Exchequer Bills; but this had been used only to the extent of 1,000,000l. The total receipts would be 79,384,000l.; the total expenditure probably 78,000,000l., leaving a balance of 1,384,000l.

In answer to Mr. Disraeli's accusation that there was extraordinary war taxation in time of peace, he pointed out that the year was not a year of ordinary peace expenditure. There had been lent 1,000,000l. to Sardinia; 91,000l. paid on account of hereditary pensions under an Act of the last Session; there would be a loss of upwards of 2,000,000l. on the article of malt, by the reduction of duty and drawbacks: it was therefore incorrect to say that no reduction had taken place in war taxation. In order to show that the pressure of taxation had not diminished the resources of the country, he cited figures showing the flourishing state of the export and import trade, the large employment of shipping, and the diminution in the number of emigrants. Deducting the three years of peace expenditure just before the war 152,323,000l., from the three

years

of war expenditure 228,721,000l., he said the remainder-76,398,000l. afforded a pretty close approximation to the cost of the war. Of this sum, he set down 40,362,000l. as the war taxation.

The total expenditure for the year 1857-8, he estimated at 63,224,000l.; that is, interest on Funded and Unfunded Debt, 28,550,000l.; permanent charge on the Consolidated Fund, 1,707,000l.; Army, 11,625,000l., Navy, 8,109,000l.; Packet Service, 965,000l.; Civil Services, 7,250,000l.; Collection of Revenue, 4,215,000l.; Superannuation

in Revenue department, 475,000l.; Persian War, 265,000l. Beyond this, there were debts to be provided for amounting in all to 2,000,0001.; which made a total estimated outlay of 65,474,000%. Sir George Lewis went into a detailed explanation of these items, to show that they were not excessive, even as compared with the estimates of peace years; and in accounting for the increase, he pointed out a variety of causes, such as the Packet Service, the transfer of the Coast Guard from the Customs to the Admiralty, and the increased charges arising from the use of steam in the Navy.

Before he came to the taxation for the ensuing financial year, he made some remarks on the compact said to have been entered into in 1853 between Parliament and the country with regard to the continuance of the financial arrangements of that year. Now, to admit the doctrine of compact, it should be shown that the state of things on which the compact was made remained unchanged. But the plan of 1853 was formed on the assumption of peace. That assumption did not turn out to be correct-war, a disturbing cause of the first magnitude, succeeded, and not only increased the annual charge for the Debt, but left warloan sinking-funds to be provided for, and 2,000,000l. of Exchequer Bonds, payable this year. And on the other side of the account, we had had a loss of 150,000l. by the alteration of Stamp Duty on Bills of Exchange in 1853, a decrease of 290,000l. in Assessed Taxes, 260,000l. by the abolition of the Newspaper Stamp Duty, and 60,000l. on the Carriage Duty; total remission of taxation since 1853, 760,000%.

After this, Sir George Lewis made a statement to show that the direct is only one-half of the amount of the indirect taxation of the country; and then, touching on the Paper and Wine and Spirit duties, and the duty on Fire Insurances, he intimated that no change would be made in them at present.

At length he came to the Income Tax. As the law then stood, the exchequer was entitled to receive 16d. for the ensuing year, and 5d. for the two following years; in all 26d., or 26,000,000%. The proposal which he had to make, looking at the increased charges on the revenue for the year to come, owing to the debts contracted during the war, and owing in part to the remission of taxation during the same period, was to fix the income tax as it was fixed originally by Sir Robert Peel for the next three years, at 7d. in the pound. (Cheers.) The effect would be, that the exchequer would receive twenty-one instead of twenty-six millions. With regard to Tea and Sugar, he proposed a gradual diminution of the duties on tea from 1s. 9d. to 1s. 7d. next year, 1s. 3d. in 1859, and 1s. in 1860; on refined sugar, from 20s. to 18s. 4d. in 1858, 16s. 8d. in 1859, and 13s. 4d. in 1860; brown sugar, from 13s. 9d. to 12s. 8d. in 1858, 11s. 8d. in 1859, and 10s. 7d. in 1860.

The total revenue for the ensuing year he estimated at 66,365,000l., which would leave a surplus over the expenditure of 891,000l., viz:Customs

Excise

Stamps.

£22,850,000

17,000,000 7,450,000

Land and Assessed 3,150,000

Taxes

The total amount of the taxes that would be reduced this year was 11,971,000l. In conclusion, he observed that if the liabilities of the next three years were discharged, and the accruing liabilities were met, the entire debt of 40,000,000%. arising out of the war would be extinguished in 20 years.

The right hon. gentleman concluded with the customary formal motion for a grant to pay off Exchequer Bills.

Mr. Gladstone said, considering the comprehensive nature of the statement just made, and the gravity of the matters which it involved, it would be inexpedient to enter into a discussion upon it that night. After a short debate, in which many explanations were called for and were given by the Chancellor of the Exchequer, the Chairman was ordered to report progress.

more

The opportunity for a ample discussion of the financial state of the country and of the plans proposed by the Chancellor of the Exchequer, was soon afterwards afforded by a motion made by Mr. Disraeli, pursuant to notice, on the 20th of February. The right hon. gentleman's motion, which led to a very interesting debate, continued to a second night by adjournment, was in these terms:

"That it would be expedient, before sanctioning the financial arrangements for the ensuing year, to adjust the estimated income and expenditure in a manner which shall appear best calculated to secure the country against the risk of a deficiency in the years 1858-9

and 1859-60, and to provide for such a balance of revenue and charge respectively in the year 1860 as may place it in the power of Parliament at that period, without embarrassment to the finances, altogether to remit the income tax." In introducing this motion, to which the feeling respecting the income tax then prevalent in the country lent great interest, Mr. Disraeli observed that, whatever differences of opinion might exist upon other questions, there was none upon one point, that our finances should be in a wholesome condition. He approved the course taken by the Government with respect to the war income tax, but he thought they should have announced their policy with reference to this tax earlier. He reminded the House that he had to comment upon a financial statement essentially prospective, and his general objection to that statement was, that its consequences showed that the remission of the income tax in 1860 would be not only difficult, but absolutely impossible. The Chancellor of the Exchequer had estimated the expenditure of 185758 at 65,474,000l., and the revenue at 66,365,000l., leaving a surplus of revenue of between 800,000l. and 900,000l. But his (Mr. Disraeli's) estimate of the revenue and expenditure for the year 1858-59 was, that, while the amount of the former would be 61,404,000l., the expenditure, including Exchequer Bonds, 2,000,000l., and Sinking Fund, 1,500,000l., would be would be 66,389,000l. Consequently, upon the statement of the Chancellor of the Exchequer himself there would be an apparent deficiency of 5,000,000l. in the year 1858-59; and he asked the House whether, under these circumstances, it was

not its duty to examine the whole scope and tendency of the Government plan, and ascertain its probable result. With such a deficiency in 1858-59 there must be a deficit of at least 10,000,000l. in 1859-60, the period at which the income tax, yielding 7,000,000l., was to be taken off, when a colossal deficiency would have to be grappled with. The obvious remedy was so to adjust the income and expenditure as to prevent this defi ciency, and to remit the whole income tax. The Chancellor of the Exchequer had assumed that the gross expenditure of 1858-59 would be the same as that of 1853-54namely, 55,840,000l. Why, then, not reduce the expenditure of 1857-58 to that standard, which would leave a surplus of 4,000,0007. in the Exchequer, without any addition to the duties on sugar or tea? If the Chancellor of the Exchequer had really determined to fall back upon the expenditure of 1858, there was no necessity whatever for any new tax, although the estimates of that year were millions above those of Lord Derby's Administration. He was for wise, not wild, reduction; he did not propose any measure hostile to public credit, or a vote of want of confidence in the Government.

The Chancellor of the Exchequer observed that Mr. Disraeli had, in his

opinion, offered scarcely any objection to the financial plan of the Government. In his excursive flight he had commented upon the estimates of taxation for two successive years; but no Finance Minister had ever proposed to fix, or could fix, any plan of expenditure for a future year; that depended upon Parliament alone; so that when Mr. Disraeli talked of a deficiency in future years, he in

troduced an idea foreign to the subject. In order to show a deficiency, there must be a comparison between revenue and expenditure. He had stated on the last occasion that he estimated the revenue of 1858-59 at 62,300,000l., and that of 1859-60 at 62,265,000l., and he had compared this estimate of revenue with the actual expenditure of 1853-54-namely, 55,840,000l., which showed an excess of revenue. If he had taken the estimate of charge for the present year, it would have included special expenditure caused by peculiar circumstances, this being the first year after the war. Premising, however, that he gave no positive estimate, and expressed no opinion of the expenditure beyond the present year, he stated details showing its probable amount in succeeding years, the result being that, according to reasonable computation, and making allowance for arrangements for the redemption of debt, there was no probability of any deficiency or of an impediment to the remission of the income tax in 1860. In that year he estimated that the revenue would be 58,115,000l., and the expenditure 54,200,000l. Considering the resolution (the terms of which he criticised) to be uncalled for, that it would lead to no practical result, while it would be open to much misapprehension, he should neither affirm nor deny it, but should vote for passing to the order of the day.

Mr. Gladstone said, no man was more deeply interested than he was in this question, which concerned a plan of finance in every part contradictory to that which he had proposed, and which had been adopted by the present House of Commons. The efforts of successive Administrations had been

directed to the consolidation and simplification of the financial laws, whereas the Chancellor of the Exchequer had condemned the labours of Parliament for the last 15 years. The income tax, grievous and inquisitorial as it was, had been introduced to purchase blessings to be wrought out by its instrumentality. With what beneficial changes was it proposed now to associate this tax? The notion was, that this year there would be a remission of taxation to the extent of 11,970,000l.; but, omitting war taxes, to the amount of 4,470,000l., the cessation of which was not due to the grace or favour of the Government; the remission of the income tax in 185758 would be only 4,600,000l., against which was to be set 1,400,000l. to be laid upon tea and sugar; so that the real amount of taxes remitted in 1857-58 would be only 3,184,000l., and he was not satisfied that the supposed surplus of 900,000l. would be bona fide available. After entering into further financial details, and insisting upon the obligation of Parliament to adhere to the stipulation entered into with the country respecting the income tax, Mr. Gladstone proceeded to a closer criticism of the Budget, which discovered, he said, fatal flaws. The first and main defect was, that it was based upon an excessive expenditure; and he gave notice that before going into committee he should propose that the estimates of expenditure should be revised and further reduced. He contended that 6,000,000l. had been added to the regular expenditure of the country, quite apart from the war, in four years-a fact, he observed, which suggested more serious reflections. In his

opinion, the Chancellor of the Exchequer, in saying that he could not estimate the expenditure of a future year though he could estimate the revenue, had trifled with the House and treated them like children. Yet he had taken the expenditure of 1853-54 as that of 1858-59, which, for reasons stated by Mr. Gladstone, he treated as a pure delusion, calculating that the expenditure of the latter year would exceed that of 1857-58, and that the real wants of the public service were likely to increase. The prospect for next year, taking the income and expenditure of the present, appeared to him to be, that there would be a revenue, after deductions, of 61,065,000l., to meet an expenditure of 66,724,000l., leaving a deficiency of more than 5,600,000l., which in 1860 would have augmented to 8,600,000l. Adverting to the views enunciated by the Chancellor of the Exchequer on the subject of indirect taxation-views which he strongly censured-Mr. Gladstone stated the amount of taxes remitted from 1842 to 1854 at 21,985,000l., or deducting taxes imposed, 14,485,000l., added to the comforts or deducted from the privations of the country, and the increase in the revenue had covered the whole amount of remissions. Yet the Government now invited the House to retrace its steps, and to impose indirect taxes upon articles consumed by the labouring classes. To say, however, that the duties on tea and sugar should not be imposed, was to say there should be a greater deficiency; this, therefore, increased his desire to support the resolution of Mr. Disraeli, which was in entire conformity with the pledge given regarding the income tax. He VOL. XCIX.

believed that by a wise economy it was practicable to relieve taxation, to reduce expenditure, and to maintain a surplus revenue.

Mr. Wilson, in replying to Mr. Gladstone, argued that the Chancellor of the Exchequer, in dealing with the tea and sugar duties, had not only acted upon sound principles, but upon the very principles adopted by Mr. Gladstone himself in 1853. These duties were really applied to war expenses. He pointed out what he considered to be errors on the part of Mr. Gladstone, insisting upon the fallacy which, he said, pervaded his speech, of taking the expenditure of the present year as the basis of his calculation of the expenditure of years to come. He (Mr. Wilson) justified the estimates formed by the Chancellor of the Exchequer for the years 1858-59 and 1859-60, which made the surplus in the first year 4,024,000l., and in the last 3,989,000l. Nothing had been done by the Chancellor of the Exchequer to create a deficiency or to impede the settlement of 1853, so far as it could be carried into effect. The Budget, while it effectually provided for the expenditure of the present year, did not impair the means of future Ministers to meet obligations.

Mr. Laing said, the object he proposed to attain by voting for the resolution was that which was attained in 1848, when the Budget was sent back, and a new one produced, framed with a greater attention to economy. He pointed out the large increase in this year's estimates, compared with those of 1853-4, in departments unconnected with the war.

Lord J. Russell said he thought it incumbent upon him, as a warm [D]