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March 31, 1896, stood at in lieu of Exchequer Bills, as the Ex£652,026,000-a reduction of £8,134,000 chequer Bills fall due. ["' Hear, hear !"] on the year-composed of Funded Debt, I hope the Committee will agree that £589,147,000; estimated capital value that is not an unsatisfactory account of of terminable annuities, £49,218,000; the position of the National Debt as Unfunded Debt, £9,976,000 (all except compared with last year. ["Hear, £51,000 in the hands of the public); hear !”] But let us consider for a and £3,685,000 raised under special moment what we have done with regard Acts. The reduction of £8,134,000 is to the National Debt in the course of the the largest reduction ever made in any last 40 years. The National Debt-the year except the year 1894–5. I hope Funded Debt-has not been materially my right hon. Friends—the Members for increased since the Crimean war. On the University of London and for April 1st 1857, the Debt stood at Liskeard, who objected to the financial £842,000,000. This


it stands proposals of the Naval Works Act—will at £652,000,000. [Cheers.] We have be reasonably satisfied with what has paid off in 39 years £190,000,000 of actually been done. [“ Hear, hear!”] debt--[cheers)—and £100,000,000 of Now I will explain how this has been that has been paid off in the last 13 effected. Of course, there has, in the years. [Cheers.] Some may think that first place, been the normal reduction in our efforts have been wasted—[An Hon. the capital value of the terminable an- MEMBER : “Hear, hear !” and that nuities, but the amount of the Unfunded we should have done better if we had Debt has been reduced by £7,424,000, allowed the money to fructify, as it is while the Funded Debt has been increased said, in the pocket of the taxpayer. by £3,131,000. This is due to the fund. That is not my view. (Cheers.] By ing, by the right hon. Gentleman this self-denying course the Parliament opposite, of a

of £4,974,000, and the people of this country have which borrowed on short loan raised up a reserve fund of incalculable by my right hon. Friend the First importance—["hear, hear !"}a reLord of the Admiralty in order to pro- serve fund which, if the time of need vide for paying off those holders of Con- should come when this country should sols who refused to convert. It was bor-again have to fight for its life, would rowed from the National Debt Commis- enable us, without imposing a single sioners at Consols rates of interest, and extra penny of taxation, to raise a couple it has been funded by the creation of of hundred millions for the defence of £4,630,000 of stock.

On the other the country, and without imposing, hand, however, through the operation either, an atom more debt upon the of the life annuities, Land Tax redemp- people of that day than our predecessors tion, and similar ways, the Funded Debt bore without a murmur in 1857. (Cheers.) has been reduced by £1,499,000, leaving That is a thing which, I think, this a net increase in the Funded Debt of country may be proud of. (Cheers.] It £3, 131,000. As I have said, the Un- is a source of incalculable strength to this funded' Debt has been reduced by country, and, although it may sometimes £7,424,000 by the operation I have be necessary, even in time of peace, as it named, and by the remainder of the was necessary in 1885, when I was last sums borrowed on bills and bonds for responsible for the finances of the counthe purposes of the Imperial Defence Act try, to postpone temporarily the operaof 1888, amounting to £2,450,000, tion of the Sinking Fund, yet I trust having been paid off by the appropria- that Parliament will never permanently tion of the Sinking Fund under the depart from the wise and prudent policy Finance Act of 1894. The Unfunded in this matter which it has hitherto purDebt, I think the Committee will be sued. [Cheers.] I have drawn a picglad to hear, now stands at a lower ture—I hope in not too bright colours point than it has reached for 21 years. of the present financial condition of the "Hear, hear !”] The operation of country,

I have pointed to increasfunding which I have alluded to has ing receipts from productive taxes ; materially simplified the debt. I hope have dwelt upon the high condition of still further to simplify it by issuing, so the credit of the country, and the far as may be necessary, Treasury Bills steady, I, may say the rapid, diminution

Chancellor of the Exchequer.



of the Public Debt. I might go on, as large number of those persons belong to my predecessors have often gone on, to the wage-earning classes – [“ hear, call the attention of the Committee to hear !”]—for whom, surely, the benefits the improvement in the condition of the of the Savings Banks were intended. great masses of our population, testified [“ Hear, hear !”] Now I do not see by the increased consumption of dutiable why the State should undertake the and non-dutiable articles, the comforts business of banking for persons who are and the necessaries of life, and by the perfectly well able to take care of their increased deposits in the Savings Banks. own deposits and to invest them to the But I will not detain the Committee on best possible advantage—["hear, hear !”] that point, because it is unnecessary to and particularly I do not see why that dwell upon it. We know it already. should be done when, as happens under

the present law, the State is compelled to pay 21 per cent. for deposits at short

notice at the Savings Banks—a higher But there is one aspect of one part of rate of interest than would be given by this question to which I should wish to most ordinary banks—and thus, at the devote a few minutes, and that is the present price of those Government question of the increased deposits in our securities in which such deposits Savings Banks. [“ Hear, hear !”] The must by law be invested, actually deposits in our Savings Banks—in which to incur a loss by receiving them. I include both the Trustee Savings I do not want


argue Banks and the Post Office Savings Banks whether we should lose a little in order

amounted in 1875 to £68,000,000. to encourage thrift among the working In 1885 they had increased to £94,500,000, classes, but I do not see why the Govand in 1895 they had nearly reached ernment should lose in order to enable £144,000,000. ["Hear, hear!”] The depositors who belong to quite another deposits in the Post Office Savings class to obtain a larger interest for their Banks have more than doubled in the money than they can obtain from the last 10 years.

In so far as this is due ordinary banks. [“ Hear, hear !”] I to the increased thrift and prosperity of do not desire to dwell on the point, but our working classes, it will be a source I have thought it right to call the attenof hearty congratulation to all of us- tion of the Committee to the present ["hear, hear !”]-but I am afraid that, situation, because I think that before if we investigate the matter, we shall long it may

become necessary

-if find another cause, not quite so satisfac- I have the honour to remain in this tory, to which part of this increase has office—to propose some alterations in the greatly been due. [“ Hear, hear !"'] existing law which may have the effect I find that the annual percentage of in- of preventing the abuse of the Savings crease in the deposits in the Savings Banks system without

system without discouraging Banks between 1875 and 1893 was 3-4 thrift, and among these alterations may per cent., but between 1893 and 1895 it probably be included a reduction of the had more than doubled. The increase present rate of interest on deposits above was 7.9 per cent., and, of this increase, a certain amount in our banks. [“ Hear, it is estimated that about half-or, in hear !”] other words, more than £10,000,000 is due to the operation of the Savings Banks Act of 1893. That Act raised

INCREASE IN EXPENDITURE. the maximum limit of annual deposit This, Sir, is an important matter, from £30 to £50, and made other but I turn to one which is of very much changes in a similar direction. In 1894, greater importance to the country. We 35,874 persons deposited in one single may nowadays be proud in a measure of sum the maximum annual amount of the enormous revenue which we raise. £50 to a total amount of £1,793,000. But what of our expenditure ? ["'Hear, In 1895, that number of persons so de- hear !”] I remember, inany years ago, positing increased by 35 per cent. to when Mr. Lowe held my present office, 48,500, and deposited in one single sum that he said his great difficulty was to the maximum amount, to a

total of know what to do with the millions of £2, 425,000. I cannot think that any money that kept pouring in upon him.

for me

Sir, millions of money keep pouring in the Taxes ; and I have taken the actual upon me, but the demands keep pouring revenue derived from Customs, Excise, in upon me far faster than the money ; Stamps, and House Duty, and also from and if we are right to be proud of our Income Tax, treating that separately on revenue, we ought also to think of our account of the variations according to increased expenditure. {“ Hear, hear !”] the rate in the pound. In order to allow I know perfectly well that increase in for changes in taxation, I have taken our expenditure is a necessity. The ex- the actual produce of the four heads of penditure of this country must be in taxation I have named in the first of the creased correspondingly with the increas- selected years. I have analysed the ing wants of civilisation, with the natural amount of taxation imposed and remitted expansion of our Empire, and I am between that year and the next selected bound to add-in consequence of the year, and then I have either added to enormous armaments of foreign countries. the produce of the first year the net But the grave question that I think this amounts imposed in the interval or deHouse and this country ought to con- ducted from it the net amounts remitted sider is this--whether our expenditure is in the interval. This should give the not now increasing faster than our revenue which would have been received capacity to bear it. [“ Hear, hear !”] in the second of the selected years had In 1881, Mr. Gladstone called the atten- the produce of the taxes remained tion of Parliament to this matter. He stationary, and, therefore, the compariinstituted a comparison, going as far son of that sum with the actual produce will back as the year 1842. He took the show whether there has been progression annual percentage of increase of popula- or retrogression--in other words, elastion, of revenue, and of expenditure in ticity or contraction of the revenue. I certain periods. The first period was will not trouble the Committee with any from 1842 to 1858. He calculated that more than the broad results of the comthe population had increased in that parison drawn on the basis I have detime by one-third per cent. per annum ; scribed, though I shall be glad to lay a that the revenue had increased by li per memorandum on the subject on the cent. per annum ; and that the expen- Table of the House with detailed figures. diture had increased by 24 per cent. per [“ Hear, hear !”] The broad results,

Then Mr. Gladstone took the then, are these. The second decennial years from 1859 to 1873, and calculated period compares favourably, from that in that period the population in- revenue point of view, with the first creased 1

per per annum, the decennial period. The four heads of revenue by 3 per cent., and the expen- taxation which I have named showed in diture by 1 per cent. per annum. the period between 1875-85 a decline to He next took the period from 1874 to the extent of 3.93 per cent., while the 1877, in which he calculated the increase produce per penny of the Income Tax of population at 1 per cent. per annum, showed an increase of only 3.23 per the revenue at 1! per cent. per annum, cent. In the second decennial period, and the expenditure at 3} per cent. per 1885 to 1895, the produce of the four annum. The right hon. Gentleman op- taxes showed an increase of 21.26 per posite (Sir W. Harcourt) will remember cent.; and the produce of the Income Tax that he entered into a similar calculation an increase of 11:46 per cent. That in 1886 in regard to the 10 previous would seem to be a rather favourable reyears.

I have extended my survey to sult with regard to the elasticity of taxathe last 20 years, ending with the year tion in the last decennial period, but I just concluded--that is to say, for each would remind the Committee that it is of the three financial years 1875-76, largely due to the results of the year 1885-86, and 1895-96. I have taken that has just closed. If, however, we the normal expenditure excluding any- turn to the expenditure under the heads thing like War Vote or Vote I have named - Army, Navy, Civil of Credit, under the six following Service, Education, Grants in Aid, and heads---Army, Navy, Civil Service, Collection-we shall find that, while in Education, Grants in Aid of Local the first decennial period the expendiTaxation, and Cost of Collecting ture (omitting the debt charge and Votes

Chancellor of the Exchequer.





of Credit) increased by 21.92 per cent. ; DIRECT AND INDIRECT TAXATION. in the second period it increased by no But where did that increase come from ? less than 38 per cent. Taking the It did not come from Customs and Exwhole 20 years together, our popula- cise. It came from stamps, which, in tion has increased in the whole period 1875, stood at £10, 232,000 and had by 19 per cent.; the four heads of risen in 1895 to £21,403,000, and it taxation have increased by 16} per came from Income Tax also, which had cent., and the Income Tax by 15} per risen from 2d. in the pound, producing cent.; but the expenditure has increased £4,032,000 in 1875, to 8d. in 1895, by 68 per cent. [“ Hear, hear !”] producing £16,100,000. The fact is And how has that increase taken place that the direct taxpayers of this country The Army Estimates have increased by have borne the bulk of our new burdens. £4,066,000, the Navy Estimates That has been the continuous direction £8,866,000, to which we have to add of our financial policy for 50 years. I more than £2,000,000 in the year in take the usual classification of all duties which we now stand. The Navy expendi- on consumable articles as indirect taxature of last year was larger than in any tion, and all other taxes as direct taxayear known since the close of the great tion. I go back to 1841, the

year war ; but the Navy Estimates of the before Sir Robert Peel imposed the Inpresent year are more than double those come Tax, and I find that of every £1 of the year 1875-6, and yet there are some that was raised by taxation, 14s. 74d. persons who are not satisfied. [Cheers and was paid by the consuming classes, and laughter.] Well, the Civil Service Esti- 5s. 4d. was paid by the propertied mates have increased in the period to classes ; but now, of every £1 raised by which I have referred by £1,266,000, taxation, 10s. 5d. is paid by the conthe education charges are increased by suming classes and 9s. 7d. by the pro£6,673,000-nearly quadrupled since pertied classes. Let me carry it a little , 1875-76 ; the amount in aid of local further. The tax revenue in 1841-42 taxation has increased by £6,634,000, stood at a little under £50,000,000. though I must add that it would be hardly Seventy-three per cent. of that was paid fair to put down all that to increased by indirect taxation, and 27 per cent. expenditure, because part of it, at any by direct taxation. In 1861-62 it was a rate, was merely a transfer from one little under £64,000,000. Sixty-two pocket to another. [“Hear, hear !”] per cent. of that came from indirect Lastly, the cost of collection of the taxes taxation, and 38 per cent. from direct has increased by £113,000. Now, I taxation. In 1891-92 it was £83,200,000. think the Committee will see that if our Fifty-six per cent. of that came from inexpenditure goes on increasing at the direct taxation and 44 per cent. from rate it has done during the last 20 direct taxation. In 1895-96, this last years, and the

shows no year, it was £92, 482,000. Fifty-two greater elasticity, we shall be within per cent. of that has been paid by inmeasurable distance of a time when direct taxation, and 48 per cent. by we shall have to choose between dimin- direct taxation. There has been ishing or putting an end to the re- gradual transfer of burden from the induction of our National Debt and an direct to the direct taxpayer of this increase of taxation. I do not envy the country. [Sir W. HARCOURT : “An Chancellor of the Exchequer, whoever equalisation.”] I said a transfer of the he may be, who has to impose increased burden. The result is that whereas in taxation to any large extent on our pre- 1841, £1 7s. 3}d. per head of the popusent financial system. He will have no lation was produced by indirect taxation, easy task. [“ Hear, hear !”] I should and 10s. ld. by direct taxation, now like to draw the attention of the Com- £1 4s. 9d. comes from indirect taxation mittee to the way in which the increased and £12s. 6d. from direct taxation. expenditure of the last 20 years has That, I think the Committee will see almost entirely been borne. Customs, has been a progressive and remarkable Excise, Stamps, and House Duty pro- change. [" Hear, hear !”] I do not duced in 1875 £59,412,000. In 1895 say the policy is wrong. Opposition they produced £75,367,000.

cheers.] There is no doubt that under



we add

it the industry and enterprise of this revenue of the coming year. The Comcountry, our commerce and trade, and mittee will see from the papers in their our wealth, have been enormously de- hands that the expenditure of the coming veloped—[“hear, hear !”]-and, there- year is estimated at £100,047,000, fore, I suppose we may say it is justified £4,066,000 over the estimate of last by its results. But I must point out year.


the Estimate of that our system as it now stands does £7,310,000 for the Local Taxation Acnot add to the popular support which count, we have a total of £107,357,000. any Chancellor of the Exchequer can Now, that is an enormous amount ; noenlist in aid of economy. I do not know body can deny it. It is £29, 310,000 why it is, but in spite of his increasing more than Sir Stafford Northcote had burdens the direct taxpayer is too to provide for 20 years ago, and it is patient, or too comfortable, or too much more than double the sum of £51, 709,000 immersed in business or in pleasure, or which was the modest Budget Estimate too idle to do more than grumble and of Mr. Goulburn in 1846–50 years ago. pay. The indirect taxpayer of this The increase over last year's Budget Esticountry is


moderately burdened, mate is due mainly, of course, to the vast indeed very lightly burdened if he neither increase of £3, 122,000 in the Navy Esti drinks nor smokes. (Laughter.] We mates. Every Chancellor of the Exhave arrived now at this position, that chequer for the last 10 years has been in time of peace we have an Income Tax burdened with the ever-increasing burof 8d. in the pound, we have Death den of this “old man of the sea.” (LaughDuties at a point which I suppose ter and cheers.] I do not complain of hardly anybody will wish to increase, and it, because, in the first place, I believe we have indirect taxation levied only on the expenditure to be necessary—[cheers] a very few articles of great consumption, and, in the second place, if it be necesthe list of which has not been added to sary, I know that it is far more economifor very many years, and the taxation cal that we should incur it at a time on which, with the exception of the when we have leisure to think out a systaxation on beer and wine and spirits, tematised plan on which it can be made, has not been increased at all since the than to defer works which we ought to year 1878. I wish to put before the do ourselves to be attempted some day Committee the present condition of our by our successors,

and then to be financial system. I wish to ask them to provided for by Votes of Credit consider at their leisure what the posi- amounting to enormous sums, much of tion

may be of the Chancellor of the Ex- which would certainly be wasted, and chequer who in some future year may all of which might be too late for the have to meet a continuing enormous in- object for which it would be required. crease of expenditure under this system [“ Hear, hear !”] Therefore, Sir, I do of taxation, and I wish to ask them not grudge this increase in the Navy whether they are quite sure that in such Estimates of the current year.

I am circumstances our present financial policy sanguine that next year may show a decan be maintained. I do not answer crease. I need not explain the other that question to-night, but I think I heads of the expenditure, because they should have failed in my duty if, on a have been explained by the memoranda matter of this vast importance to the which have been circulated with the country, I had not done my best, in view Estimates, but there is one point of the increased expenditure of the pre- to

which I ought to call the sent year, even in this time of prosperity, attention of the Committee. The Conto place before the Committee what I solidated Fund Services would naturally think to be a cause of great anxiety. show a decrease of £30,000. Instead of [“Hear, hear !”'] Sir, I hope the that they show an increase of £35,000, Committee will not be of opinion that I and I have this year, unfortunately for have detained them unnecessarily-- me, to pay for the failures of my prede(cheers!-on these matters.

cessors some time ago. I have to ask

Parliament to start an annuity of ESTIMATED EXPENDITURE FOR 1896-7.

£65,000 in order to make up the deI now turn to what will be of more im- ficiency in an old annuity of £150,000, mediate interest, the expenditure and created under the Indian Army Pension

Chancellor of the Exchequer.

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