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Commons as part of the expenditure either of the previous year or of the year for which he was asking Parliament to make provision.
The years from 1861 to 1864 were years of memorable finance. The right honourable gentleman was Chancellor of the Exchequer, and his Budget speeches in those years, to three of which I listened from the Reporters' Gallery of this House, were considered so important that they were republished in the volume I now hold in my hands.? In neither of those years did the right honourable gentleman include in the expenditure of the year the sum raised for Fortifications, although those sums were considerable ; and when at the end of the four years he summed up the result of the finances of that period, he mentioned the 2,070,000l. which had been spent upon Fortifications, and mentioned it as special separate expenditure' which he did not take into calculation until he had to deal with the balance of debt.
There is a later authority still from the right honourable gentleman. In the year 1880 he returned to the Exchequer, and on the 4th of April, 1881, he brought forward his Budget. He said, “I find that the expenditure for the year 1879-80 was 84,105,0001., and for the year 1881, 83,108,0001. If honourable members will look at the Statistical Abstract they will find that that amount of 84,105,000l. did not include a quarter of a million which had been spent upon Fortifcations, but which the right honourable gentleman at that time, true to the consistent practice which he himself had established and defended, did not include as part of the expenditure of that year.
But, Sir, this expenditure ceased in 1880. The charges, which amounted to 21 millions in the last four years of the Conservative Government, have in the last four years not been raised by loan, and have only amounted in these years to 200,0001., and in the difficulty of making any defence for his great expenditure the right honourable gentleman takes advantage of this, and reversing the practice which he himself had followed during all those years, adds the expenditure on Fortifications to the ordinary expenditure of the years 1877–80 to improve the state of his account against the Conservative party.
But, Sir, even with Fortifications added there was a balance of 13 millions against the right honourable gentleman which in some way he had to get rid of. It happens that during the last four years the cost of what I may call the Revenue Services has very largely increased. During the four years of the Conservative Government the administration of these services cost 31į millions, during the last four years it has cost 35 millions.
In ordinary circumstances the right honourable gentleman would not have been very proud of this result; but in the exigencies of his position, he seized upon it with delight, and proceeded to reduce the balance against him by 31 millions by deducting wbat he calls the
? Financial Statements, 1861-4 (Murray).
expenses of collection. Sir, that phrase seems to me to be a most inaccurate and misleading description. The Post Office and Packet Services, in which nearly 3 millions of the increase has occurred, are in truth great trading establishments, costing several millions per annum, and there is just as much room for extravagance in their administration as in any other branch of the public service. The revenue of those departments increases largely year by year. In the last financial year it was l} million more than in the year which ended in March 1880, but the advantage to the public in the relief of taxation was 50,0001. less.
I do not, Sir, stop to discuss how far the operations of these departments have justified so large an increase of expenditure. That inquiry is not material to my present purpose. My own opinion is, that in the establishment of the Parcels Post the State has undertaken a trade, its adoption of which was not required by public necessity or convenience; and I think it has undertaken it upon terms which cast an excessive burden on the public purse. But whether the expenditure in this department be wise or not, it amounts to a sum so large, that to withdraw it from consideration, as the right bonourable gentleman desires to do, in comparing the expenditure of successive Governments, would, in my belief, be fatal to all hope of administrative economy.
But again, Sir, I yield for the moment and inquire what is the result of permitting this, as I think, unjustified deduction. There remains a balance against the Liberal Government of 94 millions. But, Sir, the right honourable gentleman's next step is a far more brilliant effort of ingenious fallacy. He wipes off this adverse balance of 94 millions, and triumphantly declares that he converts it into a balance in his favour of 41 millions, by taking credit for his expenditure upon the payment of debt.
It is important, Sir, to examine the words which he used at Edinburgh, and I confess I think they were adopted without his usual caution. He said :I deduct the debt we have paid off because undoubtedly what you spend in the payment of debt ought not to be reckoned as expenditure. We have paid 25 millions of debt against 11 millions.'
Sir, the proposition in the terms in which the Prime Minister stated it is not true.
It is not a fact that the present Government has spent, that is given out of pocket, in payment of debt’ 14 millions more than their predecessors did in the same space of time.
The right honourable gentleman bas quoted the effect produced as if it were the amount expended, but they are two entirely different things. With a complicated system of finance like ours, where large sums are paid every year in the form of Terminable Annuities, it is not practicable to ascertain, with respect to each payment, the sum
which is strictly interest, and separate that from the amount which remains applicable to repayment of capital. In every case the proportion depends upon the age of the annuity. Throughout the life of a Terminable Annuity the annual payment continues the same, but in the earlier years the effect of each annual payment upon the capital value of the debt is very much smaller than in the later years.
Now, Sir, the actual excess of payment made by the present Government is only 4 millions, not 14 millions. During the years 1877–80 the late Government were called upon to find for the total services of the debt 113 millions. During the last four years the present Government has on the same account expended 1184 millions.
The right honourable gentleman has profited by the financial policy of his predecessors, and if honourable members will refer to the Parliamentary paper lately issued upon the motion of the honourable baronet the Member for the University of London (Sir John Lubbock), they will find a column which states the amount of National Debt cancelled year by year by the automatic operation of Terminable Annuities. The amount shown by that return to have been extinguished during the four years of the Conservative Government by this automatic process was 17 millions. The amount extinguished during the last four years has been 24 millions, or an excess of 7 millions over the previous period, an excess to obtain which the present Government have not been called upon to bear a single shilling of extra charge. But, Sir, if any further demonstration be required of the fallacy by which the right honourable gentleman bas allowed himself to be misled, it will be found by deducting from the total expenditure, as he gives it, the amounts respectively spent by the two Governments upon the services of the debt. The account will then stand, after allowing the right honourable gentleman to make all the deductions which I have disputed and discussed, that the Conservative Government expended 1831 millions and the Liberal Government 1884 millions. Not one shilling of these totals that I have just given was expended upon the debt, either in payment of interest or in repayment of principal, and they leave the balance, upon the right honourable gentleman's own method of calculation, at 41 millions against the present Government, instead of 4 millions in its favour.
But, Sir, there is one more characteristic of this extraordinary financial statement, whose figures no man can shake, to which I desire to call the attention of the House. It is that if all the right honourable gentleman's figures with which I have dealt so far were admitted or assumed to be correct, it would be found on examination that he had charged twice over as against his opponents a sum of very nearly 10 millions of money. The right honourable gentleman claims to take 25 millions as the amount by which he has reduced the
debt, and in a former passage of the Edinburgh speech he said, 'In the four last years of the Beaconsfield Administration they paid off 10,984,0001. of National Debt,' and the difference between these sums is the 14 millions which he claims. But, Sir, upon referring to the Parliamentary paper No. 367 of Session 1882, honourable gentlemen will find that the late Government paid off 213 millions of debt, and on the other hand raised about 10 millions.
The right honourable gentleman would undoubtedly be justified in deducting the debt so raised when striking the balance between the two Governments, if he had not, in fact, already charged against his opponents almost the whole amount. Thus, with regard to Fortifications which were paid for out of loans raised for that special purpose, the right honourable gentleman has already added 21 millions, the amount which they cost, to the expenditure of his opponents. Now he charges against them that 2 millions over again as debt which they raised; and thus in making his balance between the two Governments, he charges the Conservatives with a sum of 5 millions in respect of Fortifications which cost half the amount. Honourable gentlemen will detect the fallacy in a moment, if they consider how the account would have stood if no money had in those years been spent in Fortifications at all.
The total expenditure would then have been 295 millions instead of 297} millions, and as no debt would have been created to pay for the works, the total debt extinguished by the Conservative Government would have stood at 13} millions instead of 11 millions. The same observation applies to a yet larger sum. The Conservative Government spent 7,300,0001. more than they took from the people in taxation, and of course they had to borrow that amount. Of the 101 millions of debt created by them, 7,300,0001. was raised for this purpose, and the right honourable gentleman charges them with it when he calculates the balance of debt paid off. But this very sum of 7,300,0001. was expenditure not raised by taxation, and therefore has already been included in the total gross expenditure of the Conservative Government. Again, Sir, the fallacy is shown by a very simple test. Suppose the Conservative Government had raised that amount by taxation instead of creating debt, the amount of their annual expenditure would have remained unaltered, for that does not depend on the source from which the money is obtained, but, according to the right honourable gentleman's novel and fantastic arithmetic, the result would have been that, as they raised no debt on this account, they would, in comparing their expenditure with that of their successors, be better off to the extent of 7,300,000l. And thus, taking these two items, I think I have made it absolutely clear that these two sums, amounting together to nearly 10 millions of money, have, by a mere blunder of book-keeping, been charged twice over against the Conservative Government.
Sir, I have now endeavoured to put before the House the grounds upon which two months ago I ventured publicly to attack that statement which the right honourable gentleman declared no man could shake. My speeches on the matter have, I know, been brought to the notice of the right honourable gentleman, but elsewhere he has not condescended to any answer, except the statement that he believes his figures may be relied upon, and that I do not at all comprehend the system on which the finances of the country are conducted.
I hope the House will not think I have made an undue claim upon its attention, in desiring to bring this controversy to issue where alone the question between the right honourable gentleman and myself can be fully examined by those who are most familiar with the subject.
I should not, of course, have assailed the right honourable gentleman's statements without a thorough and careful examination of authoritative public accounts, and I now with very great confidence leave the entire question to the impartial consideration of this House.
10 Downing Street, Whitehall: November 21, 1884. • My dear Sir,-Seeing you in the House on the evening when my figures used at Edinburgh were attacked and defended, I observed that you did not enter into the debate. But I, having done so once, am not inclined to do it again in case you should raise the question this evening. The question of comparative expenditure is one for Mr. Childers to deal with, but as to my own statements they have in the main been dealt with already; and I now inclose to you a paper which deals with other points, and, so far as I am concerned, contains all that I think it needful to say. You are, of course, at liberty to make such use of it as you may think fit.
Believe me, yours faithfully,
W. E. GLADSTONE."
Paper dealing with the points raised by Mr. E. Clarke, M.P.
in his recent Letters.
I. A. I find that according to the account in the Statistical Abstract (page 7) tbe expenditure of the late Government in 1877-80 was 330 millions, and not 329 millions; and that the expenditure of the present Government in 1881-84 was 344 millions, and not 342 millions.
B. You take your figures from an account intended to show