The Sun.
London, England, 1863-02-14 00:00:00

rim SUN, LONDON, SATURDAY EVENING, FEBRUARY 14, 1863.

of minors under seven years of age in such a position that the
transfer of tb eir moneys to the Post-office savings banks could
not, under any condition, be effected. Now, however desir-
able and wise it might be to propose stringent limitations on
the withdrawal of their moneys, or, in fact, dealing with
their cash, while they were of that tender age, yet it was
obvious that some means, however guarded, ought to be
provided for allowing the transfer of their accounts to be
by a transfer certificate to the Post-office savings banks. A
great 'number of applications from different parties, from
trustees and guardians of children, and persons interested
in them, had been made to them (the Government) signi-
fying a great desire that those powers should be given; and
in fact he though the object was obviously reasonable in its
principle, and though the mode of proceeding ought to be
carefully considered, he could not anticipate any difference
of opinion on the subject. He had had a number of letters
and applications that had been made to them. In many
cases, for example, the parents of a child applied to have the
account transferred from one savings bank to another, but
could not have that effected. He proposed that power for
that purpose should be given, and also, that reciprocal
powers should be given for transferring in a like manner
the accounts of minors from Post-office savings banks to
the old savings banks, or wherever it might be desired. So
far as his experience had gone, there appeared to him to be
on the part of members of that house, and likewise on the
part of the public, a very general desire to give a further
extension to a principle long ago introduced into our law,
and the working of which, so far as it went, had been emi-
nently salutary. He meant the principle and the practice of
converting the perpetual annuities, of which the national
debt mainly consisted, into terminable annuities, either for
lives or for terms of years. And there again, though he re-
ferred to a subject of great importance, it was one on which
there would be no difference of opinion. Tae extent to
which they were at present able to operate on that principle
was as follows. There were certain annuities existing
which would terminate in 1867 ; a large annuity payable to
the Bank of England ; and there were certain other annui-
ties, principally those mated by the Secretary at War,
during the course of the late war with Russia. To those
annuities so created by the Secretary at War, had been
joined, during the last two or three years, the annuities
created on account of fortifications, and there was likewise
a small amount of public annuity new in the market on
account of the Red Sea Telegraph, which, however, was a
very small amount indeed. Besides these particular an-
nui►ies, which were all public annuities expiring at certain
fixed dates, there was in operation from day to day a system
—mainly through the National Debt Office, partially and
to a limited extent through a portion of the savings banks
of the country—under which annuities might be purchased
on given terms by individuals, either for their own lives,
for the lives of certain other persons, or for terms of years ;
and the extent to which that system was carried, quite
apart from the other annuities of which he had spoken, ter-
minating, so to speak, in the lump on certain dates, might
be said to amount roughly to the conversion of a million of
stock per annum. That was not a very large amount, and
it was constantly asked why they did not operate more largely
in the reduction of the National Debt by the conversion of
perpetual into terminable annuities than they did operate
by the law as it now stood. The answer to that was, that
annuities were a commodity which could be sold favourably
in the market under certain circumstances and to a certain
extent, but they were a commodity of which the general
market entirely refused to receive more than a limited
quantity, except upon terms that would be so disadvanta-
geous to the public that neither the Government would re-
commend nor Parliament be disposed to sanction. But it
appeared that there Ras a mode, comparatively safe and
simple, by which they could obtain an extension of that
valuable principle of converting perpetual interminable an-
nuities, and that was by operating on funds which came
into their hands in respect of Post Office savings banks.
But in dealing with those funds, they must bear in mind
that though he thought the contingency was one most un-
likely to occur, yet they might be compelled, in order to
meet the claims of the depositors, to go largely into the
market as sellers of stock. It followed, therefore, that
they should preserve in their own hands quantities of
stock ample for the purpose of meeting such possible,
though not probable, demands. Therefore, he should not
venture, small comparatively as were the funds now held on
acecunt of the Post Office savings banks, and certain as
was the progressive influx and not effiux el money—he
should not venture to ask the house to take
a general power of converting the whole of that
property into annuity. What he proposed to do was
this —to convert the annuities which they now held, and
which were perpetual, into perpetual annuities of a lower
denomination, but to take the difference between the new
denomination and the old, and convert it into a terminable
annuity. He would suppose, for example, that it was a case
of £lOO,OOO, of 3i per cent. stock. He proposed to take power
to convert that £lOO,OOO of 31 per cent. into £lOO,OOO of 21
per cent. stock. The consequence of that would be that they
would always have'a marketable commodity on hand, and
the 2! per cent. stock, partly in consequence of its very low
denomination, had usually commanded a good price in the
market. The difference between the £2los. and the £3los.
he proposed to take power to convert into a terminable an-
nuity. The funds lodged in the Post-office savings banks,
though very considerable with reference to the time those
banks had existed, were at present very small, amounting
he should say, to something between £1,500,000 and
£2,000,000. Anything, therefore, that could be done at the
present moment, must be done upon a small scale, but at the
same time it was quite possible, and even, he should say, it
was not unlikely, that the deposits in those banks might
come to be large, and as they increased the scale on which
that principle might be applied would become more ex-
tended. He hoped the committee understood what the effect
would be. The principle of the resolution he proposed was
that a limited power should be taken to convert perpetual
into terminable annuities. That might be done, either by
converting a portion of them entirely into terminable annui-
ties, by converting the whole, or by converting any part of
annuities into perpetual annuities of a lower denomination,
and at the same time converting the difference between the
lower and higher denomination into a terminable annuity.
The effect of that would be that without encountering the
inconvenience of the sale of these terminable annuities in
the general market, which is not adapted to receive them,
they would be able to act, to a greater extent than now, on
the salutary principle of adding to the charge they now
bore with a view to the gradual reduction of the national
debt. Then the only .other point he had to observe on was
this—that these annuities would, in point of fact, be very
convenient to hold for the Commissioners for the National
Debt on the part of the Post-office savings banks. They
would be eminently desirable security for them, though not
desirable to carry into the general market, because the effect
would be that the money would return rapidly into the
hands of the Government, and would so far enable them
to meet any calls that would be likely to arise on the part of
the depositors. That, he thought, was all the explanation
which was necessary in proposing a resolution of that gene-
ral character. Perhaps it would be desirable for the commit-
tee to see the resolution in print as early as possible, and he
should be ready to lay it on the table the day after the com-
mittee reported. The right hon. gentleman then placed the
resolution in the hands of the chairman.

In reply to Sir S. NORTHCOTE,
The CHANCELLOR •f the EXCHEQUER said that
at present all he did was to ask the house to consent to the
principle of conversion in some form of perpetual annuities
into terminable annuities.
Sir H. WILLOUGHBY complained that due notice had
not been given, and that the nature of the proposal was not
clearly indicated. It might, or might not be desirable to
wind up the old savings banks; but he should like to have
known that that was the idea in the right hon. gentleman's
mind. It seemed to be, in another form, a favourite of the
right hon. gentleman to get 3 per cent. for a2i per cent.
stock—(laughter)—which, on a former occasion, was not
very favourably received. One great obstacle to the pro-
posal in respect of annuities was the hardship with which
the income tax would be found to bear upon that class of

security.
Mr. AYRTON said, if ho nndorstood the proposition
aright it was this—Xloo of 3 per cent. stock would be con-
verted into £lOO 26 per cent. stock, and a certain amount
of terminable annuity which would cease at a fixed date,
when only the 21 per cent. stock would be left. When the
terminable annuity ceased would not the capital of the Post-
office savings banks be diminished to that extent? llow
was the capital of the Post-office savings banks to be kept
intact ?

The CHANCELLOR of the EXCHEQUER said the
hon. gentleman did not seem to have clearly apprehended
the proposal. They had entirely cleared from the Post-office
savings bank scheme those ambiguities which attached to
the relations of different parties concerned in the old savings
banks. The Post office savings banks were simply bankers,
giving a certain fixed rate of interest for the deposits of the
public, and the public understood that the credit and the
property of the country were their security for the due pay-
ment of that interest. This being the case, the public
neither knew nor cared what was done with the money while
it remained in the hands of the Government; for if used
profitably
nothing.
they gained nothing, and if used otherwise they
lost
banks
were As te
paying,the questionh
eshould
not
enterthe into Post-office
it, a
savings s
the materials for coming to a conclusion were not before the
house. But, while not prepared to assert anything posi-
tively on the subject, he believed—and the very diligent and
intelligent public officers who had been engaged in develop-
ing the system fully believed—that those banks would not
cost the country a single shilling. (Hear, hear.) Supposing
the case as put by the hon. gentleman, there was a conver-
sion into a stock of a lower denomination, which, as the
hon. gentleman justly observed, was of lees value in the
market, and the difference came to be this, that instead, of
receiving a fixed sum from year to year, they would receive
two things, one a fixed sum in perpetuity of a lower amount
and therefore representing a smaller capital; and the other
a circulating system, which from year to year brought back
portions of the capital along with the annual interest.
These with other deposit money would bo for mutual re-
investment. That was the mode in which the system would
work. The question whether the Post-office savings banks
were self-supporting was, as he had said, very important,
and would be the subject of a searching inquiry in due time.
In reply to Mr. WEGVELIN,
The CHANCELLOR of the EXCHEQUER said the
process would be this :—Take a perpetual annuity of £3 per
cent. We should cancel that annuity and create in lieu of

it a perpetual annuity of 50s. per cent., converting the other
10s. into an annuity terminable at a fixed period, say, per-
haps, 1885. With regard to the fortification and other an-
nuities, the Government had been in the habit of consulting
the financial officers attached to the Government, and also
the Governor and Deputy-Governor of the Bank of England,
and there never was any difficulty as to the rate of interest,
which was always made rather favourable to the purchaser
than otherwise, and would be therefore favourable to the
buyer of the annuity in this case, which would be the Post
Office Savings Bank account which would obtain a certain
amount of advantage in the conversion of a perpetual into a
terminable annuity.
Mr. HENLEY said be would not express any opinion on
the scheme at present, but it seemed to him like paying the
interest in two different ways, which was an odd method of
reducing a debt.
The motion was then agreed to, and the house resumed.
CUSTOMS ACT (TOBACCO DUTIES).

On the motion for going into committee,
Col. DICKSON asked the Chancellor of the Exchequer
if he would allow a drawback to those merchants who have
already paid the duty on their stock on hand.
The CHANCELLOR of the EXCHEQUER replied,
that the course adopted during the last 19 years would be
followed in thin instance, and no drawback would be al-
lowed, as it would interfere with the established practice,
and cause the greatest inconvenience.
The houee then went into committee.

The CHANCELLOR of the EXCHEQUER moved :-
1. That in lieu of the duties of Customs now charged upon
the several kinds of manufactured tobacco undermentioned,
the following duties should be charged and paid thereon
upon importation into Great Britain and Ireland on and
after the day of 1863 :

s. d.
Cigars
Snuff 3 9 „
Other manufactured tobacco 4 0 „

2. That, on and after the day of 1863, unmanu-
factured tobacco warehoused in any warehouse approved for
security of duties of Customs may, in such warehouse, be
manufactured or converted into the articles denominated
cavendish or negrohead tobacco ; and upon every pound
thereof produced by such manufacture or conversion there
should be charged and paid on the delivery thereof for home
consumption the Customs duty of 3s. Bd. The right hon.
gentleman said that he had plaood the rust et these motions
on the paper as a matter of convenience and for the infor-
mation of the house, and not because it was necessrry to do
so as a matter of form. The resolution was not one which
would take immediate effect, for it was a matter in which it
was desirable that full time should be given to the house and
to the trade for the consideration of it. At present there
was a monopoly for the home manufacturer (with the ex-
ception of certain articles of luxury which could afford to
pay high duty) which was such as to amount to a total ex-
clusion of foreign competition. The duties, therefore, upon
tobacco might be considered the only remaining relic of
a system which once was the regulating principle of our
tariff. It might seem strange that these duties should have
so long escaped revision, and that the manufacturtrs of
tobacco should not have been placed on a footing with
other manufacturers; that was to say, that they should be
suojected to competition with other nations. The difficul-
ties arising in connexion with the revenue had at length met
a solution. The plan proposed would involve the manufac-
turer of cavendish or negrohead tobacco in bond ; but
at present all he asked was the assent of the house to the
general principle that the present prohibitory duty could
not be maintained. Cavendish or negrohead was now ex-
tensively smuggled. There was, practically, a monopoly
to the foreign producer, because the production of this
sweetened cavendish or negrohead tobacco was forbidden to
the manufacturer at home, but considerable quantities of it
found its way into consumption, and of this smuggling they
would attempt to get rid by means of a fair rate of duty,
and permission to the home manufacturer to enter into a
competition which he did not at present enjoy. There were
two means by which this might be done, by allowing the
free use of duty-paid materials, or by allowing the manufac-
ture in bond. The first-named plan would be attended by
serious danger to an important branch of the revenue, and
they therefore proposed the system of manufacture in bond.
With regard to cigars and the other descriptions of tobacco,
the manufacture would go on as at present. The reasons
which induced him to take this course were threefold. In
the first place it would extend the principle of free competi •
tion which had been found so salutary when applied to all
other manufactures ; second, it would tend to diminish
smuggling, and in that way he expected a considerable in-
crease of the fair trade, and consequently an increase of re-
venue. That led to the third point, if not the main object
of the measure. He could not at that moment submit any
particular estimate of the increase which it would cause to
the revenue ; but he had no doubt it would be consider
able, and that the measure would at the same time be bene-
ficial to the public. He trusted he had said sufficient to re-
commend the measure in its general outline to the com-
mittee, from which he, however, asked only a provisional
and preliminary assent. • He begged that it might be well
understood that the resolution would not affect the present
rate of duty. When the house was in committee on the bill
that would be the time to settle what the duty should be,
and when the change should take place. He should hold
himself at liberty, if good cause were shown, to make modi-
fications in the proposal. He had not had an opportunity of
consulting the trade, but intended to communicate with them
before he proceeded further with the measure. (Hear, hear.)
Sir G. BOWYER said the tobacco trade did not object to
free and unrestricted competition, but what they claimed
was that they should be put on the same footing as the
foreign manufacturers. The home trade had to pay duty on
the tobacco in a damp state, when it consequently weighed
heavy, and also upon the stalks, which were of no use at all.
The foreign manufacturer only paid duty upon the leaf he
used,'and the home manufacturer was thus placed at a con-
siderable disadvantage. He wished to ask whether cigars
would not be allowed to be made in bond as well as
cavendish and negrohead. If so, he believed that would
satisfy the trade.

Mr. CRAWFORD was glad that a full opportunity
would be given to the trade to consider the measure and to
protect their interests. Ile hoped also that time would be
given to work off the present stocks.
➢ir. AYRTON said he had the misfortune to represent
some thousand people who were engaged in the manufacture
of tobacco and cigars. He said misfortune, because the
plan of the Chancellor of the Exchequer, if carried out,
would bring many of them to great distress, if not ruin. It
might be said that this cry had been raised before by other
trades when changes were introduced, to which he would
reply, it had not always been raised without good grounds,
and justified by experience. He regretted that those engaged
in the trade had not bad the opportunity of seeing the right
hon. gentleman before he introduced his plan. They were
quite satisfied that he had been completely misinformed and
misled by those to whom he had listened on the subject. As
to free and unrestricted competition in the tobacco trade, it
was idle to use such langaage, when the growth of tobacco
itself was forbidden in this country, and foreign tobacco
was only allowed to enter under such regulations as would
enable the Chancellor of the Exchequer to abstract the
largest sum of money he could out of the pockets of the
consumers. (Hear, hear.) He hoped, under the circum-
stances, that as the right hou. gentleman only asked for a
provisional assent to the resolutions, that the house would
suspend its judgment, at all events, until they had the bill
before them. In the meantime he expected that the infor-
mation which the right hon. gentleman would receive from
the trade would materially alter his present views and in.
tentione.

Mr. W. WILLIAMS was always happy to hear of any
reduction of taxation; but he thought there were many
articles on which a reduction would be preferable to tobacco.
Even, however, if that was not the case, he could not ap-
prove of the proposal of the Chancellor of the Exchequer,
which proposed to reduce the duty on cigars from Os. to 55.,
and left untouched the duty of 3s. 2d. on unmanufactured
tobacco. The duty on cigars, consumed mainly by the
wealthy classes, was at present only about 35 per cent.,
while that on the tobacco consumed by the industrious
classes was no less than 500 per cent. (Hear.)
Mr. J. LOCKE entirely concurred with his hon. friend
as to the injustice of selecting the article consumed by the
rich for a reduction, and leaving that used by the working
classes subject to the old duty. To the rich tobacco was a
luxury—to the working men it was in many cases an abso-
lute necessary. The heavy duty imposed on the raw material
caused the manufacturer to impor tit dry and light. He paid
the duty upon it in that state, and in the working it up
mixed water, sugar, and other ingredients, which often made
it very nasty, but increased the weight and his profits. In
order to give the plan of the right hon. gentleman a chance
of passing, it should be extended so as to embrace the com-
munity at large, and the expected increase of revenue would
then follow.

Mr. ROEBUCK said the Chancellor of the Exchequer
must feel himself in a dilemma. One hon. gentleman told
him that tobacco was imported heavy; another, that it was
imported light. For his own part, he had no consideration
for either. He wished there were no tobacco in the world.

Sir S. NORTHCOTE expressed his apprehension that
the public revenue would suffer if the trade was allowed to
remain for any lengthened period in a state of uncertainty
as to when the change of duty would take place. He could
not understand why the right hon. gentleman did not give
the same privileges to the manufacturers of cigars as to the
makers of cavendish and negrohead.
The CHANCELLOR of the EXCHEQUER said the
points which had been raised would call for only a very few
observations from him. With respect to the statement of the
hon, member for the Tower Hamlets, that there was already
free competition between the tobacco manufacturers in this
country, he would only say that when the monopoly in corn
was attacked they were told that there was free competition
between the growers and sellers of corn, but that did not
prevent the adoption of the principle of unrestricted com-
petition. The hon. and learned member for Southwark said
a reduction of duty on unmanufactured tobacco would be
followed by an increase of revenue. But reduction of duty
and increase of revenue did not invariably go together, and
from all the inquiries he had made on the subject he was
convinced that any material reduction of the duty on ua-
manufactured tobacco would lead to a very large reduction
of the revenue. Practically the question, then, for the house
to decide would be, whether they would select that article
in preferecce to others for a reduction. The articles se-
lected would, he believed, yield additional revenue, place the

fair trader in a better position, and prevent smuggling to a
large extent, all of them desirable objects. With respect to
the possible loss of duty, from no time being named for the
change of duty, he apprehended that the loss, if any, would
be small. A week more or less would not materially affect
the amount of duty on the articles selected for reduction,
With regard to manufacturers, he merely desired to give
them such time as might be necessary to enable them to
bring their views before the Government and the house. He
should himself think that a very short time would suffice
for that purpose. If the house went into committee in a
fortnight, within that period they might very well dispose of
all the questions that might be raised. Then there was the
practical question put by his hon. friend as to the manufac-
ture of cigars in bond. It must be borne in mind that
manafacturing in bond was, at best, a very defective, clumsy
and costly expedient. It was however batter to permit such
manufacture than to prohibit the trade altogether; but this
privilege given to manufacturers was attended by various
drawbacks. Tho enjoyment of it was absolutely limited to
a very few spots where the Customs had considerable esta-
blishments, which enabled them to conduct the necessary
supervision. The opinion of the Government was, that
there was not sufficient reason for granting powers to
manufacture cigars in bond ; but when he was asked
whether that was an irrevocable opinion, and waa an
essential part of the proposition, most certainly he thought
that all such matters were open to discussion. The con-
siderations by which they were guided were consider-
ations in which all took a common interest, namely, the
desire to reconcile, as well as they could, the several inte-
rests of the consumer, the manufacturer, and the revenue,
Therefore he held himself entirely open to examine further
the extension of the bonding privilege to other places—
but he was bound to say that, as far as his investigations
had hitherto gone, he was not aware of any sufficient rea-
sons why it should be so extended.
After a few words from Mr. AYRTON in explanation,
The resolutions were agreed to, the house resumed, and
the committee was fixed for Monday next.
DRAINAGE (IRELAND) BILL.

A resolution on this subject was agreed to in committee.
The house again resumed.
LIABILITY OF INNKEEPERS.

Mr. WYKE HAM MARTIN, in asking for leave to
bring in a bill to amend the law respecting the liability of
innkeepers, and to prevent certain frauds upon them, said
that the object of the bill was to deal with a serious and
growing fraud. As he understood that no opposition would
be given to the measure, he would not detain the house
further, but would merely ask leave to bring in the bill.
Leave was then given, and the bill was read a first time.