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National Debt—Resolution

Volume 202: debated on Tuesday 5 July 1870

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Sir, I shall commence the remarks I have to make on the Motion which I now bring forward, which of necessity must be rather long, though I will curtail them as much as possible, by assuming that it will be admitted, that the financial position of this country is the most important and complicated which can well be considered by this House. Mr. Pitt repeatedly stated in the House of Commons, when speaking on the National Debt, that when the money was borrowed there was a clear understanding that it should be paid; and had he lived we should probably not be in the position we are now with regard to it. Upwards of half-a-century has passed away, yet the sense of the country on the subject has never been taken in a decided manner by any Government, and the Debt remains very much the same, as I hope to show. Mr. Justice Blackstone, in his Commentaries, says—

"In a democracy where the right of making laws resides in the people at large, public virtue or goodness of intention is more likely to be found. Popular assemblies are frequently foolish in their contrivances and weak in their execution, but generally mean to do the thing that is right and just, and have always a decree of patriotism and public spirit."
In America, the most democratic of nations, as soon as their Debt was contracted, they set to work manfully to pay it off. As the suffrage has been extended we have been gradually becoming more democratic, and I have no doubt it will be shown that there is throughout the country an increasing desire to pay off our Debt. I dare say hon. Members below the Gangway are aware that the Land and Labour League has placed the payment of the National Debt upon its programme. The right hon. Gentleman the Chancellor of the Exchequer, when his Budget was before the House, said he regretted that the hon. Member for Sunderland (Mr. Candlish) had been unable to bring forward a Motion he had on the Paper, and to have taken the opinion of the House on it. As my Motion is very similar to that of the hon. Member, I trust the right hon. Gentleman will be glad of my having the opportunity of bringing it forward. I regret, however, that in doing so I shall have to question the accuracy of his figures of last year. We are all liable to errors, particularly when the figures run into millions; and it is quite possible that there may be error in the calculations I venture to bring before the House, notwithstanding the pains I have taken to avoid them. Hon. Members will probably recollect that I last Session brought forward a Motion very similar to that which I now bring before the House. The right hon. Gentleman the Chancellor of the Exchequer then said—
"That in ten years, from March 31, 1858, to March 31, 1868, the National Debt has been reduced £37,819,000, being at the rate of £3,782,000 a year. Thus, though some of us may wish to go faster, it cannot be said that this great and important subject has been neglected. We have, in fact, been making progress in the right direction, and I only hope that that progress may be maintained. As far as I am concerned, I should be very glad if the House would consent to put on a 1s. income tax for the reduction of the debt; but I cannot say that I think they would allow me to do so, and I cannot hold out any hopes to the hon. Gentleman of such a result. But, by means of terminable annuities and sinking funds, we are making very fair progress in the way of reducing this great national burden."—[3 Hansard, cxcviii. 1213.]
Being satisfied that the right hon. Gentleman was acting on the principle of my Motion, I withdrew it, at the same time stating that I hoped he would go on a little faster with the reduction next year, as the rate of £3,782,000 per annum would hardly make any impression on the Debt. Small as this reduction appeared to be, I have since found, on going into the calculation, that the figures of the right hon. Gentleman were incorrect, and that he had considerably overstated the actual reduction, which, from 1858 to 1868, was £29,102,990, and not £37,819,000, as he stated. The total amount of the National Debt, including capital of terminable annuities and unfunded debt, was, in 1858, £826,134,640, and in 1868, £797,031,650. The right hon. Gentleman was thus in error to the amount of £8,716,010, which reduces the annual reduction of the Debt from the £3,782,000 to £2,910,299; but even this reduction, which embraces the 10 most favourable years, is far in excess of the rate we are now going at, as I will show by-and-by. The right hon. Gentleman, in his Budget speech this year, stated that—
"There has been a reduction in the total amount of Debt of £38,000,000 on the thirteen years from 1857."
He is again in error; the actual reduction in that period has been only £30,316,400. The right hon. Gentleman appears to have overlooked the great increase in the terminable Debt during that period, and to have made the grave mistake of considering funded Debt when converted into terminable annuities as paid off or cancelled, whereas it is only a change in the character of the Debt, the obligation to pay remaining. In fact, converting funded Debt into terminable annuities is liquidating the amount by annual instalments, embracing a portion of the amount and interest. Every year the obligation becomes smaller; but until all the instalments are paid the Debt cannot be said to be cancelled, and the capitation value of these instalments, or terminable annuities, at the end of each year are part of the National Debt, as clearly shown in the statistical abstract issued to Parliament by command of Her Majesty. I must say I was much surprised to find that the right hon. Gentleman, with a surplus this year of £4,487,000, only proposed to reduce the Debt by converting £7,000,000 Savings Bank Stock into terminable annuities to end in 1885; this £7,000,000, extended over the 15 years, is a reduction of only £337,000 per annum. The right hon. Gentleman might as well leave it alone altogether, as propose this trifling reduction, which can have little effect in permanently reducing the Debt. Notwithstanding what he said last year, I have little hope of the right hon. Gentleman taking any decisive step to reduce the Debt unless pushed on to do so by a Resolution of this House. It appears to me, Sir, that the financial position of the country with regard to its Debt does not appear to be considered by hon. Members of such grand importance as it deserves; the Debt being£800,000,000, and interest £26,000,000, it requires the entire Revenue of the Customs and one-third of the Excise to pay it. I would ask hon. Members what would be our position were we to drift into an American or European war? We should commence it with this enormous Debt, which does not press so very heavily in a time of peace, but in war it would be very different. We have only to look to America; she commenced her four years' war with no Debt, and at the end of it had accumulated a Debt almost equal to ours in amount and larger in point of interest. But Americans have all their resources within themselves, and could shut up their ports and snap their fingers at the whole world, whilst we have to draw from other countries a large portion of the very necessaries of life, including the very bread we eat; and our vessels are scattered over every sea, and in every clime, either bringing those necessaries to our shores or taking-our manufactures and products to pay for them. We should be thus in a worse position than any other nation, as stated by Mr. Reverdy Johnson, in one of his speeches; our vessels—now, in time of steamers—would be preyed on by privateers from every port, our commerce ruined, and our supplies stopped. Other nations could do without our manufactures, but we could not exist without their corn and other articles of food. It is impossible to over-estimate the importance of this. Now is the time, when we are at peace and prosperous, to put our house in order, by reducing our expenditure and gradually paying off our National Debt. When I look round this House, I feel sure that there are very few, if any, Members, if in debt to any extent, who would not do his best to get rid of that debt. If that be good policy for an individual it is good for a nation, for there is great analogy in the affairs of the two. What has America done since the termination of her war? She has been paying off her Debt at the rate of £20,000,000 a year, and continues to do so. And Belgium is rapidly reducing her Debt, which is now only three times the amount of her Revenue; let us do likewise. The question is, which is the best method to pay off the Debt? With regard to terminable annuities, the right hon. Gentleman says the public will not take them; they possibly look upon them in the same light as the great Trench political economist, M. Baptist Say, who considers them immoral. He says—
"Elles sons de plus immorales, c'est le placement des égoïstes, elles flattent et favorisent la dissipation des capitaux en fournissant au prèteur un moyen demanger son fonds avce son revenu."
I do not approve of this mode of paying off the Debt. I prefer to reduce it by a special and direct tax, and that tax an income tax. An income tax of 1d. in the pound produces £1,500,000; 9d. would, therefore, produce £13,500,000. At an annual reduction of this sum, with compound interest at 3 per cent, the whole Debt of £800,000,000 would be paid off in a fraction under 35 years. At 6d. in the pound it would produce £9,000,000. At an annual reduction of this amount, with the 3 per cent compound interest, the whole Debt would be paid off in a fraction under 44 years. An income tax of 9d. in the pound would, therefore, pay off the Debt in 35 years; and a tax of 6d. in 44 years. But as the wealth of the country increases, so must the amount raised by the income tax increase. A penny, which in the years 1856–7, when the tax was 16d. in the pound, produced 1,000,000, is estimated in the year 1870–71 to produce £1,470,000. I think it may, therefore, safely be calculated that a tax of 9d. would pay off the Debt in 25 years, and one of 6d. in 30 years; and as Government would, at all events for some time, be able to buy their own securities of £100 in the market at about the present price of Consols—about 93—they would thus make a saving of, say 7 per cent, which would further operate in hastening the extinction of the Debt. What would be our position if a tax of 6d. was imposed to pay off the Debt? At the end of 30 years the £800,000,000 would be paid off, and the country at once relieved of taxation to the amount of upwards of £35,000,000; that is the interest of the National Debt, £26,700,000, and the special income tax of 6d.—a free breakfast table there would at once be to everybody. This is the mode I propose to pay off the Debt; but I am not wedded to it if any more desirable or feasible mode can be shown. I do not think that this tax of 6d., or even 9d., ought to be considered heavy by the community for so desirable an object. I have named the income tax because I consider it the most fair and just tax we have, and because it is compulsory. The reason that it is not extended to low incomes is that the lower classes pay more in proportion than the wealthy in indirect taxation, such as on tea, coffee, sugar, &c., &c. It has been said that precarious incomes should pay less than incomes derived from property. I entirely disagree in that. If the income is precarious, the tax is precarious too. If I may use the expression, if a man is badly off and and has no income, he pays nothing; but it is different with indirect taxation, for he must, to exist in this country, consume a certain amount of taxed articles. I could say a good deal more in favour of this tax, but think it unnecessary to further encroach on the time of the House by doing so. With the permission of the House I will read a passage from Adam Smith, the best admitted authority on taxation. He says (page 414)—
"The subjects of every State ought to contribute towards the support of the Government, as nearly as possible to their respective abilities, that is in proportion to the revenue which they respectively enjoy under the protection of the State."
He was, therefore, decidedly in favour of an Income Tax. Another recommendation I have to urge in favour of this tax is that it costs considerably less in collection than the Customs or Excise. I must again quote Adam Smith on this head (page 416)—
"Every tax ought to be so contrived as to take out of the pockets of the people as little as possible over and above what it brings into the public treasury of the State."
I am sorry I cannot give the House the exact percentage cost of collecting the income tax, in consequence of the collection of the different branches of the Inland Revenue being so blended together that it is not possible to separate one item from another. There is no doubt, however, that the cost of collecting the income tax is less than that of the Excise or Customs. The expense of collecting the Customs in 1865 was £3 6s. per cent on the gross produce, and that of the Inland Revenue in 1869, £3 11s. 7d., I must say that I was sorry to find that the right hon. Gentleman, after speaking in favour of the income tax last Session on a Motion of the hon. Member for Peterborough (Mr. Whalley), and quoting Adam Smith—as I have done—proposed to reduce it 1d. The right hon. Gentleman appears quite to have overlooked the fact that it is by the income tax, and the income tax alone, he has any hold on the thousands and tens of thousands of wealthy people who either live or travel abroad; you get nothing from them in indirect taxes, for, being absentees, they consume no taxable articles in this country. The right hon. Gentleman is letting this very wealthy and numerous class gradually slip through his fingers. I must say I was much surprised to hear the right hon. Gentleman make use of the following remarks in speaking of the respective merits of direct and indirect taxation—"Direct taxation—the income tax," he said, "has a dreadful disadvantage, for it is compulsory;" and his argument in favour of indirect taxation was "it is optional; and, with a little self-denial, a man may in this country absolutely exempt himself from the payment of indirect taxes." I cannot un- derstand the extraordinary argument, particularly coming from a Chancellor of the Exchequer, that it is a recommendation to a tax that it may be paid or not at the convenience of an individual. I question, Sir, very much the policy, with such a Debt as we have, in making any reduction in taxation, save in cases where it is necessary to do so in order to make taxation bear as equally as possible on all classes. I should, therefore, instead of reducing the duty on sugar—£2,350,000—make a considerable reduction on malt, for this reason—There have been from time to time considerable reductions on wine, the luxury of the wealthy, the duty on champagne being now 11 per cent, on claret 12 per cent, on port 32 per cent, and on sherry 19 per cent; whilst the duty on beer, the luxury and the necessary of the working man, remains untouched—malt, from which it is made, being taxed at the rate of 70 per cent. This was very clearly shown early in the Session in a speech of the hon. Gentleman the Member for Yorkshire (Mr. Fielden). It has been said that the Income Tax should only be imposed in case of war. Now, Sir, I think it is in war that you should borrow and keep taxes as low as possible, when trade and commerce and the whole community are feeling and suffering from the effect of that war; and, to enable you to borrow with greater facility, pay off your debts in time of peace when you are prosperous. I shall now state to the House what we are, and what we have been, doing towards the reduction of the Debt. From 1858 to 1868 we reduced it £29,102,990, or at the rate of £2,910,299 per annum; from 1859 to 1869, £27,073,813, or at the rate of £2,707,381 per annum; and from 1860 to 1870, £17,672,747, or at the rate of £1,767,274 per annum. We have, therefore, during the last 10 years—that is, from March, 1860, to March, 1870—been reducing our debt at the rate of only £1,767,274 per year, whilst America has been reducing her Debt at the rate of £2,500,000 per month, and the entire Debt will be paid off in 1884. But if I go back to 1855—the estimated capital of terminable annuities not having been computed previous to that year—I find that, in the 15 years, from March in that year to March, 1870, the reduction was only £572,200—not the annual, but the total in the 15 years; therefore, the Debt, with this small reduction, is the same as it was 15 years since. The Crimean War probably increased the Debt between 1855 and 1858. Let us look now to the future. The present annual payment for terminable annuities to expire in 1885 is £3,494,904, from which some small reductions have to be made, which reduces it to £3,372,921. This sum represents a capital of £46,755,000, which will be finally extinguished when these annuities expire. Should there, therefore, between this and then be no other reduction, the Debt will be reduced this sum, or at the rate of about £3,000,000 during the 15 years. It has been remarked—Why should we pay off this Debt; let posterity do it? Let posterity do it! I should like to ask, who are our posterity? Our children and our children's children. The welfare of our children during our lives and after we are gone is, or ought to be, the first consideration of a parent; and I believe it to be the great struggle of life of most of us who have children to leave them in as satisfactory a position as possible when we are gone. If that be our object in our private affairs it ought also to be our object to endeavour to the best of our ability to see that the position of the country, financially and otherwise, should be in a sound and satisfactory state, which it can never be if overburdened with debt. Before I conclude I will read a passage from the Report of a Select Committee of this House, appointed in the year 1828, to inquire into the public income and expenditure—
"A course of policy founded upon the avowed principle of raising loans for the exigencies of the State in time of war, and making no provision for diminishing the permanent charge of these loans in time of peace, must appear an abandonment of all consideration for the credit and safety of the country, in the eventual occurrence of future difficulties and dangers. If the accumulated debt of each period of extraordinary exertion is to be handed down undiminished, as a load upon those who are hereafter to meet the exigencies of other struggles and other difficulties, it is too obvious to require an argument that the time cannot be very far distant when—according to the ordinary vicissitudes of peace and war in the history of human affairs—the combined weight of the past and present burthens must become too great for the most prosperous people to support, and the fabric of public credit must crumble under the accumulated pressure."
Can language be stronger or more to the purpose than this? I think, Sir, I have clearly shown that, with the exception of this trifling sum of £571,200, there has been no reduction in the National Debt within the last 15 years; and I challenge anyone to disprove the correctness of my figures. It is a mere delusion of the country to imagine, as stated by the right hon. Gentleman, that "we are making fair progress in the way of reducing this great national burden;" and I beg to remind the Members of this House that this responsibility of the Debt remaining as it is rests with them, and to ask them to support my Motion.

Motion made, and Question proposed,

"That, in the opinion of this House, it is desirable that some decisive step should be taken substantially and gradually to reduce the National Debt."—(Mr. Lambert.)

said, he agreed with the hon. Gentleman (Mr. Lambert) that the financial condition of the country was one of the most important subjects which could occupy the attention of the House, and that it was the duty of the State, as well as of individuals, to make provision for posterity. Nevertheless, he was unable to accept the conclusions at which the hon. Member arrived. No doubt, it was the solemn duty of a private person to pay off his debts, and, indeed, it was his interest to do so, because in the language of the Scriptures—"the borrower is always servant of the lender;" but the National Debt was a different thing altogether. It was merely an obligation to pay to certain individuals at fixed times annuities which we could at any period redeem at 32 or 33 years' purchase. There was, in fact, no analogy between private and public debts. Instead of comparing the National Debt to the debt of a private individual, it might be much more fairly compared to a ground-rent. What, he would ask, was the real cause of our difficulty in competing in trade with foreign nations? It was the heavy burdens which were imposed on the people in the shape of indirect taxation. Could anybody deny that the Customs and Excise duties operated as a pressure upon domestic industry? An old country like ours had, it was quite clear, great difficulty in competing with foreign nations, especially when that country happened to be highly taxed. Was it not, therefore, desirable to use our surplus revenue in doing away with those tolls which so seriously hampered us, instead of buying annuities which did not return more than 3 per cent? What private person would think of laying out his money in the purchase of terminable annuities when he required it for the purpose of enlarging his business, or adapting it to the wants and requirements of the age, and by thus investing it might realize 20 or 30 per cent profit. We were far more a nation of shopkeepers now than we were when it was thrown out as a taunt by a foreign potentate, and more than that, we were exposed to a much more severe competition with foreign nations in trade and manufactures than we were then. We could not make ourselves a young nation, but we could at least remove those hindrances to commerce and industry which existed in the shape of heavy Customs and Excise duties. When in private life a person made provision for paying his debts, the resolution was generally carried out by the practice of economy, and he, for one, should certainly support the present Motion if he thought it would lead to economy in our expenditure, and enable the Chancellor of the Exchequer to reduce the Estimates by £2,000,000 a year. Everybody, however, knew that quite the contrary would be the case; and the Chancellor of the Exchequer would be unable further to repeal the sugar and similar duties; while, if the income tax was to be increased to the extent suggested, it would, in addition to the burden already imposed, be a great tax on capital, and tend to drive it from our shores. In the United States, he might add, a great amount of suffering was caused by the heavy Customs and Excise duties, which had almost annihilated the shipping and carrying trade of that country. It was also stated that, within the last year or two, there had been a greater flow of emigration from the United States to Canada than had ever before been the case, owing to the increased cost of living occasioned by the imposition of a tax on every article of luxury for the purpose of putting an end to the National Debt. But America was still a young country, and was not exposed to those disadvantages under which, according to Mr. Hume, an old country laboured. America might afford to make an experiment of that kind; but it could not safely be attempted here. He would appeal to the experience of the Prime Minister, and ask whether our commerce was not on the point of leaving the country in 1841? Was not our trade declining? What were the means which were then taken by the right hon. Gentleman and Sir Robert Peel to restore prosperity to the country? An income tax was imposed; but it was not applied to the diminution of the National Debt, but to the reduction of the heavy Customs and Excise duties which had begun to render our position as a manufacturing nation very precarious. If that course had not been taken, probably the depression of trade would have continued. He, for one, had listened the other evening with great attention to the speech which had been made by the hon. Member for Manchester (Mr. Birley) not because he agreed with him, but because he thought much was to be learnt from what the hon. Gentleman said as to our industry being exposed to a severe trial in the markets of the world. He was, therefore, of opinion that any surplus Revenue which we might have would be far better employed in getting rid of the tolls and restrictions which now weighed upon that industry than in paying off the National Debt. Within the last 10 years, he might add, the great discoveries in gold had increased the price of all commodities except corn, and we might depend upon it that we should make a much greater sacrifice now in devoting our surplus income to buying up annuities in gold than we should have to do 20 or 30 years hence. It would be absurd, in his opinion, propter vitam vivendi perdere causas, and he, therefore, hoped the Government would not assent to the proposal of the hon. Gentleman.

Sir, the hon. Gentleman who has brought forward this Motion (Mr. Lambert), in a speech with a great deal of which I agree, has criticized the figures I used on a former occasion in this House. I am not now prepared with the documents from which they were taken, and therefore I will not enter into any argument on the subject now. They were no figures of my own, but were extracted from a Treasury Paper, and having been carefully verified at the Treasury, I believe them to be correct. I will read a passage from the speech referred to by the hon. Member. I then used these words—

"If you take the year 1857—the year after the close of the Russian War—notwithstanding the debt incurred since that date for the expenditure of nearly £9,000,000 on the Expedition to Abyssinia, of £5,755,000 on Fortifications, and of £7,000,000 for the purchase of the Telegraphs
—and, as I am reminded, I might have added £7,000,000 on account of the Chinese War—
there has been a reduction in the total amount of Debt, of £38,000,000—in all, nearly £60,000,000 applied to Debt, beyond the ordinary Expenditure met out of Revenue in those 13 years."—[3 Hansard, cc. 1617.]
But I now want to call attention to the Motion of the right hon. Member. The hon. Gentleman asks us to take some "decisive step" for substantially and gradually reducing the National Debt. That is an ambiguous phrase. Probably the hon. Member and those who will vote with him know what they mean by a "decisive step;" but I confess that I do not. If we are to take his speech as an interpretation of his meaning, the Government are expected to impose an additional income tax of at least 6d. in the pound, devoting the proceeds to the payment of the National Debt, and, as I understand, devoting all the revenue which would otherwise be employed in paying the interest to the further reduction of the Debt. The fair way of arguing the question is to ask whether the House is prepared to pledge itself and the Government, so far as it can do so, to take a course of that kind. For myself, I am not prepared to dispute the propriety of reducing the Debt. But if there is an error in these discussions it is in stating what of itself is no doubt true and well-founded, but at the same time in ignoring the fact that there are other truths besides the ones specially advocated. Though eminent writers may declare that taxation is a science, to those who have practically to deal with it it is essentially a practical art, which must depend on a great many other things, such as the temper of the nation, the feeling of this House, the willingness and the ability of the people to bear financial burdens, and whether the people—who are the ultimate judges on this question, and to whose opinion it is not only the interest but the necessity of any Government to defer—whether they prefer that their money should be spent in paying off Debt, or in reducing burdens which press more immediately upon them. Now, on such a point I should be the advocate of moderation. I should put forward no extreme opinions. On the one hand, I should be sorry to see the whole of our surplus Revenue devoted to the payment of Debt; on the other hand, I should be sorry to see the whole of that surplus applied in the lightening of burdens, regardless of the Debt. In this, as in all things, safety and wisdom do not lie in an extreme course, but in the endeavour to pursue a course of fair and tolerant moderation, and of mediation between different interests and feelings, so that none may deem themselves neglected and none exclusively favoured. These are the views with which I approach the subject, and therefore I am not prepared to agree that in this time of peace, and of recent recovery from severe commercial depression, we should make a heavy increase in the burdens of the people for the purpose of paying off the Debt. Such an operation is not called for. I do not believe it would meet with favour in this House, and I confess that whatever impeachment may thereby be thrown upon my courage, I entirely shrink from making such an experiment. The Motion of the hon. Member contemplates a decisive step in the direction to which he points. Well, a decisive step would be paying off the Debt. While, however, we are not prepared to do that, we are taking drastic and important measures towards reducing it. During the period I have been in Office I have had a share in a number of measures all tending in that direction. The Motion, as it stands, seems to cast some reflection, though not a very strong reflection, upon the Government for inertness on this score. The best answer I can make is by reminding the House of a few of the measures which have been taken for the reduction of the Debt during the last few years. Since the 1st of April, 1869, we have paid off £1,000,000 of Exchequer Bonds, exclusive of £1,000,000 issued in anticipation of Revenue. We have paid off £160,000 of Exchequer Bills. With unclaimed dividends and payments in redemption of land tax we have cancelled stock to the amount of £111,000. By issuing life annuities and annuities for terms of years we have also cancelled £643,000 of stock. We have issued annuities involving a charge upon the public of £3,370,000 a year, representing a capital stock of no less than £46,755,000, which will come to an end in 1885, the annual instalment of principal in respect of it being £1,970,000. Then, in addition to this, we have created a surplus revenue which will be applied, according to the Act of Parliament, in the reduction of Debt. Hon. Gentlemen are aware that at the end of every quarter it is the duty of the Commissioners for the Reduction of the National Debt to add up the expenditure and income of the country, to subtract one from the other, and then take one-fourth of the surplus income over expenditure and apply it for the reduction of the Debt. In the September quarter of last year the amount so applied was £1,600,000; in the December quarter, £1,300,000; for the March quarter the amount was estimated at £1,100,000, making for the whole year about £4,000,000 applied towards the reduction of the Debt. So that altogether, since the 1st of April of last year, the whole amount was no less than £7,884,000. Undoubtedly, this leaves a good deal of Debt still remaining; but the reduction effected is quite as vigorous a one as it is reasonable to expect from a country where so large a revenue is raised and such heavy taxes are still imposed. In addition to the measures I have just mentioned, there are others—though as yet they are inchoate measures—having the same effect. Thus we have cancelled stock belonging to the Court of Chancery and the Court of Bankruptcy to the amount of £5,871,000; and this, added to the other amount, makes a reduction of the publicstockstotheamountof£13,755,000. Then, by the operations consequent on my Financial Statement, we have made arrangements to pay off £7,000,000 more stock by terminable annuities for the Post Office Savings Banks stock, these annuities ending in 1885. On the other hand, we have increased the Debt for the purchase of the telegraphs by the amount of £7,300,000, and for fortifications by £200,000. I have not included in this statement the sum of £4,600,000, representing the liabilities incurred on account of the Abyssinian Expedition, which were met out of taxation. On the whole, however, the statement I have just made will show, I think, that the Government, while enabled to propose remissions in taxation which have been beneficial to the public, have also not altogether neglected their duty in re- ducing the Debt. The unfunded Debt was never known to be so low as it is at the present moment, and we have a good prospect of reducing it further. The hon. Gentleman argues as though the sole object of the Chancellor of the Exchequer were the reduction of Debt; and he takes no notice of the advantage derived by the community from the reduction of taxation. I will therefore just give an illustration to show what may be done by reducing the public burdens, and yet how little loss is incurred to the Revenue. I have been charged very seriously, by what it is the fashion in this House to call "one of the ordinary vehicles of information," with having ruined the country, or something like it, because the Revenue which terminated on June 30th fell short of the Revenue in the year ending June, 1869, by the sum of £260,000. This, it is said, shows gross mismanagement on my part, and shows that the finance of the country is breaking down. But if the House will consider the taxation existing on the 30th of June, 1869, and will contrast it with the taxation for the year ending the 30th of June, 1870, they will see it is not very surprising that the Revenue, during the latter year, should have been £260,000 short of the amount realized in the former year. Up to the 30th of June, 1869, or within a few days of it, there was still imposed a corn duty of £900,000. There was about one quarter of the sugar duty not in force in 1870—say £600,000; there was the duty on fire insurance, £600,000; and there was a penny of income tax, £1,500,000. These sums, added together, make £3,600,000. Deduct £1,000,000 for licences, and you have £2,600,000 of taxation in force for the year ending the 30th of June, 1869, over and above the taxes imposed for the year ending the 30th of June, 1870. Deducting £1,000,000 for the acceleration of the licence duties, there remain the taxes which were in force in the former year, and not in the latter, £2,600,000; and, this falling off being allowed for, the reduction in the Revenue has been exactly one-tenth of it, or £260,000. When you achieve results like that by reducing taxation, you should pause before you pass from the duty of remitting taxation, and turn your attention exclusively to the reduction of our Debt. Therefore, I cannot agree to the Motion of the hon. Gentleman, al- though I agree with him in attributing great importance to the keeping down of the National Debt. I think the House will hardly be prepared to agree to the Motion with the construction he has put upon the words "that some decisive step should be taken," and I would propose by way of Amendment, to which I hope the hon. Member will agree—"That, in the opinion of this House, it is desirable substantially and gradually to reduce the National Debt." We have no objection to agree to that, as it is exactly what we have been doing. I therefore beg to move the Amendment.

Amendment proposed, to leave out the words "that some decisive step should be taken."—( Mr. Chancellor of the Exchequer.")

said, they were indebted to the hon. Member who had introduced the subject (Mr. Lambert) for having elicited a satisfactory and lucid statement from the Chancellor of the Exchequer. He felt convinced that there was at present a disposition to look the Debt in the face greater than ever had existed before, and the country, while indebted to the Government for the reductions already made, accepted them only as instalments of what was to follow. By many persons the National Debt was regarded as property the reduction of which implied loss; but these fallacies were being exploded, and taxpayers were beginning to see that it was all the same whether taxes were appropriated to the Army, to the Navy, or to the interest of the Debt. But he did not agree with the hon. Gentleman who brought forward the Motion, that the people would be willing to pay increased taxes in order to secure the removal of the National Debt. He did not think that it would be either reasonable or proper to reduce the National Debt by increasing taxation, or to adopt the scheme by which the hon. Member had proposed to clear it off in 45 years. He considered a sinking fund a fallacy; he did not admire terminable annuities; he preferred paying off the Debt by annual instalments, in a straightforward manner, and would be glad when such an instalment became a recognized item in each Budget. The reduction of the Debt would improve the value of all securities and of land; it was not necessary to continue the Debt as a security for peace; and it was equally idle to think of maintaining the Debt because it afforded an easy and secure investment to persons who did not know what else to do with their savings. He had heard the speech of the right hon. Gentleman (the Chancellor of the Exchequer) with the utmost pleasure, and he hoped that he would be able to carry out the expectations he had expressed.

said, he was authorized by the hon. Gentleman who had introduced the Motion (Mr. Lambert) to say that he accepted the Amendment suggested by the Chancellor of the Exchequer, which he had pleasure in seconding. He believed that the proceedings on that subject would be a satisfaction to our countrymen at home, and would show those in the Colonies that there was life in the mother country yet.

said, he agreed with the conclusions of the hon. Member for the City of London (Mr. Alderman W. Lawrence), but could not endorse all the arguments by which he arrived at them, for it would hardly be an advantage to set about reducing the Debt in such a way as to raise the prices of stock in the market. He had listened with surprise to the speech of the hon. Member for Westmeath (Mr. Pollard-Urquhart), who was mistaken in supposing that the falling off in American commerce was to be attributed to the paying off of the Debt; it was rather to be attributed to the mistaken adherence to the principles of Protection. The hon. Member (Mr. Pollard Urquhart) was also mistaken in his suppositions that to reduce the National Debt was, in fact, buying up annuities at 3 per cent, for although the interest paid to the stockholder was only 3 per cent, the cost to the country was considerable more. Those who questioned the expediency of making an effort to reduce the Debt, often did so on the ground that individuals could obtain a higher rate for their investments. It must be remembered, however, that the money invested in landed property was actually paying its proprietors a less rate of interest than we were paying on the Debt. Although he was not opposed to terminable annuities in principle, and when held by the public, he must say that the whole plan of reducing the Debt by such annuities, in the manner proposed by the Chancellor of the Exchequer, was only an elaborate scheme for throwing dust in the Byes of the nation. The course an individual would follow was to pay off a portion of his debt every year, and that was the system a nation should also pursue, and the moral effect that ought to be obtained was not effected by reducing the Debt by terminable annuities. At the present period of the Session a Motion for the reduction of the National Debt was rather late in the day, and, therefore, he would not enter into an elaborate argument on the subject; but when the question was brought forward next Session, as it infallibly would be, he hoped it would be treated in a serious manner, and that they would feel that they were not doing their duty to themselves or their children unless they made a serious effort in time of prosperity and peace to reduce the National Debt of this country.

said, he desired to express a word of protest against the view entertained in certain portions of the House. There was a wide distinction between the National Debt and that of a private individual. The only obligation the country was under to the fundholder was to meet the annual interest of the Debt. It was, therefore, only a question of expediency whether they should proceed to discharge the capital of the Debt or let it remain as it was. If the land of the country were to take on itself the obligation of paying off the National Debt, he should see no objection to that proceeding; but as long as a very large portion of the Revenue was raised from the industrial classes, it would be unjust, inexpedient, and impolitic to reduce the Debt in the way proposed through the ordinary means of Revenue. As long as they maintained peace and reduced taxation, they raised the humbler classes in the social scale and improved their condition; but when they applied the surplus Revenue to other purposes they curtailed the enterprize of the country and diminished the comforts of those classes. He believed that the landowners were really the most interested in reducing the taxation of the country and transferring the annual burdens to realized property. Landed property was limited in extent, and could not be increased, and of late years the value of land, and, consequently, the rental, had much, increased. This was owing to the reforms in the fiscal system, and he believed that they should not succeed in having a fiscal system which might be considered perfect until they removed the annual burdens from the industrial classes to landed property.

said, he thought that when the hon. Member (Mr. Illingworth) stated that the whole burdens of the country should rest on land he was bound to show that the land was responsible for those burdens, and history would hardly enable him to do so. The edict of the French Emperor prohibiting the entry of British goods into France was one of the great causes of war, and he asked the hon. Gentleman whether it was the land or the commercial interests that led to that edict.

explained, that he had not said whether or not the land was originally responsible for the debt.

said, he thought such an imputation would be unfair, and he was glad it was not intended.

Question, "That the words proposed to be left out stand part of the Question," put, and negatived.

Main Question, as amended, put, and agreed to.

Resolved, That, in the opinion of this House, it is desirable substantially and gradually to reduce the National Debt.