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

TAZ, SUN, LONDON, TUESDAY EVENING, MARCH 7, 1854.

income tax, instead of interfering with the reductions
made upon important articles of consumption in the budget
of last year. (Hear, hear.)
Mr. HENLEY observed that when the late Sir R. Peel
took the management of the finances of the country into his
hands in 1811, if there was one point won which he laid
greater stress than another it was that Government should
keep a balance in the Exchequer to render them not only
independent of circumstances, but independent of the Bank
of England. (Cheers from the Opposition.) The effect of
recent non-compliance with, that policy was shown in the pro-
position now made to inflict a double tax upon the people
for half a year. Last year the right hon, gentleman (the
Chancellor of the Exchequer) complained of being so over-
whelmed by the money he had in the Exchequer that he
' found it necessary to get rid of it by some extraordinary
moans. It had been got rid of, and the consequence was a pro-
posal was now made to vote Exchequer-bills to the amount
of 1,750,000/. Ho (Mr. Henley) agreed with the late Sir
R. Peel in the necessity of keeping Government indepen-
dent of the Bank of England, and of always having an
available balance ;in the Exchequer. With regard to the
general question before the house, the right hon. the
Chancellor of the Exchequer had laid down this proposi-
tion—that in a time of war, the generation by whom it
was prosecuted should feel the pressure caused by it ; but
the right hon. gentleman had not altogether adhered to
that pioposition, inasmuch as he made the burden of car-
rying on the war fall upon a limited number of the people
of this kingdom. (Hear, hear.) By the propositions of
the right hon. gentleman, many of those who had been
most clamorous for war would not be the parties upon
whom the expense of prosecuting it would fall, and there-
fore the policy of the right hon. gentleman was entirely at
variance with the proposition he had endeavoured to lay
down. (Hear.)
Mr. GLYN observed that this country was about to en-
gage in a great, and perhaps a protracted contest, in which
the operation of the late Sir R. Peel's Banking Act of 1844
would be more felt than it had been hitherto. He con-
fessed for one that he did not look upon that act with
feelings of security, and he could not help thinking that'
its restrictions upon the general commercial operations of
the country, accompanied as they would be by a continu-
ous strain upon the resources of the country, would be a
state of things that would be severely felt. He desired to
call the attention of the Chancellor of the Exchequer to
the fact that, by the act in question the issue of the coun-
try was placed at a particular amount. By the altera-
tions made in private banks a considerable reduction had
taken place in the amount of their fixed issues, and he
could not see why the Government should not avail itself
of the opportunity of replacing the 700,0001. in question
by the machinery at its command, and by its connection
with the Bank of England. (Hear, hear.)
Mr. VANCE was afraid the Chancellor of the Exchequer
fell upon a class of holders of bills of exchange who ought
not to pay an increased rate of stamp duty. The drawer of
'a bill of exchange generally derived the profit of the trans-
action, the parties among whom it circulated generally
having a small commission or some small interest in the
matter. Upon inland bills the drawer paid the stamp, and
the bill circulated freely without charge, except a small
charge upon transfer. But, suppose a hill from our North
Atnerican colonies came to an agent here to be placed to
the credit of a merchant, that merchant or agent who so
opened, it was without reason forced to go to the Stamp,
office and get a stamp affixed to it, while the original
drawer was exempted from the taxation. He thought it
unfair to place the tax upon one class of holders only. He
also objected to the right hon. gentleman's ad valorem duty
on bills of exchange. The drawer of a small bill usually
derived the profit of the transaction, but the brok ,r who
drew a large bill of exchange, say for sugar, perhaps only
got per cent. commission. He thought the commercial
world would be dissatisfied that taxation should thus be
placed upon the transfer of commodities in the gross.
Mr. MALINS concurred with the Chancellor of the Ex
chequer in thinking that the wiseand prudent course would
be to pay our way as we waist, rather than raise money on
loans wherewith to carry on the war. The Chancellor of
the Exchequer proposed to raise the income tax from 7d.
to lOid. for a year, of which amount he proposed to raise
7d. in the first half-year, and 3id. in the second
half-year. Now, he should concur in the policy
of this course, if it affected himself alone, or persons
who were ready to meet that increased payment. But,
when the right hon. gentleman considered the difficulty
that many persons had to meet direct taxation, and how
abhorrent the sight of the taxgatherer was to those who
had not ready money, he thought they would complain
that they should be called upon to pay the whole increase
in the first half-year. Why should not the Chancellor of
the Exchequer divide the payment into two equal sums,
and levy hit in the first half year, and 54d. in the second
half-year. (Hear.) It would make the burden much easier
to those who paid income tax, and it would make no
difference to the Government, because they were obliged
to borrow the money. and rather than distress those upon
whom the burden would be thrown, it would be wiser to
relieve them in the manner ho had pointed out. (Hear.)
The Government had only to take power to raise more Ex-
chequer bills, and they would thereby very much lighten
the burden upon the tax-payers. The Government would
do well to consider, now that we were upon the eve of a
great war, whether a great war could be carried on with a
restricted currency. (Hear.) The Chancellor of the Ex-
chequer must remember what took place in October, '47,
when wide-spread bankruptcy and financial ruin were only
averted by the repeal of the act of 1844. Hon. members
on his (the Opposition) side were prepared to give that
support which the Government required for carrying on
the war, upon condition that the war should be prosecuted
with vigour, since that was the only means by which it
could be speedily brought to a close. (Hear.)
Mr. W. BROWN was of opinion that Sir R. Peel's act
of 1844 was a serious loss and inconvenience to the country.
When the Government determined to give a large discre-
tionary power to the Bank' of England in October, 1817,
many houses were upon the verge of bankruptcy, and trade
was paralysed. The 7,000,000/. or 8,00 ),000/. then locked
up in the Bank of England on deposit might as well have
been thrown into circulation. . If war broke out it would
be necessary to take off those fetters from trade. He must
express his dislike and disapprobation of a bill so injurious
to the best interest of the country as that of 1844 had
been. (Hear.)
Mr. HAMILTON gathered from the papers that there
had been some departure from the usual practice with re-
gard to the purchase of Exchequer bills on account of
savings banks. It appeared that for more than a year pre-
vious tit the sth of May, 1853, purchases of Exchequer bills
had been made by the Commissioner for the Reduction of
the National Debt, and no purchases had been made of
stock. Now, the practice had been when the Coininis-
sioners for the Reduction of the National Debt made pur-
chases of Exchequer bills, for them to be cancelled, and a
certain amount of stock to be created. He wished to ask
whether those Exchequer bills had been cancelled, and
were now in the hands of the commissioners, and if that
hail led to an increase in the national debt ?
The CHANCELLOR of the EXCHEQUER—The lion.
member for Lambeth had referred to a promise that he
(the Chancellor of the Exchequer) was said to have
made last session, that he would apply the succession-tax
to tithes, and the probate duty to land. Now he was not
conscious of having given such a promise. The Government
had come to the conclusion that the old succession-tax was
still applicable to tithes. The amount was not verylarge,
and it would be better to introduce this subject when he
brought in a bill, which he intended to do this session, for
applying the succession-tax to corporations. With respect
also to applying the probate duty to land, he was not con-
scious of having given a pledge on this subject either. He
was quite satisfied with the changes made last year, which
he was convinced were beneficial. (Hear.) The state of
the finances did not allow him to operate upon the probate
duty at all, but, if he had operated upon it, he had not
been authorised by the Government to give, nor had he
ever given any pledge to apply the probate duty to land
The right lion. member for Oxfordshire (Mr. Henley) said
that he (the Chancellor of the Exchequer) appeared to have
held opinions contrary to those of Sir R. Peel with respect
to the state of the public finances. Bit Sir R. Peel stated
that doctrine at a time when the deficiency bills had run
up to between 8,000,0001 and 9,000,0001. But when they
had not reached an inconvenient height, and were only
2,000,0001. or 3,000,0001., the circumstances were very
different. With respect to trade and circulation and pub-
lic economy, the really wise course with regard to public
balances and deficiency bills was a middle course. It would
not be wise to gq on inerdasing deficiency bills to an inde-
finite amount, er, to such an amount as 8,000,0001. or
9,000,0001., but, as long as they'did not exceed 2,000,0001.
or 3,000,001., no inconvenience was caused. Hon. mem-
bers were mistaken if they supposed that a high state of
public credit was indicated by the balances iu question.
They had something to do with it, but the true test was
the state of the inmate and expenditure. Let there be a
surplus of income over expenditure, and he would answer
for it the state of public credit would not bo bad. If the
present state of public credit were tested by the price of
stocks, it could not be considered otherwise than satisfac-
tory that our Three per Cents. were at 91 when we seemed
about to enter upon a European war. (Hear, hear.) The
hon. member for Kendal (Mr. Glyn) had alluded to
the decrease of their issues by private banks, and the ex-
tinction of a portion of their circulation. Other members
had entered upon a larger field, and appeared to threaten
the house with a discussion of the act of 1844. Now, it
was rather early-to begin such a discussion when the exi-
gencies of war had not yet commenced. The Emperor of
Russia had already set hon. gentlemen and example of re-
moving tho fetters off the currency—(a laugh)—but he
trusted the Government of this country would not man-
age matters exactly in that way. (Hear, hear.) With
regard to the issues of private banks, hon. gentlemen
should remember .that Government could not move in
that matter without the concurrence of the Bank of Eng-
land, and that the Government had not been in 'a position
since-their private issues had been extended to make it fcr
the interest of that corporation to give that concurrence.
But circumstances might arise which would ere long make
the proposition of the hon. gentleman (Mr. Glyn) a most
useful measure. He was not disposed to differ from the
hon. member for Dublin (Mr. Vance) in what he said re-
lative to foreign bills of exchange, but when the hon.
gentleman saw his resolution upon the table, which he
hoped would be in the course of two or three days, he
would find that it was not obnoxious to the objections he
'had urged. He could assure the lion. and learned mem-
ber for Wallingford (Mr. Malins) that it was not owing to
the low state of the public ba'ances that the Government
proposed to levy the addition to the income tax in the first
half year. The state of the public balances had never
entered his mind in making that arrangement, The rea-
son why the Government asked for that increase in the first
half-year was, that they might be able to make provision
for the probable expenditure. The Go;irernment could not
tell what the expenditure of the year would be, but he had
stated to the house that if warlike operation were pro-
longed during the whole of the year, they must come again
to Parliament for supplies. The Government were now
making provision for the first six months of the year, and
they therefore proposed to make provision to raise the
money for those six months. That was the principle upon
which they were acting, and it had nothing to do with the
state of the public balances. If he understood the hon.
member for Dublin University (Mr. H cmilton) aright
he had inquired whether the forms prescribed by the act
of Parliament had been gone through with regard to Ex-
chequer bills, and whether the stock had been created
which by law ought to be created. Undoubtedly the
whole of the proceedings in question were of a formal cha-
racter under the charge of the National Debt office, which
took fffect invariably by an absolute provision of law. The
power given to the Chancellor of the Exchequer was this
—that he might, if ho pleased, apply the money in his
hands to the reduction either of the funded on the unfunded
debt. If he determined to reduce the unfunded debt, the
Commissioners of the National Debt purchased the Ex-
chequer-bills, which they hold until they ran out, and the
law provided that they should then be exchanged for per-
manent securities. The hon. gentleman (Sir H. Willoughby)
asked whether the Government had not thereby added to
the national debt ? [Sir H. Thad
funded
debt.] The hon. gentleman was quite as competent to
answer that question as himself. The Commissioners for
the Reduction of the National Debt stood in this predica-
ment—that while they were the debtors of the trustees of
savings-banks, they were the creditors of the nation. The
commissioners had large same of money which they had
to dispose of in investment's, When au ',mount of stook

I was created and put to the credit of the Commissioners of
! the National Debt, the dividends were payable to them,
and they re-invested those dividends according to law,
The hon. member for Evesham said that these accounts
were extremely complicated, and he agreed with the hon.
gentleman that it was very difficult to get any view of the
working of the system. He (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 mcst conducive t ) 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-
terest ; and, although it might be very true, 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. Ho was sure hon. gentlemen
would follow him in his expl_anation 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
months 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 net 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— I
(cheers)—but he doubted whether increasing direct taxa- I
tion was the best way of effecting the object. They might '
have equalized the 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 bon. 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 quorum—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 cap sble of proof that by the transfers
which then took place the funds lost nearly 2,000,0001. 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 he
kuevelthem was a loss, and they bad 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 ought''to be added to 'the 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 SIBTHORT 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 (luring the time of peace; but no
one was more anxious than he was that the present war
should be carried on in the beet possible manner, though
he very :such 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 wistied
to say a few words. There were two modes of proceeding
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 many 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. lat
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 . unfundid 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 the Exchequer, had done what he was quite
justified in doing. He durst say when the matter came
to be th roughly 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 gl d 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 wo 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 ; anq 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 yefar should come out of
the revenue of the year, I must protest against the priuci-
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,
ho 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 eng Ted .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 tho country can be fixed when it is engaged in
a struggle in which its very existence as a nation is at
stake. (Hear.) But ss e 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' feels 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 ho may belong,
that the diminution of the indirect taxation of this coun-
try during the last ten years has been such as to surprise

the most sanguine votary of the direct school. The hon.
member for Montrose complimented the right hon. gentle-
man on the clear and able statement he had made to-night.
The right hon. gentleman is used to compliments for his
aide statements, and no man more deserves them. (Hear,
hear.) But lam bound to say, having listened with much
interest and close attwation to all that fell from his lips,
that, though I found one portion of his statement vex,'
clear, there was another portion which appeared to me in-
volved in an obscurity which does not become financial
statements at any time, and under such circumstances as
are those under which the right hon. gentleman has made
his statement to-night. (Hear.) So far as the right hon.
gentleman's statement of the balance-sheet was concerned,
nothing could be more perspicuous ; and, as to the remedy
by which he is . prepared to supply the deficiency which
may occur, nothing could be more plain. He gave as to
our expenditure and our income an explanation in lan-
guage which no one could misconceive, and he de-
scribed the remedy by which the anticipated deficiency
was to be supplied in a manner which no one could
misapprehend. Objections may be taken, no doubt,
and I reserve to myself the power, on another occa-
sion, to make them, as to the manner in which
the increased income tax is to be raised. (Hear,
hear.) But the state of the revenue, of the income and
expenditure, and the means by which the deficiency of the
increased expenditure is to be supplied, have been placed
before the committee and the country in a manner which
cannot be misunderstood. When, however, we come to
. _ _

the second portion of the right hon. gentleman's state-
ment —that which relates to the actual state of our finan-
ces and the money in hand—we did not experience the
same satisfaction, or, as it appeared to the, the same
perspicuity. (Hear, hear.) The right hon. gentleman, in
anticipation, probably, of objections, favoured the com-
mittee with, I will not call them itivect'ves, but un-
friendly criticisms on large balances in the public Exche-
quer.. There may, no doubt, be two opinions on the degree
of treasure which we should have at command, but, being
of that school which has been educated to believe that an
ample and sufficient balance in the Exchequer is au im-
portant feature of finance.—(hear)—l feel it to be my
duty to impress on the committee my conviction that the
present state of oar balance is not sufficient, and may lead
to danger. (Hear.) The committee, lam sure, will, on
reflection, feel that this is not a point of indifference, even
in ordinary times ; while in a time of exigency, in a time
when the country may be suddenly called upon to make
large unforeseen exertions, it is most unsound to encourage
the idea in the Government that the finances of the coun-
try may be left in snch a condition that, in order to meet
engagements from new circumstances, you must stretch
that credit, which should at all times be treated with
great delicacy and reserve. (Hear, hear.) When the late
Government quitted office, on the 3d of January, 1853,
immediately before our quitting office the balance in the
Exchequer was nearly 9,000,0001. sterling. (Hear, hear.)
One year after, at the commencement of this year, in
January, 1854—exactly one year after we left office—the
balance in the Exchequer was reduced one half. (Hear,
hear.) The right hon. gentleman asks, " What of that ?
If I employ the public money fur the advantage of the
public, why do you criticise my conduct ? Why do you
cavil at my policy ?" If the right hon. gentleman can show
us that he has conducted with the necessary prudence his
affairs—if he can prove that he has employed the public
money for the public benefit—the question falls, and there
is no doubt the right hon. gentleman will have a verdict in
his favour, even from those who are, abstractedly, approvers
of large balances. But I want to know what are your
balances at the present moment, and what are the engage-
ments which the right hon. gentleman has to meet at the
close of the financial year—on the sth of April next, one
month from this time? (Hear, hear.) I think that is test-
ing the question fairly for the right hon. gentlemen. I can
only estimate the amount of the balances in the Exchequer
at the present moment by referring to the returns of the
parallel period in the preceding year. According to the
parallel period in the preceding year, allowing for the ex-
traordinary deductions from the balances which were occa-
sioned by the conversion of 6,000,0001. sterling, there ought
to be now in the Exchequer—l mean, of course, on the sth
of April—something like 3,000,000/. sterling. There is no
reason why, on the sth of April next, the balance in the
Exchequer should be more than 3,000,0001. sterling. Now,
what will be the liabilities of the right hon. gentleman at
that period ? He has, first, to pay the dividends then due,
to meet the public credit. It is not in my power precisely
to fix the amount so required, but it will certainly not be
less than 6,000,000/., and it may exceed 7,000,0001.; let us
take it at 6,500,0001. The right hon. gentleman has, at the
same time, to complete the conversion scheme, or to meet
its non-success, to the amount of not less than 2,000,0001.
more, or, together, 8,500,000/. ; and he has, in the third
place, to meet the current demands of the public service
in its increased amount. Upon the whole, taking a mo-
derate estimate, I should say that the right hon. gentle.
man will, on the sth of April, have to meet demands to
something like the amount of 9,000,0001. or 10,000,0001. He
has to meet this, it would appear, with a sum of 3,000,000/.
Under such circumstances I want to know how he proposes
to carry on the business of the country. (Hear.) The right
hon. gentleman may say again—" What is the use of large
balances ? I can borrow money, and will take the amount
in deficiency bills, which will carry me on." The right hon.
gentleman in the quarter which is now expiring, from
anazary to April, has only been able to carry on his affairs
by deficiency bills to the amount of 4,000,000 sterling.
(Hear, hear.) The right hon, gentleman will perhaps
tell us that 4,000,0001. sterling is not an immoderate
amount of deficiency bills, and that it is better to carry
on the affairs of the country by deficiency bills to
that amount than by amassing the public treasure in the
Exchequer. I will let that point pass. The right hon.
gentleman says the amount of deficiency bills that Sir R.
Peel complained of was more than 4,000,0001.—was
6,000,0001. or 8,000,0001. Will the amount of deficiency
bills in the coming quarter that will be ne essary for the
right hon. gentleman be less than 6,000,000/. ? (Hear,
hear.) Is the committee of opinion that at any time the
Chancellor of the Exchequer should have in any quarter
6,000,0001, of deficiency bills ; and is the country of opi-
nion that public affairs should be thus conducted at a mo-
ment when the Chancellor of the Exchequer comes down
hero and tells us that it is impossible for him to make any
precise statement of affairs because he is not prepared to
meet any need that may be emerging ? (Hear, hear.) Sir,
I say that there should be a balance in the Exchequer—
(hear, hear) ; —but, instead of a question between proper
and improper balances in the Exchequer, between ample
balances and excessive balances, the question is now be-
tween a balance at all and a large deficiency. (Hear, hear.)
In fact, at this moment, looking to the completion of the
financial year, instead of a balance in the Exchequer you
have an enormous deficiency. (Hear, hear.) Well, now,
is that a state of affairs which is desi, able ? Is it desir-
able at any time? Above all, is it desirable in a time of
war ? (Hear, hear.) These are questions which cannot
be evaded. You may to-night say, "We have nothing to
divide 'about ; let it pass;" but you may rely upon it,
especially if those events occur which we now count upon,
that you will find this weakness in your finance perplex
all your movements, and destroy, perhaps, all the fine
combinations of the Chancellor of the Exchequer. (Hear,
hear.) Why should this state of things exist? Yon had,
not so long ago, an ample balance in the Exchequer, in a
time of peace, of commercial prosperity, of low prices ;
you had an ample balance when on the eve, I will not say
of disasters, but of contingencies that may involve disas-
ters. Why is this balance' which we had in time of peace,
not at your service now? That is what I want to know.
Had you come *o this low state of the Treasury in the
natural cause of natural events, and this position of diffi-
culty had befallen you, you might very fairly then have
said, " We have to encounter these circumstances of diffi-
culty and danger ; help us to buckle to, and face them."
But I said you had, when you entered office, this large
surplus at your command, a surplus that would have met
the exigency of the present moment ; this surplus does not
exist. Why does it not exist ? All this has been omitted
from the financial statement with which we have been
fayoured by the right hon. gentleman. (Hear, hear.) That
great balance has disappeared because the right hon. gen-
tleman about a year ago chose to take a course in monetary
affairs which the circumstances of the times did not war-
rant, and which he pursued in opposition to the best au-
thorities that could possibly guide a man even as gifted as
the present Chancellor of the Exchequer. (Hear.) Tho
right hon. gentleman dealt with our resources in a manner
which has ultimately deprived you of this command of
capital in two ways. His great object was to reduce the
rate of interest paid on the public securities, funded and
unfunded. He began by dealing with the reduction of in-
terest on Exchequer-bills. I think it was on about the Bth
of February, 1853, that the right hon. gentleman reduced
the interest on Exchequer-bills to Iti per cent. For six
weeks before the right hon. gentleman took that stop every
indication which generally influences and should govern
gentlemen in the position of the Chancellor of the Exche-
quer had intimated that the value of money was rising. I
will not look at papers, because that would &cable the
committee ; and if I make any mistake in my figures—in-
voluntarily, I am sure, for I desire to make no inistake--I
shall, doubtless, be immediately corrected. The price of
Consols when Lord Derby left office, about the end of
December, was 104 • when Parliament met again, in
February, Consols had been continuously declining, and
they were then down to an Exchequer-bills, zwiti;,
which when Lord Derby left office were from 69 to 72,' had
fallen by February to 55-59. These were, I think, very
significant symptoms. (Hear, hoar.) Yet, with such in-
dications before him, the right hon. gentleman began that
great campaign which was to be signalised by vast reduc-
tions in the public debt of the country. Did the right hon.
gentleman receive no warnings from this house ? A man
whom we all look upon as a great authority on these sub-
jects rose and entreated him to pause. The hon. member
for Westmoreland, whose absence from the house this ses-
sion has been such matter of regret—a man whom we all
regard as of most competent authority on all these subjects
—Mr. Alderman Thompson—particularly warned the right
hon. gentleman, tolling him that the time for his operation
was peculiarly inopportune, and reminding him earnestly
that money was then in large demand, and per cent.
dearer than it had been five months before. The right hon.
gentleman, kowever, persisted in his plans. I will not nog,'
dwell on what were the consequences of those plans. Tho
committee will recollect that these Exchequer-bills, the
price of which I have just quoted, the price of which had
so declined, had the interest upon them reduced to per
oont. at the time of which I have spoken. On the sth of
May they were at 2s. premium; on the 26th of May they
were at par ; on the 26th of September they were at 103.
discount. The right hon. gentleman, in the interval, had
made his financial statement, and estimated that by the
reduction of the interest on Exchequer-bills he should effect
an annual saving of 65,0001. It appears by one of the re-
turns for which I moved, and which are now on the table
of the house, that the loss which that reduction of interest
has occasioned is something like 36,0001., making, in the
whole, so far as the financial statement of the right hon.
gentleman is concerned, a difference of 100,000/. (Hoar.)
That is the brief account of the dealings of the right hon.
gentleman with Exchequer-bills, so far as the reduction of
interest is concerned. But the right hon. gentleman fol-
lowed up this reduction of interest on Exchequer-bills by a
much larger enterprise, which was announced as the herald
of measures which would ultimately affect the amount of
interest on the entire national debt—l allude to the plan of
the right hon. gentleman for converting what he styled tho
patriarchal stocks. It is of great importance that the com-
mittee should recollect that by these plans of conversion
the country is now deprived of that balance in the Exche-
quer which nothing I have heard to-night has convinced
me would not have been of great benefit to this country,
especially at this critical juncture. Well, Sir, wero warn-
ings wanting to the right hon. gentleman on that occasion ?
He advanced with only a small part of the great scheme,
And what was that? He was to convert, in round figures,
at the rate of 1001., stock, or an aggregate of small stocks,
forming altogether a sum of little short of 10,000,000/.ster-
ling. I shall say nothing of the scheme by which this con-
version of stock was to be carried into effect. It consisted
of three schemes, all of which were diametrically opposed
to each other, (Hear, hear.) Ono of these was founded on
the principle that the amount of the public debt should bo
increased ; another on the principle that the amount of the
public debt should be diminished; one went on the prin.
ciplo that the amount of the funded debt should be dimin-
ished ; another on the principle that, by means of Exche-
quer-bonds, it should be largely, and, if the House of Com-
mons did not interfere, illimitably increased. The right

• •
hon. gentleman brought fer*terd his scheme with Confi-
dence in its merits and its strong success which strong con-
viction alone could give ; for he even proposed, or rather
promised, that means should be taken to prevent the evils
that might be occasioned otherwise, by too vast and sud-
den a rush of the public to carry out his views. (Hear,
hear, and a laugh.) Was the right hon. gentleman, I ask,
without warning at the time of the danger of his proposed
course ? I will not quote the words that fell from myself
and other gentlemen about me on this bench, which it
might be supposed would not • be heeded, as coming from
political opponents, though even the words of political
opponents may not be without their value to some men ;
but I will refer to the warning which was given to the
right lion. gentleman by the hon. member for Hunting-
don, a gentleman of the 'very highest authority on these
subjects, of conspicuous moderation, and who took an ac-
tive part in extending friendly opposition to the plans of
the right hon. gentleman. That hon. gentleman, on the
22d of April, emphatically warned the right hon. gentleman
that there were marked indications intimating the extreme
inexpediency, the danger, of forcing a 24 per cent. ate& on
the market, and of reducing the interest on Exchequer-
bills. (dear, hear.) Despite this and other warnings, the
bill for converting " the patriarchal stocks" was read a
thiid time on the 23d of April ; and on the 3d of May was
read a third time in the other house of Parliweent, after
an opposition by a noble lord of high authority on such
matters, himself once a Chancellor of the Exchequer, and
who certainly had no political sympathies with those who
sit on this bench—my Lord Monteagle. (Hear, hear.) I
shall say nothing, or very little, of the unbusiness-like way
in which this bill was drawn. The fact is, it was desaribed
es a bill of such vital importance by the leader of the house
(whom I don't see in his place) that he depricated all cri -
ticisin upon it, and it was prepared and carried— I won t
say with indecent haste, but with such ill-considered limiter
that when it was passed it was found out that there was a
vital omission in it. It was discovered that in case any of
the holders of these stocks dissented from the proposition,
the Governtment had omitted any machinery by which
they were to be paid the amount of their capital that was
about to be discharged. It was in August—in the last,
week, I believe, of the session—l see the bill only received
the sanction of Parliament on the 16th of August—that
this measure, empowering the Treasury to pay dissentients
in various ways out of the consolidated fund, was passed—
passed in the morning, with perhaps 20 members present ;
and it was this bill so precipitately passed to remedy the
mischances of what ought to have been a more mature
measure—it was this rash, hurried, fatal piece of legislation
that has deprived the Exchequer of its balances--(cheers)
that has depreciated the consolidated fund, that in a time of
war has allowedyou to scramble through the first quarter of
this year with a deficiency of nearly 4,000,0001. sterling and
which, so far as I can frame an opinion—and my object is
only to elicit opinion—it is to the interest of all who have
accurate information on this important subject, which, so
far as I can form an opinion, will on the sth of April, with
a balance in the Exchequer of 3,000,0001., leave the Chan-
cellor of the Exchequer to encounter demands of nearly
10,000,0001. sterling, if not more; and this in the time of
a war which night after night every Minister who rises
prepares us to expect will be one of longer duration and
greater intensity than was anticipated when first the sub-
ject was under our notice. Now, sir, that appears to me
to be an important point for us to consider—why we are
in the position which I maintain the Exchequer ought not
to be in. It was said the other night, with regard to the
diplomatic correspondence on our table, that it was of no
use to criticise the past, that the country was in danger,
and that, under these circumstances, whether mistakes had
been made or not, we must stand to those errors (l! they
be errors), and that we must henceforth look only to the
future. Well, sir, I have not made these observations
with a view to criticise the past. If they had no reference,
no necessary reference, to the future, I
.should not have
uttered a word. I moved for the series of returns which
are upon the table at the beginning of the year, when Par-
liament first met, because I thought it of great importance
that accurate information on such a subject should die in
the bands of every member, and because they threw
light upon what was the subject of fair discussion—the
conduct of the late Government and the position in which
they left the financial affairs of the country. I might
make objections to the course taken by the right hon. gen-
tleman, and ask for explanations, but I am not desirous
of doing so to-night on a subject of so great importance as
the financial statement ; and why I bring these points be-
fore the house is, because I am certain that if you neglect
this scheme, if yon sanction it by your approval, if you
do not interfere to prevent its being permanently adopted,
you will oftene in the course of this year, find yourselves
involved in endless inconveniences, and even in monetary
' disaster. (Hear.) Let the right hon. gentleman come for-
ward, with respect to this second part of the subject, with
the same frankness as he did with respect to the first. He
says there will be a deficiency ; the nation is about to enter
into a war, and there must be increased expenditure ; the
Government must have efficient means to carry on the war
with vigour, and the House of Commons must be ready'
and prepared to support Ministers with ample means to
put the revenue into a healthy state. Would it not be
better for the right hon. gentleman to ask us to put the
Treasury and the Exchequer in a healthy state at the same
time ? (Hear.) Why does he not come forward and say,
" I attempted to reduce the interest on the public debt;
.1 have not succeeded as I intended ; but who can deny
the object was one worthy of an effort, and worthy of the
attention of Parliament ? Whether I have succeeded or
noteit is one of those objects which every Chancellor of the
Exchequer at some time or other should endeavour to carry
out. I have for the present been baffled by circumstances
—grant even that I have made miscalculations—but I ap-
peal confidently to the generosity of the house as to my
endeavour and its result. There has been or will beA loss
on these transactions. Let us meet that loss. I have re-
duced the amount of public debt ; then put the public
debt and the Exchequer in the same position as to amount
as it was. 'Do that, and then I shall have balances in the
Exchequer for the public service at a moment of exigency
like the present." That is the course which I think the
Chancellor of the Exchequer ought to pursue. (Hear.) I
do not think the Chancellor of the Exchequer ought to
have evaded fairly putting before the house the conse-
quences of his immature schemes for the reduction of in-
terest on the funded and unfunded debt of this country.
(Hear.) Better that we should have with candour ad-
mitted the disappointing results of his efforts, and that be
should have asked the house—and I am sure he would not
have appealed in vain—to place him in the same state so
far as the amount which he had reduced. The house
should have been called upon to make that good to the
Exchequer and the country. The right hon. gentleman
has diminished the amount of the public debt of this coun-
try by 3,000,000/. sterling. He is entitled, then, to oar
support to the amount of this 3,000,0001. at a moment of
exigency like the present, and he should have come
forward and asked us not merely to vote taxes in order
to put the revenue in a healthy state, but for such a vote
as should put the Exchequer in a healthy state; for, de-
pend upon it, however you may balance income and ex-
penditure, however you may make a surplus upon paper,
if your Exchequer is not in a right state you will always
be in a position of embarrassment and difficulty. (Hear.)
Now, the right hon. gentleman must raise deficiency bills
for the quarter from the sth of April to July. I should
like to know whether he has framed an estimate—l sup-
pose he has done so—of the amount of deficiency bills
which will be necessary to carry on the public service from
April to July? Can he have formed any estimate with
regard to some of those extraordinary exigencies to which
he has referred as possible ? From week to week; from
day to day, something may occur which will demand from
the right hon. gentleman what we may call a large balance
at his banker's. (Hear.) The right hon. gentleman thinks
what lam now going to refer to are trifling points. But
the right hon. gentleman must pay for his deficiency bills.
I have no doubt he finds the Bank of England as yet very
indulgent, but that will not be the case for long if he keeps
a very small balance there. The Bank of England will not
like to be lending 5,000,0001. or 6,000,0001. of money at a
lower than the market rate of interest, if they are only to
have a balance of some 300,0001. on the public account.
The Bank of England, sooner or later, must charge a Mi-
nister who depends on deficiency bills the market rate of
interest, and I want to know what may not be the market
rate of interest at such a time as this ? (Hear.) We have
seen it suddenly rise at such a moment. Suppose, for in-
stance, you have a prolonged continental contest and a
drain of the precious metal. Are you prepared to sanction
a system that the Chancellor of the Exchequer should be
administering the finances of this country by the aid, the
systematic aid of deficiency bills, and not by real balances
in the Exchequer ? A very great responsibility will de-
volve upon the committee if they sanction by their appro-
bation a course like that. (Hear, hear) I shall not
enter into any consideration of the causes which have in-
duced the Chancellor of the Exchequer to take the course
he has adopted with respect to his attempts to reduce the
interest either upon Exchequer-bills or upon stock. I re-
serve to myself the right of referring to and of considering
these pleas if they are made. My object is to impress upon
the Committee of Ways and Means the great importance
of refusing their sanction to a system of conducting the
finances of this country, which I believe to be unsound,
and which I believe also will end in great embarrassment
and difficulty to theright hon. gentleman. I guard myself
by saying this, though—that 1 deny the validity of any
pleas which may be brought forward in vindication of his
course either from the state of the harvest, the existence
of war, or from circumstances of that kind. I won't enter
into a consideration of these points, because then it would
turn this discussion into merely a personal -controversy as
regards the Ministry. I wish to keep it to this business-
like point—does the Committee of Ways and Means ap-
prove reducing balances in the Exchequer to such a degree
that the Chancellor of the Exchequer mast systematically
depend upon deficiency bills to a great amount for carry-
ing on the service of the country ? (Hear, hear.) I mean
by " a great amount" millions • I mean 6,000,0001.,
4,000,0001. we have evidence of, but I mean a greater sum
than that ; and if the Committee of Ways and Means does
not approve that course, let them not censure the Chan-
cellor of the Exchequer, but let them tell him to-night that
they are prepared, with the same willingness, with the
same unanimity with which they were prepared to support
him in the imposition of freedh taxes, in order to produce
a sound state of the revenue, that they are equally pre-
pared to place on a healthy footing the balances of the
Exchequer, which have been imperilled, perhaps, by the
injudicious, but certainly by the well-meant, plans of the
(e:fit be the
crut;
i:aithde
ethpaintiewnheeftthheer
Commit'tehaen d
Means that the Chancellor of the Exche-
quer Chancellor of thEexEciaxecqhue
treeeveenfuwe oary
should not unnecessarily be borrowing money.
The CHANCELLOR of the EXCHEQUER--The right hon.
gentleman who has just sat down complains that upon
some recent occasion liberty was denied him to discuss past
transactions. Now, lam sure I was no party to the denial of
that freedom. The right hon. gentleman, so far as lam con-
cerned, is perfectly welcome to the discussion of any trans-
actions past, present, or future; and if he has any particular
fondness for discussion upon questions of finance in which 1
am interested he will always find me quite ready to contribute
to his interest in that pursuit by taking part iu it, as long es
he is ready to return to the charge and the committee liac°
patience enough to listen. (Laughter.) The right hon.
gentleman has complained of me to-night for want of frank-
ness, because I did not state to the committee the condition
of the public balances. Now, lam in the recollection of the
committee, as to whether I did or did net allude to that
point. I intended to state, and believe I did state to theta
distinctly, in a few words, that 12 months ago the public
balances were high, and that now they are low, and, after
stating that they aro low, I went on to explain how the moneY,
had been disposed of. (Hear, hear.) But, Sir, I won't dwell
on what may be considered as personal charges ; I will 6.0
rather to the discussion of those transactions of last year to
which the right hon. gentleman has thought proper to refer-
The right hon. gentleman says that, with great imprudence,
in the early part of last year I reduced the rate of interest
upon Exchequer-bills ; that I anticipated from that reductio
the saving of 65,0001. a-year, but that, instead of a saving',_e
.n eo,
the result has been, in consequence of my proceedings, t
there has been a loss of 35,000/. during the year on Exche-
quer-bills. quer-bills. Well, Sir, it appears to me in the first place
supposing I were to admit the facts of the right honourable
gentleman, his charge would resolve itself into this :
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