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Domestic Affairs continued.-State of the Finances.-Mr Vansittart's new Plan of Finance.--Objections urged against it.-Army Estimates.
English and Irish Budgets.
The state of the finances of this given sum with the least possible secountry may well excite astonishment. verity on those who are to pay, a wise The prodigious amount of the pub. system of finance may do much; but lic debt, the magnitude of the loans as an instrument for arresting the pro. which in a season of war are annu- gress of continued extravagance to ally contracted, the variety of the certain ruin,--of wasteful expenditure taxes imposed, and the entire confi. to national bankruptcy, and of exdence which, notwithstanding all these cessive taxation to the discouragecircumstances, is still reposed in the ment and ultimate destruction of innational credit, appear to set at defi- dustry, all such systems seem to be usance all the suggestions of theoryavailing. The extent and fertility of the resour- The nation which has recourse to ces of the country, and the scrupu. the funding system, without making lous fidelity of the government in the any provision for retracing its steps, discharge of its pecuniary obligations, and for recovering in a period of repose can alone account for these singular from the difficulties into which it may phenomena. Yet as the means of tax. have been led during a season of war, ation, although extensive, are in their must look forward to insolvency as Dature not inexhaustible, while the ex. the inevitable consequence. Great penditure seems to be altogether with. Britain has, on almost every, emer. out limits, it is obvious that without gency, resorted to the funding system some vigorous effort to maintain a due since the Revolution. A weak and proportion, ultimate embarrassment timid minister will be partial to this must be the result of the present sys- system, and will rasbly increase that tem.
burden, which can be removed only To arrange and methodise the pub. by his more resolute successors. At lic income and expenditure,-to miti. the close of the American war this gate in some degree the burdens of a system had been carried to a great period exposed to unusual difficul. extent, without the provision of ade. ties,—to arrest unnecessary profusion quate means for arresting its progress. in the public business, and to raise a It was reserved for the virtue and
talents of Mr Pitt to provide the re. spend any surplus of the public mo. medy.
ney. If then this surplus be left foatThe fundamental principle of Mring and mixed with other funds, the Pitt's system was developed in the result will be, that an immediate and new arrangements with regard to the desirable use of it will be preferred to sinking fund. His plan was, to sepa- one which, though great, is distant, rate it completely from the other de. and therefore uninteresting. This is partments of expenditure, and to place no vague theory ; it has been confirmit under the controul of commissioners, ed by the experience of Great Britain responsible not to ministers, but to for the last century. The influence of parliament. He provided also that every sinking fund prior to that of Mr this fund should operate in war as well Pitt, though operating in the most as in peace ; that while new debts were favourable circumstances, and during contracted, the sinking fund should long periods of peace, has been utpay off the old ; and that, at the pe- terly insignificant.-It may be said, riod of every new loan, taxes beyond indeed, that although a sinking fund what might be necessary to pay the is expedient in time of peace, yet interest should be imposed, and form during war there can be no motive an addition to the sinking fund. -for its adoption. But those who rea
It has been thought by some per- son in this manner ought to reflect on sons, that the only mode of dischar. the temptation which would arise in ging the national debt, is by obtain. a time of war to apply the surplus of ing a surplus of revenue beyond the the sinking fund to pay the interest expenditure; that the separation of of loans, instead of diminishing their the sinking fund from the other funds amount ; thus avoiding, for the time, is in peace a measure of no real effi. that discontent which the imposition
eacy ; that in war it is equally una- of new taxes inevitably creates. Eį vailing, and must for ever be attended ven when peace arrives, the winding
with loss, because it increases the sums up of the concerns of war occasions raised by loan, and upon which the much extraordinary expence, to which persons who make the advance must this existing surplus might be most receive a profit. It would therefore, conveniently applied. For these reait bas been said, be far better that any sons, a sinking fund may be consisurplus which may arise during peace, dered as a necessary appendage to should be employed in defraying the the funding system; it ought to be expences of the war, and in lessening separated as completely as possible the amount of the loans.-Those who from all other funds, and to be guard. argue this forget, however, that in ed by the strongest barriers. It ought the actual conduct of the finances to operate at all tiines by its own in. something more is to be considered trinsic force, and not according to the than the mere science of calculation ; varying and capricious views of states. and that it is our duty to appretiate men. well, not only the nature of the affairs Another important change accomthemselves, but the character of the plished by Mr Pitr, was the introduce men by whom they are to be admi- tion of the practice of raising the nistered; not only what can, but what greater part of the supplies within the will be done. It may be laid down as year.
year. I'he sinking fund, adhered to a fixed principle, that every minister with the characteristic firmness of the will have some object, in which it minister who established it, might have would be convenient and agreeable to been sufficient for supporting the naVOL. VI. PART I.
tion under wars of common magnitude their great predecessor, once more at. and common duration ; but a war tempted to revive the funding system conducted on a scale exceeding all to a large extent. The object which former experience, and of which the they proposed was, that the war, of termination appeared wholly uncer. whose termination there was no prostain, was found to require some more pect, might be continued indefinitely vigorous measure ; the accumulation without any considerable increase of of debt became too great, and the taxation. The war-taxes, exclusively prospect of its discharge too distants of that on income, were to be applied and provision was now to be made to pay the interest of the annual loan. for carrying it on to an indefinite They were also to furnish a sinking term. These purposes could only be fund of 5 per cent. which, at the end answered by war-taxes, which, by de- of fourteen years, would extinguish fraying part of the extraordinary ex- the debt, and leave the revenue dispenditure, might diminish the amount poseable, to provide for a new loan. of the annual loans. Such a plan in. This diversion of the war-taxes from deed, to a certain extent, is, in all their original object necessarily occacases, highly expedient. Yet it re- sioned an annual deficiency, to be comquired, perhaps, the decisive and com- pensated by a supplementary loan, inmanding character of Mr Pitt to force creasing every year til it amounted to upon the nation so ungrateful a reme- a sum equal to the whole of these taxdy. This remedy was administered The interest on the supplemenalso in the most unpopular of modes tary loans was to be chiefly defrayed, that of direct contribution. After in. Ist, by the falling in of annuities ; effectual attempts to arrive at income 2d, by stopping the accumulation of through the medium of assessed taxes, the sinking fund, after its amount the direct and offensive form of an should have equalled the interest on income-tax was at length adopted, and the redeemed debt; an event which submitted to by the nation. A variety was expected to take place about the of exemptions and allowances were at year 1817.- This plan manifestly infirst admitted, with the view of miti- volved a recurrence to the funding sysgating its pressure ; but as the nation tem, and a revival of it in the most became inured to the burden, it was obnoxious shape which it could asgradually rendered more severe and sume ; for, not only were new loans to more productive. Large war-taxes be contracted for the public service, were afterwards imposed upon wine, but even to pay the interest of the pub. spirits, and tea, and other articles of lic debt. general consumption ; which, with the The ministers, by whom these arincome tax, raised the whole produce rangements had been made, were soon to upwards of twenty millions, and, removed from power, and their place joined to the permanent taxes, formed was supplied by their political adver- . the enormous annual contribution of saries. The plan was therefore abanbetween sixty and seventy millions. doned, and the new ministers set out No such burden had ever before been upon the principle of preserving entire endured by any country in any age. the war taxes, and consequently of
The administration which succeed. providing for every successive loan by ed to power on the death of Mr new impositions. But they soon found Pitt, either from an apprehension that that this was a task which they posthe limits of taxation had been ap- sessed no adequate means of performproached, or from a desire to innovate ing; that taxation was rapidly ap. as much as possible on the plans of proaching that term when an increase of the rate diminishes instead of in- siaking fund, a new fund of 24 instead creasing the produce. This tendency of 1 per cent. should be provided for was accelerated by the expenses, judi. that surplus. cious and ultimately economical, which Mr Vansittart made the following were occasioned by the great scale of remarks in support of this proposition: the war in the peninsula. It was in. “I beg leave to preface my explanacreased still more by the stagnation of tion of the system I am about to retrade, occasioned by the shutting of commend, by a few general remarks all the continental ports. In short, on the redemption of public debt. We after several temporary expedients had are apt to consider this subject (if I been tried, the chancellor of the ex. may so express myself ) too arithmeti. chequer, Mr Vansittart, became sen. cally; we compute that a certain ansible that recourse must be had to nual sum will, at compound interest, measures of a different and more deci- redeem a given amount of debt within sive character.
a certain number of years, but we forOn the 3d of March, in the present get the great considerations of policy year, Mr Vansittart explained his new and public economy which this operaplan to the committee of the whole tion involves. We do not consider house appointed to enquire into the that it disposes of the fortunes of thou. finances of the country. Besides some sands of individuals ; that it requires propositions of minor importance, as the transfer of a mass of property, to the redemption of the land-tax, and amounting perhaps to a fifth part of an addition to the sum appropriated the whole capital of the country, if to the sinking fund on each new loan, estimated according to the returns to Mr Vansittart proposed an important the property tax, from an employment change, the nature of which may be in which it has been vested by the explained in a few words. By the ori proprietors to the manifest advantage ginal constitution of the sinking fund, of the public, into other modes of octhe stock parchased by the commis- cupation. It is an experiment which, sioners was not cancelled, but was con- as far as my knowledge extends, has sidered still to be the property of these never been tried on a great scale. The commissioners, who regularly drew the present Elector of Saxony, it is true, interest, and applied it to the further discharged the debt which his prededischarge of the national debt. It was cessors had accumulated upon that in this manner that the fund accumu- country; but neither the amount of lated by compound interest ; a circum. the sum, nor the circumstances of the stance on which so much reliance was electorate of Saxony, can form any placed. This arrangement was now precedent for this wealthy and power. abolished, and the whole stock pur. ful kingdom. While war continués, chased by the commissioners (which and loans are annually contracted exhappened to be 236,000,000l. the pre, ceeding the amount of the sinking cise amount of the debt when the fund fund, that amount, however great, can pas instituted) was to be cancelled, only be considered as an advantage ; and the interest to become disposable but whenever peace may take place, for current services, or for paying the it will soon be found that there is a interest of new loans. An addition of point beyond which the annual re: 867,9631. was at the same time to be demption of debt cannot be carried made to the sinking fund. It was also without great public inconvenience. proposed, that when the loans should This is no new argument in the House; in any year exceed the amount of the my noble friend the Marquis of Lans
downe urged it with great force and while the inconvenience is still at a eloquence in opening his plan of fic distance, than when it is actually pressnance in 1807. He observed that the ing, and when any corrective may be mischief of an excessive sinking fund opposed with an appearance of justice, overloading the money market with a by the individual interests which may superabundance of capital, exceeding be affected by it at the moment ? On the means of employment, would be this account, I think it becomes the not inferior, and somewhat similar, to House now to pause, and take a dethat of a national bankruptcy. When- liberate view of the situation of the ever, therefore, the sinking fund has country with respect to the repayment reached that point beyond which it of its debt. But other circumstances cannot be employed with advantage in concur to point out the present as a time of peace, it seems to be wise to proper time for some revision of our think of setting bounds to its further system. By the original Sinking accumulation, and certainly unwise to Fund Act of 1786, provision had been exhaust the national resources by an made, that when the fund should have augmentation of taxes for its further accumulated to the amount of four increase. Whether the sinking fund millions per annum, its further accu. has now reached that point it be- mulation should cease, and the sums longs not to me to decide, and I wish purchased from that time be dischar. the most cautious and deliberate wis- ged and made applicable to the public dom of parliament to be applied to service. Had not that plan been varied the decision. But it may unquestion- by the act of 1802, the public would ably be said, that the sinking fund before this time have received relief has now reached an extent of which from the operation of the sinking the history of no country affords an fund, though only to the limited exexample. In no country has the ex- tent of the interest of four millions a. periment of an annual repayment of year; for the calculations which were twelve millions, or any thing like it, made of its progress fixed the period been tried. This at least is obvious, at which it would have reached its that the present arrangements of the highest amount about the year 1812, sinking fund require revision. As the and the average rate of interest at law now stands it will accumulate to which its operations have been conabout thirty, possibly to above forty ducted, proves in fact that it would · millions, and will be at once reduced before this time have accomplished to twenty, or even to twelve. What, that object. It seems natural to look ever may be thought of the effects of for some relief from the sinking fund its greatest amount, it is undeniable at the period at which it would acthat such a revulsion must be perni. tually have been obtained, if the concious. If the larger sum be not too stitution of the fund had not been va. great, the smaller must be far too little. ried. But there is another circum. But I perfectly agree with Lord Lans- stance still more striking in our present downe, and all the great authorities situation. When the sinking fund which have treated of this subject, was established in 1786, the total athat the plan of employing thirty or mount of debt was about 240 milforty millions in the purchase of stock lions, and the redemption of such a in the time of peace is perfectly im- sum appeared, if not utterly hopeless, practicable and visionary. A change at least placed at a very remote dismust therefore be made at some time; tance. But great as the difficulty then and if so, is it not wiser to make it appeared, the firmness and perseve