should like to know what was the channel | Government for the University of Camof communication by which they were apprised of the intention to close.

VISCOUNT CANNING, on the part of the Government, expressed his entire concurrence in the Resolution. Resolution agreed to.

THE LOAN BILL.

thirteen, including five relating to the war, | the loan just effected by the Chancellor of were passed. the Exchequer bore favourable comparison with the loan of 1835. The circumstances of the two loans were, however, different in some important respects, fully sufficient in themselves to account for the slight difference in result. In 1835 we were at peace; we now were at war. We had then no inBill read 3a (according to Order). come tax, which now told with such weight Moved, That the Bill do now pass. on the annuities in which the biddings were LORD MONTEAGLE said, as he was taken; we had now an income tax of a fully sensible that this was a Bill which heavy amount. Then there was a discount ought not to be delayed, he was reluctant allowed; now there was no discount sought to throw any obstacle in the way of the for or granted. Therefore the Chancellor third reading. He knew there was a con- of the Exchequer of the present day was siderable sum of loan deposits lying unpro- placed at certain disadvantages as comductive in the Bank of England, whilst an pared with the Chancellor of the Excheincreased charge was made against the quer of 1835; and yet, with all these dispublic for money advanced on deficiency advantages, the terms of the present loan bills. He would, therefore, content himself were nearly as favourable to the public as with calling the attention of their Lord- were those of the loan of 1835, which Mr. ships to some peculiarities in this Bill, be- Finlaison had so warmly eulogised. He fore they gave their sanction to it, as it (Lord Monteagle) considered that this loan involved a principle which admitted of con- reflected the greatest credit on the Chansiderable doubt. He did not mean that cellor of the Exchequer. He made his the principle on which this loan was con-loan, and frankly avowed that he made it. tracted was one for which the public had It had been argued most ignorantly and the slightest ground of complaint, unless, perhaps, that the amount raised by terminable annuities had not been carried further. He thought the conditions laid down by the Chancellor of the Exchequer were wise and sound, and he also admitted, that he believed the terms of the contract were equitable to all parties, and at the same time advantageous to the public. He was the last person disposed or entitled to controvert this, for in 1835 a loan very similar in character was contracted by himself in Lord Melbourne's Government, for the purpose of compensating the owners of slaves in the Colonies. The circumstances of both loans were nearly identical. The bulk of the sum borrowed was in 3 per cents, the biddings were in an annuity; and the price of the funds in 1835 only differed from their present rate by 5s. per cent, and the terms of the contract of 1835 were but in a slight degree more favourable than the present. The terms of that loan were questioned in the House of Commons, by the late Mr. Hume. The Government agreed that the matter should be referred to the decision of the most eminent scientific men; that course was taken, and the judgment of Mr. Finlaison laid before Parliament, pronounced, absolutely, that the loan of 1835 was one of the most advantageous to the country ever contracted. It is, therefore, satisfactory to find that

most absurdly that the plan of contracting the loan partly in three per cent stock and partly in terminable annuities was objectionable as an innovation. Nothing could be more untrue. He would remind their Lordships that not only did the loan of 1835 afford a precedent, but twelve of the most memorable loans of Mr. Pitt had been contracted on the same principle; indeed, he (Lord Monteagle) considered that the introduction into the loan of the principle of terminable annuities was the only secure mode of establishing a sinking fund, and that was the course taken by himself in 1835, and now very wisely adopted by the present Chancellor of the Exchequer. But, while he approved the main conditions of the loan, he must reluctantly observe that this Bill contained one clause which was not a necessary part of the loan, and which formed no part of the contract made by the right hon. Gentleman. It was, therefore, open to discussion. That clause was intended to provide for a future extinction of the debt of 16,000,000l. now created, by pledging Parliament to an issue from the Consolidated Fund of 1,000,0007. sterling annually, the first instalment of which was to commence from the termination of the war with Russia, and which was to continue for sixteen years successively. This clause contained within itself almost every vicious

principle of the old sinking fund, against | inviolate a sufficient time to produce the which every authority for the last thirty good results that had been expected. It was years protested, and it involved an error first established in 1716; but Sir Robert peculiar to itself, and which was much Walpole detected the folly of a process of more objectionable in the old Sinking Fund paying off debt when carried on contemAct. This prospective engagement as- poraneously with a borrowing, and he sumed that there would either be a surplus wisely put an end to it. So it rested till revenue of 1,000,000l. a year, or that 1786, when Dr. Price, a man of science, Parliament would be justified in adding in communication with Mr. Pitt, struck 1,000,000l. a year to the taxation of the out the notion of paying the debt with borcountry, in order to provide 1,000,000l. rowed money, and calculated that by the annually to apply to the reduction of the aid of compound interest the debt would be debt just contracted. The only third al- cleared off in some inconceivably short ternative was that of a new loan, or in time. The world was dazzled by Dr. other words, the old folly of paying debt Price and his golden globes, as well with borrowed money. All experience as by the eloquence of Mr. Pitt. The proved that these prospective engage- system continued until 1825, when it was ments could not be relied on. The Go- found that even the diminished payment vernment had only last year entered into of 5,000,000l. per annum by the sinkan engagement to pay off the 1,750,000l. ing fund produced no adequate public of Exchequer bills promised to be made good. Parliament then applied 3,000,000. good out of the revenue of the year; but as a sinking fund, but this was dealt before that year had elapsed the Govern- with in precisely the same manner as ment had been obliged to ask Parliament the 5,000,000l. had previously been. It to depart from this engagement. But in broke down, and was considered to be abthe teeth of this our latest experience we surd, unless where it was based on a real are called on to assume that at the conclu- surplus. In 1828 a Committee fully consion of the war there would be 1,000,000l. sidered this question, and the principle a year available for the repayment of this adopted appeared reasonable, which was loan: this is an hypothesis, not only im- that the sinking fund to be applied in reprobable, but almost incredible. It should demption of the debt was to be arrived at by be remembered that war was not only a a calculation of the excess of the revenue very expensive operation in itself, but that over the expenditure, which excess was to when it was brought to a close there were be applied as a sinking fund to extinguish always heavy bills to pay, ships to be paid debt. But there had been as many violaoff, retired allowances to provide, and thus, tions of the sinking fund after that enactin short, that the close of war was even ment as there had been before. The course more expensive than the war itself. Sup- taken had been to contract a debt with the pose, then, that no surplus existed, and Bank for deficiency bills payable out of the that Parliament were unwilling to increase current revenue, but under the general taxation, if money should have been bor- terms of the Sinking Fund Act, that fund rowed in time of war, and that at its ter- had been applied not to the extinction of mination money should have to be bor- the permanent debt contracted, but to the rowed for the purpose of paying off the discharge of these temporary advances. debt, that would be recurring to one of the The result of this operation was simply to most exploded blunders in finance-that increase the Exchequer balances, and then of paying off debt with borrowed money. to use the sinking fund, not in diminution But this is not all. We should remem- of debt, but in providing Ways and Means ber that our income tax, our malt tax, for the services of the year. That might are only temporary, and will cease or di- have been very wise, but it was inconminish with a return of peace. There sistent with the principles of the sinking fore, we are putting an additional burden fund. He had shown their Lordships of 1,000,000l. annually on a lessening that during a century and a half in no revenue. It may be further asked, who one instance was the sinking fund to be will place confidence in sinking funds? relied on; and he would refer them to a What had been their past experience? high authority on this subject, Lord GrenWere the statesmen of the present day to ville, who, as the colleague and friend of be more depended on than the statesmen Mr. Pitt during all his sinking fund opcof fifty years ago? The fact was that the rations, was not very likely to have lightly sinking fund had never been preserved condemned the system which Mr. Pitt advo

account actually due and payable, but with so much only as it was calculated might be necessary to meet the demands likely to be made within the day. A more pitiful and trumpery remedy he could not well conceive, and he therefore regretted that Clause 9 was introduced into the present

Bill.

THE DUKE OF ARGYLL said, that in the absence of his noble Friend who represented the Government in that House, he rose to protest against the harsh observations of the noble Lord with regard to

cated to the last day of his life; but the | his duty to object to Clause 9, which had noble Lord had, in one of the most able reference to a practice lately introduced to and scientific essays in the language, provide for the payment of the dividends of avowed his departure from the principles the National Debt. Till the April quarter which he himself had once advocated, and in 1854, as much money was raised at the which had guided Mr. Pitt in his sinking Bank of England by the deposit of defifund operations. As he himself informs ciency bills as would suffice to pay the us, years had brought with them know- whole of the dividends, even if the whole ledge, and being convinced of his former were demanded when due in one single error, he had no reluctance or hesitation in day. In April 1854, an innovation was inacknowledging it. It was with all this ex- troduced, wishing to inforce an antecedent perience and these authorities before them practice, and one not very creditable in itthat they were now called upon to adopt a self-namely, a system of feeding the pubprinciple which had, during the last twenty-lic account from day to day, not with the five years, been repudiated by every authority that had dealt with this question. He had heard it said that there was nothing in the clause which was compulsory on Parliament with reference to the obligation of providing a sinking fund of 1,000,000l. annually. He did not so read the Act. He considered that the clause created the same obligation with respect to this Motion as there already existed in respect to the whole debt, except that the payment of the sinking fund of 1,000,0007. was made contingent on the close of the war. But was it wise or just that there the course pursued by his right hon. Friend should be nothing definite as to this point the late Chancellor of the Exchequer in as it was argued? Did it add to the pub-reference to deficiency bills. So far from lic credit of England? He thought otherwise; for if the question was brought before Parliament at the close of the war, and if this 1,000,000l. were not provided for he considered that the effect of it would be to injure the public credit of the country. He (Lord Monteagle) did not mean to propose any amendment, or to call on the House to leave out the clause, because it would endanger the Bill if any amendment were made, and he did not feel justified in running any such risk, however much he deplored the error into which he considered Parliament to have fallen; but he hoped he had shown to their Lordships that there were sufficient reasons for doubting the policy of the principle embodied in the clause. He believed that it would not really act as a security for the redemption of the loan, whilst it was likely to prejudice the public credit. When the time came, if there were a surplus income of 1,000,000l., it might be applied in reduction of the debt. This, indeed, must take place without this clause and under the general law. But should there not be a surplus, it would be a monstrous absurdity, such as Lord Grenville had exposed, to go on borrowing money in order to make up a sum to extinguish this loan. Before sitting down, he felt it

that course being a paltry one, or being unworthy, as the noble Lord had charac terised it, it was, he thought, the course which his right hon. Friend was bound to take. His right hon. Friend found that the public were paying interest upon advances of a purely nominal characteradvances which had reduced many Members of Parliament, and perhaps the noble Lord himself, to use on some occasions arguments as fallacious as the advances themselves. He believed that his noble Friend the President of the Council had on a previous occasion been asked whether the opinion of the law officers of the Crown had been taken as to the course pursued by the late Chancellor of the Exchequer, and the reply was that so far from their thinking that the clause bore the interpretation that the noble Lord had put upon it, their opinion was clear that the course adopted by his right hon. Friend was justifiable, and in strict accordance with the spirit and intention of the Act of Parliament.

THE EARL OF STRADBROKE said, it was his misfortune to disapprove both of the manner in which this loan had been raised, and of the mode in which every loan had been raised for the service of the

ciple of terminable annuities, it was decided, after mature and careful deliberation on the part of Her Majesty's Government, that the difference between 100l. money and 1007. stock should be compensated by a terminable annuity, and that the loan should be reduced by annual payments of 1,000,000l., commencing with the close of the present war. There could be no doubt whatever but that at the close of the war this sum of 1,000,000l. could be very easily raised, and if any season of reverse should occur it would be perfectly competent for Parliament to repeal this clause. He thought that this provision was entitled to the approbation of their Lordships, as it recognised the principle of the redemption of debt, and decided that the present generation ought not to burden posterity with an unlimited amount of debt.

State for the last half century. He believed that if a different mode had been adopted, the national debt, instead of being 800,000,000l., would not have been half that sum. He hoped, when future loans were raised, some different system would be adopted, and means would be taken to try if loans could not be raised on easier terms for the nation. On the day upon which the present loan was effected Consols were at 90; consequently every 100l. would realise 31. 16s. 8d. per annum. By the bargain made the country would have to pay 31. 148. 6d. for thirty years-that is to say, for every 100l. there would be 31. per annum, and 14s. 6d. would be guaranteed for thirty years. He did not doubt that if Ministers had proposed three and a half per cent stock the 16,000,000l. would have been raised in a week. There would have been ample and sufficient bonus to induce the public to subscribe, and the result would have been that in a few years the opportunity would have offered of re-curred in time of war, but while fully conducing the stock to three per cent. Instead of that, however, we were bound to pay a premium of 14s. 6d. for thirty years. There was another objection to the proposed measure, that the interest was to count from the 5th January last; so that, although some of the money would not be advanced until July, and some not until December next, on the 5th January, 1856, a year's interest would be due. This was unnecessary and unjustifiable. A most unwise arrangement had been made, and he repeated that he hoped on future occasions an attempt would be made, by a bet-established. The operation of this printer system, to obtain easier terms.

LORD STANLEY OF ALDERLEY was glad to hear the opinion expressed by the noble Lord (Lord Monteagle) that the terms upon which the loan had been raised were exceedingly favourable, and he was also gratified to hear the opinion expressed that the best mode of raising money was by means of terminable annuities. It was felt, however, in deciding upon this loan, that it would not be possible to raise so large a sum as 16,000,000l. by terminable annuities. But between terminable annuities and the establishment of a sinking fund there was in effect little or no difference. In the case of the sinking fund the present generation was called upon to pay a larger sum each year in order to reduce the principal of the debt, and terminible annuities involved the action of precisely the same principle. In order to give effect as far as possible to the prin

EARL GREY fully concurred in the opinion that an effort should be made to get rid in a limited period of a debt in

curring in that opinion, he could not agree with the noble Lord in thinking that there were no objections to the clause which had been referred to by his noble Friend behind him (Lord Monteagle). His noble Friend had stated that the insertion of that clause was a retrograde step in the financial policy of this country, and he quite agreed with that opinion. They were going back exactly to their former situation under Acts of Parliament which required that sinking funds, first of 5,000,000l., and afterwards of 3,000,000l., should be

The report show

ciple was most carefully considered by a
Committee of the House of Commons in
1828, of which he (Earl Grey) was a
Member; and that Committee, after a
most careful consideration, agreed to an
able report, prepared by the late Mr.
Herries, which stated that in the opinion
of the Committee the principle of setting
apart a fixed sum every year as a sinking
fund was a vicious one.
ed clearly that the effect of the system was
to incur the risk of having to borrow with
one hand, while they were paying off with
the other. If they made a provision bind-
ing the Chancellor of the Exchequer to
pay off 1,000,000l. a year whether he had
the money or not, they drove him to the
course of paying the money, but at the
same time borrowing from the Bank in
the shape of deficiency bills; or, in other
words, he would have to pay with one
hand while he borrowed with the other.