The Sun.
London, England, 1854-03-07 00:00:00

was created and put to the credit of the Commissioners of
the National Debt, the dividends were payable to them,
and they re-iuyested those dividends according to law,
The hon. member for Evesham said that these accounts
were extremely complicated, and ho agreed with the hon.
gentleman that it was very difficult to get any view of the
working of the system. lie (the Chancellor of the Ex-
chequer) should be very glad to simplify it ; but with re-
spect to the purchase of Exchequer-bills, it was his duty
to advise the commissioners how to employ their money in
a manner most conducive to the public interest. It was
the duty of the Commissioners for the Reduction of the
National Debt to employ the money in their hands in the
most profitable manner with reference to the public in-
tenest ; and, although it might be very- trne, as the hon.
member for the University of Dublin had said, that
it was not usual to employ the savings-banks' money
in -the way mentioned, the house would recollect
that the circumstances of the present case were
not of the usual kind. He was sure hon. gentlemen
would follow him in his explanation of the position of
the Chancellor of the Exchequer with reference to Ex-
chequer-bills. He had the power to raise the rate of interest
to any amount during the currency of the bills, but if he
raised the rate of interest, he must by law raise it for to
whole of the remainder of the twelvemonth for which the
bills ran. That was a very serious matter indeed, for the
effect such a rise in the rate of interest of Exchequer-bills
was to determine at once to spend 200,0001. of the public
money. If he thought the state of the country was so bad
as actually to require it, then it was his duty to raise the
rate of interest ; but if, on the other hand, the circum-
stances of the country were of a doubtful and equivocal
nature, or it was highly probably the pressure might pass
away in the course of six months, and in a couple of
mouths he might find himself at his ease, then it was his
duty to be very careful how he raised the rate of interest
for the year ; but still it might be his duty to make provi-
sion during that interval so as to prevent the holders of
Exchequer-bills from being at the disadvantage of parting
with their security at a discount, which would be a hard-
ship, and would not tend to advance public credit. He
thought it right for a Chancellor of Exchequer to apply
money in his hands for the purpose of relieving the Exche-
quer-bill market in times of pressure' but it ought now to
be a matter of course to make use of the public money to
buy up Exchequer-bills. Those were precisely the circum-
stances of the period to which the purchases in question
referred. There was a bad state of weather, and the pros-
pects of the harvest were gloomy, but at the same time not
irremediable ; it might have happened that the weather
might have changed in June and July, so as to have pro-
duced an abundant harvest. Political circumstances were
in a state of entire uncertainty ; one day they heard that
there was every probability of a war, but the intelligence of
the next was that the differences were goingto be composed,
and such was the state of affairs, that at the close of the
session Her Majesty was advised to address congratulatory
remarks on the prospects of a speedy accommodation of the
existing differences. If the threatening circumstances had
passed away, and the harvest had been good, he thought it
probable there would have been no necessity for raising
the interest of Exchequer-bills at all, but still it was
his duty to make provision for the extreme uncertainty
of the times ; those purchases took place under those cir-
cumstances, and the Exchequer-bills were converted to
stock according to law. The hon. baronet had made a
complaint that the system was a complex one; in that he
(the Chancellor of the Exchequer) entirely agreed, and
should be glad to see it altered if possible.
Mr. J. O'CONNELL begged to express a doubt whether
it was altogether wise for a Finance Minister to make an-
other turn in the screw of the income tax on Ireland. He
was not going to argue the justice or injustice of imposing
that tax, although he might have done so had he been in
the house at the time, for he considered it clearly provable
that the imposition of that tax on Ireland was a breach of
the articles of the union. He thought, although a certain
amount was raised directly by the tax in Ireland, there
was very little gained by it in the end, as it had a ten-
dency to decrease the general revenue, and they had yet to
see by the estimate in April whether the general revenue
of taxation in Ireland had not diminished. That country
showed by the number of young men who were entering
the services that she was prepared to do her share in de-
fending the country, and he was sure the same willingness
would be evinced to bear her share of the expense—
(cheers)—but he doubted whether increasing direct taxa-
tion was the best way of effecting the object. They might
have equalized tke tax on spirits, which would have
brought a large amount to the revenue. Ireland was
quite ready to support the honour of the empire ; all she
asked for was a little consideration.

Sir H. WILLOUGHBY did not quite understand the
explanation of the right hon. gentleman with reference to
the employment of saving-banks' money. Was the money
of the savings-banks to be made an engine of creating
debt ? He wished to ask the right hon. gentleman whether
although by law there were Commissioners for the reduc-
tion of the National Debt, who were to sit—a certain num-
ber forming a quornm—and a record of whose proceedings
was to be kept, in point of fact, that body did not consist
of the right hon. gentleman '
alone, A more dangerous
system could not exist than that the Chancellor of the Ex-
chequer should by means of savings-banks, or in any other
way, meddle with the-national debt ; it was clearly against
the intention of the law, and it appeared to be a mode
of creating debt which, set at defiance all calculation.
He was aware that system had been adopted in 1834, and
he believed it was capable of proof that by the transfers
which then took place the funds lost nearly 2,000,0006. It
was supposed that practice was put an end to, but it was
now revived. He hoped the right hon. gentleman would
put the system with respect to the functions of the Com-
missioners for the reduction of the National Debt upon
some plain footing ; he did not care how it was so long as
the responsibility was properly defined. (Hear.)
Mr. HUME thought it ought to have been done openly.
He rather thought the loss had been overstated ; but lie
knew there was a loss, and they had the assurance of the
then Chancellor of the Exchequer that the practice should
not be repeated.
Mr. W. WILLIAMS considered this was a very import-
ant question. In 1840 a large amount of these purchases
had been made, and he then urged it on the house that no
sum oughtlto be added tollthe debt without authority for
it. The Chancellor of the Exchequer of the day said he
was not prepared to defend the principle of giving such a
power, but still the power was vested in him by law, and
he had exercised it as a way of making up the deficiency.
Colonel SIBTHORP said, he protested entirely against
the gross mismanagement of her Majesty's Government.
(Laughter.) He had voted, and always should vote,
against an income tax during the time of peace; but no
one was more anxious than he was that the present war
should be carried on in the best possible manner, though
he very much doubted it would be by her Majesty's Go-
vernment. (A laugh.) He was, of opinion that the country
was ready to adopt any tax that might aid in a war which
was to chastise our enemies.

Sir F. BARING said, as allusion had been made to
transactions in which he was engaged in 1841, he wished
to say a few words. There were two modes of proceeding
—one in which they purchased the usual common Ex-
chequer-bills of savings-banks' money and afterwards
turned those Exchequer-bills, under the regulations
of an act of Parliament, into funded debt. In that
case they made no increase of the public debt, but
transferred from the unfunded debt to the funded
debt, which, in many cases, was extremely ad-
vantageous to the public, and he thought a justifiable
transaction. It was a power that might be used with ad-
vantage by the Chancellor of the Exchequer, and he was
quite certain that in ninny Cases it was a very proper mode
of proceeding ; for, having the moneys of the savings banks
in their hands to invest either in the funded or unfunded
debt, it was quite right to invest them in the way that
would be most for the public service. There was another
mode of dealing with them, quite of a different character,
and that was, with those moneys to pay deficiency bills,
and thus turn such bills into funded debt. That was what
he did, and created a ,new debt, but he did not pretend to
say it was a power which he thought was not open to ob-
jection, or which, if it were thought wise' might not be
taken away from the Chancellor of the Exchequer; he
defended it in regard to the necessity of the case, and
thought it advisable under certain circumstances. What
he said was, do not, by attempting to limit the Chancellor
of the Exchequer's power to create new debt, take away
from him the very proper power he possessed of converting
through means of savings-banks' money unfunded into
funded debt, which had been repeatedly done, and never
without advantage to the public service. He was not
quite sure, not having had the opportunity of examining
the matter, but he believed the right hon. gentleman, the
Chancellor of tho Exchequer, had done what he was quite
justified in doing. Ho durst say when the matter came
to be thoroughly discussed and explained the particular
case and the grounds on which the hon. gentleman had
proceeded would be given, for he quite admitted it never
ought to be done without a clear explanation,
The CHANCELLOR of the EXCHEQUER—I am very
anxious not to be misunderstood with respect to these
transfers. None of them have relation to the investment
of savings-banks' money in paying deficiency bills. At
present I do hold some savings-banks money in consoli-
dated funds, but that will not be made national debt.
Sir F. BARING—That will be paid off ?

The CHANCELLOR of the EXCHEQUER—Yes.
Mr. DISRAELI—Sir, I quite agree with the description
which the right hon. gentleman the member for Portsmouth
has given of the two modes of investing public funds in
Exchequer bills, and I am very glad that the right hon.
Chancellor of the Exchequer has called the attention of the
committee to the difference of investing savings-banks'
money in deficiency bills and investing the proceeds of the
revenue, as I think the last to be the legitimate practice,
and one for which the highest precedents exist. With re-
gard to the general statement we have heard to-night,
whatever may be my opinion of the war in which we are
about to engage—and certainly the importance of it has
never been diminished by any discussion that has taken
place in this house, or by any allusion that has been made
to it by the members of. her Majesty's Government—al-
though the conviction on my mind increases more and
more every day, that it is a war that might have been
avoided, still I believe it to be a just and necessary war
under the circumstances in which we now find ourselves
engaged ; and I think we have only one duty to perform to
our Sovereign, and that is to give her our hearty support
in carrying on the struggle in which she is embarked.
(Cheers,) For these reasons I make no opposition to any,
vote which a Minister of the Crown may, upon his own re-
sponsibility, think it his duty to propose, in order to carry
on the war with vigour, and with the success it deserves,
and which I hope it will receive. But, while I say that, I
anticipate that this is not the only occasion on which a
committee of ways and means will be applied to, for anxious
as I am that the supplies of the year should come out of
the revenue of the year, I must protest against the princi-
ple that has been laid down that direct taxation, if there
is to be a prolonged contest, is to be the only source from
which to obtain supplies. (Cheers.) If the right hon. gen-
tleman, supposing this struggle to continue, can succeed in
raising the necessary supplies from the revenue of the year,
he will be a fortunate and successful Minister; but I can-
not myself believe that it will be the fate of any one
through a prolonged contest to accomplish such a purpose,
and therefore I think that from the first the right hon.
gentleman ought to anticipate that direct taxation will
not be the only source through which the contest will be
carried on by the country. (Hear, hear.) I do not say
the limit of direct taxation has been reached, for we know
very well that there have been wars in which this country
has been engaged when we had the property and income
tax at a much higher rate than at present : nor am I pre-
pared to say that there is any probable limit at which the
taxation of the country can be fixed when it is engaged in
a struggle in which its very existence as a nation is at
stake. (Hear.) But we must remember there has been a
very considerable addition to the direct taxation of this
country of late years, and also a very groat diminution of
indirect taxation. Every one' fools that the weight of
direct taxation is now very considerable, and that it has
recently been largely increased ; and every one on either
side of the house will admit, to whatever party in politics,
or whatever school of political economy he may belong,
that the diminution of the indirect taxation of this coun-
try during the last ton years has been such POS tc) surprise s