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They therefore deemed it most advisable to inform the House of the
whole particulars, and to leave the decision thereon entirely to the
judgment of the House, without suggesting any opinion of their
own. a No proceeding was taken by the House upon this report.
But on July 16, 1861, a petition was presented from Mr. Irwin,
one of the persons implicated by the committee in the fraudulent
transactions therein referred to, complaining of the conduct of
Mr. Lever ( a member of the House) as managing director of the
Galway Company. Mr. Lever not being in his seat, the petition
was withdrawn, but it was again brought up on July 19, when Mr.
Lever denied its allegations, and challenged enquiry. On this occasion
the petition was ordered to be printed for the use of members only. On
July 22, a motion was made that it be referred to a select committee,
upon which Mr. Lever entered into a detailed refutation of the
charges it contained against himself. The general sense of the
House' being against taking any further notice of the matter, the
motion was then withdrawn. b

Meanwhile the government had determined that the Galway con-
tract should proceed, and inasmuch as the select committee had ab-

First Report, Com", on Packet * Second Report, Ib. p. 529.
Contracts, Com. Pap. 1860, v. 14, b Hans. D. v. 164, pp. 077, 1178,
pp. 56-58. 1286.


stained from recommending the cancelling thereof, notwithstanding Galway
the adverse conclusions they had arrived at respecting it, the secre- contract,
tary of the Treasury, in Committee of Supply, on August 9, 1860,
proposed a vote of 60,000. as a first instalment upon the same. In
submitting this motion, he frankly acknowledged the weight of
censure resting upon the contract, from the terms of the report of
the select committee, but nevertheless he expressed his ' strong
feeling that arrangements of this kind could not be set aside on mere
grounds of general policy or impolicy,' and declared that he did not
believe the House had ever refused to vote the estimate for a
contract merely on such grounds. To do so in the present instance,
when more than a year had elapsed since the contract had been
made, would, he contended, be unfair to the company. He further
showed that the fraudulent transactions, adverted to in the second
report of the committee, had taken place between parties who were
no longer connected with the company, and therefore it would be
wrong to visit the consequences of their misdoing upon the existing
directors and shareholders, who were entirely blameless in the
matter. The bargain made with the company might have been
a bad one for the public, but it would be still worse for the House,
under any pretence, to sanction a breach of faith, and establish a pre-
cedent of repudiating inconvenient obligations. This vote, notwith-
standing considerable opposition, was finally passed, on division, by
a large majority.

Their contract being thus acknowledged and confirmed by Par-
liament, the company endeavoured to fulfil their engagements. But
they did not succeed in accomplishing that which they had under-
taken, and after repeatedly receiving extensions of time, and other
indulgences, they were at length informed by the postmaster-
general that their contract was at an end. This decision naturally
excited much dissatisfaction among the friends of the company, and
on June 14, 1861, a committee was moved for, in the House of
Commons, to enquire into the circumstances attending the termi-
nation of the contract. The ministry did not oppose this motion
(although it was characterised by leading members on the other side
of the House as an undue encroachment upon the functions of the
executive government), and it was agreed to without a division.
The committee carefully investigated the case and, on July 23,
made an elaborate report thereon. In it they expressed their opinion
' that the postmaster-general was justified in declining to continue
a contract which, in his judgment, at the time of its determination,
the company could not carry out efficiently.' But, they added, they
had reason to believe that ere long the company would be in posses-
sion of an efficient fleet of steamships, and should it be advisable to

Hans. D. v. 103, pp. 1071-1159.





Ked Sea
and India

re-establish postal communication between the west of Ireland and
America, they thought the Galway Company were deserving of the
favourable consideration of the government." 1 This appears to have
been agreed to by the government, for, on August 6, Lord Palmer-
ston informed the House, that whenever there was a reasonable
prospect of the company being able to fulfil their engagements, they
would give a favourable consideration to their claims. 6 His lord-
ship renewed these assurances on June 24, 1862, f and again
on February 9, 1863.*? Whereupon, on March 20, 1863, Mr.
Baxter moved a resolution, declaring that the House was not
prepared to grant a sum of money to the Galway Packet
Company. He grounded his motion upon the allegation that
the renewal of the contract was wholly uncalled for, and could only
have proceeded from corrupt political motives. Lord Palmerston
repudiated this accusation, and contended that there had been
sufficient public reasons to justify the government in giving the
company another trial. On division, the motion was negatived by a
large majority. 11 On May 4, the government formally notified the
company of their willingness to renew the contract. On July 21, on
motion of Mr. Peel (the secretary of the Treasury), it was resolved,
without debate, that the said contract be approved. 1

Having disposed of the subject of postal contracts, the committee
of 1860 turned their attention to the remaining branch of enquiry,
concerning telegraph lines, to which their third report is devoted.
It briefly describes the various lines of Ocean telegraphs, on behalf
of which the executive government had entered into pecuniary agree-
ments. One of these was the Red Sea and India Telegraph line,
which was incorporated in 1859, and afterwards attained such an
unenviable notoriety. The committee explained the circumstances
under which the government had undertaken to assist this company.
They arose out of the political importance attributed to the project,
and its uncertainty as a commercial speculation. This induced the
government to guarantee 4^ per cent, on the capital of 800,000/.
for a period of fifty years. Unfortunately, whether intentionally or
otherwise does not clearly appear, this guarantee was not made con-
ditional on success, as in similar cases, but was absolute. It was
stipulated, however, that an Act of Parliament should be obtained
to confirm and carry out the agreement. This Act was brought in,
proceeded upon, and passed as a private BilU As originally intro-
duced, there was nothing in the Bill to show the nature and extent
of the pecuniary obligations incurred by the government. It is true

d Report on Royal Atlantic Steam
Navigation Company, Com. Pap.
1801, v. 12, p. 13.

" Hans. D. v. 164. p. 1891.

' Ib. v. 1G7, p. 1023.

Ib. v. 160, p. 187.
h Ib. p. 1691.

1 Ib. v. 172, pp. 66, 1202 ; but see
Ib. v. 173, p. 1456.
J 22 & 23 Viet. c. 4.


that in the House of Lords a copy of the agreement was afterwards
added to the Bill, by way of schedule ; but whilst under considera-
tion in the Commons, it contained no information as to the condi-
tions of the agreement, whereby members could judge of its propriety
or sufficiency. 11 The line had scarcely gone into operation before it
was evident that it was a complete failure, and all attempts to
remedy the disaster proved ineffectual. In taking notice of this
result, the committee abstained from commenting upon the mode of
constructing the telegraphic cable, and confined themselves to an
investigation of the contract itself. As to the conditions under
which such contracts should be entered into, the committee would
not venture to make any suggestions. But- they pointed out that it
was obviously not in the form of a private Bill that agreements of
this kind could be effectually brought under the notice and control
of Parliament ; and they were of opinion that no power to guarantee
dividends or interests, on the part of government, should in any
case be given by a private Act. 1 As the line continued inoperative,
and as doubts were entertained whether the government was strictly
bound to continue their annual payments to the shareholders under
such circumstances, the government, actuated by a high sense of
honour, and bearing in mind that, without doubt, the public had
understood that the agreement was unconditional, the possibility of
entire failure, after completion, having been overlooked on all sides,
introduced a Bill to declare ' that the guarantee contained in the
said agreement was not intended to be and is not conditional on the
line of telegraph of the company being in working order.' The
law officers of the crown had given their opinion that, under the
circumstances of the case, the government were wholly exonerated
from continuing to pay the money ; nevertheless, as a question of
good faith, ministers persevered in the Bill, and it became law. m
Until August 4, 1908, the government hold themselves liable for
the sum of ,36,054 per annum to meet this obligation. A moiety of
the amount, however, is repaid out of the revenues of India. 11

After the introduction of this Bill, the House proceeded to give
effect to the recommendations of the committee, though not pre-
cisely in the manner they had suggested, by the adoption of the
standing order already noticed, which prescribed the course of
procedure in respect to private Bills which are intended to authorise,
confirm, or alter, any contracts with government, so as to ensure
that the attention of Parliament shall be formally directed thereto.

k Third Report of Contracts, Com. Viet. c. 4.

Pap. 1860, v. 14, pp. 665, 666. Hans. n Com. Pap. 1867, v. 39, p. 739 ;

D. v. '.61, p. 250. Ib. 1868-9, v. 6, p. 619 ; Ib. 1872,

1 Tmrd Report, p. vi. v. 8, p. 78.

m Hans. D. v. 161, p. 2152. 24 Ante, p. 779.


The foregoing cases afford ample illustration of the

effectual control which is constitutionally exercised by

the House of Commons over the grant of public money.

But these examples have been confined to particular

Eight of items of proposed expenditure. There still remains an

to^us? 6 undisputed right, on the part of the House of Commons,

the sup- t o withhold altogether the supplies asked for on the part

of the crown. Before the introduction of parliamentary

government, this formidable instrument of attack was

often made use of to wrest from an arbitrary monarch

the redress of grievances. But now there is no longer

any need to resort to such an extreme measure, and this

once dreaded weapon * lies rusty in the armoury of

constitutional warfare.'

In 1781, Mr. Thomas Pitt proposed to delay the granting of the
supplies for a few days, in order to extort from Lord North a pledge
regarding the war in America. It was then admitted that no such
proposal had been made since the Revolution ; and the House
resolved to proceed with the Committee of Supply by a large
majority.? In the same session, Lord Buckingham moved, in the
House of Lords, to postpone the third reading of a Land Tax Bill,
until explanations had been given regarding the causes of Admiral
Kempenfeldt's retreat, but did not press it to a division.^

On February 22, 1864, Mr. Bernal Osborne moved to postpone
the consideration of the navy estimates for three weeks, until the
papers relating to the Schleswig-Holstein question had been laid on
the table, the production of which he was of opinion had been un-
warrantably delayed. But the leaders of the Opposition were not
prepared to justify this extreme proceeding, though agreeing that
these papers ought to have been sooner produced, and the motion
was negatived on division.

Solitary < The precedent of 1784 r is the solitary instance in

LCe ' which the Commons have exercised their power of de-
laying the supplies. They were provoked to use it by
the unconstitutional exercise of the influence of the
crown ; but it failed them at their utmost need, and the
experiment has not been repeated. Their responsi-
bility, indeed, has become too great for so perilous a

Parl. Hist. v. 22, p. 751. Ib. p. 865. T See post, p. 823.


proceeding. The establishments and public credit of
the country are dependent on their votes, and are not
to be lightly thrown into disorder. Nor are they driven
to this expedient for coercing the executive, as they
have other means, not less effectual, for directing the
policy of the state.' 8

The resolutions of the Committee of Supply are re-
ported to the House on a future day, they are then commit-
agreed to, disagreed to, or re-committed, as the case may ^ j
require. If, on consideration of the report, it be thought
necessary to increase the sum granted by the Committee
of Supply, the resolutions proposed to be increased must
be re-committed. The House may indeed lessen the
sum proposed to be granted without re-committal, but
to increase the amount would be to impose a charge
not previously sanctioned by the committee.

' But these resolutions, although they record the
sanction of the House of Commons to the expenditure
submitted to them, and authorise a grant to the crown for
the objects specified therein, do not enable the govern-
ment to draw from the Consolidated Fund the money so
appropriated. A further authority is required, in the
shape of a resolution in Committee of Ways and Means, Votes in
which must be embodied in a Bill, and be passed through SeTo?"
both Houses of Parliament, before practical effect can be Wa y s and

i i m Means.

given to the votes in supply, by authorising the Ireasury
to take out of the Consolidated Fund, or, if that fund be
insufficient, to raise by exchequer bills fc on the security
of the fund, the money required to defray the expendi-
ture sanctioned by such votes. The votes in Committee
of Supply authorise the expenditure ; the votes in Com-
mittee of Ways and Means provide the funds to meet
that expenditure.

s May, Const. Hist. v. 1, pp. 470- Hans. D. v. 161, p. 1309 ; v. 165,

472. And see Hearn, Govt. of Eng. p. 131 ; v. 180, p. 285 ; Report on

pp. 357-360. Public Moneys, Com. Pap. 1857,

' For the origin, history, and prac- 2nd Seas. v. 9, pp. 532-538. See

tice, in regard to exchequer bills, see also post, v. 2.

VOL. I. 3 E


' The manner in which this provision is made is as
follows : As soon after the commencement of the session
as possible, when votes on account of the great services
have been reported, a resolution is proposed in Com-
mittee of Ways and Means for a general grant out of
the Consolidated Fund towards making good the supply
granted to her Majesty.

' It is the salutary, judicious, and almost invariable rule of the
House not to enter upon questions of Ways and Means until the
House has passed its judgment upon those items of the expenditure
of the year which are at once the greatest and most variable viz.
the naval and military estimates ; ' and the chancellor of the ex-
chequer ordinarily refrains from making his financial statement
until these estimates have been passed."

' This grant never exceeds the amount of the votes
actually passed in Committee of Supply ; upon this
ways and resolution a Bill is founded, which passes through its
various stages^ and finally receives the royal assent, at
a very early period of the session ; and then, but not
before, the Treasury are empowered to direct an issue
of the Consolidated Fund to meet the payments autho-
rised by the vote in supply of the House of Commons/

It is one of the especial duties of the Speaker of the House of
Commons to see that no Ways and Means Bill covers a larger
amount than has been already voted in Committee of Supply, and
agreed to by the House. After the votes in supply have been
agreed to, the Speaker officially transmits a copy of them to the
comptroller of the exchequer, to acquaint him for what purposes,
and in what amounts, the Commons have sanctioned the outlay of
public money. w

1 The constitutional effect of this proceeding is that,

- Hans. D. v. 164, p. 866. Con- Com. Pap. ]863, v. 7, p. 479. See
cerning exceptions to this practice, Exchequer Act, 4 Will. IV. c. 15,
see post, p. 788. For instances of 11. And for examples of Ses-
unusual delay in passing estimates, sional Ways and Means Acts, see
see Hans. D. v. 207, pp. 1888, 1897. 13 Viet. c. 3, 7; 21 Viet. c. 6,

* May, Parl. Prac. ed. 1883, p. &c.

683 ; Hans. D. v. 136, pp. 1310, 1395. Com. Pap. 1857, 2nd Sees. v. 9,

Second Rep. Com*, of Pub. Accounts, p. 521.



until the Queen and the House of Lords have assented
to the grant of ways and means, the appropriation of
the public money directed by the vote in supply of the
House of Commons is inoperative. These general grants
oT ways and means, upon account, provided by suc-
cessive Acts of Parliament during the session, in anti-
cipation of the specific appropriations embodied in the
Appropriation Act passed at the close of the session, may
be viewed as the form in which Parliament considers it
most convenient to convey their sanction to the ad
interim issue of public money upon the appropriation Ad in-
directed by the Commons alone, relying upon their final vtnces^f
confirmation being obtained at the close of the session. 3 " mone y-
The final grant of ways and means to cover the whole
of the supplies voted in the session is always reserved
for the Appropriation Act ; thus, although the House of
Commons at an early period of the session might have
voted the whole of the supplies of the year, they could.
still hold their constitutional check upon the minister
by limiting the grant of ways and means to an amount
sufficient only to last such time as they might think
^proper to give him the means of carrying on the public
service, and they are by such limited grants at all times
enabled to prevent the minister from dissolving or pro-
roguing Parliament.' y

When the first report of the Committee of Supply Commit-
has been received by the House, and agreed to, a day ways an
is appointed for the House to resolve itself into a com- Means,
mittee ' to consider of ways and means for raising the
supply granted.'

It is in the Committee of Ways and Means that the The
budget, or financial statement of the chancellor of the *
exchequer, is usually made. In 1833, Mr. Hume moved

x See post, p. 823. the Chanc. of Excheq. observations

y Keport on Public Moneys, Com. in Hans. D. v. 136, pp. 1310-1326

Pap. 1857, Sess. 2, v. 9. Memo, on 1395.

Financial Control, pp. 26, 27. See

3 E 2


The an amendment to the motion for the Speaker to leave
udget. t ] ie gjjajj. O g O m f; Committee of Supply, the object of
which was to compel the chancellor of the exchequer to
open the budget before the army and navy estimates
were voted, but the amendment was negatived without
a division. 2 But several instances are cited by May
wherein the budget was brought forward in Committee
of Supply, or of Ways and Means, before the usual votes
for the service of the year had been taken. 8

The introduction of the budget has been thus de-
scribed :- ' Before, or soon after the close of each
financial year b [which ends on March 31], the chancellor
of the exchequer submits to the House of Commons a
general statement of the results of the financial measures
of the preceding session, and gives a general view of the
expected income and expenditure of the ensuing year ;
he intimates at the same time whether the government
intends to propose the repeal of any taxes, or the rais-
ing of money by the imposition of taxes, or by loan, or

Some years ago it was customary to estimate the revenue of the
coming year on an average of preceding years : after a time, to
base it on the receipts of the previous year ; but, in order to allow
for increase of population and consumption, it has gradually become
the practice to estimate the revenue at a higher amount than the
actual yield of the past year. c

This exposition of the state of the finances for the
past and ensuing year gives the House of Commons all
the necessary information to enable them to exercise an
important check upon the minister, by limiting his
means of raising money to the sums actually required
for the public expenditure. If his statement shows a

Mir. of Parl. 1833, p. 964. the financial year. See Com. Pap.

May, Parl. Prac. ed. 1883, p. 1868-9, v. 35, p. 813.

667. c Chanc. of Excheq. (Sir S. North-

b Changes have been made from cote), Hans. D. v. 218, p. 644 (Mr.

time to time, in the termination of Gladstone), Ib. p. 993.


larger surplus revenue than the House of Commons
considers it prudent to leave as a margin to the govern-
ment, pressure is immediately brought to bear upon it
to procure a reduction of taxation ; d if, on the other
hand, the minister shows that the revenue will be
insufficient to meet the expenditure, it rests exclusively
with the House of Commons to grant or to refuse the
demands which may be submitted to them for meeting
that deficiency. The intention of this budget statement
is not only to lay before the House of Commons the
scheme of taxation for the ensuing year, but to satisfy
them that the public income to be raised in the year
will be sufficient, and no more than sufficient, to meet
the expenditure which the government proposes to
incur within the year.' e

In 1876, the chancellor of the exchequer included
for the first time in his budget a statement of the
operations of the Public Works Loan Commissioners,
under the amending Act of 38 & 39 Viet. c. 89 ; for
the purpose of bringing all loan transactions under the
notice and control of Parliament ; and of obtaining
authority to raise funds to provide for local loans
during the ensuing year/

After the chancellor of the exchequer has concluded Questions
his financial statement, it is customary for members to Budget. 8
rise and put questions to the finance minister with
respect to any point which may require further ex-
planation. This is a convenient practice, and is much
to be preferred to that of raising, at once, a general
debate upon the budget, as it enables the whole minis-
terial scheme to be laid before the country in a com-
plete and intelligible shape g

d Remarkable instances of yield Lewis (Uhanc. of Excheq.), Ib. p.

of revenue in excess of estimate, 519. For the derivation of the word

Hans. D. v. 210, p. 615 ; v. 218, p. ' Budget,' see Statistical Jour. v. 29,

640. p. 325.

e Rep. on Public Moneys, Com. f Hans. D. v. 228, p. 1111.

Pap. 1857, Sess. 2, v. 9 ; Memo, on * Gladstone (Chanc. of Excheq.)

Financial Control, by Sir G. C. Hans. D. v. 183, pp. 165, 411.


Measures As a general rule, all propositions directly dealing
sTdered w i tn the revenue derivable from customs, excise, or
Budget assessed taxes, whether by way of increase or diminu-
tion, ought to be treated in connection with the financial
measures of the year, and should form part of the
budget of the chancellor of the exchequer ; so as to
admit of the House exercising its constitutional control
over all such measures at one and the same time, view-
ing them as parts of one comprehensive plan. h But
cases will sometimes arise wherein a departure from
this rule is expedient : as, for instance, when there
are reasons that make it desirable that a proposed duty
should take effect from an earlier period of the year
than that at which the financial statement is made ; *
or, where the object to be attained has no special
reference to the revenue, but is for the regulation of
trade. j

It is a recognised parliamentary rule, that no im-
portant measure can be advantageously considered by
the House immediately after the statement of its prin-
ciples by the minister of the crown. Thus the chancellor
of the exchequer submits the financial statement, but
never asks the assent of the House thereto until a future
day ; or if, for financial reasons, the affirmation is asked

Online LibraryAlpheus ToddOn parliamentary government in England : its origin, development, and practical operation (Volume 1) → online text (page 75 of 85)