WAYS AND MEANS—FINANCIAL STATEMENT.

HC Deb 27 April 1865 vol 178 cc1084-156

Order for Committee read.

WAYS AND MEANS considered in Committee.

(In the Committee.)

THE CHANCELLOR OF THE EXCHEQUER

Mr. Dodson—There is, Sir, upon the whole, a somewhat remarkable contrast between the opening and the closing incidents of the life of the present Parliament.

Almost at the moment when the Parliament first met, we had been involved, although we did not know it at the time, in complications which were to issue in a costly and difficult war with China. The harvest of the year which succeeded proved to be the worst that had been known for half a century; the recent experience of war had led to extensive, costly and somewhat uncertain re-constructions, and although the Italian war had terminated in the summer of 1859, yet for some time afterwards clouds hung over the continent of Europe, in such a manner and degree as to occasion vague but serious alarm in the public mind. Since that period, Sir, those clouds have moved westward across the Atlantic, and have burst in a tempest perhaps the wildest that ever devastated a civilized country; a tempest of war, distin- guished, indeed, on both sides by the exhibition of many most marvellous and extraordinary qualities, by valour, heroism, effort, and perseverance almost without example; of a war, I may add, which in all its tragic history has presented no scene so entirely painful as the last, that scene of murder, which at this moment causes one thrill of horror throughout Europe. But as far, Sir, as this nation is concerned, we have been mercifully spared. We have been exempt from shock and danger; we see the state of the public mind tranquil and re-assured, and the condition of the country generally prosperous and satisfactory. Moreover, the history—the financial history—of this Parliament has been a remarkable one. It has raised a larger revenue than I believe ever at any period of peace or even of war, after taking into account the changes in the value of money, was raised by taxation within an equal space of time. The expenditure of the same period has been upon a scale that has never before been reached in time of peace. The amount and variety of the changes introduced into our financial legislation have been greater than within a like number of years at any former period; and, lastly, it has enjoyed this distinction attained, I believe, by none of its predecessors within our memory—that although no Parliament ever completes the full term of its legal existence, yet, in finance, it bears the burden and wins the honour of the term of seven years, for this is the seventh annual occasion on which you have been called upon to make provision for the financial exigencies of the State.

I will now proceed, Sir, to state the figures of my case, as far as they relate to the year that has just expired. The expenditure of the year 1864–5 was estimated at the time of the Budget at £66,890,000; in the Appropriation Bill, which had not materially varied the particulars, it stood at £67,073,000; and the actual expenditure has been £66,462,000, or less than the Estimate by the sum of £611,000. The variations between the Votes and the actual results as they are represented in the Exchequer account down to March 31, are not of very great consequence so far as the army and navy are concerned, because the final accounts of the expenditure in these great Departments for the year are not yet, and will not be for a considerable time, made up. But the Miscellaneous Civil Expenditure, which was estimated at £7,638,000, has, I am glad to say, only reached £7,257,000; which may be taken as the final result for the year.

And, Sir, perhaps it may be of some interest to the Committee briefly to compare that Miscellaneous Expenditure with what it has been in former years. For the purpose of greater clearness, I add to it the other items which properly make up our Civil Expenditure—namely, first what are called the Consolidated Fund charges, which do not form the subject of annual Votes by this House; secondly, the Packet Service; and thirdly, an occasional payment made last year for the redemption of the Scheldt Toll, amounting to £174,000. The total Civil Expenditure of the country under these four heads which may be said to represent the real Civil Expenditure of the country was £10,203,000. In 1859–60—that is to say, in the first year of the present Parliament—it was £10,820,000. Therefore, it shows a reduction of £617,000. In 1858–9, however, it had been less; it then only amounted to £10,040,000, being apparently smaller, by the sum of £163,000, than in the year that has just expired. Since, however, the expenditure of the year which has just ended was augmented by the payment of the sum of £174,000 under no ordinary head of charge, but for the special purpose of redeeming the Scheldt Toll by a capital payment, the total for 1864–5, on a fair comparison of the accounts should, perhaps, be taken at £10,027,000, or about the sum at which it stood in the last year of the preceding Parliament. So that this House of Commons is in a condition to state, at the close of the term of its existence, that the ordinary Civil Expenditure of the country, as a whole, has ceased to exhibit an increase.

If we turn our attention to the total expenditure of the country, and compare it with the expenditure of former years, in order to make the comparison a fair one it is necessary to make several changes in the figures as they appear in the annual and familiarly known accounts of the Exchequer. It is necessary, first, to add the special charge incurred under special Acts of Parliament for the erection of fortifications; it is necessary, next, to deduct all those heads of charge which, in a comparison with former years, do not appear in the first of the years that we bring together, but which do appear in the last; that is to say, the charges which swell the total alike on both sides, but which neutralize one another. All these it is requisite to withdraw in order to make a just comparison. It is necessary, also, I think, with a view to judge fairly of what we have been about, that we should bear in mind the great relief which we obtained in 1860 by the lapse of the Long and other Annuities, amounting to no less a sum than £2,149,000. Further, if we are to take what I may term the true expenditure of the country, we must likewise, besides the other changes which I have named, restore the sums commonly known as excesses, which are brought to account in years later than those to which they belong, to the accounts of their own proper years. When thus rectified, the expenditure of the last year—1864–5—will be found to be, without fortifications, £66,462,000, and with them £67,082,000; but after deduction of the heads which now appear on both sides of the account, and which at a former period appeared on neither—charges which amount to not less than £1,125,000—the corrected or adjusted total will amount to £65,957,000. The expenditure of the first year of the Parliament—namely, 1859–60, amounts, when rectified in the same manner, to £67,471,000:—so that there has been a reduction since the year 1859–60, without charging 1859–60 with the sums paid on account of the Annuities then about to expire, of in round numbers one million and a half, or more precisely of £1,514,000. If we turn to the year 1860–1, which was the year of our highest expenditure, we show undoubtedly a very large decrease—a decrease amounting to £6,547,000. If, however, we look to the year 1858–9, the year before the extensive operations connected with the military and naval departments commenced, then we arrive at a different result; and instead of showing a reduction such as that I have named, or indeed any reduction at all, we find an increase of expenditure, amounting to nearly three millions and a half, or, in exact figures, £3,442,000. And if we recede one stage further—that is to say, to the very different scale of expenditure which prevailed before the Russian War—we then find, on comparing the expenditure of that period with that of the year which has just elapsed, that the total increase that has taken place in the annual charges of the country amounts to £12,459,000, or very nearly twelve and a half millions. In this statement, however, I relieve the year 1853 (as I had relieved the subsequent years), of the sum of £2,149,000 which it actually paid on account of the Long Annuities since expired. If that sum is taken into our account as part of the charge of 1853, then it stands at £55,647,000, and the increase at £10,310,000. But the former and less favourable is also, though not exactly just, the more nearly just mode of statement. If we wish to come more nearly to the mark, we may safely state that the real increase of the public expenditure as between 1853 and 1864–5, at ten millions. Such then, Sir, is the state of the expenditure as compared with what it has been in former years, both in the Civil branch alone, and likewise when it is regarded as a whole; and I venture to say, speaking in a country of popular institutions, that although the expenditure of the period has been a large one, and though variety of opinion may prevail respecting its character, one thing at least appears to me undeniable. I do not believe that there has been any period of our history when the expenditure, whether small or great, has been more entirely in consonance with the general views, wishes, and feelings of the nation at large.

Sir, I come now to close the account for the year by comparing its expenditure with its Revenue; a very simple and very satisfactory operation. The expenditure, according to the Exchequer account, made up to March 31, 1865, was £66,462,000, and the Revenue for the year ending on the same day was £70,313,000, showing a surplus of Revenue over expenditure, according to the usual and established method of statement, of £3,851,000. If, however, we take into view—as we ought, perhaps, to take into view, and as the sheet I have laid on the table does take into the account—the expenditure on fortifications, provided for in a special and separate manner by Parliamentary annuities, we must then add the sum of £620,000 to the expenditure, which would raise the amount to £67,082,000; and after deducting that larger sum from the Revenue as I stated it, the surplus of Revenue over charge upon the least favourable showing still amounts to £3,231,000.

Now, Sir, passing onwards to another branch of the subject, and comparing the Revenue with the Estimates of the year, the result is also satisfactory. The Revenue, as estimated on the 7th of April, 1864, was £67,128,000. The actual Revenue has been not less than £70,313,000, showing a surplus beyond the Estimate of £3,185,000. And that surplus extends, I may venture to say, to every material head of the Revenue. It extends even to the Miscellaneous Receipts; but the difference on that head has little to do with the actual condition of the country. It runs all through the really important heads of Customs, Excise, Stamps, Taxes, Income Tax, and Post Office. The most re markable of these augmentations of Revenue, as compared with the Estimate, are those which have taken place in the department of Customs, and in the branch of the Excise. The augmentation in the case of the Customs is no less than £752,000 over the Estimate. But in the case of the Excise the excess has reached the large amount of £1,538,000. In the instance of the Customs there has been a very general increase on the several articles of the tariff; and the only important instance of decrease has been one upon which I, for one, always look upon with great satisfaction—I mean the duty received on the import of foreign corn. The decrease of the Revenue from foreign corn, which is the test of the goodness and abundance of the home supply—the decrease on the year just expired, as compared with the preceding year, is no less than £184,000. The wine duty has increased by £75,000; and the experience we have now had of the working of the new system of wine duties would appear sufficient to prove that there is a tendency to a pretty steady increase from year to year. But the most important item, and the one in which the greatest interest will be felt, is the article of sugar, on which Parliament operated by the legislation of last year. The legislation of last year was calculated to give the consumers of sugar a relief to the extent of £1,719,000. That relief, partially compensated by the recovery, it was calculated would entail upon the Exchequer for the year a loss of £1,330,000. But the circumstances have been favourable. The prices of sugar in bond have fallen in combination with the operation of the reduced duty, and hence it has come about that the actual loss to the Exchequer has only been £926,000; a result showing a recovery of no less than £404,000 beyond the recovery on which I had calculated in the Estimate of last year.

If next we look to the remarkable case of the Excise, the Committee will, doubtless, have been struck with the large excess of receipts over the Estimate. That excess is more than £1,500,000 beyond the estimated sum. Now it is well that the Committee should always bear in mind that a new element of uncertainty has recently been introduced into the Estimates of Revenue from the Excise, as a result of the change which, for a very important purpose, has been made—I mean the shortening of the malt credits, and the collection of the duty on malt within a less period after the charge has been incurred than at former times. Before this change was made, nearly the whole revenue from the malting of each year came to credit in the year following; and thus when the estimate was made the charge had in the main been already fixed. But the alteration has had the effect of including within the receipt of the current year a large portion of the Revenue accruing from the malting of the year, and therefore of subjecting the Estimate of the Revenue to a portion of the uncertainty attendant on the goodness or badness of the harvest, and the fitness of the barley for the production of malt. The excess of a million and a half under the head of Excise, to which I have just referred, may be accounted for under three heads. First, the general prosperity has led to a general increase of the items included under the head of Excise; but the two important items, in which the mass of the increase has occurred, are malt and spirits; I mean, of course, spirits of home manufacture. Malt was estimated to produce £5,800,000; it has yielded £6,377,000, or an excess of £577,000 beyond the Estimate. British spirits were estimated at £9,650,000; they have yielded £10,173,000, a sum showing an increase beyond the Estimate of £523,000. While such is the increase of the receipt from the spirit duty over the Estimate, the augmentation over the receipt of the preceding year is £432,000, under the head of British spirits, and £309,000 under the head of spirits imported from abroad; making together a total increase in the receipts under the heads of Excise and Customs jointly from the article of spirits, of £741,000 within the year 1864–5, as compared with the preceding year.

Now, looking to the comparison between the Revenue of the year and that of the preceding year, I must state that we had estimated for a diminution by the sum of £3,080,000. But in lieu of that loss we have a small gain, which, according as it is stated, may be put at either £105,000 or £147,000 in favour of 1864–5 as compared with last year. It is;£105,000 as it appears in the Exchequer accounts; it is £147,000, if we deduct the two last heads of miscellaneous and occasional receipts, which it may, on the whole, be best to exclude from a comparison of years, as the items are, to a great extent, casual in their nature. This increase is not, when viewed by itself, very material or significant; but it is both material and significant when we recollect that it is contemporaneous with a large reduction of the taxes by which the Revenue is supplied. And this leads me to a topic which is, in my judgment, of very great interest, which I am desirous to bring under the notice of the Committee, inasmuch as it has a wide and important bearing on the question of national power and resource; I mean the gradual growth which has taken place at recent but various periods in the Revenue of the country. It is, I admit, a matter which cannot be stated with mathematical precision, inasmuch as the statements that are made in the Tables of the Board of Trade with regard to the gain from new taxes, and the loss from the repeal of old ones, partake in a certain degree of the nature of an Estimate, rather than of the nature of an account. Still, I do not think, in comparing one period with another, that if due pains are taken there is any great cause to apprehend serious mistake; and, for the information of the Committee, I have endeavoured to estimate, in a manner which cannot involve substantial error, the annual rate of the growth of the Revenue of the country at three periods. I begin with the year 1840 and I come down to 1852, the year immediately preceding the difficulties with Russia, and the outbreak of the Russian war, which occurred before the next financial year was closed. Now, the mode I adopt is as follows:—I take the Revenue of the first year of each period, compare it with the Revenue of the last, and find the difference between them; then I take the amount of taxes repealed and the taxes imposed, and find the difference between these two; adding the balance of taxes repealed to the actual improvement in the Revenue, I find the true measure of the virtual or real improvement of the Revenue. For, supposing the sources to have continued the same, this, and none other than this, is the true fiscal measure of the progress of the productive power of the country.

Between the years 1840 and 1852 there were imposed taxes to the amount of £6,285,793, and there were taxes reduced and repealed to the amount of £ 13,597,85 8. The balance of taxes reduced over taxes imposed was accordingly £7,312,065. During the same period of twelve years the Revenue, after deducting the item of Miscellaneous Receipt in each case, showed an improvement of £5,051,026. Adding these two items together, we obtain the sum of £12,363,091, and it thus appears that during that period—from 1840 to 1852—the Revenue of the country, presuming the sources to have remained the same, really grew at the rate more or less of £1,030,000 a year.

I next proceed to the period which includes the Russian war, and I stop before that considerable increase of our expenditure which took place in 1859. It is the period from 1853 to 1859. I will not trouble the Committee with all the details; but I must state that in this case, owing to a change in the method of account, I am obliged to include the fraction of a year. The period is one of six years and a quarter, but for this fraction due allowance is made in the reckoning, so that the result is not disturbed. I must add that some of the estimates of taxes imposed or removed are, in the case of this second period, less definite and more doubtful. With these explanations I proceed. The balance of taxes repealed in that period over taxes imposed is very small—only about £1,000,000. The improvement in the Revenue was between £6,000,000 and £7,000,000. As nearly as the calculation can be made, that sum would mark for the period from 1853 to 1859, an average annual growth in the income of the country from the same sources of £1,240,000; instead of £1,030,000, which was the amount we found for the first period.

And now I arrive at the third and last period—from 1859 to 1865—the time at which I have the honour of addressing the Committee, and a period during which very large changes have taken place. The taxes imposed have been £7,383,000. The taxes removed have been £13,520,000, so that the balance of taxes repealed over taxes imposed in that period amounts to £6,137,000; to this amount we must add £1,100,000 of taxation repealed in 1858, but of which the effect was postponed to the year 1859–60, and we must, on the other hand, deduct from it certain taxes, which were repealed in 1864, hut the repeal of which will only take effect in 1865–6. We thus find the real and true balance of taxes repealed over taxes imposed may be taken, with sufficient accuracy for the present purpose, at £6,713,000. During the same time, the increase of the Revenue has been £3,968,000; we thus obtain a total of £10,681,000, and, dividing this sum among the six years, we arrive at the remarkable result that the rate of annual growth in the income of the country from the same sources, which had been for the first period £1,030,000, and for the second period £1,240,000, was for the third period £1,780,000.

Now, Sir, having represented a state of things which is evidently satisfactory, as bearing testimony to the increasing power and vigour of the country, I must, of course, remind the Committee that this annual growth is not a growth which can at any time be safely relied upon prospectively for a single year; because, at any time, not only calamities of a rarer kind, but the ordinary calamity of a bad harvest, might either greatly reduce the improvement for the season, or even cause it to disappear altogether.

I have next, Sir, to state briefly to the Committee the condition of the Public Balances. On the 31st of March, 1864, they amounted to £7,352,000, and on the same day in 1865 they were £7,690,000, showing an increase of £338,000. The account for advances and repayments in respect to Public Works, which has usually contributed to feed the balances, has during the present year, from causes which will soon cease to operate, and especially from the effect of the Lancashire Loan—acted as a drain upon them. The advances made were £2,069,000, and the repayments £1,706,000, showing an excess of advances over repayments amounting to £303,000.

I will next glance at our operations with respect to the Public Debt. The amount of debt paid off in the year has been as follows: of Exchequer Bonds, £300,000; of Exchequer Bills, £2,100,000; and of Stock purchased with surplus Revenue, £939,000; making a total of £3,338,000. During the year we have also liquidated debt to a further extent of £2,006,000, either by the acquisition of stock in other modes, or through the medium of Terminable Annuities. We thus arrive at a total of £5,340,000. On the other hand, we ought to make a deduction of the amount raised for fortifications, which has been £726,000; so that we have only effected a real reduction of debt to the extent of £4,614,000. I will now attempt to state to the Committee what is the real condition of our debt as a whole. And here I have to take, in a certain degree, blame to myself—although I share it with those who have gone before me—for never having on previous occasions stated, with the same approach to precision as I shall now do it, the absolute amount of the Public Debt. We are obliged, in fact, to the Statistical Department of the Board of Trade for having recently adopted a very simple but effectual method of showing the full amount of the National Debt. Our ordinary practice had been, in estimating the capital charge, to look to the Funded and the Unfunded Debt alone, and to make no allowance for the very heavy capital sums which we have been liable to pay prospectively in the form of Terminable Annuities. These annuities, I need hardly remind the Committee, represent partly a payment of interest on capital, partly a re-payment, from year to year, of portions of the capital itself. In the statement of the Debt now presented by the Board of Trade from year to year in the "Statistical Tables," there is included a valuation of the full capital amount of such Terminable Annuities as we still have to pay. I have before me that full account brought down to the 31st of March. Of course, the effect of this more full elucidation of the case is, as commonly happens, that our Debt is somewhat larger in amount than we have commonly believed it to be; in order to make a just comparison of the total Debt of the country, as it now stands with any former year, we must take care not only to reckon the particulars of the Funded and Unfunded Debt, but also the capital value of the Terminable Annuities, as it stood at each period respectively. This must be carefully borne in mind before comparing the statement of the Debt, as I shall now give it, with any current statement of it taken from the accounts for any of the years before the capital value of the Terminable Annuities was included in the computation. With this explanation, by way of caution, I may state that on March 31, 1859, our total Debt was £823,934,000, and on March 31, 1865, it was £808,288,000, showing that since March 31, 1859, there has been a diminution of debt to the extent of £17,646,000, or nearly, upon an average, £3,000,000 a year. The estimated capital of Terminable Annuities was in March, 1859, £18,856,000, and in March, 1865, that amount had risen to £21,778,000; so that, if I had adopted the old method of statement, I should have placed the capital of the Debt for 1859 at £805,078,000, and for 1865 at £786,510,000. But, after debiting the account of 1865 with the augmentation in the capital value of the Terminable Annuities, and giving credit for the reduction of the Funded Debt, which is considerable—some £11,000,000—and for the reduction of the Unfunded Debt—about £7,500,000—the result is that the total reduction is not very far short of £18,000,000. This, Sir, is a sum which may sound, and does sound, well; but, at the same time, I cannot say that it is a very brilliant result of our labours to find that £3,000,000 a year are taken from the total of our Debt, considering the enormous amount of that Debt, and the difficulties in which we might possibly be involved from the burden of it if we were ever again to be engaged in a struggle for existence. Nor am I able to boast that, as a legislative and deliberative body, we have as yet risen to a sense of the full extent of our obligations with respect to the reduction of the public Debt.

Now, Sir, when I turn from the Revenue of the last year to the movement of our trade, there is but one among the particular branches of trade upon which I need trouble the Committee with any remarks; and they will be very short. It is a trade in which this House has felt a peculiar, a natural, and a continuing interest. I will, therefore, just refer to the condition of the paper trade. I am very far from denying, on the contrary, I know and I greatly deplore it, that the period of transition, following on the repeal of the duties on paper has been for many members of that trade a period of very great severity. Of that I make no doubt whatever. At the same time it is no more than the truth to say that the paper trade, as a whole, not only has not left the country, according to prediction, but it shows no intention whatever of leaving the country; on the contrary, it evidently means to strike its roots deeper and deeper here, for it calls continually from year to year for the importation of materials in larger quantity from abroad, while, at the same time, the consumers of paper in this country are supplied with that valuable commodity more largely and more cheaply than at any former period. The importations of paper and paperhangings from abroad have risen from the insignificant amount at which they stood six years ago to no less than £477,000 in value for the year 1864; while, at the same time, the importation of materials for paper-making in this country rose from 13,700 tons in 1859 to 20,400 tons in 1862, the year after the repeal, to 44,000 tons in 1863, and to 67,000 tons in 1864.

The Committee will not fail to observe that this progressive augmentation cannot be accounted for by the disappearance of cotton-waste, because for the last year or two, at any rate, the supply of cotton-waste has been tending rather to increase. It was in 1861 and 1862 that the supply of cotton-waste was at the lowest; but, while the supply of that material from our manufactures has been somewhat reviving, here is a continually extending increase in the importation of other paper-making materials from abroad. [An hon. MEMBER: Rags!] Rags are included in my statement; but I do not distinguish between rags and other materials for paper-making, of which there are a great variety. No doubt rags only form a small portion of the whole; raw vegetable products represent by far the largest part of the imports. But, surely, the fact I have stated is a remarkable fact. And, further, such has been the advantage of the stimulus given to the search for new materials with a view to the manufacture of paper that some owners of cotton-waste now complain that they can only obtain half the price for that material which they used to obtain. That is represented to me as the actual state of the case. It is not worth the paper-maker's while, so much is his command of material augmented—I do not speak of any individual paper-maker but of paper-makers as a class—it is not worth his while, according to accounts which have reached me, to give the owner of cotton-waste the price that it was formerly worth his while to give, because he has found that he can obtain cheaper materials from other sources. Mr. Whitehead, a gentleman who writes from Belmont, near Rowtenstall, and who states that he himself produces a large quantity of cotton-waste, has informed me by letter that in 1860, when middling Orleans cotton coat him 5½d. per 1b., he could get 22s. per pack for his sweepings; but now, when he has to pay so much more for his cotton, he cannot get more than 9s. a pack for the waste. I assume that the quality is the same. And the figures appear to show that the British paper-maker has an increased command of raw materials.

As regards the exports of paper and paper goods from this country, they have risen from 136,000 cwts in 1859 to l42,000 cwts in 1864; and, finally, the number of paper-makers, which had progressively sank from 505 in 1838 to 365 in 1859, has ceased to show any sensible decline from that time onwards: in the year 1864 it was 364.

I will now, Sir, proceed to notice our trade with France, which has happily become a subject of special interest to this country; and there I find as regards the aggregate trade a continuous increase. This trade varies, however, in its form; and although the export of British produce has slightly diminished from what it was two or three years back, yet the total increase of trade with France has been steadily on the increase in point of imports as well as exports. In 1859 the total amount of our trade with France was £26,431,000, and in 1864 it was £49,797,000; showing an increase of £23,366,000, or nearly 90 per cent. And there has not been a single year in that period in which, if we take our exports of all kinds together, our exports to France have not shown an increase over the preceding year. In 1859 we exported to France of British, foreign, and colonial produce, £9,561,000; in 1864 this total had risen to £24,157,000.

After thus adverting to the condition of our trade with that country, I would desire to occupy a moment in removing a common misapprehension with regard to the comparative amount of the public expenditure in France and England respectively. It is believed—and it has been used by some of us as a consolation under the burden of our great expenditure—it is believed that the public expenditure of France is much higher than the public expenditure of this country. That belief is erroneous. It has been encouraged, probably, by the mode in which the accounts are rendered, and by the system under which local charges in France are passed through the medium of the Imperial Treasury. I have no account later than that for the year 1862. It is well known, that although the French accounts are esteemed to be perfect models of scientific precision and clearness, yet they do not appear—I mean that the final accounts do not appear—until considerably in arrear of the period to which they refer. But for the purpose I have in view it will do just as well to take this account; and the result is of great interest. In 1862 the apparent expenditure of France was £88,493,000; but of that expenditure a large proportion was for purposes of a local character, and for other purposes which do not at all appear in the Imperial expenditure of this country. The expenditure of France in that year, after withdrawing those items which do not enter into the comparison with that of this country, was £60,815,000; and the expenditure of this country in the year 1862–3—the nearest period I can take—was £70,352,000. These figures would show an excess on our part of about £9,500,000 over the expenditure of France. The account, I think, now stands somewhat better. We have made a sensible progress since that period in reducing our charges, but I am not quite sure that our neighbours and friends across the channel have as yet been so fortunate, although we are informed, and I hope correctly informed, that they have at length a prospect of moving in that direction.

As regards the whole trade of this country, I stated last year the immense amount which it had reached. I think the total then exhibited was not less than £445,000,000. It has, however, undergone a large further increase in the year recently passed. The accounts of the year ending the 31st of December, 1864—for we do not take notice of the financial year as regards the accounts of trade—those accounts show that our imports amounted to £274,000,000, and our exports to £213,000,000. Thus the two together give a total of £487,000,000; or an increase of more than £219,000,000 since the comparatively recent period of 1854, when the total was £268,210,000.

And here, Sir, I come to a question of very great interest which may well deserve and repay a few moments of our attention. There is, again, an erroneous apprehension that while the increase of the trade of this country of late years has been undoubtedly a remarkable in- crease, yet that it has been less, and less remarkable, than the simultaneous increase which has taken place in the trade of foreign countries.

Now this is a matter which is by no means exclusively historical or speculative. It touches not only the reputation of the Parliaments of England, which for the last twenty-five years have attached so much consequence to the removal of shackles from industry and commerce, but it likewise appears to bear materially upon the wisdom or necessity of continuing that policy for the future. Now, it is quite true that the trade of France exhibits a larger relative increase of late years than ours has done; but I will venture to say it would have been strange indeed if this had not been the case. And why? The trade of France languished, after the close of the great war, for a lengthened period. Her productive power had, I apprehend, undergone a great diminution. During that war, and especially during its last years, there had been an enormous loss of life, and this loss of life fell upon the male population of the age when the career of productive labour is commencing. Thus, although the difference in the aggregate numbers of the nation may not have been remarkable, yet the productive power of France had really undergone a crushing and wasting depopulation, which it required the lapse of a full generation completely to repair. It was not surprising, then, that for thirty or forty years that great country should have remained under a considerable though a progressively diminishing degree of unnatural depression as regarded its trade. Nor could it be wonderful, accordingly, that the trade of France should, after that depressing influence had ceased to operate, show a greater relative increase than that of England, a country which has never lost the energy and vigour of her manufacturing and commercial operations, and which happily has not been subjected to such sweeping-losses of her best blood through the desolating influence of war. In illustration of what I have said I am only able to compare the exports of the two countries; but they are quite sufficient and effectual for the purpose. The total exports of France in 1854 were £78,000,000, and in 1863 they were £141,000,000; showing an increase of 81 per cent. The total exports of the United Kingdom in 1854 were £116,000,000, and in 1863 £197,000,000; thus they show an increase of little more than 70 per cent. That is not a very unfavourable comparison; but still I grant that if that fact stood alone it would authorize you to say that a country, which had done little in the way of relaxing its commercial laws, had achieved relatively more than a country which had done much, and had made great progress on the road of commercial freedom. But when we look at the absolute condition of trade what do we find? We find that while France added in these years £63,000,000 to the total previous amount of her exports, England, with a smaller population, added no less than £81,000,000 to her previously vast aggregate; so that the absolute increment of trade was greater by nearly 30 per cent in England than it was in France.

But if we seek to have a fair comparison of progress, we should not select for the purpose a country like France, which has been placed under circumstances so abnormal in consequence of the ruin and ravages of war; let us take two neighbouring countries with free institutions, countries which have not undergone the same amount of suffering, which have been in a more nearly normal condition, and which have been nearly exempt both from war and also from revolution. Unfortunately it is difficult to find countries on the Continent which have been free from war and revolution; but let us take, as perhaps the best for our purpose, Belgium and Holland, neither of which have suffered under the one head or the other in a degree comparable to France. And it is material to remember that both have enjoyed largely the advantages of railways. Indeed, there is perhaps no country of Europe which has benefited more fully than Belgium, from the application of the railway system.

Now the increase in the exports of England, as I have shown, from 1854 to 1863, has been about 71 per cent; but the exports of Belgium, perhaps the most flourishing of all the countries of the Continent, only grew in the same period from £28,000,000 to £40,000,000, or 43 per cent; and the exports of Holland only grew from £24,000,000 to £30,000,000, not 71, but 25 per cent. These results appear to me to be remarkable; and I doubt whether they are commonly understood.

There again, Sir, is another country, which more than Belgium, more than almost any of the countries of Europe, exhibits the mischievous results of commercial restriction. It is Austria. With regard to Austria it is difficult to make a fair comparison. It is really lamentable to find that in a country of that vast extent and of that immense capability, the exports amounted to no more than £11,000,000 in 1844. In 1858 they had only risen to £22,000,000. Between the same years, the British exports had risen from £58,000,000 to £116,000,000. The relative increase of 100 per cent was, therefore, the same. But while the absolute increase was in Austria £11,000,000, in the United Kingdom, with a much smaller population, it was more than five times as much; it was £58,000,000. Let us hope that my right hon. Friend (Mr. Hutt), who is now in Vienna, engaged in the good work of communicating to Austria the results of our experience, may succeed in persuading the Imperial Government, not that it is a matter of vital, or even of sensible, importance to England that they should alter their tariff, but that it is of vital importance to themselves to follow our example; and that if they will act in that spirit, with a view to their own interests, we shall be perfectly satisfied with that share of benefit which must necessarily redound to us, for a process of this kind always blesses both him that gives and him that takes; but him that gives, as we have found by a happy experience, even more, and much more, than him that takes the gift.

Upon the whole, I come to this conclusion—that we have indeed derived enormous—almost boundless—advantages, from the inventive spirit which has distinguished the mechanism of the present age, and from the application of new principles of locomotion. I believe that the railway companies at present receive from the public for the services they have performed above £30,000,000 sterling per annum; and I think it would be a moderate estimate to say that a further sum of £30,000,000 per annum may perhaps not unfairly represent the addition to the wealth of the country, which has been gained by the introduction of the railway system, even after making every just allowance requisite for the capital invested in other modes of locomotion which have been either wholly or partially paralyzed by the introduction of railways. But after all that has been said on the subjects of machinery and locomo- tion, all these figures go to place it beyond doubt that immense advantages have also resulted from the apparently simple but in practice sufficiently difficult business of removing the bars, fetters, and obstructions, devised by the perversity of man himself, from the processes of human industry, and of trusting to the simple expedient of freedom for the development of the productive power of a country. And, Sir, it is no small honour to the kingdoms of the Queen that, as in regard to locomotion, so in regard to the freedom of trade and industry, it has been given to them to lead the vanguard and bear the banner of civilization. In the words of one of our own poets—used to describe the establishment of justice and order after barbarous anarchy, and not less justly applicable to the changes we have now in view with all their long train of consequences, it may be given to our acts— To serve as model for the mighty world, And be the fair beginning of a time. To be the beginning of a time, richly fraught not only with economical advantages—not only with results which can be exhibited in statistical tables—but fraught more richly still with results which promote and confirm the union of class with class among ourselves, and even, as we may hope, of nation with nation throughout the wide surface of the earth.

And, Sir, in closing such a survey as this, I hope I shall not trespass too much upon the patience of the Committee if I avow that I cannot here forget or overlook the man who bore a larger share than it was given to any other man to bear, in securing those great benefits for his country and for the world. Well and justly has testimony been borne to him in these walls by higher authority than mine, and it may be nothing less than impertinent in me, if I presume to make any addition to the acknowledgments already better paid. Nevertheless, closely associated as I was with Mr. Cobden in all the transactions connected with the conclusion of the Commercial Treaty with France, I cannot forbear from rendering such a tribute as may be within my power, both to his acts, and to a character worthy of, and perhaps greater than, the acts themselves. The praises which have been bestowed upon him here, and the sorrow which has been felt for him by his countrymen, have not been confined to us; they have been shared by the civilized world. Those praises have been re- echoed with earnestness equal to our own in every foreign land, and there is no civilized country which has not thought it a privilege to share with us in the honours we have paid him. Mr. Cobden, Sir, requires no eulogies from me. His memory is part of the inheritance of his countrymen; and, for myself, I am convinced that, along with the recollection of his distinguished services, there will always abide among us an accompanying and scarcely less marked remembrance of his character, so true, so manful, so courageous, so simple, so unselfish, so devoted, so genial; a character of which it may be said with truth that it has added as much lustre to his greatest actions, as it has received lustre from them.

Sir, I come now to state the Estimate of the Expenditure and Revenue for the service of the financial year which has just commenced.

The charge of the Funded and Unfunded Debt for 1865–6 is put at £26,350,000; the charges on the Consolidated Fund are taken at £1,900,000; the Votes for the Army, £14,348,000; for the Navy, £10,392,000; the Collection of the Revenue, £4,657,000; the Packet Service, £842,000; and the Miscellaneous Civil Services are estimated to amount to £7,650,000. This last amount is not yet precisely fixed; but it cannot vary, in any material degree, either one way or the other, and at any rate I have no reason to doubt this sum will suffice for the total amount of the expenditure which we shall ask the House to sanction. The figures I have just stated give a total charge of £66,139.000; which is a sum less by £1,110,000 than the Estimates voted in the year 1864–5.

I will next take the Revenue for the coming year. The Revenue from Customs I venture to put at £22,775,000; the pro duct of the Excise at £19,030,000; and I may add that in this Estimate of Excise allowance is made for a considerable deduction from the receipts we have had during the past year from the article of malt. The Stamps I put at £9,550,000; the Taxes, £3,350,000; the Income Tax, £7,800,000; the Post Office, £4,250,000; the Crown Lands, £315,000; the head of Miscellaneous Receipt, £2,650,000; and lastly the China Indemnity is taken at £450,000. In the Miscellaneous Receipts which come to our credit this year are included several sums which are mentioned in the first page of the Army Estimates, and for which credit is there taken as forming virtually a reduction of Army charge. Formally they are not a reduction of Army charge, because the money will be voted and repaid; but virtually and really they may deserve that description, because they will come back to the credit side of the account as well as enter into the debit side, and they represent a part of the effective relief which, as we calculate, will be given to the people in respect of Army Expenditure. They are chiefly connected with repayments from India and the Colonies.

The total estimated income of the year is £70,170,000, while the total estimated charge is £66,139,000; and I need scarcely observe that these figures show a probable surplus of re venue over expenditure amounting to £4,031,000, or say in round numbers £4,000,000.

I come now to the rather difficult question of the disposal of the surplus. And I will first call the attention of the Committee to several minor changes, affecting the conduct of business and of some value and importance to those who will be benefited or affected by them, but which it will hardly be necessary for me to take into account, as they will make no material change in the balance of Income and Expenditure, partly because their pecuniary effect will be small, partly because they may in some degree balance each other. It is proposed, with regard to the transfers of shares and conveyances, to make an increase in the steps of the duty payable on those transfers for the convenience of parties, so as to enable them more precisely to adjust the amount of their transactions to the sum they have to pay, instead of driving them occasionally to make two conveyances in lieu of one, for the sake of effecting a small saving. It is proposed that an anomaly which now exists with respect to the stamp duty on scrip certificates and receipt bonds shall be removed, as it is found to lead to inconvenience. At present the duty does not apply where the loan of the company, though made in England, is foreign, but it does apply to all domestic transactions. As I am opposed to protecting the Englishman against the foreigner, I am at least equally opposed, where we have a choice, to any arrangement of law which can have the effect of protecting the foreigner against the Englishman. It appears to me that in all cases where the transaction has reference to a person living in this country, the stamp duty ought to be the same in one case as in the other. If, then, a loan be raised for foreign purposes in this country the operation will, in future, be subject to the same charge as if it were wholly domestic. Again, Sir, an application has been made to the Government, which I think is a proper one—to the effect that the stamp on the letting of small tenements for periods less than a year should be reduced. Though small in amount, yet in certain cases it is now felt to be very burdensome. The stamp, so far as the sum paid conveys an idea of it, does not present this appearance—for it only amounts to 6d.; but when we come to consider that in many places houses are let for a week, a fortnight, or a month, at such low rents as 2s. 6d., 3s., and 3s. 6d. a week, it may form a sensible or even a heavy tax, and it appears highly probable that the payment of the present stamp has a certain measurable effect in deterring people from using the form of a written agreement, which we certainly ought not to discourage. We, therefore, propose to reduce the amount from 6d. to 1d. in the cases of these small lettings. In the case of the present minimum duty levied on appraisements of property under £50 we propose to make a reduction by a proportionate scale. We propose that if the property only amounts to £5 the duty shall be only 3d. instead of the present £50 duty of 2s. 6d., and from 3d. we shall go upwards in proportion to the amount of the property. We propose to give relief to a certain class of gentlemen who labour under an unequal charge. How this anomaly arose I do not know. Special pleaders and conveyancers now pay the same licence duties as attorneys and solicitors; but the latter have a very equitable allowance of half duties for the first three years, while special pleaders and conveyancers have not that allowance. We propose to give them the benefit of that partial remission. Then, with respect to the stamps on various ecclesiastical licences, we propose to make a reduction. It appears that in several cases the present licences are so high as either to be felt as a burden or to prevent altogether the use of the instrument to which they apply. We propose, again, to make an alteration with regard to the stamp on what is called a "charter-party." The law affecting it is at present in a very unsatisfactory state; and this will be a matter of some importance to several ports, especially in the north of England. The present duty on a charter-party is 5s.; but we propose to reduce it to 6d., subject to certain conditions as to drawing the document, which we shall require in all cases where it is to have the benefit of the reduced charge to be put on paper previously stamped, and bearing a printed form; which form, however, may be altered in every case as convenience may dictate. We think it better to have a 6d. duty enacted by law and to get it, which we expect to do, rather than a 5s. duty which, except in a few instances, we are not so fortunate as to receive. We also propose a change in respect of policies of marine insurance, to the effect that policies issued abroad shall not be recoverable here except they be brought home to be stamped within a certain time. The purpose of this change is to prevent what may be regarded as an evasion. We also propose to remove the present limit of time for claiming returns of duty in cases of marine reinsurance, as the existing limitation is found to be attended with inconvenience in the case of time policies in that department of business. The last change we propose in respect of assurances is one to make more equitable the arrangement of the stamp duties on assurances given by certain companies for a variety of minor purposes. Some of these duties require re-consideration, and we shall endeavour to make a proposal which will have the effect of charging them at a very moderate rate on an harmonious and consistent principle.

And now, Sir, paulo majora canamus. I have said that the disposal of the surplus is difficult. It is difficult, not so much in itself, as by reason of the view which has been taken of the claims upon it I come to a great subject which, during one evening of this Session, received the attention of the House and formed the topic of an interesting debate. I refer to the Malt Duty. Sir, when that subject was under discussion on the occasion to which I allude, my right hon. Friend the President of the Board of Trade, on the part of Her Majesty's Government, expressed their sense of the great importance of the question, and stated their conviction that, at any rate, whether they might be sanguine or not as to the result, it deserved and would receive careful and laborious consideration at their hands. My right hon. Friend stated so fully and clearly the reasons which prevented the Government from agreeing to the Resolution moved by the hon. and learned Gentleman opposite (Sir FitzRoy Kelly) that, though possibly he may not have satisfied all who heard him, he must, at all events, have convinced many that we were justified in the course which we then adopted; that is to say, in declining to pledge ourselves to the Resolution by which it was sought to affirm the claim of the Malt Tax on the surplus.

Now, Sir, in approaching the consideration of this very important question, I will begin by deprecating and putting aside one particular argument which has been constantly put forward by those who advocate the repeal of the Malt Tax. It is constantly stated, "In all your legislation you have done nothing for the class of agriculturists." Well, Sir, I should like to know the class for whom you have done anything. In my own opinion among the most marked of all the characteristics of our legislation of recent years has been this: that we have been steadily endeavouring to extricate ourselves from the vicious habit of looking to the supposed claims, and supposed separate and rival interests, of classes, and to legislate simply and exclusively for the interests of the country at large. I know, indeed, that there are classes whom we are supposed to have injured. I know there are constituencies in the country by whom a view quite opposite to ours has been taken, and by whom gentlemen who were disposed to place confidence in the present Administration have been rejected, and candidates attached to the party opposite have been preferred, on the ground that Her Majesty's Government were in favour of a policy injurious to the interests of this or that particular trade or of agriculture. But I want to know in what instances, during the existence of this Parliament, we have asked Parliament to surrender, or in what instances Parliament has consented to surrender, any portion of the revenue of the country, which is the property of the country, on any other plea of interest but the broad and comprehensive interest of the nation at large? I believe that legislation for the benefit of a class is a mistake of the worst order. In the first place, it is a betrayal of our duty to the nation, whose trustees we are, without distinction of class; and, in the next place, such legislation confers far less of ultimate advantage, even on the favoured class, than the share which that class itself would derive from wise legislation impartially applied and spread over the whole community.

Indeed, Sir, I am disposed to think that if in any single case we have made a proposal which did at all savour of regard for the interests of a class—and I do not say it was an unfair one, because we had to deal with a most peculiar case—it was one in regard to which you, Sir, (Mr. Dodson), must take your share of responsibility, as the able and persevering leader of the movement of repeal; though we ourselves are ready to take our share of it also. I allude to the measure for relieving the hop growers from the duty which they were formerly liable to pay on that commodity. And it is not a little singular if while we are reproached for having neglected legislation for classes, and in particular the interest of agriculture, the fact shall appear to be that we have in every case but one repelled and refused legislation for classes, and that one case the case of an agricultural product. I do not now, Sir, enter on the question whether the repeal of the Malt Duty may be recommended on other and higher grounds; but I protest against its being granted on the ground that it is for the interest of a class.

I propose now, Sir, to discuss, in the first instance, with the permission of the Committee, the important question of the amount of relief which the removal of the Malt Duty would confer upon the consumers of beer. It has been stated, and stated seriously, that although the Malt Duty only brings £6,000,000 into the Exchequer, yet the cost of that duty to the consumers is £20,000,000. I think one distinguished Gentleman in this House has elaborately stated something more or less akin to this, and has supported in argument his bold proposition. We are reproached, Sir, with being a beer-drinking nation, and we are told that the use of that excellent liquor deadens the imagination; but if there be conformity between the practice and the preaching of the advocates of the repeal of the Malt Tax, the latter assertion would, appear not to be well founded. There seems to be no deficiency of imagination on their part, when they feel emboldened to assert that this tax, which brings only £6,000,000 to the Exchequer, costs £20,000,000 to the consumer. When we come to the proper point in the discussion, I shall endeavour to show in a few words what is the real amount of the burden caused by the Malt Duty and by the licences imposed for financial purposes on the traders, in addition to the cost of the beer itself. Meanwhile, I have to give precedence to some other topics.

The next accusation against the Malt Duty is that it seriously restricts the application of malt for the feeding of cattle. I am persuaded, however, that, as far as the purposes of serious discussion are concerned, we have heard nearly the last of that charge. A long series of experiments has been made, which has incontestably established this proposition; that if malt is to be used beneficially in the feeding of cattle it must be used only exceptionally and occasionally. In the vast operation of feeding stock, even what is exceptional and occasional may still be important, nay extensive. I do not question the importance of the use of malt for this purpose: but it is I think only adapted for particular classes of cases, and is not intended to be a substitute for any of the great modes of feeding heretofore generally in use. That, however, is but an opinion; and if that opinion be false, and if it be held by any person that malt is extensively available—available in a wholesale manner—for the feeding of cattle, then I say that under the Act passed last year there are ample means now existing of applying it for that purpose. Twenty-eight malt houses were opened for the purpose of preparing malt for feeding cattle, after the passing of the Act of last year. Out of those, eleven have since been closed; some of the remaining houses are doing a very active business, and others, I believe, are doing a business less active. Now, shall I be told that this comparative narrowness of result has been caused by the burdensome and restrictive character of the regulations which are imposed by the Excise on those houses? There is no evidence in support of such a proposition; but there is this significant fact on the other side—that not one of the persons who have closed their malt houses have alleged that their having taken that course had any connection whatever with the regulations imposed by the Excise on their industry. Their reason has been merely this, that they have not found a sufficient demand for feeding malt, and that they consider it more profitable to use their malt houses for the purpose of preparing malt to be applied to its ordinary use in the manufacture of beer. I have here the names of several of those gentlemen who have permitted me to quote their letters stating the cause of their having closed their malt houses. I would read extracts from those letters to the House if it were desired. But perhaps it may suffice to say that in not a single instance has the closing been attributed to difficulties arising from the restrictions imposed on the trade.

The next charge commonly brought against the Malt Duty is that it operates injuriously upon the price of the middling and lower barleys. That is a charge of great importance, and to it I will presently, with the permission of the Committee, recall attention for a few moments.

I think that the last serious charge against the operation of the duty is that it discourages brewing at home. Now, it is impossible that that charge should be maintained by those who say that the Malt Duty, although producing only £6,000,000, yet, through the medium of the brewer, coats the consumer £20,000,000; because, if the duty should be repealed, the man who brews at home will be relieved only of his share of this £6,000,000, while at present he pays' a proportionate share, not of £6,000,000, but of £20,000,000. It is evident that if all these factitious additions are made to the burden of the Malt Duty before the beer reaches the consumer, the present system is that which offers the highest possible premium upon brewing at home; because, instead of paying these enormous sums, in which he is mulcted through a factitious medium, all that a man has to do is to pay 21s., or whatever the precise sum is per quarter, and then he can brew for himself; whereas, according to the allegation made, he must, in buying from the publican, submit to a charge of more than three times that amount.

Now, Sir, I would ask what is the question before us? Are we asked to consider the abolition of the Malt Duty, or are we only invited to attempt its reduction? I own that I put aside, as remote or even visionary, the question of the abolition of the duty. The abolition of the Malt Duty, by which I mean the abolition of all duty upon the principal one among all the strong drinks of the country, would be the death-warrant of the whole of our system of indirect taxation. It is idle and futile to the last degree to suppose that having beer made free from taxation you can tax wine and spirits on the one side, and can tax tea and sugar on the other. The only consistent man who supports the repeal of the Malt Duty is, if so I may presume to say, the sly hut determined foe of indirect taxation. I can quite understand the speeches which are made by such Gentlemen in favour of the repeal of the Malt Duty—"Take it away," say they, "it is a very improvident and a very improper tax." They make speeches in this House which are received on the opposite side with loud cheers, and they are on these occasions welcomed as allies with remarkable cordiality; the Gentlemen who so welcome them not perceiving that the real end of all this must be the imposition of the whole burden of our taxation upon property. The repeal of the Malt Duty, in the absence of other forms of taxation upon beer, is, I repeat, the death-warrant of indirect taxation. I assume, therefore, that the question before us is not that of the repeal, but that of the reduction of the Malt Duty.

Now, our confining the question to the reduction of the duty, it must be admitted, somewhat weakens the argument; because we shall still, when the duty has been reduced, have all those magical terrors which are connected, in the imagination of the opponents of the duty, with the operation of the system of Excise; and, more than that, we have all the real disadvantage of restrictions, which must always amount to something, and which must continue as long as you maintain an Excise upon malt at all. I take it for granted, however, that the practical question for the present occasion is, at what cost can we make such a reduction of the Malt Duty as will sensibly lower the price of beer? That inquiry, I hope, states the question fairly and honestly. To answer such a question, we must carefully ascertain what is the proportion of the present price of beer which is really due to taxation. I say now "to taxation," and not "to the Malt Duty," because, although the bulk of the taxation consists of the imposition upon malt, there is also the commutation of the hop duty, which comes out in the shape of the brewer's licence; and there, moreover, is a trifling charge for the maltster's licence, of which, small as it is, yet account should be taken.

Now, Sir, this is a subject on which it is not possible for me to ask the Committee to accompany me through all the details of the inquiry through which we, however, as we were in duty bound, have patiently passed. My right hon. Friend the President of the Board of Trade stated that the Malt Duty imposed upon beer a tax of 12½ per cent; and I am able to say two things—first of all, that I believe that that statement of my right hon. Friend was a rigidly just one, in every sense of the word, for the purpose with a view to which he used it—namely, for the purpose of comparison with the duty now imposed by law upon tea; and secondly, that very high authorities connected with the trade, men intimately conversant with all the details of the brewing trade, have, upon being applied to, given the very figure that was mentioned by my right hon. Friend, namely, 12½ per cent, as the true value, in their judgment, of the Malt Duty. The other minor duties of which I have spoken would not conjointly make an addition of more than from 1 to 2 per cent—so that undoubtedly, upon that showing, the duty altogether would not amount to more than from 14 to 15 per cent. However, I think it is possible that the computation I have now mentioned may have in view the price to the consumer in retail. It may be more proper that I should take it upon the barrel of beer. That is the fair way, as it appears to me, for the purpose of comparing the burden of this duty with the burden of the tea duty upon the chest and half-chest of tea; and having, on the one hand, caused the officers of the Revenue Departments to make a most careful and sifting examination, and having, on the other hand, conferred with those whom I believe to be best informed, and who, at my request, have kindly gone with great care into the details, I am prepared to allow that the taxation upon beer, as sold in barrel, of which all but 1 or perhaps 2 per cent is the Malt Duty, may, for the sake of argument, be taken, on a liberal estimate, as high as at 20 per cent. I believe that I am safe in challenging any attempt seriously to impugn that statement.

Well, then, Sir, the next step is this: if 20 per cent is added to the price of beer by the duty upon malt, how much must we take off that duty in order to produce a sensible effect upon the price of beer? I mean the price to the consumer; because, although thus far I have been speaking of the price per barrel, the great bulk of beer is not ultimately sold in the barrel but by the pint or quart; and I do not think that anything which would reduce the price less than a farthing a quart ought to be regarded by Parliament as a sufficient object to induce us to interfere with the Malt Duty. I even think that is a moderate statement of the ease. Some might go beyond it; but I will assume with confidence that you must, at the least, reduce the price by a farthing a quart. What, then, is the reduction of the Malt Duty that would be absolutely necessary in order to reduce the price of beer by a farthing a quart? It must be reduced, according to the best calculation I have been able to procure, to somewhat less than one-half of the present amount. It is now 2s. 8₽d. a bushel; and it must be reduced to 1s. 2d. a bushel, in order to give to the consumer a reduction of a farthing a quart in the price of beer. Now, I have to ask, what would be the cost to the Exchequer of such a reduction? Because when the advocates of the repeal, and the strong advocates of the reduction of the Malt Duty, come to this question of the cost to the Exchequer, they have a dangerous habit of dealing in generalities, and they delight in assuring us, with smiling countenance, that in one way or other, especially by increase of consumption, the cost to the Exchequer will be very greatly reduced, or indeed, in the view of some, altogether neutralized.

Now, I will state, first, what would be the first cost; and then what would be the effect of the increase of consumption. The proper time of the year at which to reduce the duty, if it were reduced at all, would, I think, beyond all doubt, be about the 1st of October. That is the period at which the stock of malt in the country is the lowest; and it is, therefore, the period at which we should have to pay the most moderate amount of drawback. At that time we estimate that we should have to pay drawback on about 15,000,000 bushels of malt, costing £1,160,000; and we should have an estimated loss in duty charged, for the remainder of the year, amounting to £1,320,000. That is to say, that we cannot touch the Malt Duty for the purpose of giving to the consumer one farthing upon the quart of beer, at a less cost to the Exchequer for the first financial year than £2,480,000. But that is not the worst of the story. That is the cost of the first year; but what will be the cost of the second year? In the second year the reduced duty would operate for the whole twelvemonth. According to the estimate formed at Somerset House, the cost for the second year of the reduction from 2s. 8½d. to 1s. 2d. would be no less a sum than £3,360,000. I might almost rest upon these figures; they are far more eloquent than any comment that can possibly be made upon them; but I must not omit still to touch upon one topic that might possibly be raised, and that is the increase of consumption. We may be told that there would be a great recovery arising from the increase of consumption. Now, Sir, what I venture to say is this—that in the case of malt not only would there not be a great recovery from increase of consumption, but that there would be no recovery at all; and, on the contrary, it is probable that the increase of consumption, with whatever other advantages it might be attended—and I am not considering those advantages, for at this moment I am engaged in an inquiry purely fiscal—that the increase of the consumption of beer would in all likelihood be attended with a further loss to the Exchequer. Gentlemen may hear these words with some surprise; but the explanation is easy; for if there is a large increase in the consumption of beer, a portion of that increase displaces the consumption of spirits. ["Hear, hear!"] Very good! Oh, set out upon your mission of philanthropy, and I am ready to travel with you, perfectly ready to be your companion; but then I beg you to find me the money from some source or other. Do not, however, let us confound together things which are distinct and separate. We are now, Sir, looking at this question from the driest point of view, that of pounds, shillings, and pence; and, after all, setting apart the hustings, and the poll, and everything else, the discussion will at last come to that very sober issue. Now, supposing that of every additional thousand pounds laid out upon beer after this reduction one-fourth part should displace an equal expenditure on spirits—and I do not think that an extravagant estimate—I believe that probably a larger portion of this increase would be in substitution for spirits—but, taking it at one-fourth, what would be the effect upon the Exchequer? Why, Sir, it would take £8 laid out upon beer after this reduction to bring into the Exchequer what £1 laid out upon spirits now brings in; and if £2 worth of spirits are displaced by the additional consumption of £8 worth of beer, it follows that the Exchequer would lose £1 for each £8 added to the consumption of beer. Thus, then, so far from gaining it would lose, and lose heavily, from every addition to the consumption of malt and beer. But I will not argue the question between malt and spirits further than this—that I have made good, and more than made good, my propositions; first, that if the Malt Duty is to be reduced it must be from 2s. 8°d. to 1s. 2d.; secondly, that with such a reduction you must in the first year lose, in round numbers, two millions and a half; thirdly, that in the second year that £2,500,000 will be raised to more than three millions and a quarter; and lastly, that you must lay your account not with recovery, but with a further loss in consequence of the increased consumption of beer, and the consequent displacement of spirits.

Again, Sir, I am bound to say that I cannot put out of sight in dealing with this matter the Irish and the Scotch question. I think that in the nature of the Scotch there is great patience, and in the nature of the Irish great vivacity; and I believe that the patient and the vivacious would combine together were we to reduce the Malt Duty for the benefit of this country, and would say in a voice of thunder to the Finance Minister of the day, "We protest against this unequal dealing, and we mean to make our protest good in some manner or another—you may find out the way for yourself—we insist, if you reduce this tax for the advantage of England, upon your doing something for Ireland and Scotland." To the three other sources of loss, therefore, which I have mentioned, a fourth would be added, arising out of the demands of the representatives of Scotland and Ireland. That, I am sure it will be admitted, would not be a very hopeful prospect for us in a financial point of view; nor is it one which we can think it consistent with our duty to ask Parliament to entertain.

What then, let me ask, are the grounds for this great innovation—this dangerous inroad—on our established fiscal system? Is the consumption of beer declining? Is the trade a dying trade? Has the Englishman changed his nature? Has he ceased to supply himself with a sufficiently liberal proportion of this excellent and truly national drink? On the contrary, the figures all point upwards. Nay, more, the Members of the present Government, and in some degree the right hon. Gentleman opposite (Mr. Disraeli), too, may claim the honour of having each done a good deal to pro- mote the consumption of malt by means of the new and heavy burdens which we have laid on the consumption of spirits. And what has happened? I find—I cannot give the returns for Ireland, but for the purpose of what I am about to state that is not material—that in 1841 the consumption of malt in Great Britain was 1.701 bushels per head of the population; while in 1863 it had risen to 1.793 bushels per head. Now that, I think, furnishes evidence of a very handsome growth. But how stands the case with spirits, on which, year after year, during the period from 1853 to 1860, additional burdens have been laid? In 1841 the consumption per head of spirits in Great Britain was '763 gallons; while in 1863, to my great joy and satisfaction, it had sunk to 645; during the very time, observe, while the consumption of malt had risen from 1701 to 1793. The case, then, as represented by those figures, is not such a very bad one after all. But there is another way of putting it. It may be said, "It is, perhaps, true that things, as regards the consumption of malt, are a little better now than they were twenty years ago; but, then, let us go back to the good old times of our forefathers and see how differently the matter stands." Well, Sir, let us adopt that course; my argument will, I think, abide the issue. What date shall I take to represent these good old times? I will take the year 1722; probably that will be remote enough. Now, Sir, I find that the consumption of beer in 1722 was for England, 6,000,000 barrels; or at the rate of about a barrel per head, inasmuch as I believe that the population at the time was only some six millions. In 1830 the consumption was 8,000,000 barrels; thus, in that year, lamentable to say, it had sunk from one barrel to two-thirds of a barrel per head. In 1864, however—so powerful were the restorative processes which had been introduced, and so much had the consumption of beer been assisted by the legislation which we have effected with regard to spirits and otherwise—we go back, with a population of 20,000,000, to the good old scale, and we consume 20,000,000 barrels, or as nearly as may be the same quantity of beer per head as in 1722. I see before me my hon. and learned Friend the Member for Suffolk (Sir FitzRoy Kelly), and my right hon. Friend the Member for Hertfordshire (Sir Bulwer Lytton), whose able and eloquent addresses in bringing this subject before the House were overspread and coloured by a tone, I will not say lugubrious, but at least somewhat tragic. I am confident they will feel after what I have said that they may go home with hearts at least partially disburdened, and may give to their future disquisitions on the Malt Tax something of a more cheerful hue.

But what, let me ask, is now the consumption of beer in England? In some instances it is astonishing. I am about to relate an anecdote in connection with this point, which I may preface by saying that I have had the best reason to look upon it as authentic, though I confess I was disposed to be a little incredulous for the moment when first I heard it. The authority from which it came, however, entirely forbids the continuance of any sceptical feeling. The subject of my tale is a labouring man, whose ordinary avocations are on the River Thames. There is nothing peculiar in the heat or atmosphere in which he works, but his employment requires great muscular exertion. An accident occurred to this man's hand, and he went into an hospital at the east end of London. One of the surgeons there dealt with his case, but the result was not quite satisfactory. The surgeon accordingly announced that he should wish to open the hand again, but that before he performed the operation he was anxious to be assured that his patient was in every sense of the word a temperate person. He asked some persons who knew him whether he was temperate, and they informed him that he was. He put the same question to the man himself, and he said, "Certainly, I am temperate, and have always been so." "What quantity of beer do you usually drink?" asked the surgeon. The reply was, "Never more than eight quarts a day." I inquired, that being the consumption of a temperate man, how much an intemperate man of the same calling might be supposed to drink: and I was told that the quantity would run from twelve to sixteen quarts a day. Such an instance, however, is of a class that must be exceptional. But now let us reckon the consumption for the whole population of the country. If hon. Gentlemen will have the goodness to take the number of barrels of beer brewed annually in England, to reduce them to quarts, to make a fair deduction for the population of Scotland and Ireland, who drink but little beer; for women, who drink but a small proportion relatively to the men; and for young persons under fifteen, who likewise drink only a very small proportion of the whole quantity consumed, they will find that every adult male in England consumes not far short of 600 quarts every year; and when you take into account the pauper, the criminal, the sick, the wealthy, too, whose consumption of malt liquor is not great, and that very large and respectable class, who pass under the soubriquet of "teetotallers," all of whom enter more or less into the calculation, I do not think the demand for the repeal of the Malt Tax can be supported by the argument that access to a sufficient quantity of beer is hopelessly difficult, or that the consumption of it is insignificant or is gradually dying away. More than £40,000,000 sterling is, as far as we can learn, laid out by the population of England every year in the purchase by retail of this valuable beverage. So much, then, for the consumption of beer, which I think I may fairly say is not declining, but is, if slowly, yet rather steadily on the increase.

But what is the condition of the producer of the grain that makes the malt?—because, although I deprecate class legislation, I admit it is material that we should sec whether the producer of barley is suffering any hardship. Now I will try the point I have thus indicated by the fairest of tests; I am not now dealing with the question between the better and the worse class of barleys, but with those tests which relate to the general value of this grain in the market. These tests are two. The first, what is the average price of barley, relatively to that of wheat, now, as compared with former years; and the second, what has been the price of barley absolutely, and without reference to that of any other product, during the same period?

Taking first, Sir, the average price of barley relatively to that of wheat, I find it to be as follows. For the ten years before the repeal of the beer duty—the years from 1820 to 1829—barley was worth very little more than half what wheat was worth; the price of barley in those years was as 54 and two-thirds to 100. For ten years after the repeal of the beer duty (1830–39), it was as 57 and one-seventh to 100. For ten years further(1840–49), as 58½ to 100; for ten years further (1850–59), as 62 and one-eighth to 100; for the year 1864, the year in which this great crusade against the Malt Duty revived, barley, which forty years ago was worth only half the price of wheat, was worth, as nearly as possible, three-fourths the price of wheat, or, as 74½ to 100. But adverse critics may say, "Oh, the price of wheat has gone down greatly, and therefore this standard of comparison is not a fair one; the two may have gone down together, but wheat in a greater degree than barley." I come then to apply the second test; the test of price, not comparative, but absolute. Accordingly, I take the price of barley absolutely, and without any reference to the price of wheat; and I find it stands thus:—For ten years before the repeal of the beer duty (1820–29), the price was 31s. 10d.; for ten years after the repeal (1830–39), 32s. 5d.; for ten years further (1840–49), 32s. 9d.; for ten years later still (1850–59), 33s. 2d.; while the average price for the five years ending with 1864 was 34s. 4d.; so that the price has regularly and progressively been tending upwards; and this greatly suffering interest—observe that I am now speaking of it as a whole—when its grievances are examined into, turns out to be the victim of nothing more or less than an increasing consumption of the manufactured article, and a higher price for the raw material. I, for one, cannot see how, under these circumstances, the producers of barley can be regarded as having any just cause of complaint founded on alleged suffering from the present state of the law.

But there is another topic to which I wish to advert: I allude to the relative taxation of malt as compared with other articles—a point which I look upon as one of great consequence, both in argument and in practical effect, although the right hon. Gentleman the Member for Oxfordshire (Mr. Henley) found fault with my right hon. Friend the President of the Board of Trade for the comparison which he made on the subject. And here I shall begin by comparing the taxation on barley in the form of malt—that is, on beer—with the taxation on barley in the form of spirits. Beer is taxed at one-fifth of its value, or 20 per cent; spirits are taxed at four-fifths, or 80 per cent. Now, if you want to mark your high moral indignation at the use of spirits through the imperfect, yet not by any means wholly ineffective medium of fiscal arrangements, I think you cannot well go further than a rate of taxation under which, whenever a man is disposed to lay out 5s. in this commodity, he only gets at the outside Is. worth of spirits for it, while the other 4s. go into the Exchequer. Upon that side, therefore, I mean in comparison with the article of spirits, there is no apparent injustice in the taxation upon beer.

What, then, is the case with beer as compared with wine? It has been said that the duties upon wine have been reduced practically to nothing, a duty of 1s. a gallon amounting only to 2d. a bottle. But the relation which the present wine duties bear to the whole of the wine imported into this country has been examined by the very competent gentleman whose duty it is to examine into the statistics of the Department of Customs, and it is found, that, while beer is taxed at 20 per cent, wines of all descriptions, from claret and champagne downwards, are taxed on the average at 27 per cent. But even that is a very fallacious way of stating the case; for the tax on clarets and champagnes has no relation at all to the price of beer; beer sold by the quart is not in competition with clarets and champagnes. If we really desire to estimate any branch of relative taxation upon commodities, we must take such qualities of each commodity as are capable of coming into competition with one another; we must, therefore, take the poorer and lower wines, such wines as will admit of being sold at prices somewhat approaching to the price of beer, and therefore of coming into competition with it. I have inquired into the character of the wines consumed by the poor, who are the great drinkers of beer. One of these wines is called Hamburgh sherry. The people of Hamburgh have the reputation of being adulterators of wine. It is, however, always to be borne in mind that, according to their own view, they simply understand better than other people the chemistry of wine, and what we call "adulteration" they say is nothing but scientific mixture. The price of Hamburgh sherry is 5s. a gallon, duty paid, and of that 2s. 6d., or 50 per cent of the price, is duty, while, as we have seen, beer is only taxed at 20 per cent. Spanish red wines have recently been imported to some extent, and the same observation applies to the duty upon them. The common sherries from Cadiz, again, pay about the same rate as the Hamburgh wines—that is to say, they too are sold at 5s. per gallon, the duty being 2s. 6d., or 50 per cent. The common clarets imported from France for popular consumption are sold, duty paid, at about; 2s. a gallon. The duty upon them is 1s. a gallon, or at the rate of 50 per cent. This class of wines, therefore, which alone can enter into any real competition with ordinary beer, is subject to a taxation approaching 50 per cent; while beer itself contributes but 20 per cent. Even in the cases I have quoted, the competition is but partial; for while beer is sold at 4d. per quart, the cheapest of these wines is sold at more than 1s. per quart.

I pass now, Sir, to the other side of malt—for malt lies, we may say, half way between the stronger liquors, such as wine, and especially such as spirits, on the one hand, and the article of tea on the other. And now I appeal to Gentlemen who make such honourable manifestations of the strength of their disapproval of the consumption of spirits. It is quite evident they consider strong liquors very dangerous. I apprehend I shall find a way to their hearts without any difficulty when I plead for moderation in the impost upon tea. If beer ought to be taxed more lightly than the wines which compete with it, and more lightly than spirits—as I grant it ought to be—then, I put it confidently to the House, ought tea to be taxed more heavily than beer r I ask attention to that proposition, because it is one fertile in consequences. If the principle that tea ought to be taxed more heavily than beer be sound, then it is desirable to uphold that distinction; but if the principle be unsound, then it is very much to be wished that it should in practice be abandoned. The tax on beer, as I have already stated, is about 20 per cent; the tax on tea, the charge which it bears of Is. per lb., cannot be stated at less than 40 per cent. The short price of tea varies at different times, but for some years past it has not been above 1s. 6d. per lb., sold by the chest; a few days ago it stood at no more than 1s. 3d. If we take the price at 1s. 6d., the tax of 1s. per lb. upon tea will be at least 40 per cent; if we take the price at 1s. 3d., the tax will be about 45 per cent. Now, I think it requires no great hardihood to assume that, in the mind of Parliament, to state this case is to prove it; that it will not be attempted to justify a state of things in which tea is taxed twice as heavily as beer. Under the circumstances, then, of such undue relative taxation, I ask, what ground is there for making the vast sacrifice of Revenue that I have shown would be entailed by reduction of the Malt Duty? And do I not further show that up to this moment we have failed to do full justice to the consumers of the article of tea?

There is but one point connected with this case of the Malt Duty, upon which the Committee have heard me with so much kindness and patience, with which I have still, as I just now intimated, to deal, and it is this. It is alleged that injustice is done relatively to the lower and middle classes of barley as compared with the better sorts of barley by the present system of raising the Revenue from malt. I have shown that there has been a progressive and steady rise in barley, not merely year by year, but in periods of ten years after ten years; and I might easily have shown that the relative inequality is, at least, not greater than it was, and, consequently, that the growers of the lower and middle classes of barley have participated in the advantages of these improved prices. But, Sir, I do admit that the incidence of the Malt Duty does press on barleys of the middle and lower qualities; that is to say, it alters the natural relation of value between them and the superior barleys. The duty is laid on a certain measured quantity of malt—which, for the purposes of this discussion, is just the same as if laid on a measure of barley—and a bushel of barley of high quality is known to yield more valuable malt than a similar quantity of barley of lower quality. We have been asked whether it is not possible to devise something in the nature of a remedy for the inequality created by the operation of this system; and I am happy to say that we have found, what we think is at least a partial remedy, even if it would he too bold to hope it will prove something more than a partial remedy. Now, it would be very unjust to alter the form of the duty absolutely from a duty by measure to a duty by weight; because many persons might not wish to adopt the substituted system, and the growers of fine barley especially might believe that their interests would be injuriously affected. But what we think may be done, and what we shall ask the House to do, is to give to the maltster the option, if he thinks fit, of having the duty charged by weight. Hon. Members will at once perceive the operation, or at least the aim, of the proposed plan. Those who wish to be charged by measure will not be subject to any change; hut in other cases when the alternative method may be preferred, we ask Parliament to give the maltster the option of adopting it.

The plan we propose to adopt will be this. A certain weight will be assumed as the average or standard weight of a bushel of barley of such quality as is now ordinarily used for malting. Barley meant for malting will be weighed before steeping by a sample bushel. It will then be guaged as malt in the same manner as now. The whole weight of the parcel malted will be divided by the standard weight; and the quotient will give the number of bushels to be charged with duty. The effect will be to relieve all barleys lighter than the standard. I hope it is not too much to expect that the result of that change will be to improve the position, at least, of the lighter, if not of all the middling and lower barleys in the market, by giving them fair play as compared with the heavier barleys, which now undoubtedly derive something of a factitious advantage from the form in which the duty is levied. This measure, it is right that I should add, will not form any part of the chief financial Bill of the year, but will form the subject of a separate Bill, which I shall have the honour to lay on the table.

And now, Sir, I conclude this lengthened argument on the subject of the Malt Duty. Perhaps it may be said that the prospect I have held out is a prospect of the indefinite continuance of the Tax. On that subject I do not profess, I should rather say I do not presume, to offer and opinion. I am not bold enough to prophecy the removal of any tax yielding six millions; still less to suppose that the great article of beer can in our time be set free from charge. But I do venture to point out that our present position with reference to the repeal of indirect taxes is scarcely as good as it may possibly be a short time hence. Down to the present time we have felt it a paramount obligation to apply a portion of whatever measure of relief we felt ourselves in a condition to give towards the reduction of the Income Tax. Supposing the reduction of the Income Tax now to have reached its term—or at the time, be it sooner or later, when it shall have reached its term—it is evident that the state of things, and the position of the House of Commons with regard to the remission of indirect taxation, will be different. So soon as the Income Tax shall either have been abolished, or reduced to a point at which the House may deem that it may hold its hand and is not called upon to do more in that direction, this House will be free to deal much more largely, than it can do at present, with indirect taxation. It will be relieved, as far as Income Tax is concerned, from what it has recently felt to be an obligation to make a fair and equitable division of its bounty between direct and indirect taxation. I do not presume, however, to hold out any prospect, or to offer any opinion on this point, nor do I ask the Committee to imply any such opinion. My business, and that of my Colleagues, is simply, from the case before us, and with reference to the present year and to existing circumstances, to arrive at the best conclusion we are able; and we have arrived at a double conclusion. First, that it is not in our power, with justice, to ask the House to absorb so very large a portion of the surplus of the present year as would be absolutely necessary, together with the further burdens that would be entailed, if we were now to make a partial remission of the Malt Tax; and secondly, as the result of that examination of the relative weight of taxation to which we have been invited—and almost forced—we are of opinion that the first and best step we can ask the House to take is to do an act of justice which has hitherto remained undone, and to place the duty payable by the consumer of tea upon a footing more nearly resembling that of the duty upon beer.

And further, Sir, considering it our duty to make a proposal on this subject, we have thought it better to make that proposal one of a decisive character; such as will afford to the consumer the benefit of a sensible and considerable reduction. Taking what is called the long price of tea—that is, the duty-paid price of tea as delivered out of bond—we find that it is usually delivered out of bond at 1s. 6d. per lb. That is somewhat higher than the present rate; but if the actually selling price be lower, so much the better will be the effect of the reduction. Now we are of opinion that if we can reduce the duty by so large a sum as 6d. in the lb., we shall cause a reduction in the whole price of the article, eventually at least if not instantly, of more than 20 per cent. This reduction, with the growing inclination and taste of the country, and with the increased importation to which it will no doubt give rise, must impart a power- ful stimulus to the consumption of the commodity; and will, we trust, place this most valuable and most healthful of all the luxuries of the poor within the reach of many who now do not enjoy it at all, or who only enjoy it in a very limited degree. Under this head then, Sir, Her Majesty's Government have to make a very considerable proposal; and I do it, in their name, with a distinct intimation that if the Committee when it comes to vote upon the subject should agree to the change, it will not be in our power, with propriety, to make any other proposal bearing upon the subject of indirect taxation during the present year.

The estimated consumption of tea, apart from the reduction of duty, for the year 1865–6, was 92,000,000 lb. The loss upon this amount of consumption, at 6d. in the lb., supposing it were all loss, would amount to £2,300,000. I have taken, however, the recovery from that loss from the increased use of tea to an extent of 9,000,000 lbs. to be £225,000, and I think that with favourable circumstances the recovery may go even beyond that limit; but no higher figure could be taken in conformity with the usual rules of prudence which guide the Department of Customs in the advice they tender us on a subject of this kind. Probably, therefore, the change would cause for the full period of twelve months a loss of £2,075,000; but a portion of the year would have elapsed—and indeed nearly a month has already elapsed—before the change could come into operation. And hero I may take the opportunity of saying that if it be agreeable to the Committee, as I trust it will, I shall ask them to vote upon the Resolutions I am about to submit on the subject as early as on Thursday next. On the assumption, then, that about one-tenth of the year will have elapsed before the new duty will come into operation, and therefore deducting one-tenth or £207,000 from the sum of £2,075,000, the loss for the financial year by the reduction of the duty will probably be £1,868,000; while in the year 1866–7 we shall have to reckon on a further loss of £207,000.

The next subject upon which I have to trouble the Committee—and I am happy to say we are now passing rapidly through the matters I have to lay before them—is the question of the Income Tax. Now, I think that if this Parliament were challenged as to the reason why it has not dealt with the Income Tax in a more sweeping manner than that which it has actually adopted, it would be easy to point for an answer to a single one of the many figures which I laid before the Committee at an earlier period of my address, showing that even after the reductions of the last few years, yet ten or twelve millions a year had been added since 1853 to the expenditure of the country. Besides this we must bear in mind that it would have been impolitic, not to say impossible, to suspend all other remissions of taxes for the purpose of applying our whole force to the reduction or the abolition of the Income Tax. Now, even without allowing for the relief from the long Annuities in 1860,1 have pointed out that £10,000,000 a year has been added to the gross total of the public expenditure. Undoubtedly, notwithstanding this great augmentation of charge, if Parliament had thought fit to forego every other object, we might now be in a position to extinguish the tax on incomes But I do not think it would have been conformable to the equity and fair dealing, which usually distinguish the proceedings of this House, if any such plan had been adopted. Independently of this consideration, there is an opinion more or less widely spread in the country and in this House, an opinion which, for aught I know, may be the opinion of the majority of this House, but upon that point I do not undertake to say anything—that the Income Tax is a tax fit to be permanently retained. ["Hear, hear!" "No!"] I am not now referring to my own personal opinion, which is the same it has ever been. But that is an affair of infinitely small moment. Neither do I wish it to be taken for granted that either the House or the Government has committed itself finally on the highly important question, whether the Income Tax ought or ought not to be retained as an ordinary and permanent part of our system of finance. Whatever may be our individual opinions, this question is a subject of great importance, which in another Parliament may have to be considered, with a view to a practical issue. There are, indeed, those who hold that there is an obligation affecting me personally, and affecting no one else, which binds me to bring about the extinction of the Income Tax. In that view I cannot participate; for the extinction of the tax must depend on the judgment of the country and of Parliament, not on mine. But, undoubtedly, I do think it is appropriate to the function of this Parliament, and the Government is of opinion that it is part of the duty of this Parliament in particular, that we should do what we can towards the reduction of the Income Tax to what may be estimated as its proper minimum. It is, Sir, at this moment, in our power to make such proposals, as will leave the Income Tax within manageable limits. The Income Tax at present is at a point the lowest it has ever up to this time reached; I mean that practically it is now levied at a rate as low as at any previous time. It is perfectly true that for a moiety of one year—namely, the year 1858–9, it was at 5d., but for the other moiety it was at 1d.; and the average for the year has never been lower than 6d. Well, Sir, we now propose to ask Parliament to remove from that tax of 6d. one-third of the amount, and to bring the rate down to 4d. in the pound. If that proposal be accepted—and I confess I do not anticipate its rejection—the effect will be to reduce the annual yield of the Income Tax—not in the first year, but after the reduction has taken full effect—to £5,200,000. That would be the amount of the tax, and that would be the condition in which we should hand it over to the new Parliament. We estimate that £5,200,000 would be the produce of the Income Tax at 4d., for the value of the penny has progressively risen. It was once my duty to state, and it was then learned with satisfaction, that the value of the tax was one million for each penny; it is now my duty to state, and it will give you no less pleasure to hear, that each penny of the Income Tax produces £1,300,000. By giving the Income Tax at that reduced rate over to the hands of the new Parliament, I think we shall accomplish a double object. If it shall be the pleasure of that Parliament, and if it shall also be the desire of the country, to approach that tax with a view to its extinction, the amount of the tax will have been brought within such limits that it will not be beyond their reach to adopt measures which would permit that object, in any fairly favourable circumstances, to be rapidly and effectually attained. But if, on the other hand, it shall be the view of Parliament and the people, that it is wise permanently to retain an Income Tax—an Income Tax at a low rate—as part of the ordinary financial provision of the country, then that rate at 4d. is the rate at which, in time of peace, and in the absence of any special exigency, we believe it may be most justly and wisely so retained. Such, Sir, is the condition in which we propose to place the great financial subject of the Income Tax; a condition which will make its retention easy, if the country desire it to be retained; and its extinction practicable, if the country should wish it to be abolished.

A penny of the Income Tax produces, as I have said, £1,300,000. The final loss to the Exchequer, therefore, and the final restoration to the public at the expense of the Exchequer, from the adoption of our proposal, will be £2,600,000. Of that sum a proportion reaching not quite two-thirds will accrue in the year 1865–6, namely, £1,650,000; the loss of the remainder, or £950,000, will, as we estimate, not accrue till the financial year 1866–7. So much for the Income Tax in connection with the financial operations of the present year.

And now, Sir, I come to the only remaining Resolution with which I shall have to trouble the Committee. There can be no doubt on the minds of those who hear me, even before I speak it, that I refer to the subject of Fire Insurance. I may properly begin by reminding the House that on the 21st of March it arrived at this Resolution— That, in the opinion of this House it is expedient that the reduction of the Fire Insurance Duty made in the last Session be extended at the earliest opportunity to houses, household goods, and all descriptions of insurable property. On that Resolution take. Indeed, the two sums which I have given—£1,868,000 for the Tea Duty, and £1,650,000 for the Income Tax, amounting together to £3,518,000, show that there remains to us but a narrow margin. At the same time, that margin is sufficient to enable us to meet the expressed wish of the House.

Now, Sir, the measure of last year relating to this subject will require notice from me for a few moments. The portion of the Fire Insurance Duty with which we dealt last year was essentially distinct from the portion with which we did not deal, in this respect—that the former was a tax upon trade, upon industry, and, therefore, virtually a tax upon consumption, whereas the remaining portion is a tax upon property. But let not the House be afraid that, in stating that distinction thus broadly, I am about to venture upon urging it as an argument for the imposition of a difference of rate of tax. The desire of the House for an uniform rate has been clearly and unmistakably expressed, and we have not the smallest idea of disputing it. It is, however, desirable to keep in view the essential distinction between the two portions of the tax. The experiment of last year has not yet been fully tried; it has been only nine months in operation, and we have not as yet got so much as a full year's receipt of the new duty upon stock-in-trade; but I am bound to say that, as far as it goes, the experiment does not enable us to be very sanguine as to the ultimate results of the reduction in producing a recovery of Revenue by the increase of the practice of insurance. There seemed to be high authority for taking a more sanguine view at the time; but although my estimate was not very exalted, for it was framed upon the assumption of a moderate recovery—namely, an increase of 10 per cent in all, in which was included the ordinary annual increase—the result has shown a figure even less. It was stated, and stated strongly, by hon. Gentlemen in the discussion of last year, that when we came to deal with that portion of the Fire Insurance Duty which affects property the result would be more satisfactory, and that a larger increase, and a larger recovery of Revenue, would take place in regard to that portion of the tax. How that may be I do not presume to say; but undoubtedly, as far as stock-in-trade is concerned, the remission has not, up to this moment, proved very successful in its results. Still, I do not grudge the reduction which has taken place, because that tax, as applied to stock-in-trade, was unquestionably a tax upon industry, and the benefit of the remission and of any consequent increase of insurance, whether in itself small or great, is certain to find its way to the consumer of those industrial and commercial products which are the subject of the tax.

Now, Sir, it has been a common thing to say in the House of Commons, that the tax on Fire Insurance is a tax on prudence. In such arguments as I have ever employed, so far as I can recollect them, in resisting Motions for the repeal or reduction of the duty, I have not been used to defend the tax upon its merits. My arguments have, I believe, been mainly based on the doubtful nature of the very sanguine anticipations of recovery upon which most of those Motions have, to a great degree, been founded. However, I think that the definition of the tax, as a tax on prudence, may be amended; and that we might call it, as to the chief part of it, with greater accuracy a tax upon property, but with a double exemption; the one being an exemption in favour of improvidence; and the other an exemption in favour of those large holders of property in the form of houses and buildings, who are able to take their chance, and perform for themselves the function which is called self-insurance. I must say that no part of the argument ever used on the subject of Fire Insurance has appeared to me to tell so strongly against the present state of the law as this, because it is said, and, as I think, said unanswerably, "If you are to make insurance against fire the means of imposing a duty upon property"—and my hon. Friend the Member for Buckingham, I think, (Mr. Hubbard) showed clearly that the duty of 3s. per cent was equivalent to an Income Tax of 1d. in the pound upon houses and buildings—"it ought to be imposed equally, and there ought not to be a virtual exemption on behalf of large holders of property." That, as it appears to me, is an argument to which there is no reply.

Now, as I have said, the general expectation of the House is that if we make the reduction which is pointed out by the Resolution adopted on the 21st of March there will be a considerable recovery of Revenue from increase of insurances against fire. Whatever recovery there is will undoubtedly be a very great good, because it will indicate a mitigation in the inequality now caused by a large exemption from the tax; and it will also show that the inducement to self-insurance is operating with less force than that with which it has heretofore operated. We, therefore, at once admit, and we admit especially in deference to the authority of the House, that the experiment is perfectly well worth putting to the proof; and as we have still remaining at our command the means of trying the experiment, we intend to place in your hands, Sir, a Resolution for the purpose of giving it effect. If the experiment should succeed—if, relatively to the amount of reduction, the recovery should be large—then, as I have said, a great good will be accomplished. If the experiment should appear on the whole to fail, then undoubtedly it may be the duty of another Parliament, of perhaps another Government, to look further into the question, and to consider maturely, whether Fire Insurance ought not to be placed on a footing yet more, and far more, liberal and free. I know there are those who hold that insurance against fire is a thing which ought not to be encouraged, because it is an encouragement to carelessness. I take it, however, that the House has deliberately adopted the reverse of that proposition, and that it desires to see Fire Insurance placed upon the best possible footing, and carried to the greatest possible extent. It may, therefore, be the duty of some future Parliament, and of some future Government, to re-examine the question, in case the results of this measure should not be satisfactory; and if it should be found necessary to give a further relief at some future time from the Duty on Fire Insurance, undoubtedly the House will be disposed to look at the elements of which the duty is composed; one of them being a tax upon property, which must be considered in conjunction with other taxes imposed upon property, and as such forming an essential part of our fiscal system; and the other a Tax on the act of Insurance, which is in itself purely a commercial operation, and which, as it would seem, ought to be looked at in regard to the nature of the risk, rather than to the value of the property to which it applies.

I come now, Sir, to explain the estimated financial effect of this reduction. The Revenue from Fire Insurances in 1865–6, apart from any change, was taken at £1,450,000. We propose to reduce the duty to an uniform duty of 1s. 6d. from June 25. We shall add to the Resolution of the House a further change of minor consequence, which was not indicated in the Resolution, but which I am quite sure will be universally approved, and that is a diminution of the duty of 1s. upon the insurance policy, which is quite distinct from the 3s. imposed annually on the renewal of the policy. That charge of 1s. forms a serious impediment to small insurances. In the larger, and even in the middling insurances, the Company takes upon itself the payment of the shilling; but in insurances from £300 downwards the Company requires the insurer—and it is not at all unreasonable—to bear this charge. The eon-sequence is that the man who is insuring £100 has to pay 4s. per cent upon his first year, and the man who insures £200 has to pay 3s. 6d. per cent. We, therefore, propose to substitute for the shilling duty a penny stamp; but at the same time expressly to require the penny stamp to be put upon the receipt given for the money, which the spirit of the present law requires, though I am not sure that it has been practically enforced. The financial result will then be this. The actual payment of this duty is usually three months in arrear, and the change will only take effect at the close of the first quarter of the financial year. Accordingly for the first half-year we shall receive the old duty. The old duty was taken at £1,450,000, and half of that would be £725,000, which we shall expect to receive. The yield of the new uniform duty of 1s. 6d. we take for a whole year at £930,000. That is a reduction of £520,000 for a full financial year by the measure you are now invited to adopt, and this sum of £930,000 includes an estimated increase of 10 per cent upon the description of insurances we are now going to reduce. One-half then of the old Revenue which we should get would be £725,000. On the remaining half-year we should receive one-half of £930,000, or £465,000; and putting these two sums together we have £1,190,000, instead of £1,450,000, showing a loss for the present year of £260,000, while we necessarily have to reckon for the next year on a loss of £260,000 more. Sir, I will now state very succinctly the results of the several changes which we ask the House to adopt. First, I will give the total amount of relief which these changes will afford to the public when they have come into full operation. The full relief given upon tea will be £2,300,000; upon the Income Tax, £2,600,000; upon Tire Insurance, £520,000; the total of these figures, representing the whole of the operations you are now called upon to sanction, will be £5,420,000. I now come to the actual loss which we must expect to encounter in the financial year already commenced. The loss from the reduction on tea will be £1,868,000; from the reduction in the Income Tax, £1,650,000; and from Fire Insurance, £260,000. The total loss for 1865–6 would thus be £3,778,000. In 1866–7 there will be a further loss upon tea of £207,000; upon the Income Tax, of £950,000; and upon Fire Insurance, of £260,000; showing a further burden for 1866–7 of £1,417,000, or a total amount of loss to the revenue, for the two years taken together, extending to the sum of £5,195,000. The figures, however, at which we have to look most minutely now are those which state the total amount of the loss for the present year—namely, £3,778,000. So much has to be deducted from a surplus which I stated at £4,031,000; and the remainder, the very slight surplus which I ask the Committee to permit us to retain in our hands, will be £253,000. It will be seen that, after deducting that surplus from the burden of loss to be laid upon the year 1866–7 by the legislation proposed for the present year, there will still be an estimated charge of about £1,160,000 which we are now imposing upon the resources of the next year. And it may be asked whether that is a prudent measure. My answer would be twofold. In the first place, when you deal with taxes upon property, you deal with taxes which are receivable in arrear of the period to which they refer; an inconvenience which has been much mitigated by the change introduced in 1860, with respect to the Income Tax, but which we have not been able wholly to remove. Therefore in such cases it is absolutely inevitable that our legislation should, to a considerable extent, affect the balance of the year succeeding that for which we immediately legislate. That is my first answer. But I likewise remark that, looking to the state of the country, and to the fact that we are dealing with the Revenue, not of one year, but of two years, and that the increment of the Revenue even for one of these years would, in the natural and ordinary course of things, come to a larger sum, I do not think that the Committee need scruple on the score of prudence to accede to the proposition which Her Majesty's Government have instructed me to submit.

There is, however, Sir, another request which I have to make of the Committee, and which I trust they will be disposed to grant. It is that they will join with us in shielding resolutely against any sort of invasion that modest, possibly too modest, sum of a quarter of a million which I ask that we may be permitted to retain. Sir, we have felt ourselves to be like persons enclosed within a secured and well-girt precinct, while outside the door we have crowds of hungry claimants. The more prosperous the country is, the larger the surplus available for the remission of taxes, the greater is always the number who demand remissions. We see the famishing crowd without, on all sides and of all kinds— Circumstant animæ dextrâ lævâ que frequentes. We have opened the door to those who we thought had in equity the strongest claims, and whose claims we might be able to satisfy. But there remain many behind. There are many Customs duties with which it may still at a future time be desirable to deal. It is not necessary to name them. There are duties still remaining upon raw materials, and there are other duties which undoubtedly it would be most desirable to repeal. But I hope the Committee will think with us that we have acted wisely in proposing a heavy reduction on the great article of tea, rather than in distributing what we have been able to afford in smaller and less effective amounts. Then passing beyond the department of Customs there is the claim to the abolition or the reduction of the duties on public conveyances. That is, I think, a claim for which there is much to be said; and glad shall I be when the time comes at which a favourable ear may be given to the applications which bear upon that subject. There is, again, the powerful claim of those who are connected with the business of marine insurance. I cannot say that I think their case is by any means so urgent; yet, at the same time, it may be, within certain limits, a fair subject for future consideration. These are specimens; and, Sir, there are also many other claims immediately hanging over us in respect to which I trust that the House will support us in declining to make further inroads upon the Exchequer. And now I have especially in view a matter to which I was understood previously to refer—a proposal that will, as it appears, he made for the relief of a particular class from a duty which they have for some generations been liable and accustomed to pay. I am sure that if the House is prepared to enter upon the question of the relief of one particular class from duties which it now pays, whether in the shape of an annual licence, or in the shape of a stamp upon admission, it must, in order to satisfy the demands of justice, similarly be prepared to consider the case on behalf of the whole body of the interests so affected; but to deal with the whole body of those interested or, indeed, to deal with any of them, is neither compatible at the present moment with financial prudence, nor with the elementary principles on which the conduct of Parliament in fiscal matters should rest. I trust, therefore, Sir, that we shall have that support from this House for which I have asked, if it thinks that our proposals are upon the whole reasonable and just, and that they have, likewise, been carried to an extent as wide as the circumstances in which we stand will warrant. I must confess that I cannot but entertain a very sanguine hope as to their acceptance. I am so sanguine as to believe that the immense difficulties I have described as lying in the way of any effectual dealing with the Malt Tax at the present juncture may have made some impression even on minds which were favourably predisposed towards its remission. It is a great satisfaction to myself, as it is also to my Colleagues, to believe that the proposals we now tender are proposals which may be not unacceptable to hon. Gentlemen on the other side of the House. They are few—they are simple—they are intelligible. If it had been compatible with my duty to submit them without illustration or explanatory statement, they might probably have been imparted in fewer words than those of any Budget that has ever dealt with an extended remission of taxation. And, Sir, we are strong in the persuasion, first of all, that they are likely to win the approval of this House; and second, that they will likewise obtain the favourable verdict of the nation whose interests it is our duty, to the best and the utmost of our power, to study and defend.

the House divided, with the following result:—Ayes 137, Noes 65. Among the "Noes" were found many Gentlemen who have been the steady and invariable and earnest supporters of the repeal or reduction of the Fire Insurance Duty; and also many Members of the Government, who, in asking the House, ineffectually, not to adopt the Motion, did not grapple with it upon its merits, acknowledged the importance and force of the judgments which the House had been pleased to give, and only deprecated what they thought, but the House did not think with them, to be an inconvenient and premature declaration. I have thus referred to the Resolution, and in some degree analyzed the Division upon it, for the purpose of showing that little room for doubt has remained upon the mind of the Government as to the course which they should

Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, in lieu of the Duties of Customs now charged on Tea the following Duties of Customs shall, on and after the 6th day of May 1865 until the 1st day of August 1866, be charged thereon on importation into Great Britain and Ireland: viz.—

		£	s.	d.
Tea	the lb.	0	0	6"

THE CHANCELLOR OF THE EXCHEQUER

then moved that the Chairman report Progress, and ask leave to sit again.

MR. WHITE

Sir, with the greatest respect for the high authority of the right hon. Gentleman the Chancellor of the Exchequer, I regret to say I differ from him in accepting the magnitude of our exports as an infallible test of the prosperity of the country. I cannot admit that the greatness of a nation's exports is a significant or sufficient criterion of the aggregate well-being of a people. The right hon. Gentleman, as a proof of our superior prosperity, has adduced the fact that the exports of Holland and Belgium have not increased in the same ratio as our own, but he has forgotten that the social condition of the great bulk of the population of those small but flourishing kingdoms is incontestably better than our own. We all know the vast value of the exports of the Southern States of the American Union prior to the civil war, yet who would aver that the slaves—the producers of those great staples, cotton, tobacco, and sugar—shared in the wealth which their own labour had created? To come nearer home, I must say that this assumption of the right hon. Gentleman is negatived by the fact that Ireland largely exported articles of food when her own inhabitants were in the very agonies of a famine. The best test to my mind of the prosperity of a country does not consist in the magnitude of its exports, but in the social well-being and comfort of the great bulk of the community. The Chancellor of the Exchequer has told us that the condition of the country is prosperous and satisfactory. Glad should I be could I concur with this view of the case, but I cannot do so, when from the official report of the medical officer of the Privy Council I learn that quite one-fifth of the whole population obtain, owing to the scantiness of their earnings, too little food to keep them in proper health and vigour. Has not the recent report of Dr. Hunter on the Public Health told us that the household accommodation and domestic circumstances of a large portion of the labouring classes is in the highest degree deplorable, if not absolutely revolting? Almost every page of Dr. Hunter's Report bears terrible testimony to the truth of the recent declaration of an eminent constituent of the right hon. Gentleman the Chancellor of the Exchequer—I refer to the Professor of Political Economy at Oxford—namely— That the English field labourer has no parallel in the civilized portion of the earth. Paint his life in the darkest colours, and you have not even then described the wretchedness of his condition. If this can truly be said of the rural population, how stands the case with the same class in our cities and towns? Why, it cannot be denied that a large portion now exist in a state of ghastly poverty, herding together in filth and squalor indescribable, heedless or unconscious of the ordinary dictates of morality or decency, The history of the world would hardly exhibit a parallel to the co-existence of so much privation in one portion of the community, and so much prosperity in another—the almost unbounded wealth of the few, with the unceasing poverty of the many—a marvellous augmentation of the resources of the realm with the very scantiest increase of the comforts of the people. That this statement is not exaggerated I can prove by the latest Poor Law Returns. They are from 655 places in England and Wales, and show out of a population of 19,885,912, there were 1,011,753 paupers, and of that number nearly 50 per cent were able-bodied. When, in addition to these, we remember that there were millions who were always on the very verge of pauperism, I cannot, in spite of the opinion of the right hon. Gentleman, regard the present condition of the country as satisfactory. Nor is this all, for though we expend some £16,000,000 for paupers, police, public justice, and private benevolence, we yet learn from the judicial statistics that we have 130,000 known criminals at large to prey upon the rest of the community. It was stated at the last Social Science Meeting, and the statement was not contradicted, that the average wages of an adult agricultural labourer in the South Western counties was 9s. a week. Such a miserable stipend—with all our boasted prosperity—must he regarded as a social anachronism, to use no stronger language. By the Poor Law Returns the average earnings of our agricultural labourers, forming one-third of the whole of our working classes, was not more than 11s. per week, and it must not be forgotten that during the last half century quite six millions of our population have been constrained to emigrate. It is not, I consider, satisfactory to find how little better off is that class by whose hands such vast wealth has been created. Hence, whilst the Chancellor of the Exchequer might justifiably point with exultation to the stupendous magnitude of our exports, the marvellous growth of our imports, and the amazing development of our revenue, I must be pardoned if I venture to think that the scant and inadequate recompense for ordinary manual labour is a practical condemnation of our present social condition. Whilst it is very gratifying to find that the growth of the revenue during the last five years is at the rate of quite two millions per annum, still I should have been much better pleased if our legislation had tended more to the diffusion than the accumulation of wealth. That such is the case would seem obvious when we reflect how little the creators of our opulence participate in the enjoyment of it. It is calculated that two-thirds of the total product is the share of but one-seventh of the public; whilst the remaining one-third is distributed among the other six-sevenths of the community. I should have been glad to have learned from the Chancellor of the Exchequer out of his grand total of £70,313,000 how much was derived from direct and how much, from indirect taxation. Then, perhaps, it would have been too apparent, that whilst only some seventeen millions were obtained from the realized wealth or property of the country, we still raised forty-two millions of our revenue by Customs and Excise duties on articles of ordinary domestic consumption by the great bulk of the people. Moreover, might not a further elucidation have demonstrated that of this total of forty-two millions of Excise and Customs duties, more than one-half was extracted—may I not say extorted—from the physical necessities (they have become such) or the physical enjoyments of the unenfranchised, unrepresented portion of the working classes? And yet the constitutional text-books lying on the table before me tell us that taxation without representation is—tyranny. In my humble judgment, property pays too little and poverty too much under our present fiscal system; for whilst we have been abandoning Customs duties paid by the rich, we have continued taxing for a vast revenue, articles mainly consumed by the poorer classes. With regard to the Revenue Estimates of the Chancellor of the Exchequer for the coming year, he must forgive me if I presume to say that I think he put his figures too low by one million at least. About a month ago I made my own Estimate and was bold enough to publish it. I then put the expenditure for the year ending the 31st of March next at £65,500,000, and the revenue at £71,000,000, which amount would have left more than five millions available for the reduction or remission of taxation. I am sorry the Government will require for the coming year £639,000 more than I had deemed possible by my calculation. Assuming no alteration in the existing scale of taxation—allowing for the reductions of the past Session which will come into operation in this financial year; in fact, adopting the same basis of Estimate as the Chancellor of the Exchequer, I still hold that my own Estimate will yet prove correct when the outturn of next year's income is known. I can well understand why the right hon. Gentleman habitually puts his probable income at too low a figure; for by so doing he avoids many importunate demands for relief from taxation, and moreover enjoys the satisfaction of having an annual surplus available for the diminution of the National Debt. Contrasting the present condition and the probable future of the country, the prospects of a favourable outturn of the revenue are more encouraging than at the corresponding period last year. Then the minimum of Bank-rate was 7 per cent, and it is now 4 per cent. Then the price of cotton was double what it is now. Then the early termination of the American contest was dubious. Judging by the recorded average price of wheat which, on the 15th instant, was precisely (namely forty shillings and one penny a quarter) as at the same date last year; one would infer that the prospects of the harvest were no better last year than at that date. Further, wool last year was 25 per cent higher than now, and other raw materials of manufacture were at enhanced rates compared with those now ruling. At this time last year sugar was 30 per cent higher, and stocks 35 per cent less—tea 12 per cent higher, and stocks 15 per cent less than at the present time. Moreover, throughout the whole of the past year loanable capital was excessively dear, and the minimum Bank-rate of 1864 reached the unprecedentedly high average of 7 1–16 per cent. By comparison with last year the employment of labour on the construction of railways and other home enterprizes must be greatly facilitated, and the consequent consumption of articles liable to Customs and Excise duties must be greatly promoted; as also by the political saturnalia of a general election and the disgraceful expenditure it will involve. Seeing that the anticipated revenue is drawn from the same fiscal sources as heretofore; and besides, as far as I can make out, the average increment of the last three years' revenue has been at the rate of two-and-a-half millions per annum; I am constrained to think that we shall have on the 31st of March, 1866, quite as good a result as during the preceding three years. Before I sit down I must thank the Chancellor of the Exchequer for his judicious boldness in proposing such a telling reduction of the Tea Duty. On a recent occasion I recorded my opinion that in justice to the working classes the duty on tea should be forthwith reduced, but I confess that at the same time I avowed my belief that I did not expect the right hon. Gentleman would have the courage to propose the reduction of a duty which had been so recently lowered by Parliament, at his own recommendation. In conclusion, the Chancellor of the Exchequer must pardon my remarking that I think he claimed undue credit for the diminished scale of expenditure for the past two years and for the ensuing one. I must be forgiven if, as a humble Member who has uniformly, albeit ineffectually, protested against the extravagant expenditure of the Government—if I presume to say that I do not accept the greater prodigality of the past as a valid excuse for the lesser but still incontestable wastefulness of our present expenditure. The Chancellor of the Exchequer has referred to what the new Parliament may he called upon to do. Hence I would express my hope that it will find itself hound by every obligation of duty, and by every principle of political honour, to press upon Ministers the urgent necessity of public thrift and judicious retrenchment. I feel so strongly on this point, that I trust one of the earliest Resolutions of the new Parliament will declare that no Ministry is worthy of confidence which shall venture, in a normal condition of public affairs, to ask for more than sixty millions per annum for the whole Government expenditure. I am quite confident that that amount is more than is really needed to discharge every public obligation, and to maintain in full efficiency all the establishments of the Government. In this conclusion I am fortified when I recollect that sixty millions are quite seven millions in excess of what sufficed for the average annual expenditure of the ten years preceding the Russian war. During the whole of that period the average yearly expenditure, adding the cost of collection, was fifty-five millions; but then also was included the payment of £2,149,000 per annum, the amount of the Terminable Annuities, which expired in the year 1860. We have since remained at peace in Europe, and yet during the last five years we have been expending annually sixteen millions more than on the average sufficed during the ten years prior to the Russian war. What we have got for this stupendous outlay as regards international influence and prestige may be gathered from the Dano-German debate of last Session. What we have gained by this enormous expenditure in home strength and external power may be learned from our recent discussions on the Army and Navy Estimates. According to the concurrent testimony of right hon. Gentlemen and gallant Officers, sitting on both sides of the House, we have now no guns and no ships which are able to do efficient service. It is true we have fixed forts, but on movable foundations, at Spithead; iron clad ships wholly unseaworthy, but admirably adapted for shore batteries, and a highly interesting collection of smashed targets (a specimen of which can be seen at the Crystal Palace), which accurately represent the sides of that ship of the future which, by no conceivable chance, could ever be exposed to such rough treatment. In conclusion, whilst I deliberately record my protest against the magnitude of our present expenditure, I wish I could indulge the hope that Parliament and the country would never again be deluded by Ministerial declarations into mistaking costly inefficiency and unproductive expenditure for permanent security and national strength.

MR. BENTINCK

said, he had listened with great interest to the very eloquent speech of the right hon. Gentleman, but he wished he could say that his satisfaction had equalled his interest. He was some what amused to observe that the first class of persons for whom the right hon. Gentleman had thought proper to express his beneficent intentions were the special pleaders, and he was bound to say the latter portion of his speech explained the grounds on which the right hon. Gentleman looked so favourably on that particular profession. But the right hon. Gentleman had gone beyond special pleading, and in one part of his speech had dealt in vague and unfounded assertion. Taking every opportunity of putting forward the completeness of his conversion to the doctrines of free trade, the right hon. Gentleman told them he not only objected to protection for Englishmen against the foreigner, but that he protested as strongly against protection for the foreigner against the Englishman. Was the case of rags for the manufacture of paper, or the position of the riband and silk weavers, present to the mind of the right hon. Gentleman when he made that statement? Had he not in these instances been the champion of protection for the foreigner? He did not think those afflicted interests would regard the remarks of the right hon. Gentleman on that subject with any satisfaction. But the particular object he had in rising on the present occasion was to advert to the manner in which the Chancellor of the Exchequer had thought proper to deal with the question of the duties on malt. The right hon. Gentleman said that those who sought the reduction of the malt duties had no right to ask for any favour, for no class of industry had been so favoured by legislation. Now, he would tell the Chancellor of the Exchequer what class had been favoured, clearly, distinctly, and grossly, to the prejudice of the rest of the community. It was the class which had embarked in the special industry of publishing penny newspapers. Was it not clearly and distinctly a case of class legislation when the duties on paper were repealed? All that had been said about the advantages of the diffusion of knowledge might be classed among the "Flowers of Rhetoric." It was not a question whether they should enable the people of this country to have access to a larger amount of information at a lower rate—every man in the country, however small his means, might have obtained any amount of the cheapest literature before the repeal of those duties—but the object was to give a substantial money benefit to a small but influential class, who were able in return to give very powerful support to the Government. When, therefore, the Chancellor of the Exchequer called on those who desired a repeal of the malt tax to forego their complaints on the ground that no other class had been unfairly favoured by legislation, he begged to deny the assertion. So long as the wisdom of Parliament considered it right to maintain the present legislation on the subject of paper, every other class would have a right to complain of gross and unjust class legislation. The right hon. Gentleman had made another remarkable assertion, which showed how far he was trusting to information received from others. It had been proved, he said, that malt was not a good description of food for cattle; but in the rural districts the right hon. Gentleman would find a large number well qualified to form an opinion on that question who took a totally different view of it. Another assertion was still more startling. He said that even if malt was beneficial as food for cattle, his Act of last year provided every possible facility for applying malt to that purpose. Why, it was well known that the Act of last Session was encumbered by so many provisions and vexatious arrangements that it was practically inoperative. The right hon. Gentleman asked whether those who complained of the malt duties sought for their reduction or entire abolition. Now, he (Mr. Bentinck) would frankly avow his belief that no reduction of the duties on malt short of their entire removal would be really beneficial to those who complained of them in their present state. Whether it was possible to do away with the tax at once was another question; but he should not be dealing frankly with the House did he not state that, while he and those who agreed with him merely asked at present for a reduction of the tax upon malt, they looked forward in the course of time to the total abolition of a tax which pressed so unfairly upon a particular portion of the community, and which was so vexatious in its character. The right hon. Gentleman stated that beer drinking was on the increase, and that therefore the growers of barley ought to be satisfied; but in making that assertion he had not taken into consideration one or two points which bore strongly upon the subject; for instance, he had not taken into account the very great increase of late years in the quantity of beer exported. The real grievance of the consumer was that by reason of the existence of the duty on malt beer was both bad and dear, while what he (Mr. Bentinck) anticipated that by the reduction of that tax was that he should obtain a better and a cheaper article of consumption. The right hon. Gentleman entered into a somewhat singular calculation, and endeavoured to console those who sought for the repeal of the duty by referring to the comparative price of wheat and barley, and told them they ought to be content when there was so little difference between the prices of the two articles. That, however, was a total misconception of the real state of things. Thanks to the right hon. Gentleman and to others who had dealt with our finances for many years, the price of barley had not been raised to that of wheat, but the price of wheat had been forced down to that of barley. He (Mr. Bentinck) did not consider that much ground for consolation. The right hon. Gentleman proceeded to say it was not right to lay a heavier tax upon wine than upon beer. Of course, he did not expect to receive the assent or sympathy of the right hon. Gentleman and of those Gentlemen who were wont to say that such a thing as a Protectionist could scarcely be discovered in England; but, nevertheless, he felt bound to assert that many millions of his fellow-countrymen would infinitely prefer that a tax should be laid upon the Frenchman's wine instead of upon the Englishman's beer. Therefore, when the right hon. Gentleman proceeded to draw parallels between the tax upon wine and that upon beer he was only carrying out that most mischievous portion of the doctrine of free trade which postponed the interests of the Englishman to that of the foreigner. The right hon. Gentleman, in order to wind up with one of those pleasant suggestions he knows so well how to make, told them that, although he was not going to deal with the malt tax now, they must not despair, as he did not say that at some future time some future Government might not deal with the duties on malt, and that perhaps they might look forward to the question being attended to by the House of Commons when the income tax had been repealed. Certainly, that prospect was but poor consolation to those upon whom the tax was now pressing with great weight. The right hon. Gentleman concluded his speech by saying that he believed the nation would approve his Budget. He wished to know what the right hon. Gentleman meant by the words "the nation?"—because it would appear that he had fallen into the very common error of regarding as the nation that portion of the community which was most frequently represented in that House, and who, therefore, held the control of the financial measures of the Government. If that body were to be regarded as "the nation," no doubt "the nation" would approve the Budget of the right hon. Gentleman. But he ventured to think that there was another portion of the population and the wealth of the country which had been lost sight of by the right hon. Gentleman, and which was entitled to be considered as coming within the pale of "the nation," who would not approve the statements which had been put forward that evening. He could only express the hope that that part of the community to which he had alluded, and which had been so long endeavouring to procure a remission of one of the most unjust taxes that ever existed, would not relax their efforts, but would see that their only chance of forcing upon any Government any remission of this unjust burden was by trusting to their own unaided energies and by relying upon their own unceasing exertions.

MR. MARSH

said, he could not agree in the remarks of the hon. Member for West Norfolk (Mr. Bentinck), for he regarded the reduction of the price of wheat as one of the greatest blessings ever granted to the country. His right hon. Friend the Chancellor of the Exchequer, in his most admirable financial statement, had argued that the increase in the imports of the raw material for the manufacture of paper showed that the repeal of the paper duties had acted as a strong stimulus to the manufacture of paper in this country; and then, against this increase in the importation of the raw material, he set an alleged decrease of the English raw material, from the supply of cotton-waste having diminished. But the contrary was the case. The waste of Indian cotton, of which a large quantity had been imported during the last year or so, was 20 per cent greater than that of American cotton, and therefore the decrease of cotton-waste must have been but small, and could not be regarded as counterbalancing the large increase in the importation of the raw material for the manufacture of paper. The right hon. Gentleman's argument with reference to the malt tax was most conclusive and unanswerable; but in one respect he might strengthen it to some extent. The right hon. Gentleman, in estimating the consumption of beer, had excluded women and children from his calculation, but had omitted to exclude the cider drinkers of the country, who might be taken roughly to amount to a million persons. His right hon. Friend had mentioned the fact that wine was sold in this country at the present time at 5s. per gallon. He had tasted that wine at some of the railway stations, and had been satisfactorily convinced it was most horrible stuff. It was retailed at the railway refreshment stalls at 6d. a glass, and as there were twelve glasses to I a bottle, there resulted to the vender a profit of about 700 per cent. This was; a state of things he wished to see altered, and he believed the only way to enable the public to obtain good cheap wine was to make the sale of wine a free trade. The sum received by the Exchequer from the sale of wine licences was but small, and the desire to retain it should not be allowed to prevent the public from obtaining cheap wine. The duty upon tea was to be reduced 6d. in the pound, which would relieve the poor man who consumed four ounces a week to the extent of 6s. 6d. per annum, the loss to the revenue being £1,700,000. If the poor man had a large family he would have to buy a bushel of flour a week, the duty upon which at 1s. a quarter would amount exactly to the same sum—namely 6s. 6d. a year. He wished the Chancellor of the Exchequer, with the boldness which characterized his operations in finance, had reduced the tobacco duty one-half. Tobacco was a very great comfort to a poor man, and often kept him out of mischief. He had lived in a country where there was free trade in tobacco, and where the working man was able to buy the best negro-head. If the Chancellor of the Exchequer had proposed such a reduction he had no doubt that in two years the Exchequer would be fully recouped and he would confer upon the poor man, upon whom the greater part of the duties were levied, a real boon. One of the most anomalous imposts remaining was the duty on timber. The duty on raw timber was 1s. a load; if it were split the duty was 2s. a load; but if it were worked up into pianofortes or a chest of drawers, it was not taxed at all. A ship built in America was taxed at 1s. per ton. Timber from Nova Scolia paid a duty of 1s. a load; but a ship built in Nova Scotia paid nothing at all. This was protecting not British industry, but the industry of other nations. The result was to a certain extent to induce farmers to grow ash trees in hedge rows, where they exhausted the soil, and to cause the larger trees to be cut down when they were very ornamental. At the same time he must express his approval of the Budget generally, and especially of the reduction of the duty on tea, which would be a great boon to the poor; and he should always rejoice to see their interests continue.

MR. H. B. SHERIDAN

said, that he, in common with the rest of the House, had felt the influence of the Chancellor of the Exchequer's eloquence, and there was one part of the right hon. Gentleman's masterly statement which gave him more than ordinary pleasure. He was nevertheless somewhat disappointed by his proposition with regard to Fire Insurance, for he had ventured to hope that his views might have taken a wider range, and that his policy would have been to reduce the duty to 1s. all round. He had submitted statistical evidence to the House which he hoped would convince the right hon. Gentleman that the effect of such a reduction would be to bring quite as large an amount to the Exchequer. But the right hon. Gentleman had not given the duty a chance of replacing itself, and he, therefore, for one, had no confidence in the result. He accepted the reduction, however, as a further instalment; and his only consolation was in hoping that in the next Session of Parliament the state of the finances would warrant him in applying for, and the Chancellor of the Exchequer in conceding, a further reduction of the duty to 1s.

MR. DU CANE

said, that the hon. Member for Salisbury (Mr. Marsh), who thought the Chancellor of the Exchequer had forgotten the important fact in reference to the malt tax that those who drank cider did not drink beer, appeared himself to have forgotten that those who live in cider counties used to know how to take care of themselves in matters of taxation better than those who grew barley; for when Sir Robert Walpole proposed to levy a cider tax they nearly got up a rebellion. Those who lived in barley-growing counties, however, sought for redress in a quieter manner. He did not wish, on the present occasion, to discuss the details of the Budget; but, as the representative of a barley-growing constituency, he could not help expressing, not his sense of disappointment, for he had never had much hope on the subject, but his sense of the injustice with which the right hon. Gentleman the Chancellor of the Exchequer had met the fair and temperate claims of the agricultural interest in respect to a reduction of the malt tax. Several of his friends were sanguine enough to believe that the Chancellor of the Exchequer's mysterious silence on the Motion of his hon. and learned Friend (Sir FitzRoy Kelly) was neither more nor less than the silence of consent, and that they had only to wait until that evening to be thankful to the right hon. Gentleman for a pleasing surprise upon the malt tax question. For himself, he had not shared, in the slightest degree, in that delusion. He had always thought the prize was one of far too much value and importance to be parted with by the Chancellor of the Exchequer upon any smaller compulsion than that of a majority of the House of Commons. But the weapons which the right hon. Gentleman employed against the advocates of the reduction of the malt tax were quite worthy of such a master as he had always shown himself in the art of evading pitched battles on the main question at issue. Last year he met the agitation by his Malt for Cattle Bill, the utter inutility of which the right hon. Gentleman had shown that night by his own statistics. The Motion of his hon. and learned Friend the Member for West Suffolk the right hon. Gentleman met this year by a Report from the Board of Trade, which affirmed statements that were at variance with the conclusions of nine out of ten of every practical farmer whose opinion he (Mr. Du Cane) had consulted. To-night the right hon. Gentleman had in the same spirit evaded the main question by a fanciful scheme for levying the duty by weight instead of by measure. As the right hon. Gentleman had told them that this would form the subject of a separate Bill, he (Mr. Du Cane) did not wish to discuss the details or prejudge the question. But without committing himself to a hasty opinion, he could not help fearing that the only effect of this change would be to open the door to frauds on the revenue without conferring any benefit upon the growers of inferior barley. The right hon. Gentleman had paid a feeling and a just tribute to the memory of Mr. Cobden; but he did not think that hon. Member had ever spoken more to the purpose than in one of the last speeches he addressed to the House, when speaking of the malt tax last year he warned the opponents of the tax that there would be quite as much difficulty in putting on the coping-stone of free trade as there had been in laying the foundation stone of the edifice; and when he also expressed his conviction that the advocates of the repeal of the malt tax were only at the beginning of a long and arduous campaign. What had happened that night had proved the truth of the prediction; and he (Mr. Du Cane) could not help thinking that the Chancellor of the Exchequer had thrown away a golden opportunity of doing the agriculturists justice. He found himself in possession of a surplus far larger than for many years past, and larger also than any Chancellor of the Exchequer might expect to have for many years to come, and his financial policy was on the eve of trial before the constituencies. He (Mr. Du Cane) had no wish to see the malt tax repealed at a single blow, and the deficiency made good by the income tax. He disliked the income tax, the tea duty, and the malt duty; but he thought that all taxes should be fairly considered in their turn. During the last four or five years the tea duties had been considerably reduced, the income tax had undergone successive reductions, the paper duty had been abolished—an instance of that class legislation which the right hon. Gentleman this evening had correctly described as a mistake of the grossest order—and surely now the time had arrived when it was the fair turn of the malt tax to be considered. The right hon. Gentleman had thrown away a great opportunity, for if he had reduced the income tax by one penny, dealt as he proposed with the Eire Insurance Duty, and had then employed the rest of his surplus to get rid of one-half of the malt tax, as an instalment towards its future repeal, he would have retained all his present friends, and would also have conciliated many who, as matters now stood, would be found in future to be his opponents. It was probable, looking to the result of the division which recently took place upon the Motion of the hon. and learned Member for Suffolk, that the present House of Commons would approve the right hon. Gentleman's financial scheme; but when an appeal was made to the constituencies he believed that a very different opinion would be expressed. No doubt cheap tea and cheap beer were equally acceptable to the working classes; but they ought not to be put in the same category as regarded the question of taxation. The duty on malt was a violation of a fundamental principle of free trade, because it fell on the raw material of an article of both home production and consumption, but the duty on tea was levied exclusively on an article of foreign growth and manufacture. The fact was that if malt was, in this case, to be compared with any- thing it ought to be compared with corn or bread and not with tea and sugar. Then as to the respective incidence of the income tax and the malt duty. If the mass of the labouring population and of the farmers were asked which they most objected to, they would reply that they would prefer the tax upon an article of absolute necessity to them to be reduced rather than the income tax, which they did not pay. The pressure of the malt duty, especially in barley-growing districts, was treble that of the income tax. For instance, a farmer cultivating 300 acres of land in a barley district would consume for himself and his labourers some 100 bushels of malt a year. Supposing his rent to be 30s. an acre it would amount to £450 a year, and the income tax upon one-half that amount at the present rate would be £6 5s. while the tax upon 100 bushels of malt would be £13 10s. Therefore the proposed reduction on the latter tax of 2d. in the pound would save him only £2 annually, while a reduction of the malt tax by one-half would save him upwards of £7. The right hon. Gentleman had made use of the old argument, of a comparison between the prices of barley and wheat, and showed that as the former maintained its value the farmer had no grievance to complain of. But that argument was a gigantic fallacy. No one ever denied that first-class barley always fetched a good price; but the effect of the Excise duty was to create a monopoly and to render all but the first-class barley unsalable for purposes of malting. The averages of prices, too, which the right hon. Gentleman had quoted were not fairly struck because they were taken solely upon first-class barley. [The CHANCELLOR of the EXCHEQUER dissented.] The right hon. Gentleman said "No;" but statistics, he thought, would prove his (Mr. Du Cane's) statement. However, he would not pursue that point; but would only add that if the hon. and learned Member for Suffolk should think it right to renew the contest he would be found again under the hon. and learned Gentleman's banner; but it was upon the hustings that the great battle of the malt tax must be fairly fought out, and he believed that when that battle was fought the right hon. Gentleman would find that he had reckoned without his host, and that an approval of his Budget would not be pronounced by a large portion of the taxpayers of this country.

SIR FRANCIS CROSSLEY

said, he had listened with interest to the eloquent statement of the right hon. Gentleman, and approved of the main proposals of his financial scheme. He did not think that hon. Members were to blame for bringing under discussion such questions as the insurance duty and the malt tax even before the Budget, as it was their province to suggest to the Government what kind of Budget would be pleasing to their constituents. He had voted against the repeal of the malt tax and for the repeal of the insurance duty, and he was therefore glad to find that the Chancellor of the Exchequer had made a concession in respect of the latter duty, but he must not expect too great results from the modification. He had told the right hon. Gentleman last year that he must not expect too great an increase in the insurances on stocks, because manufacturers and merchants like himself had before the reduction always insured, when they were charged 1s. or 8s. per cent for extra risks; but when the premium was only 1s. 6d. upon furniture it would be questionable whether parties would insure to a large extent. Even with the reduction now proposed as there would still be a tax of 100 per cent upon prudence; and when the duty on beer was only 20 per cent surely that was an excessive rate. The hon. Member for Norfolk (Mr. Bentinck) had challenged the right hon. Gentleman's calculations as to the consumption of beer since 1722, because of the increased exportation of that article; but the hon. Gentleman himself overlooked the number of total abstainers in this country now who were not to be found in former times. The right hon. Gentleman seemed to think that Parliament ought to make some further effort to reduce our enormous National Debt; and in that opinion he (Sir Francis Crossley) entirely concurred. He should like the Government to set aside every year £500,000 for the purchase of terminable annuities, to expire at the end of 100 years; that sum thus set aside would ensure, at that period, a reduction of the Debt by a sum of £10,000,000, and that he thought would be a much better safeguard against future wars than our present enormous expenditure. He was glad that the duty upon tea had been reduced to so large an extent, as the consumer was likely to get the benefit from it; and he also approved of the manner in which the Chancellor of the Exchequer had dealt with the income tax.

MR. BARROW

said, he could not share the satisfaction which had been expressed in the hon. Gentleman's proposition; for, although he was desirous to see a reduction of the income tax, he had no desire to be relieved at the expense of those who suffered grievously from the incidence of the malt tax. He protested against the charge, that in asking for a reduction of the malt duty, they were seeking for class legislation. No manufacturer paid duty on the article of his manufacture. The small farmer was very little affected by the income tax, but he was very largely concerned with the malt duty, which was a tax upon an article that he largely consumed; in fact, that tax fell as heavily upon him as the income tax did upon the large proprietor. It was said that if the malt tax was repealed, the landowners would raise their rents by an equal amount, but he had too good an opinion of the landlords to believe that statement. He differed from the remarks which the Chancellor of the Exchequer had made respecting the barley averages, and considered that his conclusions were drawn from incorrect premises. It was a fallacy to calculate the price of barley from the average price returned from the markets, for the average price to the grower was much lower than that. He was not asking for class legislation or favouritism, but as the manufacturer did not pay a tax on the articles of his manufacture, the farmer ought not to be taxed for barley, which entered so largely into his consumption for various purposes.

MR. WHALLEY

said, that he had always been opposed to the malt tax, and he thought that if the hon. and learned Member for Suffolk had proposed to the Chancellor to repeal it, and to increase the income tax 2d. in the pound, that that right hon. Gentleman would have agreed to the proposal. He rose to express his satisfaction generally with the proposals of the Chancellor of the Exchequer, and particularly with the speech of the right hon. Gentleman. Looking at the reduction of the income tax and at the promises made by the right hon. Gentleman with regard to that particular tax, he inferred that it was his intention of still further dealing with that tax in the event of a surplus next year. As a direct tax, the income tax was harsh, oppressive, and demoralizing.

MR. SCLATER-BOOTH

said, that on the right hon. Gentleman the Chancellor of the Exchequer's own showing, he had the means of making an important reduction of the malt duty; but, on the contrary, the right hon. Gentleman had gone out of his way to show that he was not inclined to conciliate the good feelings of the agricultural class. He had never been one to contend that, with such an Imperial expenditure as we had to meet, beer was an unfit subject for taxation; and he admitted that it would be difficult to relieve beer altogether from taxation so long as alcoholic drinks were subject to taxation. Although, therefore, it would be difficult to remit the duty altogether, he thought it would be far better if it were levied on beer instead of malt. He was inclined to think that if the malt tax had been one that affected the trading and manufacturing interests it would long ago have been readjusted. A tax on beer instead of on malt would be acceptable to the farmers, and would prevent them feeling that their interests were not duly considered by the Government. Among the agricultural classes the feeling was that the right hon. Gentleman did not pay that deference to them which he paid to other classes. The right hon. Gentleman now proposed to reduce the duty on tea, of which nobody complained. The right hon. Gentleman, in support of his proposal, had been guilty of gross fallacy in his comparison of the relative proportion of taxation on a barrel of beer and on a chest of tea. Before such a comparison could fairly be made the tea must be put into the pot and made an article for consumption; and the same fallacy existed in the comparison which the right hon. Gentleman had drawn between beer and spirits. He thought that the right hon. Gentleman ought to have taken that opportunity to re-adjust the malt tax.

MR. J. B. SMITH

regretted that the Chancellor of the Exchequer had not taken this opportunity of repealing the timber duty. It was an indefensible anomaly that we should admit the manufactured article free of duty, and impose a tax upon the raw material, more especially as timber was now the only raw material upon the importation of which any duty was levied. He was aware that it would have been impossible this year to repeal this duty without making a corresponding reduction in our expenditure; but the expenditure was, in his opinion, far beyond what it ought to be, and he hoped that next year it would be so reduced as to render possible the measure which he was advocating. He regretted that the right hon. Gentleman had reduced the income tax, for he thought that if placed on a proper footing it would not be an unpopular tax; and he did not desire to see it totally abolished. Seeing that our direct taxation was so small as compared with indirect taxation, he thought all reductions should now be confined to the latter. The duty upon tobacco was so enormous as to lead both to smuggling and adulteration. At the time that he was President of the Manchester Chamber of Commerce some tobacconists of Manchester brought before the Chamber the losses to which honest traders were subjected by having to compete with those who undersold them by selling adulterated instead of real tobacco. The Chamber sent a person to buy a small quantity at twenty tobacconists shops, and it was found that only two out of the twenty were genuine tobacco. He believed that if the duty were reduced by one-half there would be no loss to the revenue.

LORD JOHN MANNERS

said, that the Chancellor of the Exchequer had never been more sanguine than on the present occasion; but despite the right hon. Gentlemans sanguine anticipations that after the speech which he had delivered that evening he should never again hear, either in the House or out of it, the arguments which had been used against the retention of the malt tax at its present amount, he could assure the right hon. Gentleman that all the arguments which had induced him to recommend the diminution of that duty remained in full force. He had never heard any remarks of the right hon. Gentleman which were more full of fallacies and assumptions than those which he had made that evening with reference to the malt tax. After having endeavoured to show that unless they went very deeply into the reduction of the tax they had better leave it alone, the right hon. Gentleman referred to no less than four sources of diminution of revenue, the last of which was the article of spirits, and he argued that the revenue would lose as much or more by the decrease of the consumption of spirits as it would gain by the increase of that of beer. Was there ever an assumption so entirely and absolutely without proof? At the very best it could only be an as- sumption; but it was an assumption that was not justified by any experience they had had of past legislation, or of the legislation of the right hon. Gentleman himself. The right hon. Gentleman greatly reduced the duties upon wines, and he told them in glowing language that the cheap wines which would come in would find their way into the consumption of classes of people who, up to that moment, had never had the opportunity of consuming wine of any sort at all. Well, and what had been the effect? The consumption of beer, spirits, and tea had increased, and the consumption of wine, which he told them had greatly increased, had taken place pari passu with that increased consumption of popular beverages. Then, he asked, why was not a similar recovery to take place in the consumption of beer to that produced by a corresponding diminution in other taxable and potable articles? All analogy was against the right hon. Gentleman, and he challenged him to his proof. The right hon. Gentleman went on to state that it was not fair to contrast wine with beer, wine being a costly article and beer a cheap one. The true comparison between beer and any other popular drink would be in the article of tea, which, according to the right hon. Gentleman, was to come into popular rivalry with beer. Well, in the present Budget he was going to reduce the duty upon tea one-half, and he contemplated most naturally—and justly, as he (Lord John Manners) believed—that the increased consumption of tea would very greatly recover the first loss to the revenue; but he did not anticipate any falling off in the consumption of beer—not a bit of it—but he assumed that the consumption of beer would go on increasing without the slightest reference to the great increase in the consumption of tea. He had no doubt the right hon. Gentleman was correct in his anticipations as to the increased consumption of tea; and therefore he contended that, on his own showing, taking his own figures, the assumption of the right hon. Gentleman, that by dealing with the malt tax they would reduce the revenue on other articles, was an assumption not worth the breath that conveyed it to the Committee. The right hon. Gentleman fell back upon an argument which he thought he was entitled to the sole merit of discovering. He told them that if he ventured to reduce the duty upon malt without touching the duty upon spirits every Irish and Scotch Member would be up in arms against the proposition. Now they had had this question discussed two or three times during the last two or three years; and he had a vivid recollection of a speech made last year by an Irish county Member, strong and argumentative, in favour of the reduction and ultimate repeal of the malt tax. That speech was made by the hon. Member for the County of Westmeath (Mr. Pollard-Urquhart), who sat behind the right hon. Gentleman, and was also a Scotch landed proprietor. The right hon. Gentleman had really invented this argument; for he could not suppose that a proposal which promoted the physical comfort and moral improvement of the people of Ireland and Scotland would be opposed by the representatives of those countries, because the Chancellor of the Exchequer might not be disposed to make a corresponding diminution in the taxation upon spirits. He entreated the right hon. Gentleman, when next he addressed the House, not to endeavour to raise sectional and national differences upon a question which ought to be treated upon broad and Imperial grounds, and which, in reality, affected for good the people of Ireland and Scotland equally with the people of England. Then the right hon. Gentleman stated that he had found most clearly from the operation of his most wonderful Act of last year that the farmers of England and others did not want any alteration in the malt tax; because, whereas some twenty-eight people had taken out licences under that Act eleven of them had already given up the precarious boon offered them; and he had letters from some of them (he did not say how many), informing him that they had done so, not in consequence of the stringency of the regulations in that Act, but because they could not find a market for the article. He (Lord John Manners) should like to know how many of the eleven persons to whom he referred had written for information to the right hon. Gentleman, and how many of them had told him that the reason why they had given up their licences was because they found the farmers, whose custom they hoped to obtain, did not wish to go some miles to purchase an article which they wished to be allowed to manufacture for themselves out of their damaged or inferior barley. The fact was that the right hon. Gentleman's scheme had failed, and fallen to the ground. He (Lord John Manners) would not now refer at length to the nibbling at the malt tax, to which the right hon. Gentleman had alluded; but as the measure of last year had failed, so assuredly would this nibbling attempt on the outposts of the malt tax. The right hon. Gentleman would find that neither his concessions nor his arguments would have the slightest effect in convincing that large section of the community who felt that they were aggrieved, and insulted even by the maintenance in undiminished severity of a burden which pressed heavily upon them. But the right hon. Gentleman denied, in somewhat grandiloquent terms, that any repeal, or reduction of taxation had of late years taken place for the benefit and at the instance of any particular class. On this he joined issue with the right hon. Gentleman. He could not suppose that hon. Members had forgotten that the abolition of the duty on the importation of raw cotton was in the first instance sought for by the class which it chiefly affected. It must also be borne in mind that all remissions of taxation must be regarded as conducing in the long run to the benefit of the community generally, and he had no doubt that the whole community would ultimately derive considerable benefit from the repeal of the malt tax even though it could be proved—as it undoubtedly could—that the malt tax pressed with unusual severity on the cultivators of the soil. But the right hon. Gentleman went on to argue that those who advocated the repeal of that tax were, after all, only playing into the hands of those dreadful beings who had their headquarters at Liverpool, the financial reformers, who sought to prepare the way for the remission of all indirect taxation. But were there no reasons founded in justice and common-sense why the malt tax should be dealt with without necessitating the repeal of every other indirect impost? Was not the malt tax essentially a burden on production and industry, and might it not be fairly classed with those duties which the right hon. Gentleman himself had been among the most earnest to denounce and repeal? It really seemed as if that part of the Chancellor of the Exchequer's exposition which regarded the malt tax had been originally designed as a reply to the arguments of the hon. and learned Member for Suffolk (Sir FitzRoy Kelly), but that for some reason or other it had not been let off. He thought, he might add, that the right hon. Gentleman had not scanned very carefully the division list in connection with the hon. and learned Member's Motion, for if he had done so he would have found that the financial reformers to whom he alluded, although they might occasionally find it convenient to entrap unwary country gentlemen into alliance with them by expressing their hostility to the tax, yet were silent in debate on the subject and absent or hostile upon a division. Of course, he should be glad to have the support of those Gentlemen if they were willing to give it; but then he would observe that he hoped when the time came to discuss the total abolition of the duty on spirits and other articles which were the objects of indirect taxation, the right hon. Gentleman would be able to make out a better case against their abolition than he had against the repeal of a duty on industry which ought, on his own principles, to be done away with at once and for ever. He would, moreover, advise those unfortunate Whig Gentlemen who were about to look for the support of county constituencies in the interest of the present Government, not to go to the hustings with the weight of the malt tax round their necks, for they would not find that the arguments of the Chancellor would have much weight in that quarter. The agricultural constituencies would, on the contrary, feel that they had been treated with an entire want of due respect and consideration by the right hon. Gentleman, and would infer from his present speech that they had nothing whatever to expect from him but a determined opposition to their just claims. He had simply to say in conclusion that it was not his intention to offer the slightest opposition to the Budget, but would content himself with the expression of his regret that the Chancellor of the Exchequer, by the tone and tenor of his speech, had shown that he had not the slightest intention to concede any portion of the just claims of the agricultural and beer-consuming classes.

MR. SURTEES

said, he had heard with considerable regret the statement made by the Chancellor of the Exchequer that it was not his intention to deal with the malt tax in the present Budget. The substance of what the right hon. Gentleman said on the subject was, "How can I, in justice to Scotland and Ireland, remove the malt tax, while I leave the spirit duties un- touched?" But under that query two I fallacies were, he thought, to be found; the first being that no relief from taxation ought to be given to one section of a highly composite community without providing some contemporaneous compensation to the others; the second, that the spirit duties as a method of taxation were analogous to the malt tax. Now, remission of taxation, he contended, must be partial as well as gradual; partial, because it would be almost impossible to apportion a surplus strictly among the various public burdens which affected specifically different sections of the population. No Chancellor of the Exchequer, as far as he knew, had ever attempted, out of a moderate surplus, to grant relief to all classes at once. All had, on the contrary, proceeded on the common-sense principle of relieving first one class and then another. It was, of course, a grand thing for a Finance Minister to find himself able to attack a burden the pressure of which was spread over an unusually large area. But the question "Whose turn has come?" was always the true one. Last year came the turn of the sugar duties; also the turn partially of the fire insurance duty; and us a matter of justice, not as a matter of favour, he thought it was now the turn of the malt tax. Still more extraordinary than the first was the second fallacy to which he alluded; nor did he believe that the Chancellor of the Exchequer had really imposed upon himself the belief that there was any true analogy between the spirit duties and the malt duty. The spirit duty was a tax upon the manufactured article—the malt tax was a tax upon the raw material. The true analogy was between beer and spirits—between a beer duty and the spirit duty. The fallacy was made more palpable if it were borne in mind that the raw material of beer and whisky was, or ought to be, the same. He said whisky, because brandy and rum were foreign products. Gin was, to a great extent, a luxury confined to England, and was additionally exceptional, because it was the greatest parent of vice and misery in the kingdom. It was the opium of England, as absinthe was of France. Well, the right hon. Gentleman in his Budget last year contemplated with satisfaction the gradual change of taste that was going forward from stronger and more ardent liquors to milder and more wholesome liquors; and, again, as if to show the es- sential difference between the case of beer and spirits, he said in the same speech, in regard to this particular article (spirits), it was the business of the Government to derive from it the largest amount of possible revenue, without the same regard which was paid in other cases to the encouragement of the manufacture or to augmented consumption. The right hon. Gentleman's argument, therefore, finally stood thus:—Because there was a manufactured article the consumption of which, "though an evil," was great among the Scotch and Irish, the burdens upon which were beneficial to State morality, therefore the remission of a troublesome tax upon a blameless article of English consumption must be postponed. According to this, the malt tax would never be removed until the moral taint attached to the consumption of spirits was done away. For even if the right hon. Gentleman had a surplus large enough to deal with both the spirit duties and the malt tax at once, he would still feel bound from motives of morality to retain the former, and from motives of impartiality to retain the latter.

MR. MAGUIRE

said, he was puzzled to know why the Chancellor of the Exchequer had introduced into his speech the subjects of the rag duty and the condition of the paper trade, which he stated to be most flourishing. Now it was not more than a month ago, that a deputation of seventy Members of that House and eighty representatives of the paper trade waited on the First Minister to represent the condition in which the trade was, and to ask for a redress of injury—or, in fact, for justice. The truth was that the trade was suffering deeply from the unfortunate blunder made at the time of the negotiation between this country and France which eventuated in the French Treaty. On the occasion of the interview with the First Lord of the Treasury, a proposal was made on behalf of the trade, and if that proposal were adopted it would have the effect of releasing the trade from the consequences of a most deplorable blunder. It would not raise the price of the manufactured article to the consumer, or affect in the slightest degree the newspaper press of the country. On the contrary, he thought he might say that so far from raising the price of paper, it would, without imposing one shilling of taxation, have the effect of lowering the price. The Chancellor of the Exchequer stated that a gentleman who had a large quantity of waste cotton on hand could not get more than 9s. or 10s. for what 25s. were formerly paid. The explanation of the fact was simple. At the time of the cotton famine the relative value of cotton waste to cotton rags was so enormous that the trade could not use it—they could scarcely get cotton-waste at all, and what they did get was of the worst possible quality; but it was now coming back to something like a normal price, and gradually re-entering into consumption. He thought he could prove that the blunder made by the Government had entailed on the trade most calamitous consequences. Within the last nine months, to his certain knowledge, no fewer than seven or eight important houses in the trade had been obliged to stop business. Under these circumstances, he hoped that the Chancellor of the Exchequer would on the part of the Government adopt the proposition of the trade, which was ready to bind itself not to raise the price of paper for the next five years; and, indeed, no intention of that kind existed. Without entering into the comparison between whisky and malt, he expressed his regret, as an Irish Member, that the Chancellor of the Exchequer had not thought of the strong claims of the Irish distillers. [A laugh.] Some Gentlemen might laugh, but it was a fact that the trade was nearly crushed out of existence. The duty was too high, and a large amount of revenue might be obtained from a lower duty.

Mr. BASS

said, he was sorry that the right hon. Gentleman the Chancellor of the Exchequer was not in his place to hear the observations which had just been made in reference to the paper trade. As to the Budget, he (Mr. Bass) thought it would be satisfactory to a large proportion of the people; but, notwithstanding that the Chancellor of the Exchequer had secured the gratitude of all the old women in the country by reducing the tea duty, he must say that he regretted that the right hon. Gentleman had not paid any attention to the claims of the malt duty for consideration. He thought that the right hon. Gentleman had fallen into one or two errors upon the subject. He had said that the consumer would not get a farthing a pot reduction in the price of beer, unless the duty was reduced from 2s. 8½d. to 1s. 2d.; but, in his calculation, he had left out of consideration the profit which the brewer expected to make upon the capital he advanced to pay the malt tax. The brewer paid 32s. or 34s. per quarter for his barley; but, in addition, he paid 22s. duty upon its conversion into malt; and his profit must be calculated upon the whole amount. He was persuaded that the additional competition in the trade by the reduction of the duty would tend to the benefit of the agricultural interest. The Chancellor of the Exchequer had attempted to alarm the Committee by stating that a reduction in the malt duties would cause a diminution in the receipts for the spirit duties. But he (Mr. Bass) was persuaded that such apprehensions were entirely groundless. In 1853 the consumption of malt in this country amounted to 36,000,000 bushels; in 1855, during the Russian war, those duties were largely increased, and the consumption of malt fell to 30,000,000 bushels; but in 1858, when the extra duties were removed, the lost ground was more than recovered, for the consumption of malt rose to 38,000,000 bushels. Now, with regard to the spirit duties, in 1853 duty was paid in England upon 10,350,000 gallons, and in 1855, in the middle of the Russian war, it was near about the same, being 10,384,000 gallons; but in 1858, when the duty upon malt was materially reduced, the duty was paid upon 10,448,000 gallons, being more than was paid in 1855, when the duty upon malt was so much higher. The Chancellor of the Exchequer had, he was happy to find, acknowledged the injustice he committed three years ago in favour of the farming interest by the imposition of the brewer's licence. He then took off the duty upon hops, and in order to recoup the revenue for the loss he imposed an additional duty upon brewers' licences. Now, anything more nearly approaching confiscation than that was never attempted by any Chancellor of the Exchequer. He was, therefore, glad to find that at last the right hon. Gentleman was sensible of the injustice he then inflicted on the brewing interest. The practical effect of the change had been that while in the last three years he had been compelled to pay 20,000 guineas for a licence to carry on his business, before he could tell whether he was manufacturing at a profit or a loss, so far from receiving any benefit in return from a reduction in the price of hops, he had to pay an additional price for his hops, because the growers of hops, having no longer any duty to pay, were not obliged to send their hops to market, but held them back in order to obtain better prices. He considered that a great grievance. The Committee had no doubt heard enough about the malt tax, but he could not refrain from saying that although he had never listened to a more ingenious speech than that made that night by the Chancellor of the Exchequer, it would not convince him that the right hon. Gentleman had not made a great mistake with regard to the malt duties, and he felt quite convinced that the Government would be sure to hear of it when a general election took place. No outcry had been raised against the tea duty, but a strong desire had been expressed for a reduction of the malt tax. The Chancellor of the Exchequer had endeavoured to show that the malt tax was not out of proportion to the duties on other taxable articles; but if that were so, the dealers in malt had been for the last fifty years most unjustly treated, because in 1815 there was a much smaller duty paid on malt than now, and consequently since then they had been paying a much higher duty than they ought to have done. He was sorry the Chancellor of the Exchequer had not entertained the malt question in a more liberal spirit; and all he could say, as an individual trader was, that he should continue to enjoy the present profit upon the duty that remained, and the country would have to pay for it.

MR. R. LONG

said, the Chancellor of the Exchequer had spoken of the expediency of dealing impartially with different kinds of taxation; but the policy of the Government for some time had been to take off Customs duties, leaving the Excise duties in their full oppressiveness. In fact, the fiscal policy of the right hon. Gentleman was to favour the foreign trade at the cost of the home trade. He was in favour of a reduction of the malt tax with the view to its ultimate abolition. A more transparent sophistry it would be difficult to meet with than was embodied in the assertion that the abolition of the malt duty would give a death-blow to indirect taxation. If the duty on malt were abolished to-morrow there was nothing to prevent the right hon. Gentleman from requiring licences to be paid for as well on the consumption as on the sale of beer, both of which would be indirect taxes. Nobody need brew or sell beer unless he liked; but duty levied upon malt was in fact duty levied upon meat. And far from convincing those who felt with the agriculturists on this subject, the Chancellor of the Exchequer would doubtless find that his own words in 1853, when he told the farmers that the reason the repeal of the malt tax as a cause was so weak was because they had never taken the trouble to agitate, would be remembered and turned to account. There would soon be agitation enough on the subject, and in the next Parliament, doubtless, no one would be so earnest an advocate for the I repeal of this tax as the right hon. Gentleman himself. The right hon. Gentleman would render good service to the country; if, by consolidating the assessed taxes in any way, he could do away with the labour inflicted on certain classes in filling up the assessment papers, and also if he would turn his attention to the tax on farm leases, which stood unnecessarily high.

House resumed.

Committee report Progress; to sit again To-morrow.