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ARCH 3. The house of commons having formed itself into a committee to consider the finances of Great Britain, the chancellor of the exchequer said that he had for a considerable period devoted a great share of his attention to this subject, and should communicate to the committee the result of his labours. At the same time it was impossible to doubt, that the late important events in the north of Europe had produced a great improvement in our financial prospects. The credit of the country might now be considered as standing on more solid grounds, and requiring measures of less rigour and severity than might have been contemplated six months ago. A very general impression at that time prevailed, that France would be successful in the war which she had commenced against Russia; but these gloomy prospects had been totally altered by the most extraordinary and eventful campaign ever recorded in the page of history; and though, as a man, he felt for the horrible destruction of human life in such various forms of aggravated misery; yet it might be hoped that this glorious struggle, between remorseless ambition and hardy stubborn patriotism, would be attended with the greatest bene fits to the cause of humanity. In the course of a former discussion, he suggested that further measures might be taken for promoting and 1813.

facilitating the redemption of the land-tax: This was the first measure which he had again to press upon the consideration of the committee; and he had to observe, that the commissioners for this redemption had framed an elaborate report on the subject, which was now on the table, and would form the groundwork of a bill which he meant to introduce. The principal object of the measure would be to simplify and facilitate the arrangements necessary in the redemption the land tax, by dispensing with many of the formalities which it was at present necessary to go through. He should have to propose, as one clause of the bill, that upon a simple notice given to the collector, by any per son desirous of redeeming his landtax, the collector might be allowed to charge his tax double or treble, as might be agreed upon, for a certain number of years respectively, at the close of which the process of redemption would terminate; and that the produce of such tax should be annually applied to the reduction of the national debt: The second proposition which he meant to make was, that on all loans hereafter to be con-. tracted, there should be an additional 11. per cent. to the sinking fund for their liquidation. Besides which, he proposed that on exchequer bills, and other floating unfunded property, a sinking fund of one per cent. should be annually

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voted; and he had to observe, that some of those exchequer bills had been outstanding for so long a period as since 1795. There was a third proposition to which he wished to call the attention of the committee. It was his intention to submit a measure for the repeal of the act of 1802, as far as it directed that the produce of the sinking fund should accumulate at compound interest for the extinction of the national debt. At the time of the establishment of the sinking fund, the inconveniences attending the rapid increase of the national debt were contemplated, and the object of that measure was to correct them; but the inconveniences which might attend the too rapid reduction of that debt, were then kept out of view (a laugh from some members). It was not, however, the less true, that a too rapid reduction might produce injurious effects on the property of the country, by throwing too great a quantity of money into the market at one time; and these effects had been ably and judiciously stated by his noble friend the marquis of Lansdowne, in 1806. The only instance which he had heard of a great portion of national debt being paid off, es in the case of the elector of Saxony; but that instance, as referring only to a small country, had no peculiar reference to this great and opulent empire. The point then was, that, the sinking fund should be sacredly supported to a certain amount; but he believed it might be shown that its enormous increase, by throwing into the market immense sums of money at one time, would produce effects similar to those of a national bankruptcy. Whether the sinking fund had now reached that point in this country, beyond which it would be inpolitic to carry it,

would be a fair subject for the con sideration of the house: its operation was, of course, counteracted by the effect of the loans which were rendered necessary by the war; but it might unquestionably be said, with truth, that in no country during peace had twelve millions been annually thrown into the money market. From the period of the complete introduction of the funding system, in the early part of the last century, to the close of the American war, the object of our measures of finance during war appeared to be only to provide for the immediate expenses of the year, by borrowing such sums as were necessary for any extraordinary charge incurred, and by imposing such taxes as might meet the interest of the loan, leaving to the period of peace the consideration of any provision for the repayment of debt; and this being attempted at. irregular periods, and on no permanent system, was never carried into effectual execution; the total amount of debt redeemed between the peace of Utrecht and the close of the American war being no more than 8,330,000. The accumulated expenses of the American war, and the depressed state of public credit and of the revenue at the close of that war, impressed on the vigorous mind of Mr. Pitt the necessity of adopting a more provident system, of which he laid the basis, with admirable judgement, in the sinking fund acts of 1786 and 1792. At the commencement of the war of the French revolution, Mr. Pitt thought it sufficient to meet the charge of military and naval expenses by loans, accompanied by that provision for gradual redemption, which had been established by the act of 1792. The increased expenses of the war, and the prospect

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of its long continuance, induced him however, in 1797, to plan the most efficacious system by which a long duration of war could be supported, that of equalizing the income with the expenditure of the country. For this purpose he proposed, in 1798, the establishment of a general tax on income; intended, with the aid of some other war taxes, to provide within the year for a great part of the public expenses, and also to repay, within a few years after the conclusion of peace, all the debt contracted beyond the amount of the king fund in each year. The plans adopted for increasing the national income upon the renewal of the war, by lord Sidmouth, and afterwards by lord Grenville and lord Henry Petty, in 1803, 4, and 6, were on a much larger scale; and there was every appearance that the income of the nation might at the present time have equalled or exceeded its expenditure, if the necessity of a large increase in our foreign expenses had not arisen. The total amount of the public expenditures, exclusive of the sinking fund, was, on an average of the years 1806 and 1807, about 61,600,000l. The income of 1807 (taking the property tax, according to its assessment, at 11,400,000l.) was about 59,700,0001. The net produce of the public income, on an average of the years 1809, 1810, and 1811, deducting the arrears of property tax paid in beyond the assessment of each year, was about 64,000,000l. which, with the addition of the taxes imposed in 1811 and 1812, would appear to leave a considerable surplus beyond the amount of the expenditure of 1807: but to this expenditure must be added the increased charge of unredeemed debt since that year. This amounted to about 2,300,000.

which, added to the before-mentióned sum of 61,600,000Z. being the expenditure of 1807, made together nearly the above sum of 64 millions. The expenditure of the same years, 1809, 1810, and1811, amounted, it was true, on an average, to nearly 73,000,0007. and that of the year 1812 might be estimated at about 81,000,0001. exclusively of the repayment of exchequer bills and loyalty loan. The amount therefore of the sum to be provided, in order to equalize the receipt and expenditure of Great Britain, on an average of the years 1809, 1810, and 1811, allowing for the increased charge of unredeemed debt, might be esti mated at 9,000,0001; or, taking the expenditure at 81,000,000., at about 17,000,000l.: from which sums must, however, be deducted the future produce of the taxes inposed in 1811 and 1812, which might be estimated at about 2,500,0002. and which would reduce the former sum to 6,500,000l. and the latter to 14,500,0007. To raise even the lowest of these sums by an immediate imposition of new taxes, in addition to the great exertions already made, would, however, be considered as a very heavy burden; and one, the severity of which might be felt still more sensibly, from the apprehension, by no means unreasonable, that such a sacrifice might eventually prove to have been unnecessary, as many supposable and even probable case might arise during the continuance of the war, in which it would be possible very considerably to reduce our expenses. Nothing more, therefore, could be expected as a permanent war system, than to provide for such a scale of expense as must necessarily arise out of the state of war, without including that great G2

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increase which had been occasioned by our extraordinary exertions abroad in the last four years; and which, in whatever way it might appear to the wisdom of parlia ment most proper to provide for it, must be considered as of only an occasional nature. In the foregoing statement he had assumed, that the sinking fund was no portion of the national expenditure. In fact, by cancelling a certain portion of debt in each year, it reduced the debt really incurred to the amount in which the sum borrowed exceeded the sum to be redeemed. It was evident indeed, that whether the fund was applied in the purchase of stock already existing, or in reducing the amount of stock to be created, the effect would be nearly the same; and the equalization of the public income and expenditure might consequently be considered as a primary advantage of the sinking fund, no less than the actual redemption of debt. The former of these objects, so far as was requisite to meet that part of the expenses of the war, which might be considered as necessarily permanent, appeared by the foregoing statement to have been already accomplished. It had, indeed, been effected by means which, while they evinced the extent of the resources of the country, and its firm and unskaken spirit, pointed out at the same time the expediency of not calling for any further avoidable sacrifices; for this great object had, in fact, been accomplished by the extraordinary payment of more than two hundred millions of war taxes. This unexampled exertion might be considered no less powerfully cooperating with the sinking fund, in its other great object of the reduction of the debt, since the creation of a new debt to an equal amount

had thereby been avoided. These considerations might be thought sufficient to prove to the committee the general expediency of any alteration of the present arrangement of the sinking fund, which, without violating the provisions of the act of 1792, might diminish the weight of those further burthens which the progress of the war might impose on the nation; and with this view it might be proper to advert to the remarkable period at which the re demption of the debt had actually arrived. When the establishment of the sinking fund was proposed by Mr. Pitt in 1786, the debt amounted to near 240,000,000%; a sum, of which few then living ever hoped to see the redemption, but which, by the steady perseverance of parliament in this important measure, had already been redeemed. Having entered into various other statements, he said it was his object to propose to the committee a plan, by which a gradual and equable reduction of debt might be provided for, with great immediate advantage to the public. It was only necessary to enact, that the debt first contracted should be deemed to be the first paid off, whether purchased by the sinking fund originally provided for its redemption, or by any other. He had already shown, that this supposition involved no absurdity; the old stocks, and the additions to them, being so mixed, as to render all discrimination impossible: and it was surely very allowable in practice to assume that any given portion of the public debt was discharged, when an equal sum, funded in the same securities, had been paid off. A sum equal to the capital of the whole public debt existing in 1786, having already been purchased by the commissioners, or

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transferred for the redemption of land-tax, or the purchase of life annuities, the execution of this plan would only require, with regard either to that sum, or to any debt hereafter to be redeemed, that a certificate of such redemption should be published in the Gazette, and laid before parliament by the commissioners; and that, thereupon, the stock so redeemed and standing in the names of the commissioners should be at the disposal of parlia, ment, and liable to be cancelled, in such proportions and at such times as parliament might direct, to such an amount as might be necessary for charging, upon the same securities, the dividend and sinking fund of any loan which might have been contracted for the public service; but that the whole sinking fund created by the act of 1789, or by any subsequent act, should be continued and applied, until the total redemption of all debt existing, or to be created during the present war. In order, however, effectually to secure the means of redeeming all future loans within 45 years, and to preserve a proper proportion between the sinking fund and the unredeemed debt, it would be expedient to enact, that whenever the sum borrowed in any year should exceed the sum to be paid off, a sink ing fund should be provided for the excess of loan, equal to one-half of its interest; and for the remainder of the loan, or for the whole, if not exceeding the amount to be redeemed within the year, a sinking fund of one per cent. conformable to the act of 1792. He might also observe, that all this arrangement involved the repeal of those provisions of the act of 1802, under which the whole sinking fund then existing was directed to accumulate at compound interest. Till the

complete redemption of the debt which then remained unredeemed, it would be proper to make good to the sinking fund the annual sum of 870,000l. which would have been appropriated to the redemption of the different sums provided for in 1802, if that consolidation had not taken place, and if those sums had been accompanied by the usual redeeming fund of one per cent. And while in this respect the proposed plan would revert to the original arrangements of the sinking fund, it would also conform to them by returning, with much greater advantage, to the principle of those provisions, by which relief would before this time have been obtained to the public by the limitation of the sinking fund, as established by the act of 1786, and then restricted in its accumulation to the annual sum of 4,000,000%. He might observe, in favour of the proposed plan, that it was less liable than any other modification of the sinking fund to be abused as a precedent for encroachment upon it; not only because it arose out of the principles of the sinking fund itself, but because it turned entirely on the application of the stock purchased by the commissioners, which must, in any possible arrangement of the sinking fund, be cancelled sooner or later; the only question being as to time and mode. In considering the subject, the committee must not forget that the great and ultimate object of the sinking fund was to relieve the nation from the burden of taxes which would be entailed upon it by the indefinite extension of the public debt, It answered other collateral purposes of considerable importance, but that was its direct and immediate object. The right honourable gentleman observed, in conG 3

clusion,