of capital importance that this house should
maintain, as far as possible, the influence and credit of its
financial vigour in the face of the country ; and even if it
were in my power to show, which I do not assume, that in
one point or another the Chancellor of the Exchequer
might have made a bargain more precisely consistent with
the public interests, I should have to balance the advan-
tage so attained against the great and heavy disadvantage
which I have good reason to know attaches to the position
of the Chancellor of the Exchequer when his proposals are
made the subject of undue criticism. I am, therefore, dis-
posed to withhold that criticism upon the present occa-
sion ; but there is one question upon which I think it
necessary to reserve my ju lgment. The Chancellor of
the Exchequer began his speech by a reference to the
time at which he inade his financial statement, and ap-
peared to think that he required to apologise for
not having come before the house at an earlierperiod than
the 20th of April with an exposition of his views and
and'pro-
posals for the year. There was one reason, undoubtedly,
why it was desirable, if it could have been done, that this,
finances of the country should have been brought under
the view of the house at an earlier period of the session—
namely, the rapid growth of the expenditure, which during
the last quarter has pressed so severely upon the immediate
resources of the Exchequer that it was necessary, if the
Minister did not come down to ask for additional supplies,
he should use his own discretionary power by availing him-
self of the favourable state of the public funds to raise
money by sales of stock belonging to the National Debt
Commissioners. The hon, member for Wick has censured
that proceeding. I am responsible for a large part set' it.
and my hon. friend is responsible for having continued in
the same course. I do not believe it would have been satis-
factory to the house if at an early period of the session,
before the conclusion of the financial year, they had been
asked to make their financial arrangements. The truth is
this. In a time of peace it is an easy matter to propose
financial arrangements which shall last, for twelve months,
but in a time of war it is very difficult to do so. On the
other hand, it is annoying and worrying to the house to be
continually pressed with one application after another for
an increase of taxation. It is desirable to adhere to
the principle of annual statements, and not to multiply
your financial plans. Last year it may be a ques-
tion whether, in our desire to act upon constitutional
grounds, and place ourselves at once at the com-
mand of Parliament, it was for the public eonvenience
that twice the house should be asked tc alterthe taxes and
make pecuniary provision for the expenses of the year. At
any rate I think the Chancellor of the Exchequer has done
quite right in reserving his statement till the usual time,
using his discretionary power to supply himself with money
upon terms not more disadvantageous thauworhm
would have
withbeen
the plan of coming clown prematurely to Parliament
.i.,, l
tneerwscaleagainbeforeof
the
taxes,
end whichef thehe session.would probably
Nay
f havea
m d
its.:
posed to regret that, having statement
till the 20th of April, he did not postpone
delayedhisftniatnfceil
raafew days
umeesntitonneogfottihae.
longer.l
greatest impsaoyrtathnCet. wiYthourehfaetr-eeneaet ttheisam(el
whether the expert-
issue of these negotiations Lions going forward at Vienna.
must depend w Vienna. (Hear, hear.) Upon the
db
et t uurnedfeorrthe willyear
70,000,0001. be 80
Although
, 000t0h,whether it
must
s tw
ii. it
in
l.
or
r expenditure
attnyn
need case s e
noth hvee reye llaarrggee,
aysett
h,
ei ncthhaee
ec
ev lel no
rt ()off at
hs el) e.
Le' dx
ye
hie eqaueee r,
has stated to-night. For example, there aro 4,000,0001. for
embodying the militia. Of that 4,000,0001.,
least,
Perha 4,000 000/ would be saved in case of peace.
,Take, the transport" 5 000,003/. and
3,000,0001. at
e.OOO _ service. Between ~ .
Trio .voVt. have been voted. It would be practicable to save
rethaulialf
of
in So • h the large :::::rt.e., that the event of peace. with
"uportitnolYtaakb
aistusape„fice Portion of that money has been voted for the
4:l:teh•tiAha.relaeraigoPgener:meoa:isehaipon; eight millions, voted for the Ord-
%,velosle the
'gilt, at a timewhen Iwi es for
T h e dailyn eeaene
edi
thyo
fuer: hourly
hceosnesum psupplies,tion
:is that, ba d not
Proposed
, Lay to day the issue
war
beenitself.
o.ll6;a"ected with them would terminate
eoualii
atheapveeabeiemnpgelrta(aluitf
,
be said that a war telt ithee-chtfer eve expect from
Terence at Vienna. It may
but the present •Le"-"B've '4 at porn Ree ee effe. ,allY time. So it might •
negotiation on foot; aae • -4" it Pee 1' . '
rtalh pro 4 lar• There
la a
Vets has been made in