FIRST NIGHT

HC Deb 15 April 1861 vol 162 cc544-611

Order for Committee read.

House in Committee.

Mr. in the Chair.

THE CHANCELLOR OF THE EXCHEQUER

Mr. Massey, Sir, The retrospective portion of the statement I have to submit to you is the most unfavourable—indeed, I may say it is the only unfavourable—statement of account that it has ever been my lot to lay before the House of Commons. For that as well as for other reasons, the Committee will, I hope, forgive me if I invite their attention somewhat at large to its details. Whatever we may think of the legislation of last year, we must all concur in the opinion that it was no ordinary year in the financial history of this country. It was a year in which the House gave its sanction to that great instrument, the Treaty of Commerce with France; it was a year in which we received a remission of our hereditary burdens, through the diminution of the charge on debt, such as we probably shall never receive again, it was a year in which the controversy with respect to Protection, which had so long agitated the country and disorganized this House, was at length finally wound up, for it closed without leaving on the Statute Book of the United Kingdom one single protective duty of more than nominal amount. It was also a year of the highest taxation and of the greatest expenditure that has ever been known in this country, unless in the midst of an European war; and, finally, it was a year marked by a succession of seasons—the spring, the summer, the autumn, and the winter—the most unfavourable with which it has pleased Providence to visit us for the course of about half a century. The questions, I may further observe, which were debated in this House during last Session were questions of no ordinary moment, from whatever point of view we may look on them. The issue which they raised was no trifling issue. In the beautiful tragedy of Schiller, Mary Queen of Scots is made to say of herself, "I have been much hated, but I have also been much beloved;" and I think I may with equal truth say that the financial legislation of last year, while I do not mean to contend that it was not unacceptable to many, met, as a whole, with signal support from a great body of public opinion in this country. Be that as it may, I feel bound to admit that although the financial proposals of the Government were last Session fully and minutely canvassed, they were fairly and in no factious spirit discussed within these walls.

In taking a retrospective view of those measures and of their operation, it will be my duty to lay before the Committee, as far as I am able, the whole material facts exhibited by the financial history of the past year; and while I cannot but doubt that I must perform that task most imperfectly, yet I must add that the shortcomings in that respect with which I may be chargeable will not be owing to any want either of will or of effort on my part. I may further add that in making this statement I hope to be seconded in my desire to afford the fullest information to the House by the patient indulgence of its Members on both the one side of it and the other.

I shall first, then, Sir, submit to your notice the estimated and the actual expenditure of the past year. The expendi- ture which was estimated and provided for in the regular Votes for the year, and entirely apart from the Act which was passed towards the close of the Session for erecting with borrowed money certain fortifications, amounted to £73,664,000; and, inasmuch as the Act relating to fortifications was by common consent treated as a matter entirely distinct from the ordinary financial arrangements of the year, I shall not further refer to it, except casually on one or two points, or in any manner include its provisions in the statement I have to make to-night The estimated expenditure was then, as I said.£73,664,000; while the actual expenditure was £72,842,000:—thus, as is apt to happen at a time when great warlike preparations are in progress, following closer on the estimated expenditure than is usually the case, but still falling considerably short of it, and showing a difference of £822,000 in favour of the Exchequer.

Sir, into the details of this difference for the last year I do not mean to enter, but this I may say—that while there was a considerable saving on the estimate for the collection of the revenue, and a certain amount of saving on some other estimates, there was a considerable overcharge for the navy, resulting from the settlement of the accounts of former years. These nearly balance one another, so that the sum of £822,000 which I have mentioned as representing the difference in our favour as between estimated and actual expenditure is a difference almost entirely due to the Vote of Credit taken for the prosecution of military operations in China. That Vote, which I submitted to the House last July, amounted to £3,800,000, while the expenditure amounted only to something more than £3,000,000; a fact which ought to be sufficient to convince the House that any man laboured under a delusion who supposed that it was the object of the Government in the last Session, to understate the demands for the public service, or that they ventured to invite the sanction of the House to what they believed in their consciences to be an inadequate provision for the military operations in which there was a prospect of our becoming engaged. I have, I may add, stated the balance remaining to us on the China Vote in round numbers, for it is in point of fact somewhat less than £800,000.

But, passing by that point, I shall next proceed to the examination of the Revenue of the past financial year—a subject in dealing with which the Committee will, no doubt, follow me with a greater degree of interest. That subject I will endeavour to place before you in all the various lights by which, so far as I am able to form an opinion, it may be in my power to increase your means of knowledge with respect to it. And this in three principal modes. I will first compare the Revenue of the last with that of the previous year; then I shall compare it with the actual expenditure of the year itself; and, finally, with the Estimates framed at the commencement of the year. The two last of these modes of comparison will render the Committee assistance in forming an opinion as to how far the Government exercised a sound judgment in the calculations which they made beforehand. But I may observe that the first mode of dealing with the point—that is to say, a comparison of the Revenue of the last with that of the previous year—is the one of the greatest public and general interest, regarded as a means of exhibiting the condition of the country.

In 1859 we had a year of which I may say all the circumstances were favourable to the Revenue. So favourable were they, indeed, that on the 10th of February, 1860, I, proceeding on the Estimates framed in the public departments, told the House of Commons I anticipated little more than a balance of revenue and expenditure, after provision should have been made for a certain amount of charge on account of the war with China; when, however, the 31st of March arrived there was a balance in our favour to—nominally a greater extent—but in reality to the extent of about£l,200,000. In 1860–61, on the contrary, we have had a year of unfavourable circumstances so far as they are dependent upon the dispensation of Providence—a year in which the supply of the fruits of the earth was stinted, and which may be looked upon as one of the severest within the memory of any living man. The Revenue of 1859-60 was £71,089,000, and the Revenue of 1860–61 was £70,283.000. There is an apparent decrease of £806,000. In proceeding to comment on this decrease, I hope the Committee will not think I am trifling with their understandings when I point out to them that one of these years was materially shorter than the other. The revenue of this country is in the gross about £200,000 a day for every paying day in the year; and that part of it which depends strictly upon operations from day to day may be stated at fully £100,000 a day. The year 1860–61 was, for every practical purpose, shorter by three days than 1859–60. It was shorter in this way:—1859–60 was a Leap year, which accounts for one day; and 1860–61 was in the predicament—most happy with reference to our other interests, but not favourable to the interests of the Revenue—of both commencing and ending with a Sunday. By means of this extra Sunday there was a loss of a clear day's pay. And the third day is accounted for by the circumstance that in the course of the year 1860–61 there fell two Good Fridays; one of them was at the very close of the year, and the effect of it, with the following Sunday, was to throw some business and some payment of duty forward into the present financial year. After noticing, however, that two Good Fridays fell to our lot in the course of 1860–61, I may mention to the Committee that in the present year, 1861–62, there is no Good Friday at all. Now, Sir, the deduction of three days, representing revenue to the amount of £300,000, shows a real diminution in the Revenue of 1860–61 as compared with 1859–60 of £506,000, or, in round numbers, £500,000; and that, upon the whole, is a fair and just comparison as between the two years, so far as the totals are concerned. With respect to particulars, I have endeavoured to examine the subject with all the care in my power, and what I find is as follows:—We remitted taxes last year to the extent of £2,900,000, or in round numbers, £3,000,000; but what with the income tax, the additional spirit duty, and the minor charges of all kinds we derived from the proceeds of new taxes a sum not very far short of the same amount. So far, therefore, the balance was not materially disturbed. There was one other point, however, which might have disturbed it. It was this—in both years we made some draughts on temporary resources. In 1859–60 we had £856,000 from the retrenchment of the malt credit; and we had, likewise, the sum of £250,000 in the shape of a repayment of a debt from Spain, making together £1,106,000. In 1860–61 we also made by anticipation a large demand upon temporary resources. We were to have £300,000 from the hop duty; but that sum entirely disappeared from the receipts of the year, partly by the failure of the crop, which has very greatly reduced it, and partly by the necessity of postponing the payment upon the reduced crop. We were to have £1,100,000 on account of the malt duty; but that sum, owing to the disastrous circumstances of the harvest, shrank into £778,000. We got £250,000 from Spain, a payment equal in amount to that made in the previous year; so that, as compared with £1,106,000 of temporary resources in 1859–60, we had £1,028,000 in 1860–61. It is, consequently, fair and just to say that the absolute Revenue of the country, after making every reasonable deduction, diminished under the circumstances of the last year at the very outside by about £500,000. I must confess, Sir, that when I consider that the bad season of last year certainly did not represent a loss to the Revenue upon the whole of less than from £2,000,000 to £3,000,000, I cannot but regard with satisfaction the fact that the country exhibits a real deficiency in the yield of its taxes to an extent not exceeding, but rather falling short of £500,000. And I cannot doubt that if we had been blessed with a season of ordinary clemency we should in lieu of a deficiency under this head have been able to present a considerable surplus.

Let me now, in the second place, compare the revenue with the expenditure of the country for the year. The expenditure of 1860–61 was £72,842,000, and the Revenue, as I have said, was £70,283,000, showing upon the face of the figures a deficiency of £2,559,000. But, Sir, this account likewise requires some rectification. In the first place, a sum of £288,000, or, in round numbers, £300,000, out of the £2,559,000 belongs in every substantial respect to the account of 1859–60. There was a payment made by the State on account of drawback to the holders of certain stocks of wine. It was estimated and allowed for by me in the accounts of 1860–61 at £350,000, and was so taken by the House at the time when the final statement of estimated revenue and charge for that year was laid before it. Of course that money, not having been disbursed within the year 1859–60, went into the balances of the country as part of the surplus revenue; and it was merely owing to a legal technicality that were obliged to charge it as part of the expenditure for 1860–1. It is a legitimate deduction, having nothing to do with the real expenditure of 1860–61. That deficiency is thus reduced to £2,271,000, or in round numbers, £2,250,000. Further, it will be recollected that a large part of this deficiency lay within the anticipations and arrangements of last year. In the month of July, when we had before us the estimate of the charge for the war with China, the Government proposed, and the House agreed—I think without opposition—that a portion of that heavy charge should be defrayed from taxes, and that the remaining portion should be taken from the balances in the Exchequer, which were well able to bear it. I will not now enter upon the question whether this may substantially be said to be equivalent to borrowing a corresponding amount of money. It is certainly the withdrawal of so much available cash from the coffers of the State. A sum of about £1,300,000 or, as it was after-wards reckoned, £1,400,000 was the sum in the final estimates of expenditure for which we made no provision; in other words, that was the amount which we were to take from the balances in the Exchequer. If we deduct that sum of say £1,416,000 from £2,271,000, representing the deficiency that stands on the balance sheet of the year, it follows that the real deficiency over and above what was anticipated in 1860-61, and what was sanctioned by Parliament, is £855,000; and certainly in a year of charges so heavy, and of receipts so unusually stinted with reference to the permanent power and resources of the country, I do not think that is an unsatisfactory result.

But, Sir, I come now to that which has more to do with the question of the judgment that the House of Commons may he disposed to pass upon the Government—I mean the comparison between the Revenue of the year and the Estimates of that Revenue which I laid before the House last Session. I shall not refer at any length, Sir, to the various, and, happily, contradictory complaints that were made front different quarters—some alleging that the estimates of the Revenue had been outrageously swollen through the partial sentiments of the Government, and others asserting, with equal confidence, and I have no doubt equal sincerity, that an improper reserve had been exercised, and that the estimates of Revenue presented to the House were kept far below what everybody knew would be realized. The Revenue as estimated was £72,248,000—the actual Revenue was £70,283,000, the difference £1,965,000, or, in round numbers, for the purposes of this discussion, I will call it £2,000,000. Now, Sir, if the Committee will—as I am sure they will—give me their kind and unwearied patience to assist me in the task, I will ask the particular attention of the Committee to the constituent elements of this sum of £2,000,000—because they are material as throwing light not only or mainly upon the conduct of the Government, or even the wisdom of the proceedings of Parliament in a particular Session, but upon a number of questions of very considerable permanent interest and importance in connection with the welfare of the country. To bring clearly before the mind of the Committee the manner in which this difference of £2,000,000 has arisen, I shall first deal in the gross with all branches of revenue which are of the least importance to the issue—all branches, namely, except the two great branches of Customs and Excise. The several branches of Stamps, Assexed Taxes, Income Tax, the Post Office, Crown lands, and Miscellaneous receipts were estimated to yield taken together £27,457,000. They actually produced £27,542,000, showing an excess of £85,000. Some heads were £50,000 above the estimate, others were £50,000 below it; but we may overlook these details, satisfied with the fact that these branches of revenue yielded in the aggregate as nearly as may be what they were estimated to produce.

A word in passing on the subject of the minor duties—not because they form a vital or important part of this question, but because there is some misapprehension with respect to them. When they were originally proposed to Parliament in February they were expected to yield about £900,000; but in the course of the Session an important change was made in them with a view to diminished pressure on the trading community, upon whom several of them immediately fell; and the consequence was that the ultimate estimate of the yield of these duties, after taking credit for a number of small adjustments, was about £590,000. One of the duties—that upon chicory—remained in abeyance during the greater part of the year in consequence of the largeness of the stocks which had been imported into this country, and which, having been imported free of duty, were naturally enough exhausted before any duty-paying parcels were brought into the market. It should, likewise, be borne in mind that the Act for the granting of wine licences was passed only last year; and although I must say it was passed with as much expedition as was consistent with the consideration that so important a subject demanded and received at the hands of the House, yet it was not possible to get it into full operation until the end of the summer and travelling season, so that up to the close of the financial year it has had only a very partial effect. In other respects I do not know that the produce of these minor duties was materially different from the final form of the financial estimate.

I come now, Sir, to the revenue of the Customs and Excise. And first of all I must warn the Committee that the revenue of the Customs as it stands in the figures that hon. Gentlemen have seen in the public journals is too favourably represented. The Customs were estimated to yield £23,430,000. They actually yielded £23,305,000; that is, there was an apparent deficit of £125,000; but, although that difference is a decrease, yet substantially it may be said to represent equality. For, on the one hand, we have to allow for that shortness of the year, which I have already explained; and on the other hand, it so happened that the amount paid into the Exchequer was some what in excess, as compared with the actual receipts of the department. I need not trouble the Committee with details, but, when these items are reckoned, they leave both sides of the account nearly balanced, and we may say that the revenue of Customs yielded as nearly as possible what it was estimated to yield. But then it is material to observe that in all cases of this kind the revenue of the Customs profits unduly at the cost of the revenue of Excise. When we have a bad year the meaning is we have bad seasons; when we have bad seasons the meaning is that the produce of the earth is less abundant than usual. If the produce of the earth is less abundant than usual, more produce must be imported from abroad, and though little of it comparatively is subjected to duty, and none of it to a high duty, yet, of course, the operation virtually tends to remove certain dutiable articles from the region of the Excise, and bring to the credit of the Customs accounts may have accrued from such a cause. Sir, that is particularly remarkable in the present case, so far as regards the great article of corn. We call, and not unjustly, our duty on corn a nominal duty; and yet the yield of that nominal duty in the year just expired was £866,000. Sir, the amount of that receipt for the year, I confess, I regard with the greatest dissatisfaction. Every pound we receive from corn over and above the sum received on the average reminds us that the harvest has so far fallen short of what is necessary to supply the ordinary wants of the country. It tells a melancholy tale, in the first instance, of deficient yield from our own soil; and in the second place every such pound gained tells of £2 or £3 withdrawn and withheld from the Revenue in the shape of a narrowed consumption of comforts and luxuries by the people. On corn, I reckon, that in this case there is an increase of £366,000, over and above the sum of £500,000, which I take generally to represent the average Revenue. In addition to this sum, £54,000 was received on sugar used in breweries, to supply but very partially the deficiency caused by the miserable failure of the crop of barley. £47,000 was received on hops, arising in some part from a similar cause. These three items of corn, sugar, and malt, together make a difference of £467,000, which conies, I may say, unlawfully to the credit of the Customs, and which represents far more than a corresponding prejudice to the Excise. It is worth while, considering the importance of this subject, if the Committee will allow me, to exhibit it to them anew by means of some further detail. If I take three great articles immediately connected with the condition of the people, and paying Customs' duty, which, together, yield no less than £17,000,000 yearly—I mean the articles of tea, sugar, and tobacco—the revenue from these three articles during the past financial year, notwithstanding the growth of the population in numbers, was entirely stationary. Tea, taken alone, showed an increase of £5,000; sugar an increase of £18,000; and tobacco showed a decrease of £21,000; so that the increase on tea and sugar exceeded the decrease on tobacco by a sum of no more than £2,000. But then, as I have already said, £54,000 was received on sugar used in breweries as a substitute for malt; so that the actual decrease was £52,000 on these three great articles so immediately connected with the comforts of the community, and the amount of revenue on which forms a measure and a test of the degree in which those comforts are enjoyed.

The Committee will, no doubt, like to know what has been the effect of the changes which have been brought about by the reduction of the Customs' duties on a number of imported articles. All I can say must be by way of general description as to the operation of these changes, inas- much as we must bear in mind that narrowed power of consumption which we may trace throughout all the figures of Customs and Excise during the year. And we find, I must confess, under the circumstances, the result of these changes has been not unsatisfactory—certainly, it has been less unsatisfactory than the figures which I have just given to the Committee. I reserve for separate consideration the articles of spirits and wine. I begin by taking together all the other articles on which duties were reduced in the last Session of Parliament, of which the principal were timber, hops, raisins, currants, figs, and a few others. The total amount of reduction on these articles last Session was £663,000. The total loss to the revenue was £529,000. So that there has been a recovery by increased consumption amounting to £124,000; but, I have no doubt, it would have been much greater had the circumstances of the year been more favourable. Next, with regard to spirits imported from abroad, the Committee will observe that we made two changes last year, in opposite directions. We began, in February, 1860, by abolishing in substance the differential Customs' duty on spirits, although a small difference remained to cover the proved cost of Excise regulations. The amount of reduction on brandy which was the only material article affected under this head was £446,000. But in July we laid on an additional duty on foreign as well as on British spirits of one shilling and elevenpence per gallon, which was estimated to yield £400,000; so that, in point of fact, the balance of relief we gave on the article of spirits imported from abroad was only £46,000. We surrendered £46,000 of revenue—that is to say, taking all the three descriptions of imported spirits together, two of which were not affected by the decrease, but all of which were affected by the subsequent increase, the result was that the increase on Geneva was £67,000, and on rum £193,000, while on brandy there was a diminution over the whole year of £181,000; so that there was an actual gain to the limited extent of £79,000 on spirits, together with a relief from taxation of £46,000.

But the most important and interesting of the changes made last Session, with regard both to its effect on the Revenue, and likewise on the consumption and condition of the people, was that which was made in the duties on wines. I will endeavour to state the facts to the Committee without any unnecessary waste of words, but, at the same time, with such fulness and clearness as are essential in order to appreciate the substantial results. With regard to this particular alteration of Customs' duty my belief is that when you compare the new system with the old we may say that this particular change, of all the changes which have heretofore been made in Customs' duties, was, in the first place, as a mere fiscal change, the most difficult to make on account of the administrative operations necessarily attending it; it was, secondly, sure to be the slowest in working out its full results; and, thirdly, I believe it was, perhaps, the very best. The loss which I anticipated upon wine—that is the amount of relief given to the consumer by the reduction of that duty—was £830,000. The actual loss sustained by the Revenue has been £493,000. We have here then the important fact that of all the articles in the tariff, wine is the only one that has faced the unfavourable circumstances of the year, and has brought us even a larger revenue than I ventured, calculating on an average state of circumstances, to expect. The utmost reduction of the loss I ventured to state to the House was from £830,000 to £515,000 by the increase in consumption; wine, and wine alone, has done all, and more than all I anticipated, and the actual loss is only £493,000. We began, as the Committee will recollect, with a simple reduction of duty from about five shillings and tenpence to three shillings; we ended the year with the initiation in full of the new system of charging the duties which was contemplated and provided for in the Act of last year; and since the new system of charging the duties began the deliveries I think, speaking roughly, have been not less than double what they were under the former system. Whether they will continue at so high a figure I do not pretend at this moment confidently to predict; but I have no reason to doubt they will continue at a satisfactory rate of increase, both as regards the consumption of the country and as regards the receipts of the Exchequer.

I will now give to the Committee very briefly the figures as regards the importation of wine into this country in the years 1859–60, and 1860–61. In the financial year 1859–60 wine, other than French, was imported to the extent of 8,021,000 gallons, while French wine was imported to the extent of 1,155,000 gallons. And here I ought to say I think the importa- tion was in some degree increased by the fact that the changes in the law were made some two months before the end of the year. The total importation of wine, therefore, in the year ending March 31, 1860, was 9,176,000 gallons. In 1860–61 the importation of wine other than French increased from 8,021,000 to 9,878,000, while the importation of French wines increased from 1,156,000 gallons to 2,631,000 gallons. The total importation was thus 12,509,000 gallons against 9,176,000 in the preceding year. The increase upon French wine was 1,476,000 gallons, or 127 per cent; while the total increase of all wines was 3,333,000 gallons, or 36 per cent. I must here observe, as I have done on other occasions, that it will take a long time to work out the full effects of the changes we have made in the duties upon wine. I think the lessons of former experience distinctly teach us that such will be the case. I believe it would be in the power of any ingenious person who made adequate research into the subject, to write an exceedingly curious tract upon the history of the taste for wine in this country. The changes which that taste has undergone have been wonderful; but substantially, we may say—and I hope the hon. Member for Norfolk (Mr. Bentinck) will not be shocked by the assertion I am about to venture—we may say that in the really "good old times" of "Merrie England,"—that is to say, those times that are sufficiently remote from our own to merit the application of that laudatory epithet—in those times the prevailing taste in this country was for light wine. Strange as it may seem, the taste for wine has been materially connected with the course of politics. The Revolution of 1688, and still more the Hanoverian Succession and the wars with France brought about political arrangements bearing upon commerce which have greatly altered the taste of this country as to wine; so that a people which, as a people, had before loved light wines, began to love strong wines. I believe it is a fact that the University of Oxford, with which I have the honour to be intimately connected, actually petitioned Parliament against the grievance of the imposition of a heavy duty upon light wines, on the ground that it almost compelled them to drink port. It is impossible to look into the literature of the last century without finding ample evidence to the same effect. There is an interesting work, which, no doubt, many hon. Members have read, which describes the state of things in Scotland about a century back—I mean the "Autobiography of Dr. Alexander Carlyle." Dr. Alexander Carlyle may be said to have been a gentleman-clergyman of the Church of Scotland. I do not mean to say a word against his character, but it is quite evident to anybody who examines his memoir that whatever his theological and pastoral qualifications may have been, he added to them a perfect acquaintance with the science of good living. Nothing struck me more in perusing his work than the frequent notices which are interspersed here, there, and everywhere throughout his pages of the uses, merits, and prices of different kinds of wines; and I think it to be an important fact which this gentleman puts upon record when be informs us that the hotel price of claret in Edinburgh 100 years' ago at a club with which he dined—wine of a quality with which he was satisfied, and, therefore, with which I have no no doubt that any one of us would be satisfied—the hotel price of that wine was not more than 18s. per dozen. This is a matter, I say, with regard to which it may take a long time to develope fully any alteration likely to take place in the taste of this country. Yet, even at this very early period I cannot avoid mentioning to the Committee some information which I received a few weeks back from a deputation which attended me upon this subject. The deputation was composed of persons who, I believe, were keepers of refreshment houses with beer licences, in the eastern part of the Metropolis, and who had, likewise, taken out wine licences. They gave me the joint results of their experience, and it contained one element of comfort for the hon. Gentleman opposite, who, I know, has a strong opinion upon the comparative merits of light wines and powerful wines. They said the effect of their having taken out wine licences was that a moderate proportion, or from 5 to 10 per cent of their entire takings or sales consisted of wine, which they sold at 8s. per gallon as draught wine, and which was formerly not to be had except in bottle. I believe the lowest price of wine which was accessible in that way to the ordinary consumer was from 2s. 6d. to 3s. per bottle, or 18s. per gallon. That deputation, likewise, communicated to me another fact which, I confess I learnt with much interest—namely, that but a small proportion of the wine sold by them was consumed upon the premises, the chief part being fetched from thence for the houses of the poor, and as far as they knew it was principally intended for the use of the sick. They also said—and this is the circumstance of which the hon. Gentleman opposite will bear with satisfaction—that the wine in demand with them was entirely and exclusively strong wine, and that no symptoms of a taste vacillating in favour of weak wines had yet made its appearance among their customers.

Before quitting this subject, I wish to refer to the rumours that have gone abroad as to supposed intentions of the Government to change the system now in operation for charging the duties upon wine according to its alcoholic strength ascertained by distillation. And I have to say upon that point, in the first place, that I think the department of Customs deserves credit from this Committee for the energy, intelligence, skill, and desire to meet the convenience of all parties, with which they have applied themselves to the introduction of a new and undoubtedly, at first, a difficult system. But I have further to say upon this subject that the results of the system are, upon the whole, in a high degree, satisfactory, that we are convinced that it will be effectual for its main object, and that it deserves to be firmly and resolutely supported by the House. It may be true that a portion of it may be found less favourable than was hoped and expected by some portion of the wine-growers of France—I mean especially those of the South—for the introduction of their wine; it is, likewise, true that I do not pretend to represent that in all its details the system is perfect; but I do say that its inconveniences are few as compared with its advantages; and I think the Committee will feel that it would be absurd to attempt to ascertain and amend those minor defects that may be found in the law as to the precise adjustment of the scale until we shall have had such experience that when we do touch them we may reasonably expect to touch them satisfactorily and effectually, and until we may feel we have exposed the danger of being obliged to amend and cobble our own work from year to year. I do not think the time has yet arrived, nor that it will arrive in the present year, for any change at all. When it does come I hope such minor changes as are required may be made; and I am quite sure that when they shall be made the honourable and enlightened conduct of the Government of France in respect to the Commercial Treaty and the adjustment of its own laws to meet the requirements of that treaty will not be forgotten either by the present or any other Government of England.

So much, then, for the revenue from Customs. But there still remains to be considered the Excise revenue of the past year. The revenue from Excise was estimated in 1860 as likely to be £21,361,000. Instead of that amount, the actual receipt was only £19,435,000; showing a deficit of £1,926,000. In point of fact, if the Members of the Committee will be at the pains of comparing the deficit upon the Excise with the entire deficit upon the aggregate revenue as compared with the Estimates, they will find that they correspond within a few thousands of pounds. This heavy deficit upon the Excise arises upon three articles; first upon hops, which were estimated to produce £870,000, while they really yielded only £580,000. a deficiency in round numbers of £300,000. The next item was malt, which was estimated to produce £6,900,000, but which yielded only £6,116,000, or a deficiency of nearly £800,000. The third article was the article of spirits, which was estimated to produce £10,150,000. but which actually yielded but £9,240,000. or a deficit of £910,000. Thus the deficiencies upon these three articles together represent the sources of the failure of the Revenue of the year to reach its estimated amount.

As for the hop duty, in the first place that deficit is accounted for in a manner so plain by the immediate operation of the season that I need not detain the Committee upon the point. The whole duty chargeable upon British hops was £70,000 instead of £300,000 which was the amount estimated for the year; and I may observe for the information of the Committee that as the periods of credit were abridged by an Act of last year, two years' crops are included in the £870,000 which I have mentioned. Even of that £70,000 it became necessary for the Government in the exercise of its discretion to allow the payment to be postponed, so as to pass into the next, that is to say, the present financial year. Thus, the sum of £300,000 is disposed of. As to malt I am sorry to say that the £800,000 I have mentioned can scarcely be said to represent the whole extent of the evil. There is no doubt that the relation between the consumption of beer and the manufacture of malt, although an essential relation, is not one which takes immediate effect; but still it is undoubtedly true that with a favourable year we ought to have had a considerable advance in the consumption of malt and of beer, because malt has been deriving benefit for some time, especially in Ireland, from successive augmentations in the spirit duties, and the sale of beer must have benefited materially during the last year throughout the three kingdoms, in consequence of the general increase of duty upon spirits in the month of July, 1860, which was enacted without any corresponding increase in the duties upon malt. It is one main complaint of the distillers of spirits—than whom I never had the pleasure of meeting with a more intelligent body of British merchants or tradesmen—it is one of their chief complaints that they are taxed so unfairly in proportion to beer. There is a difference in the amount of duty imposed on the alcohol in spirits and in wine as compared with that imposed upon the alcohol in beer, which is greatly to the disadvantage of the latter article. I admit that from its nature beer ought to be taxed more lightly than ardent spirits; but we have certainly pushed this principle somewhat far. The alcohol in pure spirit pays 10s. to 10s. 6d. per gallon, the alcohol in wine pays from about 6s. to 7s., and the alcohol in beer pays but 1s. 10d. per gallon. That is a very large difference, and it appears yet larger when we consider the tax in relation to the value of the articles. The tax upon beer may be said to be from 18 to 23 per cent; upon what may be called medium sorts of wine—that is the only sorts of wine that can ever be reckoned to compete with beer—it is from 25 to 80 per cent; while the tax upon spirits is five times that amount, for it is hardly less, if it be less at all, than 400 per cent. So much for the deficiency upon malt. But the Committee will be anxious to hear what is to be said with regard to the spirit duties. We anticipated an increase in the Revenue from the duty imposed in July last on British spirits of £650,000; whereas, there has been altogether a diminution in the actual yield of the spirit duty, as compared with the estimate, of no less than £910,000 or £250,000 more than the whole increase at which we aimed. Certainly, I cannot say otherwise than that, at first sight, this is an astounding diminution; but it is a result which deserves the careful attention of the Committee; moreover, it is one that will reward that attention. The question of the augmentation of the duties on spirits is one which does not concern exclusively any particular Ministry or Government. The proposal we made last year was a proposal made in conformity with a very general feeling. We were all aware that the result—at least the momentary and immediate result—was, in some degree, uncertain. We were all desirous that the duty on this particular commodity should be carried to the highest practical point. I will endeavour to lay before the Committee what I believe to be the exact state of the case—only observing at present that the duty on spirits fell short by more than £500,000 of the sum which it had yielded in the previous year, and I endeavoured in making the proposal to give a fair and full statement on the one hand of the risks or uncertainties it involved, on the other of what we thought, and still think, the commanding reasons in its favour. And now while, on the contrary, it was estimated that it would yield about £400,000 more than the same duty had yielded in the year before.

I now entreat the Committee to accompany me while I exhibit the subject to them in some new lights: and, first, let us take, instead of the entire year, the year broken into two parts, and they will not be a little surprised at the results. I will take two periods then, first, from the 1st of April to the 14th of July, when the additional spirit duty was entirely unknown, and perhaps was not even dreamt of, either by distillers or consumers; and the second period from the 15th of July until the 31st of March, when the additional duty was in operation. From the figures I shall lay before the Committee, it will be seen that a very considerable decline from the previous yield of the spirit duty was in operation before the duty was enlarged, and that since the duty was increased, on the Contrary, the decline has been checked to some degree in some cases, while in others an absolute and substantial increase has taken place; and, especially this is curious if we take the case of England alone, because in Scotland and Ireland social causes are at work which as far as mere ceremonies are concerned have caused a steady decrease in the consumption of spirits.

I will now give the case of England in the first instance, and then that of the United Kingdom, and I will then go to the cases of the other two countries in detail if the Committee desire me to do so. In England the spirit duty received between the 1st of April and the 14th of July of 1859–60 was£l,203,000; the amount received in the same period of 1860–61 was £1,045,000; showing a decrease of £158,000 in that portion of the year in England before the additional duty could influence the Revenue. Then, taking the part of the year from July 16 to March 31, when the additional duty was in operation, the amount received in 1859–60 was £2,991,000, and in 1860–61 it was £3,245,000, that is to say. it had an increase under the new duty of £254,000; an increase very nearly corresponding with the estimate that had been formed. I may say generally that in Scotland there was a large decrease before July, and a small increase afterwards. In Ireland there was a large decrease before the spirit duty was altered, and a considerable, though somewhat slackened, decrease afterwards. In the United Kingdom there was a decrease of £654,000 before the duty was changed, and an increase of £90,000 after the 14th of July. These comparisons are of themselves valuable as far as they go, but I must point out to the Committee that the operations of the spirit trade itself, in the form of extra deliveries at one time and another, in reference to anticipated changes, are such as materially to bewilder and delude those who endeavour to draw inferences from them without the advantage of a long experience. On the whole, however, in 1859-60 there were extraordinarily large deliveries of spirits, from an anticipation of an increased duty. This very materially diminished the productiveness of the duty in 1860–61. The main cause of the deficiency is to be found not so much in a lessened consumption, as in the fact that the stock of duty-paid spirits in the country has been materially reduced. It is matter of interest to know in what degree, but can only be matter of estimate. According to the best information that can be obtained by the Board of Inland Revenue it appears that in 1860 the duty-paid stocks amounted to 3,000,000 gallons of spirits, and in 1861 they were only 2,000,000 gallons; this decrease of 1,000,000 gallons of itself represents a duty of no less than £500,000. Some effect of this kind has followed every augmentation of duty in the whole series of augmentations since 1853. From 1853 to 1858 we have had successive augmentations, hardly one of which produced the result anticipated for the next following year; and the tendency of them all was to contract, in some degree, the consumption, but especially the stock. I doubt whether the consumption was so much restricted as would be expected relatively to the increase of price; but the immediate result and tendency was to diminish the duty-paid stock; and where the duty formed so large a proportion of the price, it told severely on the revenue returns immediately after the augmentation of the duty. In 1853–54 I had the honour of proposing to the House the first of these augmentations, and I estimated the result at £476,000. I did obtain, I believe, £590,000; but that was the first augmentation, and a small one, and it constituted an exception to the rule. In 1854–55 I proposed a second augmentation from which the estimated return was £450,000; the amount obtained was £373,000. In 1855–56 my right hon. Friend, now the Secretary for the Home Department (Sir George Lewis), proposed a third augmentation. That was expected to yield £1,000,000; the actual return was £707,000. Lastly, the right hon. Gentleman opposite (Mr. Disraeli) proposed an augmentation of the Irish spirit duty, on which the return expected was £500,000; but in the first year it only yielded £85,000; but in the second year this £85,000 rose to £304,000. The experience, therefore, of all changes of this kind shows that some time is required to bring them into regular operation. But I am bound to say, after examining the subject with great care, and all the inquiry into details I could possibly make, that I am convinced the experiment is likely, even in a fiscal point of view, to be successful, while so far as social considerations are concerned, we are of opinion that it is and will be very beneficial. It may, indeed, diminish the consumption of spirits, nay, we sincerely hope it may have this effect; but it has not yet given rise to the only real evil we might have had to apprehend—an increase in illicit distillation. I have here the Returns, though not beyond the end of 1860, of the number of convictions and of commitments to prison in each of the three kingdoms of persons charged with keeping illicit distilleries in the years 1859 and 1860, or, at least (since the Returns for the year are not yet completed) in the first nine months of the fiscal year of 1860, compared with the corresponding nine months of the year preceding. I will not trouble the Committee with the whole of the details—I will only assure the Committee that in each of the three countries there has been a considerable diminution in the number of convictions and punishments, especially in Ireland, which is the country we naturally look to with most apprehension, and which may be called the piccant part of the United Kingdom in these matters. In England the number of persons committed to prison in the first period of 1859 was 54; in the second period it fell to 39; in Scotland the number of commitments was 6 in the first period, and 5 in the second; in Ireland the detections in the first period were 1,829, and the convictions 101; in the second period the detections fell to 918, and the convictions fell to 84. The machinery of detection employed in Ireland is so efficient that the reports of the constabulary sent in to the Government may receive the most complete reliance. No doubt the competition of wine may have done something; but that cause is altogether so slight and insignificant that the consumption of wine in this country need not be mentioned or thought of for a long time to come, if it is ever to be thought of, in competition with those great articles of consumption so much better known to the people of this country—namely, ardent spirits and malt liquors. The consumption of wine is utterly insignificant in comparison and competition with spirits; neither has the consumption of malt liquors produced any great effect, though as far as it has produced a change I will not say it is a change to be promoted by any grossly unequal or unfair adjustment of duties, but still it is a change which in all its social aspects we must view with satisfaction. The competition of spirits brought from abroad, again, has not been of a very important magnitude. There has, however, been an increase in the consumption of brandy and Geneva, owing to the removal of the differential duty, to the extent of 345,000 gallons, balanced partially by a decrease in rum of 170,000 gallons. That is the statement which I have to lay before the Committee in regard to the diminution of the revenue from spirits. And now, Sir, I shall proceed to say a word on the general policy of the legislation of last year; because there are those who think, and very naturally think, that the House of Commons in the course of last year departed from its ordinary practice, and may be said in some degree to have shrunk from its duty in consenting to resort to the use of temporary resources, instead of meeting the full expenditure of the country from an adequate amount of taxation, and from that source exclusively. I think, Sir, I can truly say that there is no one who is more anxious than myself to invite and urge this House upon every occasion to the utmost exertion for the purpose of maintaining the credit of the country. I quite admit that the only firm and permanent foundation upon which we can stand is that which has for its basis an even balance between income and expenditure; and which steadily eschews as a great evil the creation, under all ordinary circumstances, of public debt; but, at the same time I think it quite impossible, in dealing with the arrangements of a particular year, to omit all regard to the peculiar burdens which it may bring and to the rapid, enormous, and almost incredible growth of the expenditure of the country. I will state in round numbers, yet with substantial precision, how this matter stands. The right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli) had three years ago, as Chancellor of the Exchequer, to propose the Votes necessary for the service of the country, and the Votes which he proposed were somewhat under £64,000,000. Two years only had elapsed when, in 1860, it was my duty to propose to this House Votes which were somewhat under £74,000,000—an increase of about £10,000,000 in the national expenditure within that short period. Now has the House of Commons really flinched from its duty in regard to the mode of providing the money? I admit that we drew to some extent upon temporary resources, but I confidently urge that we were justified in doing so. Now, how much of this great augmentation in our expenditure was raised by taxation? With unrelenting hand we imposed £7,000,000 of new taxes in the course of those two years to meet the annual expenditure of the country; and some part, at any rate, of this new taxation was in the shape of permanent additions to our fiscal resources We raised by taxes in the year about £70,000,000. The increase of taxes in two years, as I have said, was £7,000,000. We had in China a war expenditure of some £5,000,000 to provide for; and under these circumstances the result has been that, combining together what we have taken from the balances, and what we have derived from the malt credit and the Spanish payment, we have drawn from temporary resources other than taxes a total sum of no more than £2,450,000 towards meeting that war expenditure. I must confess that I do not think there is in that statement anything of which the House of Commons can accuse itself unless, indeed, there be an imputation upon quite different grounds, and unless it be that the consciences of some hon. Members may reflect upon them for not having given sufficient attention to the rapidly growing amount of the national expenditure.

And now, what have been the operations of the past year with regard to the balances in the Exchequer and to the public debt? That is very easily stated. The balances in the Exchequer on the 31st of of March, 1860, were £7,972,000; on the 31st of March, 1861, they were£6,672,000; but £150,000 of this last-named amount was money raised for the fortification annuities, deducting which, we had on the 31st of last March a balance of £6,522,000—being an actual diminution in the balances of £1,450,000; while the estimated deficiency provided for was, as I have said, about £1,400,000. The Committee will see, under these circumstances, that there is no appearance of a diminution likely to entail inconvenience in meeting the demands of the public service. And I may add as a conclusive proof to the same effect, that we have met the changes of the current question without any payment for interest on Deficiency Bills. With regard to the National Debt, again, the account is a simple one. We had last year to pay off £1,000,000 of Exchequer bonds. That rendered it necessary to ask Parliament to raise another £1,000,000 of Exchequer bonds in lieu of them. Besides that, in consequence of the very formidable prospects of the harvest during the month of August, entailing an almost certain loss of revenue, I was obliged in view of that contingency to ask rather suddenly, late in the Session, for authority in case of need to borrow another £1,000,000 of Exchequer bonds to meet the possible exigencies of the country. The state of the case, then, is this:—The old £1,000,000 has been paid off and replaced by the new £1,000,000. Out of the second £1,000,000 which I so took authority to borrow, in view of a probable deficiency, £600,000 has been borrowed. Against that, £139,000 of Exchequer bills has been paid off and not reissued. So that, in fact, in consequence of the circumstances of last year and its war expenditure, the direct addition to the debt of the country, leaving out of view the diminution of balances, is £461,000, or something under half a million.

Before quitting absolutely this lengthened retrospect, I must say it appears to me that there is a lesson to be derived from it over and above anything that I have thus far endeavoured to state. I will ask the House, if they will allow me, to compare very briefly the year which we have just brought to a close with the latest preceding year which seems chiefly to resemble it in its main features—I mean 1853? In both of these years there were large remissions of taxation. In both the harvest was a very bad one. No doubt the harvest of 1860 was considerably worse than that of 1853; it was also preceded by an unfavourable spring, which raised the price of animal food to an unprecedented height, and it was followed by a most severe and ungenial winter, which for several weeks deprived, if not one half, yet a considerable proportion of the labouring population of their employment, Notwithstanding all this, I cannot help feeling it my duty to ask the Committee to note, as I have said, the resemblances, and at the same time to note in one important respect the marked contrast, between 1853 and 1860—I mean as to the immediate and palpable effect of the remissions of duty made in these two years respectively. I do not know whether there is any one who will reply to me that if there was a difference it was because in 1853 the remissions were wise, while in 1860 they were unwise remissions. I have an equal interest in the effect of both, as it was my fate to have proposed both. Substantially, these remissions are akin in their character, and if there be a preference for either I think the remissions of last year are likely to be rather preferred, upon examination, to those of 1853. But let us mark in a very few words the singular contrast of the results attained. In 1853–4 we remitted £1,500,000 of Customs' duties, and every shilling of that £1,500,000 was made up in Customs' revenue within the year, with £23,000 to spare. That has not been the case this year. As I have just said, there was upon the Customs' revenue of 1853 a gain or recovery of £1,523,000. Last year we took off sums amounting in all to £2,376,000, after allowing £400,000 of additional spirit duty which we laid on. Instead of recovering the sum of £2,376,000, however, we only recovered £580,000. Again, as to the Excise. In 1853–4 the Estimate of Excise revenue was £14,640,000. After deducting the amount of taxes imposed, we gave a balance of relief which I take at £350,000; and the Excise revenue of 1853 showed an increase of £623,000;—so that at the end of the year the revenue gained in that branch to the extent of £973,000. In 1860 this was far from being the case. The Excise revenue was originally estimated at £19,170,000. We imposed upon it, in the shape of malt credit, additional spirit duties, and hop credit, an increase of £1,945,000, beyond the £19,170,000. But, instead of such a recovery as we had in 1853, the revenue only increased from £19,170,000 to £19,435,000; or, in other words, we obtained out of this £1,945,000 only a sum of £265,000. This is a very serious and important fact, which I am sure must attract the attention of the Committee. I do not undertake to give any complete, or full, or demonstrative explanation of this fact. But I cannot help calling the attention of the Committee to one circumstance which I have not yet specifically mentioned, of difference between 1853 and 1860—I mean the difference in the expenditure of the country at the two periods. In 1853–4 the Imperial expenditure of the country—I mean that which excludes all the purely local rates and taxes—was under £56,000,000; the local expenditure was under £16,000,000; and the total expenditure was under £72,000,000. But in 1860-1 the Imperial expenditure alone amounted to what the local and Imperial expenditure together had been in 1853–4. It amounted in round numbers to £73,000,000, including the small sum which came due in respect of the fortifications. The local expenditure, as nearly as I can make it, was about £18,000,000. The total expenditure, therefore, had grown from under £72,000,000, to £91,000,000, or nearly £20,000,000 in the space of seven years. Now, Sir, I do trust that this will be remembered and considered. Let us think for a moment what is the meaning of these few last words and figures. Nothing but reflection can at any time be required in order to bring this House to a just view of its position; and all I am anxious for is that we should reflect, and should reflect in time. What are the annual savings of this country? May we take them at £50,000,000? Enormous as that sum is, I believe it may be taken as the amount which the skill, and the capital, and the industry of England may be computed to lay by every year. If it be so, and if we take this £50,000,000 for a period of eight years, we get a total capital of £400,000,000. Now, if we put upon that sum of £400,000,000—taking all kinds of investments together—an interest of 5 per cent. the result is that it gives us the £20,000,000 as the aggregate result of the whole savings of the nation for eight years; so that the total savings of the nation for these eight years would appear to have been completely absorbed and swallowed up in the grave of this vast expenditure. Nor can I help thinking that there is some degree of relation between the inordinate growth of expenditure and that diminished elasticity of the revenue, which we cannot fail to observe in comparing our fiscal experience during the last year with the fiscal history and results of the year 1853–4.

Sir, I have still to do justice to one important subject. I have referred to the fact that last year, on the proposal of the Government, Parliament was pleased to diminish the immediately available resources of the country, and likewise to the fact that the revenue of the year is, upon the whole, unsatisfactory. Does there arise from the association of these two facts any presumption that Parliament, in its decision last year, mistook the path of duty and erred in judgment? I think I can show that, if the employment of the people and other circumstances have not been such as to yield an adequate revenue in the year such as it has actually proved to be, the condition of affairs would have been far less satisfactory but for the wise and provident legislation of Parliament. At any rate I am ready to raise that issue and to state the facts. The Committee is aware that in November last the Treaty of Commerce with France reached its final form by means of supplementary Convention. It is not necessary for me to speak in this place of the signal services which, in the view of the Government, Mr. Cobden has rendered to the country in connection with that treaty. But it is a pleasure to refer to the able and intelligent assistance which he received from the coadjutors who were associated with him in his work by the heads of certain of our administrative departments. And it is no more than an act of absolute justice that, having watched with deep anxiety the proceedings in regard to this treaty from the commencement to the close, I should record the sense I entertain, in common, as I know with all my colleagues, of the conduct of the Government of France, alike in their inception, their progress, and their completion. It is not necessary, and, indeed, it would be idle to refer to particulars; but, looking at the whole course of the proceedings, from first to last, no one can conceive a more loyal, thorough, intelligent, unflinching determination than has been exhibited by the Ministers of France, under the animating spirit and guidance of the Emperor, to give full effect alike to the terms and to the principles and spirit of the treaty, not for the sake of British interest, nor with any mere wish to conciliating England, but for the sake of the interests of France.

I will now proceed to exhibit to the Committee in a form which must be slight and general, yet which need not, I trust, be delusive, the effects of the measures of 1860 on the trade of the country. The export trade of the last year was the largest we have seen. The exports from this country, so far as we are enabled by official means to ascertain them, came to £136,000,000 of declared value, against £130,500,000 in the preceding year. The increase, indeed, was really greater than it seems, because the amended system of statistics introduced in the middle of the year, requiring greater time for the correction of the documents which give account of the goods, had the practical effect of leaving a gap which told very seriously on the month of June, and thereby unduly reduced, perhaps by several millions, the apparent exports of the year. It may be justly said that we have no precise means of knowing in what degree the increase of exports may possibly have been connected with the measures adopted by Parliament. I come, therefore, to matters which we have better means of judging, I mean the importations of foreign goods. If a great increase of importations has taken place I do not suppose there is now any Gentleman here, as there might have been in previous times, who will deplore that fact as a great calamity, and will insist that, as it must have been paid for in gold, it must constitute an impoverishment and not an enrichment of the country. I shall presume that you have faith enough in free trade to believe that an increase in our exports must necessarily have accompanied, or must in due time accompany an increase in our importations.

I now pass to particulars:—The importation of silks is generally associated with serious distress in one or two particular districts of this country; but it singularly happened that, as far as regards the trade of the season of 1860, the article of ribands, in which the manufacturers and weavers of Coventry are largely interested, is one of the relatively few that exhibited an absolute decrease of importation I may, likewise, say in reference to the treaty with France, that it is not the riband manufacturers of France, as I am informed, from whom the people of Coventry have to apprehend a serious pressure, but the thrifty and industrious weavers of Basle, who are on the Continent the producers of the cheapest ribands, and the most formidable rivals to our manufacturers at Coventry. Of course, we have no means of officially knowing what is the consumption of English ribands; but I hold in my hand the statement which I have obtained from private sources, from persons at the centre of the trade, who have the best means of information, and the effect of it is this—that in 1860 there was a decrease in the importation of French ribands of about 12¼ per cent. and a decrease in the use of English ribands of 26 2–3ds per cent. [Mr. Hear, hear!] My hon. Friend's cheer refers, no doubt, to the fact that there was a still greater decrease in English than in French ribands. The change of last year, while beneficial in its general character, aggravated, I have no doubt, but certainly did not cause, the distress in Coventry. I much regret the coincidence in time of the two circumstances. I am sorry that by a right act we should in any degree have pressed even for a moment on a particular class. But the change in the law, requisite on its own grounds, was at most but an accessory and secondary cause. The distress at Coventry was partly owing to the change of fashion and still more to the bad weather, which almost destroyed the spring and summer demand; nor must we forget that it has also been to strikes and combinations among the workmen, and in general to those defective arrangements which are especially incident to close and protracted trades, that these distresses and sufferings are traceable. I am deeply sorry, however, that it should have so happened, and that a change which was absolutely demanded in justice to the people and every class of producers should for a moment and in a particular instance have been accompanied by any distress.

I will now proceed to take very rapidly the other particular articles to which I must refer. We heard last year in this House from the hon. Member for Launceston a doleful wail concerning the destruction that was declared to be impending over I know not how many millions of the property of our British fellow-subjects in North America. Notwithstanding the terrors of that prophecy we persevered in our legislation; and I must record it to the honour of the colonists, that, as far as I am aware, not one word has escaped from them in complaint against the just and expedient measures adopted by Parliament for the benefit of the country. I am happy to say that they are not ruined, and that on the contrary their property is, to all appearance, in a very satisfactory condition. There has been an immense increase in the importations of foreign timber; but colonial timber has not disappeared from the British market, nay, it has even been more in demand than it was before. In 1859–60 colonial timber and deals were imported to the extent, taken together, of £1,262,000 loads. In 1860–61, after the perpetration of the act of destruction to the trade, as we were told it would be, the import of colonial timber and deals rose to 1,276,000 loads.

Now, Sir, one of the objections most commonly taken last year to the measures adopted by the House was that the duties reduced and abandoned were of moderate amount, useful for fiscal purposes, and without any tendency to restrain trade and consumption. I will test the value of this objection by reference to certain articles, and we shall see that even when the duties given up were moderate in amount, it was wise and advantageous to abandon them. I will give the import of four leading articles of food set free from duty last year—butter, cheese, eggs, and rice. In 1859–60 butter was imported into this country to the extent of £2,362,000 in value. That was an enormous amount; but in 1860–61 the import rose to £4,122,000. In 1859–60 cheese was imported to the amount of £1,097,000, and in 1860–61 to the amount of £1,592,000. The import of eggs rose from £345,000 in 1859–60, to 497,000 in 1860–61; and the import of rice in the same years from £890,000 to £1,142,000. In the importation of these four articles there was a total increase of from£4,694,000 in l859–60, to £7,393,000 in 1860–61.

I will next venture to state to the Committee the general results, without a selection of articles, of the legislation of 1860 upon the import trade of the country. I must, however, take out and treat by if- self the article of corn. The importations under this head are so large that they cannot fail to awaken a sentiment of wonder in the mind of every one who hears me. I exhibit this particular commodity by itself—because it is an exceptional article excess in the importation of which is due to a temporary cause, and must evidently tend, if it has any effect, to restrain the importation of all other articles, and to displace them for the moment. In 1859–60 the importations of grain of all kinds amounted in value to £17,384,000; but in 1860–61 they rose to no less a sum than £38,159,000. We must, of course, deeply regret the diminution of the re-sources of producers and the increased tax on consumers within our own shores which those figures imply; but, on the other hand, it must inspire every man with a deep and cordial sentiment of thankfulness to the Almighty Disposer of events when we find what marvellous results have been achieved for us, so far beyond the powers of any and every Government, by the free skill and enterprise of trade, and when we know that in the day of our scarcity no barrier was interposed between our wants and the abundant supply that the broad earth could from any of its regions furnish, and that the ships of England floated over every sea, almost bursting with the cargoes that made up the enormous amount I have stated. The figures I have quoted represent a quantity of, perhaps, not less than 20,000,000 of quarters. The importation in the financial year just ended was more than double that of the previous year, the percentage of increase being 119½ per cent.

Passing on from the case of corn, I take next a very small class of articles on which duties were for special and exceptional reasons imposed in 1860. In what may be called the simplification of the Customs' Tariff certain articles, particularly some limited branches of the wood trade, were brought under a duty, and the result is rather singular. I believe the measure was a sound one and for the interests of commerce, but the result shows that the imposition of a duty had a highly restrictive effect upon these particular commodities. The total value of the importations of these articles, principally chicory and certain woods, in 1859–60, was £2,906.000, and in 1860–61 it was but £2,405,000, being a decrease of £501,000, or 17¼ per cent.

Having thus set aside the case of corn as one standing on its own ground, and the minor cases in which duty was augmented, I will now proceed to deal with the rest of our imposts as a whole. And I crave the particular attention of the Committee to the figures which I am now about to give. Without any selection of articles, I will give in three classes the whole values of the articles imported which we have now before us. First of all, with the exceptions I have named, I will refer to the whole of the articles forming the subjects of British trade in the way of imports which were left untouched by the legislation of last year; I will then give you those on which Parliament last year reduced the duties; and, lastly, I will give you the articles on which the duties were wholly repealed. And I may mention that as the financial year has but just closed, the figures I shall quote may not be minutely accurate; but they are correct for every substantial purpose. The imports of those articles the duties on which were left untouched last year, amounted in 1859–60 to £138,155,000. In 1860–61 the value was nearly the same—£137,406,000. Thus it appears there was a trifling decrease, which being so small we may overlook. We have, therefore, before us, in point of fact, a stationary condition—always excepting corn—as the general condition of trade. I come now to the articles on which the duty was not removed, but reduced last year. In 1859–60 before the reduction the value of the imports of those articles was £11,346,000, but in 1860–61 since the reduction the value was £13,323,000, showing an increase of £1,976,000, or 17½ per cent. while the rest of the trade of the country was stationary. Next come the articles on which the duties were repealed in 1860. The value of the importations of those articles in 1859–60 was £15,735,000, while in 1860–61 it was £22,062,000; being an increase of £6,327,000, or no less than 40½ per cent. The principle, I take it, on which we have proceeded throughout in our operations in this field of legislation has been this—that the true basis of a large and solid revenue for this country lies in the extension of its trade. The experience is as yet narrow and the time is too short to ascertain what will be the final result of the changes of last year: the Treaty with France is still a one-sided instrument—the legislation of France is not in full operation, except as to some two or three heads, which are not to be considered as the most weighty or important in their probable effects. We have as yet reaped little of the benefit which is to arise from the relaxation of the tariff of France. But in this first year, the very year when from the failure of our crops we so specially needed increased means of employment for the people, we are able to show that, as the result of the reductions made on our side by that treaty and the accompanying measures, an addition has already been made to the trade of the country of nearly £9,000,000 sterling. For my own part, I believe that the merits of this great instrument, even considered merely with reference to its commercial consequences, may well stand and be judged on the results of such a statement.

Sir, I will now pass from the retrospective part of my duty to that which concerns the future; though I must not do it without thanking the Committee for the unbounded indulgence which it has shown me, nor without assuring you that I shall not have to make such extravagant demands on its time and patience in the portion of my task which still remains.

I come, then, to the financial year which has already begun—the year 1861–62; and I have first to present to the Committee the Estimate of the expenditure of the country for that year. Much of it is already before them in detailed estimates, and the whole will very shortly be in their hands. The interest on the Funded and Unfunded Debt in 1861–62 will probably amount to £26,180,000. I may say on this head of charge that if we compare it with the corresponding head for the past year, that there are various modifications of minor points. The interest of the Unfunded Debt has been increased, and the interest of the Funded Debt is, on the other hand, diminished in consequence of the lapse of certain annuities; but it is not worth while taking up the time of the House by going into the details, as the amounts are not of great significance. The Consolidated Fund charges will probably amount to£l,930,000, the Estimates for Army and Militia to £15,256.000, and those for the Navy to £12,029,000. I may say here that it will be our duty in the course of the present Session to ask the House for a further Vote of Credit on account of the war in China, which will probably amount to £1,000,000. The total charge for military operations under these heads, ordinary and extraordinary, will be £28,285,000, without including the packet service, which stands at something less then a million, and which formerly was included in the estimates for the Navy, but which is now removed to a separate Vote.

The charge for Miscellaneous Civil Services will be £7,737,000. Upon this particular head of expenditure I will just venture to say that there is an apparent increase in the gross sum to be voted this year for the Miscellaneous Civil Services amounting to £203,000; but I have the satisfaction of assuring the Committee, on the other hand, that there is no general increase in the items of these Estimates. I can very readily account for more than the £203,000 which represents this apparent increase. The main part is a real charge, although it is a charge which is occasional, and a charge in respect to which we obtain value for what we pay. The census which is now going on will cost the country, I believe, no less than £127,000. A sum of £37,000 will be charged in the Estimates for the salaries of the district registrars under the Court of Probate; but more than a corresponding sum—namely, about £50,000, will be received in the shape of stamps which are to form part of the Stamp Revenue, and which will henceforward be the form of the fees paid to those officers. Therefore that apparent increase represents a real economy. There is also an extra charge of £40,000 for the Mint connected with the execution of the copper coinage; but that charge is counteracted in a satisfactory manner by the set-off of £90,000 in the Miscellaneous Revenue, showing a net profit of £50,000. There are, however, several charges in the Estimates of this year which deserve the particular attention of the House. One of them is connected with the drawing of the frontier line in western North America between the British territory and the United States. For this purpose I am afraid a considerable expense will very probably be incurred, while it will be the endeavour of the Treasury to limit as much as possible the charge arising out of the measures which have been adopted. I will, however, leave it to my right hon. Friend the Secretary of the Treasury to explain the particulars of these Estimates in detail at the proper time. For the present I am justified in saying that, while both in former years and this year we have somewhat retrenched the charges for the Miscellaneous Estimates by the use of balances which were found standing to the credit of certain of the services, the provision we make will be amply sufficient for the expenditure, and that the figures I have laid before the Committee, though they may present some apparent increase, do not represent any real or general increase. We have little, indeed, to boast of; but at any rate, for the present, whether permanently or not, we have been able, somewhat, to repress the movement in that direction. The Revenue Department charge is £4,780,000. That presents a diminution, as compared with last year. A considerable part of that diminution—not less than £70,000 or £80,000—represents the reductions of establishments, as far as they have gone, in the Customs' Department, which are among the beneficial results of the legislation of last year. I do not by any means think that the limits of those useful retrenchments have been reached; nor do we as yet obtain the full benefit of such as have been actually made, for in all reductions of this sort there are always superannuations to be provided, and the charges for superannuations will fall upon this estimate. The Packet Service will be £995,000. That is an estimate which always inspires me with some jealousy. For the present year there is a small diminution in it, which is mainly due to the receipt of certain colonial payments in aid of the packet service between this country and certain of the colonies. The total Estimate for the expenditure of the year is £69,900,000; or, in round numbers, £70,000,000. This is as nearly the precise sum likely to be required for the national expenditure as we can venture to reckon. There are, however, some special causes of uncertainty. The Vote of Credit for the Chinese operations has been calculated on the same principles as heretofore. It is, however, impossible in regard to a Vote of Credit taken for war charges to be as precise as when we are dealing with the ordinary grants. From its very nature it belongs to a class of expenditure that cannot be estimated with precision. Still I do not doubt that substantially it is likely to correspond with such demands as will be made upon us. The House will be asked also in the course of the Session to vote a certain sum—£200,000—on account of "army excess" in the year 1859–60. That is a matter into which I need not enter. I know there is a controversy going on which another set of combatants have all to themselves with respect to the causes of this excess, but it has no bearing on the statement I am now submitting to you, because it is asked in order to give Parliamentary sanction to a charge which has already been incurred and met, and this vote will in no way enter into the balance-sheet of the year. £69,900,000, then, is the sum at which we estimate the expenditure of the present financial year.

I come now to the estimate of the Revenue for the year. And in stating the amount of the Revenue I will take the liberty of including certain small sums which will be received if the Legislature shall think fit to adopt some minor financial adjustments which we are about to make. The whole extent of them is very small, if we except those stamps to which I have just referred. They will not be perhaps more than £50,000 a year, and it is more convenient to include these items at once in my general estimate of Revenue, than to bring forward subsequent and separate modifications of it in order to include these details with regard to them. In the Customs' revenue we propose to double the duty which was laid last year upon the article of chicory, and, including the small sum of £15,000 on this account, the Customs' may be expected to yield £23,585,000. Of course that includes the augmented duty on spirits, which will now be in full operation for the entire year. The revenue of the Excise will probably be not less than £19,463,000. The revenue of Stamps is estimated at £8,460,000. Under this head are included some further small changes of which I will now take a cursory notice. We propose to reduce the amount, which has long been felt to he high, for hawkers' licences. The payment is now £4, which we know is a severe charge. We propose to reduce that which is a £4 licence, if taken for a year, to £2, and at the same time to allow licences for half a year to be taken for £1. That change, it is expected, will be made without any loss of revenue. With regard to the Refreshment Houses Act of last Session, we propose to declare more clearly the law, and while so declaring also to enlarge in one particular the meaning of refreshment-houses with respect to their liability to duty when kept open at night. The effect of the legislation of last year was to confine the imposition of duty to those houses which were kept open at night; but I think it was the clear intention and desire of Parliament that all classes of those houses should he embraced. I propose to make clear the law, and, likewise, to declare that a particular class of shops shall be taken to fall within it; that tobacco shops, where they are kept open at night for the purpose of smoking, shall be included, and shall be made subject to the inspection of the police. That change may produce, as we estimate, about £20,000. There is another change which we are about to make, which I must say is one of the clearest as to the policy on which it is founded ever submitted to Parliament, and it is also, though a small matter, yet a matter in which considerable interest is felt by many Members. I refer to the state of our law with regard to the sale of spirits. Probably many hon. Gentlemen have not inquired into the method by which, when there is a necessity for the use of a small quantity of spirits in their own household that demand is usually or very frequently supplied. I am afraid that if the proceedings of hon. Members, as heads of families, were investigated, it would turn out that probably nine-tenths of them have been at times or habitually unconscious breakers of the law. But the law on this particular subject is so irrational that I cannot refuse to submit an alteration of it to the judgment of Parliament. The law is this—that unless an householder wants for the purposes of his house or family as large a quantity of spirits as two gallons, which most probably would not be consumed in most of our houses, or in many of them, in a twelvemonth—unless he wants two gallons of spirits, which may be left in the keeping of servants, with the temptation incident to such keeping, he has no choice but to send a servant for it to a public-house. I really must say that law is a discredit to society. I think that it imposes on the whole middle class a condition which well deserves that epithet—that all who do not keep men servants, but have women servants, should, when they have occasion to send for a small quantity of spirits for a sick child or a sick wife, have no choice but to send a woman servant for it to a public-house. What we propose is, that on payment of £3 3s. a year the wholesale spirit dealer, who now pays £10 10s. a year, may acquire the right of selling spirits by retail. By that change we expect to obtain a small revenue of £5,000 a year; but before quitting the subject I ought to give the finishing touch to the picture of the present state of the law by stating that it is the constant practice of the Board of Inland Revenue when breaches are made known to them, not to press for penalties, the law being one which public opinion would make it clearly impossible to carry into effect. Then we pro- pose a change in the stamps at present applicable to agreements for furnished houses let for less than a year. At present they pay the same ad valorem duty as a conveyance. The principle in other cases is to tax transactions of a fugitive character at a much lower rate; and we propose, instead of 10s. for every £100 of value, to require a stamp duty of 2s. 6d. on each part of an agreement—that is to say 5s. for the whole, whatever may be the amount of the letting. That will probably yield another small revenue of £5,000 a year. We shall propose provisions to make sure that the duty is properly enforced and paid. It is at present generally evaded. We further propose that house-agents in all cases shall take out a £2 licence, so as to keep them under the view of the Revenue Department, and so help to secure the due use of these stamps. There will also be an alteration of the law with respect to foreign bills of exchange. Instead of having jumps, as I may term them, of considerable amount in the scale, the stamps will increase by smaller steps at the rate of 1s. for every £100, and in that way we shall render the operation of the law more convenient to those who employ these instruments. The small charges which I have just named, together with the transfer of £50,000, the probable amount of the fees of the district registrars in the Court of Probate, will raise the revenue of the Excise to £19,463,000; the Stamps, as I have already said, is computed at £8,460,000; the revenue from taxes are estimated to be£3,150,000; and the revenue from the income tax at 10d. I calculate at £11,200,000. Of course, the Committee will have perceived that in making this statement I am assuming the continuance in statu quo of all taxes which exist; and that I have chosen as being probably, for the present occasion, the most convenient and intelligible mode. The revenue from the Crown lands is expected to be £295,000, and the Miscellaneous revenue £1,400,000. Upon that item I will say that, although the Miscellaneous revenue has lost the benefit this year of £250,000 received in payment from Spain, yet on the other hand it profits very considerably by a new arrangement with the East India Government with reference to the payment due from that Government on account of non-effective services. It was generally fixed by Act, and now stands so, £60,000. It will be henceforward taken at so much per head on the numbers serving from year to year in India, and will be between £200,000 and £250,000. That brings the Miscellaneous revenue to £1,400,000. A certain profit will also, as I have observed, accrue from the profits of the cupper coinage; this I take at £50,000. Lastly, we estimate the indemnity from China to be received by the 31st of March, 1862, at £750,000. That is more than a year's receipt of that indemnity. I hear an hon. Member say "the occupation will cost more." I have an inclination to sympathize with that hon. Member. For my own part, I look upon receipts arising from this source much as I regard an extraordinary receipt from corn duty: it is apt to be indicative of greater charge or loss in another form. But this £750,000 must be taken as representing about a year and a half's indemnity. Two sums have been paid. Nothing has been brought to account in this country, but the sums are available as they may be received to meet our current payments in China. I must remind the Committee that we cannot reckon a payment of this kind minutely and precisely, as if we were dealing with payments at home, yet on the whole, taking into view the two payments already made and five quarterly payments which will come due upon April 1862, I think we may, without risk of error, such as to disturb my general calculations, anticipate coming into possession of a sum of £750,000 in China, which will come to credit and be available for expenditure up to the 31st of March, 1862. More minute details on this subject may be reserved for a future stage. [Sir How much from the Post Office?] I beg pardon—the Post Office will yield £3,500,000. The total of those items is £71,823,000, and if not the very largest, it is one of the largest, Estimates of revenue which has ever been presented to this country in a time of peace.

It remains to compare this sum of £71,823,000 with the estimate of expenditure. The estimate of expenditure is £69,900,000; so that on the face of the Estimates there is a surplus of estimated revenue over estimated expenditure to the extent of £1,923,000. And, Sir, I must say I cannot pronounce that sum without seeming to myself to hear at the moment what I may describe as a loud crash. I hear somewhere in the distance a great downfall of prophecies, predictions, forebodings, lamentations, sympathies, remonstrances, and regrets, of which the crop last year, though it was a bad season for other products, was most abundant.

I have now arrived at the time for stating the proposals of the Government with regard to the balance. And this is the time when I may repeat the observation which I have recently made as a matter of form, that it is not a balance which we possess by the existing law, but one which, if we are to have it, we must ask you to give us. The Income Tax Act has expired. The Act levying the tea and sugar duties expires on the 30th of June. These three taxes represent a sum of £22,000,000. We shall have to ask you to renew Bills of which I shall say more by and by, but the authority for renewing which we shall have to obtain from yon. Her Majesty's Government have come to the conclusion that they cannot reasonably expect to be allowed to keep in hand, or to take into their hand for the purpose of keeping it, a balance so large as that which I have named. Independently of the circumstance that it does not grow out of existing law, but depends on grants to be made afresh in Committee of Ways and Means, it would, in point of fact, be an amount which no Chancellor of the Exchequer for nearly the last thirty years—that is to say, since the present arrangement of the Sinking Fund—has ever, under any ordinary circumstances, presumed to ask or has ever had the smallest chance or hope of being permitted to retain. I therefore presume, Sir, that I shall carry with me the approval of the Committee when I say that we think this is an occasion on which we may dispose of a portion of the balance shown by my Estimate of revenue and charge by a remission of taxation.

Now that I have advanced to this point, it is obvious that four subjects, all of them important, will occur to the mind of every man who considers the question of remission. Each pair of these subjects is connected together. Two of them are the duties upon tea and those on sugar; and these subjects are connected together by the fact that the duties were imposed together and have been bandied together, first, for the purpose of war; and again, subsequently, for the purpose of meeting an extraordinary expansion of expenditure. The duties now leviable upon tea and sugar have been called war duties; and it is undeniable that they are duties which as to a certain portion of their amount stand on special and peculiar grounds. That is to say, it was in consideration of the financial pressure caused by a war that Parliament consented to raise them; and again, when the war had concluded, it was to meet an enlarged scale of peace-expenditure that their fall was in part arrested, and they were allowed to remain at a higher point than had previously been contemplated. Indeed, I think that no one can fail to feel that they are duties the reduction of which is greatly to be desired. At the same time, while the duty upon tea is more than 100 per cent. and the duty upon sugar is over 50 per cent. the supplies of both articles are abundant; the consumption of them both in ordinary years and in ordinary states of the country, shows a decided disposition to increase the cause which led to the imposition of the extra rates—namely, a high expenditure, is still in existence, and there is no such great difficulty attending them as to give them an urgent, imperative, and paramount claim upon the attention of Parliament. The other two subjects which must occur to the minds of the Committee are those which were likewise associated together in the legislative proposals of last year and in the debates of this House—I mean the one, what is called the tenth penny on the income tax, and the other the repeal of the paper duties. When her Majesty's Government proposed the repeal of the duties upon paper the issue was raised by my hon. Friend the Member for Somersetshire (Sir William Miles), representing the party in Opposition, of course in the form which he thought was most favourable to himself, but which undoubtedly involved no unfairness and could not be, and was not, complained of by the Government in this form—namely, that the tenth penny of the income tax was imposed in order to bring about the repeal of the duties upon paper. These are the subjects upon the discussion of which I wish to enter at this moment, and to which I invite the particular attention of the Committee.

And here we are faced at once by the old controversy between direct and indirect taxation. I take some credit to myself that I have never entered in this House into any disquisitions upon such a subject. I have always thought it idle for a person holding the position of Finance Minister to trouble himself with what to him is necessarily an abstract question—namely, the question between direct and indirect taxation, each considered upon its own merits. To many people both, as is natural, appear sufficiently repulsive. As for myself I confess that, owing to the accident of my official position, rather than to any more profound cause of discrepancy, I entertain quite a different opinion. I never can think of direct and indirect taxation except as I should think of two attractive sisters who have been introduced into the gay world of London, each with an ample fortune, both having the same parentage—for the parents of both I believe to be Necessity and Invention—differing only as sisters may differ, as where one is of lighter and another of darker complexion, or where there is some variety of manner, the one being more free and open, and the other somewhat more shy, retiring and insinuating. I cannot conceive any reason why there should be any unfriendly rivalry between the admirers of these two damsels; and I frankly own, whether it be due to a lax sense of moral obligation or not, that as a Chancellor of the Exchequer, if not as a Member of this House, I have always thought it not only allowable but even an act of duty to pay my addresses to them both. I am, therefore, as between direct and indirect taxation perfectly impartial. But then I must say, that with regard to the remission of indirect taxes, I hope that the memorable history of the last twenty years will never be forgotten; for I do not scruple to state that if you look to its economical profits on the one hand, and then to its political, social, and moral results on the other, it is difficult to know which to give the palm in point of magnitude. If we had not gained one single shilling by the remission of indirect taxation it would have been worth having for the sake of the manner in which it has knit together the interests and feelings of all classes of the community from one end of the country to the other. If, on the other hand, it had had nothing to do with any question of moral and social results, still the merely economical results in promoting the material well-being of the people have been so signal and extraordinary that we may well rejoice to have lived in a period during which it has been our happy lot to take part in bringing about such changes. But, Sir, there cannot be a grosser delusion than the supposition that the work of Parliament, during the period I have named, has been to destroy indirect taxation. The hand with which Parliament has wrought a pruning—not to destroy the tree but to strengthen the stock. The aim of the operation has been to give it greater size and vigour; and the consequence is that at this moment, when indirect taxation has been destroyed as the fashionable phrase is, not once but four or five times over, indirect taxation is larger and more productive—I do not mean in this particular year, but in any ordinary year, and upon the average of the last two or three years—than at any former period of our history. Its condition recalls to my mind the tree of golden leaves which has been described by Virgil, from which his hero was ordered to pluck a branch, and on whose trunk, the moment one branch had been plucked, another took its place. In the language of the great poet himself: —"Primo avulso non deficit alter Aureus; et simili frondescit virga metallo. And then advice is given which we have done well and shall yet do well to follow— Ergo alte vestiga oculis, et rite repertum Carpe manu. I believe the comparison to be a just one, between this tree of Virgil and that thriving tree of indirect taxation on which Parliament has expended so much of its energy and its care. It has done much, yet something may still remain to be done, and I trust that when favourable circumstances shall offer, the House of Commons will not hold its hand, but will from time to time carry on so good a work, always observing those limits on which its goodness depends, within the limits of prudence and justice. But, Sir, in speaking thus of indirect taxation I cannot deny that remissions of direct taxation are as just and as desirable; and I as fully feel as Gentlemen opposite may feel that our direct taxation has reached a point at which it is most desirable that we should if we can begin, at least, to apply to it a downward movement. I do not think that the condition of this country with regard to its finances can be wholly satisfactory when, in time of peace, the income tax stands at 10d. in the pound. I know very well that I am supposed to be under a special responsibility, not only for the amount, but for the existence of the income tax. It has often been charged upon me, and I believe is to this day alleged that it is my absolute duty, whatever be the circumstances, and whatever be the expenditure, to find means of abolishing that tax with or without a substitute. I must confess that I think that is a hard imposition. I should like very much to be the man who could abolish the income tax. I do not abandon altogether the hope that the time may come. ("Hear!") I can assure hon. Gentlemen that I am not about to be too sanguine, for, in fininishing the sentence, I should have proceeded to quote Mr. Sidney Smith, who, in his admirable pamphlet upon the ballot, speaking, I think, of its establishment, or of something else, as of a very remote result, says he thinks we had better leave the care of this subject to those little legislators who are now receiving a plum or a cake after dinner. I am afraid that some such amount of prudence may be necessary with regard to the income tax. But in point of fact this is simply a question of expenditure, and I will not speak of expenditure as a thing that can be suddenly and rapidly dealt with. Upon all sudden attempts to reduce it, and upon all promises to make sudden, extensive, and sweeping reductions in it, I should look with great suspicion and disfavour. But, looking forward into the picture, and desirous to afford such indications as I can, I should hazard an opinion that, if the country is content to be governed at a cost of between £60,000,000 and £62,000,000 or £64,000,000 a year, there is not any reason why it should not be so governed without the income tax, provided that Parliament shall so will it to be. If, on the other hand, it is the pleasure of the country to be governed at a cost of between £70,000,000 and £75,000,000 a year, it must, in my judgment, be so governed with the aid of a considerable income tax. That I believe to be the whole case, and I really cannot conceive that my responsibility to abolish the tax is that absolute and unconditional responsibility wholly apart from any question of the amount of expenditure for which provision is to be made, which it has been represented by some Gentlemen to be. I think that it would be a most enviable lot for any Chancellor of the Exchequer—I certainly do not entertain any hope that it will be mine—but I think that some better Chancellor of the Exchequer, in some happier time, may achieve that great accomplishment, and that some future poet may be able to sing of him as Mr. Tennyson has sung of Godiva—although I do not suppose the means employed will be the same— He took away the tax, And built himself an everlasting name. But the business we have before us is of a much humbler order. What we have now to do is to deal with a moderate surplus as best we can; and Her Majesty's Go- vernment think that, looking at all the circumstances of the case, they may in the present year propose to Parliament to remit from the income tax the penny which in 1860 they asked Parliament to impose. The cost of that change, if it be accepted by the House of Commons, will be as follows:—Each penny of the income tax now yields about £1,100,000 a year, and the remission of this penny will, in the course of the present financial year, cause a loss approximating to, but rather beyond three-quarters of the whole annual product, a loss nearly of £850,000. The tax will then be levied at the rate of 9d. in the pound upon incomes of above £150 a year, and of 6d. in the pound upon incomes below that amount. The sum of 9d., it will be recollected, was imposed upon the country without any reference to remissions of duty. It was imposed in 1859 to meet the necessary charges of the year with our expenditure on its augmented scale, even before the outbreak in China; and it stands totally disconnected from any question of financial and legislative policy for the country.

The fourth and last of those subjects to which I have referred is the duty on paper, and Her Majesty's Government are of opinion that happily the time has now arrived when they may approach the consideration of that question without awakening any adverse feeling, and when they may hope not only that there will be no revival of a painful and arduous controversy, but that by the proposal which they make they may seal up that controversy and bring it to a final close. During the last Session of Parliament I heard but few Members of this House object to the repeal of the paper duty on the merits of the proposal itself. My right hon. Friend the Member for Coventry (Mr. Ellice), on the third reading of the Bill for the repeal of that duty gave expression to sentiments which certainly did not accord with my own feelings at the moment, but which I admit were felt by many Members of this House. On the 8th of May, 1860—and his observations will spare me the necessity of entering again into detail on the question—his words were— With respect to the tax which we are now discussing, I have not a word to say in its defence. It is about as odious a tax as one can well imagine. It is not only a tax which interferes, as all Excise taxes do, with an important branch of manufacture, being almost the only tax"— My right hon. Friend might, perhaps, have gone further, and said the only tax— Of that description now left in our fiscal system; but it also impedes the circulation of information and of knowledge. Upon all these grounds no man is more disposed to repeal this tax, whenever we can do so without robbing the Exchequer. But when we are called on to repeal it at the risk of leaving a large deficit, or when we are called on to impose other taxes equally odious to the people, I think we should wait until some more favourable time presents itself." [3 Hansard, clviii. 945.] My right hon. Friend laid down two conditions. He said, "I will not repeal this tax whilst there is any risk of a deficit." I do not raise any old controversy, and, indeed, I admit that, if my memory serves me right, we had at the period when that speech was delivered a prospect of increased outlay; but I have shown you on the figures that there is no prospect of a deficit now. He also said, "I will not repeal it when we are called on to propose other taxes equally odious;" and I do not think I am misrepresenting his intention when I say that the meaning was—"I will not repeal the duty on paper if that repeal is to be purchased by the augmentation of the income tax." I now invite the right hon. Gentleman and the Committee to concur in that repeal in conjunction, not with an augmentation, but with the commencement of a diminution in the rate of the income tax. When we consider the subject on its merits every man, I am sure, will admit the powerful considerations that must concur in recommending the measure we propose. There is the yet unredeemed pledge conveyed by the Resolution of this House. There is the increased and increasing difficulty of executing the law: there is, under cover of that Resolution and much connected with it, the conscientious and impartial declaration of the department intrusted with the duty of collecting the tax; there is the important fact that the repeal of this tax received the sanction of a large majority of this House last year; and though that majority dwindled on a subsequent occasion, it dwindled only in the face of the fact that new demands for public purposes bad come into view, and it had become obvious that some new fiscal measures must be taken to supply the wants of the Exchequer. Such being the case we are convinced that we are under altered and happier circumstances making a proposal which will receive, not the acquiescence only, but the approval and sanction of the House. I trust there is no one here who thinks this an improvident measure—who believes it to be what is called a sacrifice of the entire source.

of revenue, and imagines that a tax of this kind on its repeal leaves behind it no reproductive powers. I have in my hand an account of the entire produce of the Excise duties at certain periods. In 1844 these amounted to £14,469,000; since then we have repealed £2,355,000, and assuming that no reproductive power exists in remissions of this class, there should now remain of Excise duties £12,114,000, instead of which they amounted, in 1859, to £20,224,000. Of course, in that sum was included a certain amount—perhaps about £2,000,000—arising from the augmentations in the duties upon spirits in Scotland and Ireland between 1853 and 1858, but the great bulk of that was derived from the augmented strength and consuming power of the country, and that augmented strength and power were themselves due to the vast increase which I have named, amounting in the gross to no less than £8,126,000, the extension of its trade, industry, and enterprise consequent upon these remissions, and other remissions like these, more than upon any other course.

Let me give the Committee the financial results of these two propositions:—We have a probable or estimated balance of £1,923,000. One penny taken off the income tax will deprive us for about three-fourths of the year during which the change will be in operation of £850,000. We cannot propose the repeal of the paper duty from the 15th of August, the period which was fixed on last year, because that would trench rather too sharply on the amount at our command. We propose to date its remission from the 1st of October. The loss on Excise revenue by repealing the paper duty from the 1st October is computed at £675,000; and there will be a loss of Customs' duty from the same cause of £15,000; making together £690,000. There will be, however, a saving by reduction of the Vote for stationery of about £15,000—a sum representing but a very small proportion of the direct saving which the public will make by the repeal—but that is the amount of the direct saving on the consumption of paper, more or less, for the present financial year. Adding to this £10,000 the amount of the saving by reduction of the establishment charges for the half-year, the total saving will amount to £25,000, leaving a net loss on the repeal of the paper duty of £665,000. Coupling this sum with the sum to be lost by reduction of income tax, the total remission will be £1,515,000, which, when deducted from the balance of revenue, will leave a residue of that balance which I have submitted to the Committee, or what is commonly called a surplus, to the moderate amount of not more than £408,000, And here, Sir, on the part of the Government I must make an appeal to the House of Commons. I venture to express a hope that its Members will give us their support in resisting any attempt at invading this very moderate surplus. The Government have selected what they thought great and important items for a remission, which they have thought it was their duty to propose for the benefit of the community at large, and of the trade and industry of the country; and with respect to other overtures, even though they should appear reasonable in themselves, we feel it an absolute obligation, in which we trust the Committee will give us its support, to decline, in the absence of further means and of a fuller Exchequer, to listen to any such demands however pressing they may be.

But, Sir, I must not finally dismiss this subject without referring as I pass on to a matter of considerable though secondary importance—I allude to what are called the minor charges on trading operations. In my official capacity I have received memorials from several Chambers of Commerce expressing the desire of the mercantile world to be relieved from those charges, and I should be very sorry to leave any portion of the merchants of this country under the impression that the expression of any wish of theirs had not led to the most respectful examination of the subject on the part of any Chancellor of the Exchequer, and particularly on the part of one being, like myself, closely connected by origin and association with their class. The yield of these charges is about £310,000, or £320,000 a year; and it is obvious that the Exchequer is not in a condition to make a surrender of that sum. But, further, I am bound to say that as regards the greater number of these charges I cannot admit that any case has been made out to justify such a surrender. In all there are six of them. The charge on dock warrants, the charge on delivery orders, and the charge on contract notes are the three first:—These three are stamp charges, and I believe them to be as unobjectionable as almost any charges to be found among the stamp duties of the country. Two others of the measures of this class, adopted last year, have reasons for their maintenance entirely apart from their fiscal results. One of them consists in an imposition of a stamp duty of 1s. 6d. on the bills of lading taken out for commodities exported from this country, and it yields a sum of £40,000 or £50,000 a year. But the charge was imposed for a purpose beyond the mere collection of revenue—namely, with a view of obtaining accurate and trustworthy instead of inaccurate statistical information. That object we have been in a great degree enabled by means of this instrument to attain; I am bound to say that I think it one of great public value, and although in a very few cases of very small values the charge may have been inconvenient I cannot admit that a case has been made out against the continuance of the tax. Next, and sixthly, as regards the charge of certain small fees by way of percentage on deliveries of goods out of warehouse; the object in our view was not merely to obtain a certain amount of money, but to impose by means of a self-acting check a limitation upon an expenditure which was very serious in its amount and very difficult for the servants of the Crown to control; I refer to the charge incurred and to be incurred by extending what are termed warehousing privileges to small ports, and also to inland towns. The effect of the tax was to put on these places a portion of the charge of the establishment. I confess I think that a very valuable tax, and I am not prepared to admit that it is attended with serious disadvantages, or with any great imposition of labour upon private parties in order to its collection. The remaining charge is one with respect to which I must say that I cannot go the same length. I refer to the charge of 1d., according to a scale which has been established, on goods imported into this country. I frankly admit that although the tax is attended with some appreciable amount of statistical benefit, I think there is a good deal of labour connected with its collection imposed on the mercantile classes; and labour, after all, when it is imposed on the taxpayer is in itself an additional tax. If that cannot be got rid of by any better arrangement—a point on which I dare not hazard an opinion—I am quite willing, and, indeed, am of opinion that Parliament, at an early period, should reconsider the subject. But with respect to the demands advanced by certain Chambers of Commerce for the abolition of the whole of these charges, I think I have shown that even were the measure in itself desirable, yet the Government, with such a moderate balance as £408,000, would not be justified in acceding to their demands.

Sir, perhaps it may be thought that by the proposals we make we are called to compromise the interests of the next financial year 1862–3. We have certainly laid an additional deficit upon that year. There will be the second portion of the paper duty—somewhat less than a moiety—amounting to £525,000, which will not come upon this year, but will appear as an item to our debit in 1862–3. There is, likewise, the remaining quarter of the income tax. which would be in full £280,000, making a total of £805,000. Now, Sir, I do not at all think, provided we do not aim at too great an exactitude of detail, and provided we are not supposed to be making calculations for a more remote future, which are of necessity dangerous even for the year actually current, but are only endeavouring to sketch circumstances prospectively so far as they may be made the fair subject of conjecture. I do not think it at all unfair to ask, is there a reasonable prospect that we shall in what we now propose be doing justice to the Revenue of 1862–3? I say, then, in reply that there is every prospect of it. In the first place, as far as regards China, the present year is a year, to a considerable extent, of war expenditure. A not inconsiderable portion of our Army and Navy Estimates are due to the force in China; and even as regards the balance between the Vote of Credit and the amount of indemnity there is a sum of £250,000 still forming a special burden on this year. In taking £500,000 as the sum due to China and now borne on our Naval and Military Estimates, I am sure that I am understating the amount. Then, if I take £250,000 men as the excess of direct war charges we have this year to defray, and if I take £500,000 as that which may be called the normal and regular increment of the national revenue one year with another from the growth of the population, and of wealth, those sums will together amount to a considerably larger total than the amount we are going to take from the Revenue of 1862–3 by the changes to which we now invite your attention.

Now, Sir, one point remains, and it is this. I propose to re-enact the income tax and tea and sugar duties only for a single year. There is an advantage in a more permanent legislation, but we feel this difficulty—if we were to ask for the re-enactment of those duties for three years, that it would be said that such a proposition implies a certainty that they will not be reduced before the end of three years. Our object is to leave these questions open, in the hope that we may see some reductions of expenditure which it may be beneficial to apply in that direction; and, therefore, on the whole, we think it fitting for the moment, though admitting that the proceeding is on general grounds not without inconvenience, to propose the re-enactment of these taxes for one year only from the 1st of next July.

With respect, again, to the levying of the income tax, the exceptional operation of last year, which brought into the compass of twelvemonths two quarters of the former year together with three-quarters of the later one, now gives place to the normal condition, and the collection for the year will be one-quarter at 10d. and three-quarters at 9d. I shall, however, ask leave to introduce a clause into the Bill to facilitate the collection of the tax on certain dividends which fell due since the 1st of April, and escaped payment of the tax. This is not, in point of fact, an ex post facto legislation, for the gentlemen who received those dividends would be bound to return them in Schedule D; but as it is just possible that here and there some one or two might forget to make the proper return, to prevent any accident of that sort, the Bank and other paying bodies will be required to supply lists of the names of the parties and the amounts they have received, so that we may see that the law is fairly and uniformly applied.

I come now, Sir, to the succession of the subjects which we shall follow in submitting our proposals. I shall ask the Committee to vote immediately, in the usual form, with out prejudice to their ultimate decision, a Resolution enabling me to charge a double duty on foreign chicory. That Resolution is the only one on which I shall ask the House to vote to night; but I shall propose that the House should again resolve itself into a Committee of Ways and Means on Monday in order to decide on the proposals of the Government. It is very desirable, in reference to the collection of the income tax and the making of the new assessments this year, that the decision should be as expeditiously arrived at as is conformable with the convenience of the House, and the nature of the duties on tea and sugar, so important to commerce, likewise makes despatch desirable. As to the mode and order of proceeding, we intend to adopt that which we think will at once give the House the most ample facility and convenience in discussing the measures of the Government, and be best suited to the position and office of the House as a branch of the Legislature. As our proposals are all strictly financial, and as they together form one single plan, we shall present them all in their proper connection with one another by a series of Resolutions in Committee of Ways and Means. We shall take, first, the income tax; then the tea and sugar duties, and after these the repeal of the duties on paper. Some minor Resolutions will follow; and when they are all reported together from the Committee, we shall ask leave to bring in a Bill pursuant to the Resolutions which the Committee will, as we hope, have adopted.

Now, Sir, it is impossible for me to conclude a financial survey of the affairs of the country, with, at any rate, so much of effort to exhibit their details to the Committee without some few reflections upon its general condition. And, in referring to that general survey, I must, in the first place, tender the expression of my gratitude for the kindness and patience with which the Committee have followed me through what I may almost call a wilderness of figures. Sir, as respects the connection between the general condition of the country and its financial state, I must say the reflections which this picture before us suggest are satisfactory. We have seen this country during the last few years without European war, but under a burden of taxation such as, out of a European war, it never was called upon to bear; we have also seen it last year under the pressure of a season of blight, such as hardly any living man can recollect; yet, on looking abroad over the face of England, no one is sensible of any signs of decay; least of all can such an apprehension be felt with regard to those attributes which perhaps are the highest of all, and on which most of all depend our national existence—the spirit and courage of the country. It is needless to say that neither the Sovereign on the Throne, nor the nobles and the gentry that fill the place of the gallant chieftains of the Middle Age, nor the citizens who represent the invincible soldiery of Cromwell, nor the peasantry who are the children of those sturdy archers that drew the crossbows of England on the fields of France—none of these betray either inclination or tendency to depart from the tradition of their forefathers. If there be any danger which has recently in an especial manner beset us, I confess that, though it may be owing to some peculiarity in my position or some weakness of my vision, it has seemed to me to lie during recent years chiefly in our proneness to constant and apparently almost boundless augmentations of expenditure, and in the consequences that are associated with them. I do not refer to this or that particular charge or scheme, I do not refer to the Estimates of the year; but I think that when in on extended retrospect we take notice of the rate at which we have been advancing for a certain number of years, we must see that there has been a tendency to break down all barriers and all limits. For my own part I am deeply convinced that all excess in the public expenditure beyond the legitimate wants of the country is not only a pecuniary waste—for that is a comparatively trifling matter—but a great political and a great moral evil. It is a characteristic of the mischief which arise from financial prodigality, that they creep onwards with a noiseless and surreptitious step; that they are unseen and unfelt until they have reached a magnitude absolutely overwhelming, and then at length, we see them, as perhaps they now exist in the case of one at least among the great European nations, so fearful and menacing in their aspect that they seem to threaten the very foundations of national existence. Sir, I do trust that the day has come when a check has began to be put to the movement in this direction; and I think, as far as I have been able to trace the sentiments of the House and the indications of general opinion during the present Session, that the tendency to which I have adverted is at least partially on the decline. I trust it will altogether subside and disappear. It is certainly true—and I for one should be among the first to uphold the soundness of the assertion—that sweeping and rash reductions of expenditure are to be deprecated almost as much as excess and prodigality. But, at the same time, there is many a one who shares that sentiment and yet who still feels that it is demanded by high public expediency and by national duty that we should recur I do not say to the charges for national wants, with the nations overgrowth, will vary and will grow, but to the spirit the temper and the rules, with which no long time ago we were all want to regard the subject of the public expenditure. Sir, I trust that such a wish may be realized, and if only it be so, then, for my own part, I say that, if there be difficulties in the work of Government they are not, so far as regards the department with which I have the honour to be connected, difficulties which any man of ordinary courage need for a moment, under whatever contingencies, hesitate to face. The spirit of the people is excellent. There never was a nation in the whole history of the world more willing to bear the heavy burdens under which it lies—more generously disposed to overlook the errors of those who have the direction of its affairs. For my own part I hold that, if this country can steadily and constantly remain as wise in the use of her treasure as she is unrivalled in its production, and as moderate in the exercise of her strength as she is rich in its possession, then we may well cherish the hope that there is yet reserved for England a great work to do on her own part and on the part of others, and that for many a generation yet to come she will continue to hold a foremost place among the nations of the world. Sir, I beg leave to move the following Resolution:— That, towards raising the Supply granted to Her Majesty,—In lieu of the Duties of Customs now charged on the articles undermentioned, the following Duties of Customs shall, on and after the 16th day of April, 1861, be charged thereon on importation into Great Britain and Ireland; namely:—Chicory, or any other vegetable matter applicable to the uses of Chicory or Coffee, raw or kiln-dried 12s. the cwt.

SIR STAFFORD NORTHCOTE

said, he was aware that the Committee would not expect him at that moment to give any decided opinion upon the elaborate statement which they had just heard. They all knew very well with what extreme ingenuity and skill the right hon. Gentleman laid before them his financial statements; but, great as were the expectations which had been excited as to the statement to be made that night, he was sure that any one who had listened to the speech of the right hon. Gentleman must feel that those expectations, so far from being disappointed, had been exceeded. He had been partly induced to rise at that moment because he took to himself, to some extent, the "crash" which the right hon. Gentleman imagined he heard, of the predictions and expectations as to the probable results of the last financial year. He (Sir Stafford Northcote) and those who sat with him on that side of the House objected to the pro- positions of the Budget of last year on the ground that the provision made by the Chancellor of the Exchequer was not sufficient for the wants of the year, and they now had statements laid before them which showed that those predictions were perfectly right. The deficiency on the last year was actually no less than £2,271,000, and the deficiency would have been still larger if it were not for the fact that the expenditure had been less than the estimate of the right hon. Gentleman by as much as £800,000. The deficiency on the year would, therefore, have been upwards of £3,000,000 if the right hon. Gentleman's estimate of the expenditure had turned out to be correct. In addition to this the Committee could not yet be informed what the real expenditure for the year had been, inasmuch as a great part of this expenditure had been incurred in distant parts of the world, and was only estimated, and not ascertained. Beyond this the proposals of the right hon. Gentleman in February last did not correspond with the financial scheme which was subsequently adopted. The remission of the paper duty was one of the principal proposals of the right hon. Gentleman's Budget; and when hon. Gentlemen on that side of the House made their predictions they were speaking on the assumption that the paper duty would be taken off, and the spirit duties levied at 8s. a gallon; whereas afterwards the paper duty was retained, and the spirit duties were raised to 10s. a gallon. Even if they had not taken the large Vote for China, the income, as originally provided by the Chancellor of the Exchequer last year, would not have been sufficient. Now, as to the large surplus of the present year of £1,900,000, it was, no doubt, very satisfactory to hear that there was to be a surplus; but in truth the right hon. Gentleman put the matter in a very ingenious way, and there was in reality no surplus whatever. What hon. Members on that side of the House said last year was that if the taxes which fell in this year were not renewed, there would be a deficit which they would have to deal with of between £11,000,000 and £12,000,000; and it now appeared that the actual deficit was £8,500,000, and that but for the retention of the paper duty and the increase in the spirit duties, it would have been £11,400,000. It was well that the Committee should be reminded of these circumstances. They were to be asked to vote in a week's time—and he did not complain that the time was not sufficient—the whole scheme of taxation for the following year; but it was well that they should remember that last year they entered upon the discussion of the Budget under the influence of a speech such as the one they had just heard; and when they came later in the Session to try to stop some of the proposed measures, they were told that they were then too late. It was, therefore, of the highest importance that they should this year thoroughly sift the grounds upon which the financial measures were recommended to them. He did not, as he said on that occasion, wish to express any opinion as to the merits of the financial scheme, but only as to the importance of giving due consideration to the matters proposed to them. The right hon. Gentleman said, as he understood, that he expected the loss to the revenue caused by the repeal of the paper duty and the remission of 1d. in the pound of the income tax would be compensated by reductions in the naval and military expenditure. But there was one material item which the right hon. Gentleman seemed to have forgotten—the circumstance that £1,000,000 of Exchequer Bonds would fall due in May, 1862, and another £1,000,000 in May of the following year, and if he was not mistaken a third in the ensuing year. At all events, there was £3,500,000 which had been added to our debt, in the shape of Exchequer Bonds, of which £2,000,000 would fall due in the two following years; and, when he considered this circumstance, coupled with the facts that we had drawn heavily on the balances, that we were borrowing for fortifications, and that we did not yet know the full cost of the China war, he could not help feeling that they should consider carefully what would be the effect of the changes proposed in reference to the financial year. He had thought it his duty, for the present, at least, to point out to the Committee that the predictions of last year were justified by the result.

MR. DODSON

said, it appeared that there was a surplus of £1,900,000, and the Chancellor of the Exchequer proposed to remit £1,100,000 of income tax, and £1,400,000 of paper duty. True, there would be no deficiency this year, because the Exchequer was not to lose one quarter of the year's income tax, nor was the whole of the paper duty to be lost this year. Still in his opinion it was rather a dangerous experiment to prepare a de- ficiency for the following year; and he thought that it would have been more prudent this year to have remitted either the penny of income tax or the paper duty and the hop duty, or some such minor tax, for that course would have left the Exchequer with a surplus, and not have trenched on next year's resources by anticipating reductions.

MR. HADFIELD

expressed his regret that no diminution of the duty on fire insurances had been proposed. It was a most impolitic tax, and he believed that if it were reduced in amount there would be no great loss to the revenue, as the number of insurances would largely increase.

MR. HENNESSY

said, that in March last he proposed a Resolution in reference to the duty on chicory, and he was in hopes that the right hon. Gentleman the Chancellor of the Exchequer would have seen the propriety of equalizing the duties on chicory and coffee. The proposition of the right hon. Gentleman to increase the duty on chicory was, no doubt, a step in the right direction; but the right hon. Gentleman must know that the great difference in the duties on these articles led to vast adulterations, and therefore he should be glad to know whether he intended to increase the duty on chicory, and particularly on powdered chicory, which was ten times more valuable than the root.

MR. POLLARD-URQUHART

said, that the hon. Member for Stamford in criticising the financial statement had made no allowance for the bad harvest of last year, which he (Mr. Urquhart) believed was the principal cause of the falling off of the revenue; and it was the first time of late years that so bad a harvest had not been followed by increased taxation or by a loan. The bad harvest of 1839 was followed by an increase of 5 per cent upon the customs, and 10 per cent upon the excise; whilst that of 1847 was followed by a loan. This year, however, the bad harvest was followed by a remission of taxes. As everybody lamented that there was not a reduction in his own hobby tax, he, as a West India proprietor, must lament that there was no reduction in the war tax upon sugar; but, as a whole, he must say that he agreed with the proposal of the Government.

MR. G. C. GLYN

said, he had no doubt that the statement of the Chancellor of the Exchequer, which turned into a surplus what all the world feared would be a serious deficiency, would give satisfaction to the country. He should have liked to have heard that the duty on fire insurances was to be reduced; but he would not press that question on the present occasion, for he believed that the proposed remissions of taxation were precisely those which the country desired. The reduction of the income tax would be regarded as a great boon, while the House of Commons was, in some sense, bound to deal with the paper duty. He regretted that the Chancellor of the Exchequer was not able to announce a further payment from Spain, and he regretted still more that nothing seemed to be expected from the Government of Greece. About three years ago a Committee appointed to consider the subject reported that they saw no reason why Greece should not resume payments to the three guaranteeing Powers. Instead of payment being made, however, the debt due to us went on increasing every year, and it now amounted to at least £800,000. They knew from the common sources of information that the Greek Government was now in a position to order steamers of war and other things, and he could not but think that the best course for them to pursue was to pay their debts.

MR. E. BALL

thought that, as one great portion of the public had more particularly suffered by the bad harvest, the right hon. Gentleman should have come to the conclusion that that distressed class should be more particularly considered in the remission of taxation. He could hardly say that he hoped that this would be the case, for he never had been able to obtain the sympathy of the right hon. Gentleman for the farmer. As the malt tax pressed particularly upon the farmer it would have been but right if relief in that direction had been afforded to that class of the community which, by the confession of the right hon. Gentleman, were the more immediate sufferers from the bad harvest. The malt tax was a tax which was most oppressive in its nature; but, instead of giving relief the light hon. Gentleman last year insisted upon the prompt payment of the tax. By anticipating the payment last year he got some £700,000 or £800,000; but the effect was that many abandoned the production of malt, and there was also less malt used, so that there was a loss on the malt duty of £750,000. He trusted that even now the right hon. Gentleman would consider the propriety of dealing with the malt tax.

MR. W. EWART

, as an advocate for many years of the repeal of the taxes on knowledge, begged to express the pleasure he felt at the proposal of the Chancellor of the Exchequer to abolish the paper duty. He thought that good faith with the country and sound policy alike demanded that this duty should be removed; and he, therefore, rejoiced to find that his right hon. Friend had adopted the course he had. He did not entertain so confident a hope as his right hon. Friend that the light wines of France would be largely consumed in this country, nor could he coincide with his right hon. Friend upon the propriety of retaining the alcoholic test. It would be better to admit the more alcoholic wines of France, which, if they came in under a shilling duty, would sell in this country for 1s. a bottle. There was a point on which he wished to remark, and that was the new copper coinage. The coins were not at all what was required. What was wanted was something much smaller and more convenient—something much more resembling that of France.

MR. CAVE

said, the mercantile community would be much disappointed to learn that the right hon. Gentleman intended to continue the objectionable penny charges which seemed against every principle of taxation by combining the minimum return to the revenue with the maximum of loss and annoyance to the tax payer. The country, he thought, would regret to hear that sugar and tea were again to be postponed to paper, and the most solemn and reiterated pledges again unfulfilled. No time could have been better than the present for reducing these duties, as the accumulation of large stocks of both in the country ensured that the reduction would benefit the consumer, and not go into the pockets of the importer. The right hon. Gentleman knew well that even the revenue suffered from these high duties, which gave a premium to adulteration. But we could not expect to have good sound claret at 14s. a dozen for nothing, and the price the poor man would have to pay was that he must still put up with sugar which would not sweeten his tea; and tea which was equally maris expers with the remarkable beverage which had been so successfully puffed by the Chancellor of the Exchequer.

MR. J. EWART

said, the commercial community would be greatly disappointed by the continuance of the penny duties; and he was correspondingly glad to hear the right hon. Gentleman promise to re- consider the penny duty on packages-There was no tax more unpopular among the trading community.

MR. BERNAL OSBORNE

The Chancellor of the Exchequer is such a great magician on these subjects that he must be a bold man who would attempt to criticize him; but this I must do him the justice to say, that when he talked of having to lead us through a "wilderness of figures" it proved under his leadership to be nothing but a garden of flowers. I am rather amazed at hearing the hon. Member for Shoreham (Mr. Cave) taking such small exceptions to a great scheme. For myself, I have always taken exception to the repeal of the paper duty under the financial circumstances of the country, and never voted for it; but I think the right hon. Gentleman has acted with great wisdom in proposing to remove this fruitful subject of controversy between the two Houses and in taking off the paper duty. As far as my own personal predilections are concerned I should have preferred the reduction of the tea and sugar duties; but I cannot resist the conviction that the paper duty was a most dangerous subject to be left open after the course taken by the other House of Parliament, and I congratulate the right hon. Gentleman on the great nerve and wisdom he has shown in dealing with it. That penny on the income tax thrown to us country Gentlemen will float his Budget. He has wrapped up the paper very well, and if the penny does not float the Budget through, it will be very unwise of us not to take the come promise he offers. I think, too, the right hon. Gentleman has acted wisely in placing these matters in one Bill. I, of course, reserve my right to look into the details; I admit I was rather surprised to hear of this surplus. I expected rather to hear of an increase of the income tax than of a penny being taken off. Reserving my right to look into these matters, I thank the right hon. Gentleman in the name of my constituents for the statement he has made, for his nerve in making it, and for his condemnation of the profligate expenditure sanctioned by this House. Such an expression, coming from such a quarter, will do good service, not only in this House, but also in the country.

LORD ROBERT CECIL

said, he also wished to say a word about this "profligate expenditure." He thought nothing would be more calculated to injure the character of that House and of the Government than if the right hon. Gentleman persisted in using language of this kind. If any one was responsible for the expenditure of the country it was the Chancellor of the Exchequer himself. The right hon. Gentleman was bound to take one of two courses—he was bound to protest in the Cabinet against any expenditure that he believed to be profligate, and if his remonstrances were not attended to it was his duty to carry out his views in the manner usual to recalcitrant Ministers. But if the right hon. Gentleman did not think proper to take this course he was bound not to discredit the Estimates that he himself moved. The right hon. Gentleman was at present asking the House to save him from the effect of his own measures. A Minister ought not to sanction that which he did not approve, and the Finance Minister ought least of all to say he disapproved the way in which the finances of the country were carried on.

COLONEL SYKES

said, that he had received from some of his constituents great complaints with regard to the penny taxes, and he trusted the right hon. Gentleman would take the subject again into his consideration.

MR. PAGET

said, that the remission of the paper duty would afford a great relief in the manufacturing districts, and contribute not a little to the removal of the distress among the operatives. Vast quantities of paper were used in reference to some articles of manufacture.

MR. FRANK CROSSLEY

said, that the hon. Member for Cambridgeshire (Mr. E. Ball) had spoken of the malt duties as being oppressive to the agricultural interests; but it was not the agricultural interest that paid it—it came out of the pockets of the consumers. He thought the statement of the Chancellor of the Exchequer a very able one considering the immense difficulties by which he was surrounded. They had had a bad harvest and a fall of revenue, yet the Chancellor of the Exchequer had so arranged his expenditure as to enable him now to propose a reduction of a penny on the income tax, and the abolition of the paper duty, which the House stood pledged to abolish, and which was left in a most unsatisfactory state at the close of last Session. He thought the removal of the duties on tea and sugar very desirable, but he did not think this was a good time for it, on the ground stated by an hon. Member, namely, because there were large stocks of those ar- ticles in the country at the present time. The removal of this duty at such a time would injure the large holders of tea and sugar; but, on the other hand, the high price of these articles pressed heavily on the poorer classes. But the paper duty was, in his opinion, the thing to be dealt with first, for it was inconsistent to grant large sums for the spread of education and at the same time to tax the very articles that were employed in doing it. It had been stated that a duty of £886,000 had been paid on corn imported this year. If a duty of 1s. per quarter were raised on all the corn grown in this country the sum would have been three or four times that which he had mentioned; therefore, it was clear that the agriculturists received protection to the extent of something like three millions a year. He thought, therefore, the next best thing the Chancellor of the Exchequer could do would be to strike off that impost altogether.

MR. LONG

said, he must express his regret at the demeanour of the right hon. the Chancellor of the Exchequer when the hon. Member for Cambridgeshire spoke of the distress of the agriculturists. He begged to inform the right hon. Gentleman that if he were as well acquainted with the distress of the agricultural community as he (Mr. Long) was, he would not have met the remark of the hon. Member for Cambridge with the smile he did. He should be glad to see some practical proof of the sympathy of the right hon. Gentleman with the agricultural interest, which he might well have displayed in the manner pointed out by the hon. Member for Sussex, by abolishing the hop duty, and thereby carrying out the free trade principles, to do which, he always alleged, was his honour and glory.

SIR JOSEPH PAXTON

joined with the hon. Member for Nottingham (Mr. Paget) in the opinion that the repeal of the paper duty would act very beneficially in the manufacturing districts. The consumption of paper was very great in connection with the ribbon trade. There was not a yard of ribbon made that had not in its fold a piece of paper, which added very considerably to its appearance. The custom, he believed, was established by the French some four or five years ago. He thought the right hon. Gentleman had rather underrated what would be the production of the revenue of next year. He (Sir Joseph Paxton) believed he could see certain indications that the revenue for the next year would far exceed what the Chancellor of the Exchequer had stated. There were only two causes which could prevent our finances regaining a healthful condition—one was another bad harvest, which he trusted a kind Providence would avert; the other was our being drifted into a war, which he trusted the good sense of the country would not permit.

MR. BENTINCK

said, he found it was not the intention of the House to enter into a discussion on this occasion, but he thought some misconception had arisen as to what was said by the hon. Member for Cambridge (Mr. Ball). The hon. Member for the West Riding (Mr. Crossley) had said that the hon. Member for Cambridge had expressed his surprise that the Chancellor of the Exchequer had done nothing for the agricultural interest. That was a slight misconception, for it was quite impossible his hon. Friend (Mr. Ball) could have felt any surprise that the right hon. Gentleman had done nothing for the agricultural interest; for from the year 1846, when the right hon. Gentleman seceded from the party who were more particularly connected with the agricultural interest, he had done his best to show that, however great might be the zeal of the convert, it was far exceeded by the hatred of the apostate. He would only, whilst on his legs, advert to what had been said by the hon. Member for the West Riding as to the agricultural interest still receiving protection to the extent of £3,000,000 per annum. He wished they did, or that it was more; but he confessed he did not see how the hon. Gentleman made the £3,000,000 up. The tax of 1s. a quarter had amounted only to £800,000. He thought that if the hon. Member for the West Riding was disposed to open the question as to the amount of protection received by the commercial and the agricultural interest respectively, he would find that the balance at present was decidedly in favour of the former. He, therefore, thought that the hon. Gentleman would do well not to raise that question.

MR. FRANK CROSSLEY

said, that a tax of 1s. a quarter on all corn imported affect the value of all corn grown, and in that way the agriculturists were protected to the extent of £2,000,000 or £3,000,000.

MR. HOPWOOD

said, he would ask the Chancellor of the Exchequer to consider the expediency of imposing a tax on railway tickets; that would enable him to remove the duty on hops and malt, and the most objectionable duty on fire insurances.

MR. MALINS

expressed his great satisfaction at the proposal to take a penny off the income tax. He accepted this step as an earnest of the right hon. Gentleman's intention to get rid of this impost at the earliest possible opportunity. He thought that after the pledge of the right hon. Gentleman in 1853 that it should terminate in 1860, he was bound to lose no opportunity of reducing it. He believed it would be much better if, instead of repealing the paper duty, they had taken 2d. from the income tax. He did not say that this proposition would have been universally approved of, for he knew there was a large party in the House that was in favour of the reduction of the paper duty, and they had the advantage of a clap-trap cry that they wished for the repeal of the taxes on knowledge. But if any hon. Gentleman would go into the calculation for himself, and see how much he paid on the paper for any volume, he would at once see that he had given the right designation to this cry. He admitted that there was at one time a strong feeling in favour of the reduction of the duty in that House, but the majority gradually dwindled down, till at last it amounted only to nine. The country would be surprised, after such a division, and after what had occurred last year in "another place," where a course was pursued that gave the greatest satisfaction to the country, at the decision which the Government had arrived at. The Prime Minister came down to the House, after the Bill for the repeal of the paper duty was thrown out in "another place," and expressed himself with great moderation on the subject. The Chancellor of the Exchequer took a different view from him of the question, and spoke in strong terms, and at least one of his colleagues participated in his views. He (Mr. Malins) could understand, therefore, that there had been a great contest between the right hon. Gentleman and some of his colleagues on the subject. The right hon. Gentleman seemed to have carried the day, and accordingly the duty was to be taken off. For himself, he had only to express his regret that the right hon. Gentleman should have elected this particular duty for remission and have left untouched the tax on hops—a tax that was opposed to all sound principle, which yielded only on an average £200,000, and which the right hon. Gentleman was every other year obliged to postpone. There was another duty, the reduction of which he thought would have commended itself to the consideration of the Chancellor of the Exchequer—he alluded to the duty on fire insurances. He was convinced that if that duty were reduced the deficiency would be more than made up in the course of two or three years. Yet, though he could not admit that the right hon. Gentleman had exercised a sound discretion in the repeal of the paper duties, still, if he and his colleagues had made up their mind to repeal those duties, and upon their representations that they had a sufficient surplus to enable them to do it, without knowing what might be the opinions of the party with which he usually acted, and speaking for himself only, he did not feel inclined to offer any further opposition, as be believed the House would thereby get rid of a troublesome and embarrassing question, and it would satisfy a considerable portion of the community.

MR. NORRIS

would not have risen but for the hon. and learned Gentleman the Member for Wallingford (Mr. Malins) saying that if any Gentleman would take the trouble to calculate, he would find that the amount of the paper duty on books was quite inappreciable. He, on the other hand, would take the liberty to say that if the hon. and learned Gentleman would take the trouble to calculate he would find that of every sovereign he gave to the National Society, 6s. 8d. of it—a sum with which the hon. and learned Gentleman, no doubt, was familiar—went to the Government in the shape of duty on their school books.

THE CHANCELLOR OF THE EXCHEQUER

said, he must in the first place thankfully acknowledge the great candour with which hon. Members had spoken of his financial statement. He wished to say a word or two to what had fallen from several Members, and among others, from the noble Lord the Member for Stamford (Lord Robert Cecil). The noble Lord had misunderstood some expressions that fell from him on the subject of the expenditure of the country, and said he had no right to discredit the Estimates for which he was responsible. Now, he had expressly stated that he made no reference to particular estimates. He spoke of the great expenditure of the country in the past, and deprecated large and unnecessary expenditure in the future. He had spoken, in short, retrospectively and prospectively. No one would be more ready than himself to acknowledge that it would be cowardly and contemptible for a Minister, especially for a Minister of Finance, to attempt to shift from himself the responsibility of the Estimates passed under his auspices; and certainly he had no such intention. With regard to the duty on chicory, the proposition was simply to double the duty agreed to by the House last year. The hon. Member for Kendal (Mr. Glyn) had spoken of the desirableness of ascertaining if any payment could be had from Greece in respect of the loan guaranteed by the three Powers. He should have mentioned that there was a small payment from Greece now for the first time to come to the credit of this country. Greece would pay to the Consolidated Fund for the present £12,000 a year on account of interest on that loan. Some years ago a Commission was appointed to examine into the state of the revenue of Greece, and its capability to pay a contribution or a sum in full discharge of the obligation of the loan, and if he recollected aright the Report of the Committee was to the effect that Greece was able without injury to take upon herself the obligation as to the whole of the loan; and he must confess that having a warm interest in the welfare of that country, and entertaining rather sanguine hopes of its prosperity, he thought it would be rather a good thing if it were to pay largely to the interest of the debt, as that might prevent the application of the money to other and less useful purposes. The present payment was £12,000, and in accepting that quota of £12,000, there was no waiving of the right at any proper time to make further demands for payment of interest. The hon. Member for Dumfries (Mr. W. Ewart) spoke of our new copper coinage, and complained that it was not so small as that of France. The difference between the copper coinage of the two countries was, however, very small, and the mixture of the metal was almost exactly the same in both. He wished to state to the House what he regarded as a rather curious circumstance. The Mint had been hard at work for a considerable time, and up to the last account sent to him about 30,000,000 of pieces of copper money had been sent out; but the whole of that mass of copper had been added to the circulation of the country without a single old copper piece being returned. That fact, while it proved the great scarcity of the old copper coinage, also demonstrated the great convenience of the new; and he might observe that the profit which the Government of France had made by introducing a more convenient coinage had not been less than half a million. As to the subject of the penny on packages inwards, referred to by the hon. Member for Liverpool, he could not defend the charge as it now worked, and admitted there was evidence of the trouble and inconvenience caused by it. Whether those inconveniences could be removed or not he would not now give an opinion; but if they could not it might be desirable, when Parliament had the means, to reconsider the subject with a view to the remission of the tax. With respect to the comparison that had been made between the remission of the paper duty and the reduction of that upon tea and sugar, he must observe that, although those were subjects in pari materia, they were not equal in extent of revenue. In giving up £670,000 upon paper for the present year he had given the extreme of what he thought was likely to be the balance at his command; but the reduction of the duty on the tea to 1s. 2d. per lb. to say nothing of that upon sugar, would according to the Estimates of the Customs entail a loss of £850,000. The hon. Member for Norfolk (Mr. Bentinck) had made a remark, which he (the Chancellor of the Exchequer) had heard without the least irritation, that he had always been a bitter enemy to the agriculturists. But, although he had not been angered by the observation, he could not help feeling surprised that a Member of Parliament should have made such a charge, especially as the lapse of years might have been expected to allay all extreme feelings, such as prevailed in former times. He might differ from the hon. Gentleman as to the best mode of serving the agricultural interest, but he had a conscientious belief that the setting free of a manufacture of this description was one of the best plans that could be devised for benefiting rural districts. An hon. Gentleman (Mr. Hopwood) had asked him whether he had ever considered the possibility of levying a penny tax upon railway tickets, which the hon. Gentleman seemed to think would prove a substitute for the malt tax and other duties. He had frequently considered the subject, as he was daily receiving suggestions of such a tax; but he could not see his way to deal safely with them, and be could not but regard such a tax as a most unjust one. Even if it were adopted it would not produce one-sixth of the present amount of the malt duties. In conclusion, he thanked the Committee for the patient hearing it had accorded him. The hon. and learned Member for Wallingford (Mr. Malins) had expressed himself in a manner which he (Mr. Gladstone) thought very judicious, and though he could not concur in the hon. and learned Gentleman's views, he drew from the tone of his observations a favourable augury for the harmonious manner in which the House would deal with the financial questions of the year.

MR. BENTINCK

said, he was glad to hear that his remarks had not produced any feeling of irritation in the right hon. Gentleman's mind, for that was exactly the spirit in which they were offered; but when he expressed surprise that the lapse of time had not allayed passions which existed at a particular time, he adopted a singular and untenable ground. Was it, or was it not, a fact that the right hon. Gentleman did secede from the agricultural party, and had not his whole public and financial career from that period to the present time been one of unvaried hostility to the agricultural interest? ("No, no!") It was easy to cry "No;" but he should feel glad if any hon. Member who did so would rise and make his denial good by argument. In the meantime he must assert that the right hon. Gentleman's policy had been one of antagonism to British agriculture.

MR. CAIRD

denied the right of the hon. Gentleman to constitute himself the sole representative of the agricultural interest. As himself representing a constituency largely interested in agriculture, he felt bound to say that the Chancellor of the Exchequer, following up the policy of the late Sir Robert Peel, had done more to promote agricultural prosperity than any one else. Even taking the price of corn as a test, if the prices for ten years before the abolition of the protective duties were compared with the prices for ten years succeeding, it would be found that there had been very little difference; but the real benefit to the agricultural interest had been the enlargement of trade and the encouragement of overy other kind of agricultural produce, which had led to the present state of prosperity among that class.

MR. BUTT

reminded the Committee that when a Motion was made, about ten years ago, for a Select Committee to inquire into the subject of agricultural distress, the Chancellor of the Exchequer voted for that Motion. Since then no- thing more had been heard of agricultural distress.

Resolved, That, towards raising the Supply granted to Her Majesty,— In lieu of the Duties of Customs now charged on the articles undermentioned, the following Duties of Customs shall, on and after the 16th day of April, 1861, be charged thereon on importation into Great Britain and Ireland—namely, Chicory, or any other vegetable matter applicable to the uses of Chicory or Coffee, raw or kiln dried, 12s. the cwt.

House resumed.

Resolution to be reported To-morrow.

Committee to sit again on Wednesday.