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SIR STAFFORD NORTHCOTE-BUDGET OF 1862.

Wilkes would be inconsistent. The claim of right of search in free ports had been abandoned in all civilized states, and the United States governments had been specially active in abolishing it. "This is the very thing the British captains used to do," said Mr. Lincoln. "They claimed the right of searching American ships and carrying men out of them. That was the cause of the war of 1812. Now we cannot abandon our own principles. We shall have to give these men up, and apologize for what we have done."

Happily the terms of the despatches from England were, as Mr. Seward said, courteous and friendly, not dictatorial nor menacing, and the task of reconciling his government to a pacific course was therefore the easier. The commissioners and the secretaries were liberated, and were sent to this country in a British man-of-war. It was no long time since international courtesies had been exchanged the eldest son of the queen had been welcomed with enthusiasm in the States, and England was grateful. In the despatch itself the real horror which would be felt at the approach of hostilities between the two countries was suggested. But though this feeling was general, there was still a strong party on each side which maintained a hostile attitude by respectively abusing England and speaking with dislike, if not with contempt, of the Northern States of America, while certain newspapers on both sides accentuated the invective and helped to maintain the ill-feeling.

Sir Stafford Northcote had been one of the longest if not one of the most effective speakers against the budget of 1861, and though he had apparently not forgotten that he was once private secretary to Mr. Gladstone, and always spoke of the chancellor of the exchequer as "my right honourable friend,” he persisted in contending that the calculations for the financial year would be fallacious. On this occasion Sir Stafford Northcote may be said to have first come prominently to the front and to have achieved decided success as a parliamentary speaker, though he was already known as an authority in figures, for he had sat, as it were, at the feet of the great Gama

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liel of finance. Mr. Disraeli said that the chief credit of the debate on the opposition side belonged to Sir Stafford Northcote, and doubtless the attack on the budget was sharp and the arguments against it were carefully arranged, but we have seen how the measure passed, and the paper duties were abandoned in spite of the forebodings of those who deplored the tendency to remove all taxes on cheap newspapers, and who, not having altered their views as Mr. Gladstone had altered his, still regarded such imposts as necessary, or at least desirable, for "preventing the circulation of bad matter;" a result, by the by, which the old oppressive taxes on cheap publications had never effected, as could be shown by turning to the files (if any exist) of many scandalous periodicals issued between the years 1830 and 1850. When the budget for 1862 was brought forward both Mr. Disraeli and Sir Stafford Northcote were ready to renew the attack. That budget, though not so elaborate as the preceding one, was, like some of its predecessors, a remarkable exposition of the resources of the country and of a scheme for providing an adequate revenue notwithstanding adverse circumstances and an expenditure, some items of which, like the sum spent for fortifications, had not been approved by the chancellor of the exchequer.

The civil war in America had already begun to make its effects felt. In the first quarter of the year our exports to the States had diminished from £21,667,000 to £9,058,000, being a difference of no less than £12,609,000. There had been great distress, enforced idleness, and a consequent enormous loss of production. The harvest of 1861 had been deficient in quantity, and the winter of 1860 had been one of such severity that the distress in London and our large towns strained the provisions of the poor-law beyond their ordinary limits, and at last, so far as London was concerned, almost caused a break-down in the system, which had to be largely supplemented by private charity and public subscription. All these causes operated to diminish the revenue, and yet so successful had been the financial operations of the previous year and the working of the commercial treaty with

France, that the revenue showed an increase of £2,000,000. While our trade with the United States had seriously diminished, that with France had increased in a single year from £2,190,000 to £6,910,000. Unfortunately there had been a nearly corresponding increase of expenditure. The chancellor of the exchequer announced that the real expenditure of the past year was much greater than the estimate by means of supplementary grants in 1861 and 1862, principally in reference to the despatch of troops to Canada and a small amount to China; so that the actual expenditure of the past year was £70,878,000. The total expenditure of the year 1860–61 was £72,504,000. The revenue of the past year was £69,670,000. This was a decrease, taking into account circumstances connected with the financial year, of £809,000. This must be considered satisfactory, when it was remem,bered that in 1861-62 they had parted with three items of revenue-by reducing the income-tax ld. in the pound, making £850,000; the paper duty, involving a loss on the last six months of the financial year of £665,000; while no malt credit had been taken up, as was the case in 1860-61 to the extent of £1,122,000. It was not a fact that the revenue was declining. In the customs, on the first three quarters of last year there was an increase of £468,000, but in the last quarter there had been a decrease of £100,000. Yet although the gross revenue had fallen off by £609,000, the customs had exceeded the estimate by £464,000, the stamps by £130,000, taxes by £10,000, the income-tax by £15,000, and the miscellaneous by £81,000. In the excise there had been a falling-off amounting to £456,000; there had been a loss on spirits, hops, and paper. With regard to the estimates, that of the China indemnity, which had been placed at £750,000 had only realized £478,000 up to September, but when the two quarters due in March were paid there would be a gross receipt of £658,000. There were other deductions which would make the whole sum actually received this year from this source only £266,000. The total estimate of expenditure was £70,040,000, the estimated total revenue would be £70,190,000. There

was no prospect of the remission of taxes, but rather of heavy expenditure which would make additional taxation necessary. The total result of the treaty of commerce, including the increase in foreign and colonial exports, showed an amount of £10,000,000. The government had determined to do without a surplus, and to impose no new taxes, reserving to themselves the privilege of taking the necessary steps to meet any contingency which might arise. There could be no remission of taxes, but the burden of the country would be lighter by £600,000 or £700,000. Demands had been made on the government by various interests, to which Mr. Gladstone referred, but it was proposed to make some changes in other matters. The increased sobriety of the people and a diminished power of consumption had caused some falling off in the estimated amount derived from the spirit duties, and it was not proposed to touch them. The sugar duties being classified duties were unequal in their pressure; but the difficulties of removing this classification were so great that no change could be effected without a complete inquiry into the subject, and he would consequently be prepared to assent to a committee for the purpose. With regard to the malt credits, no case for a change had been made out, and an alteration would deprive the revenue of £1,300,000 a year. The minor duties on exports and imports, while entailing an amount of labour in collection which gave them a claim to repeal, yet amounted to £182,000; and with a surplus of £150,000 it was not possible to deal with them, besides which they afforded a means to the Board of Trade of obtaining valuable statistical information. But he was willing to grant an inquiry into the subject. With regard to the wine duties, there was a favourable increase in the trade; but on the whole it was determined to retain what was called the alcoholic test, but altering and modifying it by reducing the four scales to two, admitting all wines from 18 to 26 degrees of alcohol at a duty of 18., while from 26 to 42 the scale would be raised from 28. 5d. to 2s. 6d., and above 45 an additional duty of 3d. on every additional rise of strength. This would yield

RETRENCHMENT-DEBATE ON FINANCE.

a net gain of £15,000 a-year to the revenue. Coming to the hop duties the chancellor of the exchequer announced that it was not possible to surrender duties which yielded £300,000 a-year on the average. He proposed, however, to do something in the way of commutation by readjusting the system of brewers' licenses and including in them a charge for the hop duty; while, at the same time, relief would be given to smaller brewers in respect of the charge for their licenses. The result of this plan would be to secure to the revenue nearly as much duty as now, while it would cause a complete free trade in home and foreign hops. The customs and excise duty on hops would be repealed from next September; and it was also proposed, as regarded private brewers, to exempt from license all brewing carried on by the labouring classes. By this financial operation there would be a loss to the revenue of £45,000.

These being the proposals of the government, Mr. Gladstone reviewed the financial results of the past three years. He pointed out that it was an error to suppose that the public expenditure was still growing, for that of 1861 was less than that of 1860, while in the year ensuing there was a decrease in the estimates of over £700,000. Putting aside new items of expenditure which had never been included in the estimates before, the actual diminution was £1,700,000. But the level of our expenditure still demanded attention, for it was a higher level than could be borne with, comfort and satisfaction by the people, or than was compatible with a sound condition of finance. The growth of expenditure was partly owing to the growing wants of the country; then to a sense of insecurity which had prevailed in the country; next to the influence of the establishments and expenditure of other nations; and lastly, to special demands which had arisen out of exigencies which had sprung up-demands which were in substance, and in everything except the name, war demands. "With respect to the state of establishments and expenditure abroad," said Mr. Gladstone, "I do not know whether honourable members, in their perusal of the journals and in their observation of the condition of other countries,

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have fully comprehended what a race the governments of the world are running, and at what a fearful pace outside of England national obligations are now in course of accumulation." Nearly all countries were in the same predicament, and the only flourishing budget he had seen was that of the Ottoman Empire. During the last twenty years France had added 250 millions to her debt, of which 180 millions was not attributable to war expendiAustria and Russia had added to their debts, and the financial year of 1861 alone had added to the state debts of all the great countries 200 millions of mouey. England had not added to her debt, but among extraordinary expenses there was the cost of the war with China, which had been £7,054,000. In the last three years, what might be called war expenditure, including China, New Zealand, and the despatch of troops to North America, was £8,600,000. To meet this extraordinary expenditure the income-tax had risen since 1859 by three millions, and, including the spirit duties and other imposts, there had been taxes imposed exceeding five millions. The taxes reduced or abolished amounted to over four millions. Their extraordinary resources were now at an end; and if they looked into the future, and asked themselves how provision was to be made for it, they must make their reckoning without these resources. About eleven millions had been devoted in the last three years to extraordinary expenditure, of which six millions had been met by extraordinary resources, and five millions by taxes drawn from the people. As regarded the revenue it had increased since 1858-59 by upwards of four millions in 1861-62. We had passed through exceptional years without going into the market for loans, but, as he had remarked, all other extraordinary resources were now exhausted, and to meet casualties which might occur it was only to ordinary sources of revenue we had to look, and any difficulty which might be anticipated was only to be met by the application of the principles of true and strict economy.

The budget was attacked by Mr. Disraeli with his wonted vigour. He accused Mr. Gladstone of profusion; of having by the re

peal of the paper duty sacrificed a surplus of a million and a half for the sake of a barren triumph over the upper house. He had calculated his loss at £655,000, when it was £850,000. "The right honourable gentleman," he said, "never proposes a vote--and it falls to him to propose the most profuse votes that any minister in time of peace ever brought forward-he never does this without an intimation that he does not sanction in his heart the expenditure he recommends. . . . How is it that the party which preaches retrenchment and reduction-who believe all our estimates, especially the naval and military estimates, are much too extravagant-who are opposed to fortifications, and who do not much like iron ships-how is it that this party always support a minister who is bringing forward these excessive estimates and who provides for this enormous expenditure? Well, that is a great question. This at least we know, that while the spendthrift is weeping over pencewhile this penurious prodigal is proposing this enormous expenditure--he always contrives to repeal some tax to gratify the interests or prejudices of the party of retrenchment. No wonder, then, we hear no longer the same character of the income-tax; no wonder we are no longer reminded of that compact entered into by the house and accepted by the country for its gradual and permanent abolition. Unless the house expresses, on a fitting occasion, its opinion, there is very little hope of our obtaining any redress in this respect. ... Who will deny that this position of affairs is peculiar and perilous? I remember some years ago, when the right honourable gentleman was at the head of a small party, not then absorbed in the gulf of Liberalism, that we heard much prattle about political morality. What then most distinguished the right honourable gentleman and his friends was their monopoly of that admirable quality. They were perpetually thanking God that they were not as other men, and always pointing their fingers at those unfortunate wights who sat opposite to them. Now we see the end of 'political morality. We see the position to which political morality has brought the finance of a great nation. I denounce this system

as one detrimental to the character of public men, and most injurious to the fortunes of the realm."

This was a telling example of what was regarded as a "damaging speech" from the leader of the opposition, but it had no very damaging effect, for the house knew pretty well that Gladstone had objected to the fortification scheme, and had spoken with no uncertain and no insincere voice against the growing tendency to increased expenditure. It was for this reason that the party of retrenchment trusted him, for they knew that if the time should come when retrenchment could be practised, he would be able to use his extraordinary financial skill to secure the results to which he had declared he looked forward with anxiety. No very lengthy reply was needed. After having answered some of these representations of his opponent, Mr. Gladstone reminded his hearers that the repeal of the paper duty was said to be an improvident proposal; yet the opponents of that measure proposed to part with £950,000 of tea duty, which would have been so much addition to the alleged deficiency. He was well content to be called by Mr. Disraeli the most profuse chancellor of the exchequer on record. He was satisfied to bear any epithets of vituperation he had already produced or might produce on a future occasion. It was not difficult to bear the abuse of the right honourable gentleman when he remembered that far better men than himself had had to suffer it. But he should be still more content if the effect of his opponent's speech was such as to bring the house and the country to a due sense of the gravity of the financial situation, and the necessity for a reduction of expenditure. With regard to the income-tax, he did not desire that it should be permanent; and if the country could be gorerned by something about £60,000,000 it could be done without- but it could not be abolished with an expenditure of £70,000,000. He did not yet despair of reduction and retrenchment, though he did not look forward to sweeping reductions.

To Sir Stafford Northcote, who had risen early to oppose his financial proposals, he hal already made a reply, in which he had sand

[graphic]

SIR STAFFORD HENRY NORTHCOTE

FROM A PHOTOGRAPH BY JOHN WATKINS

BLACKIE & SON, ONDON GLASGOW & EDINBUROH

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