COMMITTEE MOVED. AMENDMENT MOVED.

HC Deb 20 February 1857 vol 144 cc947-1028

Order for Committee read.

Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."

MR. DISRAELI

Sir, before the House goes into Committee on the financial arrangements of the Government, I ask them to pause and to consider their scope and tendency. In offering some statements and arguments to the House, by which I hope to persuade them to adopt the Resolution before us, it is my intention, so far as I can, to conduct the discussion in that temperate spirit which I think discussions of this nature essentially require. This is a financial debate, and so far as I am concerned I shall not introduce into it any topic which may in any way lead the House to depart from the consideration of those financial details which are now before us, a sound judgment upon which appears to me to be of the utmost importance to the community at large. We have, Sir, and always shall have, great differences of opinion in this House on political subjects, whether foreign or domestic. I dare say that differences of opinion will always exist in this House as to the manner in which our foreign relations should be conducted; or on subjects such as that which occupied our attention last evening, as to what classes shall be the depositories of political power in England. But, Sir, there is one question upon which there ought not to be a difference of opinion in this House, and that is, the importance of maintaining our finances in a wholesome condition, and of taking care that the Government of the country do not impose taxes which are not necessary.

Now, Sir, I willingly and at once approve the course which has been proposed by Her Majesty's Government with regard to the war income tax. I have ever considered that the continued existence of that impost involved a public grievance. Considering the spirited manner in which the people of this country supported the Ministry during the late war, the generous and almost lavish manner in which they placed their resources at the disposal of the Government in that arduous struggle,—I think it would have been a great political mistake if the people had found themselves saddled with a heavy burden which did not in its origin come from their own free will, and which, according to their understanding, had been obtained almost by a clerical error in an Act of Parliament. I have no doubt the people of this country are prepared at all times to endure such burdens and to make such sacrifices as they think are necessary for the public advantage; but if they make a sacrifice they require—and I think it is not unreasonable they should require—that at least they should make it of their own free will, and that it should be an act of their spontaneous devotion. Now, when we doubled the income tax to carry on the war, there is no doubt that the whole community heartily acceded to the proposition. They agreed to double the income tax in order to carry on the war, and they consented that the increased impost should continue for a year after the war had ceased. That was clearly understood throughout the country, and by all classes of the community. The language by which that burden was entailed upon them for a second year was introduced into an Act of Parliament of comparative insignificance, not into that by which the tax was doubled; and it certainly was not at the time understood by the great body of the people that the consequence of our legislation would be, not merely to double the income tax, but to enforce that double tax, granted for carrying on the war, for two years after that war had ceased. There is no doubt that the discovery gave rise to a feeling of surprise and indignation. It was, in my mind, no longer a financial, but had become a political question—a question whether it was politic to allow the disposition of the people, which during the war had been so admirable, to be soured by such a circumstance, and whether, if we continued pedantically to adhere to the letter of the bond, we could in future emergencies appeal to popular feeling with equal success. Considering, then, that this was a political and not a financial question, I deeply regret that Her Majesty's Ministers should have permitted that agitation to exist which in the autumn did prevail upon this subject. I know it may be said that Parliament was not sitting at the time, and that there were, therefore, no means of communicating to the country the sympathy of the Government with the spirited manner in which the people had supported them in the war, and their consequent disposition to exempt them from this doubled tax, imposed in a manner so equivocal, and to enforce which would have been an act of political injustice. But, though Parliament be not sitting, there are means of communicating to the country the intentions of the Government other than through this House. There are means, either by a speech or by a letter, by which we know that public opinion can be tranquillised or can be agitated; and I regret very much that Her Majesty's Ministers did not think it consistent with their duty to communicate to the country during the autumn the intention which they have since announced in Parliament. The noble Lord the First Minister, for example, went down to Manchester because he wished to communicate to the country his opinions upon an important political treaty. The noble Lord might, when this agitation had assumed a disagreeable character—when not merely a grievance was complained of, but the very principles upon which the tax was to be continued were discussed—have availed himself of similar machinery, and have announced the determination of the Government to redress this public grievance. However, we were disappointed in that respect. There was another opportunity at which that communication might have been graciously made; that was at the opening of Parliament. I think it would have been most gracious to have announced in the Speech from the Throne that this grievance should be redressed. That opportunity also was lost; and in consequence I gave notice on the first night of the Session, that I should ask the opinion of the House upon the subject. I mentioned then what I now say, that I considered I was dealing with a strictly political question, and not with a financial one; that I believed there was a great public grievance which ought to be redressed; and that I thought it advisable and proper that the redress of that grievance should take place immediately after Parliament assembled; and that, as the Ministers themselves did not offer such redress, I thought it was consistent with the duty of a Member of Parliament, not connected with them, to make the attempt. In so doing it was not my intention to interfere, nor do I consider that I did in any way interfere, with the financial arrangements of the Chancellor of the Exchequer. I did not ask him for his Budget; I did not ask him for his Estimates. If the Government had, on my Motion, taken the opportunity of announcing their policy with respect to this grievance, they would not have been pressed for their financial measures; they might have brought them forward after the expiration of an interval of a month from this time. However, those measures are now before the House, and it is necessary that we should calmly and accurately discuss their effect. They are of an importance which it is quite unnecessary for me to dilate upon to this House.

Sir, I have no wish at any time unnecessarily to indulge in prospective finance. I agree that on ordinary occasions it is more convenient, I should say most convenient, in discussing the financial position of the country to confine ourselves to the current year, whose fortunes we are endeavouring to lay before the House. But, on the present occasion, if I indulge in prospective finance, I must remind the House that I am commenting upon a statement which is, in its character and provisions, essentially prospective. It is not I who have introduced the prospective element into our debates upon this subject; it is the Chancellor of the Exchequer himself, who has brought before the House a prospective Budget, founded upon another Budget eminently prospective—namely, that of the right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone) in the year 1853. The Chancellor of the Exchequer, the other night, did not confine his ken to the commencement and end of the ensuing year. On the contrary, the right hon. Gentleman, not only upon that, but also upon another occasion, sketched the position of the Exchequer for a period of three years to come. On Friday night—the night on which he made his first and principal statement—the right hon. Gentleman submitted his views under the name of his "plan," and said, "If my plan is adopted I shall be able to do this and that and other things in the course of the next three years." The right hon. Gentleman did more than this. His plan is prospective, not merely as regards his schemes, but also as regards our pockets: because he proposed new taxes to be levied for a period of three years, and which are even to vary during that space of time. Therefore, those who should find fault with the Motion which I am about to introduce to the notice, and I hope to the acceptance of the House, on the ground that it interferes prospectively with the finances of the country—though I do not suppose that upon mature reflection such an objection will be urged—must have forgotten the Budget of the Chancellor of the Exchequer, and the nature of the financial arrangements which we now have to discuss. It is, I repeat, the Chancellor of the Exchequer who has, by what he calls his "plan," introduced the prospective element into our discussions, and it is utterly impossible to form any opinion upon the arrangements which he proposes—it is utterly impossible to offer any criticism upon the scheme which he has submitted to our notice—unless we consider their bearing not merely upon the present year, but also upon the subsequent years before the period arrives when, as we had hoped, the income tax was, according to the arrangement of 1853, entirely to cease.

Now, Sir, I have two general objections to offer to that plan upon which the right hon. Gentleman dilated on Friday evening. I think that the inevitable consequences of that plan will be to cause financial embarrassment, and to render the remission of the income tax in 1860 not merely difficult but absolutely impossible. These are the two great objections which I entertain to the financial plan of the Chancellor of the Exchequer, as elaborately described to the House on Friday night.

Now, with the permission of the House, with very little appeal to figures, and that as succinct as possible, I will endeavour to show the grounds on which I intend to support these objections. I have at this moment very little comment to make upon the Estimates of expenditure and income which the right hon. Gentleman offered for the year 1857–8. I mean to say that at this moment I have no particular observations to make upon them. I do not now want to inquire captiously into the accuracy or wisdom of those statements. The House will recollect that the right hon. Gentleman estimated the expenditure for the year 1857–8 at the sum of £65,474,000, which was to be defrayed by an income of £66,365,000, leaving a surplus revenue of between £800,000 and £900,000. I do not, in this estimate, observe upon the omission of provision for the Persian war. I will not dwell upon the fact that this country is at present at war with distant countries, yet that in these estimates no provision is made for the expenditure to which those wars will lead. I am still willing to believe that we are to have peace with Persia, and that we are not at war with China. It is, of course, impossible entirely to shut out the knowledge of existing circumstances and the consideration of their influence upon our finances; but I will, as much as can be, remove them from the question, and will, if possible, confine myself to the financial facts and the financial speculations which have been introduced to the House by the Chancellor of the Exchequer. In the year 1857–8, then, we are to have an expenditure of £65,474,000, with an income of £66,365,000. The House will recollect that one of the most important items of that estimated income accrued from the income tax itself. The right hon. Gentleman, besides the £7,000,000 which he will obtain if we raise the tax 2d., will be in the enjoyment of £4,500,000 sterling arising from the still unrealised produce of the war income tax. Now, Sir, having stated to the House the expenditure and income of 1857–8, I want to put before it also the income and expenditure of the year 1858–9, the second year of the right hon. Gentleman's plan. As regards the income, I have taken, as far as I could, the figures which were afforded me by the right hon. Gentleman. The House will understand that any figures that I read, unless they have been furnished by the Government, I offer, of course, with diffidence; yet in my general conclusions I have given so large a margin that if my views are right in the main the results will not be affected by any inaccuracy on the score of figures. This, then, is my estimate for 1858–9, the second year of the right hon. Gentleman's plan:—He took for 1857–8 the estimated revenue from the Customs at £22,850,000. This calculation supposed the duty on tea to be 1s. 7d. per lb. instead of 1s. 9d., the rate for the current year; and it reckoned the duty on refined sugar at 18s. 4d. per cwt., instead of 20s. But in 1858–9 the duty on tea will be 2d. less per pound, and that on refined sugar 1s. 8d. less per cwt. I, of course, have great difficulty in forming an estimate of our probable loss on tea and sugar, in the event of the Chancellor of the Exchequer's proposition for 1858–9 being accepted. I therefore offer, unaffectedly, rather a suggestion than a formal statement of figures; but I have estimated that the loss may be on tea £469,000, and on sugar £442,000, making together a total of £911,000. I take the Customs, then, for 1858–9 at £22,339,000; the Excise at £17,000,000 (being the figures of the right hon. Gentleman); the stamps I take at the same amount as in 1857–8, namely, £7,450,000; the land and assessed taxes at £3,150,000; the income tax, reduced to 7d, in the pound, I take at £7,000,000; the Post Office at the same sum as in 1857–8—namely, £3,000,000; the Crown lands at £265,000; and the miscellaneous revenue at £1,200,000. The total income from these various sources will be £61,404,000. Now for the expenditure of 1858–9. I take the estimated charge for the debt at £28,550,000. This, of course, ought to include the interest on the whole of the war debt; but there must be deducted from this charge the interest on the £2,000,000 of Exchequer bonds, amounting to £70,000, which will make £28,480,000. Next, I take the charge on the Consolidated Fund at the same scale as in 1857–8—namely, £1,770,000; the army I take at £11,625,000; the navy at £8,109,000; the packet service at £965,000; the civil service at £7,250,000; the collection of the revenue at £4,215,000; and the superannuations at £475,000. This gives a total of £62,889,000. There are two other additional items, the first of which is the £2,000,000 of Exchequer bonds payable in 1858–9; and the sum of £1,500,000 for the sinking fund in the same year. These items added to the former total produce an aggregate of £66,389,000. Thus even taking the right hon. Gentleman's own figures, there would appear to be a deficiency in the second year of his financial plan. I ought to state why I have taken the army, the navy, and the civil services at the same figures as the right hon. Gentleman reckoned them for the year 1857–8. The right hon. Gentleman, when he made his financial statement a week ago, in applying himself to the discussion of the great estimates, entered into an elaborate argument to show us that no very considerable reduction could be looked for on these items. [The CHANCELLOR of the EXCHEQUER: I said that no considerable reduction could be expected in them for the present year.] I beg the right hon. Gentleman's pardon. He will have an opportunity of following me in the debate, and I must hope, therefore, that he will allow me to proceed uninterruptedly in my statement. The right hon. Gentleman says "for the present year"—but, unfortunately, on Friday last, the whole tenor of his argument was that on the whole of these items—the army, the navy, and the civil service—the increased charge was of a permanent character. He compared the Estimates of 1857–8 with those for the three years immediately before the war, and stated that the current year was the period of transition from war to peace, and that though the current year would exhibit a great reduction in war expenditure, there was no ground for looking for any future considerable reduction in these large items. The Estimates for the present year not having been laid before us previous to his financial statement, he took the liberty of introducing them then in detail, and showed from analysis the excess of the present over the corresponding Estimates in the time of peace. He proved, in fact, that there was no ground for reduction with the exception of one item, on which the right hon. Gentleman laid very little stress—and I believe rightly so—namely, that of unfulfilled contracts. He analysed the expenditure under six distinct heads; and, though I will not weary the House with detail, I must recall to the right hon. Gentleman's recollection, that his observations could not be limited to 1857–8, the ensuing year, for the whole of his reasoning tended to convey that, exclusive of the unfulfilled contracts—to which he attached but small weight—the principle of reduction could not be further carried out to any appreciable extent. With regard to the navy, having given us five great items of excess, the right hon. Gentleman said that one of them was for an increase in the marines and the coastguard. This, he told us, was the result, not of a war Act but of an Act passed in time of peace. He next informed us that the price of provisions was high—another causes of the increase; a third was, that the scientific Vote was also augmented; the fourth cause of additional expense during the ensuing year was the item of unfulfilled contracts, which must either be fulfilled or forfeit paid, and that either of these causes would entail expense during the present year. We have very recently obtained some information that will guide us in ascertaining the amount of the last-named extra charge, and we may, I think, safely conclude that it will not be very considerable. Then the right hon. Gentleman said that the vote for steam machinery and coal would be greater than before in consequence of the progressive introduction of steam power into our navy—that owing to this circumstance we must look to an additional expenditure on this head, permanent in its nature. Then came the increase for the factories in which to repair our machinery, for enlarging our docks, and for the extension of the packet service. Now, none of these items for next year, with the single exception of that for unfulfilled contracts, is for purposes of a temporary character; therefore I do not suppose that the right hon. Gentleman anticipated the possibility of making any reduction upon his estimates. Continuing this line of remark he came next to the army, and here again we had from him the same description of analysis. I will not trouble the House by going into detail on these points; but when we look to the items of this analysis, to the explanation of the principal sources of increase as given by the right hon. Gentleman—whether we look to the artillery branch, to the creation of new military trains and a new hospital corps, to the item of £225,000 for warlike stores (the result of unfulfilled contracts), to artificers' wages, or to education, works and buildings, we can but conclude the result of that analysis to be that, in the right hon. Gentleman's opinion, reduction was not the means by which the financial arrangements of the country could be carried into effect. Therefore, I believe, I am perfectly justified in taking for the expenditure of 1858–9 the same estimates as he proposes for the ensuing year, 1857–8. And in neither case has any provision been made for the existence of war, or to the possibility of fresh misconceptions, which might lead to an increased expenditure. The consequence will be that, with an expenditure for 1858–9 of £66,300,000, and an income of £61,000,000, you will have an apparent deficiency of about £5,000,000 sterling. This, then, is the result of the second year of the right hon. Gentleman's plan. I may, I think, fairly ask the House whether that is not a result which should at least call upon us to reflect, and whether, before we sanction financial arrangements which, upon the face of the statement of the right hon. Gentleman, threaten such an issue in the second year of his scheme, it does not become our duty, previously to going into Committee of Ways and Means, to examine the whole scope and tendency of the plan of the Government and clearly ascertain its probable effect? But if the second year of the scheme leads to a deficiency of £5,000,000—if such be the result of 1858–9—what becomes of the year 1859–60, its third year, and the year, too, which is to witness, according to the general idea of the House, the extinction of the income tax? All the causes of de- ficiency which prevail in 1858–9 equally prevail in the case of 1859–60; and the revenue will further have to sustain the loss of another reduction of the duties on tea and sugar. Sir, I shall not attempt to estimate exactly what will be the amount of the second reduction of those duties; but the House will see that the general effect of the right hon. Gentleman's plan will be that at the end of its third year we shall find an accumulated deficiency, according to his statement of Friday last, of about £10,000,000; and that, too, just as we have arrived at the point when we ought to take off the income tax producing £7,000,000 sterling. That appears to me to be a very grave position of affairs. What will be the condition of this country if in the year 1860, at the termination of the right hon. Gentleman's plan, it finds itself with an accumulated deficiency of perhaps £10,000,000, and at the same time the right hon. Gentleman has to come forward and propose the extinguishment of the income tax? And if he proposes its continuance, I venture to say—as I said the other night—that every controversy which has been appeased, though not settled, by the belief that the income tax was to cease would be revived. Every class, every section that is now under the belief that it entered into a compact with the Chancellor of the Exchequer of the time would come forward to demand the reason why that compact was violated. You would have one body of men who would say, "It was because we were told that the income tax would cease in 1860 that we submitted to the succession duty." The Irish Members—I believe the income tax is not very popular in Ireland, remembering the peculiar circumstances under which they were first led into this tax—would very naturally come forward and say, "We acquiesced in the extension of the income tax to Ireland because we were told that extension was part of a scheme which secured its extinction at a particular period." As for England itself we can form some idea by the agitation of the last autumn of the character of the questions which would arise here. Graduated scales, distinctions of assessments—the old quarrel between precarious and permanent incomes—whether trade profits are to pay as high a rate as rents derived from real property or the dividends of the public creditor—whether professional remuneration is to be taxed at the same rate even as trade profits—who are to be exempt—whether there should be any exemptions? these are the questions which you would then have to discuss; and under what circumstances?—apparently, according to the financial statement of the right hon. Gentleman, with a vast accumulated deficiency. That appears to me, calmly considering the statement of the right hon. Gentleman, the result at which we should arrive. Financial embarrassment, and instead of the extinction or even mitigation of the tax, the very impossibility of its extinction seemed to me to be insured by the policy which the right hon. Gentleman introduced to our notice on Friday night. We had some time since from a right hon. Member of this House, a financial scheme which was very popular in this House, and which was supported by the great body of Gentlemen opposite. That was a prospective system also, and in its extensive ken it ranged over a wider territory than that which the right hon. Gentleman occupied the other evening; but the basis of that scheme was the extinction of the income tax, and every measure of importance connected with it had some relation to the year 1860, at which time that extinction was to take place. But the new scheme of prospective finance has a peculiar and distinctive feature of its own—not the extinction, but the perpetuation of the income tax. Sir, we have before in this country suffered under deficits, as, I dare say, many hon. Gentlemen remember. They have been a cause of great anxiety in this House, and of deep despondency in the country generally. But of them, at any rate, we can say this—that they were the consequence of mismanagement and misfortune. They came unexpectedly, they accumulated gradually, and, though they assumed at length, from their vast dimensions, a formidable and menacing character, still everybody was obliged to allow that, however deplorable such a result might be, it could in a great degree be accounted for by inevitable causes. We had a deficiency in the year 1841, which, no doubt, was to be traced in some measure to a reckless reduction of taxation in 1839; but it was produced much more by the visitation of Providence—we had had three bad harvests; and we bowed to the decree of a Power before which even Parliaments must with humility bend. But this is the first time that a Chancellor of the Exchequer has come forward with a plan creating an enormous and increasing deficiency; and that, too, in the face of a House of Commons, the cardinal point of whose financial policy has been throughout its now long existence to accomplish the extinction of the income tax. So that we have brought our finances to this position—that the year 1860—when the policy of 1853, on which the hope and expectation of Parliament and the country have rested for the extinction of the income tax, was to have been accomplished—is to witness not its extinction but its perpetuation, and instead of receiving that relief from taxation to which we have been looking forward with such anxiety, we are then to be called upon for new taxes to meet a deficiency which may amount to not less than £10,000,000. I am, of course, perfectly willing to admit, that figures of this kind must be received with considerable allowance on both sides of the House. There may be countervailing causes which, to a certain extent, may alter these calculations; the consuming power, for instance, on which so much of our financial system very properly rests, may increase, though we must remember that it is at the present moment a consuming power at high prices; and therefore we must not count too much on that. But, admitting that your Customs and Excise may increase—admitting a whole series of mitigations—this great fact remains, that in the year 1860, if we pursue the financial plan introduced on Friday night to its consequences, instead of witnessing the extinction of the income tax we shall have to grapple with a colossal deficiency. Under these circumstances I thought it my duty to place on the table the Resolution to which I am about to ask the House to agree.

Now, Sir, let us see what, if I am right in my estimate of the consequences of the plan of the right hon. Gentleman, would be the wisest and most temperate course to adopt. If the House, really believes that we are menaced by a deficiency, what can be more judicious than to proceed upon this excellent principle of finance—which, indeed, must be the basis of all sound financial schemes—to adjust the estimated income and expenditure in such a manner as is best calculated to prevent a deficiency, and then, in pursuance of a policy to which I believe this House is pledged, to provide in the best manner we can for enabling Parliament in the year 1860 to remit the whole of the income tax, as was promised to the country in 1853. That, Sir, is the object of the Resolution which I placed on the table, but no sooner had I given notice of this Resolution than a most extraordinary change occurred in the financial world. The right hon. Gentleman the Chancellor of the Exchequer was at the table—the House being in Committee of Supply—moving a Vote to which there was no opposition, and he took advantage of that opportunity to offer to the House a supplement to his financial statement of the preceding Friday, introducing elements, in my opinion, entirely inconsistent with the statements, arguments, and plans which he had previously laid before us. I am not complaining of this; the right hon. Gentleman has a right, of course, to make two financial statements if he chooses—there have been Chancellors of the Exchequer who have made even more—I am only putting before the House a narrative of these incidents. And what was the right hon. Gentleman's statement of Monday night? It was apparently addressed to my Resolution, which was then in the possession of the House, He said—very frankly I own—"I can answer the Motion of which notice has just been given at once," and, mentioning me, he said, I seemed to fear a great deficiency in the years 1858–9 and 1859–60; but that there was in reality no fear of any such deficiency. "I will tell you," said the right hon. Gentleman, "what are my estimates of the expenditure for those years"—(he might have told us on Friday, but that is nothing);—"and I will tell you how I mean to meet that expenditure." The right hon. Gentleman, with great frankness, gave us his estimates for those years, and they varied very slightly, but not in any degree so as to affect my argument, from the figures which I had assumed before he made that supplementary statement—leaving, therefore, if my first conclusion was just, on each year a vast deficiency. "But," says the right hon. Gentleman, "there will be no deficiency, because we are going to adopt the expenditure of 1853–4." No doubt, if the Government be going in 1858–59 to adopt the expenditure of 1853–4, that is an important element in the consideration of the financial plan. But if that be the case, although I do not complain for a moment of the previous criticisms into which I have been betrayed by the right hon. Gentleman making his statement on Friday—which I considered to be a statement of authority—inconsistent with that which he made on Monday, I say if that be the case, and if we are to take the statement of Monday, as I do without complaint, as the authentic statement, what are the irresistible inferences which we are to draw from it? In the first place, Sir, one naturally asks if there is to be that vast reduction in 1858–9 which is to prevent these enormous deficiencies, what is the reason that the reduction has not some effect in 1857–8? Let us know what are the causes which will enable the Government in 1858–9 to make reductions of which, according to the representation of Friday, no hope was held out for 1857–8. If I go through all the heads into which the Chancellor of the Exchequer elaborately analysed the Estimates which had not been introduced by their respective Ministers on Friday—if I go through his analysis of all the causes of excess of expenditure in 1857–8 over 1853, I cannot find—except in that poor item of "unfulfilled contracts," for which a large estimate, including gunpowder and timber, would be £500,000—that any of them, according to his views, would be less influential in 1858–9 than in 1857–8. But now, Sir, after that statement of the right hon. Gentleman's, I want the House to consider this:—What would be the effect if in 1857–8 the Government would do that which they say they are prepared to do in 1858–9? Let me show to the House the effect of that upon our income and expenditure. We are to fall back in 1858–9 to the expenditure of 1853–4. Now, the gross expenditure of 1853–4, as stated by the Chancellor of the Exchequer on Monday, was £55,840,000. Add to that the increased charge of the debt, £746,000; add the Exchequer bonds to be paid off in 1857–8, £2,000,000; add also the Sinking Fund for 1857–8, £250,000, and the total will be £58,836,000. That is an estimate for 1857–8, drawn up on the expenditure of 1853–4, which is to be the basis of 1858–9. Now, this is very important; and let me press it therefore upon the attention of the House. Having ascertained that we might have an expenditure of £58,836,000, let us see what the income of 1857–8 would be on the supposition that the income tax was not increased beyond 5d., and that there was no increase in the tea and sugar duties. The income estimated by the Chancellor of the Exchequer on Friday was £66,356,000. From that deduct for the 2d. on the income tax, £2,000,000; deduct also the tea and sugar duties, which I take at £911,000; and we have then the income for the ensuing year £63,455,000, against an expenditure of £58,836,000. We thus should have, according to the new position of Monday, a surplus at the end of the year of upwards of £4,000,000 in the Exchequer without adding any new taxes whatever, without increasing the income tax, which ought to be only 5d. in the pound if we adhered to the old system, and without adding to the taxes upon sugar and tea. The right hon. Gentleman, then, by the statement which he made on Monday, has opened a most interesting subject of speculation, which I am sure every hon. Member must appreciate. Now, Sir, how do we stand in this matter? because it is exceedingly difficult to deal with a financial statement which has apparently two colours and two forms and aspects. If the statement of Friday be the authentic statement, we are about to be landed in a great deficiency, and there is no hope whatever of seeing the end of the income tax in 1860. If, on the other hand, the version of Monday be the orthodox version, we not only get a reduction of the income tax immediately, and we not only have no recourse to those indirect taxes which have created so much odium out of doors, and which are so much opposed here, but we have a fair prospect also of getting rid of the income tax in 1860 altogether. But it is impossible that two results can be more different. If we are to adhere to the Budget of Friday, it is deficiency; if, on the other hand, we are to fall back, as we were told that we were on Monday, to the expenditure of 1853, we have before us the most rosy prospect that a financial Minister ever introduced to the House of Commons, especially at the termination of a war. I should think, then, that a debate upon the scope and tendency of these financial propositions is not at all irrelevant or unnecessary.

Now, I know it will be said that in the estimate which I have offered there is an element as regards the last two years of the right hon. Gentleman's plan, assuming that he really adopts the expenditure of 1853, which I have omitted; but I assure the hon. Gentleman that I have not forgotten it. According to the estimate of income and expenditure for 1857–8 drawn up on the basis of the expenditure of 1853 I have shown to the House that without any increase of taxation whatever there would actually be left in the exchequer a surplus exceeding £4,000,000—that is to say, that there would be left in the Exchequer about that sum which the right hon. Gentleman will obtain by that large portion of the war income tax which is not yet paid. That is the exact sum probably which would be found as surplus in the exchequer. Otherwise, without the war income tax for 1857–8, the expenditure and income would exactly balance themselves, suppose that you took the expenditure of 1853. The right hon. Gentleman, however, may say, "But if you take the expenditure of 1853 there is an item of vast amount which, will enter into the calculation of 1858–9 and 1859–60—which is not included in 1857–8—I mean the charge for the sinking fund for the war debt of £1,500,000. Therefore, if the income and expenditure of 1857–8 did balance themselves after that surplus derived from the war income tax was deducted there would be a deficiency of £1,500,000 upon those two years." Well, Sir, I grant that. I grant if you established the expenditure of 1853 as the basis of your operations, and if you did all that I have sketched out, that you would find a deficiency in consequence of the sinking fund for the war debt of £1,500,000 for the last two years of the right hon. Gentleman's plan. But remember that we shall have in the Exchequer a surplus of upwards of £4,000,000. I do not mean to say that that £4,000,000 can legally be applied at the present moment to the liquidation of the sinking fund, or even to the payment of the Exchequer bonds of the last two years. The law respecting surpluses and balances is too rigid to permit of the Chancellor of the Exchequer's applying it without appealing to Parliament. But see what the effect of the statement of Monday is:—Here you can, by falling back to the establishments of 1853, carry on the affairs of the country without any new taxes whatever, and with a large surplus at the end of the current year of upwards of £4,000,000 in your Exchequer; but in the last two years there will be a deficiency in consequence of the action of a special sinking fund for the liquidation of the war debt. But when we recollects hat that large balance has been obtained by war taxation in a time of peace, I do not see why the Chancellor of the Exchequer, instead of imposing new vexatious and odious taxes upon the people, should not come forward and ask the House of Commons whether, in equity, that surplus of £4,000,000 might not be applied to the liquidation of the war debt. In that case, according to the statement of Monday, the right hon. Gentleman might carry us through the three years of his scheme without increasing any of our taxes, and might be enabled to deal ultimately with the income tax by the aid of the terminable annuities and such other means as might then providentially arise. What a different plan has the Chancellor of the Exchequer marked out! The Chancellor of the Exchequer, in this state of the finances, comes forward and proposes new taxes. The Chancellor of the Exchequer enters into an essay as to the comparative merits of direct and indirect taxation—a barren subject for this House and the country; for, whatever their relative merits may be, it is clear that our revenue must be derived both from direct and indirect taxation, and that we must appeal to both to a very large extent. But the Chancellor of the Exchequer finds himself in this position, according to the Friday view, that he comes forward to propose the most odious of direct taxes and the most odious of indirect taxes. Sir, with regard to the income tax, I am not one, and I think I have shown I am not one, who will resist a fair introduction of direct taxation in our system. But, I say, direct taxation has never taken a more intolerable form than in the income tax. It has been condemned by the voice of the country and the decision and policy of this House. I need not enter into the catalogue of its enormities—that it is unjust, unequal, inquisitorial. There are very few who have listened to me who have not had personal proof of these qualities of the tax. They are grievances which are not to be borne, and in time of peace the income tax, as a permanent feature of our taxation, cannot be endured. In a national emergency these grievances are not felt. At such a moment private grievances are absorbed in public patriotism, and no one thinks of the injustice, the inequality, and the inquisitorialness of a tax, if he believes that the honour or existence of the country is at stake. In such an emergency no one criticises a tax; but just in proportion as it is exempt from criticism at a period of public danger, the moment a period of tranquillity returns you will find a reaction of odium to that degree that the tax is, perhaps, more criticised than it deserves. But the result is that the income and property tax is the most odious form of direct taxation, and I protest against that easy mode of argu- ment which prevails, and which holds that any person who opposes the income tax is opposed to direct taxation. When I oppose it, it is as the most odious form of direct taxation. Then, Sir, what is the main article of indirect taxation upon which the Chancellor of the Exchequer is going to inflict an impost? Sir, if there be one article more than another which, in my opinion, the Chancellor of the Exchequer ought not to interfere with it is tea. I do not say this for the convenience of debate or of Parliamentary combination. I despise and repudiate such considerations. When I had an opportunity my views on this subject were sufficiently shown. I had not the glory of carrying the reduction of the tea duties, but as the organ of Lord Derby's Government I was the first British Minister who tried to grapple with that question. I therefore express the deep conviction of my own mind on the subject, and I say that tea is the very last article that the Chancellor of the Exchequer ought to have dealt with; and that the most odious of direct taxes and the most odious of indirect taxes are not the sources of revenue that ought to have been selected when in the face of the papers I referred to tonight it becomes a matter of controversy whether any new taxes at all are required. Indeed, it appears to me, from the Chancellor of the Exchequer's statement of Monday, which I take from the observations of the right hon. Gentleman to be the real financial statement, that we should waste our time in criticising the former Budget. Well, then, if the Chancellor of the Exchequer and his colleagues have really determined to fall back on the expenditure of 1853, there is no cause whatever made out for any new taxes at all. Now, Sir, I know that some Gentlemen are much alarmed at the word "reduction," and, Sir, unquestionably rash and precipitate reductions, aiming at no precise object, and founded upon no precise information, are the most dangerous courses to which Parliament can ever have recourse, and ought never to be sanctioned by this House. But, on the other hand, it is certain that wise reductions, aiming at distinct and practical objects, and founded upon ample and authentic information obtained by experience and research, are measures which, of all others, deserve the respect and approbation of Parliament—are the measures of all others which is not only the privilege but the duty of this House to sustain and originate, and are the measures of all others which are most entitled to public approbation and gratitude. When some Gentlemen, therefore, are alarmed at reduction, I am tempted to recall to their recollection what is the reduction which appears to terrify them. In 1852, it was my lot, as the organ of the Government, to accept the Estimates prepared by our predecessors at the moment we succeeded to office. In the course of a few months circumstances were very much changed. There were many considerations of an alarming character. The political horizon was clouded. There was great alarm in the public mind that the defences of the country were not sufficient. We had to consider that difficult question; and, although our Government was weak, we resolved to come to Parliament with supplementary Estimates, the principal object of which was to secure that this country should have an efficient navy and an efficient ordnance. We came to Parliament—not, be it remembered, to a friendly Parliament—but on our representations Parliament instantly supported us. I believe I may say that the money intrusted to us was skilfully and efficiently employed; I believe that no money ever voted by Parliament was more skilfully and more efficiently employed. Witness what took place in our navy and in our artillery. But the necessary consequence of the supplementary Estimates of the Government of Lord Derby was a considerable increase on previous estimates. When we retired from office our successors accepted entirely the policy which we had originated in improving the defences of the country. They completed, and they completed in a manner that deserves all praise, the plans which we had commenced. More than that—they enlarged those supplementary Estimates, and the consequence of Lord Aberdeen's Government following that policy was a still greater increase of the Estimates. The additional Estimates amounted, after we left office, to more than £2,000,000. The House will remember that when the Chancellor of the Exchequer talks of reduction, he talks of reducing the Estimates not even to what they were in the time of Lord Derby's Government—he is not going to reduce them to the sum they amounted to after they were increased by the supplementary Estimates which I moved—but to what they were when a large increase was afterwards made. Sir, I hope hon. Members on both sides the House will remember this in considering this question of reduction. We have before us several significant precedents ns to how the House of Commons has acted on this subject. I need not dwell upon what took place in 1816, although it may be well that hon. Gentlemen should remember the circumstances. You had a King's Speech in which the Estimates were described by the Ministry as having been prepared with the utmost regard to economy. The income tax was then ten per cent. The country Gentlemen came down to Parliament, and protested against the income tax. It was the country gentlemen who mainly terminated the income tax in 1816. It was not, however, merely the country gentlemen who protested, nor was it the precipitate action of men who acted from the impulse of the moment, and not from thoughtfulness. The income tax was opposed by many eminent merchants of the day, and also by the greatest merchant that England perhaps ever had,—Mr. Baring, the late Lord Ashburton. He took the most decided course on the subject. He was a man of singular ingenuity, but of a prudence amounting to timidity. He was of all other men most deeply interested in the maintenance of the public credit of this country. And what did Mr. Baring say? Mr. Baring said, "You must terminate this income tax entirely; you must listen to no compromise,"—for the Chancellor of the Exchequer of that day was prepared to accept a reduction of the income tax to 5 per cent. As to a plea in excuse for the income tax that there was a tail of expenses left by the late war, "believe me," said Mr. Baring, "that if you yield, that tail will never disappear." Let the House remember what that war was, and what was the position of Great Britain, when Mr. Baring made that statement in the House of Commons. The battle of Waterloo had only been fought a year before; France was occupied by our armies; we had increased the national debt during the previous twelve months £67,000,000; and yet, under these circumstances, Mr. Baring was sanctioned and supported by the country gentlemen of England in demanding the abolition of the income tax. On that occasion Mr. Baring declared— That it was impossible, as long as Ministers could show any tail of the war expenses, that they would give it up. If they could once get the tax fixed in time of peace they would gain their object, and not a Member of the House would see the end of it. No one who had the least experience of the conduct of Government could doubt that, instead of producing redemption of debt, it would produce wasteful establishments and extravagant expenditure. It would only be by ridding the country of the tax that Ministers would be induced to practise economy. I would ask, are not the opinions of such a man to have their influence on us? What happened? The House acted on that opinion. On the 25th of March the House threw down the income tax. In May the Chancellor of the Exchequer came forward with a new Budget, and it was found that we could get on extremely well, although this £16,000,000 of taxation had been taken away. That is a very striking historical instance familiar to the House; but there is another instance, much more significant, that occurred in our own time—an instance which very many now sitting in the House must have been witnesses of, but which I am sorry to say almost every Gentleman has forgotten. So vast and rapid have been the events of modern times that the recollection of what occurred in 1848 with respect to taxation in this House has been entirely obliterated, as I learn from the personal experience of many of its Members. In 1848 there was a deficit. The political horizon was very cloudy, and the chief Minister of that day came forward, not trusting, if my memory be correct, even his Chancellor of the Exchequer to make the financial statement, but lending to it all the authority of the Premiership and the First Lord of the Treasury. He told the House that there was a deficit, and that the state of affairs demanded that they should be vigilant and watchful. He then proposed that the income tax of 7d. should be raised to 1s. Now, that was no slight proposal. Fivepence did not then bring £5,000,000 into the Exchequer, for my Irish friends had not then the opportunity of contributing to the Exchequer through this medium; but they will perhaps permit me to say, that if they support the financial proposition of the Government, they may rest assured they will have the privilege of paying it for many a long year. The Government of 1848 wanted to get £3,500,000 additional into the Exchequer, and their proposition was to raise the income tax to 1s. What happened? Why, nobody listened to it. They simply told the Government that, if they wanted £3,500,000, they must find it somewhere else. The noble Lord (Lord John Russell) knows very well that his proposition was withdrawn, and still the money was found. That was another instance in which the House and the country by their determination prevented an increase of the income tax—an increase which events proved not to have been at all necessary.

Now, Sir, I am for wise, not wild reduction. I am for reduction with a definite object, founded on definite knowledge. I do not want to confine my criticism to the military and naval Estimates. There is another branch of the Estimates which I think might be subjected to wholesome criticism. Let us examine these Estimates. We are proposing no measure which will be hostile to public credit; but, to my mind, we are taking a course which will confirm public credit, by not adding to the burdens of the people. Let us do as our predecessors did in 1816, and as we ourselves did—though we had forgotten it—in 1848. Let us support the Chancellor of the Exchequer in his wise policy of Monday. Let us forget that woeful Budget of Friday, which has frightened the isle from its propriety. Let us, in a word, dismiss from our minds any increase of income tax, any increase of tea duties. Neither appears to me to be necessary. The Chancellor of the Exchequer has now got upon the right rail, and we will support him in the policy which, "better late than never," he has now adopted. But, Sir, I would ask, is this change in, the policy of the Minister any reason why I should change my Resolution? My Resolution appears to me to be peculiarly adapted to the position in which we find ourselves. We want something that is clear in words and definite in expression. We do not wish to express any want of confidence in the Government, which, as we heard yesterday, would be likely to alarm some very influential Members of the House. We do not want to take the Government out of the hands of the Minister, and give it to a Parliamentary Committee. That is a course which I would never recommend. I do not wish to see a Select Committee taking, or even sharing, the responsibility of the Government. Let us, therefore, carry out this Resolution, which, in my humble judgment, lays down the right principle on which our finance should always rest—the fundamental and cardinal principle of finance to which this House should ever adhere; let us require that, before we sanction the financial arrange- ments of the Government, we shall see the estimated income and expenditure adjusted in the manner best calculated to secure the country against the risk of a deficiency. Surely, Sir, that is the principle on which we ought to act. Asserting this, let us then examine the best mode by which we can provide in 1860, without financial embarrassment, a balance which will allow the entire remission of the income tax. I think that my Resolution is one which the Government may accept, and all I shall do will be to ask them to act upon it. If they will act upon that Resolution, if they will really adopt the policy which on Monday appeared to be in the ascendant, and take the Estimates of 1853 in the manner then set forth, I, for one, have no wish to embarrass the Government. If I saw a bonâ fide determination on the part of the Government to carry such a policy into effect, I would even counsel those whom I may be presumed to influence to offer some assistance to the Government in those circumstances. I should not care even for the first year—though I think increased taxation is unnecessary—perhaps even for a further period, to meet, as regards the income tax, the views of the Government. If we saw that in 1860 we were to get rid of the income tax—if we saw that there was to be no permanent increase of the duties on tea, I would be disposed to make some sacrifice to meet the convenience of Government. But if the policy of the Government is this—that, though we may make sacrifices by this increase of direct and indirect taxation, we are only in the end to be landed in a deficit, then I think the House of Commons cannot too speedily and decidedly interfere to prevent a result so calamitous. In the belief that if the House will sanction this Resolution, we shall be able altogether to avoid new taxation by wise and well-considered reductions. I now place it in your hands, and commend it to the impartial but earnest consideration of the House of Commons.

Amendment proposed, to leave out from the word "That" to the end of the Question, in order to add the words— in the opinion of this House, it would be expedient, before sanctioning the financial arrangements for the ensuing year, to adjust the estimated Income and Expenditure in the 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," instead thereof.

Question proposed, "That the words proposed to be left out stand part of the Question."

THE CHANCELLOR OF THE EXCHEQUER

Sir, considering that when, on the first night of the Session, the right hon. Gentleman gave notice of a Motion relative to the income tax, he had evidently considered the subject with great deliberation; considering that although he announced his intention some days afterwards to persist in that Motion, he has since allowed it to disappear from the notice book;—considering that the Motion now before the House is a Motion substituted for the one originally presented,—and considering that the right hon. Gentleman who holds so eminent a position in this House, and is so experienced in financial affairs, has, we may assume, thoroughly investigated the matters upon which he has spoken,—considering, Sir, all these things, I cannot but congratulate myself at finding that he has offered scarcely any objection to that which may properly he called the financial plan of the Government. Sir, with the exception of a few remarks upon the absence of estimates of the extraordinary expenses of the Persian war, and also of what he thinks fit to call the Chinese war, and some general remarks upon the odiousness of an income tax, and the odiousness of taxes on tea and sugar, I do not remember that the right hon. Gentleman introduced into his address a single observation bearing upon the financial plan of the year. With regard to the want of an estimate of the expenses of the Persian war, I have already stated that we shall present one on some future day, and I did include in my statement of Friday last a sum of £260,000, which we estimated would represent the first portion of the extraordinary expenses of the expedition that we should have to defray up to the 1st April next. It is, therefore, not correct to say that no estimate for the extraordinary expenses of the war with Persia will be laid before Parliament. With regard to what the right hon. Gentleman calls the Chinese war, the operations have been carried on by the vessels on the station, and no extraordinary expenditure has hitherto been incurred—none that we could lay before the House in the shape of Estimates. As to the right hon. Gentleman's general declamation on the subject of the income tax, I think, considering the number of years during which that tax has now existed since it was proposed by Sir Robert Peel—years of peace as well as of war—that the House will hardly expect that I should enter into a formal dissertation as to the policy and necessity of that tax under certain circumstances. With regard to the tea and sugar duties, which the right hon. Gentleman declares to be the most odious of imposts, I really am at a loss to know upon what ground they are to be so designated. [Mr. DISRAELI: Only the tea duties.] For a long time tea and sugar have been included among the articles upon which a Customs' duty has been levied, and the duty is not subject to the objection of being a protective duty, inasmuch as these articles are produced exclusively abroad. They are certainly articles of general consumption, but they occupy a position somewhat above that of mere necessaries, such as bread and meat. At any rate, for a series of years, without any interruption, tea and sugar have been regarded as proper subjects for taxation. I am therefore at a loss to know why the right hon. Gentleman should stigmatize the duties upon tea and sugar as peculiarly odious. [Mr. DISRAELI repeated that he had only mentioned the tea duty.] Well, I cannot see why he should condemn me for retaining as an object of taxation an article upon which a greater amount of duty than is now proposed to be raised has in time of peace, up to the present period, been levied for a long series of years. I must assume, then, that the financial plan of the year—or the Budget—that term being confined to the estimate of expenditure submitted to the House in Committee of Supply, and to the estimate of the Ways and Means provided to meet that expenditure—having been placed before the House, the right hon. Gentleman can scarcely make any objection to that Budget, and I may regard myself as fortunate in having escaped almost entirely his censure. But in the discursive flights which the right hon. Gentleman took over the regions of finance he was not satisfied with remarking upon the estimate of revenue and expenditure for the year, but he commented upon the plan which I proposed for fixing the taxation for two addi- tional years. I may, perhaps, remind the House of our constitutional practice with regard to the determination of revenue and expenditure. The expenditure of the country is partly fixed by Act of Parliament—that is, it partly consists of the interest upon the debt, which is payable by Act of Parliament, and of charges upon the Consolidated fund, which are also fixed by Act of Parliament; and it partly consists of annual Votes in Committee of Supply. These two branches of expenditure are now about equal, the amount payable in the present year under Acts of Parliament being about £32,000,000, and the amount to be voted in Committee of Supply being also about £32,000,000. It is possible, when the Estimates are laid on the table, when a plan of expenditure is proposed upon the responsibility of the executive Government to the House, to form a financial plan or scheme of revenue and expenditure for the year; and that is what I and all persons in my position have done. But I will venture to say that no Finance Minister upon any occasion ever presented to the House a plan of expenditure for any future year. Such a thing is perfectly unheard of. The great majority of taxes are fixed by permanent Acts of Parliament and levied from year to year until Parliament thinks fit to get rid of them. Other taxes are fixed for a period of years. Formerly there were certain annual duties, such as the sugar duties, but they have now been discontinued, and at present all taxes are fixed for a perpetuity or for a period of years by Act of Parliament. I thought it my duty to propose, finding that the tea and sugar duties and the income tax were continued for a certain time, that certain alterations in the rates at present fixed by Act of Parliament should be made in respect of those duties and of that tax. The income tax was limited to continue for three years, and I proposed simply to alter the rates of the tax during those three years. The tea and sugar duties were to fall by fixed gradations to a certain amount, and were then to be fixed at that amount. All that I did was to propose certain alterations in these duties. But I never submitted to the House a plan of expenditure for a future year—for any year beyond the present. Neither on Friday, when I first addressed the House on this subject, nor on Monday, when I gave an explanation supplementary to my former address, did I attempt to give any estimate of expenditure for a future year; and if the right hon. Gentleman will look at the statements of former Finance Ministers,—for instance at that of Sir Robert Peel when he introduced the income tax, and at those of the various Chancellors of the Exchequer who have renewed that tax, he will find that on no occasion did they attempt to give an estimate of expenditure for more than one year. Therefore, when the right hon. Gentleman talks of a "deficiency," as threatened in future years, he introduces an idea wholly foreign to the subject. In order that there should be a deficiency it is necessary that there should be a comparison between revenue and expenditure; and if I had made an estimate of expenditure for future years, and the right hon. Gentleman had compared it with the revenue, and had then found there was a deficiency, he would, no doubt, have been justified in saying that I had created, as he called it, a colossal deficiency. But I never asserted that the changes of taxation I had proposed would create either a deficiency or a surplus. On the first night that I made a statement I abstained from all specific mention of future years; but on Monday, when the right hon. Gentleman had given notice of the Motion he has now made, I thought it would be convenient to the House to know what was the revenue which I calculated for the two years to which that Motion referred, and I accordingly read an estimate of that revenue. The totals of that estimate, by the way, were not stated by the right hon. Gentleman exactly as I stated them. The totals which I stated were £62,300,000 for the year 1858–9, and £62,265,000 for the year 1859–60; and I said that if you compared that revenue with the expenditure of the year 1853–4, you would find no deficiency. That was the statement I made, taking the last year before the war as a standard of comparison; because, if I had taken as my standard the estimated expenditure of the present year, I should have taken an estimate which has not been agreed to by the House, and which, moreover, relates to a year of great peculiarity—the first year after the war. However, any hon. Gentleman may make the comparison for himself, either of the revenue, such as I have stated it, with the expenditure of the present year, or of that revenue with the expenditure of 1853; but, whatever year may be taken as the standard of comparison, I must be understood as declining to make any positive estimate, or to give any opinion as to the amount of expenditure of any year after the present. With regard to the argument of the right hon. Gentleman, that there will be a great sum, which will accumulate, to be defrayed in the year 1860, by which the difficulties of repealing the income tax will be increased, I wish to call the attention of the House to a few remarks. At the same time I repeat, I do not undertake to make a Budget for more than one year. I express no opinion whatever as to the probable expenditure for a year after the present. Nevertheless, I shall take a general view, so as to throw some light on the possible financial position of the country in the two following years. The revenue estimated for the years 1858–59 and 1859–60 is, as I have already stated, about £62,300,000 and £62,260,000 respectively. I hold in my hand a statement of the gross revenue of every year since 1830. There is only one year from 1830 up to 1853 in which the gross ordinary income exceeds £58,000,000. The revenue which I have provided resulting from the alterations of taxation will be at the lowest £62,265,000, being nearly £4,000,000 greater than that of every year prior to 1854–5. Since 1854 the revenue has been £64,000,000 for 1854–5, and £70,550,000 for 1855–56. In the present year the revenue will amount to about £71,885,000. The revenue for next year is estimated at £66,365,000, being the year 1857–8, for which I propose the present Budget. Then we come to the years 1858–9, when the revenue is estimated at £62,300,000, and 1859–60 at £62,265,000. The question is whether it is probable that an income of that amount will be insufficient for the expenditure of those two years. Notwithstanding the disapprobation of the right hon. Gentleman, I must again be allowed to institute a comparison between the expenditure of these years and the expenditure of the year 1853–4. The expenditure then was £55,840,000. The revenue proposed to be raised in each of these two years is £6,460,000 in excess when compared with that expenditure—that is to say, the income of the years 1858–59 and 1859–60, as compared with the expenditure of 1853–4, shows a surplus of £6,460,000. We must consider in a Parliamentary point of view what may be regarded as the first charges on that income. I will at once assume that, looking at the im- portance of our national defences, the expenses for the army and navy will be the first charges. Comparing the estimates of the present year with the estimates of the last year before the war, there is an excess of about £4,000,000. We certainly cannot reasonably anticipate that that excess shall continue at its present amount. Some portion, everybody will admit, is due to this being the first year after a war. [Mr. DISRAELI.—The second year; that is important.] At all events it is the first year after the disbanding of our armies, and after the return of our army from the seat of war. Unquestionably great difficulty is experienced in making reductions suddenly in the army and navy, and in military and naval establishments, and we must therefore consider that a large portion—I will not say how large, but a large portion—of the present excess is due to the peculiar circumstances of the present year. What reduction we may be able to make in future years, under that head of our expenditure, is a matter on which I can now express no opinion. It will depend on many causes, many of which are within the control of this House; but inasmuch as we have not yet been in Committee of Supply, and the Estimates have not undergone any debate, it would be premature to offer an opinion as to the extent to which the Estimates for the army and navy may be susceptible of reduction in future years. That they will admit of reduction to a greater or less extent I deem absolutely certain. We then come to the estimates for the Civil Service, and I confess that offers greater difficulties in the way of reduction than the army and navy. This has been owing to the great increase which has taken place of late years in that branch of expenditure, so that now the estimates for the Civil Service amount to rather more than £7,000,000—that is to say, they exhaust the whole of the Income Tax at 7d. in the pound. At the same time, the House should bear in mind that a sum of £1,200,000 has been transferred from the Consolidated Fund to the annual votes, which is a transfer of expenditure, not an increase, and merely appears under a different head. But, Sir, there has been of late years a great increase under this head of charge, owing in a great measure to the policy which has been received with so much favour in this House, and particularly found advocates among hon. Gentlemen opposite, of transferring charges of a local nature to the National Exchequer. As it is a matter of some importance, perhaps the House will allow me to state to them a series of items of this character which are now charged upon the Civil Service Estimates. There is the item of criminal prosecutions in England and Wales, formerly paid out of the county rate, £250,000; the same for Scotland, £12,000; maintenance of prisoners in the United Kingdom, £126,000; Poor Law charges, £118,000; County Constabulary, £146,000; the same for Ireland, £645,000—making altogether in relief of local rates, £1,297,000. There has been also a transfer to the Civil estimates of an item of £268,000 from local fees in County Courts. There is also a charge, which must be considered in the nature of relief to local expenditure, for education in Great Britain, which this year amounts to £529,000, and for Ireland to £181,000. The branch of science and art takes £45,000, and these three items make together £755,000. The total of items of this class is £2,320,000. That is a branch of expenditure which has been growing, and is still on the increase, and in the reduction of which any Executive Government will find itself comparatively powerless. The next charge which will come upon those years is the charge for the debt. If the revenue should be found insufficient, after defraying the service of the year, to defray the repayment of debt charged by law on those years, it will of course be open to Parliament when that time arrives to consider whether any other arrangement may be made for the discharge of that obligation. I should be extremely sorry if I thought that anything would interfere with the payment of the four series of Exchequer Bonds which stand for payment in the present and the three succeeding years. At the same time, if it should be found that they can only be paid by imposing on the country taxes of a very onerous description—if the financial pressure is severe—of course it will be open to the Parliament of the day to consider whether the burden can be distributed over a greater number of years. My hope and conviction are that it will be possible to defray them in the years when they fall due. But with regard to the sinking fund which is due in the same years, a different reason applies. I ought, perhaps, to explain to the House the way in which that sinking fund is to work. The sinking fund for the two loans of £16,000,000, and £5,000,000 was made to commence in the same manner in which the income tax was made to cease—that is to say in a year after the 1st of April succeeding the ratification of a treaty of peace. That was the case with the first two loans, because they were contracted in the course of the war. The third loan of £5,000,000, was contracted after the war, and therefore a definite period was fixed for its payment. When the first and second of these loans were contracted the duration of the war was quite uncertain. It might have lasted five or ten years. If it had lasted for any period of that sort, and Exchequer Bonds had fallen due during the continuance of the war, it would have been impossible to pay such bonds out of the annual revenue, and it would have been absolutely necessary to have recourse to a new arrangement, such as a new loan, for their discharge. But as the war happily lasted only three years, it so happens that the first payments out of the sinking fund upon the three loans fall in the same year as the first redemption of the Exchequer bonds; and hence arises a great accumulation of redemption of the debt in those three years. The House will observe, that the amount to be redeemed in the present year is £2,250,000. In each of the two next years the sum will be £3,500,000. It would be a perfectly legitimate financial operation, if Parliament should think fit to do so, to postpone that sinking fund for three years. The only effect of such postponement would be, that the first loan, for example, instead of being paid off in 1873, would not be paid off till 1876, and so with regard to the other two. In that way, if Parliament thought fit, relief might be afforded to the finances during the next two years. Sir, there is also another reason why it might be reasonable to adopt that course. When so large a sum as £3,500,000 is to be redeemed within a year, and that redemption takes place by the purchase of stock by the Government, they raise the price of stock as against themselves, and the redemption is therefore effected on unfavourable terms. I have not stated the full extent of the redemption of debt which will be going on in those three years. There are now annual payments upon terminable annuities to the extent of about £4,000,000. Now, the annual charge of these annuities, if they were converted into perpetual annuities, would be £900,000. The difference therefore, in the three years between the charge upon those terminable annuities, and upon them, if converted into perpetual annuities, would be £9,300,000, which represents with tolerable accuracy the annual extinction of the debt. And, therefore, if in those three years the whole of the debt represented in the return which I hold in my hand were extinguished, together with the payment of the terminable annuities, we should have redeemed £18,550,000 of the debt at the end of those three years. I have explained to the House that I do not undertake to make a Budget for the next two years, but that, according to any reasonable computation of expenditure, and also making allowance for those legitimate arrangements which may be resorted to with regard to the redemption of the debt, if Parliament should so determine, there can be no ground, as far as we can judge, for anticipating that financial embarrassment (involving a deficiency of £5,000,000), in a future year, which the right hon. Gentleman has depicted in such alarming colours, and which, he says, would render the extinction of the income tax impossible. I have, I trust, shown that that part of the right hon. Gentleman's speech, which consisted of the demolition of an imaginary fabric—namely, the balances in the next two years between revenue and expenditure upon which I had relied, together with the right hon. Gentleman's calculated deficiency, is wholly founded on error and on a misapprehension of the very elements and conditions of the question. But, Sir, can it be said, with any truth, that I have opposed any additional or artificial obstacle to the extinction of the income tax in 1860? I think I can convince the House, that so far as I have done anything in that respect, I have rather afforded facilities for its extinction—that so far from rendering that end more difficult, I have rendered it more easy. I have proposed a reduction of the income tax for the present year, which the right hon. Gentleman himself not only does not object to, but which, he says, is a political necessity. I have proposed that the income tax, for the last two years of its existence, shall be 7d. instead of 5d. in the pound, and I think that that is by no means a burdensome increase. An income tax of 1d. in the pound would be 8s. 4d. per cent, and therefore the addition of 2d. in the pound to 5d. will only add 16s. 8d. per cent to £2 1s. 8d. per cent, thereby making the percentage of £2 18s. 4d. That addition, I think, cannot be regarded as a very heavy burden upon any scale of fortune. So far as the change which I propose in the income tax makes any difference, it provides an additional revenue for those two years, and so far it stands in the way of the alarming deficit of which the right hon. Gentleman talks, and which he imputes to me as its author. And the same is the case with regard to the tea and sugar duties. At present those duties are upon a descending scale. I propose to arrest that descent; and, therefore, so far as those duties are concerned they will tend to increase the revenue for the two next years. The change which I propose, so far as the addition to the income tax and the tea and sugar duties is affected, manifestly facilitates and does not obstruct. Then with regard to the provision which may be made for the discharge of the debt in these three years, if that debt should be discharged to the extent of £9,250,000, the reduction of the interest in 1860, compared with the year 1857, would be £313,000. So far, therefore, as the charge of the debt and any bearing it may have on the extinction of the income tax in 1860 is concerned, it is plain that my proposals all tend in that direction. I may, perhaps, be liable to the charge of attempting to penetrate too far into the future if I read to the House an estimate which I have prepared of the revenue in 1860–61. The revenue of a future year can be estimated according to the existing law: but it is otherwise with regard to the expenditure, because it depends upon the annual estimates which are prepared by the Government of the time being, and have to be submitted to Parliament. When, therefore, I make an estimate of the expenditure for 1858–9, for example, I can estimate that portion of the expenditure which is fixed by Parliament—such as the annual charge on the Consolidated Fund; but all the Supply Services must necessarily be framed upon mere conjecture. Supposing, then, that no alteration shall be made till the year 1860 in the taxation which I have proposed, I estimate the revenue of the years 1859–60 at £62,265,000. There would be a loss in 1860 upon the tea and sugar duties (even taking into calculation the increased consumption in that year) of about £1,065,000. There would also be a loss upon the income tax of £3,650,000, because the payment of only half of the sevenpenny-tax would fall due in that year. In respect of Miscellaneous, I estimate a loss of £100,000. The total loss, therefore, to the revenue in 1860–1, under my proposed changes, compared with that of the previous year, would be £4,815,000, and the revenue in 1860–61 would be £57,450,000. If we add for improvements in other branches of the public revenue an assumed sum of £665,000, we get a total of £58,115,000. Again, I am afraid I shall incur the displeasure of the right hon. Gentleman by referring to the expenditure of 1853–4. The expenditure of 1853–4 was £55,840,000, which we may take as a standard of comparison, approving it or not as we think fit. I deduct from that sum the difference between the interest of the debt in 1860–61, and the interest of the debt in 1853—namely, £1,640,000—which is formed by deducting from the terminable annuities, which expire in 1860–61, and which amount to £2,146,000, the additional charge of interest which has accrued during the war. The expenditure of the year—assuming always that of 1853,—is thus reduced to £54,200,000, as against an income of £58,115,000. The House may take that estimate for what it is worth. I have expressed no opinion upon it, and refer to it merely for the purpose of showing that the plan I proposed does not throw any obstacle in the way of the extinction of the income tax in 1860. With regard to that question I feel myself incapable of assenting to the latter part of the right hon. Gentleman's Resolution. It says that it would be expedient 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." Sir, I do not in the least deny that it would be extremely desirable to realize that result. All persons must wish that any onerous tax, which the income tax is alleged to be, should, by the increasing prosperity of the country, be found unnecessary for the public service. But it seems to me that we cannot bind ourselves down to any sort of pledge, or to any formal confession of faith, as to the possibility or the probability of Parliament being able to re- mit the income tax in 1860. Each Gentleman may calculate the probabilities for himself, and if we choose we can abstain from taking any measure which might render such remission of taxation either difficult or improbable. What I maintain is, that the proposal which I have made, so far from increasing the difficulties, mitigates and lessens them, and that on the contrary, it offers every reasonable prospect which we can hold out at present of a satisfactory financial adjustment in 1860. Beyond that point it appears to me impossible to go. If the state of our finances in 1860 be such as shall admit with advantage of the remission, wholly or almost entirely, of the income tax, let us trust to the wisdom and patriotism of Parliament in that year to effect the change. If, on the other hand, it should turn out, from adverse circumstances which, without the gift of prophecy, it is impossible for us to foresee, that the abolition of the income tax is impossible, we should only create disappointment and weaken the respect in which Parliament is happily held if we led the country, by an abstract Resolution, to expect a remission which circumstances might put it beyond our power to effect. Therefore, although there is little in the general tenour of the Resolution to which I have to object, I cannot see that any advantage would arise from our assenting to it. It would be open to much misrepresentation, would give rise, perhaps, to dangerous misunderstanding, and therefore I shall vote in favour of the Speaker leaving the chair. I shall neither affirm nor deny the Resolution, but shall ask the House to pass to the Order of the Day and go into Committee of Ways and Means, with a view to consider the practical question of the reduction of the war rate of the income tax. The Resolution of the right hon. Gentleman can lead to no practical result. It can produce no effect beyond that of a certain quantity of discussion in this House, and even if we were to bind ourselves down to this sort of political test, I cannot understand how we should be nearer than we are now to the attainment of the end which the right hon. Gentleman opposite and all of us must have in view—namely, a permanent and prospective settlement of our finances. So much for the latter part of the Resolution. The former part seems to me, so far as I can apprehend its meaning, to be equally objectionable. It asks the House to resolve that "it would be expe- dient, before sanctioning the financial arrangements for the ensuing year, to adjust the estimated income and expenditure in the manner which shall appear best calculated to secure the country against the risk of a deficiency in the years 1858–9 and 1859–60." I confess I am not quite clear as to the meaning of that paragraph, but I apprehend the right hon. Gentleman means—and perhaps he will have the kindness to correct me if I misconstrue the words—that we are to adjust the estimated income and expenditure of the years 1858–9 and 1859–60 in the manner which shall appear best calculated to secure the country against the risk of a deficiency in those years: I will assume that that is the meaning of his Resolution.

MR. DISRAELI

I beg to say that that is not its meaning.

THE CHANCELLOR OF THE EXCHEQUER

Perhaps the right hon. Gentleman will explain what he does mean?

MR. DISRAELI

I thought the wording of the Resolution was extremely clear. When I ask the House to resolve that it would be expedient, before sanctioning the financial arrangements for the ensuing year, to adjust the estimated income and expenditure, I do not refer to the estimated income and expenditure of the years 1858–9 and 1859–60, but allude particularly to the estimated income and expenditure of the present year.

THE CHANCELLOR OF THE EXCHEQUER

Then what the right hon. Gentleman proposes is, that we should adjust the estimated income and expenditure of the present year in such a manner as should appear best calculated to secure the country against the risk of a deficiency in the two following years. Sir, I confess I had some difficulty as to the construction of the terms of his Resolution, but I was desirous of saving his logic at the expense of his grammar. The right hon. Gentleman, on the other hand, appears to wish to sacrifice his logic and save his grammar; for by what process of adjustment of the income and expenditure of the current year we are to guard the country against the risk of a deficiency in the two following years. I am at a loss to imagine. The right hon. Gentleman is perfectly aware—he stated, indeed, in the course of his speech—that by law the Commissioners of the National Debt are bound to apply to the reduction of the debt the surplus of each separate year; and therefore if there were a surplus in the present year it could not be handed over to supply the deficiency of subsequent years, but must be exhausted within the current year. But, assuming an adjustment of the estimated income and expenditure of the ensuing year to be expedient, how is it to be carried into effect? I do not think that a discussion such as that of to-night is likely to have a very adjusting effect. The House itself cannot undertake the adjustment of the income and expenditure; and if that duty is to be performed in a workman-like and efficient manner, the right hon. Gentleman must move the appointment of a Select Committee. There must be not a "Finance Committee," but an "Adjustment Committee." I presume the first step would be to refer the Army and Navy Estimates to it; the Civil Service Estimates would follow; and so the process of adjustment would proceed through all the items of income and expenditure. Judging from the progress which former Committees have made with similar inquiries, I think I might venture to predict with considerable confidence that the Report of the Adjustment Committee would not be presented much before the end of the Session. The last Committee upon the Estimates sat two or three Sessions; but, giving the new Committee credit for extraordinary diligence, industry, and research, I think we could hardly expect their Report before the end of the Session. Even then, however, the process of adjustment would not be completed, because the House itself would have to consider and, if possible, agree to the Report; and all this before the financial arrangements for the ensuing year are sanctioned. Meanwhile, what would happen to the income tax? By law the war income tax is continued for another year. Unless some Act of Parliament to the contrary be passed by the Legislature before the 1st April next, the collection of the tax must continue. Well, then, while the right hon. Gentleman's Committee was adjusting taxation the taxpayer would be paying his war ninepence up to the end of the present Session, and thus the process which is suggested for the relief of the taxpayer would be found a principal means of continuing the burden of the taxpayer. I trust, then, that upon a consideration of this Resolution and of the effect it would have as regards either the adjustment of income and expenditure, or the question of the extinction of the income tax, the House will see that no practical benefit can result from its adoption, and that it will agree to the Motion which I had the honour of making, That the Speaker do leave the chair, in order that we enter upon a consideration of the Resolutions relating to the income tax and the tea and sugar duties, and commence at once a revision of the taxation of the country in reference to its altered position by a transition from war to peace.

MR. GLADSTONE

Sir, I have been under the belief that the question raised by the Budget of Her Majesty's Government would command very great interest in this House. I am still impressed with that belief; but perhaps the reluctance of hon. Members to address the House may be intended to convey to me that they have a right to hear my sentiments upon this question. There is no man in this House who is so deeply concerned in the question which is now raised as myself. I have stood at that box, Sir, and have addressed the House of Commons, and I have received on the part of the Government to which I belonged the assent of the House of Commons to financial plans which were in every point contradictory to those which are now proposed. How it is that hon. Gentlemen still sitting on those (the Treasury benches) find such facility for giving assent to contradictory propositions it is not for me to say; but of this I feel convinced, that if I may assume to exist in this House of Commons the same feelings which existed four years ago—I do not mean as to questions which were the subject of party contentions, but as to the duty of balancing income and expenditure—the express pledges which were given to the country on the subject of the income tax will be rigorously maintained. If this House which I now address be the same House which then accepted the propositions of the Government when we held out certain expectations to the people of England—when with those expectations we imposed the income tax upon the people of Ireland—when we obtained an opportunity for the settlement of many difficult and thorny questions on account of the expectations so held out—if this be the same House of Commons, still governed by the same motives, still sensible of the same obligations, then I feel a great confidence in the vote which this House will give upon the present occasion.

Sir, my right hon. Friend who has just sat down has, I am bound to say, in the speech he has delivered, entirely, candidly, ingenuously corresponded with the description I have given of his financial plan. Everything for which we have been labouring during the last fifteen years is—I do not say destroyed, because the destruction of the results of fifteen years' labour is not the work of a single day—but everything in regard to finance for which we have been labouring during the last fifteen years is in principle condemned alike by the speech as by the plans of the right hon. Gentleman the Chancellor of the Exchequer. Why, Sir, for several years before 1841 it was the misfortune of this country that there arose a series of deficiencies in the revenue. We recollect what it cost us to repair those deficiencies. We thought that from that time forward the principle had been established that it was the first duty of the House of Commons to provide a revenue adequate to meet the demands of the public service. We will see by and by what are the views of my right hon. Friend upon the subject of the balance of income and expenditure. We thought we had been simplifying and consolidating our financial laws. Upon three separate occasions—in 1842, again in 1845, and in 1853—with the general assent of Parliament—for it was no party question—great efforts have been made by successive Governments to consolidate our financial laws, and we removed from our Customs' tariff more hundreds of articles than I dare venture to mention. By that means we set a great portion of our trade entirely free, and that I believe has been the main cause of its subsequent vast expansion. But what says the Chancellor of the Exchequer? Does he approve that simplification? No; but he has done this—he has disinterred old Arthur Young; he has brought Arthur Young before us, and Arthur Young says that to load an infinity of articles with taxes infinitely small is the perfection of finance. That, however, is a total condemnation of the principles by which Parliament has been guided during the last fifteen years. In 1853 this House gave its solemn assent to this principle—that the income tax, while it continued in time of peace, if it was to continue at all, should be continued for special purposes—namely, for the purpose of introducing great improvements into our financial system, so as to relieve the mass of the people from heavy burdens. Therefore, although the tax in itself was grievous, inquisitorial, unequal, a tax which it was desirable to get rid of, yet Parliament agreed to tolerate it for a further time, but only for that one purpose, which mitigated the re- collection of the hardship of the tax by associating with it a recollection still more pungent of the blessings to be wrought out for the mass of the people through its instrumentality. What has become of that principle in the hands of the right hon. Gentleman the Chancellor of the Exchequer? With what beneficial change does he propose to associate the continuance of the income tax? My right hon. Friend has certainly not evaded the subject. His candour and ingenuousness forbade him to evade it. He scorned to escape it—he discussed the subject of indirect taxation—he knew there were three matters respecting which much feeling prevails in the country as to the expediency of the existing law. The right hon. Gentleman knew there was the tax on paper, which it is urged is not only a heavy burden upon literature, not only a burden upon the manufacturers, but a restraint upon the extension of rural labour, to which the manufacture is so well adapted. He took the tax upon insurances, which is a scandal to England. He took also the tax on wine, which he knows to be the greatest impediment to our enlarged intercourse with France; and how did the right hon. Gentleman deal with those subjects? How does he propose to associate the continuance of the income tax with the recollection of a benefit conferred? He said that the duty on paper was not a bad duty; that the tax upon insurances was a good one; and as to the duties on wine, he would discuss them another day. I ask, then, whether I use the language of exaggeration, or the language of truth, when I state that my right hon. Friend has completely, in his speech, thrown overboard, condemned, repudiated—as far as the act of one year can go—principles of finance which were introduced amid difficulties and struggles—which were first extensively applied when the party opposite was in power, and applied with the general approval of that party, as well as of the party on this side of the House. With respect to all those things my right hon. Friend—I will not say destroys all the benefits which have accrued, for as yet he has only had one opportunity to practise his hand—but he has done pretty well, and I am certain that if the Chancellors of the Exchequer who may succeed him should follow his example, or if he himself continues to labour in his vocation as sedulously in future years as he promises to do in this, and if those labours should obtain the sanction of the House of Commons, at the end of the next fifteen years you will find but few relics of the great efforts and great achievements of the last fifteen years.

To pass from the speech to the Budget—I am sorry to find that, owing to what circumstances I cannot tell, it has been made the means of propagating throughout the country a series of impressions as to matters of fact which are totally unfounded. I am quite sure it was not the intention of the right hon. Gentleman to produce any such effect, but I am quite as certain that such effects have been produced, and that the production of them is owing to the inadvertent use he has made of figures in his statement. The impression that has gone abroad is, that £11,970,000 of taxes are to be remitted. That was the inference of the right hon. Gentleman's speech. We are told that about £9,000,000 of the income tax is going to be given up for the year 1857–8, and that after these great operations there will remain a surplus revenue of £900,000. Notwithstanding all this, there is to be no departure from the expectations held out to the country with respect to the cessation of the income tax in 1860; but, on the contrary, we are going to make a new affirmation of them by passing a Resolution to the effect that the grant of 7d. in the pound on incomes shall be for the term of three years and no longer. Now, Sir, I believe (and I hope to be corrected if I am wrong) that these are the exact impressions as to the character of the Budget now before the House which were propagated on Friday night, and which since that night have by means of the public journals passed throughout the country. Now, I venture to say that not one of these assertions is true. I do not speak now of matters of argument, I speak of matters of fact, and I say they are not true. I take the first statement of my right hon. Friend, when he gave us a list of taxes about to be repealed, though he did not tell us of any taxes about to be imposed—an omission much to be regretted. The Chancellor of the Exchequer told us that £11,970,000 taxes were to be repealed; and I think I am right in saying that it is the almost universal belief of the House that we are now going by our own acts to extend that amount of relief to the country for the year 1857–8, and still to retain a surplus of £900,000. Am I not right in that? because if the foundation is cut away from under these financial plans the whole of their merits are cut away. We must see what we are going to do, and what we propose for the future after the proposed repeal of taxation. Now out of that sum of £11,970,000 there is a very large portion the repeal of which does not depend on any proposal of the Government or act of ours. When war taxes are granted they are invariably granted by the Parliament for the purposes of war in time of war. Thus the war tax on malt, yielding £2,000,000, has lapsed by Act of Parliament. The war tax on coffee £135,000 lapses by Act of Parliament from the 5th of April next. In like manner the war tax on tea of 6d. in the pound lapses, causing by Act of Parliament a boon to the country of £1,588,000, from the 1st of April next. The war tax on sugar of 2s. 1d. (taking brown sugar) lapses from the same date, making a relief to the consumers of £755,000. That is to say, there are several sums, amounting to £4,470,000, the repeal of which the people ought not to owe to the grace or favour of either the Government or the Parliament in the present Session, but which disappear in virtue of the operation of the Acts which limited them to the war. To begin with that—is not that a considerable hole to make in my right hon. Friend's promised repeal of £11,970,000 of taxes, the grace, beauty, and virtue of which repeal was, we were told, to attach entirely to the votes we should be called on to give in the present Session? So much remission as I have stated was already enacted by Acts of Parliament; but what are we called on to do? It is here that the great misapprehension lies. It is believed by the country—or it was believed—and it is still believed to a very great extent by this House, that we are going to grant the remission of £9,000,000 of the income tax applicable to the year 1857–8, and that after having made that remission there will still be a surplus of £900,000. Is that a fact or not? We heard abundance of comment and criticism—I would almost call it cavil—from the Chancellor of the Exchequer to-night on the folly of attempting to balance income and expenditure for future years. Yet it is very convenient for the Chancellor of the Exchequer to vote away from future years the revenue which he retains for the present year, and, applying that revenue to the ways and means of this year, to leave future years destitute; and, when called to render an account, to say, "It is vain to pretend to balance the income and expenditure of a future year." Now, let my challenge be clear and intelligible. I will endeavour not to be ambiguous. I say that the Government are not giving away £9,000,000 of the income tax for the year 1857–8. I say that they are now giving up only about one half of that sum, or £4,600,000, in respect to income tax; and that against even that is to be set the sum of £1,416,000 as taxes levied on tea and sugar additional to the present law from the 5th of April next. Therefore, the real amount of the remission we are called upon to sanction for the year 1857–8 is not £11,970,000, but £3,184,000. I give my figures with such clearness that no one shall misunderstand them, and I challenge contradiction. But that is not the only remission which the Chancellor of the Exchequer is asking us to vote. He is asking us to vote the remission of another half of the income tax for the year 1859–60—another £4,600,000. Against that too, there is a small set-off; for while he is going to lay an additional burden on tea and sugar for 1857–8, he is going to make an additional burden on 1858–9 of £560,000, which I deduct from the repeal of £4,600,000 of income tax. He is therefore inviting us to sanction a net remission of £4,040,000 for the year 1858–9 and £3,184,000 for 1857–8. Then, these considerations will reduce the total amount of remission to be enjoyed in 1857–8 according to the Chancellor of the Exchequer's plan and by Acts of Parliament to £7,654,000; and the total amount of remission which his plan invites the House to enact, which is to take effect partly in this year and partly in next, amounts to £7,224,000; but the total remission he proposes now to grant and to be enjoyed in 1857–8, amounts only to £3,184,000. Under these circumstances, I think I am justified in the statement I made, that the most extensive misapprehensions of fact in this case had gone abroad. If it were true that we were really about to surrender £9,000,000 of the income tax; if it were also true—as my right hon. Friend allowed it to be supposed, though he did not say so—that while we are making the surrender of the income tax for our own benefit, we are at the same time keeping our hands off the tea and sugar of the poorer classes, and that still there would be a surplus of £900,000, I venture to say that the opposition to the Budget of the Government would be of a very light and airy character. But, Sir, I do not admit the surplus of £900,000. The request of the right hon. Gentleman was certainly a very modest one, when he hoped this would not be considered too great a surplus. Too great a surplus! Why, the right hon. Gentleman did not say a word about what you will have to vote for the two wars in the East. When we recollect that we have to carry on two wars in the East, and that the right hon. Gentleman has not called upon us to vote any money for the expenses of those wars; that amongst all the votes he has submitted to Parliament he has not asked for one farthing for the Chinese war, while with respect to the Persian war he finds it the most convenient cause to keep it as long as possible out of sight—can you believe, with these considerations before you, that the right hon. Gentleman is correct in his estimate of £900,000 surplus? He confines himself, as to the Persian war, to covering the expenses of last year, and does not call upon us to vote any money for its charge in 1857–8. If there be any life in the House of Commons—any sense of its constitutional duty—it will not allow the Persian war to be conducted on those principles. I give the fullest notice that I do not understand it to be the function of the representatives of the people, while attending in this House, to allow wars to be begun by the Government, to be carried on by the Government, without any explanation or estimate of the charges being submitted to us: until after the conclusion of the war, after the money has been spent and the lives of our countrymen sacrificed, the little bills are presented, and we are told by the Chancellor of the Exchequer that we have nothing to do but to consider how they shall be paid. That is not my understanding of our duties as representatives of the people. If the Government form such an estimate of our duties, I tell them that I for one will never conform to that estimate, and if the House of Commons shall be of the same determination as myself, we shall invite the Government to give us a distinct explanation of the character and expenses of those wars. If they decline our invitation, we shall urge them to do so. And if they still refuse, we must coerce them by our votes to give us an estimate of the expenses of the Persian war, that we may know precisely what it is before the war goes further, and not allow ourselves to be kept in ignorance of it until the war is over. So far from thinking the £900,000 surplus asked for by my right hon. Friend, a sum which it is immodest in him to ask, I think it so extremely narrow for his purpose that I cannot consent to consider it as a surplus bonâ fide available; for, without asking any such questions as that put to-night by my right hon. Friend (Sir James Graham) about the liquidation of the Sound dues, or any questions concerning the increased sums necessary for the civil service of the country, I see two wars going on, the whole cost of one of which we are to assume must be defrayed by this country, while half the cost of the other, we are told you are to liquidate. If you have two wars going on you have two operations in progress to absorb this modest surplus of £900,000. I say, therefore, in short, that £11,970,000 of taxes are not repealed; that £9,000,000 of income tax for the year 1857–8 are not repealed, and that a surplus £900,000 does not remain by those proposals. With regard to the termination of the income tax in 1860, the right hon. Gentleman did not make a direct promise on that point, but he rather facetiously observed that the Government would by their financial measures give additional facilities for bringing the tax to an end in 1860. But into that we shall inquire a little more by-and-bye. So much with regard to the description of the Budget of Her Majesty's Government, and to the remissions which my right hon. Friend proposes to make. Sir, the right hon. Gentleman the Member for Buckinghamshire, in the speech which he has addressed to the House to-night, spoke of the difficulties attendant on prospective finance. No doubt those difficulties are serious. I myself am the person properly responsible, perhaps, for having proposed in the House of Commons, on the part of the Government of 1853, a plan which involved much of prospective computation. I believe I was justified in propounding that plan, regard being had to the circumstances under which it was proposed; but, at any rate, my conviction is that, as it was proposed by a Government and accepted by a Parliament, and especially as it was accepted by the Parliament in which we are now discussing the Budget of 1857, it is a great deal too late now for my right hon. Friend to say that you had no means of estimating the revenue and expenditure of future years. My right hon. Friend was not in the Government or in Parliament in 1853, and he did not recollect the severity of the censure he was bestowing on his present colleagues; that almost every man who sits beside him on the Treasury Bench gave me a cordial and generous support in 1853, and that in that year Parliament, as well as myself, did enter into a prospective financial calculation—did in that year pretend to form an estimate—of course allowing for circumstances beyond our control—but taking into view any ordinary course of public affairs we did, I say, pretend to estimate the expenditure as well as the revenue of future years. It does not, then, do for my right hon. Friend, as the organ of the Government—for I will not make him responsible for this—above all, it will not do for this House, who made themselves to a great degree responsible for this plan of prospective computation, and induced the public to accept the income tax on the faith of them—it will not do, I say, for the House now to tell the public, "We can present an estimate of the revenue of future years, but as to the expenditure of future years that is altogether beyond our control." My right hon. Friend was not in the House in 1853. I shall inquire whether the proceeding of 1853 was a reasonable or bonâ fide proceeding—whether, looking at the circumstances which have since occurred, we were then justified in making the estimates we did; for, Sir, had I been capable, for the sake of any temporary advantage, of coming down to this House, or had my colleagues been capable of encouraging or supporting me in that appeal to this House, for abundant advances for our financial arrangements in 1853 on account of future years, I would consider that I had acted the part of the veriest charlatan that ever stood at that bar, if not of the basest swindler that was ever placed in a dock, if my appeal had not been based upon what I believed to be a fair and conscientious calculation. As my right hon. Friend has put aside the undertaking entered into on that occasion—for he says it is absurd to estimate the expenditure of future years—let us now, Sir, see what grounds we had for the promises made to the public on that occasion. In the month of April, 1853, I showed a surplus of revenue over expenditure, for the year ending in the coming month, of about £500,000. At the close of that year, though the expenditure had swelled to the extent of at least £500,000, in consequence of some military preparations, there was a surplus of £3,000,000. If there had been a corresponding expenditure for the year 1854 —I mean had it not been for the war—we could have confidently calculated on a surplus of nearly £2,000,000. Therefore, Sir, I do not think there is the least reason to doubt that had the circumstances of the country been of the ordinary character, the state of the revenue and expenditure would have realized the expectations held out in 1853. Well, Sir, if it be the case, I think our duty is reduced within very narrow limits—because our duty is to inquire candidly and dispassionately into these intervening circumstances, and see what amount of additional difficulties have been laid upon us, and then to consider whether the difficulty arising out of those intervening circumstances is or is not sufficient to absolve us from the pledges then virtually given to the people of England. Then, Sir, I say those circumstances are not sufficient to absolve us from those pledges. It is perfectly true that there have been some difficulties, principally owing to the war—some increase of unavoidable charges. My right hon. Friend has told us that the additional charges in respect of the debt since 1853 are £1,460,000. And he alluded to the other sum of £1,250,000 as an addition since 1853. But he says you have not only incurred a new permanent charge in the shape of debt, but you have likewise abandoned a good deal of revenue since 1853. He gave the sum of £760,000 as the amount of taxation abandoned since 1853, which he afterwards reduced to £470,000, and he contends we are worsened since 1853, not only by the new debt which has been created, but by the £470,000 of permanent revenue which has been abandoned. I say the contrary. I reverse the statement of my right hon. Friend, and I contend that we have not only not reduced, but have added to the permanent revenue since 1853. He appears altogether to have overlooked the operation of the spirit duties. He said the produce of the spirit duties was £1,500,000; but from that item you must deduct £436,000, the sum imposed in 1853, which leaves £1,064,000; and from that again, if we subtract £470,000, the amount said to have been abandoned, we then have an absolute excess of permanent revenue to the extent of £594,000 imposed since 1853, or, in round numbers, £600,000 a year. That applied again to the additional charge on the debt of £1,250,000, would make the real increase of permanent burden since 1853, £656,000. That is the alteration, brought about since 1853, after what may be called the permanent financial loss to the country in consequence of the taxing and borrowing occasioned by the war; and I think it is plain to this House, and will be plain to the people of England, that it is not an item of such magnitude as will enable us to escape from the promises we gave and the expectations we held out to them in that year, for which promises and expectations we had value received in the shape, I am bound to say, of political credit and popularity at the time, and in the shape of additional stability to the finances of the country during the war. In order to state the case fairly, I must say there is another item in which there is a falling off in the estimated revenue. In 1853 there was great difficulty in estimating the produce of the succession duty. I made the estimate £2,000,000. We are now told by the right hon. Gentleman that £1,300,000 is the more probable sum, and therefore we must deduct £700,000 from my estimate as the result of our altered position since 1853. But as the person upon whom the promises made to you may be said to rest, I say the changes that have since occurred do not absolve me in honour and in conscience from the duty of straining every nerve still to maintain and realize those promises and expectations, of the benefit and fruit of which my colleagues and myself availed ourselves at the time.

Sir, I come now to the question connected with the essential merits of the Budget of my right hon. Friend. In my opinion that Budget has four fatal flaws—flaws and faults which, speaking for myself, nothing can induce me to tolerate. One of them is, that it is based upon an excessive expenditure. I take this opportunity, in passing, to subscribe to what was said to-night by the right hon. Gentleman opposite (Mr. Disraeli) on the subject of military expenditure. Deprecating rash proceedings and wholesale promises, the right hon. Gentleman, notwithstanding, expressed his conviction that much reduction might be safely, prudently, and cautiously effected, and yet that you might have your establishments in a state of perfect efficiency. Sir, the right hon. Gentleman so fully expressed my opinions upon that subject that I have no desire to add to what he said. I maintain, however, that the Budget is based upon an excessive expenditure. I will not at present go into the question whether the Estimates that are now laid before us are the same Estimates with respect to which, on the 3rd of February, the Queen assured Parliament that they had been drawn with a due regard to economy. This, however, I will say—that estimates ought to be drawn according to the judgment and conscience of a Government, and not according to the pressure of political inconvenience which may be anticipated from presenting them in one form or another. I will not now enter into that question, as we shall have much more to say upon expenditure before the Session is far advanced; but I may take this early opportunity of repeating what I stated on the first night of the Session—that, from the view of the estimates which has been given us in general terms by Lord Panmure, the Secretary for War, and by the Under Secretary for War (Mr. F. Peel), it will be my duty to object to them. I avail myself, therefore, of this opportunity to give notice that before you, Sir, leave the chair to go into Committee of Supply, it is my intention to propose a Motion to the effect that, in order to secure the country that relief from taxation which it justly expects it is necessary, in the judgment of this House, to revise and further to reduce the national expenditure. I have no right to claim authority in matters of finance—all that I have to claim is this—that the earnest application of my mind is to form a conscientious judgment upon the prospects of the country; and in the exercise of that duty I must state that I have never known a time when the financial prospects of the country—mixed up as they now are with political affairs, and with the pledges and proceedings of the Administration—presented an appearance of so much difficulty. In my opinion a most arduous task will be imposed upon the Minister of the next five years in providing a balance between revenue and expenditure. Sir, is the House of Commons really aware of the rate at which, and of the mode in which the expenditure has been growing? I will not now enter into details. If I have the opportunity it will be my duty to do so on some future occasion, and then it will be for Parliament to consider whether Her Majesty's Government have fulfilled their special obligation of controlling the expenditure of the country and checking the House of Commons when it shows an undue disposition to expenditure. I will, however, state some facts which are summary and succinct. From 1842 to 1853,—during twelve years of constant improvement and continued social progress,—such was the administration of your finance that the expenditure of the country underwent no increase whatever. I say no increase whatever, because the amount is so trivial that it is hardly worth naming. In 1853 the expenditure exceeded that of 1842 by £234,000 only; and if you take the year 1852, which was not an inactive year in point of expenditure, you will find that the expenditure was positively less than it was in 1842. Since 1853, Sir, a change has passed over the spirit of our dream; a change has passed over the temper of the Government, over the temper of the departments, over the temper of the House of Commons, and over the temper of the country. Do not let us seek to shift the blame from ourselves. I believe that, in a great degree, this change is the natural and necessary result of war. If we were beings governed by pure reason, then no doubt it would be justly argued that in time of war, when enormous demands are made upon the public purse to meet the necessary purposes of the public service, we ought at all events to exercise a peculiar economy in all the ordinary departments of the State. But the case is practically just the reverse. You contract a habit of extravagance. War of necessity means reckless expenditure; useless, and worse than useless expense; and even if there were an attempt to control it, nothing worth naming could be done. But the civil expenditure of the State and the temper of the House of Commons are infected with this habit of extravagance, and see what is the result. The expenditure of the country did not increase from 1842 to 1853. From 1842 to 1853 you discharged your duty—your first duty—as stewards of the money of the people of England, by giving them an account which showed that, notwithstanding the growth of population, the extension of trade, and the creation of a multitude of new public services, they were yet served at no greater cost than was thrown upon them ten years before. What is the case now? Why, the Estimates of 1856–7, as compared with the expenditure of 1853, show an augmentation of £7,000,000. In twelve years you have a growth of £234,000; in four years you have a growth of £7,000,000. It is true that some deduction must be made from this amount, for we now include in the accounts of revenue and expenditure the charges for the collection of the revenue. A sum of £900,000 out of the £7,000,000 may, I suppose, fairly be put down on account of the increased cost of the collection of the revenue. Part of that charge will, I hope, disappear with the return from a war to a peace income. Another portion of it is reproductive—that is connected with the Post Office. But after striking off the charges connected with the collection of the revenue you have yet a hard increase of upwards of £6,000,000 in the permanent expenditure of the country. You find an increase of £3,600,000 in the Military Estimates, £1,750,000 in the Civil Services, and the remainder—about £750,000 in the additional charge for interest. This is a state of things which excites in my mind the most serious reflections. I am quite persuaded that these facts are new to the country. The popular mind has not realized to itself the fact that upwards of £6,000,000 have been added to the regular expenditure of the country—quite apart, as I shall show, from the expenses of the war—in the short space of four years. It is time we should bethink ourselves what measures we are to take in order to discharge our duty as stewards of the money of the people—unless, indeed, we are prepared, according to the recommendation now before us, simply to shut our eyes and rush forward in the dark without inquiring whether there is before us a precipice or a plain. I shall not enter further into details on the subject of expenditure, beyond observing that, in my opinion, there is nothing more unfair than to press a Government in point of taxation, and at the same time to encourage them in expenditure; and as I am now soliciting the House to vote that we shall have no deficiency, so I intimate my readiness to contribute my humble part towards avoiding a deficiency by endeavouring to procure a further revision of the Estimates which have been placed before us by the Government.

My right hon. Friend the Chancellor of the Exchequer has said to-night that he will not affirm or deny the Resolution before the House, but that he thinks it uncalled for and unnecessary. The word "deficiency" has a disagreeable sound. It awakens many singular recollections. We have been accustomed for a number of years to hear, not of deficiency, but of surplus. We had begun to hope that we had almost banished the term "deficiency" from our vocabulary as well as from our recollection. The Chancellor of the Exchequer therefore deprecates the obtrusion upon the notice of the House of this invidious and offensive phrase. He will not affirm or deny the Resolution, but he thinks it unnecessary and uncalled for. He cannot understand the meaning of the phrase "adjusting income and expenditure." He says there can be no adjustment in a Committee of Ways and Means, nor in a Committee of Supply; that it must be referred to a Select Committee, who could make no Report until the end of the Session, when it would be practically useless. That is the view taken by my right hon. Friend of the duty of the House of Commons with regard to the adjustment of income and expenditure. But it does not agree with my experience. I remember periods—for instance 1842—when this House did feel very severely its duty with regard to the adjustment of income and expenditure. These words which seem to the Chancellor of the Exchequer as if written in a foreign language—and indeed I believe if they were written in a foreign language he would understand them a great deal better—bear a homely English signification, and the task incumbent upon the representatives of the people at this moment is, in my judgment, to see if we can restore to them something of that proper force and significancy which they bear in our mother tongue. By adjustment of income and expenditure we mean this—that when you have estimated the fair demands of the public service you shall take care, as far as human forsight can enable us to do, to provide an income which will actually cover the whole of it. That is what we mean by the adjustment of income and expenditure. I hope the House will enlarge the views of my right hon. Friend on this point, and certainly by affirming this Resolution we shall take one great step towards enlarging those views. The right hon. Gentleman opposite (Mr. Disraeli) invites us to say—"Do what you will, we will have no deficiency. Antecedent to any question about this or that tax, about this or that expenditure, the first duty of the House of Commons is to determine that it will have no deficiency. As every honest man determines that he will pay his way—that he will cut his cloth to his measure—that if he cannot spend all that he would he will spend what he can—so let your determination be." But, Sir, after all, we are in no such condition. We have to draw upon a treasury which is ample for every purpose. The plea of necessity ought never to be urged in this House as a reason for stinting the public service in its reasonable demands. We are under no such difficulties as press upon an individual, therefore, Sir, we are bound to make adequate provision for those services to which we give our sanction, and not to have recourse to schemes which I do not hesitate to say an honest debtor seeking to compound with his creditors would never venture to advance. The whole of this matter really depends upon one point. Does my right hon. Friend threaten us with a deficiency, or does he not? He himself has given us his answer upon this subject, and what an answer it is! On Friday night it escaped him in the course of his speech on the Budget to say anything about the balance of a future year. No doubt, it was quite open to my right hon. Friend to avoid saying anything about the balance of future years, if only he would let future years alone, or have given future years the same chance which he has given to this year. But I have shown—and I challenge contradiction from my right hon. Friend—that he is not repealing taxes in this year. He is repealing them to an extent, in comparison, extremely limited. The grand remission which he asks you to make, is a remission for the year 1858–9. Now, I ask my right hon. Friend and the Government, if you are going to retain £4,500,000 of income tax for 1857–8, which you are going to vote away for 1858–9, is it not your duty to show us that the Chancellor of the Exchequer next year will be able to pay his way? Is it to be supposed for a moment that we are this year to curry favour with the country by voting away the money of 1858–9 in order that the Chancellor of the Exchequer in 1858–9, may be obliged to come down to the House in time of peace and reimpose the income tax? I will not now enter into the question as to whether that tax is to be repealed or not, but I say that my right hon. Friend, who is voting away the money of 1858–9, is under an obligation to show us that he has a reasonable prospect of establishing in that year a balance between income and expenditure. Here I must refer again to those proceedings which, although originally my own, yet, having received the sanction of the Government and of Parliament, have now become matter of public record. When, in 1853, we entered into the subject of prospective finance—when we then endeavoured to sketch out what would be the course of expenditure and revenue until 1860, we should not have been permitted to shelter ourselves—and we did not seek to shelter ourselves—under such doctrines as those set up by my right hon. Friend tonight. What does he say? He says you can estimate the revenue of a future year, but not the expenditure. Why, Sir, does my right hon. Friend think, now, that his reputation as a finance Minister will be advanced by the adoption of that distinction? He can estimate the revenue of a future year; he can tell us what will be the state of trade, what will be the state of the consuming population, how much malt, how much tea, how much sugar they will be able to consume in a future year! Now, I rather think there are Gentlemen in this House who have been Chancellors of the Exchequer, and who have had very melancholy experience that it is not possible to estimate in a future year what will be the consumption of these commodities. On this point I say he cannot estimate the revenue of a future year—that is to say, he can only estimate it subject to the ordinary contingencies which mark the course of future affairs. In that sense he can: in any other sense he cannot estimate the revenue of a future year. Well, but that sense in which he can estimate the revenue of future years is exactly the sense in which he can estimate the expenditure. I must confess, Sir—it is better that I should at once speak out frankly on this subject—it appears to me that when my right hon. Friend stood up in his place and said he could not estimate the expenditure, but could estimate the revenue, he was trifling with the House, and was using us like children. ("Oh, oh!") That I frankly own is my opinion. What, Sir! He cannot estimate the expenditure! He cannot calculate it within any limits! He cannot tell whether it will be £50,000,000 or £5,000,000! ("Oh, oh!") Be patient, I beseech you, with your exclamations. You will soon find that I am speaking reasonably. I say there is a permanent course observable and established by experience just as much in regard to the expenditure as in regard to the revenue of this country; and the national expenditure, apart from the contingencies of war, does not fluctuate more than—nay, not so much as—the revenue. Now, what has my right hon. Friend done?—and I should like to see and to hear the defenders of the right hon. Gentleman's opposite proposition. He has presented to us an estimate of the expenditure for the year 1857–8, which amounts to £63,250,000. He is then told that he will have a deficiency of £5,000,000 in 1858–9. His answer is that he takes the revenue of 1857–8, carries it on to 1858–9, and allows for the changes which will take place in the revenue. He then compares that revenue, not with the expenditure of 1857–8, carried on in like manner to 1858–9, with fair allowance for circumstances likely to occur, but he goes back to 1853, with an expenditure of £6,000,000 less, and he compares the revenue of 1858–9 with the expenditure of 1853. Where is the Gentleman in this House who will get up and justify such a calculation? Sometimes my right hon. Friend compares, and sometimes he says he cannot compare. He says, "I give no opinion; take it for what it is worth; it is something or nothing." Now, I say we have a right to know the value he attaches to those figures which he himself has quoted. In my opinion they are a pure and perfect delusion. Let me ask him this question. He has compared the revenue for 1858–9 with the expenditure of 1853. Does he in his conscience believe that the expenditure of 1858–9 will be the expenditure of 1853? Does he believe that? No, Sir. You may wait long enough for an answer to that question. He does not believe it. There is no man here that believes it; and if we allow a statement like that of my right hon. Friend to go forth with our sanction we are palming off a delusion upon the country. I will presently examine the case more particularly; but here is a sum of £1,760,000 added to the Miscellaneous Estimates and Services of the country since 1853. My right hon. Friend knows that the great bulk of that is in the shape of permanent charge; and, as to the portion of it which stands as temporary charge, although some of this may disappear, it is likely to be succeeded by other and probably more expensive items of the same kind. Every year for a considerable time past the miscellaneous expenditure of the country has been rapidly increasing. Does my right hon. Friend, then, really think this expenditure will be reduced by £1,760,000 in 1858–9? If he sees his way to that, then he is not trifling with us; but if he does not, if he knows, as I know, that there has been a progressive increase of charge under this head—that the wants of the country are multiplying—that the disposition of the House of Commons to yield in these matters is greater than it used to be, then I say my right hon. Friend is trifling with us and with the country. Again, Sir, if my right hon. Friend thinks that this £1,760,000 can be disposed of in 1858–9, I want to know why we are to pay it for 1857–8? When I come to ask the House—not to refer the Estimates to a Select Committee; I know perfectly well how that might defeat the purposes of those who are in earnest by inducing this House to undertake the duty of the departments of the Government, which they are necessarily unable to perform—but when I ask the House to send the Estimates back to the Government in order that they may reconsider them—(and having once practised upon them with success they may again try their hands)—when I submit, as I shall, such a proposition to the House, I shall certainly ask my right hon. Friend why, if we are to pay £1,760,000 less in 1858–9, we are to pay £1,760,000 more in 1857–8? The truth is, and I believe there are not two opinions about it on either side of the House, the reference to the expenditure of 1853 is purely illusory. We have nothing to do with the expenditure of 1853. I wish we had. I believe that by vigilance and by firmness the House of Commons may produce an impression upon the expenditure. But I am not so sanguine as to believe that they can next year go back to the expenditure of 1853. I advance with considerable confidence the opinion that the real wants of the public service are much more likely to increase, than they are to diminish in the year 1858, as compared with the year 1857. And now, Sir, I will give the House some reasons for that opinion. In the present year the charge for the militia stands at £400,000. That is much below the average charge. I believe it is considerably below the probable charge in future years. I find no fault with the Government for the lowness of that charge. As the militia was embodied during the period of the war, I think it perfectly rational that the charge for it in the year succeeding a peace should be light; but I wish to point out to the House the probability that that charge may require to be increased in future years. My right hon. Friend has taken the charge for the Persian war at £265,000 or £270,000. We know prettly well of what value those figures are likely to be. You have an expedition of considerable magnitude already gone to the Persian Gulf; you have a further expedition preparing to start from India; if I am rightly informed you are already engaged in sending expensive stores from this country; and you have likewise a separate and distinct expedition from India into Afghanistan. I remember very well the first Estimate for the Chinese war. It was about £160,000. The cost of that war—I know it was recovered from the Chinese, but I do not apprehend that this is to be recovered from the Persians—the cost of that war, which was of an infinitely less serious character than that in which we are now engaged, was several millions. Then there is the Chinese war, of which up to the present moment we have heard nothing. We hear of troops going from India to China; we know that destructive service is going on; but not one farthing of provision have we made. The right hon. Gentleman told us that he was in the military departments pressed with war contracts; that there were certain war contracts which had not yet expired. On the other hand, let me ask how stand his stores and materials? He knows very well that every depository is bursting—that you have an immensity of stores standing over from the war; but of course as these stores deteriorate by time—as we get more remote from war, your expenditure upon stores and materials must necessarily be expected to increase. There is also the item for the coast-guard. The figures are not very clear; but, so far as I am able to understand them, there is a small increase of something like £60,000 or £80,000 in the probable expense of the coast-guard for the present year. But when the Coast-Guard Bill was before the House of Commons, my right hon. Friend the First Lord of the Admiralty (Sir C. Wood) stated that it would come only very gradually into operation; that the cost would, in the first instance, be very light, but that at last a very considerable increase of expenditure would be incurred. There is another source of increase in our expenditure. My right hon. Friend the Chancellor of the Exchequer again in this Estimate of income for future years—which he can form, although he can form none of expenditure—has taken the miscellaneous receipts at an amount extraordinarily high. The average of those receipts for the five years ending with 1854 was £796,000. My right hon. Friend takes them at nearly £1,200,000, for the present year, and at £1,400,000 for the year following. How that is to happen I know not. I rather fear that we must expect a decline of the miscellaneous receipts as estimated for this year. Then, Sir, you have to keep in view this fact, that your Miscellaneous Estimates are in constant and rapid growth, that, allowing for all that you have transferred from the Consolidated Fund to the Votes of the House, the Miscellaneous Estimates have, within the memory of many who sit here, increased from £2,000,000 to £6,000,000; that they have, at any rate, since 1853, independently of the transfer of services, increased by £1,750,000. What probability does that raise for future years? This increase is not owing to casual circumstances; it is necessary. It is partly due, I am afraid, to our carelessness and extravagance; but still in a very considerable degree it is the answer of the Government to the increasing and expanding wants of society, and you must in the main, I am assured, look for a growing and steady augmentation in these demands. Therefore, I say, that if we are to deal seriously—I will add, honestly—with this matter, if we are, as prudent men, and even as honest men, to consider ourselves bound to bring our receipts and expenditure into due relation with each other, we must reckon that our charges—that is, the real wants of the public service, as distinguished from those unnecessary expenses resulting from wastefulness and extravagance, of which I hope we shall get rid—are in future years much more likely to increase than to diminish in amount. I grant, upon the other hand, that there are small items upon which you will gain. I dare say that the cost of the non-effective departments of the military service will by lapse of time undergo some diminution, quite irrespective of any vigorous attempts at retrenchment. I do not at all dispute that we may upon the whole hope to see a disposition towards an increase of the revenue. But at the same time I must observe that, though our revenue has hereto- fore increased largely, it has increased under the influence of that kind of legislation upon which my right hon. Friend (the Chancellor of the Exchequer) throws—what shall I say?—I will not say throws contempt, but of which he has certainly spoken in a manner as far as possible from flattering. Apart from wise legislation, we have no right to anticipate great or rapid growth of the revenue of this country. Well, Sir, what I now come to is this. You are going to vote away four millions and a half of money from the service of the year 1859, which you are going to retain for the service of the years 1857–58. Is that a legitimate proceeding? Are you authorized to take that step upon the simple plea that you have nothing to do with future years? If you vote that sum away from 1859, why do you not vote it away from 1857–58? You keep it for 1857–58 because you want it. You are going to take it away from 1859. If you take it away from that year without satisfying yourselves that there will then be a just balance between revenue and charges, you are creating a deficiency for that year. For one, I will not be responsible for creating that deficiency. It fills me with astonishment that Her Majesty's Ministers, who have in former years been associated with many beneficial measures with respect to our finances, now show so much indifference to what I, for one, must venture to call the very first principles of duty in regard to the finances of the country.

I hope the House will not think. I am taking an undue liberty with them; but, as my right hon. Friend has at one time seemed to make a comparison for future years, and then, when pressed with its consequences, has shrunk from abiding by it, I must shortly lay before the House the prospects which are before us. I take as my standard the income and expenditure of the present year. That is the fair principle. That is the rule by which I had to abide in 1853. I was not allowed to make arbitrary assumptions, going back to some forgotten period, which was merely a means of deluding the people. I take the income and expenditure of the present year, and I say that the rational course for the House to pursue is to consider what are our prospects, as they are founded upon that basis. Now, Sir, in 1858–9, if you start with an expenditure of £63,250,000 and a revenue as now of £66,365,000, you have in the first place to provide for the paying off of £3,500,000 of debt. I must say that I listened with astonishment to the speech of my right hon. Friend on that subject. Two years ago my right hon. Friend, in rather a solemn way and under the pressure of the war, proposed to Parliament to establish a sinking fund. Many Members of this House—I think the right hon. Gentleman opposite (Mr. Disraeli) was one, I was one myself, and many of those who sit near me concurred with me—many Members of this House objected to that proposal. We said—"When peace comes you will find that there will be people who will not like this sinking fund, who will begin to tamper with it, who will make suggestions that after all you are not bound to abide by it exactly, that you can relax the terms a little, and who will find one mode or another to evade it." My right hon. Friend treated that prophecy with great indifference, and he induced the House to give him his sinking fund. I was fully persuaded that people of that kind would appear, but I confess I did not expect that they would appear with my right hon. Friend as their standard-bearer. But my right hon. Friend himself, the creator of the sinking fund, he who compelled us to adopt it, he who would not listen to our prayers, he who despised our warnings and ridiculed our prophecies, has not only seen them fulfilled, but fulfils them in his own person. He says with regard to this sinking fund—I think that, after all, it will be a very legitimate operation if you throw it over an increased number of years.

THE CHANCELLOR OF THE EXCHEQUER

What I said was—if you postpone the commencement of it for three years.

MR. GLADSTONE

I feel anything rather than dissatisfied, so far as my argument is concerned, with the explanation of my right hon. Friend. I thought he really did propose to pay something, but now it appears, from what he says, that he proposes to pay nothing, but to leave it to the Gentleman who may be Chancellor of the Exchequer three years hence to come down to this House and make a proposal. I think I know what that proposal will be. He will naturally come down and say:—"In 1857 there was a most patriotic and upright Government—the Government which had proposed the sinking fund—but, notwithstanding that, they would not undertake it, but proposed its postponement. We did not propose it, and never recog- nized its principle. We propose that it shall be adjourned for another three years." My right hon. Friend's explanation does not affect the argument. When we postpone our obligations for three years it is pretty easy to tell what will become of them. My right hon. Friend then, according to his own plans as they stand by law, will have to pay in 1858–9 £66,724,000. His revenue is now £66,365,000; but in 1858–9 he is going to lose £4,600,000 by income tax, and a further sum of £700,000 by a fall in the duties upon tea and sugar; therefore his loss in 1858–9 will be £5,300,000. Upon his own figures he will have a revenue of £61,065,000 to meet charges which, according to legal arrangements, he has himself stated at £66,724,000. It is quite true, Sir, that we may have unexpected prosperity; but we may have unexpected adversity. The results of the Persian and Chinese wars may be favourable, but they may be, in a financial view, unfavourable; and we have no right to expect that any change so serious will take place as to favourably affect the deficiency which must result from the scheme contained in the Budget of my right hon. Friend.

I must now, Sir, go into the future, because my right hon. Friend does not abandon the principle of the termination of the income tax in 1860. On the contrary, he claims credit, not only from those who wish to see the end of that tax—and I am not afraid to confess that I most earnestly desire to see it no longer than 1860 a permanent part of our financial system—but also from those who, without wishing to commit themselves to such a declaration, nevertheless consider it wise to endeavour to bring about such a system of revenue and expenditure as to enable the Chancellor of the Exchequer to dispense with the income tax as part of our permanent system of finance. My right hon. Friend says that it is quite a mistake to suppose that his proposal would render the cessation of the income tax less certain than it would be under the arrangement of 1853. He has, it is true, added to the tax; but, by some extraordinary effort of his own mind, he has come to the conclusion, and wishes the House to come to the same conclusion, that that increase adds to the probability of its termination. Now, what are the facts as regards this tax? From 1842 to 1853 the income tax was retained at a uniform rate of 7d. in the pound, and the country at last became convinced that the scale of 7d. was a rate of perpetuity. My right hon. Friend, now the First Lord of the Admiralty, in the year 1848 announced that the sevenpenny scale must be perpetual. [Sir CHARLES WOOD intimated dissent.] I beg pardon. My right hon. Friend gave utterance to that observation, not, I admit, as a matter of prophecy, but as a matter of opinion; and my right hon. Friend always expresses himself so clearly that I could hardly have mistaken his meaning. Well, Sir, in the year 1853 what did the Government, of which I had the honour of being a Member, do? We wanted to give the country an assurance that the income tax should terminate, and in order to give the best encouragement for that belief which we could give, how did we act? Why, Sir, we proceeded upon the principle that while the tax was levied at a uniform rate, it could not be regarded other than as a part of our permanent system of finance. We did not alter the mode of levying the tax, but we asked Parliament to make the tax a temporary tax, and to fix its termination; and in order to give an assurance to the country that it should only be a temporary tax, we proposed that the rate of it should fall from 7d. to 6d., and then from 6d. to 5d., and that it should altogether cease in the year 1860. It was not our intention to fetter the judgment of Parliament; but what we had in view and what we hoped to accomplish was to bring about such a relation between income and expenditure as to enable the Parliament, if it pleased, at the period which we named to put an end to the income tax. Now, Sir, what has my right hon. Friend done? He has cancelled, so to speak, the scheme which was proposed in 1853, and which was accepted by this House and by the country, and by making the rate uniform, has done all that in him lies to mark this tax as a permanent impost. And while my right hon. Friend does so, he makes no proposal for the reconstruction of the mode of levying this tax so as to put it in a form more acceptable to the country. It is true, that in 1853 we did not attempt to reconstruct the mode of levying it; but then we did all we could to mark it as a temporary tax, while my right hon. Friend has done all he can do to mark it as a permanent one. Well, Sir, my right hon. Friend has shown us what he thinks will be the state of things when the income tax expires, as by the Act of 1853 it ought to expire, in 1861. In the year 1853 the Government of that day laid before Parliament conclusions, based not upon vague and arbitrary assumptions of probable income and expenditure, but proceeding from the actual income and expenditure of the country. They calculated what the charges proposed would produce, both of profit and loss, and laid before Parliament the state of things which, as far as could be calculated, would exist in 1861 when the income tax would have entirely ceased. The result of that calculation was, that as far as could be ascertained there would be as nearly as possible—at all events within £200,000—a balance of income and expenditure. But now, as my right hon. Friend says, he is doing nothing to prejudice or prejudge the question with respect to the relation of income and expenditure, so as to prevent us from giving it up, let us see how, under his calculations, the case stands. It appears that in 1857–58 the loss to the revenue from diminished income tax and from the tea and sugar duties, subject, perhaps, to a slight diminution from increased consumption, will be £5,300,000. In 1858–9 the loss upon tea and sugar will be £600,000. In 1859–60 the loss on the income tax will be £3,500,000, and on tea and sugar £500,000; altogether £4,000,000. So that in the three years the total loss will be £9,900,000. Now, what have we, on the other side of the account, to set against this? In the first place, there will be £1,000,000 less Exchequer bonds to pay off; then the increase from succession duties I estimate at £400,000; and thirdly, the annuities to fall in will amount to £2,146,000, making altogether £3,546,000; so that on the face of this calculation there appears a deficiency for the year 1860–61 of £6,454,000. This is a matter well worthy the consideration of this House; but I do not end here. I have already shown the House that at the commencement of the year 1860–61 there will be a deficiency of £6,454,000. Now let us see whether that deficiency will be increased or diminished in the year 1861–62. In the year 1861 there will be a gain upon Exchequer-bonds of £1,000,000, but there will be a loss of £3,500,000 upon the income tax, so that the total deficiency in 1861–62 will amount to £8,654,000, or very nearly what is now called the "war ninepence." Now, Sir, it appears to me that the real questions for the House to consider are—whether, in the first place, all the pledges which were given in 1853 and all the expectations which were then held out are now to be cast to the winds by the same persons who gave those pledges and who raised those expectations; and, in the second place, whether by an improvident expenditure and a reckless system of finance we are to charge the country with a great and growing deficiency. It appears to me, Sir, that the present state of things imperatively calls upon us to make such arrangements in our system of finance as will be absolutely necessary if we really mean to pay the public creditors.

I much fear that I have trespassed too long upon the indulgence of the House; but there is one other point of great importance about which I should wish to offer a few observations, and it is to me a very painful subject. Some Gentlemen behind the Treasury Bench appear to ridicule that statement. I at no time (although I may give a strong expression to my opinion) wish to offend or annoy any one; but I think that those Gentlemen will presently agree with me that the subject deserves sympathy rather than ridicule. I refer to the subject of indirect taxation. I have endeavoured to show that the statement of my right hon. Friend would convey to the country an untrue impression with regard to the taxes which are to be paid, that it would convey an untrue impression with regard to the deficiency, and now, I am sorry to be obliged to say, that I think it would produce an untrue impression with regard to the important subject of indirect taxation. It is the first time within my recollection that I have heard from the Treasury bench proposals of the nature, spirit, and tendency of those advanced by my right hon. Friend on the subject of indirect taxation. We have seen and heard many Chancellors of the Exchequer. We recollect the time of the late Sir Robert Peel. I will not go further back, although I might easily do so. I revert to the right hon. Gentleman the Member for Portsmouth (Sir F. Baring). We remember him, and we remember Sir Robert Peel. We remember the right hon. Gentleman the First Lord of the Admiralty. We remember, too, the right hon. Gentleman opposite, the Member for Buckinghamshire. Every one of those Gentlemen, representing different parties in the State, and in different political po- sitions, gave from that box one and the same account of the effect produced by the remissions of indirect taxation. Sir, this question is not a party one. It was the misfortune of the right hon. Baronet the Member for Portsmouth that he found himself in a position which led him to add to our indirect taxation. I have no doubt that he has long ago repented of that measure. I have no doubt that, though it was an error of judgment on his part, it was still an error to be attributed to necessity, and did not represent the spontaneous action of his deliberate will. Sir Robert Peel came into power supported by an overwhelming majority, and then in the full possession of its confidence. While in the full possession of its confidence, and with its cheerful assent, he applied to the tariff of this country those principles of which succeeding Ministers have only had to extend the application. He destroyed prohibitions; he liberated raw materials; he reduced duties; not being instructed in the philosophy of Arthur Young, he set industry free. My right hon. Friend who followed him in many cases reduced the taxes on articles of consumption. In no instance, as far as I recollect, did he increase them. The right hon. Gentleman the Member for Buckinghamshire, who came into office in the year 1852, and led the House of Commons as the representative of Lord Derby's Government, at a time when that Government, without doubt, possessed during the whole of its career the full confidence, at any rate, of those who sat behind them—that right hon. Gentleman himself bore the largest testimony to the immense advantage which had attended the remission of indirect taxation. I need not go further down in the list—at least I shall pass over the next link in the chain—but I come to the right hon. Gentleman the present Chancellor of the Exchequer. From him, for the first time in fifteen years, I hear a different strain. The idea of the remission of indirect taxation, of the simplification of our commercial laws, of giving to trade all the freedom compatible with the effective maintenance of revenue, has no place in his mind. In his mind there is only room for disparaging estimates of what yet remains to be accomplished in order to perfect the work which I venture to say is destined to fill a bright page in the history that shall record the doings of our times. What has already been the effect produced by your operation? I will not anticipate the Motion that I intend to make on this subject by now going into details; but within the compass of not more than three or four lines is it possible to submit to the House a statement so remarkable that I am convinced every man who loves truth, or who loves humanity—every man who desires to see his fellow-creatures in possession of such a supply of the bounties of Providence as wise and just legislation can secure, whatever may have been his previous disposition—will not hesitate to yield his judgment and his heart to results so extraordinary. Sir, here are the operations of the British Parliament between the years 1842 and 1853:—From 1842 to 1846, when a Conservative Government was in office, and quite apart from that crisis with respect to a contested question which put an end to the career of that Government—the remissions of indirect taxes were £8,050,000. For the five years extending from 1847 to 1851, while my noble Friend the Member for London was at the head of the Government, the remissions of taxes were £5,310,000. In the three years from 1852 to 1854 the remissions were £4,625,000. The total amount of your remissions, in short, is £21,985,000. But, you will say, concurrently with these measures of relief, there were other taxes imposed. Well, no doubt there were the income tax and some other imposts; but then, while the amount of the taxes remitted was £21,985,000, the amount of those put on and brought into effect within the same period was £7,500,000; so that the operation, taken thus far, represents a gain of £14,485,000. And of what did the great bulk of that gain consist? It was so much addition to the comforts and the resources, so much deduction from the privations and the difficulties, of the great mass of the people. But, Sir, even that statement does not express the whole result of your policy, because, while the revenue in the first of those years—1842— was £46,965,000, in the last year, namely, 1853—I cannot take 1854, seeing that the war taxes were then imposed—in 1853 it was £54,430,000. So that your revenue during the same period, in which you remitted £22,000,000, increased by £7,500,000, being the exact amount of the taxes you simultaneously imposed. In fact, it is no exaggeration to state that your remission of £22,000,000 of taxes did not cost you one farthing. I say that a man may be glad and thankful to be an Englishman, and to have been a Member of the British House of Commons during those years, bearing his part in so blessed a work. But, if it be a blessed work, what are we to say of him who begins the undoing of it? What is my right hon. Friend about to do? As far as his statement of Friday night is concerned, you would have imagined that this innocent and harmless Budget of his was going to remit, not to impose, taxes on tea and sugar; because there was a figure that crept out which spoke of £700,000 as the loss he would sustain. I ventured, when he had sat down, after estimating this "loss," to rise and ask at what amount he estimated his gain. That question, Sir, has not yet been answered. But the case stands thus:—the war tax on tea will fall on the 5th of April next from 1s. 9d. to 1s. 3d. per 1b. My right hon. Friend proposes to raise it again to 1s. 7d.; and then he takes credit for 2d. of remission. This is his process. He says he remits 2d.; I say he imposes 4d. The difference between us is considerable; and the House, I think, will readily form its judgment as to which of us is right. He intends to introduce Resolutions enabling him to levy on the 6th of April a duty which by law would not be leviable. That I call an increase of taxation. He calls it a reduction. The difference between us is broad—it is one of principle, and radical. The effect of his proposal will be to add during the year 1857–8 £1,054,000 to the tax on tea. Then comes the case of sugar. These cases I wish to discuss more at length on a future occasion. I therefore now state only the amounts. To the duty on sugar he proposes to add 1s. per cwt. I take brown Muscovado as best exemplifying the effect of his plan. The consumption in 1856 was 7,250,000 cwt. One shilling increase upon this will give him £362,000, which, coupled with the £1,054,000 to be put upon tea, makes a total of £1,416,000—the amount which he seeks to add to the indirect taxation of the country such as it will by law be leviable after the 5th of April next. In 1858–9 he further aggravates the case, because the additional duty he then lays, if I recollect rightly, is 5d. instead of 4d. on tea, and 1s. l0d. instead of 1s. on sugar: and in the year 1858–9, therefore, with his deficiency, he will have the pleasure of extracting from the purchasers of tea and sugar throughout the country nearly £2,000,000 over and above what, under the present law, they would be liable to pay. That is the operation of my right hon. Friend. I really cannot help representing to the House the position in which it is supposed to stand. I believe it has been the boast of the Liberal party in this country to associate itself especially with the remission of indirect taxation. As I said before, it has been a work in which Conservative Governments have largely shared; but the Liberal party appear to me always to have had a peculiar pride in their close identification with it. Sir, if they feel that sentiment of pride, I trust they will have an equal regard for consistency and honour in adhering stedfastly to that work; that they will not allow it to be pulled to pieces. With respect, however, to this House at large, I beg you to observe the position in which the Government now invite you to place yourselves, and to compare it with the position you occupied in 1842. In that year you had a Ministry of the Conservative party with a triumphant majority at its back. And well do I recollect the day when Sir Robert Peel turned round to his supporters, and, having shown the deficiency in the revenue, and stated his intention to propose the remission of £1,400,000 of indirect taxes, then said— I make an appeal to the possessors of property—I call on them to come forward and saddle themselves with the burden of an income tax in order to enable them to dispense great and precious boons to the mass of their fellow countrymen. That appeal was cheerfully and honourably answered. There were political objections raised to the income tax on other grounds, but that great majority in the Parliament of 1841 to a man stood firm, to a man answered the call, and took upon themselves, the wealthy classes of the country, the burden of the income tax, in order to supply the deficiency, and to repeal £1,400,000 of indirect taxes. Can any man fail to be struck with the precise correspondence in particulars, with the complete inversion in spirit and principle, of that arrangement and of this? Then you were called upon to remit £1,400,000 of indirect taxes, now you are called on to impose indirect taxes to that amount; then you were called on to fill up a deficiency at your own cost, now you are called on to create a deficiency at the cost of others; you were then called upon to take a burden on yourselves to relieve the great mass of your fellow-countrymen, now you are called upon to take a burden off the shoulders of the wealthier classes in order that you may impose indirect taxes upon the tea and sugar which are consumed by every labouring family in the country. I can only say that, for my own part, I entertain on this subject a most decided opinion, and nothing shall induce me to refrain from giving every constitutional opposition in my power to such a proposition. Before the Speaker leaves the chair, if health and strength be spared me, I shall invite the House to declare that, whatever taxes we remove, we will not impose more duties upon the tea and sugar of the working man. When we are in Committee there will be other opportunities of renewing this protest. These things, if they are to be done, shall, at least, not be done in a corner. The light of day shall be let in upon them, and their meaning and consequences shall be well understood.

Sir, I come now—and it is the last point upon which. I shall touch, for I feel that I have trespassed too long upon the House, and cannot be too thankful for its indulgence—to the bearing of those opinions upon the Motion now before the House. To say that we will have no additional taxes upon tea and sugar would be to increase the present deficiency. There is an enormous deficiency created by the proposal of the Government, and that we are asked to supply by a most objectionable mode of raising money, and to which I hope nothing will induce this House deliberately to resort. That increases my obligation to vote for the Motion before the House. I frankly own, that Motion appears to me in complete conformity with the declaration which I, in common with the rest of the House, heard from the lips of the right hon. Gentleman on the first night of the Session, and it offers, I think, the most practical mode of doing good to the public. The right hon. Gentleman invites us to affirm that we will have no deficiency. The proposal of the Government shows a glaring, gross, and increasing deficiency—a deficiency unparalleled by anything that I can recollect during an experience of some twenty-five years. The first duty of the House of Commons is to say, that it will have no deficiency; and when we have once said that our course will be clear, because if we are to have no deficiency we must square our accounts, either by keeping on existing taxes, or by laying on new taxes, or by reducing expenditure. On a former evening I ventured to comment on the extraordinary in- difference of the public mind on the subject of expenditure, and I expressed my opinion of the dangerous enlargement which our expenditure was assuming. Already, Sir, I see very plainly, that if the Motion of the right hon. Gentleman be lost, I shall be driven to make a Motion on the subject of expenditure, which I am quite convinced, if it stands alone, I shall not carry. I am afraid, if it comes to a question of expenditure, however rash it may be, and deficiency, the deficiency will be preferred, because the deficiency is prospective; it is still a little distant; it is not immediate—and something or other may happen in the interval to avert it. I despair of inducing the House to grapple with this question, unless it is under cover of the principle of the right hon. Gentleman's Motion; and if that principle is once established, the House will have no choice but to set honestly about its duty, to consider what taxes shall be kept, what proposed, and what abandoned, and what shall be our expenditure.

That is one great motive which I have for giving my support to the Motion of the right hon. Gentleman. But I have other motives on which I regard this Motion as being entirely in conformity with the pledges to which I hold myself bound, and to which I thought that most of those who sit on the Treasury Bench were likewise bound in common with me. They, however, are the best judges of their obligations. I feel myself bound, and I shall do all in my power to redeem those pledges. Let it not be said that this is an impracticable proposition. I believe that it is perfectly practicable by a wise economy, by a fair appeal to the good sense of the Commons of England, both to grant relief from taxation and to make a reduction in the expenditure which will enable you to maintain a surplus income, and thus to look forward with confidence to that large and satisfactory relief in 1860 which, so far as was in our power, we promised in 1853. I feel strongly upon this subject, and I dare say I have expressed myself in strong language. I hope it has not been stronger than the occasion demands. I confess I do feel strongly the nature of these propositions. I will conceal nothing. I may be wrong and my judgment may err like that of other men, but this is the first time—I will not say that I have heard a deficiency recommended and sanctioned by the Government, for, unfortunately, I have heard that, and in principle it was quite as bad as this proposition, though in degree it was entirely different—but, certainly, that I have heard propounded from the Treasury Bench by the Chancellor of the Exchequer, a plan which seems to threaten to throw the land into financial confusion. I felt that it was our duty to strip the veil from a statement which was certainly calculated to convey false impressions to the country, and from the discharge of that duty I could not shrink. Every year that a man lives he learns to estimate more humbly his own powers; he must be content to see remain unaccomplished much that he may earnestly desire; but in this free, happy country, there is one privilege, and one corresponding duty, which remains to man—it is to bear his testimony in open day to the duty and the necessity of maintaining public obligations, and to strip away every veil from every scheme which tends to undermine this principle. That duty, with the indulgence of the House, I have endeavoured to discharge. No consideration upon earth would induce me by voice or by vote to be a party to a financial plan with regard to which I feel that it undermines the policy which has guided the course of every great and patriotic Minister in this country, and which is intimately associated not only with the credit and the honour, but even with the safety, of this country.

MR. WILSON

said, he was sure that he should not appeal to the House in vain for its indulgence while he attempted—not to follow his right hon. Friend who had just sat down through all the arguments on which he had touched—but to place before the House, in as clear and succinct a manner as he could, what he thought to be the errors into which his right hon. Friend had fallen. After the relations which had previously existed between his right hon. Friend and himself, nothing was more painful to him than to find himself in antagonism to him, either upon that or any other occasion; and the statements which he was about to make in refutation of some of his arguments, and the attempt which he should make to rectify some of his misconceptions, should be made with the sole desire of eliciting truth and of placing the subject fairly before the House. There were at least some topics on which his right hon. Friend and the Chancellor of the Exchequer, and the great majority of the Members of the House, were agreed. His right hon. Friend told them, that they should endeavour, at all hazards and by all means, to carry out, if possible, the implied compact which had been come to in 1853. In that view he (Mr. Wilson) perfectly concurred, and as to the means of doing it he should offer some observations hereafter. His right hon. Friend also urged them not willingly to incur a deficiency of income as compared with expenditure, and in that likewise he (Mr. Wilson) concurred. When his right hon. Friend, however, spoke of the advantages of repealing indirect taxation, he might remind him of the condition of the sugar duties when Lord John Russell came into office, when the lowest duty upon colonial sugar was 14s. per cwt. above the highest duty at the present moment, and when the lowest duty which then existed upon foreign sugar was 23s. 8d. per cwt. He was sure that his right hon. Friend did not mean to insinuate that the Chancellor of the Exchequer wished to revert either to excessive or to protective duties of import, because his right hon. Friend must be aware that the Chancellor of the Exchequer had quoted from Arthur Young merely to justify the proposition which he had made, that the additional taxation necessary for the war was fairly to be levied over all classes of taxes, whether direct or indirect. Was that a new principle? They were now dealing, though in time of peace, with the obligations which had been left them in time of war, and how did they meet the expenditure of the war? By the very principle by which the Chancellor of the Exchequer now proposed to pay the remaining obligations of the war. In 1854, when his right hon. Friend (Mr. Gladstone), who was then the Chancellor of the Exchequer, doubled the income tax, did he think it necessary to supply all the means for carrying on the war from direct taxation? On the contrary, did he not find it essential, in justice to all classes of the community, to impose some indirect as well as direct taxes? That was the principle which was initiated by his right hon. Friend in the first war budget, for the first thing which was done in 1854, when the first war taxes were laid on, was to increase the sugar duties and subsequently to suspend the fall of the tea duties. His right hon. Friend then said— It was clear to us, that it was impossible to ask the Committee to make any sacrifice of revenue, under present circumstances, upon the sugar duties; but if we lowered the sugar duties upon a certain class, and that produced a less revenue, it followed that we should be driven to raise the duties on other classes of sugar, and, in point of fact, in some form or other, there must be at least a partial increase of the sugar duties. There is another consideration which has induced Her Majesty's Government to make a proposal on the subject of the sugar duties, and it is this. This is an article on which we can ask you to increase the means of the Treasury without adding to the price paid by the consumer—I mean now at present paid by the consumer. I do not mean the price he would have to pay, supposing the alterations which have been provided for by the present law should take effect. It is withholding a boon not yet enjoyed, not withdrawing a boon, the actual enjoyment of which he has already attained."—[3Hansard, cxxxi., 1455.] That was precisely what the Chancellor of the Exchequer was doing now. In point of fact, he was not now entirely suspending, but he was practically reducing the duties. In the following November his right hon. Friend, knowing that the tea duties would fall to 1s. 3d. in the ensuing April, suspended that decline and maintained them at 1s. 6d. [An hon. MEMBER: That was during the war.] True, that was a time of war, but what were they talking about now but of war obligations? At the same time, his right hon. Friend (Mr. Gladstone) issued £2,000,000 of bonds avowedly in anticipation of the payment of taxes. In the same year he issued an additional £4,000,000, and those £6,000,000 of bonds had now to be provided for. Therefore, although we were now at peace, we had still incumbent upon us the obligations of war, and it was to discharge these obligations that these additions to the taxation were to be continued. He would now call the attention of the House to the real question before them. There had been a paper circulated among Members which showed the obligations which had been incurred during the war, and which were payable in successive years after peace. That paper showed that there would have to be repaid in the present year £3,671,000; in the following year £4,824,000; and in the third year £4,707,000. Did not that expenditure belong as much to the war as any expenditure which had been defrayed during the war? Had the money which we had now to repay been expended for war purposes, or had it not? Had those bonds been issued in anticipation of taxes or had they not? If they had, were not those taxes justly applicable to the payment of those bonds in the same manner as they were to the payment of the war expenditure? Looking at the financial position of this present year, there was according to law an income tax of 16d. in the pound, which would have yielded £16,000,000; and they would have lost £3,000,000, upon tea and sugar at the commencement of the year. The Chancellor of the Exchequer had justly explained the other night that it never was the intention of the Government to take advantage of the technicality by which they might have continued the income tax for another year; but surely it became the Government to consider in what way the expenditure remaining from the war could be met. Suppose that the Government had adhered to their strictly legal position, they would have had a surplus arising from the sixteenpenny income tax of £5,000,000, which would not have been required for the expenditure of the year; but that surplus could not have been made available for the payment of the debts of following years. The deficiency, therefore, must be made up by taxes of some kind or other. The Government did not suspend the fall of the taxes on tea and sugar, but only mitigated the force of the fall for the nest two years; and that was the best course to pursue both with regard to the interests of the consumer and the state of the finances. His right hon. Friend said that the Government did not relinquish £9,000,000 of the income tax. The Chancellor of the Exchequer had never said they did. He stated that 9d. of the income tax would be given up from the 1st of April, but that as the current half year would be collected he would only lose half that amount. But his right hon. Friend said that because the Chancellor of the Exchequer relinquished the income tax in the present year he gave up his income tax for 1858–9 and created a deficiency. But his right hon. Friend was here in error. He had stated to the House that the Chancellor of the Exchequer had taken the income of the two years 1858–9, and that he had been satisfied to balance that income by taking the income of 1853–4. But he had done nothing of the kind. The Chancellor of the Exchequer had stated the probable income of 1858–9 at £62,300,000. The expenditure of 1853–4, even adding the cost of collection, was only £55,860,000; so that there was left a margin over the expenditure of 1853–4 of no less than £7,000,000 or £8,000,000. Then his right hon. Friend asked whether the Chancellor of the Exchequer meant to tell the House that he intended to bring down the expenditure of 1858–9 to the level of 1853–4, and then he referred to the charges upon the civil service estimates as being beyond the control of the Government. This was true. The estimated income of 1858–9 was £62,300,000, and that was taking matters in their most limited view, and making no allowance for the expansion of trade and the relief to industry given by the reduction of the income tax. The expenditure of 1853–4—which the Chancellor of the Exchequer did not take as the standard of expenditure, but as the expenditure of the last and highest year of peace, and the only year with which the year 1858–9 could be compared—in that year the expenditure was £55,840,000, to which must be added certain sums for increase in miscellaneous estimates—this would leave a balance of about £4,000,000 over-estimated expenditure. Then, no doubt, that year would have to be charged with the payment of the first issue of bonds £2,000,000, and the sinking fund of £1,500,000; but still there would be left a surplus of £500,000. The Chancellor of the Exchequer said he could not hazard an opinion as to the estimated expenditure of next year; and who would pretend to be able to do so? Could his right hon. Friend (Mr. Gladstone) have dreamt, when he made his eloquent speech in May, 1853, that the whole fabric that he reared would so soon have fallen to the ground? He then proposed a reduction of the income tax, within two years, to 6d., and within two years more to 5d., but within twelve months his right hon. Friend had to raise it twice in the same year, and was moreover compelled to raise large additional taxes upon articles of consumption. The estimated income of 1859–60 was £62,265,000. The expenditure, including the increase in the civil service estimates, was £58,276,000, leaving a margin of nearly £4,000,000. But his right hon. Friend had insisted—and there was the fallacy which ran through his whole speech—on fastening the Chancellor of the Exchequer with the expenditure of the present year as the basis of the expenditure of the years to come. But we were now in the first year of peace, and no one had contended that it was in the power of the great departments to reduce their expenditure during the first or second year of peace to the lowest scale at which the establishments could be kept. His right hon. Friend had referred to buildings and constructions as matters upon which no reduction could be expected; but those were the very things in which the largest reduction would be made, since when the buildings were constructed the expense did not require to be renewed. He must say that his right hon. Friend had not treated the Chancellor of the Exchequer with that fairness which was characteristic of all his proceedings, when he insisted upon accepting the present estimate of expenditure as the only estimate which the House might be expected to see for all time to come. He had listened with the greatest attention to the speech of his right hon. Friend, but he hoped he might be allowed to say without offence, that to that moment he did not exactly understand what was the real vice and fault that he found with the Budget. Was it that he found fault with the repeal of the war income tax next year? Was it that the Chancellor of the Exchequer repealed too many taxes, or too few? Was it that he was going to leave a financial deficit or to burden the people with taxation? These questions were on the threshold of the present inquiry. That House was not a debating club, talking theoretically, but was supposed to be practically at work to raise the means and square the income, so as to meet the expenditure of the country. Hon. Members first pressed the Chancellor of the Exchequer to produce his Budget before they had decided upon the expenditure; and then they blamed him for asking for more money than was necessary, because they thought the expenditure too large. That was not treating the Chancellor of the Exchequer quite fairly. It appeared that his right hon. Friend concurred with the Chancellor of the Exchequer in repealing the 9d. war income tax. Every one agreed that this ought to be done. What else had he done? He had added 2d. more to the income tax in the following years, and had postponed the drop on the tea and sugar duties. Everything the Chancellor of the Exchequer had done was not to produce a deficit, but to prevent one. What would those hon. Members wish the Chancellor of the Exchequer to do who said that he ought to have provided for the possible expenditure two years after the Budget? Was his right hon. Friend to propose increased taxation now in order to meet an imaginary deficit three years hence? He could not help thinking that, even if the House of Commons had been informed that there would be a probable deficiency two years hence, they would still have been indisposed to listen to any proposal made at the present moment for increased taxation to meet it. He contended that nothing his right hon. Friend had done was calculated in the slightest degree to impede the settlement of 1853, so far as that settlement was left possible by other circumstances. The war had interfered with the immediate operation of the measures of 1853, and its effects had continued to be felt in all their financial arrangements, and would continue to be felt until all our obligations incurred during the war were paid off. Therefore it was not fair to say that his right hon. Friend the Chancellor of the Exchequer had done anything to make more remote or less possible the repeal of the income tax in 1860; but it was the misfortune of his right hon. Friend, that he had to provide in time of peace for obligations which the war had created. His right hon. Friend (Mr. Gladstone) had spoken, in language that must have come to the minds of all, of the effects produced by the reduction of indirect taxation in this country. Nobody could call in question the good effects that had resulted from that reduction; but, at the same time, it was impossible to deny that the consequences which flowed from such a policy must depend very much on the state of the market at the time a reduction took place. Indirect taxes might be reduced at a time when no benefit would flow either to the revenue or to the consumer—at a time when stocks were so low that the reduction of duty would only go to swell the profits of the importers. Therefore, however wise and beneficent such measures might be generally, care should be taken not to let the revenue suffer when it was obvious that no benefit would accrue to the consumer. His right hon. Friend (the Chancellor of the Exchequer) had been well advised on this subject. He had taken pains to ascertain the condition of those markets that would be affected by a change of the duties to which reference had been made, and had found that the effect would not be to injure the consumers, while the revenue would be increased. But, while his right hon. Friend suspended for a short time the decline of the duties on tea and sugar, he took care to provide for the ultimate and not very remote accomplishment of their reduction to the lowest possible point. Therefore he was not open to the accusation that he was not sufficiently alive to the great advantage of those principles of which he had been the earnest and consistent advocate for so many years. He (Mr. Wilson) believed the effect of the Budget to be that it would provide effectually the income necessary for the expenditure of the year; that, while it did so, there was nothing in it to impair the prospects of future years, but that, on the contrary, it would do a great deal to enable future Chancellors of the Exchequer to meet their obligations by modifying the difficulties that might be in their way. He contended, then, that the two points laid down in the Resolution of the right hon. Gentleman the Member for Bucks ought to be negatived by the House. The Resolution maintained that they should so arrange their expenditure in the present year as to preserve them from a deficit in the following years. Was the House prepared to impose taxes in 1857–58 to meet the services of 1858–59 and 1859–60? It was all very well to propose plans for the gradual decline of the income tax, but after so many disappointments it would be futile to come to any solemn declaration that the tax would cease in a given year. In 1845 the prospect was held out of its abolition in three years; but there came in the first year the Irish famine, which was in the next year greatly aggravated, and in that following there was much commercial distress, so that instead of diminishing, the Government had to ask for an addition to the income tax. Did that hold out encouragement to them to make any solemn declaration on the subject? His right hon. Friend (Mr. Gladstone) must admit that with regard to one or two very essential points of his plan of 1853 he had been doomed to disappointment. First came the war which destroyed all his calculations; and next came a deficiency in one of his most carefully elaborated schemes. The right hon. Gentleman calculated that the first year of the succession duty would produce £500,000, and that during the present year it would amount to £2,000,000. But the result was that it now produced exactly what was expected from it in the first year—namely, £500,000. From that source alone there was a deficiency now of £1,500,000. This showed how undesirable it was to found too certain, expectations on what would happen in future years with regard to income. All they could do was to avoid, if possible, every course which, in the meantime, would render necessary increased taxation, or endanger settlements which the House had in its wisdom carefully and deliberately resolved upon. He was aware that he had addressed them, labouring under severe illness, very inefficiently; but he could at least claim the credit of having been influenced in the statement he had made by no other motive than an earnest desire to bring the facts of the case fairly before the House.

MR. LAING

said, he thought he could offer in a few words a satisfactory reply to the statement of the hon. Gentleman who had just sat down, that it was difficult to understand what could be the object which the supporters of the Resolution of the right hon. Gentleman the Member for Buckinghamshire wished to effect from it. Their object was the same with that which was attained in 1848, when the Minister of the day, having brought in a Budget containing estimates that were considered to be excessive, had to take that Budget back again, subject the Estimates to a complete revision, and bring forward new Estimates framed with a greater regard to economy, thus saving the public upwards of £3,000,000 of money. He begged to call the attention of the House to the fact stated by the right hon. Gentleman (Mr. Gladstone), that from 1842 to 1853 the expenditure of the country remained stationary, while from 1853 to 1857 the ordinary permanent expenditure showed an increase of £6,000,000. It was high time, then, for every one who called himself a reformer to insist on a reduction of expenditure. Either the Estimates that had been just proposed were necessary or they were extravagant. If they were necessary Estimates, then the inference was irresistible that next year would find them with a deficiency. It would be found that their resources failed them. And if next year the expenditure was framed on the same scale as now, the effect would be that with an expenditure of £65,474,000 they would have an income of only £62,300,000. That was a result from which they could not escape. They might try, to be sure, to diminish the deficiency by postponing the operation of the sinking fund intended to pay off the obligations incurred during the war; but the deficit would be too large to get quit of in that way. But if the Estimates were extravagant, and there was a probable way of escaping the deficiency by reducing the Estimates, then he asked why they could not do in 1857 what was done in 1848? He had examined the Estimates mainly with a view of seeing how far they would bear out the assertion that the large ex- penditure for which they provided was caused by the war, and the more he had examined them the less encouragement could he find for thinking if they were allowed to pass this year any large or material reduction would be made in them next year. The Estimates for the naval and military establishments—excluding the coast-guard and other expenses, which could not fairly enter into the comparison—exceeded by about £3,000,000 the Estimates of 1853–4. The causes of that excess were partly the amount of the naval and military forces, but principally the large scale upon which it was proposed to maintain the dockyards and the expenditure it was proposed to make upon bricks and mortar. Without troubling the House upon the present occasion with any details, he would simply state in round numbers the results at which he had arrived, from a careful analysis of the Estimates, and a comparison between them and the Estimates of 1853–4. The total amount voted for manufacturing establishments, including steam factories and works for the manufacture of arms, in 1853–4 was £2,700,000, while in the current year the same item amounted to no less than £3,800,000, the increase being £1,100,000. What possible effect could the war have produced upon these establishments? He should have thought that it would have had the effect of diminishing the expenditure upon them, and, as they were amply supplied with magazines and stores, that they would only have to spend £10,000,000 where they had once spent £50,000,000. They had a most magnificent steam fleet, comprising vessels of all kinds—from the Duke of Wellington to a gunboat—two-thirds of which might not be used for years, and yet they proposed to increase by £1,100,000 the sum they had devoted to ship-building purposes in 1853–4. Then the amount proposed to be expended upon new erections, upon pulling to pieces and putting up again, was £1,506,000—also a considerable increase as compared with 1853. These figures filled him with alarm, and they related to matters to which the attention of the Committee of 1848 was mainly directed. The result of the inquiry of that Committee was that an economy of £3,000,000 was effected in the Estimates, and the amount voted was expended with greater efficiency. Was there any reason for this increased expenditure? We were at peace with the great nations of Europe; we now felt no apprehension as to what might be done by a Russian fleet; and we were cordially allied to France. He had made these remarks because, in his opinion, the question of the Estimates was the whole question. It would be impossible either for hon. Gentlemen opposite, who were opposed to the income tax, or for hon. Gentlemen around him, who were opposed to indirect taxation, to carry out their views unless the Estimates were reduced. Until there was a diminution of expenditure not only could there be no remission of the income tax, but they would have to submit to a reimposition of those indirect taxes from which the industry of the country had been released by recent legislation. The moment they took that course, the moment they replaced indirect taxation, they would reverse the beneficial process which had taken place upon its remission, they would find that two and two did not always make four in financial arithmetic, and that they might double the amount of indirect taxation without doubling the revenue derived from it. For these reasons, and entertaining a strong opinion of the absolute necessity of imposing some check upon what threatened to be an extravagant expenditure, he had made up his mind to vote in support of the Resolution before the House. He hoped that if the Budget were remitted to the Ministry the result would be the same as in 1848—namely, that a better Budget would be produced.

MR. JAMES MACGREGOR

moved that the debate be now adjourned.

Debate adjourned till Monday next.