NAVAL AND MILITARY PENSIONS 1 May 1822 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 5 Speeches and Evidence [1819]
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The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 5 Speeches and Evidence 1815-1823.
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NAVAL AND MILITARY PENSIONS
1 May 1822
The Chancellor of the Exchequer moved a series of resolutions recommending a plan for spreading the burden of pensions, which arose principally from the war, equally over a period of 45 years; it was proposed to offer a fixed annuity of 2,800,000l. for that period to contractors who would undertake to pay the pensions. The pensions amounted at present to 5,000,000l. annually and they would probably be reduced to 300,000l. after 45 years, by ‘the natural decrement of human life’. ‘The transaction’, he said, ‘would stand completely clear of the sinking fund.’
Mr. Ricardo was astonished how ministers could come down with grave faces, and propose such a measure, after all the anxiety they had expressed on the subject of the sinking fund. This plan was nothing more nor less than an invasion of that fund. The chancellor of the exchequer had said, that these annuities were a part of the debt of the country. This he (Mr. R.) admitted. But, supposing the object of ministers was, to relieve the country from taxation to the amount of 2,200,000l., and they took that sum from the sinking fund, he would ask them to compare the situation in which the country would be placed at the end of 45 years, with that in which it would stand at the expiration of the same period by adopting the plan now proposed. In both cases the object would be to raise 2,200,000l. per annum; but, at the end of 45 years, acting on the plan now introduced, would not the country be more in debt, than it would be if the sum were taken immediately out of the sinking fund? Now, if this proposition were true—and it could not be controverted— was it not, he demanded, an invasion of the sinking fund? He, however, had no objection to it on that account: but it was the greatest inconsistency in the right hon. gentleman to say that the sinking fund was to be held sacred, while he came to the House with a proposition that would leave the country more in debt 45 years hence than if 2,200,000l. were taken from it at once. He agreed with his hon. friend (Mr. Gurney), that the debt which was the object of this proposition carried a sinking fund along with it. Year by year, as lives dropped off, it was decreasing; and what was the object of the sinking fund but to place all public debt in the situation of this particular debt? Thus, if 30,000,000l. were owing in one year, to reduce it to 29,500,000l. in the next; then to 29,000,000l., then to 28,500,000l.; and so on progressively, until at last the whole was liquidated. A less beneficial effect would be produced by prolonging the debt beyond the term to which it would extend, but for this plan, which he could not help considering an entire fallacy.
The resolutions were agreed to.
3 May 1822
On the report stage, Mr. Hume moved as an amendment that the contract be made with the Commissioners for the Redemption of the National Debt.
Mr. Ricardo said, that the proposition of the hon. member for Montrose was the same as that of ministers, only he wished the contract to be made on the most advantageous terms. Whatever bonus the private contractor obtained, would be a clear loss to the country. There could be no doubt that, if the sum required were now taken from the sinking fund, at the end of 45 years the country would be in a better situation than if the money were borrowed of individuals. He was an enemy to all complicated schemes, and was for avoiding a crooked path when there was a straight one before him leading to the same end. The obvious course was to take the sum from the sinking fund.
The House divided: for the amendment, 56; against it, 135. Ricardo voted for the amendment.
[See further p. 191.]
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