hoped it might be as the right hon. gentleman desired. He must say he was surprised to hear from the hon. member for the Wick burghs a declaration to the effect that the Government could with ease borrow money on terminable annuities. It was all very well in theory and in the closet to say this would be easy; but it should be remembered that in all contracts there were two sides. He doubted very much whether the Government would have been able to borrow money in the way recommended by the hon. gentleman, except by making such sacrifices as would have been repudiated by the House and the country. The hon. gentleman asked the House to see what France had done in the case of railways, where there had been borrowed large sums of money for a period of ninety-nine years. The cases were, however, exceedingly different. That money was borrowed upon government concessions, which were supposed to be most favourable, not on a fixed dividend, but on a fluctuating profit. It was, in fact, a commercial speculation. But he could not imagine that the hon. gentleman supposed we could borrow in that way. We could not farm to contractors the revenue of the country; nor, indeed, could we in any way compare the two modes of raising money, which was for different objects, with different expectations, and with very different inducements. (Hear.) It seemed to him, indeed, the most preposterous notion ever mooted in that house. But then the hon. gentleman said we should try open subscription, as in France. Now, we were bound, in a matter of this kind, to consider the character of the two countries, and the people with whom we had to do. In France, the small owners and capitalists, frightened, perhaps, by all that had passed in their own country, where there had been so much revolution and fluctuation, were accustomed to lay out their savings in small purchases of land, or on mortgages of land, and other safe investments. The French people had, and still have, throughout France, a great deal of money divided among them, either hoarded or employed at a low rate of interest. He did not believe that the same thing existed in England. The Englishman did not keep his little savings by him, but invested them in what he thought would yield him an interest, and he generally required a large interest; and if these £16,000,000 had been offered to the people generally in this country, divided in small sums, he did not believe that they would have been found diverting their existing investments for the purpose of subscribing to a loan on the terms on which the Government obtained it. It was not open to the Government to obtain the money either in that way or by terminable annuities, but they still could act upon a principle of honesty, and maintain that it was the policy of this country to continue keeping a surplus income in time of prosperity, to be applied to the diminution of the public debt. (Hear, hear.)

Mr. Gladstone agreed with the honourable gentleman in the two points to which he had just adverted. He was firmly convinced that it was not possible for the Chancellor of the Exchequer to contract for so large a supply of money in terminable annuities, except at a price wholly extravagant. The honourable gentleman had likewise done a service to the cause of truth in making a statement which would dissipate, it was to be hoped, the delusive opinion which had prevailed in this country, to the effect that it was competent for the Chancellor of the Exchequer to adopt here the means for raising a loan which were wisely used in France, an opinion which he believed was never entertained by those who had made a careful estimate of the immense difference of the circumstances of the two countries. (Hear, hear.) The honourable gentleman, however, had not been just in the comments he had made on the speech which fell from his right honourable friend, though he was glad to see that both concurred in strongly holding the opinion that it was the duty of Parliament in easy times to maintain a surplus revenue for the reduction of the national debt. He knew this to be the opinion of the honourable gentleman from his words, though the honourable gentleman thought his right honourable friend indifferent on the subject; and he knew that it was the opinion of his right honourable friend from something better than his words-from his proceedings when Chancellor of the Exchequer, because it had been the constant and successful endeavour of his right honourable friend to create a large surplus revenue applicable to the reduction of the debt from year to year. (Hear, hear.) He did not believe that there was a man more disposed, in the exercise of the powers of Government, to draw on the confidence of the country for the maintenance of a surplus revenue in time of peace than his right honourable friend

(Mr. Goulburn). The question, then, was, not whether it was desirable to maintain a surplus revenue, but whether the clause which the Government invited the House to pass with a view to the repayment of the loan would assist in its maintenance? The honourable gentleman said it was the assertion of a principle, but he (Mr. Gladstone), though respecting the motives which induced the Chancellor of the Exchequer to propose the clause, doubted whether the House would ever attain the object in view by an enactment of that description. When the honourable gentleman said that this was the assertion of a principle, he (Mr. Gladstone) must observe that he apprehended that when Parliament wished to make a solemn expression of its conviction, the proper place for so doing was not in the clause of a bill, but in the preamble. What was the use of Parliament enacting a clause for the purpose of declaring what it had no power to give effect to? This clause purported to be a contract and pledge, but a future Parliament might, many years hence, question the right of the present Parliament to abridge the discretion of that future Parliament, by not merely asserting the principle that a surplus revenue should be maintained applicable to the extinction of the debt, but by specifying the particular amount and form of investment, with respect to which the future Parliament would be a better judge than the present. (Hear, hear.) It would not promote the object in view, and it would be going beyond the province of the present Parliament to dictate to a future Parliament the manner in which it should exercise its discretion on this subject. Another great disadvantage attending the proposed mode of proceeding was, that the clause provided not only that £1,000,000 a year should at a future period be set aside for the extinction of the debt, but that the money should be applied in the redemption of Consols. Now, how could the House, at the present moment, tell whether it would be advisable, in 1860 or 1870, to lay out the million in the purchase of Consols or of other stock? It might be preferable to redeem Exchequer bills or Exchequer bonds, or other stocks; and were they likely, then, to promote by such enactments the maintenance of a surplus revenue? However much he respected the motives of the Chancellor of the Exchequer in proposing such a clause, he was of opinion that the present Parliament had better rest satisfied with the performance of its own duties, and would do well not to undertake to teach future Parliaments theirs. He must not be told that the proposed clause was at any rate harmless; for were not enactments of this kind calculated to throw dust in the eyes of the people and create delusive hopes? Were they not calculated to give undue facilities for the creation of unnecessary loans, by pretending to provide the means of repayment? (Hear, hear.) These were grave questions, and he believed that the more straightforward and explicit the proceedings of that House were, especially in matters concerning the money of the people, the better. Before he sat down he wished to draw attention to what he supposed must have been an inadvertence. On consulting the votes, he found that not only the resolutions relating to the loan, and to the Customs and Excise duties were, in conformity with previous practice, voted, but the committee had also voted, on the moment of its proposal, the resolution for the imposition of a new income tax. Now, he apprehended that the privilege of discussing all resolutions relating to taxation, on their first proposal, was one of the most important privileges of the House, though that privilege was occasionally wisely waived when it was necessary to confirm a contract, such as a loan, or when it was necessary to prevent a waste of the public resources, as in the case of the Customs and Excise duties. No reason whatever of this kind was applicable to the income tax, for there was no proceeding to be taken with regard to it which depended in the slightest degree upon the resolution being passed on Friday night. The same observation applied also to the stamp on bankers' cheques. The invariable usage was to give the House time for consideration, after hearing the financial statement, before calling on it to proceed to any vote. The right hon. gentleman, the member for Buckinghamshire, when he made his financial statement in December, 1852, not only did not press the House for any vote, but it was actually in the first stage, in the preliminary committee, that his proposals were resisted and rejected by a majority. The present departure from the usual practice had, no doubt, happened inadvertently, but the point was of such grave importance, that he had felt it his duty to enter his protest against it.

Mr. M'Gregor (Glasgow) contended that the Chancellor of the Exchequer

ought to have submitted the loan to open competition by which means he would have been enabled to obtain £20,000,000 at par, in terminable annuities, at 4 per cent., and thus, with the aid of £3,000,000 of Exchequer bills, he could have provided for the expenses of the year, without increasing the taxation of the country.

Mr. Laing rose to correct the misapprehension into which the honourable member for Huntingdon (Mr. Baring) had fallen, in respect to the argument which he had used on Friday night. The great object which he had then urged against the Chancellor of the Exchequer's scheme was founded on the creation of so large an amount of debt in the ordinary Three per Cent. Consolidated Stock, and he had not argued distinctly in favour of the creation of terminable annuities, but had simply represented that it would have been possible for the right honourable gentleman to have raised an equally large amount either by a system of terminable annuities, or by the creation of stock at the market rate of interest which the Government credit would have commanded at the time, viz., at 3 per cent. Another very serious objection which he felt to the right honourable gentleman's proposition was, that as the Three per Cents. were, to a great degree, the barometer which regulated the state of our national credit, owing to there being a large amount of trust and other moneys of the same description ready to be invested in them, the result of adding so largely to this description of stock would be, to make the other securities range at a lower rate than they otherwise would do. Had not the price of Consols been unnecessarily depressed by the sale of savings bank stock, and had the loan been proposed in some other description of stock, Consols would have stood some 3 per cent. higher than they did at the present time. But a fall of 1 per cent. in Consols was equivalent to a diminution of about £10,000,000 in the value of the whole national securities, and a scheme which, for the sake of getting only £16,000,000, caused even a temporary diminution in the aggregate value of the national property to the amount of some £25,000,000 could not be a very good one. Except in case of great urgency, any addition to the Three per Cents. ought to be avoided. In his opinion, it would have been practicable for the Chancellor of the Exchequer to have resorted to the plan of terminable annuities, and it was for the purpose of showing that they were quite as marketable as any other description of security, that he had, on Friday, quoted the case of the French railways, where there was somewhere about £100,000,000 of property invested entirely in terminating stock. It was a mere question of price, and, though, no doubt, a considerable present sacrifice would be inevitable, yet now that we were, in all probability, at the commencement of a new series of loans, it was well worth trying whether they could not be advantageously effected in terminable stock. The Chancellor of the Exchequer might easily have ascertained from the great moneyed corporations at what price they would effect such a loan; and, if the sacrifice had appeared too great, he would then have had the other alternative open to him of effecting it in Threeand-a-Half per Cents., by which means, though no actual reduction of debt was secured, yet there would have been a prospect of effecting, at some future period, a reduction in the interest. The honourable member for Huntingdon had misunderstood the argument of the right honourable gentleman the member for Cambridge University. The right honourable gentleman did not object to the principle of attempting to reduce the debt, but to a mode of doing so which would be entirely illusory. If the Government were in earnest, let them embody this principle in the very terms and essence of the loan, and then the performance of the obligation so imposed could not be shrunk from without their committing an act equivalent to national bankruptcy. They certainly ought not to burden posterity with a perpetual charge of this description; but he (Mr. Laing) could not be a party to the creation of a mere fictitious guarantee for the repayment of this loan, which, when it came to be tested, would not hold water.

Mr. James M'Gregor said that the hon. member for the Wick burghs (Mr. Laing) had quoted as a parallel to this loan the raising of a large sum of money on the French railways, upon which £100,000,000 were borrowed in what the hon. member called terminable annuities. Now, the fact was, that the profits on the French railways were so large that they enabled a considerable sum to be regularly laid by for what was termed an amortissement, by which means the parties who subscribed the £100,000,000 received back again, on the expiration of the lease, the amount

of the capital they had previously invested. It would be well for the unfortunato holders of railway property in England if they could receive back their original capital. With regard to the contract which the Chancellor of the Exchequer had entered into for this loan, it was only fair to say that, in the difficulty in which he had been placed in having to borrow £16,000,000 concurrently with the imposition of additional taxes, the right hon. gentleman had conducted the operation in a highly satisfactory manner, and that its execution reflected upon him the greatest credit.

Mr. Hankey had heard with much 'astonishment the objection by the right hon. gentleman the member for the University of Oxford to that House pledging itself to the redemption at a future time of the loan now to be raised. Why, that was precisely the same course which that right hon. gentleman himself pursued last year, when he raised a certain sum upon Treasury bonds, and asked the House to agree to a certain amount of taxation, to afford him the means at a subsequent period of redeeming those bonds. Thus the House was involved in a pledge to maintain a certain amount of taxation to enable it to fulfil the engagement into which it had entered; and it was no more than what the present Chancellor of the Exchequer asked them to do in regard to the repayment of this loan. It would in no way be inconsistent with their duty to give the best pledge in their power for the honesty of their intention, when peace should happily be restored, to maintain such an amount of taxation as would admit of the gradual reduction of the national debt to the point at which it stood before the contraction of this loan.

Mr. Wilkinson doubted the wisdom of the House now entering into a pledge to be fulfilled hereafter, when the circumstances of the country might be altered in a manner which it was utterly impossible for anybody now to foresee. With regard to the creation of 3 per cent. stock, as suggested by the hon. member for Wick, that course, in the present state of the monetary affairs, would not have been expedient.

Mr. Cardwell was surprised to hear the hon. member for Peterborough (Mr. Hankey) confound the issuing of Exchequer-bonds upon a distinct contract with the lender of the money, with a clause in a bill which would form no stipulation of the contract entered into with the persons advancing the loan, but would be a mere vague paper promise, which those who made it had no power whatever to perform. In contracting loans and pledging the public credit, they might be embarking in a course which would prove erroneous, and therefore his right hon. friend (Mr. Goulburn) argued, that the public should be made aware at the outset of the real nature of the obligation to be imposed upon it, and not be lulled into a false security by the flattering idea that this would only be a temporary loan, to be repaid on the conclusion of peace, when, in fact, no provision either was or could be made in this manner for effectually carrying out such an engagement. With regard to the raising of the loan, it was all very well for the hon. member for Wick to say that it was only a matter of price, but it was the duty of the Chancellor of the Exchequer, after making the best calculations in his power, to secure for the public the largest sum of money at the cheapest possible rate. As to the expediency of borrowing upon loans terminable on shorter notice than a twelvemonth-in doing so they obtained a substantial return for any additional price they paid to the lender, because it was well known that the condition of giving twelve months' notice presented a serious practical obstacle to the operation of reducing the interest on the debt. It was no sufficient answer to this to say that those loans, the interest of which could be lowered on a shorter notice, were already large in amount; for it was obvious that the greater the proportion of debt over which they could spread a reduced rate of interest, the better would it be for the public.

The Chancellor of the Exchequer—I have listened with the utmost respect to the remarks made by my right honourable friends the members for the two Universities on the proposal contained in the resolution before the House, with respect to the annual repayment of the loan after the expiration of the war. The opinions they expressed will command great weight, not only from their financial experience, but from their ability in all matters relating to this branch of the subject. Sir, I fully admit that the resolution in question is not a matter of contract between the Government and 20

VOL. XV.

the lenders, and it is perfectly open to this House to consider this question, without placing any limit on the discussion, and to deal with the clause, when the bill is before them, as they may think fit; but this proposition has been deliberately proposed to the House by the Government, as they believe it to be a proper and defensible proposition, and when the proper time comes, they will feel it their duty to adhere to, and to take the sense of the House upon it. I cannot but think that there has been some misapprehension as to the precise effect of the proposition in question. On Friday night, when I explained its nature, what I distinctly stated was, that this House could not make any irrevocable law; that an act passed by this Parliament might be repealed by a Parliament fifteen years hence; and that we could not do anything which would effectually tie up the hands of our successors. Precisely the same objection that my right honourable friend makes to this proposition might be made to every act which passes this House which affects future generations. There is nothing peculiar in the proposition which we make. It cannot control the future discretion of Parliament; but the effect which it would have, if it received the authority of law, is this-it creates a permanent charge on the Consolidated Fund, and it becomes the duty of the existing Government to make provision for that sum out of the Ways and Means of the year (hear), and it will be the duty of the Chancellor of the Exchequer, so long as this act remains unrepealed to estimate for £1,000,000 in his annual Budget for the purpose of repaying the loan now contracted. I am perfectly aware that it may so happen that the nation may be engaged in war, or that there may be some pressing necessity which may render it inexpedient that the surplus revenue of a particular year should be applied to the reduction of this debt. If so, it will be in the power of Parliament to untie the hands of the Government, and to repeal, either permanently or temporarily, this provision which makes it necessary that the Government should provide this £1,000,000, and to make any provision which they may deem suited to the exigencies of the time; but, until Parliament does so interfere, and does so untie the hands of the Government, it will have to make this provision for the extinction of the debt. This is all that it is possible for us to do; for we can in no way place a limit on the future discretion of Parliament. We are all unwilling to create a permanent burden for posterity, and circumstances prevent us from borrowing so large a sum as the loan required in terminable annuities. It has been stated by the honourable member for Huntingdon, who is entitled to speak with great authority on this subject-and I am satisfied that his statement will be confirmed by ail persons who will carefully consider the question-that a loan of £16,000,000 cannot be effected on terminable annuities without giving terms so extravagant that the Government would be justly condemned if it agreed to accept them. (Hear, hear.) I question whether, without giving terms absolutely extravagant, so large a loan could be effected at all in terminable annuities of thirty years; for there is a great objection on the part of the public to receive back every year a portion of their capital in driblets, subjecting them to the necessity of expending their capital as income, or of re-investing it in a troublesome manner in small sums, under embarrassing circumstances. These would be difficulties so great, that it is very questionable whether so large a loan could be effected at all in terminable annuities. As it was not, therefore, in the power of the Government to effect the loan in terminable annuities, they have gone so far as they believed they possibly could-they have raised a portion in perpetual stock and they propose, at the same time, to make it obligatory on the existing Government to apply for £1,000,000 annually to extinguish the debt so created. I am willing to admit that this is not a paramount authority, and that Parliament has the power to rescind it; but it is impossible for us, without making repayment of the debt matter of specific contract between the Government and the lenders, to impose more stringent obligations. With regard to terminable annuities, there is this advantage-the repayment of principal and interest is made a matter of specific contract between the Government and the lenders; but with regard to perpetual annuities this is not and cannot be the case. The right hon. member for Cambridge made some remarks as to the expediency of contracting for this loan in 3 per cent. securities rather than in Consols, on the ground that one was redeemable by a year's notice, which, with regard to the other stock, was not the case. He spoke of Consols as being irredeemable; but I cannot help thinking that he confounded two ideas which are wholly different-viz, the reduction of