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the Federal government was taking a course | 23d of December Lord Lyons wrote to Earl

calculated to provoke hostilities on the part of England, and that the demonstrations against this country made by a strong and turbulent party in America might carry the ministry there to acts of aggression or defiance which must lead to farther complications. To thoughtful men on both sides war between Britain and the Federal States would be scarcely less horrible or less fratricidal than the conflict already going on between North and South; and, though with perhaps too suggestive promptitude, it was decided to despatch troops to the number of 8000 to Canada, and it was argued that this step was necessary to show that we were in earnest in our representations, a great load of anxiety was felt to have been removed when Mr. Seward's reply was received, in a long and rather circumlocutory despatch, containing the satisfactory declaration that Captain Wilkes had acted without authority, and that the four persons taken from the Trent should "be cheerfully liberated."

The conclusion was an equitable one, and it should not be forgotten that the concession had to be made at a most critical juncture, when the Federal reverses had made the position of the government extremely difficult, and the popular ferment against England for her supposed sympathy and support of the Confederates was almost uncontrollable.

Whatever may have been the mistaken estimate of English feeling on the part of American agitators, it could not be denied that the prompt declaration of neutrality by our government had secured the Northern States against a probable French intervention on behalf of the South, while other states of Europe had followed our example. The foreign envoys at Washington were now, in obedience to their governments, earnest in their representations to Mr. Seward that he could not consistently with international law refuse to comply with the demands made by Great Britain.

Even before the prompt declaration sent by the Emperor of the French to Washington, M. Mercier, the French minister, had spoken to Mr. Seward in the same sense. On the

Russell: "M. Mercier went, of his own accord, to Mr. Seward the day before yesterday, and expressed strongly his own conviction that the choice lay only between a compliance with the demands of England and war. He begged

Mr. Seward to dismiss all idea of assistance from France, and not to be led away by the vulgar notion that the emperor would gladly see England embroiled with the United States in order to pursue his own plans in Europe without opposition."

This was a curiously worded communication when it is read side by side with an intimation by Lord Palmerston to the queen that he had been credibly informed that General Scott, while in Paris, had let it be understood that he was commissioned to propose to France to join the Northern States against England, in which event the French province of Canada would be restored to the empire. "General Scott," added the jaunty premier, "will probably find himself much mistaken as to the success of his overtures; for the French government is more disposed towards the South than the North, and is probably thinking more about cotton than about Canada." Whatever truth or falsehood there may have been in the rumour about General Scott, Lord Palmerston was right in his conclusion. General Scott may have been a political Captain Wilkes, assuming an authority for which he had no warrant, and this seems probable from the attitude preserved towards England by President Abraham Lincoln. He, as well as other sagacious leaders in the Northern States, must have seen that the British government was acting loyally in declaring the South to be a belligerent and announcing complete neutrality. We needed cotton as much as France did. A whole manufacturing industry in England was paralysed-a whole population in deep distress for the want of it, and, in addition to this, the Southern States would have maintained free-trade with England, and the North had imposed duties many of which were almost prohibitive in relation to English commerce. Mr. Lincoln recognized this, and with his clear good sense also saw that to persist in supporting the action of Captain

SIR STAFFORD NORTHCOTE-BUDGET OF 1862.

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Wilkes would be inconsistent. The claim of 1 liel of finance. Mr. Disraeli said that the right of search in free ports had been aban- chief credit of the debate on the opposition doned in all civilized states, and the United side belonged to Sir Stafford Northcote, and States governments had been specially active doubtless the attack on the budget was sharp in abolishing it. “This is the very thing the and the arguments against it were carefully British captains used to do," said Mr. Lincoln. arranged, but we have seen how the measure " They claimed the right of searching Ameri- passed, and the paper duties were abandoned can ships and carrying men out of them. That in spite of the forebodings of those who dewas the cause of the war of 1812. Now we plored the tendency to remove all taxes on cannot abandon our own principles. We shall cheap newspapers, and who, not having altered have to give these men up, and apologize for their views as Mr. Gladstone had altered his, what we have done."

still regarded such imposts as necessary, or at Happily the terms of the despatches from least desirable, for "preventing the circulaEngland were, as Mr. Seward said, courte- tion of bad matter;" a result, by the by, ous and friendly, not dictatorial nor men- which the old oppressive taxes on cheap pubacing, and the task of reconciling his govern- lications had never effected, as could be shown ment to a pacific course was therefore the by turning to the files (if any exist) of many easier. The commissioners and the secretaries scandalous periodicals issued between the were liberated, and were sent to this country years 1830 and 1850. When the budget for in a British man-of-war. It was no long time 1862 was brought forward both Mr. Disraeli since international courtesies had been ex- and Sir Stafford Northcote were ready to changed—the eldest son of the queen had been renew the attack. That budget, though not welcomed with enthusiasm in the States, and so elaborate as the preceding one, was, like England was grateful. In the despatch itself some of its predecessors, a remarkable exposithe real horror which would be felt at the tion of the resources of the country and of a approach of hostilities between the two coun- scheme for providing an adequate revenue tries was suggested. But though this feeling notwithstanding adverse circumstances and an was general, there was still a strong party on expenditure, some items of which, like the each side which maintained a hostile attitude sum spent for fortifications, had not been by respectively abusing England and speaking approved by the chancellor of the exchequer. with dislike, if not with contempt, of the The civil war in America had already begun Northern States of America, while certain to make its effects felt. In the first quarter newspapers on both sides accentuated the in

of the year our exports to the States had vective and helped to maintain the ill-feeling. diminished from £21,667,000 to £9,058,000,

being a difference of no less than £12,609,000. Sir Stafford Northcote had been one of the There had been great distress, enforced idlelongest if not one of the most effective speakers ness, and a consequent enormous loss of proagainst the budget of 1861, and though he duction. The harvest of 1861 had been dehad apparently not forgotten that he was once ficient in quantity, and the winter of 1860 had private secretary to Mr. Gladstone, and always been one of such severity that the distress in spoke of the chancellor of the exchequer as London and our large towns strained the pro“my right honourable friend,” he persisted in visions of the poor-law beyond their ordinary contending that the calculations for the finan- limits, and at last, so far as London was concial year would be fallacious. On this occa- cerned, almost caused a break-down in the sion Sir Stafford Northcote may be said to system, which had to be largely supplemented have first come prominently to the front and by private charity and public subscription. to have achieved decided success as a par- All these causes operated to diminish the liamentary speaker, though he was already revenue, and yet so successful had been the known as an authority in figures, for he had financial operations of the previous year and sat, as it were, at the feet of the great Gama- the working of the commercial treaty with France, that the revenue showed an increase was no prospect of the remission of taxes, lut of £2,000,000. While our trade with the rather of heavy expenditure which would United States had seriously diminished, that make additional taxation necessary. The with France had increased in a single year total result of the treaty of commerce, includfrom £2,190,000 to £6,910,000. Unfortun- | ing the increase in foreign and colonial exately there had been a nearly correspond- ports, showed an amount of £10,000,000. ing increase of expenditure. The chancellor The government had determined to do withof the exchequer announced that the real out a surplus, and to impose no new taxes, expenditure of the past year was much greater reserving to themselves the privilege of taking than the estimate by means of supplementary the necessary steps to meet any contingency grants in 1861 and 1862, principally in refer- which might arise. There could be no remisence to the despatch of troops to Canada and sion of taxes, but the burden of the country a small amount to China; so that the actual would be lighter by £600,000 or £700,000. expenditure of the past year was £70,878,000. Demands had been made on the government The total expenditure of the year 1860–61 by various interests, to which Mr. Gladstone was £72,504,000. The revenue of the past year referred, but it was proposed to make some was £69,670,000. This was a decrease, taking changes in other matters. The increased sointo account circumstances connected with the briety of the people and a diminished power financial year, of £809,000. This must be of consumption had caused some falling off in considered satisfactory, when it was remem- the estimated amount derived from the spirit bered that in 1861-62 they had parted with duties, and it was not proposed to touch them. three items of revenue- -by reducing the in- The sugar duties being classified duties were come-tax ld. in the pound, making £850,000; unequal in their pressure; but the difficulties the paper duty, involving a loss on the last of removing this classification were so great six months of the financial year of £665,000; that no change could be effected without a while no malt credit had been taken up, as complete inquiry into the subject, and he

, was the case in 1860-61 to the extent of would consequently be prepared to assent to £1,122,000. It was not a fact that the revenue a committee for the purpose. With regard was declining. In the customs, on the first to the malt credits, no case for a change had three quarters of last year there was an in- been made out, and an alteration would decrease of £468,000, but in the last quarter there prive the revenue of £1,300,000 a year. The had been a decrease of £100,000. Yet al- minor duties on exports and imports, while though the gross revenue had fallen off by entailing an amount of labour in collection £609,000, the customs had exceeded the esti- which gave them a claim to repeal, yet mate by £464,000, the stamps by £130,000, amounted to £182,000; and with a surplus taxes by £10,000, the income-tax by £15,000, of £150,000 it was not possible to deal with and the miscellaneous by £81,000. In the them, besides which they afforded a means to excise there had been a falling-off amounting the Board of Trade of obtaining valualle to £456,000; there had been a loss on spirits, statistical information. But he was willing hops, and paper. With regard to the esti- to grant an inquiry into the subject. With mates, that of the China indemnity, which regard to the wine duties, there was a favourhad been placed at £750,000 had only realized able increase in the trade; but on the whole £478,000 up to September, but when the two it was determined to retain what was called quarters due in March were paid there would the alcoholic test, but altering and modifying be a gross receipt of £658,000. There were it by reducing the four scales to two, admitother deductions which would make the whole ting all wines from 18 to 26 degrees of alcohol sum actually received this year from this at a duty of 1s., while from 26 to 42 the scale source only £266,000. The total estimate of would be raised from 28. 5d. to 28. 6d., aud expenditure was £70,040,000, the estimated above 45 an additional duty of 3d. on erery total revenue would be £70,190,000. There additional rise of strength. This would yield RETRENCHMENT-DEBATE ON FINANCE.

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anong extra

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 £15,000.

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 has 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 pame, 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,

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 accmurlation." 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 back added 230 millions to her debt, of which 180 millions was not attributable to war expenditure. Austria 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 money. England had not added to her debt, but ordinary 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 re

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 liad 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

sources.

peal of the paper duty sacrificed a surplus of as one detrimental to the character of public a million and a half for the sake of a barren men, and most injurious to the fortunes of the triumph over the upper house. He had cal- realm." culated his loss at £655,000, when it was This was a telling example of what was £850,000. “The right honourable gentleman," regarded as a “ damaging speech” from the he said, “ never proposes a vote---and it falls leader of the opposition, but it had no very to him to propose the most profuse votes that damaging effect, for the house knew pretty any minister in time of peace ever brought 'well that Gladstone had objected to the fortiforward-he never does this without an inti- fication scheme, and had spoken with no unmation that he does not sanction in his heart certain and no insincere voice against the the expenditure he recommends. ... How is growing tendency to increased expenditure. it that the party which preaches retrenchment It was for this reason that the party of reand reduction-who believe all our estimates, trenchment trusted him, for they knew that · especially the naval and military estimates, if the time should come when retrenchment are much too extravagant-who are opposed could be practised, he would be able to use his to fortifications, and who do not much like extraordinary financial skill to secure the reiron ships--how is it that this party always sults to which he had declared he looked forsupport a minister who is bringing forward ward with anxiety. No very lengthy reply was these excessive estimates and who provides for needed. After having answered some of these this enormous expenditure? Well, that is a representations of his opponent, Mr. Gladgreat question. This at least we know, that stone reminded his hearers that the repeal of while the spendthrift is weeping over pence- the paper duty was said to be an improvident while this penurious prodigal is proposing this proposal; yet the opponents of that measure enormous expenditure-he always contrives proposed to part with £950,000 of tea duty, to repeal some tax to gratify the interests or which would have been so much addition to prejudices of the party of retrenchment. No the alleged deficiency. He was well content wonder, then, we hear no longer the same to be called by Mr. Disraeli the most profuse character of the income-tax; no wonder we chancellor of the exchequer on record. He are no longer reminded of that compact en- was satisfied to bear any epithets of vitupertered into by the house and accepted by the ation he had already produced or might produce country for its gradual and permanent aboli- on a future occasion. It was not difficult to bear tion. Unless the house expresses, on a fitting the abuse of the right honourable gentleman occasion, its opinion, there is very little hope when he remembered that far better men than of our obtaining any redress in this respect. himself had had to suffer it. But he should

. . Who will deny that this position of affairs be still more content if the effect of his oppois peculiar and perilous? I remember some nent's speech was such as to bring the house years ago, when the right honourable gentle and the country to a due sense of the gravity man was at the head of a small party, not of the financial situation, and the necessity for a then absorbed in the gulf of Liberalism, that reduction of expenditure. With regard to the we heard much prattle about political morality. income-tax, he did not desire that it should be What then most distinguished the right hon- permanent; and if the country could be govourable gentleman and his friends was their erned by something about £60,000,000 it could monopoly of that admirable quality. They be done without--but it could not be abolished were perpetually thanking God that they were with an expenditure of £70,000,000. He did not as other men, and always pointing their not yet despair of reduction and retrenchment, fingers at those unfortunate wights who sat though he did not look forward to sweeping opposite to them. Now we see the end of reductions. 'political morality.' We see the position to To Sir Stafford Northcote, who had risen which political morality has brought the fin- early to oppose his financial proposals, he had ance of a great nation. I denounce this system I already made a reply, in which he had said

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