THE BUDGET—FINANCIAL STATEMENT, WAYS AND MEANS.

HC Deb 16 April 1863 vol 170 cc200-64

WAYS AND MEANS considered in Committee.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER

Sir, the causes which have during, recent years attracted an unusual degree of interest to the annual financial statement are not of such a nature that any well-advised lover of his country should desire their operation to be permanent. They may be summed up in the following words:—The few years which have last passed have been years of unusual pressure upon the resources of the country, and have been, as times of unusual pressure must be, years likewise of unusual anxiety. During the course of the last Session of Parliament that anxiety found its natural and most legitimate method of expression in a Resolution of the House of Commons. In the Resolution to which I refer, Her Majesty's Government found it declared by the House, the proper organ of the sense of the country, especially upon such a subject, that while it was the desire of the House that—I am not now quoting the words, but referring to the spirit of the Resolution—that ample provision should be made for the honour and security of the country, and for the efficiency of the public service, it was likewise the fixed opinion of the House that the burden of taxation was inconvenient, and that efforts ought to be made in that respect by the executive Government to afford relief to the people. Therefore, Sir, the statement which I have now to submit is not merely a statement of the annual account and estimate of Receipt and Expenditure for the past and coming years respectively, but it is likewise, I will presume to say, the answer of the Government to a formal, a deliberate, and, I believe I may add, a unanimous Resolution of the House of Commons.

And, Sir, it is well the people should understand—what, at the time I refer to, Her Majesty's Government, by the mouth of my noble Friend the First Lord of the Treasury, fully acknowledged—that that Resolution was not premature, but, on the contrary, was well founded, and was fully justified by the circumstances of the case. It is well they should understand how rapid, how peculiar, I will venture to say, how exceptional had been, up to a certain epoch, the growth of the public expenditure, and how much it was to be desired—indeed, how needful it had become, in the interests of the nation, that the subject should attract a particular attention. I will advert first to the expenditure of the financial year 1859, the first year subsequent to the Russian war. the accounts of which were not extensively affected by war charges, The expenditure of that year very considerably exceeded the scale of our expenditure before the war; it amounted to £64,664,000; but in the very next year, 1859–60, the expenditure increased to £69,502,000, showing an augmentation of £4,838,000. In the year 1860–1 the amount again rose, and came to £72,842,000, showing an augmentation within two years of no less than £8,178,000. I will refer to the average of the four years from 1859 to 1863, and I take these four years because they are the years to which the general description of large disbursements peculiarly apply. The average charge of these years was £71,195,000 if we include the amount laid out in fortifications, and £70,678,000 if that item be excluded. This increase upon the aggregate public charge is in reality even larger, because it occurred at a time when we had enjoyed a peculiar relief amounting to more than two millions of money from the charge of the National Debt, owing to the lapse of the Long Annuities.

It may perhaps be useful, in bringing this statement and the condition of things which it is intended to illustrate more clearly and fully to the mind of the Committee, if, instead of simply comparing the aggregate expenditure or the country at two periods, I now compare that portion of the expenditure which may be said to be matter of choice on the part of the Legislature; for, Sir, it is plain that a large portion of the public charge does not lie practically in the main within the discretion of Parliament from year to year. We have no option at all as to providing the monies necessary for the payment of the dividends on the National Debt. We allow ourselves but little more liberty with respect to the sums applicable to the discharge of such other public engagements as are placed upon the Consolidated Fund. A third important item of our expenditure — namely, the charge which we incur in the collection of the revenue—has been regulated by its own fixed and ordinary rules, and has not partaken of the remarkable upward movement to which I hare referred. The second of those three items, although nearly invariable, it will be convenient to include in the account I am about to present, but the first and the third will be excluded. With these preliminary explanations, I proceed to state briefly to the Committee what, during the period I am now considering, was the growth of that part of our expenditure which may be termed practically optional as to its particular amount; that is to say, of our expenditure after excluding the entire charge of the debt, and a sum of between four and five millions for the collection of the revenue. In other words, we thus arrive at the basis for a comparison of expenditure, so far as it depends upon the state of opinion hero and out of doors, and likewise upon our annual Votes.

This portion of the public charge amounted in 1858–9 to £31,621,000; in the year 1860–1 it had risen to £42,125,000. Thus there had been an increase of ten millions and a half, or about 33 per cent in two years only. If next we make our comparison with the year which immediately preceded the Russian war, the result, is yet more remarkable, not to s y more startling. In the year 1853–4 the optional part of the expenditure of the country—the Committee will understand my meaning in the phrase—was £23,511,000; in the year 1861 it was, as I have said, £42,125,000: thus the increase in the period of no more than seven years was £18,614,000, or more than 80 per cent. Such, Sir, was the state of facts which attracted, and deservedly attracted, the particular notice of the House of Commons during the last Session of Parliament.

Let it not be supposed, Sir, that in adverting to these fads I mean to leave room for the inference that the increase I have named was a causeless increase. Its causes exist, and are well known; indeed, they are subject, I believe, to little controversy or dispute. There were extensive and costly transformations of arms and vessels, which appeared to be required by the progress of military or naval science. There was a great advance of philanthropic views in regard to the condition of our seamen and our soldiers This advance—this improved state of public sentiment, led to a great, and somewhat sudden expenditure, but an expenditure grudged, I believe, bf none—at least, as to the principle on which it rested. There was, thirdly, a great extension of our military establishments, having reference in no inconsiderable degree—as must always be the case from the sympathy that now prevails between na- tion and nation—to alike increase in military establishments abroad, and to the general circumstances of Europe. There was further a desire, warmly and very: generally, though perhaps not unanimously, entertained by the public, that the fixed defences of the country should be strengthened and enlarged. And, yet again, there were in 1860 and 1861 direct war charges, which amounted, as will shortly be seen, to a very large sum of money. All these causes of increase in the public expenditure were definite in their character, and easily traceable in their effects; but I should not do full justice to the elucidation of the case if I failed to add, that together with these causes another cause came into operation which is less easy to follow and detect, but which is pretty certain to exercise a powerful influence at periods when, from whatever reason, a vast and sudden increase of public expenditure may occur. I mean, Sir, this—that together with the called-for increase of expenditure there grows up what may be termed a spirit of expenditure, a desire, a tendency prevailing in the country, which, insensibly and unconsciously perhaps, but really, affects the spirit of the people, the spirit of Parliament, the spirit of the public Departments, and perhaps even the spirit of those whose duty it is to submit the Estimates to Parliament, and who are most specially and directly responsible for the disbursements of the State. When this spirit of expenditure is in action, we must expect to find some relaxation of those principles of prudence and rules for thrift which direct and require, that whatever service is to be performed for the public should be executed in the most efficient manner, but likewise at the lowest practicable cost.

I do not, Sir, submit this statement as a confession of misconduct on the part of the Government. All I have to say on the part of the Government, and it may be said without reproach to any other body, or any other Power, is this:—I do not think that in proposing to Parliament the outlay of these vast sums the advisers of the Crown outran in the smallest degree the general state of public feeling, opinion, and conviction. I think, that if it were necessary, it could be proved from the chronicles of the times, and perhaps, in particular, from the Journals of this House, that on many occasions their proposals, instead of having outrun the demands of opinion, rather fell somewhat short of what the public sentiment, if it did not even require, would at least have warranted and sustained.

But, apart from discussion as to causes, the effect of all this has been that the finances of the country have been kept for a period of four years in what may be called a state of tension. I will go one step further: I have spoken thus far without reference to the special part borne by any organ of the State in regard to this expenditure, but I do not hesitate to add the admission that the tension I have described was, for the time, enhanced through the policy which the Government pursued, and which, especially in the year 1860, it induced the House to adopt. We resolved, in the autumn of the year 1859, to treat with France, and finally to contract and simplify the tariff; but the result of remissions of taxation in a period of high expenditure, warranted though they may have been by their causes and their consequences, was undoubtedly to produce an increase of the tension which prevailed and an aggravation of whatever solicitude might have been entertained in regard to the condition of our finances.

Such, then, was the general position of our financial affairs anterior to the state of circumstances which specially belongs to the subject of to-day. I now come to consider the balance sheet of the financial year which has just expired. But in submitting that balance-sheet to the Committee, I must beg its Members to bear in mind the peculiar terms which were used in presenting the Estimates of last year; for I do not think it possible to form a just appreciation of the real condition of the country, or of the extent and elasticity of its resources, without taking into view now, as we took them into view twelve months ago, the particular circumstances of the time. The mere figures of the comparison between one year and another invariably require to undergo much careful analysis before they can become the basis of sound conclusions, and it is especially requisite at such a juncture as the present that careful regard should be had to the main circumstances determining the commercial and material condition of the nation. Last year, Sir, when I submitted the Estimates of Revenue and Expenditure to the House of Commons, I submitted them on the part of my Colleagues, and speaking their sense, not without particular reserve. We were then only able to present Estimates of Income and Charge such as may be said pre- cisely to have balanced one another; and we were compelled to associate with the presentation of that too nicely-balanced statement a reference to particular causes, which, we thought, it was obvious might disturb, and most seriously disturb, the relation of the two sides of the account. The statement of Receipt and Expenditure for the past year, which we have now to invite you to consider, is, in my opinion, a remarkable and hopeful statement; but in order to judge whether it is in reality, and how far it is, remarkable and hopeful, it is absolutely necessary to have regard to the specialities by which the state of the country has been marked. I do not now refer simply to the fact, that during the three last years the harvests have in no one instance been equal to an average yield, important as that fact must be held; but I refer to two causes, both of a marked and special nature, and both of which also, as it happened, have been mentioned in the short conversation which preceded the commencement of the principal business of the evening. There is in the first place the condition of Lancashire and of its cotton manufactures. To Lancashire, up to a recent period, every Englishman has been accustomed to refer, if not with pride, yet with satisfaction and with thankfulness, as among the most remarkable, or perhaps as being absolutely the most remarkable, of all the symbols that could be presented of the power, the progress, and the prosperity of England; and at the moment when I speak we can refer to Lancashire more warmly and more thankfully than ever as regards all the higher aspects of its condition. The lessons concerning it which within the last twelve months we have learned, have, in one point of view, been painful and even bitter lessons. Yet, in other aspects, and in those, too, which most intimately and permanently belong to the future condition and prospects of the country, they have been lessons such as I will venture to say none of us ever hoped to learn; for however sanguine may have been the anticipation of any one among us with regard to the enduring fortitude and patience of the English people, I do not think they can have estimated that power of endurance, that self-command, that cheerful, manly resignation, that true magnanimity in humble life, at a point as high as we now see that it has actually reached. But, Sir, notwithstanding, so far as regards the material condition of Lancashire, beyond all doubt for the time the tale we have to tell is a melancholy tale. So menacing did we consider the state of the case as it stood twelve months ago, that it was then my duty in presenting the Estimates of that year to state frankly to the Committee that we had before us the prospect of an alarming deficiency in the supply of the great material of labour in Lancashire, and that if this deficiency should continue throughout that year, we could not presume to hope that our Estimates would at its close be sustained by the results. Nay, so serious did we think the case, that we could not undertake to measure the amount of short-coming which might possibly follow; we therefore considered it to be useless for us at that time to state an estimate of that amount, or to ask the House to make such provisions as might be adequate to meet the calamity; and we thought it better to wait for the teaching of experience, and to deal with the evil when it should arise. Gloomy as were those anticipations, they were anticipations founded on the supposition that the scarcity of cotton might continue at the point which it had then already reached; but what has been the fact? The scarcity has not only continued at that point, unhappily it has undergone a great enhancement. I will refer to the trustworthy criterion of prices. In the financial statement of last year I mentioned to the Committee the prices which had prevailed during the spring of 1862, in the Liverpool market, for those descriptions of American cotton which are commonly taken as representing the average of the supply from that quarter—namely, the Uplands and the New Orleans. Those prices, which in the spring of 1861 had been from 7d. to 8d. per pound, had risen in the spring of 1862 to between 1s. 1d. and 1s. 2d. per pound; and that was the state of things which we regarded as so formidable in its probable results to the revenue of the country. But that price, high as it was, in the course of the ensuing autumn was nearly doubled; and at this very moment, as I find from the latest quotations, the price of the American cotton required for our manufacture, which in ordinary times is 6d. or 7d. per pound, stands at 2s. and 2s. 1d. per pound. So that the calamity which had befallen Lancashire, viewed in its material and commercial aspects, has not only continued at the point it had then reached, but has grown to be far more severe. It has attained, without doubt, to the most afflicting stringency. Partial and temporary mitiga- tions there have been—such mitigations, thank God! we have witnessed during the last few weeks; but they are not of a character which would warrant us in cherishing any sanguine hopes of a great further improvement in the immediate future. We have had, then, one of the wealthiest portions of the country, and perhaps the very wealthiest portion of its labouring population, in a condition of unexampled prostration and of grievous suffering; and the balance-sheet which I am about to present to the Committee has been subject to a corresponding amount of disadvantage.

But I also stated that there was a second special cause of depression. It is one which up to the present time has been but partially mentioned in the House of Commons, but one which I think the Committee will agree I could not with propriety pass by in silence on the present occasion. I refer, Sir, to the state of Ireland. I very much doubt whether the attention of the public has been fully awakened to the amount of calamity which during the last few years has befallen that portion of the United Kingdom. The depression under which it labours has, without doubt, been partially balanced by the favourable condition of the linen manufacture; neither is it concentrated and driven to an extremity, like the distress in Lancashire, at a particular point on the surface of the country. It is, on the contrary, generally diffused; its extent is as broad as the area of agricultural industry, and it is exclusively connected with the failure of the crops, being therefore of the nature which affords us the hope that with more favourable seasons it will altogether disappear. It may be a matter of interest to the Committee to receive some information which Her Majesty's Government have obtained with regard to the extent of that failure—I should rather say of those successive failures in Ireland during the last few years. The Irish Government have caused inquiries to be made, and statements have been drawn up, which exhibit in a summary form the principle facts of the case. I need hardly remind English and Scotch Members that for the purpose of such inquiries in Ireland we have the aid of a highly-organized and elaborate system of agricultural statistics administered by public authority. I shall avoid all minute detail, and content myself with presenting to the Committee a single statement; but I must first endea- vour to convey a clear view of the basis on which it is founded. The statement embraces the crops of the last three years 1860, 1861, and 1862. The standard of comparison is with the crops of the preceding four years, from 1856 to 1859. Up to 1858 we have the consolation of believing that the condition of Ireland was one of steady and even of remarkable improvement. In the year 1859 that improvement was seriously checked; still I have taken the four years together, from 1856 to 1859, as representing what may be called the average and normal condition of Irish agricultural production. The mode of estimating the crops has been as follows:—The crops of oats, wheat, and potatoes are taken, as the three principal crops. An attempt is then made to estimate the value of the residue of the chief products of the soil, by ascertaining the number of stock in the country from year to year, by valuing them at the price which we know to have ruled for each season respectively, and by assuming that one-third of the total value of the stock existing in the country at any given period represented the annual return from stock. This calculation may be nearly correct, or it may be partially incorrect, but at any rate it seems quite sufficient for the purposes of comparison. We have, then, to put together four items. The oat crop, the wheat crop, the potato crop, and one-third of the estimated value of the live stock in the country. The amount of these four items was for each year from 1856 to 1859, on an average, £39,437,000; in 1860–1 it fell to £34,893,000—a decrease of £4,544,000; in 1861–2 there was a further fall to £29,077,000—a decrease of £10,360,000. In 1862–3, low as was the point previously reached, it descended yet lower, and fell to £27,327,000, from the former average of £39,437,000; thus showing a decrease of somewhat above twelve millions sterling. This amount equals nearly one-half of the total estimated value of the agricultural products of the country, as measured on the principal items or constituents of agricultural wealth. It falls not very far short of the full amount of the established annual valuation of the country, which is £13,400,000. The state of circumstances thus exhibited is one not less remarkable than painful. It may be assumed, as a general rule, that the first effect of pressure on the labouring classes is to tell on the consumption of strong and especially of spirituous liquors. We need not, therefore, wonder that under the circumstances I have named the consumption of home-made spirits in Ireland, which in the year 1861–2 had been 2,463,000 gallons, fell in 1862–3 to 2,292,000, showing a decrease of 171,000 gallons.

Undoubtedly, Sir, the operation of these two special causes, the one the cotton famine of Lancashire, and the other the striking failure of the crops in Ireland, has been to deprive the Exchequer of a very large amount of revenue, which under other circumstances it could not have failed to receive. It is not within my power to offer any close estimate of that amount; but I think it is obvious that we must bear circumstances of so unusual a character in mind, when we have to form a judgment on the condition of the revenue of the country during the past financial year. The expenditure of the year which expired on the 31st of last March was estimated in the preceding April at£70,040,000, and provision was made by Parliament for that amount. When the whole business of Supply had been brought to a conclusion, the amount had been raised to £70,108,000. Such being the estimated expenditure for the year, the actual expenditure was less by £806,000, and came to the sum of £69,302,000. There is very little in this portion of the account which calls for observation. Supplementary Estimates, I am happy to say, there have been none: the excesses belonging to former years, and charged against this one, have been insignificant in amount The expenditure of the Army has been beyond its Votes by about £200,000; but this excess, as I am informed, is only due to the fact that the Department is more than usually forward in its payments to the Treasury chest on account of disbursements abroad, and will in all likelihood disappear on the final settlement of accounts for the year. The issues for the Navy have been considerably within its Votes. The Miscellaneous expenditure shows an excess of issues also reaching about the same amount of £200,000. This excess is, I believe, entirely due to the change of system which took effect on the 31st March. At that period, for the first time in our financial history, all the services were required to surrender the balances standing to their credit; and I presume there is a natural disposition, with Departments as well as individuals, when a certain day is approaching on which a balance must be surrendered, to take care that that balance shall not be larger than they can help.

I now come to compare the expenditure of 1862–3 with the expenditure of the immediately preceding years This is a matter of considerable interest, and in order to exhibit it with as much accuracy as possible, I shall take the expenditure of these preceding years respectively, not as it may have chanced to stand on the provisional accounts made up for the 31st of March, but as it stood on the final account when every charge had been brought home and assigned to the period to which it properly belonged; an adjustment which, as I need hardly observe, must always require time, and cannot be effected on the day when the financial year expires. The expenditure of the year 1862–3 was £69,302,000; that of the immediately preceding year was £70,838,000; there was thus a decrease of £1,536,000. The expenditure of 1860–1 was £72,504,000; there was therefore a decrease in 1862–3, as compared with 1860–1. of £3,202,000. The expenditure of 1859–60 was £70,017,000; the expenditure of 1862–3 therefore exhibits a decrease, as compared with 1859–60, of £715,000. But, in point of fact, the decrease of expenditure has been considerably greater than appears on the face of these figures. The reason is that in 1862–3 there was brought to account on both sides, both as revenue and as charge, a sum of about £1,125,000 which had not appeared at all in the accounts of the preceding years. After correcting, therefore, the statement by the deduction of this sum, the real diminution in the comparative expenditure of last year was as I will now state it. As compared with 1860–1, £2,661,000; as compared with 1861–2, £4,325,000; and as compared with 1859–60, £1,840,000.

I come now to the comparison of the expenditure of 1862–3 with the revenue of the year. The amount of the revenue is known to the Committee, having been published in the ordinary quarterly Return. It is £70,603,000. There is therefore a surplus of revenue beyond expenditure amounting to £1,301,000.

The Committee will, however, be anxious to make the comparison, which is always a matter of interest and importance, between the actual out-turn of the revenue and the estimate which was formed of it beforehand. On the 3rd of April, 1862, I estimated the probable amount of the revenue at £70,190,000. I have already referred to the general reserve I then made with regard to the cotton districts. Independently of that reserve, I also stated that a sum would have to be deducted from the estimated amount of revenue on account of the drawback on hops, which would be intercepted in its way to the Exchequer, if the House should think fit to adopt the proposition I then suggested for the removal of the duty on that article. Drawback is of two descriptions: there is the drawback on export under the operation of the ordinary law, and there is the drawback on stocks in hand remaining in the country, which is sometimes accorded by Parliament at an amount agreed on. Neither of these items admitted of nice estimate, and the latter of the two was matter of arrangement some time after the financial statement had been made. Taking them together, we found reason to think it probable that they would practically dispose of the small surplus we had presented of £140,000. Subject to this correction, the revenue of the country, as estimated beforehand, was £70,050,000. The actual revenue, as I have stated, was £70,603,000; the excess beyond the estimate thus shown, which amounts to £553,000, is, indeed, no very large excess if we consider it absolutely, but constitutes, as I think, a very remarkable result if we measure it with reference to the peculiar circumstances of depression which have affected large portions of the country.

And now, Sir, with respect to the particular branches of the revenue. The Customs exhibit an increase of £484,000. This branch of revenue has been variously affected during the closing months of the year—on the one hand, by an opinion which had gone abroad of a probable change in the duties on tea, or on sugar, or on both; and on the other hand, by a Bill which I had introduced for altering the duties on tobacco. The expectation of change in the duties on tea and sugar was injurious; the effect of the Tobacco Duties Bill was partly to diminish, but partly and in a greater degree to improve the revenue. On the whole, the tendency has been to keep the revenue from Customs somewhat below its legitimate amount, but not, I think, to any material extent.

The revenue from Income Tax produced an excess of £467,000 beyond my estimate. The cause of this excess is to be found in a new assessment of the property of the country, which has never failed, when from time to time it has occurred, to disclose a very considerable increase in the amount on which payment has to be made, [A. laugh.] I do not now refer to any increase due to the discovery of malpractices, for I am not aware that they vary much from one year to another; but to an increase occasioned by the progression and steady growth of the wealth, of the country.

The amount brought to account for payments from China in liquidation of the Indemnity, which I estimated at £170,000, has been £212,000. I might, perhaps, have taken credit even for a larger sum, because there is no doubt that the Treasury chest in China has received, and has applied for the purposes of the public service, further sums of public money since the date of the latest account which has reached us, that date being the 30th of last September. It has, however, been thought best to take no credit beyond the date up to which we have received the account.

The revenue from Stamps shows an excess of £369,000 beyond the estimate, and the head of Miscellaneous receipt shows a similar excess of £266,000. But there is nothing which requires me to dwell upon these or upon some other branches of the revenue; I, therefore, pass to one to which I desire to direct the particular attention, of the Committee.

The revenue of Excise shows a large deficiency in comparison with my estimate, and likewise some deficiency, though it is not considerable, as compared with the revenue of the previous year. The apparent deficiency, as compared with my original estimate, is £1,185,000. From this sum, however, we have to deduct the sums paid for hop drawback, which amount, I believe, to £160,000. There still remains, therefore, a deficiency of somewhat over a million in this branch, as compared with the estimate. For practical purposes we may consider this deficiency as divided between the two great articles of malt and spirits. The malt duty, which had been estimated at £5,800,000, produced within the financial year only £5,392,000, showing an apparent deficit of £408,000. In order to comprehend the nature of this deficit, it is necessary to take into view the variation of the seasons. The season of 1861–2 had been not only a very favourable, but a particularly early season. The barley, being in excellent condition, was brought to malting at a very early period; and as the time of receiving the duty depends upon the time when the grain is malted, an unusual proportion of the entire receipt for that season entered into the revenue of the; financial year. But the season of 1802–3 was a late season, and in consequence we have received during the financial year a smaller proportion than usual of the entire revenue from malt. In consequence, although the receipt from malt, as I have stated it, falls much short of the estimate, yet the portion of duty from the malting of 1862–3 which is still outstanding, will, as we anticipate, show an improvement upon the revenue of the preceding year. I may, however, observe generally, that the estimate of this important revenue is of necessity more uncertain now, that the payment is more promptly exacted, than it was at the period when very long credit was allowed after the charge had been taken, and when, accordingly, it was known at the period of the financial statement what would be the actual receipt for the coming year. The duty was then charged in one year and received in the year following. It is now, as to a large part of it, both charged and received in the same year.

The revenue from spirits, which was estimated sit £10,000,000, has amounted only to £9,394,000, showing a deficiency of £606,000 as compared with the Estimate. On this item, together with the former one, I hope the Committee will fix its particular attention. I can feel no surprise and no disappointment at the present state of the Revenue derived from malt and from spirits. The deficiency under these two heads of receipt is the true representative of the distress which weighs upon the labouring class in Lancashire and in Ireland. In all cases of serious pressure upon that class, economy must be effected somewhere, so soon as means and credit are exhausted. No great economy can usually be effected upon the necessaries of life; it must therefore be effected upon what we may term either its comforts or its luxuries. Within one of these descriptions stimulating liquors must be held to fall. There is no wonder, I think, that we see a deficiency of a million in the receipt of Excise; the true wonder is that we do not see much more of corresponding decrease in other branches of the revenue.

I pass, however, to a more particular consideration of the case of the spirit duty, which deservedly attracts a special interest, on account of the high price to which the duty has, by successive steps, been raised. The assertion has been confidently made—first, that the revenue expected from the augmentation has not been realized; and secondly, that the failure to receive it has been due to an increase of illicit distillation. My reply is this:—It is undoubtedly true that the whole revenue anticipated from the augmented spirit duty has not been realized, but a considerable part of it has been received; and, without doubt, we must have received another considerable portion, had it not been for the distress of Lancashire and of Ireland. The total amount of revenue which we were led to expect from the last augmentation, in 1860, was £1,400,000. Of this, £1,000,000, it was thought, would be from home-made spirits, and £400,000 from foreign and colonial spirits. The latter of these sums, from foreign and colonial spirits, has been received; and the figures I will now give to the Committee with respect to British spirits will, I think, demonstrate, that although we have not received nearly what we expected, we have obtained some part of it. For this purpose it is necessary to take neither the natural nor the financial year with a view to our comparison, but the year ending at the date nearest the time when the new duty was imposed. The new duty was imposed in July 1860. In the year ending June 30, 1860, the receipt from spirit duty appears to have been artificially increased by very large deliveries at the commencement of the year, which took place under a belief that an increase was about to take place. I therefore omit the year ending June 30, 1860, and go back to the year ending June 30, 1859—a year, I may add, of general prosperity. With the receipt from spirit duty for that year I will compare the receipt for each of the three years beginning with July 1, 1860. In the year ending 30th June 1859 the revenue for British spirits amounted to £9,400,000. That was the last year but one of the 8s. duty. In the first year of the new duty ending June 30, 1861, it was £9,702,000; in 1862, it was £9,988,000; and in 1863, £9,837,000. It would thus appear, that founding the comparison upon this basis, we have received an augmentation of about £400,000 per annum from British spirits, besides £400,000 more from foreign and colonial spirits; and if this be so, we have, notwithstanding the distress which prevails, received more than half of the revenue which was originally anticipated. I ought not to omit to notice that the figures I have given for the year 1863 are founded upon estimate so far as regards the last quarter of this year, but upon an estimate which may, as we believe, be reasonably relied on.

At the same time, Sir, whatever degree of uncertainty may still hang about the question of fiscal result, the material point after all has always, in the view of the Government, and, I believe, in the view of Parliament, been this — not whether we have failed to receive the whole amount we had anticipated, but whether the failure is due to illicit distillation or is to be ascribed to other causes. This is, as I think, the only question which ought to exercise a practical influence upon the judgment of the Committee. With regard to commodities in general that are consumed by the public, and that are also taxed for the Exchequer, the Legislature proceeds upon the principle that the sum of money which may be required for the purposes of the State should be levied from an area of consumption as extended as possible. I am not aware that we have ever adopted this principle as one applicable to taxation upon ardent spirits. I think the principle of legislation, with respect to spirits, has rather been that we should raise as much money as we can obtain from an area of consumption as small as we can make it; and the only limiting consideration has been, that we ought not to stimulate illicit distillation. The question, therefore, is—whether, owing to the augmentation of the duty upon spirits, illicit distillation has been extended. With regard to that question, I have been careful to welcome information from whatever quarter. From time to time it has been stated to me, either by persons interested in the trade, or by other persons, that illicit distillation not only prevails, but has been largely increased. I do not doubt the sincerity of these allegations, but it has been found almost universally impossible to obtain facts and details in support of them. On the other hand, it is the firm conviction of those who superintend the collection of the Revenue in the three kingdoms, taken together, that illicit distillation has not been augmented, but reduced; and, as far as Ireland is concerned, which is a principal point of danger, the evidence to this effect, founded upon Returns, would appear to be quite conclusive. There is no trade within the country, so far as I am aware, of higher intelligence and respectability than that of the distillers; and I think that even their testimony, though I am far from saying that it is uniform, in some degree concurs with the testimony of the revenue officers throughout the country, and sustains me in expressing the opinion that there has never in recent times been a period when there was so little illicit distillation as during the last three years. We may, therefore, be reassured with respect to any misgiving on this important head, which the state of the revenue from spirits might at first sight suggest; and it remains a matter of lively interest to draw a comparison between the different effects which have been produced by distress, since no one can doubt that distress has had an important influence upon the revenue from Excise and from Customs respectively. We trace the effect of distress wholly or partially in the diminished revenue from malt and spirits. We fail to fail any similar diminution in the revenue from tea, from sugar, or from, tobacco. The more we examine the figures and the state of facts, the more we observe the comparatively unchecked and prosperous progress of the revenue from Customs, with the very serious check given to the revenue from Excise—the more, I think, we shall be disposed to embrace a conclusion which appears to me to be established by sufficient evidence, which is without doubt of a gratifying character, and which appears absolutely necessary for a full comprehension of the case. I mean, Sir, the conclusion that a change of habits is slowly and gradually, but steadily, making its way among the mass of the people, and that a transition is taking place from the use of the stronger and more inflammatory beverages to the milder and more wholesome drinks.

I proceed now, Sir, to compare the general revenue of the year which has last passed with the revenue of the year which immediately preceded it, and I will endeavour, by some analysis of the figures, to present them to the Committee in what I believe to be, for practical purposes, a really accurate form. I need scarcely observe, with reference to the dry and summary statement of revenue which is published on the last day of the financial year, that it is quite impossible through the figures themselves to convey the needful explanation of the figures, nor can this explanation be adequately given except on the authority and under the responsibility of the executive Government. The public is, therefore, of necessity subject for a time to a good deal of misapprehension with respect to the state of the revenue. One main source of this misapprehension is to be found in those alterations of duties which take place from time to time, and the effect of which cannot be traced upon the annual statements without much care and much information in detail. Another source of it is in the item called Miscellaneous. It is commonly supposed that this item simply consists of certain branches of revenue somewhat minute, which it is not worth while to enumerate with separate names, and which, therefore, are combined under this one head. But, in point of fact, the proper full designation of this head, and the form under which it stands in the regular public accounts is not Miscellaneous Revenue, it is Miscellaneous Receipts. The distinction between receipts and revenue may at first sight appear fanciful, but it is real, and even important. A very small portion of this branch of our income, which has now grown to a considerable amount, consists of revenue at all. During the year just expired only from £200,000 to £300,000 properly could be so designated; all the remaining sums which make up the head of Miscellaneous Receipts depend upon the rules which have been adopted by Parliament with respect to public accounts and the voting of public monies; and they consist partly of repayments, in one form or another, of monies which have been voted by the House, partly of equivalents for those monies, as, for example, in the case of the sums realized by converting into money what are called "old stores." If, therefore, we wish to institute an accurate comparison between the revenues of two successive years, the safe way is to begin by deducting from both accounts what appears under the head Miscellaneous. If the Committee will follow me, bearing in mind what I have now stated, I will endeavour to lay before them the revenue of last year as compared with that of the year preceding; and we are now dealing with a matter of importance, for this comparison will enable us to measure the elasticity of the resources of the country under those circumstances of peculiar depression to which I have referred. The gross revenue for the year 1861–2 was £69,674,000; but if we deduct the Miscellaneous receipt and the China indemnity, the real revenue, in the strictest sense, was £67,927,000. The gross revenue for the year 1862–3 was£70,608,000; but deducting, for comparison, the Miscellaneous receipts, the China indemnity, and a sum paid to the credit of the revenue from Stamps, which did not appear, on either side, in the accounts of the previous year, amounting altogether to £2,213,000, the total revenue of the last year, for the purpose of the comparison, will stand at £68,490,000, against £67,927,000 in the preceding year. But as the figures that appeared in the newspapers were too favourable for the year 1862–3, so the figures I have now stated would be too unfavourable if they were left without any correction; because, in order to obtain a true comparison, I must deduct so much revenue as was received in 1861–2 from sources which were closed in 1862–3. Those sources were three in number. In 1861–2 we received for one quarter's income tax, at the rate of 10d., together with arrears, a sum of £350,000, which was lost to the revenue in 1862–3. Again, we had received in 1861–2, on account of paper duty, after deducting the drawback, a net sum of £351,000. Thirdly, we had received in that same year, in the shape of hop duty, a sum of £211,000. These three items, taken together, amount to £942,000, which, for the purposes of this comparison, must be deducted from the revenue of 1861–2. When the deduction has been made, the amounts of revenue as received from the same sources, in the two years respectively, will be £66,985,000 in 1861–2, and £67,790,000 in 1862–3; showing an increase of revenue in the latter year to the amount of £805,000. Now, Sir, this is not of itself a very large or striking augmentation, but it is in my opinion an eminently satisfactory result if considered with due regard to the peculiar circumstances of the time. It is a result which I could not have ventured to dream of anticipating this time twelve months, had I then been aware of the severe pressure which was not only to continue, but indeed to undergo serious aggravation, both in Lancashire and in Ireland.

I will not trouble the Committee by stating in detail what has been the growth of the revenue during the last year as compared with a series of former years since the year 1858. But I will observe generally, that after going through the same process of rectification which has already been adopted in making the com- parison between the years 1861–2 and: 1862–3, it exhibits an average annual increase of very nearly the same amount as that which I have stated for the last year. In strictness it has been a trifle more, for the average annual increase which has prevailed during the four years from 1858–9 to 1862–3 has reached the sum of' about £875,000.

There is, however, one branch of the revenue in 1858–9, as compared with the last year, in relation to which I may still venture to offer the Committee some information, inasmuch as it is material that they should see what has been the effect upon the Customs revenue of the very extensive changes, reductions, and remissions of duty which have since taken place. I find that in 1858–9 the gross revenue from Customs was £24,118,000; deducting charges of collection, which were £1,063,000, the net revenue was £23,055,000. In the year 1860–1 extensive changes were made in the Customs revenue which involved a balance of remissions and reductions over augmentations to the extent of £2,450,000. Now, the gross Customs revenue in 1862–3 amount to £24,034,000. We have to deduct the charges of collection, which amounted to £991,000. The net revenue then stands at £23,043,000, against nearly the same sum, namely, £23,055,000, four years earlier, nearly two millions and a half of duties having been remitted during the interval. In 1859–60, however, the revenue from Customs had been higher.

I now come, Sir, to the estimate of the Expenditure and Revenue for the current financial year. For the current year the charge for Funded and Unfunded Debt, according to the present state of the statutes by which it is governed, is estimated at £26,330,000; the charges on the Consolidated Fund at £1,940,000; the Army Estimates are £15,060,000; the Navy Estimates are £10,736,000; the Estimates for collection of Revenue, £4,721,000; the Miscellaneous Estimates (so far as they have been already presented to the House), £7,692,000. There will be, however, under the latter head some charges dependent on questions not yet finally adjusted, the amount of which I am not yet able to state to the Committee with the same degree of precision. Of these charges the most important part is connected with public buildings; but besides the Miscellaneous Estimates the Packet Estimate: has not yet been finally settled. The arrangements with the Galway Company are not yet so far matured as to enable Her Majesty's Government to make a positive proposal, or even to state what course it may be their duty to take with respect to it; and the arrangements with respect to the West India Mail Service are still under consideration. The Committee will observe, therefore, that I cannot now present to them the precise figures which relate to those matters. And I may add, there is a Bill before Parliament, which I hope may become law, and which proposes, for the benefit of the public, to enable us to make a further conversion of stock, now held by the National Debt Commissioners, on behalf of the savings banks, from the form of perpetual into that of terminable annuities. If that Bill shall meet the approval of Parliament, it will eventually add £140,000 to the annual charge of the debt; but for the present year the increase of charge will not exceed £70,000. I have then before me three items of expense which are still uncertain. First, as to Miscellaneous charges, principally for Public Buildings; secondly, as to charge for Funded Debt; thirdly, as to the Packet Service. On account of these three items, including the entire charge of the Packet Service, I add the sum of £1,270,000 to the sum of £7,692,000 which represents the Miscellaneous Estimates already before the House. The two together make £8,962,000, and give us a total of £67,749,000 as the probable or estimated expenditure for the year 1863–4.

I do not, of course, include in the Estimate those extraordinary charges for fortifications which Parliament decided in the year 1860 to meet by a different method of provision.

But, Sir, I must not forget that the statement I am now making forms, in some measure, an answer from the Government to the Resolution adopted by the House last year. I therefore proceed to put this estimate of expenditure in comparison with that of former years. It is less than the actual expenditure for 1862–3 by £1,553,000, and higher than that for 1858–9 by £3,085,000, although the charge for the Debt was then greater by £2,197,000. The estimate of revenue stands as follows:—The Customs revenue estimate is £24,180,000. For the purpose of affording a clear understanding of this account to the Committee, I assume a renewal at the present rates of all taxes which expire this year. In estimating; the Customs at £21,180,000, there is taken into account the alteration in the tobacco duties. It is not easy to estimate exactly its effect on the revenue, but I take it at £100,000, which sum is included in the estimate. The estimate for Excise is £17,600,000. The receipts for the Excise last year were less than this amount; and after the statement I have made, with respect to the distress prevailing in certain portions of the country, it will naturally be asked why I anticipate an increase in this branch of the public revenue as compared with the last year, when the actual receipts were£17,155,000. But the receipts last year, before they reached the Exchequer, were subject to various deductions, such as from £150,000 to £160,000 on account of hop drawbacks. Besides, the outstanding portion of the malt duties on the current year is better than the corresponding portion was for the last year; and this, together with certain minor augmentations due to the gradual growth of the licence duties and other duties of Excise, places the estimate for Excise at £17,600,000. The Stamps I take at £9,000,000, Taxes at £3,160,000, the Income Tax at £10,500,000, the Post Office at £3,800,000, the Crown Lands at £300,000, the Miscellaneous at £2,500,000, and the China Indemnity at £450,000. Here, again, it will be asked why so much larger credit is taken for this item than in previous years. The answer to that is twofold. First of all, in the year which has just elapsed, we made a large payment to the merchants in China of nearly £200,000—£192,000, I believe—on account of their claims, and there is no corresponding item of deduction from the receipts of the present year, which will therefore come net to the public service. Again, though I have only taken credit in the account of last, year up to the 30th of September, I believe in the present year we shall be able to take credit up to the 31st of December; in fact, £450,000 from this source is an Estimate which I feel perfectly justified in making. All these items together bring up the estimated Revenue for the year 1863–4 to £71,490,000. The estimated Expenditure for the year is £67,749,000; consequently, there is an excess of estimated Income over estimated Expenditure of £3,741,000.

The Committee will, perhaps, incline to the opinion, that when the Government has no impediment remaining in its way to prevent it from proceeding to the agree- able duty of the remission of taxation, it is idle for them to trouble themselves with the consideration of any questions tending to the augmentation of revenue. But, at the same time, in the complicated and extensive financial system of this country, anomalies, great or small, are from time to time brought to light; sometimes from the representations of interested persons, sometimes because they are found to have been anomalies when originally embodied in the law, and sometimes because provisions that were originally altogether unobjectionable have become anomalous, and even mischievous, in consequence of the alteration of circumstances. It is the duty of the Government steadily and continuously, and in some considerable degree without reference to popular pressure, although always paying a due regard to popular opinion, to remove those anomalies upon fitting occasions by judicious proposals to Parliament for their own sake as well as for the sake of the revenue to to be obtained by the change.

The first change in our revenue laws proposed in the present year which has a bearing upon financial matters, though mainly relating to trade, is that which has to do with the tobacco duties, and which has already become law. I have already taken credit for the gain likely to result from that alteration of the law in the Estimate of the Customs revenue which I have laid before the Committee. The next claimant upon our attention is one familiar to the Committee—I mean the duty on chicory. It is not necessary that I should dwell upon it at any length—the state of the case is very simple. There appears to be a very general agreement among persons of authority both in the Revenue Departments and in the commercial world, that as chicory and coffee are used strictly for the same purposes in a combination together which is indistinguishable to the ordinary consumer, they ought to pay the same tax. Then comes the divergence of opinion; because one portion of the world says, "Raise the duties on chicory," and the other says, "Lower the duties on coffee." If that be, as it seems to be, the only alternative, my own inclination is very decidedly to raise the duty on chicory, not only because it tends to greater gain, but for these two very plain reasons:—At the present moment coffee is lightly taxed in proportion to its value, when we compare it with tea or any other article with which it can be compared; and, conse- quently, if we lower the duty upon coffee, we hazard great part of a very considerable revenue—some £500,000 — without having any hopes of so acting upon prices, or improving the circumstances of consumption, as to give any sensible relief to the people, or of producing any corresponding or even applicable improvement to the revenue. I propose therefore to remove the existing anomaly by raising the duty upon chicory. I propose that the duty on foreign chicory shall be fixed at 26s. 6d. per cwt., which sum, after a fair allowance for additional waste in the preparation of the article, will, we think, correspond with the present duty of 28s. per cwt. on coffee, With respect to chicory grown at home, we propose to fix the duty of Excise, according to precedent, not less than to equity, with a small further allowance. We propose that the duty of Excise shall be 24s. 3d. per cwt. I may take this opportunity of stating, that while with regard to the other Resolutions which I am about to introduce to the Committee we shall propose to take them on this day week, and after that to introduce a Bill in which they shall be embodied; with regard to the Resolution on the chicory duties I shall take the course usually adopted in such matters, and shall ask the Committee to pass it at once, of course without prejudice to the ultimate judgment of the House on so grave a question, for the single purpose of preventing the release of the article at the present duty to-morrow morning.

There are several other proposals, of no great magnitude, which I shall endeavour to pass over, allotting to each, if I can, little more than a single sentence. It appears to be an evident anomaly in the law, as it is now worded, that strong liquors sold at clubs are sold without any licence. These clubs are, for all purposes we are now considering, in direct competition with coffee houses and hotels, which pay licence duties. We propose that the clubs shall pay the same rates of licence duties as the occupiers of hotels and coffee-houses; but, of course, effectual provision will be made to prevent any annoying accompaniment—such as interference at the discretion of a magistrate, or liability to the visitations of the police. The question is of little moment as to revenue, but is a question of equality of taxation, and my whole object is to establish that equality. The next proposal I have to submit to the Committee is one of a similar character, and requires only brief explanation. At present, this case not unfrequently arises. A person applies to a justice of the peace for a licence to sell strong liquors. He obtains a licence to sell spirits; and along with his licence to sell spirits he takes out a licence to sell beer, for which he then only pays £l. He afterwards drops the licence to sell spirits, and continues the licence to sell beer at the same price; but every other person wanting to sell beer, and not arriving at it through the medium of a spirit licence, pays £3 6s. I therefore propose that a man who arrives at a beer licence through the medium of a spirit licence, but who is a beer-seller, shall pay the same duty as he who takes it out at once without any such process.

I am sorry to detain the Committee with these details; but all persons interested in the financial proposals of the year expect, as a matter of course, that at this season of the year a full statement shall be made of those proposals, and it would not be fair to those parties it I were not to deal with all that affects them in detail. I proceed to mention another case.

A year or two ago we removed a great anomaly, by which no person except a publican was permitted to sell less than a dozen bottles of wine; but there is a similar anomaly still existing, which forbids every one except a publican from selling less than two dozen bottles of beer. I propose to remove that anomaly, and to give an additional licence for selling a less quantity of beer to those persons who are beer-dealers, that is to say, sellers of beer not intended to be consumed on the premises. The Committee may rest assured that this change will be equitable and convenient, nor is it likely to entail any risk of abuse. There is another question which also demands our consideration, and is of considerable interest to the parties concerned. The proprietors of omnibuses have been before the Chancellor of the Exchequer, seeking for a reduction of the duty to which they are liable. Their case really divides itself into two parts. One of their complaints is of the amount of duty they have now to pay; and the other of the undue competition they have to sustain. With respect to the amount of duty they have to pay, it is only a quarter of what the proprietors of public carriages had to pay twenty-five or thirty years ago; and so lately as about eight years ago this House took the matter into its own hands, and did grant a considerable relief to these parties, This adjustment, recent as it is, may, I think, be held to be a settlement of the question as to amount of duty. I confess it appears to me that the only case they can possibly make at present is that of undue competition. The proprietors of stage carriages in the country complain that carriers, who profess to travel under four miles an hour, and who also carry passengers, pay no duty whatever. It is impossible, as is alleged, to know whether they do travel at four miles an hour or not; but their carriages are not of a character to pay at the same rate as stage coaches; and what I propose is, that all small carriages carrying passengers for hire shall pay half the duty now paid by proprietors of stage carriages; thus combining a general relief in favour of small carriages with the removal of the exemption as regards those small carriages which are said to travel under four miles an hour. The other part of the complaint of the omnibus owners is with respect to the competition of the railways and of the unequal manner in which the railway duty, as now imposed, is found to work. The House is aware that railways are supposed to pay 5 per cent on their passenger receipts. But in 1842 a sort of compact was made between the Government and the railway companies, and it was ratified by the legislation of this House, under which the railway companies undertook the obligation to run a certain number of trains at fares not exceeding one penny per mile, upon the condition of the exemption of those trains from taxation. It may be said that this was a covenant then made between them and the Government, and that if the exemption be discontinued, they are released from the obligation of running the trains. That is so, as far as regards the trains contemplated by the Act of 1844; but that Act did not contemplate the trains which I now have principally in view, and the plan we propose is more favourable to the railway companies than the compact or covenant of 1844. The question whether the legal obligation should be continued is not within my department, and is one upon which I am not prepared to give any strong opinion. But since that time an anomalous state of things has grown up. Although exemptions are, as a general rule, to be strongly condemned, the case of this exemption is peculiar; for at the time when it was granted, in 1844, it ap- peared that those of the poorer class who had occasion to travel were actually losers by the introduction of railways, and Parliament, in order to apply a remedy to so great an evil, made a special arrangement for exempting trains of a peculiar class. But a system has grown up under the provisions of the Act, as they have been interpreted, which gives to the whole of what is termed excursion traffic an entire exemption from duty, while the regular passenger traffic is liable to a tax of 5 per cent on the receipts. The Government submit roost confidently to the House that that is an anomalous and injurious state of things. In the first place, it is wrong, unless for special and strong reasons, to draw a distinction between one kind of traffic and another, and to give a premium to railway companies to cultivate one kind of traffic in preference to another. In the second place, it is not only wrong, but absurd, to give that particular premium in the case of what we term excursion traffic. It, no doubt, is very useful and valuable in its way, but at the same time seems to be attended with considerable inconvenience and considerable danger. Far be it from me to say that Parliament should presume to discourage or repress excursion traffic; but we ought not to stimulate and force it by direct pecuniary encouragement at the expense of the general traffic of the country. The effect of this singularly anomalous arrangement is, that while railways are supposed to pay 5 per cent on their receipts, they only pay between 3 and 3½ per cent; and in the case of some railways, which deal only in a particular kind of traffic, not much above 2 per cent; and so far they may, perhaps, be thought to give a fair subject for complaint to competing interests. What we propose is this — to destroy the exemption altogether, and to commute the payment of 5 per cent with exemptions into a payment of 3½ per cent without exemptions. The result will be nearly the same. It will be slightly in favour of the Treasury; but we shall establish a sound principle instead of an unsound principle, and an equal state of things between rival interests.

There is another small matter which I have to mention. We propose to assimilate the law in Ireland as to charitable legacies to the law of England. Charitable legacies in Ireland at the present moment are insignificant in amount, but they do not pay legacy duties. We propose to repeal that exemption.

This, however, connects itself with a subject of much greater importance, so far, at least, as principle is concerned, to which I desire now to ask the attention of the Committee. I refer to an exemption which is granted by the Income Tax Acts to what are termed "charities," and to corporations, with respect to such part of their income as they shall prove to have been expended for charitable purposes, as the term is construed by the law. I proceed to state to the Committee the origin and grounds of this proposal, which I earnestly hope—nay, I confidently expect, will receive the sanction of the Committee.

It will be remembered that in the year 1859 the Government announced its intention to ask Parliament to extend to corporations the succession duty, which, in that year, was for the first time imposed upon real property and upon settled personalty. We had not time to carry through legislation for the purpose in that Session, but the principle appeared to receive the decided approval of the House. It appeared to be felt that there was no reason in the world why corporate property should enjoy a benefit not enjoyed by the property of individuals, or, in other words, should receive a premium at the expense of the property of individuals; for it must be borne in mind, that in every case exemption means a relief to A at the charge of B. In considering, however, the question of a succession duty for corporations, which have no succession, it became obvious that the form of the tax ought to be commuted, and that it should be an annual duty, instead of a duty recurring only at long intervals; but further the investigation of the subject could not but impress the Government with the view of this remarkable fact. In this country we have levied, during the financial year which has just expired, about fifteen millions of hard money, by direct taxation of various kinds—Income tax, Probate duty, Legacy duty, Succession duty, House tax. Every shilling of this great sum is taken out of the pockets of individuals. Property, held in mortmain, held in the hands of corporate bodies, or under trust for charitable purposes, contributes, as I shall be prepared to show, nothing whatever to this great sum of fifteen millions. I venture, Sir, to say that this state of things is unjust. It is not fair that the taxpayers of the country, to a very large proportion of whom taxation is, and must be, a serious burden—that the fathers of families, men labouring to support their wives and children, should be taxed at an augmented rate, in order to afford the luxury of exemption to bequests, for what we term charitable purposes; for in the main the property which enjoys this exemption is property which has been devoted to its present purposes, not during the life-time of the donor, but on his deathbed, or by his will, and when it was no longer his to enjoy. We doubt the policy of encouraging, at the charge of the public, particular persons to devise methods of thus disposing of their wealth, which may be attended in some cases with much benefit, in others with very little; but which very generally tend to gain credit and notoriety for the individual himself, which he probably would not otherwise have enjoyed. As for example, sometimes by his name posted up in enormous letters; sometimes by appointing bodies of governors, who may meet together at sumptuous banquets from year to year in the name of charity, and thus periodically glorify some pious and immortal memory of a founder. I cannot now attempt to draw any full or just picture of this subject, nor do I wish to be understood as giving utterance at present to one single word in disparagement of these institutions, except up to the point that they ought not, as I urge, to enjoy that very large amount of positive pecuniary preference, at the cost of the general community, which is allowed to them by the present provisions of the law.

Let me now advert to a point which is of great importance with a view to the just consideration of the case. At the time when the exemption on behalf of charities was first granted, the practice of the State was very different from, what it now is. One of the main objects of endowed charities is education; and for education at that period the State made no provision. Another main purpose of these endowed charities is to relieve the poor. At that period the State undertook no expenditure for the poor, apart from local taxation; still less can it be said that the public then undertook any expenditure, directly or indirectly, on account of charities themselves. How stands the case now in these three respects? The Votes which are submitted to this House for the present year, with a view to those purposes, include—First, for Education, £1,111,000; for the Poor Law Board, £227,000; for Universities, £35,000; and for the administration of these charities themselves an item of £18,000, which is money taken from the taxpayer and which by no means represents the total of direct charge on their account. So then the public are now called upon not only to maintain and improve the property of these charities by means of our general taxes and of our commercial legislation, without their making any contribution themselves, but moreover the State is required to bear the charge of costly investigations, and to provide the expense for maintaining considerable establishments in order to assist, facilitate, and cheapen the management of these same charities. There are other points of the case into which I do not intend to enter at large; one is this, that it is hardly possible to construe in a satisfactory manner the meaning of the law as to what are and what are not charities for the purpose of taxation; the law is therefore of necessity applied, not with certainty and precision, but roughly and hand over head as it can best be done. The opinions of Law Officers of the Crown have thrown considerable doubt upon parts of it. If a person leave property for the benefit of the poor of his parish, one would suppose that this, in the sense of the law, must be charity; but no, this it has been ruled is not charity, because it simply goes in aid of the poor rate, and in relief of those who pay it. Other questions of the most perplexed description have arisen, and the the practical difficulties in the administration of the law are hardly to be described. I have stated that we pay at present a sum of £18,000 a year for the maintenance of the Charity Commisssion, an expenditure which I believe to be highly beneficial, in particular to the charities themselves. But, over and above this, the Revenue Department is put to serious expense in the endeavour to execute the law, from the excessive complexity and minuteness of the claims for exemption, and from the difficulties attending their verification. A single institution has property in forty, fifty, nay, it may be, in a hundred different parishes; and on each of these properties are charged severally a multitude of small bequests, into the separate investigation of which it is scarcely possible to enter with a view of ascertaining whether they are for purposes which the law regards as charitable or whether they are not. We propose, therefore, that the exemption of charities generally shall cease to exist, partly on account of the altered practice of the State and the heavy charge it undertakes for charitable purposes, partly on account of the difficulty and confusion encountered in the attempt to give effect to the exemptions, and partly on account of the sound general principle that all property ought to contribute to the taxes of the country, which, if they are justly and wisely imposed, ought not to be regarded as a penalty on property, but as the necessary means of rendering property available for the effective use and enjoyment of the owner.

There are, however, certain portions of the exemption which it may be well to keep alive. I mean particularly that part of it which affects the buildings belonging to hospitals, colleges, and charities of various other descriptions. We do not propose to withdraw this portion of the exemption, and simply on the practical ground, that whereas a main part of our view is to simplify the law, and make it capable of certain and uniform execution, we should impede our own purpose were we to attempt to tax generally buildings not occupied for profits, as it would be extremely difficult to arrive at any equitable principle on which they and the sites they stand upon could be valued. In the case of places of Divine worship we propose to go a step further, and to allow the exemption to continue in favour of the funds devoted to keeping them in repair.

I wish also to refer for a moment to what are termed voluntary subscriptions, and institutions dependent upon them, lest it should be apprehended that they are affected by the proposal of the Government. They stand on a totally different footing from the exempted charities, and they are not charities at all in the eye of the law. No tax would reach them, as there is no person who would be assessed in respect of them. The property of endowed charities will be liable, because it will be taxed at the source; but all income from voluntary subscriptions will remain as it is now, taxed neither more nor less; for in truth it is already taxed in full, as the subscriptions usually form part of incomes which have paid the tax already.

Another reservation appears to us to be required by the justice of the case, and it is as follows: — Whenever there is an individual whose total income is under £100, and who is already in receipt of a portion of that income from a charity, we propose to provide that such portion shall in no case be liable to any abatement on account of income tax, until the interest of such individual shall have determined. For we consider that such a person has acquired a beneficial interest in the grant that he enjoys; and if he were subjected to abatement on account of income tax, we should place him in a worse position than other persons having an equal income, and that in derogation of rights acquired previously to the passing of the enactment we propose. This may be regarded as a matter of detail, but it is one which I have thought it material to explain, at least in general terms.

There is much more to be said on the subject of charities and their exemption; and a good deal of perplexity is involved in some parts of it. I will, however, for the present, forbear to notice many of the points to which I may find occasion to advert on a future opportunity.

I am not able to state with precision the financial result of the proposal we now make. This much, however, we do know, that we make an abatement or repayment of income tax on property amounting to two and half millions in yearly value. We further know that a very considerable amount of real property in various parts of the country is discharged from assessment altogether—a measure, I believe, adopted without express legal authority, but apparently with a view of saving expense in minute investigation, which would otherwise constantly recur. It is, however, probable, indeed, it is almost certain, that in many cases portions of this property have passed from the possession of charities into the hands of private individuals, who now pay no tax upon it; in fact, of a considerable portion of it we have entirely lost sight; but so far as we can estimate the effect of the exemption the loss which it causes can scarcely be less than £100,000 a year. If it be removed, we shall obtain three-fourths of this sum, or £75,000, during the present financial year. The new minor charges to which I previously referred are likely to bring in about £58,000 for the year; the two together make £133,000, which, added to the surplus I before stated of £3,741,000, makes £3,874,000.

I have now, Sir, to state the manner in which we propose to deal with this surplus of estimated income and estimated expenditure. And the first subject which I have to mention is one to which I can scarcely allude without a pang to my self-love: I refer to what is termed the penny charge on goods inwards. It was enacted in 1860, and it is sometimes called a small, sometimes a petty charge, according to the inclination of the person who is describing it. It was originally submitted to the House in the belief, on the part of Government and of their advisers, that it was capable of being framed with great simplicity, and of being levied without entailing any delay or hindrance in the course of trade. I am bound to admit that this expectation, as we soon found, could not altogether be realized: it was requisite, however, to persevere with the proposal for the purpose of obtaining a sum of money necessary in order to enable us to give effect to what the House and the country justly regarded as great improvements in our commercial legislation and administration. I conceive that the great expansion of the trade of the country since those improvements were effected amply shows that this charge has not constituted a capital grievance. Still, I own that an amount of inconvenience is found to attend the operation of it, which, is considerable in proportion to the revenue it yields. It may be stated generally that it is liable to that class of objections which attach to droits de balance, or, as we call them, nominal duties. We have now, I am happy to say, arrived at a condition of the revenue which enable us to dispense with this particular payment, and I accordingly propose that on and after the 1st of July the penny charge shall cease and determine.

Together with the penny charge inwards, I have to mention another charge of 1s. 6d. levied on every bill of lading outwards. Both the intention and the operation of the two are altogether distinct. The charge of 1s. 6d. was imposed mainly with a view to statistical rather than to fiscal objects; on the other hand, there is no delay or obstruction whatever to the course of trade in connection with this charge. We consented last year to refer the consideration of it, together with the former one, to a Select Committee presided over by my hon. Friend the Member for Honiton. That Committee undertook to examine into the value of the statistical information obtained from the bill of lading in connection with this charge; and they reported that all needful statistical information could be obtained without it. We have assented to the reference of this question to the Committee, and we felt that the merchants of this country are themselves the parties most interested in procuring good commercial statistics, and that their authority is accordingly of great weight in such a matter. Under these circumstances, and as the revenue derived is not very important, we have thought it well on the whole to treat this charge in the same manner as the penny inwards, and we therefore propose that from the same date the 1s. 6d. duty shall disappear.

The total revenue derived from these charges amounts to £191,000. As that revenue will cease on the first of July, we shall lose this revenue for nine months out of the twelve: I must therefore deduct on account of the repeal of these charges £142,000 from the surplus which I have mentioned. There have been times, Sir, in the history of other generations when it has been considered not only warrantable, but highly laudable, for parents to bring their own children to the scaffold or the axe. I now find myself in that predicament. I offer up these children of mine with the greatest cheerfulness and good humour, as far as I am concerned, on the altar of the commerce of my country.

The next subject which I have to submit to the notice of the Committee is one to which I feel anxious to draw its particular attention. It is of greater magnitude than the matters which I have just mentioned; but it is not, at the same time, of such magnitude as to dispose of a very large portion of the surplus at our command. It relates to what may be called the "minor incomes" now liable to the income tax. I must begin by reminding the Committee of the course with respect to it which has been taken at former periods by the Legislature. When Mr. Pitt first introduced the income tax, £60 was the lower limit of the incomes to which the tax began to attach; but it began to attach at that point in a form so mitigated as to be of very little financial value, and we do not propose to return to such a provision in the construction or rather re-construction of the tax. Mr. Pitt fixed the limit upwards at £200, and it was only on incomes at and above that amount that the full force of the tax fell. A very complicated arithmetical series of deductions was submitted by him to Par- liament, which provided that the deductions should grow larger and larger, as the incomes became less and less, down to the point fixed. I have cited the authority of Mr. Pitt simply to show that in his view, and in the view of the Parliament of that day, £200 constituted the limit at which the full operation of the tax ought to begin to attach; and likewise that £60 was the sum which as they thought might properly be withdrawn from the scope of the case altogether. Now, Sir, it is undoubtedly true that since the time of Mr. Pitt the wealth of the country has enormously increased, and that with that enormous increase in wealth the relative value of a given pecuniary income of so many pounds sterling has become diminished. An income of £200 a year at the present day gives less consequence and less social standing to its possessor than it did in the time of Mr. Pitt; and an important part of the proposal I am about to make is, that we should fix £200 a year as the limit below which some deduction or favour in some form should attach to incomes liable to the income tax.

At a later period, under the pressure of war, the limit of the full tax was carried down to £150. When Sir Robert Peel revived the tax in 1842, he revived it at that amount, and he granted beneath that point a total exemption; but he framed his measure entertaining the hope of the early extinction of the tax. When, in 1853, the tax was renewed for seven years—and again with a hope of its extinction which proved to be fallacious—the limit of the tax was moved downwards, and fixed at £100 instead of £150. The ground upon which that was done, and I think justly done, by Parliament, was this:—It was shown that no class of the community had benefited more by the general extension of trade and the increase of profits resulting from the imposition of the income tax, and by the direct diminution of protective and other indirect duties, than that class whose incomes ranged between £100 and £150 a year. It was, I may say, then thought to be due in justice to those who had incomes somewhat above £150 per annum that those whose incomes were immediately under that sum should thenceforward make some contribution to the fund by means of which such great benefits, common to all classes, had been realized.

So far as regards the amount of income at which, the application of the income tax commences, in the opinion of the Government it is justly fixed by the present law at the sum of £100. I must, however, state that what I may call the sore place, at any rate the sore place above and beyond all others, in the working of the income tax, is at the point where incomes range from £100 up to £200 per annum. I venture to give this opinion with much confidence, for I have, however unworthily, been the occupant of my present office for a considerable time, and have been, I may venture to say, in a peculiar manner, the confidential recipient of the sorrows and grievances of the tax-paying community. I may add, that the opinion I now express is, I know, shared by the authorities of the Revenue Departments, practically most conversant with the working of the tax. From time to time, I may almost say from day to day, the post brings me complaints of individuals respecting the working of the income tax, and I believe I am stating the case moderately rather than otherwise, when I inform the Committee that among those complaints nineteen out of twenty proceed from persons whose incomes, exceeding £100, fall short of £200 a year. One circumstance which makes the tax particularly galling to this class of taxpayers is, that the charge is more accurately and fully levied in their case than in the case of many wealthier persons assessed in respect of trades and professions. As a general rule, the concerns of those who possess only these smaller incomes are more transparent, so to speak, than the private affairs of their richer fellow-countryman. Every neighbour can see through them; they may be said to live in glass houses; deception, if they were disposed to deceive, would be for them almost wholly impossible. They pay the tax fully and readily, and they see or they surmise that many persons above them in the world, are not and cannot be always brought to account with equal strictness. There is another difficulty in the case; it frequently happens with a considerable portion of the labouring class, and until the period of the distress in Lancashire that portion was much larger than it now is, that the aggregate income of a single family may amount to more than £100 a year, and yet we cannot bring that family under the operation of the tax, because the wages of the father singly, who is the head of it, do not amount to that sum; while, on the other hand, it has been felt by the Legislature that to investigate and ascertain the separate earnings, such as they may be, of the wife and children, would entail an inquisition quite intolerable. This constitutes, in our judgment a strong reason for dealing gently and equitably with taxable incomes between £100 and £200 a year. The two points at which the operation of the tax may be said to pinch more than at any others, are where it falls upon incomes of £100 or a trifle more, or upon incomes of £150 and a little over that amount also. We have endeavoured to frame a proposal which will, in our opinion, go far to meet the justice and equity of the case. I do not speak of justice in the most determinate and rigid sense. What may be called mathematical justice is hardly applicable to this subject. And, indeed, in principle there is no injustice in requiring any man to pay income tax who is able to pay it. Still, there is a wider and less rigid kind of justice which it is the desire of Parliament to administer in fiscal legislation, and which has due regard to considerations of prudence and policy, and to the degree of pressure which can practically be brought to bear on flesh and blood. Our plan, then, is as follows:—Retain the point of £100 a year, as the lowest point at which income shall become taxable at jail; adopt the point at £200 a year as the point at which income shall be brought under the full pressure of the tax; remove altogether the distinction at the point of £150; abolish the double rate which now prevails, and in lieu of it have only one rate, but allow every taxable person, whose income ranges between £100 and £200 a year, to make a deduction of £60 from his: taxable income. I venture to hold out a strong hope that the effect of this proposal, if adopted by Parliament, will be to mitigate in a remarkable degree the difficulties which are now felt in the application of the tax to the lower incomes, especially at the two critical points of £100 and £150 to which I have referred. I am very desirous that this proposal should be clearly understood, and perhaps I may render it more intelligible if I state what will be its effect upon incomes at various rates which are to have the benefit of it. The figures I am about to give are computed upon the supposition that the new law is to be compared with the old one at the rates of tax now ruling, viz: 9d. and 6d. in the pound. On an income of £100 the tax is now £2 10s.; under the new system it would be £1 10s. On an income of £125 it would be £2 8s. 9d., instead of £3 2s. 6d. as at present; on an income of £150, £:5 7s. 6d, instead of £5 12s. 6d; and on an income of £175, £4 6s. 3d., instead of £6 11s. 3d. The relief, therefore, as will be seen from these figures, will be most considerable at the points where the inequality is at present greatest. Those who entertain very strong objections to the income tax may, perhaps, think it would be better to retain upon its head all the inequalities with which it is charged. I have, however, always felt, and I continue to feel very strongly, the force of these objections; but, at the same time, I think it is our duty to remove, wherever it is practicable, those inequalities which produce great, and I must say: very intelligible, public discontent. I speak the opinion of all who are practically conversant with the working of this branch of taxation when I say that the adoption of this proposal will be a great—I may say almost an immeasurable—boon to those classes whom it concerns.

And now, Sir, as we have got the pickaxe into the fabric of the surplus, and have dislodged from it one or two bricks, we shall find it very easy to complete the bulk of the operation, and to bring the whole—or nearly the whole—of that fabric to the ground.

The subject which I have next to bring under the consideration of the Committee is that which is commonly called the tea and sugar—but I prefer to call it the tea or sugar—duties.

In the first place, I assume it to be beyond doubt that the question of what we rather loosely, but still intelligibly, call the war duties on tea and sugar, occupies a front place among the questions which, in the present condition of the revenue, must be brought under the view of Parliament.

In the second place, it is, I believe, the view of Parliament, as it is also of Her Majesty's Government, that in a ease where we are happily able to offer a reduction of taxation, we should have a mixed and joint regard for the two great descriptions of taxation—the direct and the indirect. Now, it is quite impossible for us to make what I should consider an effectual change with respect to both the tea and the sugar duties. The cost would be too great of reducing at the same time the tea duty to 1s., and the sugar duties to the point at which they stood before the Russian war. It appears to us perfectly clear, that what- ever we do, we ought not to divide the remission upon either article into two or more parts, but rather to choose one of two subjects, and deal with it effectually. It will be much better, as it seems to us, to make such an alteration as will give a sensible stimulus to trade consumption, and thus, in consequence, a sensible stimulus to revenue, than to dole out and divide into minute proportions, and ineffectual or less effectual amounts, the relief which it is in our power to bestow. Practically, therefore, the question comes to be one of choice between the tea duty and the sugar duty, for reduction of the whole amount, which is in question, upon either. This is I suppose, Sir, the first time in the history of legislation or of mankind, that these two articles have been placed in hostile competition with each other. Nature seems to have ordained that intimate alliance between them which has been satisfactory to the experience of us all. I am truly sorry that it should fall to my lot to propose a severance of their union, even if only in appearance, and if only for a time. I have, however, this consolation, that if we confer a boon on the one, it immediately overflows upon the other; for the old established combination in their use makes it entirely certain, that if we reduce the duty upon sugar, we shall bring about an increased consumption of tea; and if we reduce the duty fron tea, we shall excite a larger demand for sugar. That being the state of the case, let us proceed, Sir, to inquire which of the two has the greater claim to immediate relief. In the first place, there is no difficulty in either case as regards the stocks on which we have to draw, for of both articles we have an abundance. As regards the prices, sugar is for the moment the cheaper of the two, but its cheapness depends, in some degree, on the continuance of a great calamity to mankind—the sanguinary war in America. The special arguments which may be urged in favour of the selection of sugar for reduction appear to me to be these:—First, that nine years ago the duty upon sugar was actually lower than it now is; whereas, with respect to tea, although a date has been fixed by law for its falling to 1s., it has never really been below the point at which it actually stands. Secondly, the general trade in sugar is larger and more important than that in tea. The incidental and collateral effects upon commerce, in connection with the reduction of the sugar duties, would be more considerable than those proceeding from a reduction of the tea duties. Turning, on the other hand, to the arguments applicable on behalf of tea, they will be obvious enough to the minds of hon. Members. Some of them are secondary considerations, not wholly unimportant, even if, of themselves, indecisive. Our present relations with China, the existence of our military establishments there, our interest in developing the commerce, and establishing the social order of that great country, are, without doubt, important topics of national consideration, but they can hardly be allowed to turn the scale in a question such as this. There is, however, a negative argument, by no means unimportant, in favour of tea, which is to be derived from certain proceedings now in progress with respect to sugar. The subject of duties upon sugar is one of peculiar complexity in its practical application, more particularly with reference to the scale of drawbacks which it becomes necessary to allow on behalf of refined sugar when exported from the country where it has undergone manufacture. It happens that at the present time, on the proposition of the French Government, most of the countries which possess an important sugar refining trade have agreed to send, and have sent, representatives to Paris, to consider the detailed regulations now in force on the subject. Hitherto, each country has been accustomed to allege against the others that what are called drawbacks are really bounties. It is of great importance to the European trade in this cardinal article, that a common understanding should be arrived at. Of course, nothing will be done in the course of the inquiries in Paris to bind the judgment of the executive Government, much loss of the House of Commons; but if legislation on sugar be postponed, we should approach the consideration of the details with much greater advantage, when we have before us the results of the comprehensive, minute, and impartial inquiry which we have reason to expect, But, Sir, perhaps the most important argument for tea, as bearing immediately on the case, is that the present duty on tea is much higher, in relation to value, than the corresponding duty on sugar. I will take, not the prices of tea or sugar at this moment, but the ordinary or average prices. The duty on tea is more than 100 per cent—in other words, it is greater than the usual price of tea in bond—while the duty on sugar is only equal to about half of the usual value of the article. In a question of relative justice in the distribution of relief, this consideration has appeared to the Government to be of the greatest importance. It will also appear, that by the reduction of duty which is contemplated, it is in our power to produce a much more sensible effect on the price of tea than on the price of sugar, and in proportion we may hope to bring about a more considerable increase of consumption, and restoration of revenue. By a reduction of duty also, we can much more considerably lower the price of tea than of sugar. The price of a cwt. of sugar, duty paid, is on an average about 35s. If we take off 3s., to reduce the duty to a minimum, it brings the price to 32s.; which is a reduction of about 8 per cent. On the other hand, the duty price of a pound of tea is 3s.; and if we take off 5d., that reduces it to 2s. 7d., or a reduction of about 14 per cent. It will therefore be obvious to the Committee that we have reason to anticipate a more considerable and buoyant effect from the reduction of the duty on tea than on sugar. Guided by these considerations, we have formed the intention to propose to the Committee the reduction of the duty on tea from 1s. 5d. to 1s. per pound. We likewise propose that this reduction shall take effect immediately after the Resolution I am about to lay upon the table shall have been adopted in Committee and by the House. So far as our forms of procedure are concerned, there is no necessity for a Resolution previous to the Bill; but one will be submitted, as offering the simplest mode for obtaining the judgment of the House, and a practical settlement of the question. We intend to submit the Resolution on Thursday next; we shall propose to report it on Friday; and on the subsequent morning the tea duty will, as we hope, be reduced to 1s. per pound.

We are of opinion that the revenue from tea should at present be granted only until the 1st of August 1864. It may be important to consider during the next Session, or at an earlier date, whether, according to the practice which formerly prevailed, some one important branch of revenue should in future be voted only from year to year, and whether the branch of revenue to be so voted should not be the duty on tea. When the duty upon sugar comes to be finally settled, the two subjects can be considered together. I am not able to say at what period the question of sugar duty can be dealt with; but with a view to the joint consideration of the two articles in relation to the question I have named, it will be most convenient to renew the tea duty only until August 1864. The Committee need not apprehend that the proposal thus to fix the duty upon tea only for a limited period will have any disturbing or unsettling effect; for it is thoroughly understood by the trade, and by the country, that when the tea duty shall be reduced to 1s. per pound the reduction will be, so far as we may presume to look forward into the future, a final measure.

We estimate as follows the financial results of the change:—In 1862–3 we consumed 77,500,000 lb. of tea, which paid a duty of £5,497,000; in 1863–4, if there were to be no change in the law, we should estimate for a consumption of 79,636,000 lb., which would yield a revenue of £5,640,000. The first loss of 5d. per pound on that amount, for twelve months, would be £1,659,000. We think, however, we may venture to reckon with safety upon an increased consumption, in the first year after the reduction, of 6,000,000 lb., producing a revenue of £300,000 We shall thus reduce the loss for the entire twelve months to £1,359,000; but a small portion has already been broken off the financial year for which, we estimate: on account of this fraction of the year I strike off £59,000, and I reckon, accordingly, on a net loss of £1,300,000—a large sum without doubt, but a sum which I think will be adequately compensated by the benefit we are about to confer on the community.

It may be thought that in a case like this we do not at all require the aid of any ocular demonstration. It has, however, happened that my hon. Friend the Member for Lancaster (Mr. Gregson), apparently mistrusting the intelligence of the Committee, has been good enough, at the close of his long campaigns as leader of the movement for the reduction of the ten duty (and I take this opportunity of offering him my public and cordial congratulations on the triumph he has so justly earned), to forward to me the two parcels which I hold in my hands. Of these the one is labelled "a pennyworth of tea at 1s. 5d," and the other "a pennyworth at 1s.;" and the Committee will readily perceive the considerable difference in their respective bulks. This matter is not without interest, because an idea prevails, that when duties of this kind are reduced, an undue proportion of the benefit is arrested, while on its way to the public, by the merchant and the dealer. It will therefore, I am sure, be a matter of great satisfaction to the Committee to find that my hon. Friend, a man of the highest character and honour, and deservedly possessing the confidence of the whole mercantile world, especially of the East India and China trade, has pledged himself to me personally and individually that in every case the man who shall buy a pennyworth of tea under the new duty will have at least the same increase over what he would have bought under the old duty, as is represented by the large packet which I hold in my right hand, compared with the small packet which I hold in my left hand.

What now remains to be considered is the question of the Income Tax. It will be recollected that my estimate of receipts from the Income Tax for 1863–4, taking the tax at 9d. and 7d, in the pound, was that the tax would produce, in the course of the financial year, £10,500,000. A reduction of the tax from 9d. and 7d. to 7d and 5d.—I am not now taking into account the loss by the change in minor incomes, as I wish to keep that question separate from the question of poundage—would cause a diminution in the year's receipts of £2,350,000, or £1,175,000 for each penny of the 9d. That would be the loss upon the tax for the whole year; but the whole of the loss would not be felt in the present year. A careful estimate made by the Board of Inland Revenue shows that the loss in the present year would probably not be more £1,600,000, and that a further sum of £750,000 would stand over till the financial year 1864–5. But there is also to be reckoned the plan which I recently explained to the Committee for the relief of minor incomes. For an entire year the loss from the adoption of that plan would be £400,000; for the actual financial year we may very safely take it at £300,000. It therefore follows that we may reduce the Income Tax 2d. in the pound for the whole community, and we may likewise adopt a further plan of relief for minor incomes, at a cost to the revenue in the present year of £1,900,000, with a further prospective charge of £850,000.

And here, Sir, in passing, I cannot re- frain from calling the attention of the Committee to a subject of no inconsiderable interest, and reiterating an opinion which I ventured to express in a former Session, but which was then received with some (I admit) not unnatural scepticism—the opinion, namely, that the change in our fiscal arrangements, by which we now collect three-quarters of the Income Tax for the year within the year, in lieu of only one-half as before, is a change of the greatest and most beneficial importance. When we collected only one-half of the tax in the year, the effect was this:—At various periods we legislated in respect to the Income Tax under the pressure of great political and financial necessity, with a view to the events of the year with which we had to deal, and yet we only received within that year one moiety of the sum which we directed to be raised. On the other hand, when we remitted a portion of the tax, one-half, or more than one-half, of the entire remission passed not into the year which we had immediately in view, and for the wants of which we were making provision, but into the year beyond, as to the needs and circumstances of which we had no information before us. By means of the change which brings us in each year three-quarters of the tax belonging to that year, we have got the Income Tax, so to speak, much more in hand. It is, I fear, unavoidable that we should always remain three months behind hand over and above the sums which may be in arrear. Unavoidable, I mean, in England; in Scotland a better arrangement, in some respect better, has been found practicable, and in that kingdom the whole of the tax is received within the year, though at a very late period of the year. So far, however, as England is concerned, by levying three quarters out of the four, instead of two, the Government is enabled to adjust its financial arrangements with a much closer adaptation than was previously possible to the circumstances of the country and the necessities of the State. With the present system of collection, our total amount of remission being £2,750,000, £1,900,000 of that amount will fall upon the financial year, and £850,000, or less than one-third part, will remain for 1864–5. But under the former system no less than £1,483,000 of the total loss would have stood over to 1864–5, and only £1,267,000 would have been felt in the year now current.

I shall now, with the permission of the Committee, put together the various remissions I have proposed, so as to bring them under one view. The relief upon the small charges—that is, the loss for the current year—will be £143,000. The relief to minor incomes will entail a loss of £300,000. The relief to the consumers of tea will be £1,660,000, but the loss to the revenue for the year will, as we estimate, be only £1,300,000. The loss for the year from a reduction of 2d. in the general rate of the Income Tax will be £1,600,000. The total loss for the year will be £3,343,000. But I wish to call particular attention to the fact that a further loss of £898,000, nearly the whole of it due to the Income Tax, but some small part of it to the minor charges on trade, will fall upon the financial year 1864–5. We thus incur a total loss for the present year of £3,343,000; but we ask the House to give its legislative sanction to changes, which between the present year and the next will bring about a loss of £4;241,000. When I add to that total loss to the State the further relief which the consumer will derive from a part of the duty on tea being made up by increased consumption, it appears that the whole amount of remission of taxation which you are to-night asked to take into consideration is £4,601,000.

The effect of these operations upon our estimated surplus will be as follows: — The surplus, as I stated it some time ago, with the addition of some small sums to be derived from intended legislation, amounted to £3,874,000. The several branches of estimated revenue which I stated to the Committee will require to be rectified as follows:—The Customs, instead of £24,180,000, will yield £22,737,000; the Income Tax, instead of £10,500,000, will yield £8,675,000; and to other branches of the Inland Revenue must be added £58,000. The total revenue has been estimated at £71,490,000; from that sum we propose to deduct losses by remission amounting to £3,343,000. The total estimated revenue will therefore stand at £68,147,000. The surplus, before deductions, was £3,874,000; and after withdrawing from it the sum I have named of £3,343,000, it will be reduced to the moderate sum of £531,000. With this moderate surplus Her Majesty's Government do not propose to part; and for many reasons we trust that the House of Commons will support us in resisting any efforts, however well they may be meant, and from whatever quarter they may proceed, with a view to destroy or diminish it. We look to the state of the country, to the balance-sheets of past years, to the scale of our expenditure, and to the condition of the world:—with all this before us, we feel that it would be inconsistent with our duty to acquiesce in the withdrawal of any of the resources which we have retained in order to constitute our surplus, and we confidently and earnestly appeal to the Committee for its unequivocal support against any attempt to wrench it out of our hands.

Now, Sir, with respect to our plan as a whole, it is not, at any rate, one which pretends to originality. The public had anticipated in the main the proposals we were about to make. That has not been owing, so far as I am able to judge (and I can form the judgment with some confidence), to premature disclosures, but simply to the state of the facts. The state of the facts, the bearing of the public interests, and events which had taken place in former years, distinctly indicated, within certain limits, what should be the course of Government, if it sought to do justice to the country, or to obtain the favour of the House of Commons. With regard to the tea duty, for example, in addition to other reasons which weighed with us, one was the prominent position which had been given to the question in a previous discussion in this House at an important political crisis. In 1860 it was the claim of the tea duty which Her Majesty's Government thought themselves bound to weigh carefully against the claim of the duty on paper; and again it was the claim of the tea duty which, in 1861, hon. Gentlemen sitting opposite deemed it their duty, as the strongest claim which could be made, to offer in opposition to the claim of the duty on paper. If there is to be a contest for the honour of ownership in the principal parts of this proposal, it may belong, perhaps, to those who first published them to the world; and I am not aware to whom it could be given with greater credit—for the Government are not disposed to contest the point of honour—than to my right hon. Friend the Member for Cambridge (Mr. Walpole). He last year proposed a Motion which certainly came, at the moment, to an untimely and even a violent death. But it has re-appeared, I trust, under happier circumstances, and it has formed the basis of the plan of the Government in its largest and most important parts. Sir, it is no motive of dissuasion to us, with respect to any financial proposals, that they should have already found favour in other quarters. If we felt bound from regard to the interests of the country to do now as we have done before, to pit in debate our proposals against those of others, and to contend stoutly and resolutely for them, we should not hesitate to adopt that course. But if the time has happily arrived when we are enabled, compatibly with and in obedience to our public duty, to submit to the House plans which have been already declared to be the favourite plans of others, we, so far from being deterred on that account from making ourselves the responsible proposers of those plans, are the better pleased to think that it is in our power, as we hope it may be on the present occasion, to unite in one firm intention the general sentiment of the House, and to secure its approbation, without distinction of section or party, to measures which we think are for the benefit of the country.

Such, Sir, is the state of the case with regard to the plans of the Government, and to any right of authorship in them. But before concluding I must make a further appeal to the indulgence of the Committee with reference to some observations that I submitted at the opening of my statement. On commencing that statement, Sir, I had to make, and I made broadly the admission, not only that for the last four years our finances had been placed in a state of tension, but likewise that the degree of that tension had been somewhat enhanced in consequence of the large remissions of duty which we proposed in 1860, and which were adopted in that year and in 1861. We are now, as I trust, passing out of what I have formerly described in ibis House as an exceptional period. And standing, I trust, at its close, I desire to state with exactitude to the Committee the two following points—first, I wish to state what has been the general state of our account of revenue and expenditure for the last four years, taken as one account; secondly, I desire, without seeking any revival of controversy, or impugning the opinions or conduct of others, yet respectfully to present to the Committee facts which I think demonstrate that we have been justified by considerations of prudence and policy in asking Parliament on a former occasion, notwithstanding the vast amount of the expenditure and its pressure on our re- sources, once more to take in hand the prosecution, I may almost say the completion, of the great work of commercial legislation.

And first, Sir, as regards the account of the country for the last four years, I will place it before you in a form which is summary and comprehensive, but which I trust will be found intelligible to every one. The principle on which it is framed is strictly this—I place to the debit of the account everything in the nature of special resource that we have consumed, and I place to the credit of the account all payments that we have made in reduction of the public debt.

First, let me consider what to set down to the debit of the four years. Taking the income and expenditure of these four years as one year, there is a balance of deficit upon them amounting to £1,061,000. Next, the special separate expenditure upon fortifications, for the same period, has been £2,070,000. Thirdly, the malt credit, taken up within these years, and not belonging to them as ordinary Ways and Means, have been £1,972,000. This sum, together with a repayment from Spain of £500,000, amounts to £2,472,000. I must, however, set off against receipts not belonging properly to this period payments which have been made within, but which did not properly belong to it. Omitting any reference to a sum paid for the redemption of the Stade dues, these payments were of two kinds—there were drawbacks on duties abolished, or, in other words, reimbursements to the taxpayers of revenue received in former years, amounting to £795,000. There were charges for the Russian war, and for a former war in China, amounting to £497,000. Adding these together, I obtain a sum of £12,920,000 as the total amount of my set-off. This leaves a balance of special receipts over special payments for the four years amounting to £1,180,000. This sum, therefore, forms the third item to the debit of my account. Fourthly, I must take into view the repayments of advances on account of Public Works as compared with the issues for the like purpose, and I find that the former are in excess of the latter during the four years by a total sum of £2,375,000. Lastly, I must compare the state of the public balance, that is our cash with our bankers, in 1863 and 1859 respectively. At the date of March 31st in each year, I find here for the fifth item on the debit side of the account a decrease in the ba- lance amounting to £526,000; thus the total sum which we have consumed during the four years in order to meet the demands of the Public Service, and which we have not drawn in the regular manner from taxation has been £7,212,000.

Allow me here, as I have had occasion to advert to the state of the balance, to make a remark by way of parenthesis. It is my intention to submit to the House Resolutions which will empower me to pay off in the month of May the million of Exchequer bonds which will fall due at that date. This proposal is in no degree founded upon any such idea as that there is an obligation to liquidate debt of this description at a particular time in preference to other debts, but simply upon the belief that it will be a convenient and profitable operation. More than this, we take into view the state of the country, especially Lancashire, and we shall ask the House to intrust us with power to refund that money, or any part of it, within the year, if need shall arise, but without any serious expectation at the present moment that we shall have occasion to exercise the power we seek.

Well then, Sir, £7,212,000 is the sum which stands at the debit of the special account of the four financial years 1859 to 1863. Turning to the other or credit side of the account, we have from time to time made payments out of the balances for the redemption of debt, amounting in all to £1,883,600; but besides payments of this kind, the law provides us with a machinery silently and continually at work towards the redemption of the debt, in the form of terminable annuities, whether upon lives or for periods of years. Upon analysing the public charge on account of terminable annuities for the last four years, I find that the portion of it which does not represent the mere interest, but represents repayment of capital, may be stated at £5,501,000. Thus, then the total of the sums which we have paid out of the taxes of the country during the four years towards the reduction of debt has been in all £7,384,000; while, on the other hand, the total sum which the same four years have enjoyed for their own uses, though not belonging to their regular income from taxation, has been £7,212,000; in other words, the two sides of the account have been as nearly as possible balanced.

But in order fairly to estimate the operation of these four years several particulars must be borne in mind. In the first place, we had to defray out of the animal income extraordinary charges arising principally from two causes. We had to meet no less than £8,500,000 of direct war expenditure, of which in round numbers £7,000,000, after allowing for half a million of indemnity, were due to the war in China, and nearly a million and a half to the war in New Zealand and to the expenses of the force sent to British North America at the close of 1861. I am not aware that at any previous period of our financial history an amount of charge approaching to this has ever been borne, from the ordinary resources of the year. We have, secondly, had to meet heavy expenses for re-construction or transformation in the naval and military departments. It is not easy to ascertain the precise cost of these operations; but if I compare those heads of the Estimates which embrace them for the years 1859–63 with the amounts of the corresponding services before those years, I find an excess—which, as I conceive, nearly represents the truth—of almost eight millions more. Thus we have a total sum of sixteen and a half millions, in round numbers, paid away during the four years for war expenditure, and other purposes of a character highly exceptional.

But, Sir, this is not all, for during those four years there have been brought into operation extensive and important changes in our commercial and fiscal laws, and the Committee will justly expect that after the varied experience of the period I should make a statement to them with regard to the condition of some branches of our trade. A portion at least, I may add, of the facts to which I shall call their attention, appears to me well to deserve particular and careful notice.

The repeal of the paper duty is a measure of which it is very difficult to trace the effects with precision. In point of fact, it is only by a very slow process that the consequence of repealing an Excise duty is usually developed. In the case of glass, soap, and other articles it has been so, and I have no reason to suppose it will be otherwise in regard to paper. But it is remarkable, that although the diminution of the export trade in cotton has necessarily led to a great decrease in the consumption of paper used in that trade for the purpose of packing, which is usually a very large consumption, yet we have the evidence of a considerable increase in the consumption of paper in this country. There is enough of it, I conceive, entirely to justify the faith with which those who urged the repeal of that duty lave looked forward to its probable results.

I am surprised, I confess, at the amount of foreign paper which has been imported into this kingdom. Our imports of foreign paper of all descriptions in 1856 were 15,767 cwt. In 1862 they were no less than 193,639 cwt. Those imports form, very nearly 20 per cent of what the total manufacture at home had grown to be in the days of the Excise duty. But what is most satisfactory is, that together with this vast increase in the imports of foreign paper there would appear to have been some not inconsiderable increase in the manufacture of British paper. We have no power now, as the House is well aware, of following minutely the amount of paper that is made in this country; but we are able to do two things:—We can first of all follow carefully the amount of British paper which is exported; and next we can register and record the amount of the materials brought into the country for the manufacture of paper. The amount of British paper of all kinds that was exported in 1858 was 115,491 cwt. In 1862, the first year of the repeal of the duty, the amount exported was 149,326 cwt., showing an increase of 34,000 cwt. And here, one word as to the import of rags; and I trust the Committee will not grudge a moment for this point, because it is really tragical, it is almost funereal, to look back upon the dark anticipations once entertained as to the almost total banishment of that valuable article, with which we were threatened, from the markets of this country. In 1856 the import of rags for making paper into this country was 10,287 tons. In 1860 it had risen largely—namely, to 16.154 tons. I am bound, however, to suggest that that increase in 1860 was probably due, in a very great degree, to the anticipations entertained, till about the month of June in that year, that the duty would be repealed. However, in the year 1862, the first full year of the repeal of the paper duty, the import of rags rose again, and reached to 23,943 tons. Thus, then, we had an increase in the export of British paper, and a large increase in the import of foreign rags, out of which British paper was to be made.

Something however which has occurred during the past year with respect to the paper trade may seem to call for notice. What I am about to quote, I shall quote not in disparagement of the highly intelligent persons by whom the paper trade of this country is carried on, but simply as an illustration, so far as it may be of any force at all, of the operation of Excise duties upon a manufacture into which science materially enters. The British paper-maker at the International Exhibition of 1862 was on his own ground; the foreigner had to come here; and it is natural to suppose that the British manufacturer was at least as fully and, at any rate, as favourably represented as the foreigner. At any rate, what was the state of facts in regard to the medals and honourable mentions, delivered, I presume, by a competent and impartial jury? Eight medals, I believe, were awarded to British papermakers, sixteen to French papermakers, and fifteen to Prussian. That appears to me to be a significant and important fact with respect to the operation of Excise duties and restrictions on a manufacture which gives scope for the application of science.

As respects the article of wine, there has been a small increase of receipt, amounting to about £30,000, and the quantity entered for consumption has been increased by 109,000 gallons. The consumption of French wines has somewhat diminished during the year, a result at which I can feel no surprise after the extraordinary increase that had taken place in the year immediately preceding. The consumption of Portuguese wines has likewise diminished, as has the consumption of wines from the Cape. The Spanish wines have fared best during the year, and they exhibit an increase of 290,000 gallons.

I come now, Sir, to consider a subject which is always of great, and which is also at this moment of painful interest. I mean our trade with the United States. It is of great interest, because of its importance to the country; and it is at present of painful interest, because the reduction it has undergone bears melancholy witness to the secondary action of those far greater and more frightful calamities which afflict the continent of North America; and I shall likewise proceed to state the condition of our trade with France, because this is the first occasion of a financial statement, on which I have had it in my power to exhibit one full year of the working of the commercial treaty with France, and of the altered system that it introduced.

The value of British goods exported to the United States in 1859 was £22,553,000. In 1862 it had fallen to £14,398,000, and thus exhibited a decrease of £8,154,000. The value of foreign and colonial goods exported to the United States from this country had, during the same period, increased. In 1859 it had been only £1,864,000. In 1862 it had increased to £4,052,000; the augmentation was no less than £2,188,000, but nearly the whole of it was represented by the single article of cotton wool, which amounted in value to no less than £1,721,000. However, deducting the increase upon our foreign and colonial goods from the decrease upon our export of British goods, there remains an aggregate diminution in our export trade to the United States of about £6,000,000.

I take next the case of our trade with France, and here it will be my pleasant duty to point to a very different state of things. The year 1859 was the last full natural year before the treaty of commerce. In that year the value of British commodities exported to France was £4,754,000. In the year 1860 the treaty was concluded, and it took effect almost wholly as regarded our imports, but on a very few articles as regarded our exports. The value of British goods exported to France in 1860 was £5,250,000, and thus showed an increase of about £500,000. In 1861 the treaty took effect as regarded its provisions relating to the duties upon imports into France. It came into operation late in the year—namely, on the 1st of October. A very large augmentation appeared in our exports, but a part of this was due to the concurrence of a very bad harvest in France with a large supply of foreign corn in the markets of this country. In consequence, we sent a great quantity of corn to France, but in order to a more just calculation I shall not take this article into account. After striking off the sum of £1,750,000 for an excess in the export of corn, I find that in 1861 the value of British goods sent to France rose to £7,145,000. It thus showed an increase of £2,391,000 over what it had been in the last year anterior to the treaty. Then came the year 1862 with the treaty in operation from its beginning to its close. The value of British exports during the year now rose to £9,210,000. It thus showed an increase of £4,456,000. In other words the amount of British goods sent to France had about doubled under the operation of the treaty of commerce.

But the figures I have named by no means set forth the whole extent of the advantage which the trade of England and France has derived from the treaty, for an augmentation of exports till more remarkable took place in foreign and colonial produce, and I need hardly remind the Committee that the foreign and colonial produce which we send to France is something that we have ourselves obtained elsewhere in exchange for British produce. It therefore follows that every increase in the export of foreign and colonial produce from this country constitutes or represents effectively a corresponding increase in the export of British manufactures. The value of foreign and colonial produce sent to France in 1859 was £4,800,000, whereas in 1862 it amounted to no less than £12,614,000. Accordingly, the total amount of exports to France, which in 1859 was £9,561,000, had in 1862 gone up to no less than £21,824,000 In fact, while we had a decrease in the total trade to the United States of £6,618,000, that decrease was a great deal more than made up by the increase in the trade to France, for the augmentation in the French trade was £12,265,000.

It may, perhaps, be interesting to compare the case of our exports in woollens to the two countries respectively. To the United States in 1859 we sent woollens of all descriptions to the value of £4,502,000; in 1862 to the value of £2,711,000, showing a decrease of £1,791,000. To France, on the other hand, we had in 1859 sent woollens to the value of £419,000; in 1862 we sent to France woollens to the value of £2,176,000; showing an increase of £1,757; an increase in that which may be said to have filled up the entire void in our direct trade in woollens to the United States.

The deplorable effects of the cotton famine upon our general trade it is impossible for us to mitigate, so far as I am aware, by any measures of legislation; but in 1861, after the deficient harvest of the preceding year, we were enabled to show the powerful stimulus which had been imparted to the industry of the country through its export trade by means of the reduction and abolition of Customs duties which took place in the Session of 1860 And now once more, in 1863, I am enabled, during the afflicting pressure of the cotton famine, to point to similar and not less remarkable results which, under Pro- vidence, we owe to the wise arrangements made with France, through the agency, and owing, in a great degree, to the personal weight and credit, of my hon. Friend the Member for Rochdale.

Now, Sir, I submit these facts to the Committee not without the confidence that they may be held to justify the belief we entertained and acted upon four years ago—this belief, namely, that it was matter of high public moment that we should, even amongst the embarrassments and heavy charges of that period, endeavoured to enlarge the the area of British trade, industry, and enterprise, by a reduction and remission of taxes judiciously selected for the purpose. I admit, that in order to make up for that reduction and remission, we were compelled to impose, for that single year, one additional penny in the pound of Income Tax, which would not otherwise have been required; but I think few can regret that temporary and not very great addition to the Income Tax, when they consider that the effect of the legislation then proposed by the Government has been, in this period of severe trial to the industry of the country, to put in motion, and to keep in motion, not millions only, but perhaps even tens of millions of that industry.

If the Committee can so far extend its patience as to bear with me for a few moments longer, I will now draw their attention to a statement which they will probably receive with interest and surprise.

The Income Tax has now been in operation for a period of nineteen years. It was imposed partly with a view to supply a deficiency in the income of the country as compared with its expenditure, but in a great degree with a view to developing the trade and industry of the people, and thereby of bringing about an increase in the wealth and comfort of all classes of the community. After these nineteen years, and after a succession of different assessments, we are now in a condition to form some judgment as to the additions that have been made during that period to the means and resources of the country. I have made it my study to examine the subject with as much precision and rigour of investigation as its nature and the means at my command would admit. It may be that the statement I am about to submit may be capable of being further sifted in such a manner as to modify in a greater or less degree its results. I do not pre- tend it is infallible; I am sure it is remarkable; I believe it is substantially correct; at least, I can say that no pains have been spared to make it so.

In order to be as near the truth as possible, I do not compare the entire Income Tax of 1862 with the entire Income Tax of 1843, but I compare the Income Tax of the two periods minus that portion of it which only represents income proceeding from public taxation; because it is quite plain, that if we have several millions added to the income of England from the growth of public establishments, that increase, whatever be its character in other respects, does not represent a corresponding addition to the real wealth of the country. Therefore, I take schedule A as representing landed property, railways, mines, &c.; schedule B as representing farming profits; schedule D as representing commerce and professions; and so much only of schedule E as belongs to private establishments. This is the basis or area of taxation upon which I have founded my comparison I exclude Ireland altogether, because Ireland was not taxed in 1842, and its appearance would, therefore, only disturb the computation. I also exclude incomes below £150, for the same reason.

The Income Tax, at 7d. in the pound, in the year 1842–3, attaching to Great Britain only, and in Great Britain only to incomes of £150 and upwards, was assessed upon an aggregate amount of income in the schedules I have named reaching£156,000,000. Upon the very same area, with the same limitations, in 1860–1 the amount of assessed income was £221,000,000. Further, I am not aware that there has been any change in the machinery of the tax, or any improvement in the powers of levying the tax, as compared with the powers of escaping it, that will in any way account for the difference. On the contrary, certain concessions and relaxations have from time to time been enacted by the Legislature, which, as far as they go, would rather tell in the opposite direction. The difference, however, amounts to no less than £65,000,000 of annual income, or two-sevenths of the whole annual taxable income of the country within the area described. That is a most remarkable result; but there is a certain feature of that result which, when carefully examined, is yet more remarkable; and that is the accelerated rate of increase in the latter portion of that period. I again invite the attention of the Committee for a few minutes. I compare two periods—one of them before 1853, and the other since 1853, the year when the basis was altered. In ten years from 1842 to 1852 inclusive, the taxable income of the country, as nearly as we can make out, increased by 6 per cent; but in eight years, from 1853 to 1861, the income of the country again increased upon the basis taken by 20 per cent. That is a fact so singular and striking as to seem almost incredible. [Sir JOHN PAKINGTON: Australia!] Australia! Oh, no; I must not at this hour offer to the Committee a dissertation on the true effect of the discoveries of gold; but in passing I may say I grieve to see that in regard to that matter my right hon. Friend is evidently lost in the depths of heresy.

If I may presume, Sir, to refer to the causes of this vast increase of wealth, I would suggest two in particular. First of all the enormous, constant, rapid, and diversified development of mechanical power, and the consequent saving of labour in so many forms, and to so vast an extent, by the extension of machinery; in this, I of course include the modern means of locomotion. But the extension of machinery by steam power and otherwise has, speaking generally, been in active operation, together with the economy of labour it begets, for the last hundred years. There is another cause which has been actively at work during the lifetime of our generation, and which especially belongs to the history of the last twenty years. I mean the wise legislation of Parliament, which has sought for every opportunity of abolishing restrictions upon the application of capital, and the exercise of industry and skill; and has made it a capital object of its policy to give full and free scope to the energies of the British nation. To this special cause appears especially to belong most of what is peculiar in the experience of the period I have named, so far as regards the increase of the national wealth.

Such, Sir, is the state of the case as regards the general progress of accumulation; but, for one, I must say that I should look with some degree of pain, and with much apprehension, upon this extraordinary and almost intoxicating growth, if it were my belief that it is confined to the class of persons who may be described as in easy circumstances. The figures which I have quoted take little or no cognizance of the condition of those who do not pay income tax; or, in other words, sufficiently accu- rate for general truth, they do not take cognizance of the property of the labouring population, or of the increase of its income. Indirectly, indeed, the mere augmentation of capital is of the utmost advantage to the labouring class, because that augmentation cheapens the commodity which in the whole business of production comes into direct competition with labour. But, besides this, a more direct and a larger benefit has, it may safely be asserted, been conferred upon the mass of the people of the country. It is matter of profound and inestimable consolation to reflect, that while the rich have been growing richer, the poor have become less poor. I will not presume to determine whether the wide interval which separates the extremes of wealth and poverty is less or more wide than it has been in former times. But if we look to the average condition of the British labourer, whether peasant, or miner, or operative, or artisan, we know from varied and indubitable evidence that during the last twenty years such an addition has been made to his means of subsistence as we may almost pronounce to be without example in the history of any country and of any age And this, Sir, is a result of the causes I have described, upon which it is impossible to look without feelings of the liveliest satisfaction. For it must always be borne in mind, that when we speak of the expenditure of the Government, we speak of that which is taken in great measure out of the earnings of the people, and which forms in no small degree a deduction from the store which is necessary to secure to them a sufficiency, I do not say of the comforts of life, but even of the prime necessaries of food, of clothing, of shelter, and of fuel. Scarcely in any country, scarcely in any period, have the earnings of the labouring community availed to secure to them in these primary respects even sufficiency, much less general abundance. And if we have been enabled by proceedings of ours, taken within these walls, to raise the standard of comfort and to diminish, if not to do away with, the fearful gap which existed half a century ago between the absolute I necessities of the labouring man and his means of supplying them, we have accomplished a work for which the name of the Parliaments of this time will be blessed to the latest generation. It was about twenty years ago, when Sir Robert Peel, Prime Minister of this country at the time, referred with the greatest authority to the devouring effects of the Naval and Military Estimates then maintained by the Governments of Europe. I am afraid, Sir, that since the period at which he felt called upon thus to speak, the evil has grown not less, but more intense. In no quarter have those establishments diminished, in few are they stationary, in almost all they have increased. The natural consequence has appeared in the financial condition of almost every country; and speaking generally, it might be said without any gross exaggeration that deficit has become a rule. Nor need I dwell upon the evils political and social, and not financial only, which permanent or even frequent deficit entails. In some countries, for example in France, great efforts have been made to mitigate or retrieve the mischief; but although authority, talent, energy, and skill are known to have been employed for the attainment of the object, it yet remains to be seen in what degree these efforts are likely to succeed Italy, again, to take another instance, with her destinies as a nation still hanging in the balance, appears—probably from the necessities of her position, but not on that account the less unhappily—to be accumulating debt from year to year, with a rapidity which may well make her best and fastest friends tremble for the future. It would be easy to enlarge the catalogue of instances, but, perhaps, I have said enough of finance abroad. But I observe with pleasure that the Finance Minister of France, in a discourse which he recently addressed to the Senate, has spoken in condemnatory terms of what he calls the expenditure of emulation. He expresses the hope that this expenditure, due not to the wants of each country, but to the rivalry of one country with another, is likely to be diminished, and surely it is easy for every right minded man fervently to re-echo the prayer. I am unable, indeed, to deny that a certain relation must exist between the general expenditure and especially between the defensive and military expenditure of the different countries of Europe. In framing the Estimates of Public Charge for the year, it has of course been the duty of Her Majesty's Government, first and most of all, to keep in view the honour, the interests, and the security of the country; and next to that honour, those interests, and that security, the deliberate judgment given by the House of Commons in the course of the last Session of Parliament. But subject to these considerations, as I trust I may also say both, on my own behalf and on that of my colleagues, it is to us matter of additional satisfaction, after reading the eloquent denunciation of the Finance Minister of France, if, while we submit a plan which offers no inconsiderable diminution of the burdens of the people, we can also minister ever so remotely to the adoption of like measures in other lands—if we may hope that a diminished expenditure for England will be construed beyond the Channel as the friendly acceptance of a friendly challenge, and that what we propose, and what Parliament may be pleased to accept, may act as an indirect yet powerful provocative to similar proceedings abroad. Gratifying it must ever be to the advisers of the British Crown that the British people should enjoy an alleviation of their burdens; but, over and above the benefit to them and the satisfaction to us, there will be a further benefit and a further pleasure if we may hope that we are allying ourselves with and confirming such tendencies as may exist elsewhere in behalf of peace, of order, and of civilization, and that we are assisting, in however humble a degree, to allay unhappy jealousies, to strengthen the sentiments of good will, and to bring about a better and more solid harmony among the greatest of the civilized nations of the world.

I now, Sir, place in your hands the first of my Resolutions—that relating to the increase of the duties on Chicory.

MR. WHITE

said, he regarded with great satisfaction the admirable Budget which the Chancellor of the Exchequer had brought before the Committee; and the more that he had showed that he would carry out in office the policy he had advocated in opposition. He had calculated that the Chancellor of the Exchequer would have a surplus of £3,300,000, and that the right hon. Gentleman would be enabled to reduce the duty on tea to 1s. He was happy to find that his expectations had been warranted in this respect. He might challenge contradiction when he declared that the history of no country, in ancient or modern times, whether barbarian or civilized, afforded a parallel instance of so enormous an exaction on an import of such general domestic use as their fiscal system had so long levied on tea. It was astonishing that a duty of cent per cent on a staple article like tea had so long continued; it was only custom, which in this country reconciled some people to every abuse, that had led to the toleration of such an unwise and unjust tax. Tea, relatively to its prime cost, still paid to the Exchequer proportionately a higher duty than it had forty years ago; for, in the old bad times of East India monopoly and suicidal protection, the duty on tea was an ad valorem one of cent per cent. And had that duty been unalterably fixed from that period to this date, that impost (enormous as it undoubtedly was) on tea would have been far less exorbitant, owing to its diminished prime cost, than the reduced duties which had been levied during the last ten years. The average price of tea during that period, in bond, had, he found, been 1s. 4½ d per lb.; whilst the import duty thereon had averaged 1s. 6½ d. per lb.; that was 2d. per lb. more than its total value laid down here, all expenses in and from China included. It appeared to him that the recent changes in their Customs and Excise duties had diminished the previous relative ratio of contribution by the rich and well-to-do classes, whilst they had augmented the amount paid by the operative and poorer classes. Admitting that the duties on coffee, tea, and sugar had been reduced, yet had not the Excise duty on home-made spirits been nearly quadrupled (from 2s. 8d. to 10s. per gallon) in Ireland, and increased in Scotland from 3s. 8d. to 10s., and raised almost fifty per cent in England—say from 7s. 10d. to 10s. per gallon—and five per cent, added to the malt duty? He need not say what class had paid that increased amount of indirect taxation. Contemporaneously the duties on foreign spirits and wine had been lowered more than fifty per cent, and he need not indicate who were the gainers by those reductions. It was the same class which was also now exempt from the payment of all duties on its foreign silks, lace, gloves—indeed, on almost every exotic article which could minister to its refined tastes or luxurious enjoyment. Notwithstanding our improvement in fiscal knowledge, it could be proved that in our system of indirect taxation the cardinal principle laid down by Adam Smith had been disregarded. Of the sum of £24,000,000 of Customs revenue one-half was now derived from tea and sugar, and a further £11,000,000 from tobacco, foreign spirits, wine, coffee and corn. Thus £23,000,000 out of £24,000,000 Customs duties were drawn from seven articles of general domestic consumption. In short, the bulk of their Customs revenue was extracted from the hard earnings, if not the necessities, of the poorer classes. Most of the reductions which had been made in the Customs duties benefited the wealthier classes in a much larger degree than the poorer classes; for if the total home consumption of tea last year was 79,000,000 of pounds, one-half would have been consumed by the working classes; and at the average cost in bond of the quality of tea they used, it would be found that at the present rate of duty, namely, 1s. 5d. per lb., it paid quite 100 per cent on its selling value. From a he turn, for the production of which the House was indebted to the justly lamented Sir George Lewis, it appeared that one-eighth of the entire of the earnings of the working classes of this metropolis was spent on tea and sugar. The main portion of the Customs duties were charged on articles of general consumption; and in respect of tea, the duty on which had undergone so many mutations in this country, the Russian Government had acted in a more paternal manner towards their people than the British Government had in respect of the operative classes of the United Kingdom. He believed that the consumption of tea would be so greatly increased by the reduction that the immediate loss to the revenue would not be more than £1,000,000, and in three or four years probably there would be no loss at all. Many among the population of this country never tasted tea at all, although it had become a conventional necessary of life; and among the adult operative class he was informed that the consumption was not above 6½lb. per head, whereas in Australia it was at least 14lb. per head of the whole population. At a duty of 1s. the retailers would be able to sell for 2s. per lb. a strong, sound tea, incomparably superior to that horrible decoction which thirty or forty years ago, in the time of the East India Company, was supplied to the public under the name of Bohea. The reduction of the duty would lead to a large increase in the use of the better sorts of tea. At least, fifty per cent of the finest teas brought into this country at present were re-exported to the Continent. The ladies who had the government of the tea table—from reminiscences of old times perhaps—were at present uncommonly sparing in the matter of tea, and spooned it out as carefully as if it were an article of the greatest luxury, but he felt convinced that in a few years tea-caddies would become obsolete and would be replaced by tea-chests. From careful inquiries which he had made, and from his own personal knowledge of the empire, he felt convinced that the tea-producing capabilities of China would keep pace with any increased demand, in fact, that they were practically illimitable; and Mr. Fortune, once his fellow-traveller, in his recent work, had stated that Japan also could produce an enormous amount of tea. He was citing from statistics, and he ought not to omit remarking that never were the statistics of the tea trade more favourable than now for the immediate reduction of the duty. For irrespective of the new sources of supply in Japan and India—both of which were opening out so rapidly—they had of tea, at the present time, in stock and afloat, a quantity unprecedented in magnitude. It was about equal to eighteen months' consumption, at the rate of last year. It amounted in stock and afloat to 118,200,000 lb. of tea. He believed that the benefit of this reduction would at once reach the consumer, and that eventually the revenue would not suffer. He did not agree with those who thought that the right hon. Gentleman should have made a larger reduction of the income tax. As long as the middle classes of this country bore so supinely the present extravagant expenditure, he would not assist them to throw the burden of taxation on the shoulders of the poorer classes. But for the inequality of its incidence the Income Tax was a very good one—if, indeed, any tax could be a good one; and he did think that the time had now arrived when, as a permanent tax, it should be placed upon a more equitable footing. The several items of the last revenue Returns showed that a very undue proportion of the national income was drawn from indirect as contrasted with direct taxation. Why, then, should there be an erroneous belief that direct was gaining on indirect taxation? He believed that but for the bad harvests in Ireland, and the collapse of our great national industry in Lancashire, the Chancellor of the Exchequer would have been able to tell them that he had obtained from ten items of Excise duties more than thirty different items of that class produced a few years ago. The time was long passed when it would be seriously contended that the judicious reduction or even the repeal of a tax was equivalent to throwing away a certain amount of revenue. A Return, dated the 13th of May, 1861, showed that while in 1847, 2s. 2¼d. per pound duty on tea yielded £5,006,494, the 1s. 5d. duty in the preceding year yielded £5,690,000, or more than £500,000 additional revenue. During those sixteen years the population increased 5 per cent, and the consumption of tea increased 50 per cent—the main, increase being in the last ten years, and notwithstanding an augmented value of the commodity caused by two Chinese wars. From 1841 to 1862 the population had only increased 11 per cent, but the total value of imports and exports had increased 300 per cent. In 1841 the imports and exports were valued at £100,000,000, and in 1862 they were valued at more than £300,000,000. In conclusion, he had much pleasure in tendering his humble and hearty thanks to the Chancellor of the Exchequer for the beneficent policy which he had so wisely adopted, at the same time believing, that however highly the right hon. Gentleman might be applauded upon commercial and economical grounds, he deserved far more praise on account of the moral and social consequences resulting from that policy to the benefit of that large portion of his fellow subjects whose interests, under the present limited position of the suffrage, were so imperfectly represented in that House.

LORD ROBERT MONTAGU

said, he was not going to imitate the hon. Member for Brighton, in killing a dead dog. The 5d. duty on tea had already received its death warrant, and he would not keep it stretched and racked on a bed of pain, but would let it die in peace and quiet. He must, however, advert to two points on which the Chancellor of the Exchequer had enlarged. The right hon. Gentleman had commenced his speech by pronouncing an apology or recantation for what he styled "the great and rapid augmentation" in the expenditure between the year 1859 and the year 1863; that is to say, during the time that Her Majesty's present Government had been in office. The Chancellor of the Exchequer had said, that the expenditure had increased by the enormous amount of £8,000,000. Nay more; as the necessary yearly expenditure had been diminished during that time to the amount of £2,000,000, by the falling-in of the long annuities, the expenditure had in reality been augmented by £10,000,000 during the time that Her Majesty's present Government had been in office. The right hon. Gentleman also stated that what he called the "voluntary expenditure," or that which "depended on the opinion of the country, and the vote of Parliament," had, in two years alone, been increased by the enormous amount of £10,500,000, or 25 per cent. This was not even the whole of the mischief which had been created, for the Chancellor of the Exchequer had admitted that "the taste for expenditure had been stimulated in the country by the greatness of the expenditure itself." Yet, on whom did the right hon. Gentleman lay the blame? Not on Her Majesty's Government, who had expended this money, and during whose lease of power this augmentation had been brought about; he repeated the unconstitutional doctrine of which he was so fond, that the blame was not to attach to the Government, but to the House of Commons, and to the people of England. And what were the grounds on which he based such an assertion? What was the only proof which he used? He said that the sense of the House had been taken last year, on the Motion of the hon. Member for Halifax; and that the House had then justified the course of expenditure by accepting the Amendment of the noble Viscount. Surely the right hon. Gentleman's memory had failed him; surely he had forgotten the facts of the case. On that occasion the noble Viscount rose, and distinctly stated that the issue should not be, whether the expenditure was or was not justifiable, but which of the two parties should be in power. The issue which he distinctly placed before the House was, whether the noble Viscount or the right hon. Member for Buckinghamshire had the greater number of supporters in the House; in other words, which party had been most active in bribing the borough constituencies. This House had, therefore, never expressed any judgment upon the augmentation in the expenditure of the country. The other topic on which the right hon. Gentleman had enlarged was what he had termed "commercial reform;" and he had pretended that he had, in his financial policy, been extending and continuing the policy which Sir Robert Peel had inaugurated in 1842. Yet he (Lord Robert Montagu) must object to such an assumption. The policy of Sir Robert Peel consisted in lessening the burdens on the raw materials of manufacturing in- dustry, and on the various necessaries of life. Yet what had the Chancellor of the Exchequer recently done? He had lessened the duties on claret and champagne. Were these necessaries of life, or were they luxuries? Wine, being an article of luxury, was a very fair subject for taxation, and for maintaining the revenue of the country. Thus, also, the tobacco duties had been decreased within the last month; yet who would deny that tobacco was merely an article of luxury? In fact, the spirit of the alteration of the customs tariff, in accordance with the French treaty, was to lessen the burdens on luxuries, to diminish the taxes which touched the rich, but to leave unaltered the burdens which pressed on the poor, and those which, by falling on raw materials, restricted the amount of production. For instance, the duties had been taken off French gloves; these were used by the rich. The poor always wore gloves which were manufactured in England—namely, dog-skin gloves. He had also removed the duty from French boots; yet the poor wore only the boots which were made in Northamptonshire and the north-western parts of Huntingdonshire. Other articles used only by the rich had also been relieved—namely, French wines and brandy, lace, ribbons, and silk, embroidery and gold brocade, jewels, walking-sticks, and so forth. Yet all this while he had never lessened the taxes which pressed on general consumption; for instance, the malt tax, which was eminently a tax on the raw produce of the country, and affected an article of very general consumption by the poor. The same principle had reappeared in the present Budget in the tax which was to weigh down the poor carriers throughout the country, and in the removal of the exemption of charities from the income tax.

MR. CRAWFORD

said, the statement of the right hon. Gentleman was so simple and precise in its terms that any Member might, without exposing himself to a charge of rashness, venture at once to make a few comments on the changes he had proposed in the financial arrangements of the country. Speaking on behalf of the great commercial community with which he was connected, he was prepared to express his perfect concurrence in the financial scheme which the right hon. Gentleman had propounded on behalf of the Government. In making the tea duties and the income tax the principal subjects for re- mission, he had undoubtedly taken a course which commended itself to the country at large. There were no two items of taxation which more generally affected that class of the community whose incomes were below £200 a year. He regretted, however, that he had not dealt with the question of sugar; but at the same time he thought he had done right in giving precedence to the tea duties. He trusted, however, that a reduction of the sugar duties at the earliest possible time would not be lost sight of by the Government. The right hon. Gentleman had referred to the effect of the remission in increasing the consumption of tea; but he did not form an estimate of the additional revenue which would be derived from that increased consumption. He was informed, by those well acquainted with the subject, that for every additional pound of tea consumed in consequence of the reduction of duty something like 3½ lb. or 4 lb. of sugar would be used. If therefore, during the ensuing year, there was an increase of 6,000,000 lb. in the consumption of tea, the increase in the duties on sugar at their present scale would amount to about £150,000, which would, pro tanto, augment the surplus which the Chancellor of the Exchequer would have to deal with at some future time. He was sure he spoke the sentiments of the great body of his constituents when he said that the abolition of the petty charges and the stamp on bills of lading would be most acceptable to the whole commercial community. He would only again express his approbation of the mode in which the Government had dealt with the surplus of the year.

MR. VANCE

regretted that his hon. and gallant Friend the Member for the Queen's County (Colonel Dunne) had been unable to bring before the House, on Tuesday evening, as he had proposed, the subject of the taxation of Ireland, inasmuch as the discussion which would have taken place with respect to it might have had the effect of inducing the Chancellor of the Exchequer to modify some of the proposals which he had made to the House that evening. He thought that spirits formed one of the best articles for taxation; and if they could by taxation diminish its use among the people, they would greatly promote their morality and prosperity. They ought to fix the duty at as high an amount as they could do without giving rise to the evil of illicit distillation; but he thought the Chancellor of the Exchequer had exceeded that amount. The House would be surprised to hear that in Ireland now the number of gallons of spirits brought to charge in the year was only about half what it was in 1852. In 1852, when the duty was 2s. 8d. a gallon, 8,200,000 gallons were brought to charge; but in 1862, when the duty was 10s., the number was only 4,600,000 gallons. The conclusion inevitably was, that there must be a large amount of illicit distillation in Ireland; and he was confident, that if a more moderate rate of duty than the present were imposed, the Exchequer would obtain a larger revenue from spirits, and illicit distillation would, to a great extent, be suppressed. The duty of 2s. 8d. might be too low, but he was certain that 10s. was too high. In the city he represented, no less than eleven illicit stills had been seized within the last year. The last time he saw Returns on the subject, they showed that illegal distillation was on the increase. There were formerly fifty large distilleries in Ireland, and now there were only eighteen, the difference being made up by illicit stills. Moreover, notwithstanding that there was an apparent diminution in the sale of spirits, there had been an increase in the number of commitments for drunkenness—a significant fact, pointing to the same conclusion. Of course, such a state of things was very demoralizing, and he hoped the Chancellor of the Exchequer would give his attention to the subject.

MR. SCULLY

said, the proposals of the Budget might afford matter of congratulation to Englishmen, or even to Chinamen, such as his hon. Friend the Member for Brighton (Mr. White); but he could not see that they would be of any advantage to Ireland. The Chancellor of the Exchequer had acknowledged that there was great distress in that country—although the Chief Secretary had been denying it ever since he came into office;—but he had not followed up that admission by offering any relief. He doubted whether the mercantile operations of Ireland were sufficiently extensive to derive much benefit from the remission of the petty charges; and as the Irish poor were not in the habit of indulging in libations of tea, they would profit but slightly from the reduction of the duty on that article. He had always held that the opulent classes in Ireland should be taxed as highly as those in England, and for that reason supported the introduction of the income tax, in spite of the objections of his constituents. At the same time, he thought something should be done for the poor. The right hon. Gentleman had omitted Ireland from his calculations as to the increased tax-paying powers of the empire. [The CHANCELLOR of the EXCHEQUER: No.] Then the right hon. Gentleman had not dealt fairly with the Committee, because they were not made to understand that the increase in the produce of the income tax was due to Ireland being brought within its scope. All that the Budget did for Ireland was to impose the income tax on charities which were previously exempt, which was certainly a very Irish mode of giving relief. There had been of late years a great diminution in the value of the wheat, oats, and potatoes of Ireland, and also of the live stock. There was a decrease under the last-named head, between 1859 and 1862, of £4,163,954. Notwithstanding this falling off, the taxation had remained the same, or rather had increased. In 1843, which was a very flourishing year, the taxation of Ireland was only £3,594,647, while in 1858 it had risen to £7,361,073, or very nearly double. He believed that the people of England were ready to do justice to the Irish people; but there was not a particle of sympathy on the part of the oppressive oligarchy of England with the Irish people. It was a delusion to imagine that Ireland was represented in that House. The state of the Irish people proved the contrary. Every poor man in Ireland, who could get out of the country, was ready to leave it to-morrow. He would not expose his countrymen to ridicule by calling them the finest peasantry in the world, but they were the finest race of helots ever placed under despotic rule. From 1846 to 1861, a period of fifteen years, no fewer than 2,208,970 persons had emigrated from Ireland; and from 1841 to 1861 the population of the country had diminished to the extent of 2,410,581. Such a thing could not have occurred in a well-governed country. The truth was that the grievances of Ireland received no attention in that House. He was afraid the time would come when England would regret having allowed so many of the Irish people to emigrate to America to swell the ranks of her enemies there. It was possible that at some future day the American Eagle might avenge the wrongs of Ireland, and then England would be sorry for her neglect and misrule. Why should not such Irishmen as were unable to find employment in their own country be assisted to emigrate, not to the United States, but to some British colony where they would add to the strength and security of the empire? Perhaps a little of the surplus which the Chancellor of the Exchequer anticipated might be made available for such a purpose. A good scheme of emigration, which would not cost the Government a single shilling, and the promotion of arterial drainage in Ireland, were two of the measures which ought to receive immediate attention. There were three ways by which the people of Ireland might be materially benefited by the Government, without entailing any loss upon England—namely, by aiding emigration, by promoting arterial drainage, and by other public works. It was said that would not be political economy, but it would be true political economy. The rents that were paid to the landlords were spent out of Ireland; the enormous taxes that were levied on the Irish people were taken out of the country; and he wanted to have some of those taxes applied to the benefit of the poor of Ireland. The reduction of the income tax would not benefit in the least the classes to whom he referred. Among his constituents there was not one in the hundred who paid income tax. The Irish people were indifferent to what was done in that House, and lightly indifferent. He did not believe if the whole 105 Irish Members were to leave the House to-morrow any of their constituents would trouble themselves about it. The Irish people knew that their representatives had no power in that House; and that if they were united tomorrow upon any point, they would be out-voted by men who knew nothing and cared nothing about Ireland. The opinion of all classes of Irishmen, except those who held place under Government, was that the country was unfairly treated, and the people were deeply discontented. He never knew the feeling of the Irish people against England to be more rancorous than it was at the present moment. Of course, the Government might keep down the people; but the opinions of some of the ablest Englishmen were strongly opposed to the way in which Ireland was treated by this country. Mr. J. Stuart Mill, in his Political Economy, said that the land of every country belonged to the people of the country; that landlords had no right in morality or justice to anything but rent or compensation for its use: that if Government would not make the country fit for the people to live in, it was judged and condemned, and that justice required that the actual cultivators of the soil should be enabled to become in Ireland what they became in America, proprietors of the soil which they cultivated. He had given some of the best years of his life to advocating a plan by which he believed the cultivators might be made proprietors, but it had not been taken up, Mr. Justice Byles, one of the soberest judges on the English bench, had, in his able work on Free Trade Fallacies, said of Ireland that, notwithstanding all its advantages, no words could describe its condition; no parallel existed or ever had existed; no province of the Roman Empire ever presented anything like it; no negroes in Africa, no slaves in Cuba or South America were worse off than the people of Ireland; and who were responsible? Mr. Justice Byles replied, the common sense of Europe said it, and America repeated it—those who governed Ireland were responsible; it was from the perverse legislation of England that the wretchedness of Ireland proceeded. Such were the opinions of enlightened Englishmen like, Mr. J. Stuart Mill and Mr. Justice Byles, and he hoped they would carry with them more weight than his words had done.

MR. F. S. POWELL (Cambridge)

said, the Chancellor of the Exchequer had referred to the patience with which the income tax was borne by some classes in tin's country; but as he had lately come from his constituents, he wished to state what their feelings with respect to it were. The Chancellor of the Exchequer's language had not done justice to the feelings which were entertained with respect to that tax by many classes in England; and persons who were in the enjoyment of small incomes, whether engaged in trade or members of the professions, would regard the income tax proposals of the Chancellor of the Exchequer as a great boon. The country would, he thought, regret the omission of the fire insurance duty from the list of reductions. He trusted that this tax on prudence would ere long he removed from our financial system. It was, moreover, a tax on legitimate operations of commerce, and acted as a restriction on trade. The tax on charities would be received in some parts of the country with some reserve. Was it to apply to the endowed and grammar schools of England? There were charity estates managed by trustees, in which, after defraying the expenses of management, a changing and not a fixed balance was handed over to the master as his salary. He trusted that in these cases the master would not have to pay the income tax twice over. He could not but believe that the Chancellor of the Exchequer's remarks on charities were conceived in a jocose spirit, that they were made for rhetorical purposes, and that they were not to be regarded as expressing the temper with which he had entered on the investigation of the question. He trusted the House would never do anything to check the flow of that liberality which had done so much for England.

COLONEL BARTTELOT

said, that the reductions in the income tax and on the tea duties would be a great boon to the whole community. There was, however, one great interest omitted by the Chancellor of the Exchequer in his Budget—the great agricultural interest. The right hon. Gentleman had adverted to the agriculturists of Ireland; but the same remark applied to both countries, and the last three harvests had yielded such a diminished income to the agriculturists that they ought to have received some relief at the right hon. Gentleman's hands. The malt tax pressed most heavily and injuriously on the agricultural interests. He believed, that if it were reduced, the revenue would not decrease, while it would enable the poorer classes to obtain their beer cheap and unadulterated. The farmer would also benefit, because he would be able to grow barley for feeding purposes on inferior soils. The malt tax had been condemned by high authorities, and he trusted that on some future occasion the present Chancellor of the Exchequer, or whoever might be his successor, would be in a position to reduce or repeal the malt tax; and the more so because the result of the war in America had been that the large imports of corn had sent down wheat to so low a price that it could not be grown for the price paid of late by the producer.

SIR FRANCIS CROSSLEY

expressed his satisfaction with the Budget. In reference to the remarks of the hon. Member for Cork (Mr. Scully), he begged to inform him that he could speak from practical experience, that under good management and kindly treatment the Irish were a most industrious people, and he would recommend his countrymen to give them more to do at home, in draining and improving their land, which would be the most profitable thing that they could do. It was quite true that the French Treaty removed duties from articles of luxury, but it must be borne in mind that those luxuries had to be paid for by the different manufactures of this country, which gave employment to the industrious classes, and thus effected a double good, first by cheapening the luxuries to the rich, and secondly by giving employment to the poor to pay for them. He did not know what they should have done in Yorkshire and other manufacturing districts if the French Treaty had not happened to come in just at the close of the American trade. He believed that both France and England would prosper from the continual interchange of commodities. He hoped that on a future occasion the sugar and fire insurance duties would come in for readjustment. He could not see why the manufacturer should have to pay a high duty for insuring his stock when the farmer was altogether exempted. He was opposed to similar exemptions in reference to assessed taxes. Why should he have to pay 16s. 6d. a year for every horse he employed at a factory, whilst he paid nothing for those employed on a farm? With regard to terminable annuities, he thought that they should be used more frequently as a means of reducing the National Debt. Half a million annually spent in such annuities would in a hundred years pay off £10,000,000 of the public debt per annum, and would continue the reduction at that rate so long as that system was adopted.

MR. P. A. TAYLOR

begged, as the representative of a manufacturing population, to express his satisfaction at the reduction of the tea duty; though he should have preferred that the right hon. Gentleman had reduced the sugar duties as well as the tea duties, and left the income tax as it stood. Great as might be the inequalities of the latter impost, indirect taxation was not less unequal. It pressed upon the working classes with the severity of a poll tax—the poor washerwoman for example, being made to pay as much towards the revenue on her cup of tea as the millionaire did for his. One of the worst features of the income tax was that it did not discriminate between incomes derived from business and those derived from land. It was all very well to say that the former ceased to contribute to the Exchequer when it ceased to be earned; but that was no answer to those who maintained that the precariousness of trade and professional incomes required that a distinction should be drawn between them and incomes obtained from such stable and permanent sources as land. The impost ought, if continued, to be readjusted so as to cease to be a burden upon the individual and instead become a burden on the property he possessed.

SIR HENRY WILLOUGHBY

regretted that the Chancellor of the Exchequer was not then in his place, as the main practical use of discussions like the present was to elicit explanations of the intentions of the Government on points which might have been left in doubt by the Budget speech. Their object then was not so much to enter into all the details of the right hon. Gentleman's scheme, as to ascertain whore they really would be that night week. He was glad to hear that the right hon. Gentleman had been able to satisfy himself that there was a bonâ fide surplus of £3,874,000. Assuming the existence of that surplus to be a fact, he would not quarrel with the way in which the Chancellor of the Exchequer proposed to dispose of it. He thought it was quite right to get rid of the petty charges on commerce which were a source of vexation rather than of revenue; and, as to the tea duty, part of that was a war tax, which the House was pledged to remit. He thought the Committee had not received sufficient information in reference to the expenditure as well as to the revenue for the year. He agreed most cordially with the right hon. Gentleman in wondering at the extraordinary increase which had taken place in the public expenditure; but if the Chancellor of the Exchequer extended his observations a little further back, he would find that increase even more remarkable—so remarkable, indeed, as to render it doubtful whether the House would sanction the present Estimates; but they had already voted away £67,000,000, and it was too late to talk of reduction for this year. Suppose, instead of selecting the last four years, the right hon. Gentleman had taken the last 20, dividing these into periods of five years each. From 1842 to 1847 there were levied from the country over £250,000,000, or at the rate of about £50,000,000 a year. In the next five years the average increased slightly, being about £51,000,000 yearly. Then came the period of the Crimean war, when the amount jumped up to £66,250,000 a year, £331,000,000 being levied from the nation in those five years alone. But it was the period ending in 1862 which should press most heavily upon the conscience of the House, for in those five years the expenditure even of the Crimean war had been exceeded—the aggregate amount levied being £349,000,000, or at the rate very nearly of £70,000,000. Although the reduction to £67,774,000 was something to be thankful for, it was evident that there was no justification in the present circumstances of the country for the continuance of a war expenditure. He desired to know how the Chancellor of the Exchequer got his surplus for this year—for that was the marrow of the whole question? He stated it to be £530,000;—he (Sir H. Willoughby) greatly doubted that there was any margin. The confusion of the accounts was so great that frequently they even deceived that most vigilant branch of the nation—the; public press. When such items as "Miscellaneous Revenue" were introduced, amounting last year to upwards of £2,250,000, it was impossible to say exactly of what the revenue for the year consisted. The most superficial observer must at once see that the question of surplus turned on the composition of this Miscellaneous Revenue, which did not arise under any of the ordinary heads of Customs, Excise, Revenue, Stamps, Crown Lands, or anything of that kind, but sprang from items like Chinese ransoms or the sale of old stores. The Committee were aware that large sums, amounting nearly to £1,000,000 were paid by the Indian Government for the purpose of maintaining Indian troops. Could these items be dealt with as revenue? Clearly not. There were also outstanding accounts between India and this country, of which the Committee on the Organization of the British Army gave a most deplorable account. A quarter of a million had been received from the Indian Government on part of these accounts, and there was at least an equal sum due by this country for charges incurred in China. Unless all these points could be satisfactorily explained, the surplus claimed by the right hon. Gentleman vanished into the air.

MR. POLLARD-URQUHART

said, the Chancellor of the Exchequer had not taken into account the natural increase arising from the Customs and Excise duties, from which, in times of ordinary prosperity, a margin of £800,000 might be looked for. In the coming year the consumption of tea and sugar would be stimulated by the alterations announced by the right hon. Gentleman. Under these circumstances he thought the right hon. Gentleman had rather under than overstated his case, and there need be no apprehension of the realization of a substantial surplus. The result of the finance of the last four years, as stated by the right hon. Gentleman, might well make him confident. His policy had been tried under adverse circumstances, and had not been found wanting. Some of his own countrymen had found fault with the Budget, because it did nothing for Ireland, but that was a mistake. Were Irish labourers not interested in the reduction of the duty on tea? And did it make no difference to those of them who were employed in the large ports of this country whether trade was brisk or not?

MR. LINDSAY

was satisfied with the Budget of the right hon. Gentleman upon the whole, but he was not satisfied with his statement in regard to the sugar duties. The merchants of the City of London would not, he was sure, be satisfied with it. The sugar duties were in a most unsatisfactory state at the present moment; and if no other Member raised the question, he would undertake to do so when the Budget came again under consideration on Thursday next.

(1.) 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 17th day of April 1863, be charged thereon on importation into Great Britain and Ireland: viz. Chicory, or any other vegetable matter applicable to the uses of Chicory or Coffee, raw or kiln-dried … the cwt. £1 6s. 6d.

(2.) Resolved, That, towards raising the Supply granted to Her Majesty, there shall be charged and paid for and upon all Chicory, or any other vegetable matter applicable to the uses of Chicory or Coffee, grown in the United Kingdom, for every hundredweight thereof, raw or kiln-dried, the Excise Duty of twenty-four shillings and three pence, and so in proportion for any greater or less quantity than a hundredweight. In lieu of the Excise Duty now chargeable on Chicory, or such vegetable matter as afore-said.

House resumed.

Resolutions to be reported To-morrow; Committee to sit again To-morrow.