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to Mr. Spooner that his motion was irreconcileable with those fundamental principles which, as a friend of the Established Church, he could not but recognise. He must maintain that no man ought to contribute to the maintenance of a religion to which he did not subscribe. Could he suppose that there could be in such a country as this an identity of religious opinions? His (Lord Palmerston's) objections to the motion were-first, that to abolish this endowment and to repeal the Act would be a breach of faith to

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CHAPTER II.

FINANCE AND TAXATION-The Bank Charter Act-The Chancellor of the Exchequer moves for a Select Committee to inquire into its operation -Remarks of Mr. Glyn, Mr. Laing, Mr. Disraeli, Sir C. Wood, Mr. Spooner and other members-Committee of Inquiry appointed-THE INCOME TAX-Great interest felt by the public respecting the cessation of the War Income Tax-The Chancellor of the Exchequer makes his Financial Statement on the 13th February-He announces the intention of reducing the Income Tax for the next three years to 7d. in the pound Observations of Mr. Gladstone-On the 20th of February Mr. Disraeli moves a resolution pledging the House to the total remission of the Income Tax in 1860-His Speech-He comments with much severity on the calculations of the Chancellor of the Exchequer, who vindicates his own statement of the Finances-Mr. Gladstone supports the motion, and strongly urges a reduction of the Estimates--Mr. Wilson replies to Mr. Gladstone-Lord John Russell supports the financial views of the Government-Remarks of Mr. Bentinck, Sir F. Baring, Mr. Walpole, Mr. Cardwell, Sir C. Wood and other members-The Resolution is negatived on a division by 286 to 206-Mr. Gladstone opposes the propositions of the Chancellor of the Exchequer on the Tea Duties, and advocates a further remission of the dutySpeeches of the Chancellor of the Exchequer, Lord John Russell, Mr. Gibson and other members-Mr. Gladstone's Amendment is rejected by 187 to 125-The Bill is passed-Debates on the Income Tax-Sir Fitzroy Kelly moves to reduce the tax to 5d. in the pound, but without success-Mr. Gladstone moves a Resolution in favour of a reduction of the Expenditure-He enters into a detailed statement, showing the rapid increase of the National Expenditure within the last few years--The Chancellor of the Exchequer justifies the conduct of the Government— Debate in the House of Lords on the Second Reading of the Income Tax Bill-The Earl of Derby enters upon many topics of public interest with reference to the impending Dissolution of Parliament-His animadversions upon the financial operations of the Government-He is answered by Lord Granville-Strictures of Mr. Disraeli to the same effect in the House of Commons-Lord Palmerston's reply-Remarks of Mr. Gladstone on the connection between our foreign policy and the increase of the Estimates.

HE policy of the existing laws relating to the currency had recently undergone some discussion, and in the preceding Session a motion had been made for sub

jecting the operation of the Bank Act of 1844 to parliamentary inquiry. The Government declined at that time to accede to the demand, but intimated no unwill

ingness to institute an inquiry into the working of the law on a future occasion. In fulfilment of this understanding, the Chancellor of the Exchequer, at the commencement of the present Session, moved for the appointment of a select committee to inquire into the operation of the Bank Act of 1844, and of the Bank Acts for Ireland and Scotland of 1845; also into the law relating to joint-stock banks. In order to elucidate the operation and policy of the Act of 1844, he went back to the time of the Bank restriction, and the measure adopted by Sir Robert Peel in 1819, the convertibility of banknotes into gold. Acting upon the report of a committee of that House, Sir Robert, in 1844, introduced the Act in question, with the view of further enforcing that principle, by imposing certain conditions upon the issue of banknotes, and providing securities against their over-issue,-a policy which he (Sir G. Lewis) thought it superfluous to justify. The issue of notes by the Bank of England beyond the limit of 14,000,000l. on securities was regulated by their reserve of bullion, and the effect of the Act of 1844 had been to increase the amount of gold in the coffers of the Bank. Another change in troduced by that Act was the separation of the issue and the banking departments, which afforded a security to the creditors of the Bank. Referring to the crisis of 1847; to the trials to which the Act of 1844 had been subjected, owing to the abnormal state of things occasioned by the war, which led to a large exportation of bullion; to the changes in the monetary systems of certain

continental countries; and to the extraordinary drain of silver to China, he thought that as, notwithstanding all these disturbing causes, the currency of this country had remained in a sound state, and the credit of the Bank had never been questioned for a moment, it did not appear expedient that any material alteration should be made in the Act of 1844. He then noticed some of the points of detail which would come under the consideration of the committee. One of these points was the precise limit of the issue of notes, some desiring that the limit should be extended about 1,500,000l., upon the presumption that the paper circulation would thereby be enlarged to that amount. But his opinion was, that the alteration would not have that result, and that it would only lead the Bank to reduce to that extent their

reserve of gold. At the same time, he admitted this was a subject fairly within the consideration of the committee. Another question was whether, assuming that there should be a legislative limit to the Bank's issue of paper, a power should be vested in the Government, to enable the Bank, under special circumstances, to depart from the restriction. He was, however, entirely hostile to such a proposal. He adverted briefly to other minor points, and to the laws respecting the Irish and Scotch banks and joint-stock banks, observing that the manner in which the latter were wound up was anything but satisfactory; at the same time, he dissented from the suggestion that they should be placed under the supervision of a Government officer.

Mr. Disraeli thought there should be two committees. He

was at a loss to understand, he said, what were to be the labours of the proposed committee, since the Government seemed to have made up their minds upon the subject. He thought it would have been better if the Chancellor of the Exchequer had at once brought in a Bill.

Mr. Glyn, concurring with Mr. Disraeli in opinion that there should be two committees, observed that the question of convertibility was distinct from the machinery and mode in which that principle was carried out; and he objected among other things, to the limitation by the Act of 1844 of the issue of notes to 14,000,000l., for which fixed sum the Chancellor of the Exchequer had assigned no reason. The true principle, in his opinion, was, not to allow the amount of notes issued on securities to be fixed, but to make all issued above that amount bear a fixed rate of interest, according to the bullion in the Bank, which ought to regulate the rate of interest.

Mr. Henley strongly urged the division of the inquiry between two committees.

Mr. Malins entered into many details to show that nothing could be more unsatisfactory than the working of the Act of 1844; that there had been no deficiency of gold, and that what the country wanted was not gold, but banknotes, the issue of which, in spite of the exigencies of trade, was stopped by the Act, while the Bank had locked up in its coffers a supply of gold sufficient to meet demands, making money unnecessarily dear.

Mr. Headlam objected to mixing up with matters concerning the Bank Charter the law of jointstock banks, the present state of

which was disgraceful, and required immediate alteration.

Mr. Laing observed that Mr. Malins, though ostensibly maintaining the principle of convertibility, advocated a relaxation of the Bank restriction, and an issue of notes that would infallibly exhaust the stock of bullion. The only safe mode of adjusting the supply of money to the demand was by the rate of interest, a rise in the rate at once diminishing the demand and increasing the supply. Agreeing in the main with the Chancellor of the Exchequer, he mentioned certain points in respect to which they differed, and which, in his opinion, were fit for inquiry. It was the interest of the public that there should be a large and efficient reserve; but the interest of the Bank lay the other way. He thought, however, that some arrangements might be made between the Bank and the Government upon this point.

Mr. J. M'Gregor found fault with the working of the Act of 1844; which was vindicated by Mr. Pollard-Urquhart.

Mr. Newdegate considered the objection to an absolute limit of the issue of notes unanswerable. He pointed out what he considered a vice in the Act of 1844, that, while it restricted the action of the Bank when the amount of bullion was small, there was no restriction upon its use when large, which induced the Bank to stimulate speculation.

Sir C. Wood, in reviewing the objections to the Act of 1844, observed that it was never supposed that that Act would remedy speculation and all the evils connected with the currency; its object was, as far as possible, to regulate the circulation, and to secure the

convertibility of bank-notes. The amount of 14,000,000l. to be is sued on securities was fixed because that was the minimum of notes retained in the hands of the public. He denied that the crisis of 1847 was in any way caused by the Act of 1844, the rules of which were, in his opinion, the best for their purpose, and the least stringent that could be laid down. With respect to the latter part of the motion, he thought there was a great deal of force in the objection to referring the subject of the joint-stock banks to the same committee, and if the House should be of that opinion, the Chancellor of the Exchequer would not insist upon that part of his motion.

Mr. Spooner insisted that the contract of 1819, by which it had been said Parliament should be bound, was an unjust contract, which deranged bargains made in a depreciated currency, and which never had been acted up to, and never could be. He believed, if the Act of 1819 had never passed, that the currency would have been restored before this time, without the evils occasioned by that law. He enlarged upon what he held to be the evils of that law and the Act of 1844, and declared that in his opinion a plan might be devised which would secure the convertibility of notes without the alternations and mischiefs caused by the existing law.

Mr. Wilkinson defended the Act of 1844, the sole complaint against which, he said, was, that it was supposed, erroneously, to raise the rate of interest.

Mr. Muntz thought that after the declarations of the Chancellor of the Exchequer, the appointment of a committee was a mere sham.

Mr. Hildyard urged that care

should be taken that the committee on a subject so important should be a fair one, or its opinion would go but a little way with the House or the country.

After some observations from Mr. Cayley, Mr. A. Hastie, and Mr. Ingram, the Chancellor of the Exchequer consented to withdraw the latter part of his motion relating to the law of joint-stock banks, and in this amended form the motion was agreed to.

The great anxiety that prevailed at this time respecting the financial position and prospects of the country was satisfied at a much earlier period in the Session than usual, by the Chancellor of the Exchequer, who made his financial statement on the 13th of February. The right hon. Baronet commenced by premising that he had taken the speediest opportu nity for announcing his financial arrangements. The Army aud Navy Estimates had been presented but a few days before; and no vote had, as yet, been taken upon them in Committee of Supply.

He then proceeded to call attention to the income and expenditure of the current financial year, 1856-7.

The revenue of the current year, ending on the 5th of April, he had taken at 71,740,0007.; the actual amount would probably be 71,885,000l. The Customs had produced 23,600,000l., instead of 23,850,000l., his estimate; and this arose from the short stock of sugar and the check to the consumption of tea. The expenditure was estimated at 82,113,000., leaving a deficiency of 10,373,0001., including a margin of 2,000,000l. To meet this deficiency he borrowed 7,499,0001. Power was taken to borrow 4,000,0001. on

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