The Sun.
London, England, 1854-04-12 00:00:00

being about to make a statement had caused a great
deal more alarm and apprehension than had existed before.:
(Hear.) It was bruited about that they were to have a
loan, that a fresh incotne.tax was to be proposed—in fact,
all sorts of rumours were abroad, and it turned out at last
that all the right hon. gentleman wanted was to compare
the state of the French and English funds, and to tell the
house that the English funds were not so low, and the de-
ficiency not greater than it was in 1844 a period following
the enactment of Sir R. Peel's income tax, which was in-
tended to correct the very evils which he (Mr. Baring) was
atraid were now arising. (Hear) He certainly should not
have thought it necessary for the right hon. gentleman to
enter into so long a statement for the single purpose of re-
moving any apprehension which he might think existed.
Ho could see no cause for elan' or apprehension ; the
only mode in which any cause could arise would be by mis-
management, and he trusted that after all that had passed,
the Chancellor of the Ex •hequer would, in his futnre
financial proceedings, show inure prudence than he was
afraid had been 'displayed during th.t last year. (Hear.)
He had certainly heard with gr -at regret that the right
hon. gentleman recognised asthe basis of his system that
he should not provide-for ths expenditure which he had to
meet hy the incoming revenue, hut that he should rely
upon the subsequent accruing revenue, and meet the defi-
ciency by Exchequer-bills. tau quite agreed that the Go-
vernment had a very fair claim for accommodation anti
assistance on the Bank of England, seeing that no private
credit could be maintained in this country if the slightest
suspicion were thrown on the maintenance of the public
faith. The Government hod the first claim on the Bank no
doubt, and that assistance under ordinary circumstances
might be rendered by the Bank, not only without damage
to the commercial body, but also with profit to itself ; but
the right hon. gentleman must remember, before callingfor
that assistance too often and too systematically, and be-
fore making deficiency-bills the basis of his system, that
circumstances might arise which no Government could
foresee, in which that assistance, if demanded from the
Bank, could not be afforded without interfering very-
largely, under the present banking system, with the con-
dition of the banking community. His right hon. friend
the member for Bucks-had alluded to the evidence of the
hon. member for Kendal, but it would be seen that that
hon. member, when giving evidence and advocating the
course taken by the Chancellor of the Exchequer of relying
on deficiency bills, had very shrewdly remarked immedi-
ately afterwards that in that case the bill of 1844 must be
altered. Without entering into an argument on that sub-
ject, he might say that if the act of 1844 was to be fairly
tried, the Government must not resort to the system of
keeping small balances, and obtaining the aid of the Bank
by deficiency bills. In fact, a shrewd opponent of that act
could not take a course more likely to damage it than to
advise the Chancellor of the Exchequer not ts provide for
his deficiency, but to rely on the aid of the Bank of Eng-
land by means of deficiency bills. He was convinced that
great injury would arise to public credit if this system of
relying on what were in point of fact advances from the
Bank were resorted to, and it was on that account that he
desired to enter his protest against it as a policy fraught
with danger to the financial security of the country. In
I.4'rance the system had been too much strained, and great
difficulty had been felt in consequence, and the right hon.
gentleman, too, might find it not so easy to get out Exche-
quer-bills as he would have found it to keep them out at a
reduced rate. Hernight find it, too, not so easy to borrow
mon y from the Bank of England, and then, probably, he
would' be driven to apply for a loan at a much less favour-
able moment. He would not, however, be supposed to be
of opinion that the country was not and ought not to be
able to raise a loan without the least damage to the future
prosperity of this country, and he thought the right hon.
. gentleman in his budget speech took a very narrow view
of the subject when he stated that our great debt threw
impediments in the was of our raising a loan. Prove
the war to be just and necessary, and every effort would be
made by the country to carry it on, and although it might
be very well to say that so long as they could they should
meet the expenses of the war by taxation in the year, yet
when those expenses were changed from 2,009,000/. to
20,090.6001., they, would not. be able, neither would-it be
just, to raise such a sum as that fromthe annual taxation,
from the capital: in fact, of the country. If they attempted
such a course capital would be driven out of the country,
the resources of the country would be impaired, and pus-
terity would feel its effects quite as much in proportion-as
the preset generation. (Hear, hear.)
Mr. LAING agreed with the Chancellor of the Exche-
quer tha-, great, !le at wk uited it e by s A:using the public
mind of the stmements which h al otsni put forth with
regard to the gteat am,,nnt of the deficiency bills. He
believed there was nothing whatever in the present state
of things to justify atlytniug liki :thrill or a.pl.rehmsion.
From the figures before the house it appeared that our
balances in the Exchequer had been diminished by some
0,000.0 Of. or 6,009,000/. heti:sw the amount at which they
would otherwise have stood, and that that amount had
been employed in paying off the South .Sea Stock an oth‘ r
funds. He went with. the right hon. gentleman in malt-
ing that experiment, but he thought that when it was
found a mistake had been made, it would have been the
wiser course to prOp :se a conversion of a I;trge proportion
of the stock into ordinary stock, offering some small bonus
to the holders, which might have induced them to take the
stock instead of being paid in mosey. The wisest mode
of replenishing the balances, lowered by this operation,
would be, he thought, by a loan, and it would be better
for the Chancellor of the Exchequer to propose it now,
when he could get it under favourable conditions.
Sir H. WILLOUGHBY would only say, upon the ques-
tion of balances, that in his view it would be better for
the right hon. gentleman, by some means or other, to re-
store hie balances, if necessary, by a direct loan.
The CHANCELLOR of the EXCHEQUER said, the
right hon. gentleman (Mr. Disraeli) and, still more, the
lion. member for Huntingdon (Mr. T. Baring) had entirely
misapprehended, and, consequently, had mis-stated to the
house both the language he had Used; and the principles
and opinions he had expressed. The right hon, member
for Buckinghamshire said, "It won't do for you to be an
habitual borrower upon the Bank ;'' and the hon. member
for Huntingdon declared that he (the Chancellor of the
Exchequer) made the use of deficiency bid's the keystone
of his system of finance. Now, he had never used any such
language, and had never done any such thing. -What was
the truth about his being an habitual borrower ? Why,
this was the first quarter he had borrowed at all—(hear)—
and, under such circumstances, it was very hard to be
charged with being an habitual borrower. He had been
fund-hed by the Bank with a statement of the amount of
deficiency bills issued and brought to charge during the
last quarter, and the result of this statement was, that there
were only eight days duriug the last quarter—during the
previous quarters he believed there was not any at all—at
which the Bank was in advance of the public balances,
and upon those eight days the amount of accommodation
varied from 29,0001. to 125,0001. The sum of 125,0001 was
the largest amount of accommodation from the Bank dur-
ing the last quarter. There was, he repeated, no founda-
tion for the statement that he was an habitual borrower—
far less that he had made the issue of deficiency bills the
keystone of his system of finance. Nothing which he had
ever said, and nothing which he had ever done, bore the
.slightest correspondence with the statement of the hon.
member tor Huntingdon on this point. He had, indeed,
said—and this was a matter no doubt open to discussion—
that a moderate and limited use of deficiency bills was, in
his opinion, a good and prudent practice
Mr. T. BARING—I did not-attribute to the right hon.
gentleman the use of the expression that the issue of defi-
ciency bills was the keystone of his financial system. I
•only said that was the tenour of his argument. (Hear.)
The CHANCELLOR of the EXCHEQUER continued—
How was it possible that any snub de, tuction could have
been made from what he had said, when his argument went
only to the extent that you might within narrow limits, go
to the Bank for advauces which night be taken up within a
week or fortnight of the quartet's revenue? The amount
of deficiency bills was the rose t of the extraordinary de
manila made for the liquidation of stock. But a more
important point than this was, that the right lion gentle-
man and other hon. gentlemen were under the impression
that a deficiency of this kind, once created, was not to be
restored without the use of 80111:3 extraordinary measure.
Now, he might tell the hon. member (Mr. T. Baring) what,
if he might say so, was the keystone of his system of
finance. It was invariably to ask this house to provide an
income which would more than meet the expenditure of
the year. (Hear, hear.) That, in his opinion, was the
keystone of finance, and, his secondary doc:rMe was this—
that the question of having a large or small balance at the
Bank was a question - open to discussion, but it was a
matter of no great moment provided you kept within nar-
rriv bounds, and provided-you always adhered to the prin-
ciple of avoiding a deficiency upon the year's account, of
avoiding a fictitious surplus, and of having au income which
would always more thin cover your expenditure. (Hear.)
The right hon. gentleman the member for Buckingham
shire had stated that he trusted he (the Chancellor of the
Exchequer) would devise some means of escaping from his
present situation in respect to the public balances during
the recess. Now, the statement which he (the Chancellor
of the Exchequer) had made to-night was, with the same
exception, what he had stated about the issue of Exchequer
bils—it was a retrospective statement. He had admitted
that, although he did not consiser there would be any-
thing inconvenient or alarming in the present amount of
accommodation, under ordinary circumstances, yet that,
under present circumstances, the case was not exactly the
same. (Hear.) He admitted that at such a period as this
we ought to take what in ordinary phraseology was called
more elbow-room, with reference to the provision of means
for the public service. (Hear.) Upon that subject it would
be absurd to enter into a discussion at the present moment.
It might be his duty to take a further view of the demands
of the public service for the year, and, if he was unfor-
tunately compelled to do so, then would be the time to
state to the house the means by which he proposed to place
the Exchequer in what he believed to be a safe and satis-
factory condition. (Hear.)
The paper was then ordered to be laid upon the table.