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

FINANCIAL STATEMENT.

The CHANCELLOR of the EXCHEQUER (having
laid the balance-sheet for the year upon the table) said,—
Sir, I have to move that that paper, being an account of
the income and expenditure for the year, do lie on the
table. It is my intention to make a statement in some de-
tail with reference to the subjects which I have included
in the notice that appears in my name on the votes—viz.,
to make a statement respecting the revenue for the year
now closed, the condition of the public balances, and the
condition of the unfunded debt; but the right hon. gen-
tleman opposite, the member for Buckinghamshire, has to-
night moved for further information upon a variety of
points connected with these subjects, and I therefore think
that, so far as the matter of argument is concerned—or
matter with respect to which there may be differences of
opinion—l shall do well, so far as lam a party concerned,
in postponing any reference, whether as to the objections
or defences, to topics of that nature. My intention, there-
fore, is to confine myself entirely to statements which may
be called statements upon matters of fact, and my reason
for my making statements of this kind to the house at the
present period is, that in the first place I have not yet had
the opportunity of presenting to the house a complete
account of the income and expenditure of the past year ;
and, in the second place, because it is exceedingly import-
ant, at a moment of alarm and excitability like the present,
that the public should be in possession of the most au-
thentic information on points on which they naturally
desire to be informed. At the same time, considering the
nature of the discussion which we have been passing
through during the principal part of the evening that has
elapsed, I shall endeavour to be very brief in the particu-
lars which I shall lay before the House. Those members
who have examined the account of the revenue of the
country published on the 6th of April will not have
failed to observe, or, at least, to infer from that ac-
count that it is a more favourable return than on the
6th of March I had given the House reason to expect.
The improvement, in fact, on the 6th of April, as corn-
, pared with my estimate of the 6th March, was no less than
749,0001.; but it must not be supposed that so considerable
a difference is to be accounted for byany substantial change
of circumstances. I spoke to the house at that period of
the necessary uncertainty attending the collection of the
income tax in Ireland, and of the extended income tax in
England, as to the precise period when that amount would
come into the Exchequer, on account of the variety of new
circumstances which the revenue department had to en-
, counter. However, that department was enabled to reduce
very greatly the amount of arrears which I then thought it
safe to estimate would be carried over to the present year.
If there is any difference as regards the ultimate receipt,
it is merely a difference as to the time of the money arriv-
ing at the Exchequer; but the difference between the esti-
mate I submitted on the 6th March with reference to the
income tax and the amount received is 417,0001. (Hear.)
Another portion of the difference to which I have referred
was under the head of Customs' Revenue. The Customs'
revenue has been subject to the action of an exceptional
cause on account of the anticipation of the reduction in the
tea duties. The effect of that reduction was necessarily to
diminish, to a very great extent, the number of entries for
the payment of duty on account of tea for delivery from
the warehouses during the past quarter, and therefore there
was a great loss on that account. But the operation of that
loss has been recovered, because, parties being anxious to
deliver the tea at a very early hour on the morning of the
6th April, this to a certain extent involved the payment of
duties on the previous day, the sth April, and thus a large
sum of money came into charge on that day, which, pro
perly speaking, belonged to the next quarter. These are
the two main causes, and indeed the only causes, to which I
may refer as accounting for the excess of revenue received
on the sth of April as compared with my estimate of the
6th of March. (Hear.) The house will observe, in examin-
ing the balance-sheet on the table, that the excess of in-
come over expenditure on the year ending the sth of April
last amounted to 3,524,0001. The excess of income over ex-
penditure for the year ending the sth of April, 1853, was
2,460,000/. The estimate I had made on the 6th of March
of the excess of income over expenditure was 2,851,0001.,
that of course being increased in consequence, as I have
shown, of the receipt of money between that period and
the sth of April, which I should not have been warranted
by the revenue department in admitting among my calcu-
lations. This gives me the opportunity of observing upon
one among many elements of uncertainty—though they are
all confined within certain limits—that attach to our pre-
sent system of accounts. If the balance of the present year
had been found precisely in the same manner as the bal-
ance of last year—if the same sums had been paid out of
the Exchequer for the purpose of supplying the Paymaster-
General's accounts for supply service, the balance would
have been less by fully 500,0001. In making a comparison,
therefore, between the surplus of the present year and the
surplus of the past year, the house will do well to estimate
the present surplus at 3,000,0001. instead of 3,524,0001. It
may be asked why was there this difference ? Why, under
the same system, have we not received the same payments
as during the last year for the same period ? The reason
is this, that, under authority vested in the Treasury by the
House of Commons, a certain amount of Exchequer-bills--
half-a-million- was about to be issued at that period, and
under a fiction of law—for I really cannot call it anything
but a fiction—in which the manipulation, if I may so call
it, of these operations is conducted, thore is no choice as to
the mode of bringing the Exchequer-bills to account, and
you cannot realise the proceeds in the Exchequer, which,
so far as I am able to judge, might be clone by a more ra-
tional mode of procedure, but they are issued to the Pay-
master-General for supply service, thus passing by the
Exchequer altogether. If, therefore, this half-million,
which stood to the credit of the Paymaster-General on
tho sth of April, had stood in lieu of an equivalent
sum which would have been issued to his credit from
the Exchequer, and, if these Exchequer-bills had not
been issued at the particular period I have referred to,
this amount would have been fairly included in our
surplus. For the reason, I have stated, however, half-a-
million ought to be deducted from the whole surplus ; and
therefore the actual surplus of income over expenditure
for the year may fairly and safely be stated at 3,000,0j0/.
(Hear, hear.) I think the house will be of opinion that
this is a very satisfactory result, so far as we have seen,
with respect to the indications which it affords as to the
state of the trade and industry of the country and the con-
dition of the people, though that trade and industry must
necessarily have undergone some contraction, or, at any
rate, some retardation in its increase in consequence of
political events and the obstruction of trade both in the
Baltic and in the Levant. (Hear, hear.) It is a more
satisfactory result still, when it is borne in mind that the
sums which I anticipated I should receive within the year
from the increase of taxes proposed during that year have
been less than we anticipated. Last year you remitted, in
round numbers, 2,600,0001. of taxes, and you laid on taxes
which ultimately were to produce a large annual amount;
but, while 2,600,0001. had been given in relief, the addi-
tional taxes laid on during the last year had only brought
into the Exchequer by the sth of April the sum of about
700,0001. The whole remissions have been in operation,
and the substituted taxes have come very partially into
play, and therefore, speaking in round numbers, while you
remitted 2,000,0001. of taxes more than you laid on, you
have a surplus of 3,000,0001. in your income. (Hear, hear.)
That is all I think it necessary to state with respect to the
revenue of the past year. I now come to another question,
with respect to which it is desirable the house should be
informed, and that is, the state of the public balances.
And here I shall most sedulously avoid reference, in the
way of defence or discussion, to the mode in which the
state of the public balances has been brought about,
my only object at the present moment being to pro-
vide the house with trustworthy, real, and accurate
information. On the sth of April, 1853, the ba-
lance in the Exchequer was returned at 7,859,000/. ;
on the sth of April, 1854, the balance was returned
at 2,778,0001., showing a decrease of 5,081,000/.,
or, in round numbers, something over 5,000,0001.
Then it is right that you should perceive how that reduc-
tion of balance has been brought about. How public
funds have been applied daring the year over and above
the ordinary methods of expenditure, under the following
heads and to the following extent :-8,048,0001. of funded
debt has been paid off; 716,0001. have been paid away in
advances under the head which is known as that of public
works, over and above the ordinary expenditure under that
head ' • and this amount of 716,0001. does not indicate or be-
long to any extension of the scheme of public works, but it
has arisen under the Metropolitan Advances Act of last
session, being a mere transfer of money, and having nothing
to do with any public works that have been performed.
(Hear, hear.) Besides that the unfunded debt was reduced
between the months of April, 1853, and April, 1851, by
1,718,0001., so that the reduction of debt and the payments
we have made under these three items amount altogether
to 10,482,000.. (Hear, hear.)i. is
represented
shownsphraevseentedin tthe decreasehatefthis
10,482,000/. about 5,000,000
of balances in the Exchequer; but, besides that, those was
r
a sum of 1,274,000/. of stock createdlin the name of the
Commissionersespect
of the
had purchasedheNationalD andebtin
t o
Exchequerfo the
billsredu cti
whichn they
cancelled ; and there was likewise an amount of about
420,0001. of altogether new debt in the name of Exchequer-
bonds. Putting together, therefore, the diminution in the
balances, the new funded debt created in the name of the
National Debt Commissioners and the Exchequer-bonds,
we come to a sum of 6,775,000/. against the 10,482,0001. of
which I have already spoken. The remainder, 3,707,0001.,
is chiefly accounted for by the surplus revenue. The ba-
UM in the Radnor, se it *lvens is the kelehoe-eked,

is 2,778,000/. 9 • and now it is desirable that I should make
a statement to the house with reference to the manner in
which that balance is brought up to the amount necessary
to cover the charge upon the quarter just gone, being
the largest during the present year. The amount of
the charge, consisting as it does of the interest in the
permanent debt and the terminable annuities, and of
the amount to be applied to the sinking fund in respect
of surplus revenue, is, of course, very much larger, as will
be sent on the 6th of April than on the previous year. In
the statement which is published regularly the probable
amount of deficiency-bills required to meet the charge of
the last quarter is stated at 5,852,0001. It is not unnatu-
ral that some uneasiness should prevail in the public
mind—deluded and mystified as I must say it is by our
system of public accounts—when anything called by the
name of deficiency appears to reach such a formidable
amount as 5,852,0'20/. However, according to ordinary
usage, some deduction must be made from this sum, and
the actual amount of deficiency bills brought to charge in
April, 1854, was 5,472,0001. This, however, makes no
material difference; 5,472,0'0/. is a very large sum of
money to have the ugly word "deficiency" attached to,
and I confess I do not wonder that gentlemen who are not
aware what the figures really mean should be astounded at
the idea of demands being made on the Bank of England
from the public for temporary accommodation to so large
an amount. I wish the house to understand what the
amount of this accommodation really is, and, if hon. mem-
bers will follow me, they will find that the figures which
1 have just quoted bear no rational relation to it. In the
first place, it may be observed that even in April, 1853,
when the balances in the Exchequer were extremely low,
and the apparent amount of deficiency bills to be issued
1,407,0001., a large sum of public money was in possession
of the Bak of England. But of this sum of 1,407,000/.,
not more than 300,0001. was chargeable with interest. The
sum brought to charge in April, 1853, then was 300,0001,
while, in April, 1854, the present quarter, it is 5,472,0001,
being an apparent increase of 5,172,0001. The house and
the public will naturally be desirous of knowing what
has occasioned this increased amount of deficiency bills
and accommodation from the Bank. The fact is, how-
ever, that the figures given in the accounts as now drawn
up indicate anything but the real state of the account
of the public with the Bank; they do not tell the truth
to the public, but leave persons to draw false inferences,
and, therefore, I think it material to state the facts to
the house, the more particularly, because I perceive that
even the best-informed persons out of doors are under the
belief that the amount of deficiency bills, stated in the
account published on the 6th of April last, really represents
a similar amount of accommodation given by the Bank of
England to the Government. The way in which these
sums are calculated is this—it is reckoned on the assump-
tion that the whole of the charge which has accrued against
the public, which the public is liable to pay, and which the
public will be called upon to pay in the course of the in-
coming quarter, will be effectively charged at the com-
mencement of the quarter, although it is evident from ex-
perience—and experience is sometimes more certain than
demonstration—that it will not be so charged at the com-
mencement of the quarter, but that a large portion of the
money represented by the figures will remain in the hands
of the bank until the calls of the public have been over-
taken by the growing revenue of the quarter. This is the
way the discrepancy arises. What does the house suppose
is the amount of the discrepancy ? We have heard state-
ments from hon. members—and I do not impute blame to
them on this account—of the great amount of accommoda-
tion which the Government had obtained from the Bank
at the opening of the present quarter. Four, five, or six
millions were spoken of as the amount of this accommoda-
tion. The 'real amount is very different. Having taken
advice as to my competency to do it, I have deemed it my
duty—not so much with a view to any pecuniary saving,
as for the removal of what I conceive to be, at this moment
a mischievous and dangerous apprehension—to regulate the
issue of those deficiency bills in point of time, with some
reference to the coming demands on the Bank ; that is to
-my, to apply to this particular part of the public service
the self-same principle which is applied to every other
branch of the public service, the principle—namely, of
charging the account only in proportion to what are
known to be the coming demands upon it. By the
adoption of that rule, the total amount of deficiency
bills chargeable against the public is reduced from the
formidable figure at which it stands in the papers before
the house, namely, 5,852,000/., to the much more moderate
figure of 2,803,0001. The sum of 2,808,0001. represents the
amount of deficiency bills chargeable against the public
yesterday. lam not able to state what the amount is to-
clay, but I believe it is not more, and probally it is less.
2,608,030/. was the amount of deficiency bills chargeable
yesterday. Let it not be supposed that the deficiency bills
have been reduced to this amount by unduly starving the
public account, and running the risk of exposing those who
have just claims to receive the answer, "No effects." On
the contrary, the balance on the audit roll or dividend ac-
count yesterday, when the business of the Bank termi-
nated, was 679,0001. The actual amount of accommoda-
tion afforded to the public yesterday was 2,129,0''01. lam
not about to enter into details connected with this subject
at the present moment, but I confess my opinion is that
if we were at peace, if we had not a growing expenditure,
if there was not the risk that the expenditure may possibly
grow with greater rapidity, and at the same time with
greater uncertainty than in ordinary times, 2,129,0001. is
not an extravagant sum to receive in accommodation from
the Bank, when we look to the amount of the quarter's
revenue, and the mode in which it accumulates from the
commencement of the quarter to its close. This, in my
opinion, has reference to ordinary circumstances, not to
those of the present moment. At the present time it must
obviously be our desire to take security against chances
which at other times it would not be necessary to take into
consideration. I speak, therefore, of this 2,129,0001. as
an amount to be progressively reduced, as I doubt not it
will be, without the smallest difficulty. What I wish to
impress upon the house is, that the sum in question re-
presents the actual amount of accommodation afforded to
the public bo the Bank, and that the sum of 5,842,0001.,
which appears in the quarterly account, really has
reference to no actual transaction. [ir. DISRAELI.—
You have not stated the amount of requirements.]
I thought I had done so. My object has been to
show that the nominal amount of deficiency bills
which appears in the quarterly statement represents the
difierence between the amount of requirements and the
balance actually in the Exchequer on the sth of April, and
that the amount of accommodation from the Bank, which
really is an accruing and approaching charge, is given in
the same statement as if it were an actual charge. I will now
refer to another point which has not been noticed in this
house, but which has been the subject of a considerable
observation out of doors. It has been supposed that large
and unusual demands have been made by the Government
on the Bank of a character calculated to reduce the amount
of capital in the market available for commercial purposes.
If we were going from year to year with the expenditure
exceeding the income, which it was necessary to make up
by deficiency bills, or even if it should be found necessary
to issue deficiency bills in consequence of this house not
having provided adequate funds to meet the public expen-
diture, I can understand that, pro tanto, the effect would
be to withdraw from commerce some portion of those re-
sources on which commercial men rely for carrying on
their transactions; but there never was anything so ludi-
crously erroneous as the statement that, in the present
case, the demands of the Government have withdrawn
from the general purposes of the London money-market
either the large sum set down in the quarterly statement
under the head of deficiency-bills, or the smaller sum
which I have mentioned as the correct one, or, indeed,
any sum at all. Exactly the contrary is the case. The
truth is, that every farthing of the large disbursements
which the Government pays out goes into the money-
market, and is available for the purposes of commerce.
The supposed amount of loanable .capital withdrawn on
the sth of April was 2,129,0001,, but on the 7th the Go-
vernment paid out into the money-inarket 2 000,0001.
What became of that sum ? It was not like 2,000,0.)0/.
consumed in an excess of expenditure over income. It
was paid to the holders of stock. They did nut tie
the money up in napkins and put it away. (Hear.)
No; they either employed it in commercial tiausactions
or purchased other stock with it, and in either case the
money was just as available for the purposes as if it had
remained iu the balances of the Bank. This was the case as
respects the present quarter, but look at the last. In
January 6,018,000/. was in like manner paid out of the
Government funds of the Bank into the money-market and
added to the loanable capital of the country. That whole
amount added to loanable capital by these payments from
the balances and by deficiency-bills has been, in round
numbers, 8,000,000/., while the whole amount withdrawn
from the market by accommodation from the Bank
amounted up to yesterday to the sum of 2,129,00 J/. These
are matters of fact which admit of no ai gutnent, and I
think they show that the Government have not, in the pro-
cess of liquidating stock, withdrawn from the money-
market any portion of the funds which, under ordinary
circumstances, are applied to purposes of commerce. I
must shortly refer to another point, because it is one
which is supposed to involve a breach of faith. An idea is
entertained by some persons that in 1844 a compact, not
written but understood, was entered into between the
Government and the Bank—l do not mean to say that this
notion is countenanced by any persons connected with the
Bank—according to which demands for deficiency-bills
were not to be made upon the Bank, under the charter
then granted. Of this compact no trace can be found, but
a written compact exists, drawn up in very express terms.
The terms of the contract were fully discussed at the time
between Mr. Goulburn and the then Governor and Deputy
Governor of the Bank, and the agreement arrived at was
this—that when the public balances should be below what
at that time was their usual amount the Bank should have
a claim for interest against the Government, and, on
the other hand, that when they should be above the
usual amount the Government should have a claim
against the Bank for a share of the profits arising
from the deposits. On a future occasion I may
feel it my duty to enter more fully into this subject,
which has some important considerations connected
with it ; I now refer to this compact only for
the purpose of showing that the assumption on which Mr.
Goulburn and the Governor and Deputy-Governor of the
Bank proceeded was, that the public balances, and, conse-
quently, the amount of deficiency bills—for they are cor-
relative—were to remain in future as they stood at that
time. The question then arises, what was the state of the
public balances and the extent of demand for deficiency
bills at that time ? If I were to refer, as I might, to the
amount of deficiency bills and public balances in the year
before the compact was entered into, I should almost ap-
pear to prove too much. What I purpose doing is this—
to take the two quarters immediately preceding the ar-
rangement entered into between the Government and the
Bank as a measure of the usual state of the public balances
and demand for deficiency bills, because these two quarters
make the best case for the Bank, as showing the largest
amount of balances. In the quarter ending the sth of
January, 1844, the amount of balances was 6,462,000/. ;
and on the sth of April, 1844, it was 3,967,000/. Let us
compare this with the account for 1854, which is supposed
to present such remarkable features. On the sth of Janu-
ary, 1854, the balances were :3,711,000/. ; and on the sth
of April, 1854, they were 5,472,0001. The average of the
two quarters of 1844 was 4,714,0001., and the average of
1851 was 4,591,0001. Thus it appears that the average of

18.54 is less' by' 123,0001, than the average of 1844, when
the Government entered into the compact with the Bank.
I now turn to the question of Exchequer bills. The
amount of those securities was, in 1833, 17,742,0001.,
and the minimum point attained during the year was
12,897,030/. The present amount of Exchequer bills
is about 16,600,0001., while the amount which Parlia-
ment has authorised to be issued is 17,774,0001., and
therefore the actual issue is 1,174,0001. short of that
authorised. It is probable that some portion of the re-
maining amount may be issued from time to time, as
the exigencies of the service may require, but I have no
reason at present to expect that it will be necessary for
me to apply to Parliament for a further grant of Ex-
chequer bills during this session. A few words more on
a matter immediately relating to the unfunded debt. I
beg to assure the house that in what I have said or may
say I am influenced by no merely personal considerations;
all I am/anxious for is the maintenance of those sound prin-
ciples on which the security of our financial system depends,
and by an adherence to which alone we can hope to meet
all demaids whieh may be made cm the Bzehequer. The ,