when it was 800,515,0007. Then came the Crimean War, and on the 31st of March, 1857, the debt was 831,722,0007. On the 30th of March last it was 798,309,000l., being a point nominally somewhat lower, having cancelled certain stock. "We stand now actually at the same point that we did in 1854. We are indebted to the savings' banks to the amount of some 3,000,0007. On the other hand, we have an immense amount of perfectly good securities that amount to about 10,000,000. That, however, is an amount which we need not take into view in dealing with such an enormous accumulation of debt. 799,000,000l. is then the present capital of the debt. Observe the rates at which we have operated upon it. From 1815 to 1854 there were nearly forty years of the most profound peace ever known, and it was therefore the very period in which it was most desirable for us to deal efficiently with this debt, if we were to place ourselves in a position to look war in the face, should cause for it unfortunately arise. I have stated that the rate of decrease per annum over that period was 2,609,0007., undoubtedly a very feeble sum when we consider the enormous amount of what had to be achieved. For three years, between 1854 and 1857, the rate of increase was nearly 9,600,0007., and from 1857 to 1866, the decrease was 3,646,0007. I wish here to call the attention of the committee to this fact, that whereas two or three millions a year have represented the average of our reductions at a time of peace-I do not believe that if you take the whole of the years of peace since 1815 that it averaged three millions a year-when you become involved in any great or protracted war, you must be prepared to see it grow at about ten times the rate at which you reduced it in time of peace. The next question is, is that a satisfactory state of things ?" The right hon. gentleman then referred to the opinions of Mr. Jevons, Sir J. Herschell, Dr. Percy, and Sir R. Murchison, as to the possible exhaustion of our coal-fields, and to the discovery of coal-beds in America and elsewhere. "It is," said the right hon. gentleman, "of no use to say a substitute will be found for coal. There are scientific men who say it may be possible to find a substitute, but if that were found it would not be peculiar to England. It is quite evident it cannot be peculiar. Therefore I will suppose our being after the next hundred years unable to obtain coal. This appears to me must be our relative position with other nations: If it is a question of coal against coal, how does the matter stand? There is another country enormously richer in this article than we are. The coal of the United States of America is about thirty-seven times greater than our own. It is true that of that coal a considerable proportion is anthracite, which has not yet been found capable of adaptation. Suppose coal is to fail, and to carry away this pre-eminence of cheap production of ours across the Atlantic, I ask you, and especially I ask gentlemen opposite, what will happen? There will be a decline-a decline of rents, profits, and wages. There will be precisely a reverse of what we have seen for the last twenty years in the increase of rents, profits, and wages. When rents, profits, and wages decline,

what will the owners of them do? The owners of wages-those who receive wages-finding wages are higher across the Atlantic, will emigrate. Owners of movable property will find a wider and more profitable field for its application, and will send their capital abroad. What will the owners of rents do? It appears to me they cannot emigrate. They may emigrate personally, but that upon which they depend cannot emigrate. At that period, when rents, wages, and profits decline, the charge on the national debt will remain a permanent mortgage on the lands and durable property of the country. I wish I could convey to the committee my own sense of the importance of these considerations. This is a matter which engages the special attention of skilful and scientific men under the direction of the Government from year to year. Mr. Hunn, whose estimate is one of the best made, estimates the coal of the United Kingdom, within 4,000 feet of the surface, and much of that could not be raised, at 83,000,000,000 tons. The consumption of coal in 1854 was 64,000,000 tons, and the present consumption is taken at 86,000,000. Every year the average consumption of coal is 3.7 per cent. greater than it was the year before. Now, taking three and a half, which is smaller than the known rate of increase-and we have reason to expect a greater increase of the increment rather than a decrease--yet take three and a half, this would give in one hundred years an annual consumption of 100,000,000 tons. Hence, the consumption of the next 104 years, that is by the year 1970, would have reached 103,000,000,000 tons, that is to say, a greater amount than all we now know to be available in Great Britain within 4,000 feet of the surface. I believe, long before you have consumed that quantity of coal, you will begin to find in operation the causes to which I have referred, and which will follow with inevitable certainty with increased. prices." The right hon. gentleman contended that the proper way to guard against these calamities was to rid ourselves as far as we could of our liabilities. With this view he proposed to devote the remainder of the surplus to dealing with the Debt, in two modes, which he explained with great minuteness, under the heads of Operation A and Operation B. Under the first he proposed to convert 24,000,0007. of the savings' bank stock into annuities terminable in 1885, and under the second head he proposed to reinvest the spare dividends; the upshot of the two operations being to extinguish by 1905 nearly 50,000,0007. of debt at an immediate annual increased charge of a little over half a million. Summing the proposed changes for the year 1866-67, Mr. Gladstone put the result thus:

up

Leaving an unappropriated surplus of 286,0007. "I have now," said the right hon. gentleman, "but to give the sum of all the operations which I have detailed, and they are as follow:-The amount of the surplus is 1,350,0007. The remissions as they stand are:-On wood, 307,0007.; on wine, 58,0007.; on pepper, 112,0007.; and on stage carriages and race-horse duty, 85,000l.; making a total of 562,000. The loss on the conversion of debt for the present year is 502,0007.; making 1,064,0007., and leaving a surplus for the present year of 286,000. In the following year there will be a further change in regard to commercial charges, and a further charge, as I have said, on the debt; the joint result will be that the income of the year will be burdened to the extent of a quarter of a million. That, however, is an amount of burden on which I have no scruples of conscience whatever, because there has been no year in the growth of the national revenue, even when there has been a bad harvest, in which it has not amounted to a very much larger sum. With respect to the debt I hope I have not been understood to prophesy or to do any thing more than make such sketches of the future according to fair and apparent probability, as appeared to have a demand upon the attention of reasonable and prudent men. So regarding them, I will not say more than this, that the facts are very grave facts. They may even be considered urgent within certain limits, and so far as regards the adoption of certain measures. Undoubtedly it did seem as well to the Government, although the proper business of the finance of the year is to make arrangements for the year, yet that we should, upon suitable and sufficient cause, cast our glance forward into the future, and endeavour, in some degree, to meet this demand, so that when we ourselves cease to ply our arduous task of conducting public affairs-and by 'we' I do not mean the Government, I mean the House, and pass away from active life, those who come after us may have reason to see that in the provision made for our own wants we have also taken some thought for them, and may find no ground either to regret or to condemn." Some comments were made by various members upon different portions of the Chancellor of the Exchequer's speech, Sir F. Kelly, among others, drawing from a part of Mr. Gladstone's argument in favour of reducing the timber duties, an inference favourable to his own project of lowering the tax on malt. The formal resolutions were agreed to.

The greater part of Mr. Gladstone's financial proposals were ratified by the House of Commons almost without discussion. Some slight opposition indeed was made by Mr. Hubbard, who moved an amendment to so much of the scheme as related to the retention of the existing duties on fire and marine insurance. He recommended that arrangements should be made for the gradual abolition of these charges. The amendment, however, met with little support. Another and a distinct part of the Chancellor of the Exchequer's proposals, which was made the subject of a separate

Bill, experienced a different result. This was the plan for the conversion of a portion of the National Debt into terminable annuities, with a view to its gradual liquidation. On the merit of this scheme, which was naturally of a somewhat complicated character, and involved important principles of financial policy, there was considerable difference of opinion. In the debate upon the second reading of the Bill, Mr. Gladstone endeavoured to make clear to the House the modus operandi by which he aimed at extinguishing a portion of the capital of the debt.

The object of the measure was, he said, the conversion of twentyfour millions of the National Debt in savings' banks deposits into annuities, amounting to 1,725,000l., terminable in 1885, and the further conversion of twenty-five millions into other annuities to expire in the year 1905. He did not, when introducing this Bill, mean to refer to the subject of coal supply as the basis of his proposal to reduce the National Debt, but only as a reinforcement of the other reason which might be adduced in favour of that proposal. At the close of the great war, debt was being paid off at the rate of 1,900,000l. per annum, while in 1849 that amount had been increased to over four millions, which was in 1859 about the average paid for half a century. In 1850, by the lapse of the long annuities, the charge was a little over two millions per annum, while in last year it was about 400,000l. more. The measure now proposed was an attempt to approximate the reducing the National Debt to the point at which it stood before 1860. He contended that the argument against paying off money which was only chargeable with a low interest was fallacious, for all the money so paid off did not cease to exist, but went straight into the money market, and was applied to commercial enterprise. He admitted that the National Debt at its present amount was relatively smaller, looking to our increased wealth and population, than when it stood at three hundred millions; but it must be remembered that this country was only extricating itself from the incidental difficulties arising out of the war, which increased our National Debt to eight or nine hundred millions. Owing to our supremacy on the sea during the revolutionary war, immense openings were given to our foreign trade, which now could not be maintained, so that there was no parallel in the circumstances. The Bill proposed in the first place to convert twenty-four millions of savings banks' deposits into terminable annuities at a charge of 1,925,000l. Any balances which might arise would be invested in Government securities; and any stock so acquired would be subject to the second operation of the measure, which would be the conversion of such stock into another set of annuities terminable in 1905. The maximum increase of charge of the first operation would be 420,000%., while that on the second operation would be 1,295,000l., which added to the 420,0007. on the first operation would make a sum of 1,715,0007. But in 1885 there would be a relief of over two millions by the

lapse of other terminable annuities, which would be placed against the charge of 1,715,000. The amount of Consols cancelled in 1885 would be sixty-two millions and a half. As regarded the principle of the plan, it was not by any means to be taken as involving that of the Sinking Fund, to which he was decidedly opposed. There could be no objection to terminable annuities in a year of surplus; but in a year of deficit, though nothing was gained, there was less disadvantage than in the case of sinking funds. Under the present Bill, the terminable annuities could not be sold in the open market. The right hon. gentleman then pointed out that the finance minister, being on the one hand a borrower, and on the other a banker, the investments of the banker balanced the deficiencies of the borrower; and this operation would apply to the meeting the charge for terminable annuities in years of deficit. The success of the proposed plan depended on a thorough understanding of the position of the State as bankers and investors of the sums taken from the savings' banks; and the bearing of the scheme on the assets, not the liabilities, of the State. On the whole it was proposed to adhere to the policy of paying off debt by means of terminable annuities cleared of their normal inconveniences and losses, and avoiding the objection of being borrowers and payers of debt in the same year.

Sir F. Kelly objected to the Bill, as it bound the House-no matter whether there was a surplus or not-to pay annually a sum considerably above one million sterling for the next forty years, making an aggregate of 63,000,000%.

Mr. Fawcett, though admiring Mr. Gladstone's general financial policy, thought it to be an unfortunate scheme to provide for future reductions by promising to increase the annual charge, and throw upon posterity a greater burden than the present generation was prepared to bear. If the debt ought to be reduced, let it be done in an earnest and manly way. Let the House and the Government adopt measures for creating a surplus revenue, which they should then apply in the old-fashioned and best manner-that was by the cancelling of stock.

Mr. Childers defended the Bill as a sound financial arrangement that would operate for the benefit of the country, whilst it did not entail a charge in excess of the present amount of more than half a million a year.

Mr. Henley believed that, stripped of the mystery with which the Chancellor of the Exchequer had clothed his proposal, it was in reality a revival of the old Sinking Fund. As long as the country was prosperous, the extra charge would be paid freely, but as soon as taxes had to be raised to meet it the scheme would fall to the ground.

The Bill was read a second time, but made no further progress. The ministerial crisis and the change of Government which supervened, caused the matter to be postponed; and towards the end of the Session, Mr. Gladstone's successor, Mr. Disraeli, finding it ne