THE FINANCIAL STATEMENT, 1882.

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The Right Hon. the CHANCELLOR OF THE EXCHEQUER having issued a revised Edition of his Speech on moving the First Resolution in Committee of Ways and Means (Monday, April 24), it has been thought desirable to reprint this authorized version for “HANSARD.”

THE CHANCELLOR OF THE EXCHEQUER (Mr. GLADSTONE): Mr. Lyon Playfair-I think that my first duty on this occasion is to tender my acknowledgments to hon. Gentlemen opposite, and especially to the hon. Member for Queen's County (Mr. A. O'Connor), for the courteous announcement which he has just made to the House. I believe, however, that I may say, without offence, that the Motion of the hon. Member for Queen's County would have been an innovation, and that it would have been in my power to have counteracted it by another innovation quite within the limits of the Orders of this House -namely, by making the Financial Statement with the Speaker in the Chair. I think, however, that the Committee will feel that it is much better that these two innovations should pass into the usual place of unfulfilled resolutions, and that the Financial Statement should be made in the usual manner, by which perfect freedom of remark is allowed to all hon. Members who may see occasion to enter into the subject.

With respect to the general financial condition of the country, I will only say that essentially the position of the Expenditure is that of a somewhat growing Expenditure, and that with respect to the Revenue, it is a sluggish Revenue. It is much as it has been during the last two years-this being the third occasion during the existence of the present Government on which I have had cast upon me duty of making the Financial Statement to the House. It is very remarkable that although employment is generally active, and although the condition of trade

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cannot be said to be generally unsatisfactory, yet the recovery of the country from the point of extreme depression has been a slow and a languid recovery, especially as far as regards the action of that recovery upon the Revenue of the country. No doubt, there is a natural explanation of the circumstance in the extreme excitement-the unnatural and the unhealthy excitement-of prices which existed during the period of prosperity which preceded the time of depression; and it is to that cause that we must look for the slackness of the recovery to which I have referred, and not to any diminution whatsoever in the resources of the country, or any deterioration of its industrial prospects.

I go on at once to lay before the Committee the particulars which it is customary for them to receive on this occasion. I shall have to deal in the first instance with the financial year 1881-2, which reached its close on the 31st of March. The Expenditure of that year was estimated at £86,190,000; the actual Expenditure was £85,472,000, showing that the Expenditure fell short of the Estimate by £718,000. The comparison of the Expenditure with the Expenditure of the preceding year is a more serious matter. Of course, the actual Expenditure in 1881-2 was well within the Estimate; but, when compared with that of the preceding year, it requires a little closer investigation. The Expenditure of 1880-1 was £83,108,000; the Expenditure of 1881-2 was £85,473,000, showing an augmentation of £2,365,000. But, in order that the House may understand the position of these two years relatively to other years, and of the second year relatively to the first, it is right that I should mention to them what was the amount of special War Charges connected with various subjects of policy which have been repeatedly before the House, and which came upon both of these years. I will give the particulars for the two years-first, for the year 1880-1; and, secondly, for the year 1881-2. In 1880-1 the Charge on account of the Transvaal was £656,000 in connection with warlike operations in that country; £446,000 of that sum was on account of the Army, and £210,000 on account of the Navy. There was a charge imposed upon that year by an arrangement made shortly before we came into Office, for the purpose of getting rid, in a small number of years, of the debt of £6,000,000, contracted a few years ago for purposes connected with the War between Russia and Turkey. That Charge-namely, the charge of the Annuity by which the debt is to be extinguished-was in 1880-1 £1,129,000. There was also a Loan of £2,000,000 contracted by my Predecessor in

Office, and advanced without interest to India. The Charge in respect of that Loan in 1880-1 was £62,000. Besides, there was a Vote of £500,000 asked by the present Government from the House in aid of Indian Finance, and voted before the expiration of the financial year to which I am referring. The whole of these special Charges for the year 1880-1 was £2,347,000. In the year 1881-2 those Charges underwent a considerable increase. The Transvaal Army. Charge was £1,066,000; the Transvaal Navy Charge was £303,000; and the Transvaal Civil Charge, for expenses which it was necessary to contract in connection with the re-transfer of the Civil Government, was £400,000; or in all, on account of the Transvaal, £1,769,000. The Charge in respect of the £6,000,000 Vote of 1878 was, for the year 1881-2, £1,350,000. The Charge for the Indian Loan was £88,000; and the Charge for the Grant in Aid of Indian Finance on account of the Afghan War was, as before, £500,000. There was also a small special Vote of £135,000 in respect of the Zulu War; making the total amount of the special War Charges for the year 1881-2, £3,842,000, instead of £2,347,000. There was thus an excess of the War Charges for that year over those of 1880-1 of £1,495,000. That, however, still leaves an increase of Expenditure of between £800,000 and £900,000. I will not attempt minutely to explain that excess. The House is aware that some classes of increase in our Expenditure may be called normal, and that some classes of increase even represent a corresponding profit. Among what are commonly called normal augmentations are such augmentations as those in the Education Vote, and among those which are usually attended by a corresponding increase of profit are the very heavy and large augmentations of expenditure for the cost of establishments and buildings in connection with the Postal and Telegraph Services. In the particular case I refer to, the increase in the Postal and Telegraph Services for 1881-2 over the former year was £317,000. The cost of the Census was £140,000; the cost of the increased Education Estimates was £140,000; and the special Expenditure connected with the state of Ireland, partly for the increase of Constabulary and partly otherwise, was £190,000. These sums account for nearly £800,000 of the augmentation which I have pointed out to the House. It is not necessary to pursue the matter into more detail.

Well, then, Sir, having compared the Expenditure with the Estimate, and having compared it with the Expenditure of the previous year, I have next to compare it with the Revenue of the year. That account will not be found to offer a very bril

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liant result; but, at the same time, it is so far a satisfactory result that the balance is on the right side. The Income for the year was £85,822,000, and the Expenditure £85,472,000; so that there is a small Surplus of Income over Expenditure amounting to £350,000. It is a matter of interest to compare the actual Revenue of the year with the Estimate, because it tends to throw light on a subject to which I have referrednamely, the languid manner in which the Revenue is at present recovering from a state of depression. The subject, however, in one of its branches leads into discussions of very great moral and social interest, although they are discussions impossible at the present moment to lead to anything like a demonstrative result. Comparing the Revenue with the Estimates of the year, I find that the Customs, which were estimated to yield £19,180,000, yielded £19,287,000; the Excise, estimated to yield £27,440,000, yielded £27,240,000; Stamps, estimated at £12,290,000, yielded £12,260,000; the Taxes, estimated at £2,760,000, yielded £2,725,000; and the Income Tax, estimated at £9,540,000, yielded the unexpectedly large amount of £9,945,000. I take all these items together, adhering to the practice the convenient practice which has now been established for some years-of distinguishing between the Tax Revenue of the country and the non-Tax Revenue-between that which is derived directly and that which is derived indirectly from taxes. I find that the Tax Revenue, estimated at £71,210,000, yielded £71,457,000; an excess, although a very small excess, which I wish to bring under the notice of the House in connection with the present state of our relations with trade and industry on the one hand and the Exchequer on the other. Coming to those portions of the Revenue not derived from taxes, they stand more favourably on the whole. The Post Office, estimated to yield £6,800,000, yielded £7,000,000; Telegraphs, estimated to yield £1,600,000, yielded £1,630,000; the Crown Lands, estimated at £390,000, owing to difficulties connected with agricultural depression on a limited scale, yielded £380,000; the interest on Advances and other moneys included under the same head, estimated at £1,200,000, yielded £1,219,000; and the Miscellaneous Items, estimated at £3,900,000, yielded £4,136,000. Upon the whole, the non-Tax Revenue, estimated at £13,890,000, yielded £14,365,000; and the total Revenue of the country, estimated at £85,100,000, yielded £85,822,000; or an excess of £722,000 over the amount at which it had been taken at the commencement of the financial year.

It has been my practice for a good many years to give the House what is necessarily a rough Estimate, but still an Estimate, on a matter of great importance-namely, an Estimate of the real increase, or the real augmentation, of the Revenue, because the accounts of the Revenue, as published, are not sufficiently clear, and those who are conversant with the subject are well aware that they are not always a safe guide to the rapid conclusions which some writers and observers are apt to arrive at from a rough inspection of them. I want, then, but not at any great length, to compare the Tax Revenue of 1880-1 with the Tax Revenue of 1881-2; but, of course, in order to make that comparison just, I must introduce certain rectifications to insure that I am dealing with exactly the same elements. The Tax Revenue of 1880-1 stood at £69,814,000. But then there was a sum of no less than £1,320,000, which was arrested on its way to the Exchequer, being part of the receipt of the Malt Tax Duty, which in due and regular course was employed to discharge the claim of the maltsters for drawback. Therefore, adding that sum, which I suppose to have been arrested, for the purpose of comparison, to the Revenue of 1881, the addition gives a total of £71,134,000. But now I have to make a deduction, for the purposes of comparison, because in that year we received a very large sum from the imposition of an additional 1d. on the Income Tax, a sum estimated at £1,460,000. I do not, however, take the whole of that sum, because about £400,000 of the produce of that 1d. may be considered to have been also enjoyed by the year just expired. I, therefore, deduct £1,060,000, which leaves the Revenue for 1880-1, for the purposes of comparison, at £70,074,000. The Tax Revenue of 1881-2 stands at £71,457,000; but then it was augmented by two sums, one connected with the change in the Spirit Duties, and another connected with the change in the Probate and Legacy Duties, which were estimated to add to the Revenue £570,000, although they did not add quite so much. Therefore, deducting that sum for the purpose of comparison, it leaves the Tax Revenue of 1881-2 at £70,887,000. Deducting therefrom the Tax Revenue of 1880-1-£70,074,000-I have a residue of £813,000, which, as nearly as I am able to estimate, indicates to the House the true increase in the Revenue of the country from the same sources in the two years respectively. It is rather remarkable how closely that increase corresponds with the increase of population. The increase of the population is something over 1 per cent. This augmentation in the Tax Revenue is also something over 1 per cent. This is not the represenattion of a very bad year, neither