HOW THE MONEY COMES IN, AND HOW THE MONEY GOES OUT ; -A- LEOTXJRE DELIVERED TO THE MEMBERS OF THE MECHANICS’ INSTITUTION, AT PETERBOROUGH, November 2 yd, 1863, BY THOMSON HANKEY, Esq., M.P. London: EFFINGHAM WILSON, ROYAL EXCHANGE. 1864. PRICE SIXPENCE. TAXES AND EXPENDITURE. The expenditure and the income of this country are known in a general way to most persons who take any interest in public affairs. Details and statistics are dry matters, but there are some leading facts con¬ nected with the expenditure and the mode in which such expenditure is provided for, which are certainly worth considering; very able and interesting books have been lately published on the subject of our Financial Policy—one by Sir Stafford Northcote, called “ Twenty Years of Financial Policy’’ and the other more recently by the present Chancellor of the Exchequer, called “ The Financial Statements of 1853-60-63.” The length of these books, and the matter contained in them, have deterred me from attempting to make any abstract suitable for a lecture, but I have tried to render one single account some¬ what more intelligible than it can be made by the annual statement in the Budget Speech of a Chan¬ cellor of the Exchequer. 2 The account before you [see below] is the General Cash Account of all the expenditure and of all the in¬ come of the Government of this country for the year ending 31st March, 1863; the 31st March being the termination of the financial year. It is abstracted, as you will see, under very few heads. These heads I propose to sub-divide for the purpose of explanation. Cash Account of the Treasury, from INCOME. £. g. d. Balance at the Bank of England and Ireland, 31st March, 1862 . Revenue: £. s. d. Customs . 24,034,000 0 0 Excise . 17,155,000 0 0 Stamps. 8,994,000 0 0 Taxes (Land & Assessed) 3,150,000 0 0 Property and Income ... 10,567,000 0 0 Post Office . 3,650,000 0 0 Crown Lands, Net . 300,000 0 0 Miscellaneous . 2,753,560 15 1 Income . Repayments of Advances . Cash Received by Creation of Additional Debt Temporary Advances Repaid. 5,288,675 13 51)0 70,603 ,SM 15 1,573,313 6 1,950,000 0 9,073,018 9 6 1 8 0 6 £88,488,568 4 9 3 Before I begin to do this, however, I should like to give you some account of the way in which the money received by the Government is made available for public expenditure, and what are the general checks imposed to prevent a misapplication of such money; that is, to prevent its being used for other purposes than those for which it has been raised. 1st April, 1862, to 31st March, 1863. EXPENDITURE. £. s. d. One year’s Interest of Debt, Funded and Un¬ funded and various Annuities . 26,231,657 2 9 Charges for the Civil and Miscellaneous other charges of a permanent nature not raised by annual votes of Parliament. 1,884,001 4 6 28,115,658 7 3 Armv and Navy. 27,635,377 10 9 Civil Service . 8,046,923 17 2 Charge of Collection of Revenue, Post Office, and Packet Service ... 5,474,048 4 0 Marriage Portion of the Princess Alice . 30,000 0 0 Votes in Committee of Supply. 41,186,349 11 11 Expenditure of Fortifica¬ tions . 1,050,000 0 0 42,236,349 11 11 Expenditure . 70,352,007 19 2 Advances by Loans . 752,180 18 11 Redemption of Debt. 1,047,521 17 8 Temporary Advances. 9,073,018 9 6 Balance in Bank of England and Ireland ... 7,263,838 19 6 £88,488,568 4 9 4 In former times there was a great officer of state, called a Lord High Treasurer, hut for a number of years this duty has been delegated to a set of Com¬ missioners appointed by the Crown, whenever there is a change of Ministers, and the first or chief of these Commissioners is called the First Lord of the Trea¬ sury, who is generally, though not necessarily, the prime Minister. The financial duties of the Ministry are, however, always performed by another of the Commissioners, who is called the Chancellor of the Exchequer, and it is his peculiar business to attend to the general financial arrangements of the country, and especially to see that as much money is provided as will be sufficient (according to the opinions of the Ministry) to meet the expenditure during the financial year. In order to ascertain what money will be re¬ quired, it is in the first instance the duty of the Chancellor of the Exchequer to call for estimates of what will probably be required from all those depart¬ ments usually expending money. These estimates must he carefully considered. Some of them may even require the consideration of the Cabinet, that is, of the Ministers in a body, such especially as the amount required to be spent on the army and navy. When the estimates have been approved, or sanc¬ tioned as far as necessary by the Ministers, the Chancellor of the Exchequer has to collect them together into one total, and then to consider in what way they can he defrayed. If the income of the past year is considered a fair estimate of the ensuing year, he has then to consider whether he will propose to 5 Parliament to make any change in the financial scheme of taxation. If the expenditure will be greater than the expected income from existing taxa¬ tion, in what way such additional income is to be raised; or if on the contrary the income will be more than sufficient, what taxes can be best reduced. All these matters having been considered, and the general scheme of the Chancellor of the Exchequer approved by his colleagues, it is then his duty to bring it before Parliament in his usual Budget Speech. I have already told you that if he has to propose a larger expenditure than his last year’s or expected forthcoming income will meet, he has then to ask Parliament to sanction some new tax; or if he has an excess, to do what is far more agreeable, to ask Parliament to abolish some existing tax. But when his scheme has been sanctioned by Parliament, the duties of the Chancellor of the Exchequer, as far as Parliament is concerned, may be said to be theo¬ retically at an end. The head of each department, such as the army or navy, &c., ask Parliament to sanction their own estimates, and when there is no special representative in tile House of Commons of the department, the duty then devolves on the Secretary of the Treasury, but not on the Chancellor of the Exchequer. The Secretary of the Treasury is the generally recognised authority respecting the expenditure of the country, excepting for the army and navy. The estimates having been already laid before Parliament for some weeks previous to their being 6 taken into consideration, are then put to the vote in the House of Commons, and when voted, the first step has been taken, but only the first step, for no money can really be got at until an Act of Parliament has been formally passed for a transfer of money from the Exchequer account at the Bank of England or Ireland, which acoouM - is commonly called a Consoli¬ dation Fund, or Ways and Means Act, and this directs the Controller of the Exchequer to follow the orders of a Royal warrant, which is granted by the Crown to the Lords of the Treasury, and in virtue of this warrant they are enabled to direct a transfer of money from the account of the Exchequer, to such other accounts as require money for the services of the country, which services have been specified in the votes of the House of Commons. It is the duty of the Speaker to take care that no larger sum is granted for the use of the Treasury in this way, than the total amount of the votes which have actually been passed from time to time in Committees of Supply. The general government account is kept at the Treasury, and it is shown in the account now before you. You may remember that I have called it par¬ ticularly a Cash Account, for there are many other accounts of a somewhat similar nature kept at the Treasury and in other departments, in order to satisfy Parliament that the money voted by the House of Commons has been applied to the special purpose intended. But these accounts cannot be made up quickly; as money voted for the service of a particular year, for instance for army purposes, may not be l 7 finally accounted for for many months after the finan¬ cial year’s accounts are closed, the army and navy being scattered in all parts of the world; but eventually all money voted can be traced until expended by the examination of the financial accounts laid before Parliament. All the money received on account of the government is considered to belong to the Con¬ solidated Fund, and is paid in as received to the Bank of England or Ireland, and placed to an account called the Exchequer Account, and cannot be touched with¬ out the sanction of an Act of Parliament, either passed at the time, or which has already been passed, and is then in force. In former days a much larger proportion of the expenditure than at present, was sanctioned by previous Acts of Parliament, conse¬ quently a much smaller amount was voted in Committees of Supply, requiring fresh Acts of Parliament, to enable the Treasury to touch the money; but now more than half, nearly two-thirds,, of the whole expenditure is sanctioned after votes in Annual Committees of Supply, and by these special Acts of Parliament. Towards the close of every session, when all the money required by government has been voted, a bill is brought in called the Appropriation Bill. This bill appropriates every separate vote which has passed the House of Commons during the session, and completes the “ Ways and Means” necessary to meet these votes. Thus when the Appropriation Act has passed, and the specific purpose of each vote designated, no other use of the money can be made, except by breaking an Act of Parliament, the adopted mode now of using 8 the money generally during the session, after the passing of Consolidated Fund Supply Bills having been made use of “ on account.” But the final Appropria¬ tion Act enables Parliament to ascertain in subsequent years, when the financial accounts are annually delivered, that the money voted has been expended in conformity therewith. There is an officer of State, appointed by the Crown in the same way as the judges, called the Controller of the Exchequer. His duty is to see that Parliamentary authority has been obtained before any money is taken from the Exchequer Account at the Bank of England or Ireland, either by Acts of a permanent nature, or by those annually passed, and this office is supposed to afford valuable security against misapplication of money by the Treasury. But practically, the only security is the general regularity and efficient system adopted and carried out by the Treasury itself, and the check of public opinion, as well as the knowledge that any misapplication of money granted for public purposes, is certain to be speedily discovered. Having thus endeavoured to show you how the money received from taxation and duties is brought into use for the purposes of the country, and what is the extent of Parliamentary control over the ex¬ penditure, I will now proceed to explain some of the principal items of expenditure, and what are the principal sources from which such expenditure is defrayed. First and foremost in the account of annual ex¬ penditure, is the charge for interest and management of the National Debt; this amounts, as you will see, 9 to £26,231,657 2s. 9d. It would be foreign to the object we are now considering to enter into any history of the National Debt, though there are many points connected with it which are interesting. The credit which this country has enjoyed at different times is an indication of the success which has more or less attended the financial arrangements of the govern¬ ment during different reigns, and under varied aspects of political affairs. I will briefly point out the pro¬ gressive increase which has occurred, and which has occasioned this heavy charge on the present generation. The first account of any National Debt in its pre¬ sent form dates from the year 1694. In a very valuable Blue Book, an account of the National Debt ordered by the House of Commons in 1858, I see it stated that “ it was in 1694 that the Bank of England was incorporated, and the foundation laid of our pre¬ sent Funded Debt.” Now if it is intended in this sentence to imply that the Bank of England is in any way chargeable with the misfortune of the existing National Debt, I beg to enter my protest thereupon. I have little doubt that monarchs long before, but not wiser than William III., ran into debt, but I very much doubt whether they were quite as honest in liquidating those debts when incurred. In the same Blue Book on the National Debt, I find that in the year 1253, Henry III. borrowed 5,000 marks, and as security for its re-payment, he assigned over “ all the Jews and all their property in England.” I think that such a pledge would not find much favour in the present day. B 10 The first entry of any Funded Debt is of an amount of £1,200,000 borrowed of the Bank of Eiir gland in 1694, at 8 per cent, interest, which interest together with a sum of £4,000 allowed for manage¬ ment, created an annual charge of £100,000. You will understand that the word Funded Debt only means a book debt, that is, an entry in a book or ledger, that such a sum has been received from a particular individual, in return for which sum of money the nation agrees, under an Act of Parliament, to pay an annual sum either in perpetuity, or for a limited number of years; and this individual thereby becomes a Fund or Stockholder to that amount, and he is at liberty to sell his right to receive such interest or annuity either altogether or in any fractional parts, as he may please. When money is borrowed by the government for a short period only, it has generally been the custom to give the lender a sort of promissory note bearing interest, and debt created in this way has been generally called the unfunded, in contra¬ distinction to the Funded or Book Debt. These promissory notes have been of late generally called Exchequer bills, or Exchequer bonds. That some considerable difficulty in obtaining money was expe¬ rienced in the time of King William III., when he was carrying on war as the leader of the Protestant party in Europe, in conjunction with his Dutch sub¬ jects against Louis XIV. of France, and the great Catholic powers of Europe is clear from such remarks as the following, which I have also found in tho account of the National Debt already referred to :— 11 “ The King writes from the Netherlands, to remon¬ strate with the Lords of the Treasury in England, against their unwillingness to commit a breach of an Act of Parliament, by forestalling the payment of the Land Tax, and says in such extreme necessity, we must not be too scrupulous; all is lost if credit is not found to pay the Fleet and the Army.” And again : “ If you cannot devise expedients to send contribu¬ tions or procure credit all is lost, and I must go to the Indies.” Fortunately for this country, expedients were found; and though we have to pay rather dearly for all the wars in which we have been engaged, I do not think that there are many persons who would say now they would be glad if King William had failed in his endeavours to maintain the Protestant ascendancy, and that England had then and there merged into the great Catholic community of Europe. The National Debt continued to increase. In about twenty years it had amounted, including Unfunded and Funded Debt, to about j£35,000,000 and the annual charge, a good deal having been borrowed on terminable annuities, paying a high rate of interest while they continued to exist, for interest and management to about X3,000,000. It was not, however, until the year 1760, after live years of war, that the National Debt first amounted to X'100,000,000, and the annual charge to about <£3,600,000. It continued to increase, however, mainly owing to wars. During the American war for independence we augmented our National Debt by 12 about i'll5,000,000, and the annual charge from <£4,700,000 to above £9,000,000. But the greatest increase of all was during the French revolutionary war, when, what with loans for army and navy expen¬ diture, and for subsidies and other aids to European powers, the debt from 1793 to 1815 was increased from £247,000,000 to £861,000,000, and the annual charge from £9,700,000 to £32,645,000. On the 31st of March last it was £799,800,000, and the annual charge, as you see, a little above £26,000,000. The present annual charge per head of the whole population, in consequence of the great increase of the people since 1815, does not amount to much more than half of the charge per head at that time, and is thus shown. The charge for the interest on the National Debt when nearly £33,000,000 divided amongst the population of twenty millions gave an average charge of about 33s. per head. At the present time the charge of about £26,000,000., divided amongst a population of about thirty millions, gives an average charge of about 17s. 6d. The next item in my account is for various charges on the consolidated fund of a permanent nature, amounting to £1,884,001 4s. 6d. For the Civil List . £. 385,000 s. 0 d. 0 For pensions granted by the Crown . 20,327 18 8 Annuities and Pensions. 274,110 5 2 Salaries and Allowances . 156,405 11 0 Diplomatic Salaries and Pensions (per Act 2 & 3 Will. IV. c. 116).... 171,409 0 0 Courts of Justice. 690,254 0 6 13 Miscellaneous Charge*. fitissian-Dutck Loan (per Acts 55 Geo. 3, c. 115, and 2 & 3 Will. IV. c. 81) 78,740 19 7 Greek Loan (per Act 2 & 3 Will. IV. c. 121) . 47,376 5 1 Annuity to Greenwich Hospital (per Act 4 & 5 Will. IV. c. 34) . 20,000 0 0 Secret Sendee (per Act 1 Viet. c. 2) . 10,0(H) 0 0 Compensation for Loss of Duties on Tin (per Act 1 Viet. c. 120). 16,443 15 0 Improvement of Harbours, &c., in the Isle of Man (16 & 17 Viet. c. 107, &c.) 3,238 6 6 Other Charges. 10,695 3 0 - 1,884,001 4 6 This Civil List is the sum granted by the Nation for the support and dignity of the crown. The amount is divided into six classes, and any surplus money from one class cannot be taken to supply a deficiency in the other. This grant is in lieu of all the former hereditary income of the Crown, the whole of which has been given up to the Nation. When it is considered that the whole of the court expenditure, whether in London, Windsor, Osborne, or Balmoral, is defrayed from this source, and that the two latter palaces have been built and furnished from this source of income, such an allowance is not excessive. No monarch that has ever sat on the throne of this country has attended more scrupulously to the economy of her court and to her private expenditure. Add to this sum of ,£405,327 the money paid annually for repairs and maintenance of the Royal Palaces— about £43,000, and the payments to the other members of the royal family about £102,000, and wo have a total of about £550,327 paid by the Nation for the support and dignity of the Crown and of the royal family. 14 The next item is for annuities and pensions 274,110/. 5s. 2d. These annuities are paid firstly to the different members of the royal family, amongst whom is included the King of the Belgians, who receives 50,000/. a year; but as he repays all excepting about 14,000/. a year, appropriated towards keeping up Claremont and his own servants and pensions, the gross sum ought to be 36,000/. a year less. This sum of 36,000/. is found on the other side of the account, amongst the receipts of the year. The other members of the royal family receive 88,000/. a year, including the annuity of 50,000/. to the Prince and Princess of Wales, granted by Parliament with the universal approbation of the country on His Royal Highnesses marriage. Various annuities and pensions are paid for distinguished military, naval, and political services. Such men as Nelson, Rodney, Duncan, Wellington, Gough, Williams, and Havelock, have been justly considered as entitled to some pecuniary mark of the nation’s gratitude, in addition to the titles and honours bestowed by their Sovereign. The pensions granted to past Speakers of the House of Commons, to the Lords Chancellors of England and Ireland, and to the Judges, are all charged under this head. Next are the salaries and allowances, 156,405/. 11s. This includes the salaries paid to the Speakers and Sergeant-at-Arms of the House of Commons, the Controller of the Exchequer, the Commissioners of Audit, the Commissioners in Lunacy, the Ecclesias¬ tical Establishment in the West Indies, various salaries 15 in Scotland formerly paid by tho Crown, and the salary of the Lord-Lieutenant and the public colleges in Ireland. The fourth item is the Diplomatic Salaries and Pensions, 171,400/. This includes the salaries and pensions of our~diplomatic servants ; and when it is considered that we are expected to have some diplo¬ matic representatives in almost every part of the world, the total sum thus paid is not large. Then comes the charge of 690,254/. Os. Gd. for Courts of Justice, Salaries to Judges and compen¬ sations ; that is, for the judicial offices abolished (this last charge is of course a gradually diminishing one). The salaries of the Judges of the Superior Courts in England are about 130,000/.; in Scotland, about 43,000/.; in Ireland, about 70,000/. The salaries of the County Court Judges are 75,000/.; of the London Police Magistrates, about 28,000/. The remainder is made up of the salaries of the Judges, and other legal officers connected with the minor courts of law in England, Scotland, and Ireland, and of the compen¬ sations to those who, for the benefit of the public services, have been deprived of their incomes by recent legislation. The large amount of these compensations is owing to reforms in the administration of justice, which abolished numerous offices, and gave the holders compensation for life. Then come the miscellaneous charges, amounting to 186,494/. 9s. 2d. The first item is for interest, &c. on Russian Dutch Loan. This w T as a loan made by the Emperor of Russia to Holland, during the long 16 continental war, and of which England guaranteed the re-payment of one-fourth part at the peace of 1815. The debt due by England will all be finally extinguished in 1916. No. 2 is interest on a loan made to the Government of Greece, the interest of one-third of which was in like manner as the Russian Loan guaranteed by this country in the year 1832, but it was only intended as an advance of money to be repaid by the Government of Greece. The total amount of the loan guaranteed by England was about 800,000/., and as the guarantee of this country only applied to one-third of the amount raised, the total amount of the loan guaranteed by the whole of the powers concerned was about 2,400,000/. The Greek Government failed to fulfil its engagement in 1843, and this charge, only intended by way of loan, has consequently fallen on us, and probably the loan will never be repaid ; but the book debt will be extinguished in 1871 by the operation of the Sinking Fund. No. 3 is an annual payment made in aid of the expenditure of Greenwich Hospital. No. 4. This is the only part of the secret service money which is placed at the disposal of the crown to be used in this country, and not subject to an annual Vote of Parliament. No. 5 is for compensation for certain rights byway of duty on all tin produced in Cornwall and Devon¬ shire, which had long been enjoyed by the Duchy of Cornwall. It was considered very beneficial for the trade of the country that these duties should he 17 abolished, and they were so abolished in 1838, and compensation granted on the average of the net produce of the ten preceding years. No. 6. This is an agreed payment for the improve¬ ment of the harbours in the Isle of Man, being one- ninth part of the revenues received from customs in that island. No. 7 are charges arising out of the Harbour Im¬ provement Act of 1861, and will cease with the present financial year. Also one-lialf of a charge for the annual revision of the valuation of rateable pro¬ perty in Ireland under an Act of Parliament in I860; the other half is advanced, but repaid by the counties. These sums together amount to 28,115,658/. 7s. 3d., and are the charges commonly called the charges on the Consolidated Fund. They have been created by general Acts of Parliament, and therefore are not necessarily brought under the annual con¬ sideration of the House of Commons, though equally liable to be dealt with by Parliament, if such should be at any time their desire. The remainder of the annual charges amount to 41,186,349/. 11s. lid., and these are subject to the annual votes of Parliament, in the mode I have already alluded to by votes in Committee of supply. The first two of these charges are for the maintenance of the Army and Navy and military operations of the country, but independent of the expense of fortifications, which I will allude to presently. The total expenditure during the year ending 31st March last, in the Army, was 16,264,789/. 10s. 9d., and in the Navy, 11,370,588/. v c 18 Total 27,035,377/. 10s. 9d. This is the great item in the increase of our Government expenditure. In the year 1853, only ten years since, our total expenditure in our military and navy establishments barely exceeded 10,000,000/. Shortly after that came the war in Russia, which caused our military and naval expen- S diture to run up to about 55,000,000/. After the close of the Russian war came the question of the reconstruction of the navy, and to a certain extent of the army. The first great change in the navy was the almost entire substitution of steam for sailing vessels, and subsequently the application of plated iron to many of our larger vessels of war, together with the use of ord/nance of a very much larger capacity. That relating to the army consisted mainly in the use of artillery of greater power, especially for s^jge pur- e poses: and it was also found necessary for sanitary purposes ■ to afFord better and greatly improved accommodation for our troops in barracks. The changes found necessary in consequence of these important questions involved the expenditure of very large sums of money. Although the change with respect to iron instead of wood in our vessels was admitted to be in many cases absolutely necessary, as well as the use of more powerful artillery, still the exact nature of the substitution was in neither case a matter free from great doubt, even with the highest military, naval, and scientific authorities ; and there are many points of the greatest importance yet to be settled before these important changes can ‘ be thoroughly carried out. The questions connected 19 therewith, and the practical experiments which have been made, and which must still for some time be continued, cannot be otherwise than attended with a great outlay of money, and for some time to come I fear such expenditure must to a certain extent be continued. It would be foreign to our subject to enter into further details respecting the armaments of the country, but I have alluded to them merely as a question of government expenditure, which appears to me to be inevitable under existing circumstances. It is some consolation to know, or to believe, as 1 certainly do, that both our army and our navy is in as efficient a state, and probably more so, than it has been in the history of our country. The number of effective men of all ranks in our army is about 150,000, and in our navy about 76,000 ; and we have 150 vessels of war in commission, which includes many of the most powerful and most effective steam ships of the largest class that ever have been built in the world. The expenditure for the volunteers and for the militia is included in this charge for the army; and that of the coast guard, and naval reserve and naval volunteers in that of the navy. We have also an effective force of troops in India of about 75,000 men, but the whole expense is defrayed out of the revenues of India. The next item in the account of expenditure is for Miscellaneous Civil Service. The total expended in that way during the year ending the 31st March, 1863, was 8,046,923Z. 17s. 2d. In the votes of the House of Commons these charges arc divided into 20 seven general divisions, which I will go over and ex¬ plain as briefly, as I can. The several heads are as follows:— No 1 is for Public Works, i.e. the maintenance and repair, and new building when necessary, of all the public buildings and other public offices, palaces, maintenance of public parks, and of all public works throughout the kingdom ; building and repairs of ambassadors’ houses, harbours of refuge, and all other works kept up at public expense not otherwise speci¬ ally provided for. j 2. —Salaries of all public officers excepting fc &i'oo (such as the Judges, &c.) which are specially provided for out of the consolidated fund:’all the clerks in all ’A the public offices, (of which there are 36,) excepting the war offices and admiralty, and all the civil depart¬ ments connected, with the army and navy, and those for collecting the public revenues, whose salaries are provided for in separate items. Also for all printing and stationery, which amounts to 342,640/.; for the postage of all the public departments, which amounts to 115,580/. ’ Under this head is also included all the expenditure connected with the administration of the Poor Laws, that is, all that is paid by general taxation on the country. .... 3. —The total sum paid under this head is for all expenditure by,the government for Law, Justice, Police and Magistrates, and prison discipline, except¬ ing the salaries of the Judges, (which is provided for by special Act of Parliament out of the Consolidated Fund,) and amounts to 2,762,236 l. The salaries of 21 Judges, &c., and pensioners charged on the Consoli¬ dated Fund amount to 762,234/. ; total for all expen¬ diture charged on taxation for Law, Police, Prisoners, &c., 3,524,470/. The amount paid out of this, for prison and convict establishments at home and abroad is 768,207/. 4. —The money expended by the country, which is provided for by annual votes, for education, including the expenditure for the British Museum (100,000/.), and for all matters relating to the educational improve¬ ment of the people is about 1,400,000/., and in addition there is a charge on the Consolidated Fund for Irish Colleges of 36,000/., making a total for education of 1,436,000/. 5. —Includes the pay of all Colonial Governors, of all expenditure relating to the suppression of slavery, for all the consular establishments in every part of the world, and for all the contingent expenses of our diplomatic service, except salaries, which are charged on the Consolidated Fund. 6. —Superannuations and retired allowances. These are the superannuation allowances to those who have been in the various public offices, independent of the army and navy and revenue department. Also various grants made to Public Hospitals in Ireland, pensions to merchant seamen out of the funds partly contri¬ buted by the seamen themselves, the relief of British seamen left abroad in distress, wrecked in fisheries, &c. 7. —This is called miscellaneous. The great item under this head is for local dues on shipping, made under certain treaties of reciprocity, the abolition of 22 which dues was considered a very beneficial arrange¬ ment for the whole country. The expenses with regard to temporary commissions, and also of the census (which has cost the country about 160,000h) is included under this head of miscellaneous charges. Such are the particulars relating to these seven votes for Miscellaneous Civil Services, as voted in Committee of Supply, and the money spent accordingly in the year ending 31st March, 1863, and which amount to <£8,046,923 17s. 2d. We then come to the cost of collecting the public revenue. This was formerly deducted from the income received by the revenue departments, and consequently no annual estimate was ever submitted to Parliament to show at what cost the public revenue was collected. A change, however, and a very im¬ portant change in this respect, was made chiefly in 1854, since which the whole of thfe expenditure has been brought before Parliament, and annually voted in Committee of Supply. The total amount paid during last year for this purpose for the three depart¬ ments of Customs, Inland Revenue and Post Offices, and Land Revenues and Superannuations, has been 5,474,048Z. 4s. The number of clerks and others employed by the Customs is about 5,300, with an average salary of about 140i.; in the Inland Revenue about 5,000, with an average salary of about 160Z.; and in the Post Office about 25,000 persons, with an average salary of about 80 l. The last of the Parlia¬ mentary Grants, made in Committee of'Supply last year, was u '30;d00L for a~ marriage portion - of the 23 Princess Alice, about which there can be no difference of opinion, I think, throughout the country. These several items, when added to the military and naval expenditure, make up the sum of 41,186,349/. 11s. lid. To this is to be added the amount expended for Fortifications, provided for by special votes, 1 ,050,000/., and we then have a total of expenditure, provided and paid for out of votes in Committee of Supply, amount¬ ing to 42,236,349/. 11s. lid., which makes the total expenditure of the country during the year 70,352,007/. 19s. 2d. There are four other items in the account before you, which are not expenditure in the ordinary mean¬ ing, as they are chiefly advances of money of the nature'of temporary loans, and are met by repayments during the year on the other side of the account; but I have introduced them, as they form part of the payments made out of the Exchequer during the year, and these, added to the balances on the 31st of March in the account of the Exchequer at the Bank of England and Ireland, show the grand total on the expenditure side of the account of 88,488,568/. 4s. 9d. We have now to examine the income, and to see how all this expenditure has been provided for during the year. The first sum in the account before you is the sum of 5,288,675/. 13s. 6d., being the balance on the Exchequer Account at the Banks of England and Ireland, on the 31st of March, 1862. The first item in the income of the country is from receipts of Customs duties. 24 Principal Articles on which Customs Duties were received in the year ending 31 st of March , 1863 :— Sugar and Molasses produced last year.£6,427,923 Tobacco . 5,774,564 Tea. . 5,485,159 Spirit, (Foreign and Colonial) . 2,703,532 Wine . 1,137,305 Corn . 971,066 Coffee . 420,352 Dried Fruits, Currants, Raisins, Figs, &c. ... 384,072 Wood and Timber. 221,053 Pepper. 106,141 Other Articles. 96,480 £23,727,647* Previous to the great changes made by Sir Robert Peel in the Tariff in 184$, Customs duties were levied on upwards of 1,000 different articles, of which the principal yielding any considerable amount of duty were 565. That alteration in 1841 reduced the num¬ ber of articles nominally to 590, but practically to 276, and this number has been again reduced, so that at the present time the number of articles in the Tariff is 167, and the practical number on which duties are levied is only 51, and this number is reduced, as you can see by the preceding table of all articles paying duty exceeding 100,000Z. per annum, so that there are really only 9 principal articles on which Customs duties are now levied. The total amount paid into the Exchequer for Customs duties, levied during the year ending 31st March, 1863, was 24,034,000Z. * The above stated Amounts, received lor Customs and Inland Revenue, do not agree exactly with the amounts paid into the Exchequer as shown in the General Account. The difference is to be accounted for principally by the variation of the Cash Balances in hand at the commence¬ ment and at the end of the financial year. 25 Next come the duties collected by the Inland Revenue, which are thus divided:— £. Excise . 17,155,000 Stamps. 8,994,000 Taxes . 3,150,000 Property and Income . 10,507,000 £39,866,000 The excise duties are levied principally on two articles, namely, on spirits and malt, on which about 15,700,000/. out of the 17,155,000/. was raised, the remainder being collected for licenses, duties on stage coach and other carriages, and on railways, &c. EXCISE Net amount received in the year ending 31 si March, 1863. Spirts . Malt . Licences . Railways. Stage Carriages ... Game Certificates Hackney Carriages Sundries . £. s. d. 9,399,706 17 3 5,389,908 4 7 1,776,851 10 10 383,056 12 10 132.445 18 7 128.445 0 0 97,461 1 6 9,520 19 10 Total.£17,317,396 5 5 Stamp duties are collected from Duties on Legacies and Successions, Fire and Marine Insurances, Pro¬ bates of Wills, Bills of Exchange, penny stamps (which give about 450,000/.), composition for stamps on Bank Notes, other than the Bank of England, &c. i) 2G STAMPS Account for the year ending 31 st of March , 1863. PRINCIPAL HEADS OF DUTY, NET. £ s. Legacies and Successions . 2,374,436 4 Fire Insurance . 1,580,636 13 Probates of Wills, &c. 1,325,358 12 Deeds, &c. 1,306,358 7 Bills of Exchange . 574,984 2 Receipts and other Id. Stamps. 452,682 17 Marine Insurances. 366,607 Licences and Certificates . 237,849 6 Newspapers, &c. 124,000 12 Bank Note Stamps. 126,256 18 Probate Court Stamps . 118,728 6 Patents for Inventions* . 111,331 7 Other Stamps, and not amounting to d. 1 4 6 0 2 10 7 0 5 6 4 2 277,507 8 7 £100,000 a-year., This is the Net Amount received...£8,976,738 8 6 TAXES. Net Amount received in the year ending 3 1 at March, 1863. £. s. d. Land Tax . . 1,106,353 16 7 Assessed Taxes, &c. 2,038,981 5 4 £3,145,335 1 11 Net Amount received for Property and) , A , ac . coo - , Imcome Tax. . .| 10 > 482 ’ 588 5 1 Taxes. You are most of you familiar with this pleasing mode of raising money. The first item is the Land Tax, one of the oldest if not the oldest tax in England, as it was originally imposed as a regular land tax in 1695, in which year a general valuation of all estates and real property was made, and this valuation has continued as the basis of the assess¬ ment to the present time. The tax was imposed permanently by Mr. Pitt, not with the view of obtaining a permanent income, but by rendering it permanent and offering what he thought would be advantageous terms, for landowners to redeem the charge, to procure an immediate command of money. The land tax producing permanently about two millions a year, had Mr. Pitt been able to induce persons to redeem it at 18 or 20 years purchase he could have obtained a sum of from 30 to 40 millions of pounds sterling; but the total amount redeemed during the whole period of nearly 70 years has been under 800,000/, a year, and to this extent has the public debt been reduced. The assessed taxes are raised by taxes on inhabited houses, male servants, horses, mules, and dogs, hair powder, and armorial bearings. I believe if all these assessed taxes were done away with, except the house tax, which now pays about two-fifths of the whole, and this house-tax increased so as to give an amount equal to the 2,000,000/., it would be a very good thing and a very welcome measure. Then comes the revenue from that profitable but most objectionable tax, the income tax; producing last year an income to the Treasury of 10,567,000/. This tax was first invented in England by Mr. Pitt, who was driven to every expedient as in the time of William III., though not to the same extent, for funds to enable us to carry on a war in combination with many other powers in Europe against France. The first of this income tax was imposed on all incomes above 60/., and at rates varying in degree up to ten per cent. It was continued during a few years, and yielded an average income of about 5£ million pounds sterling. It was repealed after or about the time of 28 the peace of Amiens in 1802, but re-imposed in the following year, and continued until 1816, when it was again repealed. The largest amount levied during those years was in 1815, when between 15,000,000/. and 16,000,000/. was received into the Exchequer, and this sum was raised on an assessment of about 170,000,000/. This tax was levied on all incomes, however small, arising from land or capital, but with certain exemptions on professional incomes. The population did not probably at that time exceed 20,000,000. With a present population of nearly 30,000,000, and with an increase of assessable in¬ come to at least 300,000,000/., the present income tax is comparatively a light burden, but I consider it an odious tax, and I hope to live to see it entirely repealed. Next is the income derived from the Post Office. The gross income, or rather the actual income, paid into the Exchequer during the year was 3,650,000/. The total income, however, received during the year was 3,695,210/. In order to ascertain what is the real income derived from this service, it is necessary to connect with this sum the total expenditure in¬ curred by this department. This remark may be said to apply to all the revenue departments, as the cost of collection and other expenditure connected with each department ought to be deducted before we can see what is the real net income derived from the col¬ lection of revenue: but in the case of the other departments, such as Customs and Inland Revenue, the cost of collection is only a small fractional part on 29 the whole receipt, whereas in the case of the Post Office, which is looked upon in the light rather of a great public convenience and utility than as a revenue department, the expenditure connected therewith forms such a large sum as compared with the revenue derived, that it is necessary to consider it separately ; the following than is the state of the case. The gross revenue received during the year ending 31st of March, 1803, was 3,695,210Z. The total expenditure in carriage of mails, buildings, postage stamps, salaries, and superanuations and compensations was 2,982,2992. 3s. 8d., leaving 712,9102. 10s. 4d., to which is to be added the sum received from the colonies for their contribution to the expenditure, 80,5402. 12s. 6d., making an actual net receipt of 793,4512. 8s. lOd. A few words in passing about the Post Office. Previous to the year, 1839, the income of the Post Office, as shown in the annual revenue accounts, was about 1,500,0002., but inasmuch as the whole of the Packet Service was performed by the Admiralty and paid for in the Admiralty expenditure, it is difficult to ascertain precisely what income the country really derived from this source. The letters carried through the Post Office, previous to the great change in the system, were estimated at about 83,000,000 annually, of which about 7,000,000 went free. This gave an average of letters of rather more than three letters annually to each person in this country. In the last report of the Post Office, I find a statement that the number of letters which passed 30 through the Post Office in 1862 was 564,000,000, showing an average of about nineteen letters per person; and I also see it stated that the number of miles over which postal services of one kind or other, is daily performed in Great Britain, is about 144,000 miles dailyr I also observe that there were 71,000,000 of newspapers delivered by post last year, and 11,700,000 parcels by book post. The total amount of revenues received from taxa¬ tion, exclusive of the Post Office, is about 67,000,000/., and the cost of collection, independent of the Post Office, but including superanuations, is about 2,484,000/., showing that the money paid in the collection of these main branches of the revenue is about 3/. 14s. 2d. per 100Z. The income from Crown Lands amount to 300,000/. This is the only account which I profess myself entirely unable to explain. The gross income amounts to 430,000/. It is true that there are charges against this income of a public return, which would not ordi¬ narily be imposed on the landed estates of private individuals, and I also observe that the balances on hand at the Bankers are larger than at the begining of the financial year. Still, I cannot but think that the net income paid into the Exchequer ought to be larger than 300,000/. The Forests cost more than they produce—income, 47,521/.; expenditure, 54,367/.; loss, 6,846/. Next to these items of revenue are those called miscellaneous receipts; they amount to the sum of 2,753,560/. 15s. Id. 31 A n Account of 11 Miscellaneous Receipts ” paid into the Exchequer in the Year ended the 31sf March, 1863, under the Heads after-mentioned. ABSTRACT. £. S. d. 1. Small Branches of the Hereditary Revenue 3,955 13 10 2. Bank of England (Profits of Issue). 130,703 0 0 3. Fees, &c. of Public Offices. 188,710 9 5 4. Trustees of the King of the Belgians. 36,000 0 0 5. Old Stores and Extra Receipts, Naval and Military Departments. 696,176 12 0 6. Extra Receipts, Civil Departments . 159,786 13 9 7. Income of London, Edinburgh and Dublin Gazettes . 24,033 2 3 8. Contribution from Revenues of India for Military Charges. 1,057,750 15 3 Ditto for Diplomatic and Consular Services 27,367 8 8 Ditto for Red Sea Telegraph Company’s Annuity. 18,027 0 0 9. Contributions towards Expenses of the Mail Service. 80,540 12 6 10. Unclaimed Wages, Ac. of deceased Mer¬ chant Seamen, Ac. 13,016 4 0 11. Savings on Grants of Parliament, Ac., and Over-Issues Repaid . 20,543 12 4 12. Conscience Money . 10,422 3 1 13. Civil Contingencies (Surplus of former Votes, Ac.). 69,512 15 2 14. Malta and Alexandria Telegraph . 565 13 11 15. China Indemnity. 212,335 0 0 16. Casual Receipts . 4,113 18 11 Total Great Britain £2,717,781 14 0 ) , Ireland 35,779 1 1 f £2 ’'° 8 ’ 560 15 1 No. I is for certain small hereditary revenue fines, &c., which formerly would have belonged to the crown, but now belong to the nation. No. 2 is the payment made by the Bank, for the privilege of issuing bank notes to the extent of 14 million pounds. This payment leaves a net profit to the Bank of about 10U,000Z. a year, but the Bank is liable to great losses from forgeries, and it is a very advantageous arrangement for the country, for if the 32 Government were to undertake the office of making o and issuing their own bank notes, it would in all pro¬ bability involve them in a considerable annual expense; whereas now they are free from all such risk, and receive about 130,000/. per annum. No. 3 are the Fees received from public offices. The largest item is that received at the House of Commons, for fees on private bill legislation, which is felt to be rather an oppressive tax, but it yields now enough to pay all the expenses connected with the establishment of the Houses of Parliament. Then there are the fees received abroad for consular service rendered, which ought to be remembered as a dimunition of the cost of our consular service; and this remark also applies to the fees received at our courts of law and at our police offices, as well as those received at record offices, especially in Scotland. All these fees are, as a matter of convenience, treated as revenue; but they ought not to be lost sight of in connection with the expenses of the respective offices in which the work is trans¬ acted from which these fees are received. No. 4 is the amount received from the King of the Belgians, part of his annuity of 50,0001., to which I have already adverted, which he does not make use of, and repays to the nation. No 5 is the proceeds for old stores sold. It is in¬ dispensable in such a large manufacturing and money expending system as that of ouy army and navy and building yards, that there should be an annual sale of such articles as are no longer required for the use of the public service, as all the stores bought in the year 33 are charged to expenditure, itis quite right to take credit for what is not required, and eventually therefore sold. No. 6 is called extra receipts. The largest item is the seignorage on the coinage—that is, the issue of silver and copper coins representing a larger amount than the intrinsic value of the metal. This seignorage on the copper and silver coinage, is much more than sufficient to defray the whole expense of the Mint. The average amount of coin issued from the Mint during the 10 years ending 31st Dec., 1861, was of gold, value 5,970,000/., cost 5,970,000/.; silver, value 858,000/., cost 347,000/.; copper, value 46,000/., cost 18,700/. This is exceptional as far as the largeness of the amount is concerned. It results from the bronze coinage, and the profit on the old copper pur¬ chased in. No. 7 is the gross income received for sale of the London, Edinburgh, and Dublin Gazettes. No. 8 is the repayment from the Government of India for money paid or advanced out of public revenue for military and other expenditure in India. I have already stated the force kept in India. No part of the expenditure of the Government of India is eventually defrayed out of the revenues of this country. No. 9 is the Colonial contribution towards the pay¬ ment of our Post Office services. No. 10 is the unclaimed wages and effects of deceased merchant seamen. These are paid into the exchequer after 6 years. No. 11 is the saving on issues of Parliamentary Grants, paid back in cash. E 34 No. 12 is money received by the Chancellor of the Exchequer from sundry persons for conscience sake. This money, when remitted in reduction of the National Debt, is annually invested in stock in the names of the Commissioners for that purpose. No. 13 is the surplus above 120,OOOh, which is always retained in the account for permanent civil contingencies, and to meet sundry payments which cannot be well ascertained beforehand; whatever remains on this account on the 31st March, in each year, beyond 120,000Z., on account of previous advances outstanding, is repaid in as revenue. No. 14 is a small sum as profit on the Malta and Alexandria Telegraph, according to agreement with the contractors. No. 15 is the further sum received on account of indemnity for the war'X China. No. 16 is sundry small receipts for captures on slavers, and from teachers who have repaid money to the Board of Education, &c. This ends the item of miscellaneous receipts, and makes the total income from revenue of all kinds 70,G03,5G0h 15s. Id. Then we have the repayment of advances to which I have already alluded, llie first of these is for coin sold or issued from the Mint. This is the way in which the silver and copper coin finds its way into circulation. The Mint buys copper, and silver and coins both, as I have already stated, at a profit; but the coin is only issued to the Bank of England, or occasionally to other parties, either of whom give 35 the full nominal value for it, because they require the small coinage of silver and copper for the wants of their customers. No person who does not require the coin for such purposes, would give 20s. of gold to receive only 18s. intrinsic value in silver, and probably not above 7s. or 8s. intrinsic value in copper coin. The second sum in this category is the repayment of loans, made through the Commissioners of Public Works Loans. This is a board of unpaid commis¬ sioners, at whose disposal a certain sum is placed by Act of Parliament, and they make loans at certain rates of interest in furtherance of works of public utility, but which are not of a nature to induce the public to find money readily, such as building and repairing churches, gaols, county lunatic asylums, and union work houses; and in some cases, as in Ireland, in aid of railways, and latterly to aid in making har¬ bours of refuge, and, more lately still, for public works in aid of the distress in the manufacturing districts. There is very rarely any money lent in this way which is not punctually repaid with the agreed interest, and a duty which otherwise might be entailed on the Government, is thereby performed in an efficient and economical manner by the gratuitous services of these Commissioners. The last in this category of receipts is the agreed repayment of part of the loan made at the formation of the new Kingdom of Italy to the King of Sardinia, and these three items com¬ pose the sum of 1,573,313Z. Cs. 8d., as you will see in the general account, maliing - a - ltog e thor 1,050,9091. borrowed. A sum of 950,000/. was received from the sale of Annuities granted under an Act of Parliament for raising money for the erection of fortifications; the amount spent for this purpose during the year, as appears on the the other side of the account, was 1,050,000/. There was a fresh issue of 1,000,000/. of Ex¬ chequer Bonds, for which that amount has been received and employed to pay off other Exchequer Bonds falling due during the year, and accounts for the sum of 1,950,000/. in the general account. Lastly, there is a receipt of 9,073,018/. 9s. 6d. for Deficiency Bills sold to the Bank of England, but probably paid off again the same or the following day out of incoming ordinary revenue. I have already stated that all the revenue of the year is paid in immediately it is received, to the account of the Exchequer at the Bank of England or Ireland. It frequently happens that though the revenue expected to come in is more than ample to meet all required payments during the year, yet on the day on which the large quarterly payments are required for the interest on the National Debt there may not be sufficient cash on the Exchequer account for that purpose. To obviate the inconvenience which might arise from this circumstance an Act was passed authorising the Treasury to borrow from the Bank a sufficient sum to meet the required payment of Interest or Dividend, and the Bank, (otherwise for¬ bidden to lend money to the Treasury.) is thereby permitted to do so for this purpose, and the Govern- 37 ment is bound to repay the Bank out of the first receipts from ordinary revenue. When the Treasury so borrow, they issue what are called Deficiency Bills, and this is the item of receipt I am now referring to, which has been borrowed and appears in the account as if it were ordinary revenue; and you will see on the other side of the account a similar sum of 9,073,0182. 9s. fid. charged as an ordinary payment, which is in fact the repayment on the same, or perhaps the following day, of money borrowed for the purpose of adjusting the accounts at the Bank on the days of paying the dividend. This power of borrowing money, in the way I have pointed out, from the Bank of England, in anticipation of forthcoming revenue, is a very good arrangement, and never likely to lead to any undue dependence on the Bank, as the Loan cannot be continued beyond the times specified in the Acts of Parliament; that, is, it must invariably be repaid before the termination of the quarter in which the money is lent. I have now gone over all the items com¬ posing the total on both sides of this account of 88,488,5682. 4s. 9d. I have shown you that the Chancellor of the Exche¬ quer began his financial year with a balance at his bankers of. 5,288,6752. l^s. fid. That he has received for ordinary revenue during the year. 70,603,5602. 15s. Id. That the repayment of money advanced for purchase of bullion,public works,&c.,was 1,573,3132. fis. 8d. 38 That he borrowed by a Sale of Annuities and Exche¬ quer Bonds. 1,950,000/. Os. Od. And that the receipts for Deficiency Bills repaid during the year were . 9,073,018/. 9s. 6d. Making the total cash sum with which the Govern¬ ment had to deal. 88,488,508/. 4s. 9d. With this cash we spent for payments as perm ament charges on the Consolidated Fund, not subject to the annual revision of Parliament 28,115,658/. 7s. 3d. Votes in Committee of Supply 41,186,349/. 11s. lid. Which sum of..69,302,007/. 19s. 2d. was the total amount to be provided for out of Taxes. We expended on Fortifications, the money (raised on Annuities) . 1,050,000/. 0s. Od. Total expenditure provided for by Taxes and Loan . 70,352,007/. 19s. 2d. Money advanced by way of Loans, which will be here¬ after repaid by the borrower, 752,180/. 18s. lid. Debts redeemed. 25,021/. 17s. 8d. and. 1,022,500/. 0s. Od. Making a total of . 1,047,521/. 17s. 8d. Temporary advances on Deficiency Bill 9,073,018/. 9s. 6d. Balance in Exchequer Account to begin the year 1863-64 . 7,263,838/. 19s. fid. Making a total of. 88,488,568/. 4s. 9d. And according to this account the ordinary income was . 70,603,560/. 15s. Id. Whilst the ordinary expenditure was 69,302,007/. 19s. 2d. 39 Excess of ordinary income over expenditure 1,301,5522. 15s. lid. But we spent, besides the ordinary expenditure, on fortifications . 1,050,0002. 0s. Od. Leaving .. 251,5522. 15s. lid. So that the great result of the financial year was that we saved .. < 251,5522. 15s. lid. which was applied, according to Act of Parliament, in the purchase of Stock; that is in the redemption of so much of our National Debt. My task is now accomplished. I have endeavoured to explain the account now before you, and I have entered with as much detail as my time will permit into the items of Expenditure and the items of Income; that is, I have shown you how the money comes in, and how the money goes out. I have not at¬ tempted to find fault with or to defend the policy of any measure, either relating to Taxation or Expenditure. I will not deny my belief that the Expenditure is capable of reduction, and that the Taxation is capable of improvement; but this I assert without fear of contradiction, that the public servants of this country, as a class, are rather underpaid than overpaid; and I also wish to express my firm conviction that the gene¬ ral duties relating to the collection of the revenue are performed with intelligence and with integrity. In the upper department of the Government especi¬ ally, the very important duties devolving on them are performed by a set of men of the highest character and of great ability; and I am confident that I could 40 easily name a score of men who could earn three times the income they now receive if they were to leave the public service, and devote their abilities to the pro¬ motion of their own pecuniary interests. The Government of no country in the world is, I am satisfied, served by more faithful public servants. We must be careful how we blame Ministers for incurring expenses which the country loudly calls for; and for the grant of public money for purposes which the public at large, not Members of Parliament, insist on being expended. It is no small satisfaction to believe that the days of peculation by public men are at an end in this country. Every man is expected to perform a fair day’s work for a day’s pay of public money; and I, for one, so long as I have the honor of being a Member of Parliament, am willing to give my support to any financial Minister who is honestly striving, as far as I can judge, to maintain the efficiency of the] public service with the smallest amount of burthen imposed on the tax-paying portion of the community. PRINTED BY J. S. CLARKE, MARKET-PLACE, PETERBOROUGH. ‘}jf tr \yk 3jf H' fcrik .‘O' ^ v Vj fXC OvKO V^'5-4-4 £ <> f ‘ . ft